Southwest Georgia Financial : SGB Reports 2017 Fourth Quarter Results

Southwest Georgia Financial Corporation · 201 First Street S.E. · Moultrie, GA 31768

PH: [phone] · FX: [phone]

News Release

CONTACTS:

Company:	Investor Relations:
Karen T. Boyd	Deborah K. Pawlowski
Senior Vice President and Treasurer	Kei Advisors LLC
Phone: [phone]	Phone: [phone]
[e-mail]	[e-mail]
For Immediate Release

Southwest Georgia Financial Corporation Reports Fourth Quarter and

Full Year 2017 Financial Results

MOULTRIE, GEORGIA, January 23, 2018 --Southwest Georgia Financial Corporation (the "Company") (NYSE American: SGB), a full-service community bank holding company, today reported results of operations for the fourth quarter and year ended December 31, 2017. Comparisons are to prior-year periods unless otherwise noted.

"2017 was an outstanding year in many respects. Loan growth was almost 14 percent, deposit growth was over 6 percent, we substantially completed the migration to a new core processing provider, and core earnings growth was strong against last year," commented DeWitt Drew, President and CEO. "Fourth quarter and full year results were impacted by the new tax legislation. We are looking forward to lower tax rates in the future, but needed to revalue our net deferred tax assets. The result was an impairment charge of $419 thousand negatively impacting the income statement. The effect was a $0.17 reduction in earnings per share for the quarter and year."

Income Highlights

•  Net income for 2017 was $3.8 million, down $227 thousand, due primarily to the revaluing of net deferred tax assets. On a per diluted share basis, earnings were $1.49. Excluding the deferred tax impairment of $419 thousand, net income was $4.2 million, or $1.66 per diluted share, a 5% increase from 2016. Average loan growth of 13% and an improved asset mix grew net interest income over 9%.

•  Annual net interest income was $17.2 million, up $1.4 million. The growth was the result of a $36.7 million increase in average total loans to $317.7 million. Growth in net interest income more than offset the $915 thousand increase in noninterest expense due in large part to higher professional fees, migration to a new core processing provider, and investment in personnel.

•  Fourth quarter net income was $717 thousand, or $0.28 per diluted share. Excluding the deferred tax impairment mentioned above, net income for the quarter was $1.1 million, up 13% over the prior-year period. Net interest income for the quarter increased $441 thousand to $4.5 million primarily due to a $523 thousand increase in interest and fees on loans.

Balance Sheet Trends

•  Total assets grew 9% to $489.2 million, driven by healthy loan growth of $37.7 million, or 13%, to $330.2 million at period end.

•  Growth in the loan portfolio was funded by an increase in total deposits of $25.5 million to $397.0 million at December 31, 2017. Noninterest-bearing deposit accounts grew over 9% to $127.7 million. Federal Home Loan Bank Advances were up $12.6 million at year-end as further funding for loan growth.

Capital Management

•  Book value per share grew over 6% to $16.03.

•  The Company has a Total Risk-Based Capital Ratio of 13.55%, a Common Equity Tier 1 Capital Ratio of 12.64%, and a Leverage Capital Ratio of 8.72%, all measurably above the federal "well capitalized" standard.

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•  In December 2017, the Company paid a quarterly cash dividend of $0.11 per common share. Southwest Georgia Financial Corporation or its predecessor, Southwest Georgia Bank, has paid cash dividends for 89 consecutive years.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, January 23, 2018 at 1:00 p.m. ET. Management will review the financial and operating results for the fourth quarter and full year 2017, as well as the Company's strategy and outlook. A question and answer session will follow the formal discussion.

The conference call can be accessed by calling [phone]. Alternatively, the webcast can be monitored atwww.sgfc.com.

A telephonic replay will be available from 4:00 p.m. ET on the day of the teleconference until Tuesday,

January 30, 2018. To listen to the archived call, dial [phone] and enter conference ID number 13675051, or access the webcast replay atwww.sgfc.com/investorrelations.cfm,where a transcript will be posted once available.

About Southwest Georgia Financial Corporation

Southwest Georgia Financial Corporation is a state-chartered bank holding company with approximately $489 million in assets headquartered in Moultrie, Georgia. Its primary subsidiary, Southwest Georgia Bank, offers comprehensive financial services to consumer, business, and government customers. The current banking facilities include the main office located in Colquitt County, branch offices located in Baker County, Worth County and Lowndes County, and a loan production office located in Tift County. In addition to conventional banking services, the Company provides investment planning and management, trust management, and commercial and individual insurance products. Insurance products and advice are provided by Southwest Georgia Insurance Services, which is located in Colquitt County. The Company routinely posts news and other important information on its website.

More information on Southwest Georgia Financial Corporation and Southwest Georgia Bank can be found at:www.sgfc.com.

SAFE HARBOR STATEMENT

This news release contains forward-looking statements, as defined by federal securities laws, including statements about the Company's financial outlook. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. Important factors that could cause actual results to differ materially from those contemplated today include a change in the Company's capital structure, new or expanded regulatory requirements, the success of the Company's growth strategy, customer preferences, the interest rate environment and other factors described in the Company's filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q under the sections entitled "Forward-Looking Statements" and "Risk Factors". The Company undertakes no obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law.

Financial tables follow.

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SOUTHWEST GEORGIA FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF CONDITION

(Dollars in thousands except per share data)

ASSETS

Cash and due from banks Interest-bearing deposits in banks Certificates of deposit in other banks Investment securities available for sale Investment securities held to maturity Federal Home Loan Bank stock, at cost Loans, less unearned income and discount

Allowance for loan losses

Net loans

Premises and equipment Bank properties held for sale Foreclosed assets, net Intangible assets

Bank owned life insurance Other assets

Total assets

LIABILITIES AND SHAREHOLDERS' EQUITY Deposits:

NOW accounts Money market Savings

Certificates of deposit $100,000 and over Other time accounts

Total interest-bearing deposits Noninterest-bearing deposits

Total deposits

(Unaudited) December 31, 2017

$

(Audited) December 31, 2016

(Audited) December 31, 2015

11,143

22,995

1,985

54,364

44,591

2,438

330,173

(3,044)

327,129

12,250

212

759

20

6,553

4,739

$

$

7,700 $ 6,157

18,819 24,923

0 245

53,566 51,476

54,603 60,889

1,874 1,869

292,524 (3,124) 289,400 11,209

250,786 (3,032) 247,754 11,158

212 0

127 82

35 51

5,357 5,231

5,599 5,020

489,178

$

$

448,501

$

414,855

25,871

129,040

30,794

46,053

37,579

269,337

127,669

397,006

$

47,420 $ 25,383

95,659 108,226

29,007 27,721

43,235 25,189

39,524 50,728

254,845 237,247

116,648 101,769

371,493

339,016

Other borrowings Long-term debt

Accounts payable and accrued liabilities

Total liabilities

Shareholders' equity:

Common stock - par value $1; 5,000,000 shares authorized; 4,293,835 shares issued (*) Additional paid-in capital

Retained earnings

Accumulated other comprehensive income

Total

Treasury stock - at cost (**)

Total shareholders' equity

Total liabilities and shareholders' equity

17,972 29,057 4,398 448,433

4,294

31,701

32,687

(1,694)

66,988

(26,243)

40,745

$

8,448 7,591

26,029 28,476

4,109 3,675

410,079

378,758

4,294 4,294

31,701 31,701

30,333 27,369

(1,786)

64,542 (26,120)

38,422

489,178

(1,153)

62,211 (26,114)

36,097

$

448,501

$

414,855

* Common stock - shares outstanding ** Treasury stock - shares

2,541,505 1,752,330

2,547,437 2,547,837

1,746,398 1,745,998

SOUTHWEST GEORGIA FINANCIAL CORPORATION CONSOLIDATED INCOME STATEMENT (unaudited*)

(Dollars in thousands except per share data)

Interest income:

Interest and fees on loans

Interest and dividend on securities available for sale Interest on securities held to maturity

Dividends on Federal Home Loan Bank stock Interest on deposits in banks

Interest on certificates of deposit in other banks

Total interest income

Interest expense:

Interest on deposits

Interest on federal funds purchased Interest on other borrowings Interest on long-term debt

Total interest expense

Net interest income Provision for loan losses

Net interest income after provision for losses on loans

Noninterest income:

Service charges on deposit accounts Income from trust services

Income from retail brokerage services Income from insurance services Income from mortgage banking services

Net gain (loss) on the sale or disposition of assets Net gain on the sale of securities

Other income

Total noninterest income

Noninterest expense:

Salary and employee benefits Occupancy expense Equipment expense Data processing expense Amortization of intangible assets Other operating expense

Total noninterest expense

Income before income tax expense Provision for income taxes

Net income

Net income per share, basic Net income per share, diluted Dividends paid per share

Basic weighted average shares outstanding Diluted weighted average shares outstanding

For the Three Months Ended December 31,2017*

$

• 4,303 $

322

282

29

70

12

5,018

333

0

110

116

559

4,459

75

4,384

218

55

82

365

1

0

0

239

960

2,297

279

217

368

4

727

3,892

1,452

735

$ $ $ $

717

0.28

0.28

0.11

2,541,505

2,541,499

2016*

• 3,780 $

284

324

22

38

0

4,448

259

0

27

144

430

4,018

45

3,973

278

53

84

354

83

38

0

186

1,076

2,191

276

228

364

4

704

3,767

1,282

280

$ $ $ $

1,002

0.39 0.39 0.11

2,547,602	2,541,505	2,547,778
2,547,602	2,541,504	2,547,778

For the Twelve Months Ended December 31,

2017*

2016

16,299 $ 14,796

1,318 1,078

1,198 1,346

101 90

195 103

35 0

19,146

17,413

1,154 935

1 0

224 104

523 573

1,902 17,244 300 16,944

1,612 15,801 160 15,641

1,005 1,086

219 210

362 342

1,523 1,478

155 354

(9) 38

187 169

870 782

4,312

4,459

9,251 8,766

1,124 1,140

850 861

1,513 1,368

16 16

3,075 2,763

15,829

14,914

5,427 5,186

1,620 1,152

$ $ $ $

3,807

1.49 1.49 0.44

$ $ $ $

4,034

1.58 1.58 0.42

SOUTHWEST GEORGIA FINANCIAL CORPORATION

Financial Highlights

(Dollars in thousands except per share data)

At December 31

Assets

Loans, less unearned income & discount Deposits

Shareholders' equity

Performance Data & Ratios Net income

Earnings per share, basic Earnings per share, diluted Dividends paid per share Return on assets

Return on equity

Net interest margin (tax equivalent) Dividend payout ratio

Efficiency ratio

2016
$448,501
$330,173	$292,524
$397,006	$371,493
$ 40,745	$ 38,422
Three Months Ended December 31,	Twelve Months Ended December 31,

2017 $489,178

2017

2016

2017

2016

• $ 717

  • $ 1,002

    • $ 3,807

      • $ 4,034

• $ 0.28

  • $ 0.39

    • $ 1.49

      • $ 1.58

• $ 0.28

  • $ 0.39

    • $ 1.49

      • $ 1.58

• $ 0.11

• $ 0.11

• $ 0.44

• $ 0.42

0.59%

0.89%

0.80% 0.94%

6.91%

10.23%

9.41% 10.51%

4.08%

3.97%

4.09% 4.14%

39.07%

27.97%

29.44% 26.53%

69.32%

71.06%

70.75% 70.64%Asset Quality Data & Ratios Total nonperforming loans Total nonperforming assets

$ 1,675 $ 2,434

$ 246 $ 373

$ 1,675 $ 2,434

$ 246 $ 373

Net loan charge offs $ 239 $ 14 $ 381 $ 68

Reserve for loan losses to total loans Nonperforming loans/total loans Nonperforming assets/total assets Net charge offs / average loans

Capital Ratios

Average common equity to average total assets Common equity Tier 1 capital ratio

Tier 1 capital ratio

Tier 1 leverage ratio

Total risk based capital ratio Book value per share Tangible book value per share

0.92% 0.51% 0.50% 0.29%

1.07% 0.08% 0.08% 0.02%

0.92% 1.07% 0.51% 0.08% 0.50% 0.08% 0.12% 0.02%

8.53%

8.65%

8.55% 8.90%

12.64%

13.03%

12.64% 13.03%

12.64%

13.03%

12.64% 13.03%

8.72%

8.87%

8.72% 8.87%

13.55%

14.04%

13.55% 14.04%

• $ 16.03

• $ 16.02

• $ 15.08

• $ 15.07

• $ 16.03

• $ 16.02

$ 15.08 $ 15.07

Quarterly

Averages

Assets

Loans, less unearned income & discount Deposits

Equity

Return on assets Return on equity Net income

Net income per share, basic Net income per share, diluted Dividends paid per share

4th Qtr 2017

3rd Qtr 2017

2nd Qtr 2017

1st Qtr 2017

4th Qtr 2016

$486,700

$471,643

$469,201

• $466,019 $452,865

  $330,842

  $324,206

  $312,848

• $302,620 $291,573

  $396,746

  $385,989

  $390,268

• $388,761 $374,346

$ 41,498

$ 41,089

$ 40,169

$ 39,054

$ 39,178

0.59%

0.81%

0.92%

0.91% 0.89%

6.91%

9.26%

10.69%

10.91% 10.23%

• $ 717

  • $ 952

    • $ 1,074

      • $ 1,065

        • $ 1,002

• $ 0.28

  • $ 0.37

    • $ 0.42

      • $ 0.42

        • $ 0.39

• $ 0.28

  • $ 0.37

    • $ 0.42

      • $ 0.42

        • $ 0.39

• $ 0.11

• $ 0.11

• $ 0.11

• $ 0.11

• $ 0.11

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