Stockholders' Equity / Regulatory Matters

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Stockholders' Equity / Regulatory Matters

15. STOCKHOLDERS’ EQUITY / REGULATORY MATTERS

Dividends paid by the Bank subsidiary are the primary source of funds available to the parent company for payment of dividends to its stockholders and other needs. Banking regulations limit the amount of dividends that may be paid without prior approval of the Bank’s regulatory agency. At December 31, 2016, approximately $2,049,022 of the Bank’s net assets were available for payment of dividends without prior approval from the regulatory authorities.

The Federal Reserve Board requires that banks maintain reserves based on their average deposits in the form of vault cash and average deposit balances at the Federal Reserve Banks. For the year ended December 31, 2016, the Bank had a total reserve requirement of $5,367,000.

The Corporation (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by such agencies that, if undertaken, could have a direct material effect on the Corporation’s and Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum amounts and ratios (set forth in the following table) of Total, Common Equity Tier I, and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital to average assets (as defined). As of December 31, 2016 and 2015, the Corporation and the Bank meets all capital adequacy requirements to which they are subject.

As of December 31, 2016, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum Total risk-based, Common Equity Tier I risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the following tables. Under the Basel III rules, the Bank must hold a capital conservation buffer above the minimum regulatory risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2016 is 0.625%. There are no conditions or events since the notification that management believes have changed the Bank’s category. The Corporation’s and the Bank’s actual capital amounts and ratios as of December 31, 2016 and 2015, are also presented in the table.

As a result of regulatory limitations at December 31, 2016, approximately $34,563,138 of the parent company’s investments in net assets of the subsidiary bank of $36,612,160, as shown in the accompanying condensed balance sheets in Note 16, was restricted from transfer by the subsidiary bank to the parent company in the form of cash dividends.

The Corporation’s and the Bank’s ratios under the above rules at December 31, 2016 and 2015, are set forth in the following tables. The Corporation’s leverage ratio at December 31, 2016, was 8.87%.

As of December 31, 2016	Actual					For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio
Southwest Georgia Financial Corporation
Common equity Tier 1 (to risk-
risk- weighted assets)	$	40,187,232		13.03	%	$	13,878,302		>5.13%		N/A*		N/A*
Total capital (to risk-
weighted assets)	$	43,311,843		14.04	%	$	24,672,536		>8.63%		N/A*		N/A*
Tier I capital (to risk-
weighted assets)	$	40,187,232		13.03	%	$	18,504,402		>6.63%		N/A*		N/A*
Leverage (tier I capital
to average assets)	$	40,187,232		8.87	%	$	18,113,752		>4.00%		N/A*		N/A*
Southwest Georgia Bank
Common equity Tier 1 (to risk-
risk- weighted assets)	$	38,377,058		12.47	%	$	13,848,917		>5.13%	$	20,003,991		>  6.50%
Total capital (to risk-
weighted assets)	$	41,501,669		13.49	%	$	24,620,297		>8.63%	$	30,775,371		>10.00%
Tier I capital (to risk-
weighted assets)	$	38,377,058		12.47	%	$	18,465,223		>6.63%	$	24,620,297		>   8.00%
Leverage (tier I capital
to average assets)	$	38,377,058		8.49	%	$	18,077,111		>4.00%	$	22,596,389		>   5.00%

As of December 31, 2015	Actual					For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio
Southwest Georgia Financial Corporation
Common equity Tier 1 (to risk-
weighted assets)	$	37,230,740		14.07	%	$	11,907,692		>4.50%		N/A*		N/A*
Total capital (to risk-
weighted assets)	$	40,262,982		15.22	%	$	21,169,230		>8.00%		N/A*		N/A*
Tier I capital (to risk-
weighted assets)	$	37,230,740		14.07	%	$	15,876,922		>6.00%		N/A*		N/A*
Leverage (tier I capital
to average assets)	$	37,230,740		9.13	%	$	16,316,153		>4.00%		N/A*		N/A*
Southwest Georgia Bank
Common equity Tier 1 (to risk-
weighted assets)	$	34,279,795		12.99	%	$	11,874,310		>4.50%	$	17,151,781		>  6.50%
Total capital (to risk-
weighted assets)	$	37,312,037		14.14	%	$	21,109,884		>8.00%	$	26,387,355		>10.00%
Tier I capital (to risk-
weighted assets)	$	34,279,795		12.99	%	$	15,832,413		>6.00%	$	21,109,884		>   8.00%
Leverage (tier I capital
to average assets)	$	34,279,795		8.43	%	$	16,274,473		>4.00%	$	20,343,091		>   5.00%

*N/A - As of December 31, 2016, the Corporation met the definition under the Basel III Capital Rules of a small bank holding company and, therefore, was exempt from consolidated risk-based and leverage capital adequacy guidelines for bank holding companies.