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| 8-K - 8-K - SOUTHWEST GEORGIA FINANCIAL CORP | sgfc8k072011.htm |
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 Results for Second Quarter of 2011
· The Bank secures a location for its second banking center in Valdosta, Georgia
· Loan and average total deposit growth driven by expansion in Valdosta market
MOULTRIE, GEORGIA, July 20, 2011 -- Southwest Georgia Financial Corporation (the “Corporation”) (NYSE Amex: SGB), a full-service community bank holding company, today reported net income of $591 thousand, or $0.23 per diluted share, for the second quarter of 2011, down $315 thousand from net income of $906 thousand, or $0.36 per diluted share, for the second quarter of 2010. The decrease in net income reflects substantially lower gains on the sale of securities and increased salary and employee benefit expenses related to staffing the full-service banking center and mortgage origination office in Valdosta, Georgia.
DeWitt Drew, President and CEO commented, “While we’re still very cautious about the economic environment, we are continuing our expansion in the Valdosta market where we have recently acquired a location to build our second banking center. We expect to break ground soon and have the branch open by the first quarter of 2012. While much of our loan and deposit growth is being driven by our Valdosta operation, we have maintained and continue to focus on expanding our customer relationships throughout our footprint.”
Return on average equity for the second quarter of 2011 was 8.59% compared with 13.56% for the second quarter of 2010. Return on average assets for the quarter was 0.76% compared with 1.21% for the same period in 2010.
For the first six months of 2011, net income was $966 thousand compared with net income of $1.3 million for the same period in 2010. The decline in net income primarily reflects the lower net gain on the sale of securities and increased salary and employee benefits. Earnings per diluted share for the first six months of 2011 were $0.38, down from $0.52 for the same period in 2010. Year-to-date return on average equity was 7.10% compared with 9.96% for the same period last year, while return on average assets decreased 26 basis points to 0.62%.
Balance Sheet Trends and Asset Quality
At June 30, 2011, total assets were $301.4 million, an increase of $4.7 million when compared with $296.7 million in the same quarter last year. The increase was mainly due to considerable loan growth driven by the Corporation’s expansion into the Valdosta market. Total loans increased $17.3 million, or 10.9%, to $176.7 million when compared with the same quarter last year. Other significant changes in the earning asset mix occurred in interest-bearing deposits with banks which decreased $24.1 million while investment securities grew $12.0 million compared with the second quarter of 2010. Nonperforming assets decreased to 1.15% of total assets compared with 1.40% in the second quarter last year and remains at a manageable level.
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Total deposits were $243.0 million at the end of the second quarter of 2011, up $3.0 million from the second quarter of 2010. Deposit growth was primarily due to a $7.2 million increase in noninterest-bearing business accounts, also driven by the Valdosta market, and a $5.5 million increase in public NOW accounts which were partially offset by a $6.7 million decline in time deposits, a product that typically has a higher cost of funds. Year-over-year average total deposits increased $8.3 million, or 3.4%, to $250.3 million.
Shareholders’ equity was $27.9 million as of June 30, 2011, compared with $27.1 million at June 30, 2010. The Corporation maintains a strong capital position with a total risk-based capital ratio of 16.66% at June 30, 2011, well in excess of the minimum regulatory guidelines for a well-capitalized financial institution. The Corporation has approximately 2.5 million shares of common stock outstanding.
Revenue
Net interest income before provision for loan losses improved to $2.9 million for the second quarter of 2011 from $2.6 million for the same period in 2010. The provision for loan losses was $150 thousand for each of the second quarters of 2011 and 2010. Total interest income increased $47 thousand to $3.4 million when compared with the second quarter of 2010, reflecting higher interest and fee income from loans. The Corporation’s net interest margin was a solid 4.21% for the second quarter of 2011, up 14 basis points from the same period last year. The increase in net interest margin was due to higher loan volume and loan origination fees, reinvestment of excess daily deposits with banks to higher yielding securities, and significantly lower funding costs. Total interest expense was $567 thousand for the second quarter of 2011, down $176 thousand from the same period a year ago, primarily because of the low interest rate environment.
Noninterest income was $1.4 million for the second quarter of 2011, down $411 thousand from the same period in 2010. The change was primarily the result of a decline in the gain on sold securities, of which a $188 thousand gain was recorded in the second quarter of 2011 compared with a $628 thousand gain on the sale of securities in the second quarter last year. Service charges on deposit accounts also declined $67 thousand, or 16.7%, compared with the second quarter of 2010, primarily due to new Regulation E rules pertaining to overdraft fees enacted last year. Partially offsetting these decreases was a $110 thousand increase in mortgage banking services driven by problem loan resolution at the Corporation’s mortgage banking subsidiary. Also contributing was income from insurance services, which increased $19 thousand compared with the second quarter of 2010.
Total noninterest expense increased $270 thousand to $3.4 million for the second quarter of 2011 compared with the second quarter of 2010. The largest component of noninterest expense, salaries and employee benefits, increased $153 thousand to $1.9 million for the second quarter due to staff expansion at the Valdosta Banking Center. Other operating expenses also increased $93 thousand due primarily to higher foreclosed asset expenses.
Review of First Six Months of 2011
Net interest income for the first six months of 2010 was 5.7% higher at $5.4 million compared with $5.1 million for the same period in 2010, primarily due to lower interest paid on deposits. A provision for loan losses of $300 thousand was recognized in both the first six months of 2011 and 2010. Net interest margin was 4.01% for the first six months of 2011, up slightly from 4.00% in the same period a year ago.
For the first six months of 2011, noninterest income was $2.7 million, down $332 thousand from the same period in 2010. As previously noted, the decrease was primarily attributed to a $315 thousand lower net gain on the sale of securities for the first six months of 2011 compared with the same period in 2010.
Noninterest expense increased $509 thousand to $6.6 million in the first six months of 2011 compared with the same period last year. The change was mainly due to a $379 thousand increase in salary and employee benefits related to staffing Valdosta’s banking center and its mortgage origination office.
Dividends and Share Repurchases
In February 2011, the Corporation paid a cash dividend of $0.10 per common share. The Corporation’s objective is to maintain sufficient equity required to support efforts to capture greater market share and expand outside of its historic footprint. Southwest Georgia Financial Corporation or its predecessor, Southwest Georgia Bank, has paid cash dividends for 83 consecutive years.
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About Southwest Georgia Financial Corporation
Southwest Georgia Financial Corporation is a state-chartered bank holding company with approximately $301 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, Worth County, and 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 the 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.
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CONDITION
(Dollars in thousands except per share data)
| (Unaudited) | (Audited) | (Unaudited) | ||||||||||
| June 30, | December 31, | June 30, | ||||||||||
| 2011 | 2010 | 2010 | ||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | $ | 5,605 | $ | 5,112 | $ | 7,304 | ||||||
| Interest-bearing deposits in banks | 6,479 | 10,959 | 30,594 | |||||||||
| Investment securities available for sale | 44,665 | 54,946 | 42,677 | |||||||||
| Investment securities held to maturity | 45,619 | 46,255 | 35,638 | |||||||||
| Federal Home Loan Bank stock, at cost | 2,088 | 1,650 | 1,650 | |||||||||
| Loans, less unearned income and discount | 176,667 | 157,733 | 159,356 | |||||||||
| Allowance for loan losses | (2,911 | ) | (2,755 | ) | (2,909 | ) | ||||||
| Net loans | 173,756 | 154,978 | 156,447 | |||||||||
| Premises and equipment | 9,581 | 9,221 | 8,857 | |||||||||
| Foreclosed assets, net | 2,919 | 3,288 | 3,670 | |||||||||
| Intangible assets | 658 | 641 | 745 | |||||||||
| Other assets | 10,004 | 9,354 | 9,159 | |||||||||
| Total assets | $ | 301,374 | $ | 296,404 | $ | 296,741 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Deposits: | ||||||||||||
| NOW accounts | $ | 36,203 | $ | 29,239 | $ | 30,134 | ||||||
| Money market | 42,935 | 50,468 | 48,124 | |||||||||
| Savings | 24,611 | 22,635 | 22,760 | |||||||||
| Certificates of deposit $100,000 and over | 32,545 | 32,472 | 31,915 | |||||||||
| Other time accounts | 61,456 | 65,859 | 68,825 | |||||||||
| Total interest-bearing deposits | 197,750 | 200,673 | 201,758 | |||||||||
| Noninterest-bearing deposits | 45,268 | 38,858 | 38,230 | |||||||||
| Total deposits | 243,018 | 239,531 | 239,988 | |||||||||
| Other borrowings | 2,000 | 2,000 | 5,000 | |||||||||
| Long-term debt | 24,000 | 24,000 | 21,000 | |||||||||
| Accounts payable and accrued liabilities | 4,423 | 4,098 | 3,643 | |||||||||
| Total liabilities | 273,441 | 269,629 | 269,631 | |||||||||
| 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 | 18,638 | 17,926 | 17,382 | |||||||||
| Accumulated other comprehensive income | (586 | ) | (1,032 | ) | (153 | ) | ||||||
| Total | 54,047 | 52,889 | 53,224 | |||||||||
| Treasury stock - at cost (**) | (26,114 | ) | (26,114 | ) | (26,114 | ) | ||||||
| Total shareholders' equity | 27,933 | 26,775 | 27,110 | |||||||||
| Total liabilities and shareholders' equity | $ | 301,374 | $ | 296,404 | $ | 296,741 | ||||||
| * Common stock - shares outstanding | 2,547,837 | 2,547,837 | 2,547,837 | |||||||||
| ** Treasury stock - shares | 1,745,998 | 1,745,998 | 1,745,998 | |||||||||
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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 Six Months | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| Interest income: | 2011* | 2010* | 2011* | 2010* | ||||||||||||
| Interest and fees on loans | $ | 2,688 | $ | 2,564 | $ | 5,103 | $ | 4,965 | ||||||||
| Interest and dividend on securities available for sale | 427 | 558 | 894 | 1,219 | ||||||||||||
| Interest on securities held to maturity | 300 | 241 | 566 | 451 | ||||||||||||
| Dividends on Federal Home Loan Bank stock | 3 | 0 | 7 | 0 | ||||||||||||
| Interest on deposits in banks | 7 | 15 | 20 | 29 | ||||||||||||
| Total interest income | 3,425 | 3,378 | 6,590 | 6,664 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Interest on deposits | 355 | 535 | 746 | 1,116 | ||||||||||||
| Interest on federal funds purchased | 2 | 0 | 2 | 0 | ||||||||||||
| Interest on other borrowings | 9 | 35 | 17 | 70 | ||||||||||||
| Interest on long-term debt | 201 | 173 | 399 | 344 | ||||||||||||
| Total interest expense | 567 | 743 | 1,164 | 1,530 | ||||||||||||
| Net interest income | 2,858 | 2,635 | 5,426 | 5,134 | ||||||||||||
| Provision for loan losses | 150 | 150 | 300 | 300 | ||||||||||||
| Net interest income after provision for losses on loans | 2,708 | 2,485 | 5,126 | 4,834 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges on deposit accounts | 334 | 401 | 702 | 786 | ||||||||||||
| Income from trust services | 55 | 67 | 111 | 121 | ||||||||||||
| Income from retail brokerage services | 105 | 110 | 175 | 171 | ||||||||||||
| Income from insurance services | 310 | 291 | 662 | 610 | ||||||||||||
| Income from mortgage banking services | 470 | 360 | 773 | 689 | ||||||||||||
| Provision for foreclosed property losses | (75 | ) | (125 | ) | (150 | ) | (125 | ) | ||||||||
| Net gain (loss) on the sale or disposition of assets | (71 | ) | 0 | (53 | ) | 3 | ||||||||||
| Net gain on the sale of securities | 188 | 628 | 220 | 535 | ||||||||||||
| Net loss on the impairment of equity securities | (12 | ) | 0 | (12 | ) | 0 | ||||||||||
| Other income | 135 | 118 | 308 | 278 | ||||||||||||
| Total noninterest income | 1,439 | 1,850 | 2,736 | 3,068 | ||||||||||||
| Noninterest expense: | ||||||||||||||||
| Salary and employee benefits | 1,911 | 1,758 | 3,817 | 3,438 | ||||||||||||
| Occupancy expense | 226 | 211 | 455 | 415 | ||||||||||||
| Equipment expense | 181 | 185 | 362 | 360 | ||||||||||||
| Data processing expense | 260 | 251 | 518 | 495 | ||||||||||||
| Amortization of intangible assets | 56 | 52 | 108 | 104 | ||||||||||||
| Other operating expense | 725 | 632 | 1,344 | 1,283 | ||||||||||||
| Total noninterest expense | 3,359 | 3,089 | 6,604 | 6,095 | ||||||||||||
| Income before income tax expense | 788 | 1,246 | 1,258 | 1,807 | ||||||||||||
| Provision for income taxes | 197 | 340 | 292 | 494 | ||||||||||||
| Net income | $ | 591 | $ | 906 | $ | 966 | $ | 1,313 | ||||||||
| Net income per share, basic | $ | 0.23 | $ | 0.36 | $ | 0.38 | $ | 0.52 | ||||||||
| Net income per share, diluted | $ | 0.23 | $ | 0.36 | $ | 0.38 | $ | 0.52 | ||||||||
| Dividends paid per share | $ | — | $ | — | $ | 0.10 | $ | 0.10 | ||||||||
| Basic weighted average shares outstanding | 2,547,837 | 2,547,837 | 2,547,837 | 2,547,837 | ||||||||||||
| Diluted weighted average shares outstanding | 2,547,839 | 2,547,837 | 2,547,894 | 2,547,952 | ||||||||||||
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
Financial Highlights
(Dollars in thousands except per share data)
| At June 30 | 2011 | 2010 | ||||||
| Assets | $ | 301,374 | $ | 296,741 | ||||
| Loans, less unearned income & discount | $ | 176,667 | $ | 159,356 | ||||
| Deposits | $ | 243,018 | $ | 239,988 | ||||
| Shareholders' equity | $ | 27,933 | $ | 27,110 | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| Performance Data & Ratios | 2011 | 2010 | 2011 | 2010 | ||||||||||||
| Net income | $ | 591 | $ | 906 | $ | 966 | $ | 1,313 | ||||||||
| Earnings per share, basic | $ | 0.23 | $ | 0.36 | $ | 0.38 | $ | 0.52 | ||||||||
| Earnings per share, diluted | $ | 0.23 | $ | 0.36 | $ | 0.38 | $ | 0.52 | ||||||||
| Dividends paid per share | $ | — | $ | — | $ | 0.10 | $ | 0.10 | ||||||||
| Return on assets | 0.76 | % | 1.21 | % | 0.62 | % | 0.88 | % | ||||||||
| Return on equity | 8.59 | % | 13.56 | % | 7.10 | % | 9.96 | % | ||||||||
| Net interest margin (tax equivalent) | 4.21 | % | 4.07 | % | 4.01 | % | 4.00 | % | ||||||||
| Dividend payout ratio | 0.00 | % | 0.00 | % | 26.38 | % | 19.41 | % | ||||||||
| Efficiency ratio | 76.25 | % | 66.87 | % | 78.86 | % | 72.12 | % | ||||||||
| Asset Quality Data & Ratios | ||||||||||||||||
| Total nonperforming loans | $ | 378 | $ | 455 | $ | 378 | $ | 455 | ||||||||
| Total nonperforming assets | $ | 3,469 | $ | 4,167 | $ | 3,469 | $ | 4,167 | ||||||||
| Net loan charge offs | $ | 110 | $ | (123 | ) | $ | 144 | $ | (76 | ) | ||||||
| Reserve for loan losses to total loans | 1.65 | % | 1.83 | % | 1.65 | % | 1.83 | % | ||||||||
| Nonperforming loans/total loans | 0.21 | % | 0.29 | % | 0.21 | % | 0.29 | % | ||||||||
| Nonperforming assets/total assets | 1.15 | % | 1.40 | % | 1.15 | % | 1.40 | % | ||||||||
| Net charge offs / average loans | 0.25 | % | (0.31 | )% | 0.17 | % | (0.10 | )% | ||||||||
| Capital Ratios | ||||||||||||||||
| Average common equity to average total assets | 8.79 | % | 8.95 | % | 8.68 | % | 8.85 | % | ||||||||
| Tier 1 capital ratio | 15.41 | % | 16.33 | % | 15.41 | % | 16.33 | % | ||||||||
| Tier 1 leverage ratio | 8.92 | % | 8.86 | % | 8.92 | % | 8.86 | % | ||||||||
| Total risk based capital ratio | 16.66 | % | 17.58 | % | 16.66 | % | 17.58 | % | ||||||||
| Book value per share | $ | 10.96 | $ | 10.64 | $ | 10.96 | $ | 10.64 | ||||||||
| Tangible book value per share | $ | 10.70 | $ | 10.35 | $ | 10.70 | $ | 10.35 | ||||||||
| Quarterly | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||
| Averages | 2011 | 2011 | 2010 | 2010 | 2010 | |||||||||||||||
| Assets | $ | 312,898 | $ | 314,028 | $ | 301,355 | $ | 305,419 | $ | 298,618 | ||||||||||
| Loans, less unearned income & discount | $ | 172,367 | $ | 161,061 | $ | 159,635 | $ | 160,584 | $ | 160,761 | ||||||||||
| Deposits | $ | 250,335 | $ | 257,083 | $ | 244,120 | $ | 243,395 | $ | 242,010 | ||||||||||
| Equity | $ | 27,515 | $ | 26,909 | $ | 27,532 | $ | 27,412 | $ | 26,727 | ||||||||||
| Return on assets | 0.76 | % | 0.48 | % | 0.40 | % | 0.31 | % | 1.21 | % | ||||||||||
| Return on equity | 8.59 | % | 5.57 | % | 4.42 | % | 3.49 | % | 13.56 | % | ||||||||||
| Net income | $ | 591 | $ | 375 | $ | 304 | $ | 239 | $ | 906 | ||||||||||
| Net income per share, basic | $ | 0.23 | $ | 0.15 | $ | 0.12 | $ | 0.09 | $ | 0.36 | ||||||||||
| Net income per share, diluted | $ | 0.23 | $ | 0.15 | $ | 0.12 | $ | 0.09 | $ | 0.36 | ||||||||||
| Dividends paid per share | $ | — | $ | 0.10 | $ | — | $ | — | $ | — |
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