EX-99.1 2 er1209.txt EX-99.1 News Release INVESTOR AND MEDIA CONTACT: George R. Kirkland Senior Vice President and Treasurer Phone: (229) 873-3830 investorinfo@sgfc.com For Immediate Release Southwest Georgia Financial Corporation Reports Positive Earnings for Fourth Quarter and 2009 * Total deposits up $20.9 million, or 9.7%, year-over-year * Total assets increased by $23.7 million, or 8.9% in 2009 * Reduced provisions for loan losses in both the 2009 fourth quarter and year * Total risk based capital ratio remains well above regulatory requirements at 16.14% * Full-service banking center in Valdosta, Georgia is expected to be open in the second quarter of 2010 MOULTRIE, GEORGIA, January 27, 2010 -- Southwest Georgia Financial Corporation (NYSE Amex: SGB), a full service community bank holding company, today reported net income of $706 thousand, or $0.28 per diluted share, for the fourth quarter of 2009, up from a net loss of $116 thousand, or $0.04 per diluted share, for the fourth quarter of 2008. The growth in net income was driven by higher net interest income, lower provision for loan losses, stronger noninterest income, and reduced expenses. Fourth quarter 2008 results were negatively impacted by an $825 thousand provision for loan losses necessitated by a $785 thousand partial charge-off of a large commercial real estate loan. Return on average equity for the fourth quarter of 2009 was 11.11%, measurably improved over a negative 2.02% for the same period in 2008. Similarly, return on average assets improved for the 2009 fourth quarter to 0.98% compared with a return of negative 0.17% for the fourth quarter of 2008. For the year ended December 31, 2009, net income was $1.81 million, or $0.71 per diluted share, compared with a net loss of $1.28 million, or $0.50 per diluted share, for the same period in 2008. Positively impacting the 2009 year-to-date results were lower salary and employee benefits of $792 thousand, due to staff reductions, and higher net interest income resulting primarily from lower interest paid on interest bearing liabilities. Net income in 2008 was impacted by a $4.11 million non-cash loss related to the impairment of equity securities, a $979 thousand loss at the Company's mortgage banking services subsidiary, and, as previously noted, the 2008 fourth quarter charge-off and related loan loss provision. DeWitt Drew, President and CEO of Southwest Georgia Financial commented, "Despite the continued sluggish economic environment, our solid deposit and loan growth, as well as prudent expense management, helped us grow the bank and post positive earnings each quarter this year. However, we remain cautious as we expect the near-term to bring continued challenges with respect to credit costs and operating expenses." Mr. Drew continued, "Our new full-service banking center in Valdosta is scheduled to open for business in the second quarter of 2010. By moving -MORE- into the Valdosta market we are broadening the opportunities for growth while bringing to this market the same community-minded, customer-centric banking philosophy that provides responsive, flexible service to the communities we currently serve." Balance Sheet Trends and Asset Quality At December 31, 2009, total assets increased $23.7 million, or 8.9%, to $291.0 million from $267.3 million at the end of last year's fourth quarter. This increase was primarily due to 7.5% growth in loans as well as higher cash and interest-bearing balances. Total loans increased $11.1 million to $160.2 million compared with $149.1 million at December 31, 2008. The loan loss reserve coverage over total loans declined nominally to 1.58%, while nonperforming assets to total assets grew to 1.84%, a 74 basis point increase over last year. The level of nonperforming assets at the end of 2009 was due primarily to one large foreclosed commercial property. Foreclosed assets increased to $3.8 million from $0.2 million at the end of 2008. That property has been under construction and the costs of improvements are now fully funded. Total deposits of $235.4 million were up $20.9 million, or 9.7%, compared with the previous year-end, due in large part to increases in money market and time deposit accounts. Shareholders' equity was $25.5 million as of December 31, 2009, up from $23.3 million at December 31, 2008. On a per share basis, book value at year end was $10.02, up from $9.15 at the end of 2008. Southwest Georgia Financial Corporation's total risk-based capital ratio was 16.14% at December 31, 2009, significantly exceeding the regulatory guidelines for a well capitalized financial institution (see accompanying table). The increase in shareholders' equity and book value per share were primarily due to the net income retained in the current year. The Company has approximately 2.55 million shares of common stock outstanding. Quarterly Revenue Expands Across Most Categories; Expenses Lower Net interest income for the fourth quarter of 2009 improved to $2.61 million compared with $2.49 million for the same period in 2008, as lower costs of deposits and borrowings more than offset the decline in interest income. Net interest income for the fourth quarter of 2009 was $2.46 million compared with $1.66 million for the same period last year. A $150 thousand provision for loan losses was made during the fourth quarter of 2009 compared with $825 thousand provision for in the fourth quarter of 2008. For the quarter, total interest income was $3.48 million and total interest expense was $867 thousand, compared with $3.64 million and $1.66 million, respectively, from the same period a year ago. The Company's net interest margin remained strong at 4.22% for the fourth quarter of 2009, but down slightly from the same period last year. Noninterest income, which was nearly 29.0% of the Company's total revenue for the quarter, increased to $1.41 million when compared with $1.12 million for the fourth quarter of 2008. Revenue from service charges on deposit accounts increased 10.4% to $445 thousand for the current quarter when compared with the same period a year ago, and insurance services revenue increased 14.6% to $274 thousand over the same period. A gain on the sale of securities of $221 thousand was recognized in the fourth quarter of 2009 from selling mortgage-backed securities. Trust services revenue was flat with the -MORE- prior year period, while retail brokerage services revenue increased slightly compared with the same period a year ago. Mr. Drew stated, "The sale of mortgage backed securities will have a dampening effect on net interest margin in the short-term, however, we believe it prudent to shorten the duration of earning assets in light of the prospect of higher rates in the future." Total noninterest expense for the fourth quarter of 2009 declined 5.7% to $2.83 million from $3.00 million for fourth quarter of the prior year. In the fourth quarter of 2009, salaries and employee benefits decreased $165 thousand or 9.9%, to $1.50 million, due to staff reductions. Fourth quarter 2009 equipment expense decreased $34 thousand or 16.6%, to $171 thousand. Other operating expenses increased $35 thousand when compared with the prior year mainly due to a $75 thousand increase in FDIC insurance assessment. 2009 Review Return on average equity increased to 7.48% for 2009 compared with negative 5.04% for the same period last year. Return on average assets increased to 0.65% compared with negative 0.46% for the same period in 2008. Net interest income after provision for loan losses for 2009 increased $614 thousand to $9.39 million compared with $8.78 million for the same period in 2008. Reduced interest paid on deposits and borrowings and a lower loan loss provision more than offset the $1.47 million decline in total interest income, when compared with the same period in 2008. The Company recognized a $536 thousand provision for loan losses in 2009, compared with a provision for loan losses of $825 thousand in 2008. Net interest margin improved 10 basis points to 4.14% for 2009, when compared with the same period a year ago. For 2009, noninterest income was $5.12 million, up from $1.48 million in the same period of 2008. Excluding last year's loss on the impairment of equity securities of $4.11 million, 2009 year-to-date noninterest income was down $456 thousand when compared with the same period last year. The majority of the decline was a result of a drop in mortgage banking services revenue of $694 thousand, or 34.3%, when compared with same period last year. Other contributing factors included income from insurance services which decreased $33 thousand, and revenue from trust services and retail brokerage services which decreased $56 thousand and $75 thousand, respectively. These decreases were partially offset by an increase in service charges on deposit accounts of $158 thousand and the $255 thousand gain on the sale of securities in 2009. Noninterest expense decreased $1.0 million to $12.20 million in 2009 compared with the same period last year, primarily due to a mortgage banking services loss of $1.0 million that was recognized in 2008. Salary and employee benefits declined $792 thousand in 2009 due to staff reductions. Offsetting this decrease were other operating expenses which were higher due to increased legal and FDIC insurance fees of $675 thousand and $416 thousand, respectively. Dividends In March of 2009, the Company suspended its regular cash dividend, which resulted in lower dividend payments of $0.07 per share in 2009, compared with $0.56 per share in 2008. The decision enabled the Company to have -MORE- financial flexibility by retaining equity necessary to support efforts to capture greater market share, grow its loan portfolio, and expand outside of its historic footprint. Outlook Mr. Drew concluded, "While 2010 is going to be a challenging year, we have a strong capital position and believe we are strategically positioned to take advantage of quality loan and deposit opportunities as the economy improves. Nonperforming assets have increased, but are centered in two relationships and appear to be manageable. While our primary focus is reduction in those assets, we continue to look at opportunities to expand outside our current footprint and the opening of a full service banking center in Valdosta gives us access to a larger, more dynamic, and growing market." About Southwest Georgia Financial Corporation Southwest Georgia Financial Corporation is a state-chartered bank holding company with approximately $291 million in assets headquartered in Moultrie, Georgia. Its primary subsidiary, Southwest Georgia Bank, offers comprehensive financial services to consumer, business, and governmental customers. The current banking facilities include the main office located in Colquitt County, and branch offices located in Baker County, Thomas County, and Worth County, and a loan production office located in Lowndes County. In addition to conventional banking services, the bank provides investment planning and management, trust management, mortgage banking, and commercial and individual insurance products. Insurance products and advice are provided by Southwest Georgia Insurance Services which is located in Colquitt County. Mortgage banking for primarily commercial properties is provided by Empire Financial Services, Inc., a mortgage banking services firm. More information on Southwest Georgia Financial Corp. and Southwest Georgia Bank can be found at its website: www.sgfc.com. SAFE HARBOR STATEMENT This news release contains certain brief forward-looking statements concerning the Company's outlook. The Company cautions that any forward- looking statements are summary in nature involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company's control. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The following factors, among others, could affect the Company's actual results and could cause actual results in the future to differ materially from those expressed or implied in any forward-looking statements included in this release: the ability of the bank to manage the interest rate environment, the success of reducing operating costs, overall economic conditions, customer preferences, the impact of competition, the ability to execute its strategy for growth. Additional information regarding these risks and other factors that could cause the Company's actual results to differ materially from our expectations is contained in the Company's filings with the Securities and Exchange Commission. Except as otherwise required by federal securities laws, Southwest Georgia Financial undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Financial tables follow. -MORE-
SOUTHWEST GEORGIA FINANCIAL CORPORATION CONSOLIDATED STATEMENT OF CONDITION (Dollars in thousands except per share data) (Unaudited) (Audited) (Audited) December 30, December 31, December 31, 2009 2008 2007 ASSETS Cash and due from banks $ 10,050 $ 7,470 $ 8,736 Interest-bearing deposits in banks 13,247 30 9,998 Investment securities available for sale 62,008 83,212 31,188 Investment securities held to maturity 24,195 12,108 88,226 Federal Home Loan Bank stock, at cost 1,650 1,618 1,653 Loans, less unearned income and discount 160,230 149,070 119,008 Allowance for loan losses ( 2,533) ( 2,376) ( 2,399) Net loans 157,697 146,694 116,609 Premises and equipment 7,777 5,783 6,291 Foreclosed assets, net 3,832 211 90 Intangible assets 848 1,056 1,283 Other assets 9,704 9,115 7,579 Total assets $ 291,008 $ 267,297 $ 271,653 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: NOW accounts $ 25,075 $ 25,283 $ 23,086 Money market 45,694 35,701 42,031 Savings 21,365 21,213 20,561 Certificates of deposit $100,000 and over 30,190 28,755 29,589 Other time accounts 72,085 64,216 66,153 Total interest-bearing deposits 194,409 175,168 181,420 Noninterest-bearing deposits 41,022 39,373 35,373 Total deposits 235,431 214,541 216,793 Federal funds purchased 0 430 0 Other borrowings 5,000 15,000 10,114 Long-term debt 21,000 10,000 15,000 Accounts payable and accrued liabilities 4,047 4,010 3,228 Total liabilities 265,478 243,981 245,135 Shareholders' equity: Common stock - par value $1; 5,000,000 shares authorized; 4,293,835 shares issued (*) 4,294 4,294 4,294 Additional paid-in capital 31,701 31,701 31,701 Retained earnings 16,325 14,512 17,039 Accumulated other comprehensive income ( 676) ( 1,077) ( 466) Total 51,644 49,430 52,568 Treasury stock - at cost (**) ( 26,114) ( 26,114) ( 26,050) Total shareholders' equity 25,530 23,316 26,518 Total liabilities and shareholders' equity $ 291,008 $ 267,297 $ 271,653 * Common stock - shares outstanding 2,547,837 2,547,837 2,549,637 ** Treasury stock - shares 1,745,998 1,745,998 1,744,198
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SOUTHWEST GEORGIA FINANCIAL CORPORATION CONSOLIDATED INCOME STATEMENT (unaudited*) (Dollars in thousands except per share data) For the Three Months For the Twelve Months Ended December 31, Ended December 31, 2009* 2008* 2009* 2008 Interest income: Interest and fees on loans $ 2,502 $ 2,414 $ 9,524 $ 9,504 Interest and dividend on securities available for sale 852 1,108 3,610 4,188 Interest on securities held to maturity 109 118 425 935 Dividends on Federal Home Loan Bank stock 2 2 5 63 Interest on federal funds sold 0 0 0 90 Interest on deposits in banks 11 0 33 290 Total interest income 3,476 3,642 13,597 15,070 Interest expense: Interest on deposits 656 905 2,885 4,425 Interest on federal funds purchased 0 6 1 23 Interest on other borrowings 36 165 169 769 Interest on long-term debt 175 79 617 253 Total interest expense 867 1,155 3,672 5,470 Net interest income 2,609 2,487 9,925 9,600 Provision for loan losses 150 825 536 825 Net interest income after provision for losses on loans 2,459 1,662 9,389 8,775 Noninterest income: Service charges on deposit accounts 445 403 1,766 1,608 Income from trust services 55 56 213 269 Income from retail brokerage services 78 69 266 341 Income from insurance services 274 239 1,069 1,102 Income from mortgage banking services 289 306 1,327 2,021 Net gain on the sale or abandonment of assets 0 0 0 13 Net gain on the sale of securities 221 0 255 0 Net (loss) on the impairment of equity securities 0 0 0 (4,105) Other income 44 44 228 226 Total noninterest income (loss) 1,406 1,117 5,124 1,475 Noninterest expense: Salary and employee benefits 1,495 1,660 6,360 7,152 Occupancy expense 209 208 846 863 Equipment expense 171 205 667 694 Data processing expense 166 171 686 643 Amortization of intangible assets 52 52 208 227 Losses related to mortgage banking services 0 3 0 979 Other operating expense 735 700 3,425 2,631 Total noninterest expense 2,828 2,999 12,192 13,189 Income (loss) before income tax expense 1,037 (220) 2,321 (2,939) Provision for income taxes 331 (104) 508 (1,660) Net income (loss) $ 706 $ (116) $ 1,813 $(1,279) Net income (loss) per share, basic $ 0.28 $ (0.04) $ 0.71 $ (0.50) Net income (loss) per share, diluted $ 0.28 $ (0.04) $ 0.71 $ (0.50) Dividends paid per share $ - $ 0.14 $ 0.07 $ 0.56 -MORE- Basic weighted average shares outstanding 2,547,837 2,547,837 2,547,837 2,547,926 Diluted weighted average shares outstanding 2,547,837 2,553,653 2,547,837 2,552,486
SOUTHWEST GEORGIA FINANCIAL CORPORATION Financial Highlights (Dollars in thousands except per share data) At December 31 2009 2008 Assets $ 291,008 $ 267,297 Loans, less unearned income & discount 160,230 149,070 Deposits 235,431 214,541 Shareholders' equity 25,530 23,316 Book value per share 10.02 9.15 Loan loss reserve/loans 1.58% 1.59% Nonperforming assets/total assets 1.84% 1.10%
Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Net income (loss) $ 706 $ (116) $1,813 $(1,279) Earnings (loss) per share, basic 0.28 (0.04) 0.71 (0.50) Earnings (loss) per share, diluted 0.28 (0.04) 0.71 (0.50) Dividends paid per share - 0.14 0.07 0.56 Return on assets 0.98% (0.17)% 0.65% (0.46)% Return on equity 11.11% (2.02)% 7.48% (5.04)% Net interest margin (tax equivalent) 4.22% 4.26% 4.14% 4.04% Net charge offs (recoveries)/ average loans 0.11% 2.28% 0.25% 0.63%
Quarterly 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr Averages 2009 2009 2009 2009 2008 Assets $287,348 $278,502 $274,125 $272,771 $266,865 Loans, less unearned income & discount 159,180 154,422 150,043 148,824 145,900 Deposits 230,903 225,634 226,345 223,387 214,420 Equity 25,402 24,237 23,752 23,504 23,017 Return on assets 0.98% 0.67% 0.38% 0.56% (0.17)% Return on equity 11.11% 7.71% 4.37% 6.48% (2.02)% Net income (loss) $ 706 $ 467 $ 259 $ 381 $ (116) Net income (loss) per share, basic $ 0.28 $ 0.18 $ 0.10 $ 0.15 $ (0.04) Net income (loss) per share, diluted $ 0.28 $ 0.18 $ 0.10 $ 0.15 $ (0.04) Dividends paid per share $ - $ - $ - $ 0.07 $ 0.14
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SOUTHWEST GEORGIA FINANCIAL CORPORATION Risk Based Capital Ratios Southwest Georgia Financial Corporation Regulatory Guidelines For Well Minimum Risk Based Capital Ratios December 31, 2009 Capitalized Guidelines Tier 1 capital 14.90% 6.00% 4.00% Total risk based capital 16.14% 10.00% 8.00% Tier 1 leverage ratio 8.83% 5.00% 3.00%
Southwest Georgia Bank Regulatory Guidelines For Well Minimum Risk Based Capital Ratios December 31, 2009 Capitalized Guidelines Tier 1 capital 14.12% 6.00% 4.00% Total risk based capital 15.38% 10.00% 8.00% Tier 1 leverage ratio 8.36% 5.00% 3.00%
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