XML 61 R23.htm IDEA: XBRL DOCUMENT

Shareholders' Equity / Regulatory Matters

12 Months Ended

Dec. 31, 2019

Shareholders' Equity / Regulatory Matters

15. SHAREHOLDERS’ 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 shareholders 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, 2019, approximately $2,750,464 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, 2019, the Bank had a total reserve requirement of $0.

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, 2019 and 2018, the Corporation met all capital adequacy requirements.

As of December 31, 2019, 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 for 2019 is 2.50%. 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, 2019 and 2018, are also presented in the table.

As a result of regulatory limitations at December 31, 2019, approximately $45,371,590 of the parent company’s investments in net assets of the subsidiary bank of $48,122,054, 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, 2019 and 2018, are set forth in the following tables.

As of December 31, 2019	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)	$	48,412,803		12.35	%	$	17,634,437		>4.50%	N/A*		N/A*
Total capital (to risk-
weighted assets)	$	52,017,151		13.27	%	$	31,350,110		>8.00%	N/A*		N/A*
Tier I capital (to risk-
weighted assets)	$	48,412,803		12.35	%	$	23,512,853		>6.00%	N/A*		N/A*
Leverage (tier I capital
to average assets)	$	48,412,803		8.81	%	$	21,991,645		>4.00%	N/A*		N/A*

*N/A - As of December 31, 2019, 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.

(1) Not including capital conservation buffer.

As of December 31, 2018	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)	$	45,802,434		11.97	%	$	17,217,892		>4.50%		N/A*		N/A*
Total capital (to risk-
weighted assets)	$	49,231,303		12.87	%	$	30,609,586		>8.00%		N/A*		N/A*
Tier I capital (to risk-
weighted assets)	$	45,802,434		11.97	%	$	22,957,189		>6.00%		N/A*		N/A*
Leverage (tier I capital
to average assets)	$	45,802,434		8.62	%	$	21,265,996		>4.00%		N/A*		N/A*

Southwest Georgia Bank
Common equity Tier 1 (to risk-
risk- weighted assets)	$	43,680,743		11.44	%	$	17,180,290		>4.50%⁽¹⁾	$	24,815,974		> 6.50%
Total capital (to risk-
weighted assets)	$	47,109,612		12.34	%	$	30,542,738		>8.00%⁽¹⁾	$	38,178,422		>10.00%
Tier I capital (to risk-
weighted assets)	$	43,680,743		11.44	%	$	22,907,053		>6.00%⁽¹⁾	$	30,542,738		> 8.00%
Leverage (tier I capital
to average assets)	$	43,680,743		8.24	%	$	21,206,909		>4.00%	$	26,508,636		> 5.00%

*N/A - As of December 31, 2018, 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.

(1) Not including capital conservation buffer.