Southwest Georgia Financial : 1/22/2019 SGB Reports Record Earnings for 2018

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 Record Earnings for 2018

MOULTRIE, GEORGIA, January 22, 2019 --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, 2018. Comparisons are to prior-year periods unless otherwise noted.

"2018 was a strong year, highlighted by 14% loan growth and 15% deposit growth. And, while the record level of earnings certainly benefited from lower corporate tax rates, it also reflects significant investments made throughout the organization that were necessary to grow organically in the markets in which we currently operate," commented DeWitt Drew, President and CEO. "We remain encouraged by our entry into the Tifton market and are keenly focused on achieving strong results in 2019."

Income Highlights

•  Achieved record annual net income of $4.7 million, up $875 thousand, or 23%. On a per diluted share basis, earnings were $1.84, up 23%. Net interest income increased 8%, or $1.3 million, to $18.6 million, primarily due to growth in average total loans of $32.2 million and an improved asset mix. Further benefiting net income was a 57% decrease in income tax expense due to the 2017 Tax Cuts and Jobs Act.

•  Growth in net interest income more than offset a higher provision, which reflected strong loan growth, and $736 thousand increase in noninterest expense that was due in large part to investments made in people, products and processes, and infrastructure, including the completion of a full service banking center in Tifton, GA.

•  Fourth quarter net income was $1.2 million, or $0.46 per diluted share, consistent with the fourth quarter last year when excluding the $419 thousand deferred tax impairment charge in last year's period. Net interest income for the quarter increased $324 thousand to $4.8 million due to an $818 thousand increase in interest and fees on loans, which was partially offset by a $568 thousand increase in interest on deposit accounts.

Balance Sheet Trends

•  Total assets grew more than 9% to $534.7 million, driven by healthy loan growth of $46.6 million, or 14%, to $376.8 million at period end.

•  Growth in the loan portfolio was funded by an increase in total deposits of $58.6 million, or nearly 15%, to $455.6 million at December 31, 2018. Given the increasing rate environment and a new business checking product aimed at retaining deposits, the mix has shifted with interest-bearing deposits up 31% to $351.9 million and noninterest-bearing deposits down 19% to $103.7 million. Federal Home Loan Bank Advances were down $15.4 million at year-end due to the strong deposit gathering activities during the year.

Capital Management

•  Book value grew 6% to $17.20 per share.

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Southwest Georgia Financial Corporation Reports Record Earnings for 2018

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January 22, 2019

•  The Company has a Total Risk-Based Capital Ratio of 12.91%, a Common Equity Tier 1 Capital Ratio of 12.02%, and a Leverage Capital Ratio of 8.97%, all measurably above the federal "well capitalized" standard.

•  In December 2018, the Company paid a quarterly cash dividend of $0.12 per common share and for the full year paid $0.47 per share, up 7%. Southwest Georgia Financial Corporation or its predecessor, Southwest Georgia Bank, has paid cash dividends for 90 consecutive years.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, January 22, 2019 at 1:00 p.m. ET. Management will review the financial and operating results for the fourth quarter and full year 2018, 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.sgb.bank.

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

January 29, 2019. To listen to the archived call, dial [phone] and enter conference ID number 13686181, or access the webcast replay atwww.sgb.bank/investor-relations, 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 $535 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, and branch offices located in Baker County, Worth County, Lowndes County, and 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.sgb.bank.

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:

Interest bearing business checking 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, 2018

$

(Audited) December 31, 2017

(Audited) December 31, 2016

14,051

21,448

2,732

58,314

36,827

1,820

376,750

(3,429)

373,321

14,574

0

128

4

6,717

4,765

$

$

11,143 $ 7,700

22,995 18,819

1,985

0

54,364 53,566

44,591 54,603

2,438 1,874

330,173 292,524

(3,044) 327,129

(3,124) 289,400

12,250 11,209

212 212

759 127

20 35

6,553 5,357

4,633 5,599

534,701

$

$

489,072

$

448,501

28,071

35,816

158,730

31,849

47,808

49,671

351,945

103,695

455,640

$

0

$

0

25,871 47,420

129,040 95,659

30,794 29,007

46,053 43,235

37,579 39,524

269,337 254,845

127,669 116,648

397,006

371,493

Other borrowings Long-term debt

Accounts payable and accrued liabilities

Total liabilities

Shareholders' equity:

Common stock - par value $1; 5,000,000 shares authorized; 2,545,776 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

10,457 21,171 3,650 490,918

2,546

18,419

25,005

(2,187)

43,783

(0)

43,783

$

17,971 8,448

29,057 26,029

3,895 4,109

447,929

410,079

4,294 4,294

31,701 31,701

33,021 30,333

(1,630)

67,386 (26,243)

41,143

534,701

(1,786)

64,542 (26,120)

38,422

$

489,072

$

448,501

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

2,545,776 0

2,541,505 2,547,437

1,752,330 1,746,398

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 (loss) on the sale of securities

Net gain on extinguishment of debt 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 31,2018*

$

• 5,122 $

368

236

33

128

13

5,900

900

0

57

159

1,116

4,784

226

4,558

279

56

125

409

1

(72)

(165)

318

213

1,164

2,478

275

349

357

4

825

4,288

1,434

275

$ $ $ $

1,159

0.46

0.46

0.12

2,545,776

2,545,776

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

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	2,545,565	2,541,505
2,541,499	2,545,565	2,541,504

For the Twelve Months Ended December 31,

2018*

2017

18,762 $ 16,299

1,427 1,318

1,027 1,198

145 101

485 195

48 35

21,894

19,146

2,383

1,154

1 1

396 224

542 523

3,322 18,572 830 17,742

1,902 17,244 300 16,944

1,015 1,005

235 219

399 362

1,604 1,523

2 155

(80) (9)

(165) 187

318 0

868 870

4,196

4,312

9,638 9,251

1,195 1,124

933 850

1,445 1,513

16 16

3,338 3,075

16,565

15,829

5,374 5,427

691 1,620

$ $ $ $

4,682 1.84 1.84 0.47

$ $ $ $

3,807 1.49 1.49 0.44

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

2017
$489,072
$376,750	$330,173
$455,640	$397,006
$ 43,783	$ 41,143
Three Months Ended December 31,	Twelve Months Ended December 31,

2018 $534,701

2018

2017

2018

2017

$ $ $ $

1,159

• $ 717

  • $ 4,682

    • $ 3,807

      0.46

• $ 0.28

  • $ 1.84

    • $ 1.49

      0.46

• $ 0.28

  • $ 1.84

    • $ 1.49

      0.12

• $ 0.11

• $ 0.47

• $ 0.44

0.87%

0.59%

0.92% 0.80%

10.77%

6.91%

11.09% 9.41%

3.94%

4.08%

3.99% 4.09%

26.37%

39.07%

25.55% 29.44%

71.11%

69.32%

71.60% 70.75%Asset Quality Data & Ratios Total nonperforming loans Total nonperforming assets

Net loan charge offs (recoveries) Reserve for loan losses to total loans Nonperforming loans/total loans Nonperforming assets/total assets

Net charge offs (recoveries) / 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

$ $ $

1,205

• $ 1,675

  • $ 1,205

    • $ 1,675

      1,333

• $ 2,434

  • $ 1,333

    • $ 2,434

      (126)

• $ 239

• $ 444

• $ 381

0.91%

0.92%

0.91% 0.92%

0.32%

0.51%

0.32% 0.51%

0.25%

0.50%

0.25% 0.50%

(0.13%)

0.29%

0.13% 0.12%

8.12%

8.53%

8.27% 8.55%

12.02%

12.64%

12.02% 12.64%

12.02%

12.64%

12.02% 12.64%

8.65%

8.72%

8.65% 8.72%

12.91%

13.55%

12.91% 13.55%

$ $

17.20

• $ 16.19

  • $ 17.20

    • $ 16.19

      17.20

• $ 16.18

• $ 17.20

• $ 16.18

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	3rd Qtr	4th Qtr
2018	2018	2017
$529,955	509,416	$	504,308	$	497,562	$ 486,699
$373,324	356,981	$	337,092	$	331,822	$ 330,842
$444,256	417,092	$	412,133	$	405,827	$ 396,746
$ 43,016	42,581	$	41,747	$	41,466	$ 41,502
0.87%	0.90%	0.91%	0.99%	0.59%
10.77%	10.74%	11.00%	11.89%	6.91%
$ 1,159	1,144	$	1,148	$	1,232
$ 0.46	0.45	$	0.45	$	0.48
$ 0.46	0.45	$	0.45	$	0.48
$ 0.12	0.12	$	0.12	$	0.11

2nd Qtr 2018

1st Qtr 2018

$ $ $ $

$ $ $ $

• $ 717

• $ 0.28

• $ 0.28

• $ 0.11

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