SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2007
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from __________ to __________
Commission file number 1-12053
SOUTHWEST GEORGIA FINANCIAL CORPORATION
(Exact Name Of Small Business Issuer as specified in its Charter)
Georgia 58-1392259
(State Or Other Jurisdiction Of (I.R.S. Employer
Incorporation Or Organization) Identification No.)
201 FIRST STREET, S.E., MOULTRIE, GEORGIA 31768
Address Of Principal Executive Offices
(229) 985-1120
Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of
the Act).
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding At August 1, 2007
Common Stock, $1 Par Value 4,288,555
SOUTHWEST GEORGIA FINANCIAL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2007
TABLE OF CONTENTS
PAGE #
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are provided for Southwest Georgia
Financial Corporation as required by this Item 1.
a. Consolidated balance sheets - June 30, 2007 (unaudited) and
December 31, 2006 (audited). 2
b. Consolidated statements of income (unaudited) - for the six
months and the three months ended June 30, 2007 and 2006. 3
c. Consolidated statements of comprehensive income (unaudited) -
for the six months and the three months ended June 30, 2007 and 2006. 5
d. Consolidated statements of cash flows (unaduited) for the six months
ended June 30, 2007 and 2006. 6
e. Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 20
ITEM 4. CONTROLS AND PROCEDURES 21
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 22
ITEM 6. EXHIBITS 23
SIGNATURE 24
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 2007 and December 31, 2006
(Unaudited) (Audited)
June 30, December 31,
2007 2006
ASSETS
Cash and due from banks $ 11,361,406 $ 11,969,567
Interest-bearing deposits in banks 1,588,346 83,210
Federal funds sold 0 332,000
Investment securities available for sale,
at fair value 31,000,181 33,322,855
Investment securities held to maturity (fair
value approximates $96,042,149 and $100,283,068) 98,234,730 102,232,804
Federal Home Loan Bank stock, at cost 1,877,800 1,966,900
Total investment securities 131,112,711 137,522,559
Loans 130,662,836 125,535,755
Less: Unearned income (36,970) (43,963)
Allowance for loan losses (2,415,151) (2,417,140)
Loans, net 128,210,715 123,074,652
Premises and equipment, net 6,465,026 6,578,997
Foreclosed assets, net 143,438 0
Intangible assets 1,507,754 1,750,511
Other assets 7,032,738 7,204,926
Total assets $287,422,134 $288,516,422
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
NOW accounts $ 53,577,180 $ 55,013,082
Money Market 15,170,305 24,376,607
Savings 22,375,531 22,228,442
Certificates of deposit $100,000 and over 28,019,921 25,725,026
Other time accounts 65,960,714 65,977,976
Total interest-bearing deposits 185,103,651 193,321,133
Noninterest-bearing deposits 40,195,190 33,387,979
Total deposits 225,298,841 226,709,112
Federal funds purchased 0 0
Other borrowed funds 10,000,000 15,000,000
Long-term debt 20,228,571 15,228,571
Other liabilities 4,348,233 3,621,820
Total liabilities 259,875,645 260,559,503
Stockholders' equity:
Common stock - $1 par value, 5,000,000 shares
authorized, 4,288,555 shares issued 4,288,555 4,288,555
Capital surplus 31,644,063 31,644,063
Retained earnings 17,670,197 16,763,299
Accumulated other comprehensive income (657,692) (482,588)
Treasury stock, at cost 1,707,612 shares for
2007 and 1,648,912 shares for 2006 (25,398,634) (24,256,410)
Total stockholders' equity 27,546,489 27,956,919
Total liabilities and stockholders' equity $287,422,134 $288,516,422
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For The Three Months
Ended June 30,
(Unaudited) (Unaudited)
2007 2006
Interest income:
Interest and fees on loans $ 2,625,314 $ 2,295,672
Interest on taxable securities available for sale 185,826 331,542
Interest on taxable securities held to maturity 958,807 1,054,168
Interest on tax exempt securities available for sale 147,288 158,684
Interest on tax exempt securities held to maturity 50,717 50,725
Dividends 31,382 30,673
Interest on federal funds sold 0 16,740
Interest on deposits in banks 49,875 26,518
Total interest income 4,049,209 3,964,722
Interest expense:
Interest on deposits 1,389,453 1,236,005
Interest on federal funds purchased 2,056 6,200
Interest on other short-term borrowings 130,113 30,713
Interest on long-term debt 201,661 267,847
Total interest expense 1,723,283 1,540,765
Net interest income 2,325,926 2,423,957
Provision for loan losses 0 0
Net interest income after provision for loan losses 2,325,926 2,423,957
Noninterest income:
Service charges on deposit accounts 421,230 430,720
Income from trust services 68,346 74,154
Income from retail brokerage services 81,073 68,149
Income from insurance services 257,735 280,932
Income from mortgage banking services 573,867 1,513,906
Net gain(loss) on disposition of assets 1,893 (455)
Net gain(loss) on sale of securities 0 0
Other income 39,385 34,876
Total noninterest income 1,443,529 2,402,282
Noninterest expense:
Salaries and employee benefits 1,727,017 1,882,485
Occupancy expense 206,368 205,145
Equipment expense 155,211 163,224
Data processing expense 168,370 171,014
Amortization of intangible assets 121,378 122,721
Other operating expenses 589,032 597,741
Total noninterest expenses 2,967,376 3,142,330
Income before income taxes 802,079 1,683,909
Provision for income taxes 181,662 465,899
Net income $ 620,417 $ 1,218,010
Earnings per share of common stock:
Net income, basic $ 0.24 $ 0.38
Net income, diluted $ 0.24 $ 0.37
Dividends declared $ 0.14 $ 0.13
Weighted average shares outstanding 2,582,290 3,249,631
Diluted average shares outstanding 2,592,188 3,270,568
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For The Six Months
Ended June 30,
(Unaudited) (Unaudited)
2007 2006
Interest income:
Interest and fees on loans $ 5,150,943 $ 4,280,199
Interest on taxable securities available for sale 377,482 663,719
Interest on taxable securities held to maturity 1,941,307 2,127,094
Interest on tax exempt securities available for sale 306,115 317,359
Interest on tax exempt securities held to maturity 101,435 101,452
Dividends 61,847 60,519
Interest on federal funds sold 427 132,704
Interest on deposits in banks 102,681 105,839
Total interest income 8,042,237 7,788,885
Interest expense:
Interest on deposits 2,767,412 2,308,460
Interest on federal funds purchased 9,045 6,200
Interest on other short-term borrowings 258,738 61,088
Interest on long-term debt 375,253 532,923
Total interest expense 3,410,448 2,908,671
Net interest income 4,631,789 4,880,214
Provision for loan losses 0 0
Net interest income after provision for loan losses 4,631,789 4,880,214
Noninterest income:
Service charges on deposit accounts 837,799 833,805
Income from trust services 139,977 149,118
Income from retail brokerage services 172,001 138,085
Income from insurance services 631,097 645,173
Income from mortgage banking services 1,837,809 2,546,315
Net gain(loss) on disposition of assets 11,390 5,077
Net gain(loss) on sale of securities 0 0
Other income 129,722 131,229
Total noninterest income 3,759,795 4,448,802
Noninterest expense:
Salaries and employee benefits 3,706,220 3,669,792
Occupancy expense 412,804 414,539
Equipment expense 311,892 319,208
Data processing expense 335,067 343,587
Amortization of intangible assets 242,757 245,442
Other operating expenses 1,158,202 1,188,077
Total noninterest expenses 6,166,942 6,180,645
Income before income taxes 2,224,642 3,148,371
Provision for income taxes 592,517 845,263
Net income $ 1,632,125 $ 2,303,108
Earnings per share of common stock:
Net income, basic $ 0.63 $ 0.71
Net income, diluted $ 0.63 $ 0.70
Dividends declared $ 0.28 $ 0.26
Weighted average shares outstanding 2,601,845 3,252,793
Diluted average shares outstanding 2,612,174 3,278,633
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For The Three Months
Ended June 30,
(Unaudited) (Unaudited)
2007 2006
Net income $ 620,417 $1,218,010
Other comprehensive income, net of tax:
Unrealized gain (loss) on securities
available for sale, net of tax benefit of
$94,924 and $164,575 for the quarter (183,970) (319,469)
Total comprehensive income $ 436,447 $ 898,541
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For The Six Months
Ended June 30,
(Unaudited) (Unaudited)
2007 2006
Net income $1,632,125 $2,303,108
Other comprehensive income, net of tax:
Unrealized gain (loss) on securities
available for sale, net of tax benefit of
$90,205 and $293,379 for the year (175,104) (569,501)
Total comprehensive income $1,457,021 $1,733,607
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six Months
Ended June 30,
(Unaudited) (Unaudited)
Cash flows from operating activities: 2007 2006
Net income $ 1,632,125 $ 2,303,108
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 0 0
Depreciation 367,550 389,100
Net amortization and accretion of
investment securities (5,763) 1,356
Amortization of intangibles 242,757 245,442
Net loss(gain) on sale and disposal of assets (11,390) (5,077)
Net change in funds related to mortgage
banking activities 1,169,594 1,292,366
Change in other assets 172,190 (674,306)
Change in other liabilities (352,976) 524,705
Net cash provided by operating activities 3,214,087 4,076,694
Cash flows from investing activities:
Proceeds from maturities of securities
held to maturity 4,000,000 3,000,000
Proceeds from maturities of securities
available for sale 2,370,102 91,762
Proceeds from sale of securities available for sale 0 0
Purchase of securities held to maturity 0 (2,000,000)
Purchase of securities available for sale (219,800) 0
Net change in other short-term investments 332,000 3,550,000
Net change in loans (5,286,826) (16,840,195)
Purchase of premises and equipment (257,364) (316,937)
Proceeds from sales of other assets 22,500 29,632
Net change in interest-bearing deposits in banks (1,505,136) 5,877,820
Net cash provided(used) for investing activities (544,524) (6,607,918)
Cash flows from financing activities:
Net change in deposits (1,410,271) 5,324,387
Payment of short-term debt and
S-T portion of long term debt (5,000,000) 0
Payment of long-term debt 0 0
Proceeds from issuance of long-term debt 5,000,000 0
Cash dividends declared (725,228) (844,810)
Proceeds from the exercise of stock options 0 58,318
Payment for common stock (1,142,225) (359,778)
Net cash provided(used) for financing activities (3,277,724) 4,178,117
Increase(decrease) in cash and due from banks (608,161) 1,646,893
Cash and due from banks - beginning of period 11,969,567 11,699,277
Cash and due from banks - end of period $11,361,406 $13,346,170
NONCASH ITEMS:
Increase in foreclosed properties
and decrease in loans $ 150,763 $ 0
Unrealized gain(loss) on securities
available for sale $ (175,104) $ (569,501)
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_________
Basis of Presentation
Southwest Georgia Financial Corporation (the "Corporation"), a bank-holding
company organized under the laws of Georgia, provides deposit, lending, and
other financial services to businesses and individuals primarily in the
Southwest region of Georgia. The Corporation and its subsidiaries are
subject to regulation by certain federal and state agencies.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes necessary for a fair presentation
of financial position, results of operations, and changes in financial
position in conformity with generally accepted accounting principles. The
interim financial statements furnished reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of the results for
the interim periods presented. The interim consolidated financial statements
should be read in conjunction with the Corporation's 2006 Annual Report on
Form 10K.
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NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Southwest Georgia Financial
Corporation and Subsidiaries conform to generally accepted accounting
principles and to general practices within the banking industry. The
following is a description of the more significant of those policies.
Principles of Consolidation
The consolidated financial statements include the accounts of Southwest
Georgia Financial Corporation and its wholly-owned Subsidiaries, Southwest
Georgia Bank (the "Bank") and Empire Financial Services, Inc. ("Empire").
All significant intercompany accounts and transactions have been eliminated
in the consolidation.
Nature of Operations
The Corporation offers comprehensive financial services to consumer,
business, and governmental customers through its banking offices in southwest
Georgia. Its primary deposit products are savings and certificates of
deposit, and its primary lending products are consumer and commercial
mortgage loans. The Corporation provides, in addition to conventional
banking services, investment planning and management, trust management,
mortgage banking, and commercial and individual insurance products.
Insurance products and advice are provided by the Bank's Southwest Georgia
Insurance Services Division. Mortgage banking for primarily commercial
properties is provided by Empire, a mortgage banking services subsidiary.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for loan losses and the
valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with these evaluations, management
obtains independent appraisals for significant properties.
A substantial portion of the Corporation's loans are secured by real estate
located primarily in Georgia. Accordingly, the ultimate collection of these
loans may be susceptible to changes in the real estate market conditions of
this market area.
Cash and Due from Banks Balances and Cash Flows
For purposes of reporting cash flows, the Corporation considers cash and cash
equivalents to include cash on hand, cash items in process of collection and
deposit amounts due from banks. Cash flows from loans, federal funds sold,
and interest bearing deposits with banks are reported separately and net. The
Corporation maintains its cash balances in several financial institutions.
-8-
Accounts at the financial institutions are secured by the Federal Deposit
Insurance Corporation up to $100,000. Uninsured deposits aggregate to
$5,535,078 at June 30, 2007.
Interest-Bearing Deposits in Banks
Interest bearing deposits in banks mature within one year and are carried at
cost.
Securities
Debt securities that management has the positive intent and ability to hold
to maturity are classified as "held to maturity" and recorded at amortized
cost. Securities not classified as held to maturity or trading, including
equity securities with readily determinable fair values, are classified as
"available for sale" and recorded at fair value with unrealized gains and
losses reported in other comprehensive income.
Purchase premiums and discounts are recognized in interest income using the
interest method over the terms of the securities. Declines in the fair value
of held-to-maturity and available-for-sale securities below their cost that
are deemed to be other than temporary are reflected in earnings as realized
losses. In estimating other-than-temporary impairment losses, management
considers (1) the length of time and the extent to which the fair value has
been less than cost, (2) the financial condition and near-term prospects of
the issuer, and (3) the intent and ability of the Corporation to retain its
investment in the issuer for a period of time sufficient to allow for any
anticipated recovery in fair value. Gains and losses on the sale of
securities are recorded on the trade date and are determined using the
specific identification method.
Long-Lived Assets
Premises and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation has been calculated primarily using the straight-
line method for buildings and building improvements over the assets estimated
useful lives. Equipment and furniture are depreciated using the modified
accelerated recovery system method over the assets estimated useful lives for
financial reporting and income tax purposes for assets purchased on or before
December 31, 2003. For assets acquired after December 31, 2003, the
Corporation used the straight-line method of depreciation. The following
estimated useful lives are used for financial statement purposes:
Land improvements 5 - 31 years
Building and improvements 10 - 40 years
Machinery and equipment 5 - 10 years
Computer equipment 3 - 5 years
Office furniture and fixtures 5 - 10 years
All of the Corporation's leases are operating leases and are not capitalized
as assets for financial reporting purposes. Maintenance and repairs are
charged to expense and betterments are capitalized.
Long-lived assets are evaluated regularly for other-than-temporary
impairment. If circumstances suggest that their value may be impaired and
the write-down would be material, an assessment of recoverability is
performed prior to any write-down of the asset. Impairment on intangibles is
-9-
evaluated at each balance sheet date or whenever events or changes in
circumstances indicate that the carrying amount should be assessed.
Impairment, if any, is recognized through a valuation allowance with a
corresponding charge recorded in the income statement.
Loans and Allowances for Loan Losses
Loans are stated at principal amounts outstanding less unearned income and
the allowance for loan losses. Interest income is credited to income based
on the principal amount outstanding at the respective rate of interest except
for interest on certain installment loans made on a discount basis which is
recognized in a manner that results in a level-yield on the principal
outstanding.
Accrual of interest income is discontinued on loans when, in the opinion of
management, collection of such interest income becomes doubtful. Accrual of
interest on such loans is resumed when, in management's judgment, the
collection of interest and principal becomes probable.
Fees on loans and costs incurred in origination of most loans are recognized
at the time the loan is placed on the books. Because loan fees are not
significant, the results on operations are not materially different from the
results which would be obtained by accounting for loan fees and costs as
amortized over the term of the loan as an adjustment of the yield.
A loan is considered impaired when, based on current information and events,
it is probable that the Corporation will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms
of the loan agreement. Factors considered by management in determining
impairment include payment status, collateral value, and the probability of
collecting scheduled principal and interest payments when due. Loans that
experience insignificant payment delays and payment shortfalls generally are
not classified as impaired. Management determines the significance of
payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower,
including the length of the delay, the reasons for the delay, the borrower's
prior payment record, and the amount of the shortfall in relation to the
principal and interest owed. Impairment is measured on a loan by loan basis
for commercial and construction loans by either the present value of expected
future cash flows discounted at the loan's effective interest rate, the
loan's obtainable market price, or the fair value of the collateral if the
loan is collateral dependent.
Large groups of smaller balance homogeneous loans are collectively evaluated
for impairment. Accordingly, the Corporation does not separately identify
individual consumer and residential loans for impairment disclosures.
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes the collection of the principal is unlikely.
The allowance is an amount which management believes will be adequate to
absorb estimated losses on existing loans that may become uncollectible based
on evaluation of the collectibility of loans and prior loss experience. This
evaluation takes into consideration such factors as changes in the nature and
volume of the loan portfolios, current economic conditions that may affect
the borrowers' ability to pay, overall portfolio quality, and review of
specific problem loans.
-10-
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based upon changes in economic
conditions. Also, various regulatory agencies, as an integral part of their
examination process, periodically review the Corporation's allowance for loan
losses. Such agencies may require the Corporation to recognize additions to
the allowance based on their judgments of information available to them at
the time of their examination.
Foreclosed Assets
Properties acquired through, or in lieu of, loan foreclosure are held for
sale and are initially recorded at the lower of cost or fair value at the
date of foreclosure, establishing a new cost basis. Subsequent to
foreclosure, valuations are periodically performed by management and the
assets are carried at the lower of carrying amount or fair value less cost to
sell. Revenue and expenses from operations and changes in the valuation
allowance are included in net expenses from foreclosed assets.
Credit Related Financial Instruments
In the ordinary course of business, the Corporation has entered into
commitments to extend credit, including commitments under credit card
arrangements, commercial letters of credit, and standby letters of credit.
Such financial instruments are recorded when they are funded.
Retirement Plans
The Corporation and its subsidiaries have pension plans covering
substantially all employees. The Corporation makes annual contributions to
the plans in amounts not exceeding the regulatory requirements.
Income Taxes
The Corporation and the Bank file a consolidated income tax return. The
Bank's subsidiary provides for income taxes based on its contribution to
income taxes (benefits) of the consolidated group.
Deferred income tax assets and liabilities result from temporary differences
between the tax basis of assets and liabilities and their reportable amounts
in the financial statements that will result in taxable or deductible amounts
in future years. Recognition of deferred tax assets is based on management's
belief that it is more likely than not that the tax benefit associated with
certain temporary differences and tax credits will be realized.
Recent Accounting Pronouncements
On December 31, 2006, the Corporation adopted Statement of Financial
Accounting Standards No. 158, Employer's Accounting for Deferred Benefit
Pension and Other Postretirement Plans. The adoption date requirement for
this standard was for fiscal year ending after December 15, 2006. This
standard requires an employer to recognize in its statement of financial
position an asset for a pension retirement plan's overfunded status or a
liability for an underfunded status. The Corporation's funded status of
pension retirement plan is the difference between the fair value of the plan
assets and the projected benefit obligation on December 31, 2006.
-11-
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment".
SFAS No. 123(R) replaces SFAS No. 123, "Accounting for Stock-Based
Compensation", and supersedes APB Opinion No. 25, "Accounting for Stock
Issued to Employees". This Statement requires compensation costs related to
share-based payment transactions to be recognized in the financial statements
over the period that an employee provides service in exchange for the award.
Public companies are required to adopt the new standard using either a
modified prospective method or may elect to restate prior periods using the
modified retrospective method. Under the modified prospective method,
companies are required to record compensation cost for new and modified
awards over the related vesting period of such awards prospectively and
record compensation cost prospectively for the unvested portion, at the date
of adoption, of previously issued and outstanding awards over the remaining
vesting period of such awards. No change to prior periods presented is
permitted under the modified prospective method. SFAS No. 123(R) is
effective for periods beginning after June 15, 2005. Effective July 1, 2005,
the Corporation has adopted this new standard using the modified prospective
method. All required details of stock option awards are disclosed in Note 9
of the consolidated financial statements.
Trust Department
Trust income is included in the accompanying consolidated financial
statements on the cash basis in accordance with established industry
practices. Reporting of such fees on the accrual basis would have no
material effect on reported income.
Servicing and Origination Fees on Loans
The Corporation from its subsidiary, Empire, recognizes as income in the
current period all loan origination and brokerage fees collected on loans
originated and closed for investing participants. Loan servicing fees are
based on a percentage of loan interest paid by the borrower and recognized
over the term of the loan as loan payments are received. Empire does not
directly fund any mortgages and acts as a service-oriented broker for
participating mortgage lenders. Fees charged for continuing servicing fees
are comparable with market rates charged in the industry. Based on these
facts and after a thorough analysis and evaluation of deferred mortgage
servicing costs as defined under FASB 122 and amended by FASB 140, they are
insignificant and immaterial to be recognized. Late charges assessed on past
due payments are recognized as income by the Corporation when collected.
Advertising Costs
It is the policy of the Corporation to expense advertising costs as they are
incurred. The Corporation does not engage in any direct-response advertising
and accordingly has no advertising costs reported as assets on its balance
sheet. Costs that were expensed during second quarter 2007 were $41,531 and
$95,904 for the six-month period.
-12-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
In addition to historical information, this Form 10-Q report contains
forward-looking statements within the meaning of the federal securities laws.
The Corporation cautions that there are various factors that could cause
actual results to differ materially from the anticipated results or other
expectations expressed in the Corporation's forward-looking statements;
accordingly, there can be no assurance that such indicated results will be
realized.
These factors include asset quality; the adequacy of the allowance for loan
losses; technology difficulties or failures; the Corporation's ability to
execute its business strategy; the loss of key personnel; competition;
changes in regulation and monetary policy; legislative and regulatory
initiatives regarding deregulation and restructuring of the banking industry;
acquisitions or dispositions of assets or internal restructuring, that may be
pursued by the Corporation; changes in or application of environmental and
other laws and regulations to which the Corporation is subject; political,
legal and local economic conditions and developments; financial market
conditions and the results of financing efforts; changes in commodity prices
and interest rates; weather, natural disasters and other catastrophic events;
and other factors discussed in the Corporation's other filings with the
Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on any forward-looking
statements made by or on behalf of the Corporation. Any such statement
speaks only as of the date the statement was made. The Corporation
undertakes no obligation to update or revise any forward-looking statements.
Additional information with respect to factors that may cause results to
differ materially from those contemplated by such forward-looking statements
is included in the Corporation's current and subsequent filings with the
Securities and Exchange Commission.
Overview
The Corporation is a full-service community bank holding company
headquartered in Moultrie, Georgia. The community of Moultrie has been
served by the Corporation and its predecessors since 1928. We provide
comprehensive financial services to consumer, business and governmental
customers, which, in addition to conventional banking products, include a
full range of mortgage banking, trust, investment and insurance services. Our
primary market area incorporates Colquitt County, where we are headquartered,
and Baker, Thomas, and Worth Counties, each contiguous with Colquitt County.
We have four full service banking facilities and six automated teller
machines.
Our strategy is to:
* maintain the diversity of our revenue, including growth in both interest and
noninterest income through a broad base of business,
* strengthen our sales and marketing efforts while developing our employees to
provide the best possible service to our customers,
* expand our market share where opportunity exists, and
* grow outside of our current geographic footprint, through acquisitions, into
areas proximate to our current market area.
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The Corporation's profitability, like most financial institutions, is
dependent to a large extent upon net interest income, which is the difference
between the interest received on earning assets, such as loans, securities
and federal funds sold, and the interest paid on interest-bearing
liabilities, principally deposits and borrowings. Net interest income is
highly sensitive to the fluctuations in interest rates. This quarter the
Federal Reserve Bank kept short-term rates unchanged at 5.25% and the rate
has been at this same level for the last twelve months. Prior to this flat
rate environment, short-term rates were increased seventeen times for a total
of 4.25%.
Our profitability is impacted as well by operating expenses such as salaries
and employee benefits, occupancy and other operating expenses, including
income taxes. Our lending activities are significantly influenced by regional
and local factors. Some specific factors include changes in population,
competition among lenders, interest rate conditions and prevailing market
rates on competing uses of funds and investments, customer preferences and
levels of personal income and savings in the Corporation's primary market
area.
To address interest rate fluctuations out of our control, we manage our
balance sheet in an effort to diminish the impact of sudden interest rates
changes by broadening our revenue sources to reduce the risk and exposure of
our financial results to the impact of changes in interest rates, which is
outside of our control. As a result of our strategy to diversify revenue,
noninterest income has grown over the last few years and was 62% of second
quarter 2007 net interest income and 26% of second quarter 2007 total
revenue. Sources of noninterest income include our insurance agency and
Empire, the Corporation's commercial mortgage banking subsidiary, as well as
fees on customer accounts, trust and retail brokerage services.
Critical Accounting Policies
In the course of the Corporation's normal business activity, management must
select and apply many accounting policies and methodologies that lead to the
financial results presented in the consolidated financial statements of the
Corporation. Management considers the accounting policy relating to the
allowance for loan losses to be a critical accounting policy because of the
uncertainty and subjectivity inherent in estimating the levels of allowance
needed to cover probable credit losses within the loan portfolio and the
material effect that these estimates can have on the Corporation's results of
operations. We believe that the allowance for loan losses as of June 30,
2007 is adequate, however, under adversely different conditions or
assumptions, future additions to the allowance may be necessary. There have
been no significant changes in the methods or assumptions used in our
accounting policies that require material estimates and assumptions. Note 1
to the Consolidated Financial Statements provides a description of our
significant accounting policies and contributes to the understanding of how
our financial performance is reported.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity management involves the ability to meet the cash flow requirements
of customers who may be either depositors wanting to withdraw their funds or
borrowers needing assurance that sufficient funds will be available to meet
their credit needs. In the ordinary course of business, the Corporation's
cash flows are generated from interest and fee income as well as from loan
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repayments and the maturity or sale of other earning assets. In addition,
liquidity is continuously provided through the acquisition of new deposits
and borrowings or the rollover of maturing deposits and borrowings. The
Corporation strives to maintain an adequate liquidity position by managing
the balances and maturities of interest-earning assets and interest-earning
liabilities so its short-term investments balance, at any given time, will
adequately cover any reasonably anticipated immediate need for funds.
Additionally, the Bank maintains relationships with correspondent banks that
could provide funds on short notice, if needed.
The liquidity and capital resources of the Corporation are monitored on a
periodic basis by state and Federal regulatory authorities. As determined
under guidelines established by these regulatory authorities, the Bank's
liquidity ratios at June 30, 2007, were considered satisfactory. At that
date, the Bank's short-term investments were adequate to cover any reasonably
anticipated immediate need for funds. The Corporation is aware of no events
or trends likely to result in a material change in liquidity. At June 30,
2007, the Corporation's and the Bank's risk-based capital ratios were
considered adequate based on guidelines established by regulatory
authorities. During the three months ended June 30, 2007, total capital
decreased $411 thousand to $27.5 million. The majority of this decrease was
a result of the stock repurchase program partially offset by net earnings
growth. Under a share repurchase program adopted by the Board in January
2000, the Corporation repurchased 58,700 shares of its common stock during
the first six months of 2007 at an average price of $19.46 per share. There
are approximately 100,000 shares authorized to be repurchased under the
current program. Also, the Corporation continues to maintain a healthy level
of capital adequacy as measured by its equity-to-asset ratio of 9.58% as of
June 30, 2007. The Corporation is not aware of any events or trends likely
to result in a material change in capital resources other than the effects of
normal operations on the retention of net earnings, repurchasing shares, and
paying dividends to shareholders. Also, the Corporation's management is not
aware of any current recommendations by the regulatory authorities which, if
they were implemented, would have a material effect on the Corporation's
capital resources.
RESULTS OF OPERATIONS
The Corporation's results of operations are determined by its ability to
effectively manage interest income and expense, to minimize loan and
investment losses, to generate noninterest income and to control noninterest
expense. Since interest rates are determined by market forces and economic
conditions beyond the control of the Corporation, the ability to generate net
interest income is dependent upon the Bank's ability to obtain an adequate
spread between the rate earned on interest-earning assets and the rate paid
on interest-bearing liabilities. Thus, the key performance measure for net
interest income is the interest margin or net yield, which is taxable-
equivalent net interest income divided by average earning assets.
Performance Summary
The Corporation's net income after taxes for the three-month period ending
June 30, 2007, was $620 thousand compared with a net income of $1.218 million
for the same period in 2006, representing a decrease of $598 thousand. The
majority of the decline in quarterly earnings was in the mortgage banking
business segment. Resources in the segment at Empire Financial Services were
devoted to working out one problem loan relationship.
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On a per share basis, net income for the second quarter decreased 35% to $.24
per diluted share compared with $.37 per diluted share for the same quarter
in 2006. The weighted average common diluted shares outstanding for the
quarter were 2.592 million, down 21% from the previous comparable quarter.
This decrease in average quarterly diluted shares was due to the
Corporation's last year's stock tender offer and the stock repurchase
program. Because of our strong capital position, we continued with the stock
repurchase program that began in January 2000.
For the first six months of 2007, net income was $1.632 million compared with
net income of $2.303 million for the same period in 2006. Earnings per
diluted share for the first six months of 2007 were $0.63, down 10% compared
with earnings per diluted share of $.70 for the same period in 2006. The
quarterly impact of the slow down in mortgage banking activities was also
reflected in net income for the six-month period.
We measure our performance on selected key ratios, which are provided for the
previous five quarterly periods ended June 30, 2007.
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
2007 2007 2006 2006 2006
Return on average total assets 0.85% 1.38% .73% .26% 1.60%
Return on average total equity 8.92% 14.57% 6.92% 1.95% 12.11%
Average shareholders' equity to
Average total assets 9.57% 9.45% 10.49% 13.15% 13.20%
Net interest margin
(tax equivalent) 3.72% 3.68% 3.65% 3.62% 3.66%
Comparison of Statements of Income for the Quarter
Noninterest income, which was slightly more than one-fourth of the Corporation's
total revenue for the quarter, was $1.443 million for the second quarter,
down 40% from the same period in 2006. The largest contributor to
noninterest income, mortgage banking services, decreased 62.1% to $574
thousand from last year's second quarter. As mentioned previously,
management resources were diverted from originating and closing loans to
address the single problem loan. The level and timing of recognizing income
from the mortgage banking business is dependent on many factors related to
originating and closing relatively large commercial mortgage loans, and
therefore can fluctuate from quarter to quarter. Currently, the mortgage
banking business has a strong pipeline of approximately $485 million in
projects. In addition to fees generated through the lending process, it also
earns fees for servicing a $480 million portfolio of non-recourse loans.
Revenue from service charges on deposit accounts decreased 2.3% from the same
period a year ago to $421 thousand for the quarter. Revenue from insurance
services decreased to $258 thousand, an 8.2% decrease compared with the
second quarter of 2006. Somewhat offsetting the declines in other noninterest
income revenue, brokerage services revenue increased $13 thousand, or 19%, as
strong stock market performance encouraged more investing activity.
Total interest income increased $84 thousand, or 2.1%, for the three months
ended June 30, 2007 compared with the same period in 2006. This improvement
for the three-month period resulted from increases in interest and fees on
loans. These increases were partially offset by decreases in interest on
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lower volume of investment securities resulting from last year's sale of
securities to fund the stock tender offer.
Total interest expense increased $182 thousand, or 11.8%, in the second
quarter of 2007 compared with the same period in 2006. Interest on deposits
increased $153 thousand, or 12.4%, during the second quarter of 2007, while
interest on total borrowings increased $29 thousand during the period.
Looking ahead, the challenge will be to manage funding costs in a higher rate
environment. Our focus on cost discipline, retaining and expanding customer
relationships, and identifying acquisition opportunities are central to the
core components of our growth strategy.
The primary source of revenue for the Corporation is net interest income,
which is the difference between total interest income on earning assets and
interest expense on interest-bearing sources of funds. Net interest income
for the second quarter of 2007 was $2.33 million compared with $2.42 million
for the same period in 2006. The decrease was due primarily to higher
funding costs which were partially offset by increases in interest income on
loans. The Corporations's net interest margin improved to 3.72% for the second
quarter of 2007, compared with 3.66% from the same period a year ago, and
compared with 3.68% for the first quarter 2007. Total interest expense was
$1.723 million for the second quarter, up $182 thousand from the same period
a year ago, due primarily to increased interest expense on deposits. The
average rate paid on interest-bearing time deposits increased 33 basis points
for the quarter compared with the same period a year ago. Lower volume of
earning assets due to last year's stock repurchase and higher funding costs
have both impacted our ability to grow net interest income, and our challenge
continues to be managing these costs in this rate environment.
No provision for loan losses was recorded for the second quarter of 2007 and
2006 due to the quality of the loan portfolio and the adequacy of the
allowance for loan losses.
Noninterest expense decreased to $2.967 million from $3.142 million for the
second quarter of last year. The largest component of noninterest expense,
salaries and employee benefits, decreased to $1.727 million for the second
quarter from $1.882 million a year ago. This decline was due to decreases in
incentive and benefit plan contributions. The Coorporation discontinued its
defined benefit plan at the end of 2006 and adopted a defined contribution
plan for employees' retirement funding. All other major categories of
noninterest expense were either relatively flat or had decreases in the
second quarter of 2007 when compared with the second quarter of 2006.
Comparison of Statements of Income for the Six-month Period
For the first six months of 2007, noninterest income was $3.760 million, down
15.5% from the same period in 2006. The majority of the decline was a result
of mortgage banking services revenue decreasing $709 thousand, or 27.8%, from
the same period last year, offset somewhat by the 22.4%, or $232 thousand,
improvement it realized the first quarter of this year. Income from insurance
services decreased $14 thousand, or 2%, and revenue from trust services
decreased $9 thousand, or 6%. These decreases in revenue were partially
offset by increases in retail brokerage services of $34 thousand, or 25%, and
service charges on deposit accounts of $4 thousand, or 4.8%, when compared
with the same period last year.
For the first six months of 2007, total interest income increased $253
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thousand when compared with the same period in 2006. This increase in the
six-month period of 2007 was primarily due to an $871 thousand increase in
interest and fees on loans resulting from $16.2 million higher average loan
volume compared with the same period last year. This increase was partially
offset by decreases in interest income from securities. The lower volume of
securities was the results of selling securities last year to fund the $13.2
million stock repurchase.
The total interest expense for the six-month period ended June 30, 2007
increased $501 thousand, or 17.2%, compared with the same period in 2006.
Over this period, the average balances on interest-bearing deposits increased
$748 thousand. However, the increase in interest expense was primarily
related to higher rates paid on interest-bearing deposits. The rate on time
deposits increased 122 basis points comparing the first six months of 2007
with the same period in 2006. Interest on long-term debt decreased $158
thousand, or 30%, for the first six months of 2007, while interest on other
short-term borrowings increased $201 thousand for the first six months of
2007. The majority of the short-term increase is due to moving the short-term
portion of the long-term debt to short-term.
Net interest income for the first six months of 2007 was slightly lower at
$4.632 million compared with $4.880 million for the same period in 2006. Net
interest margin was 3.70% for the first six months of 2007, an improvement of
3 basis points from the same period a year ago.
The six-month provision for loan losses of $0 remained unchanged from the
comparable period of 2006. Noninterest expense decreased $14 thousand for
the first six months of 2007 compared with the same period last year. Salary
and employee benefits increased while all other noninterest expense
categories decreased when comparing the first six months of 2007 to the same
period last year.
Comparison of Financial Condition Statements
At June 30, 2007, total assets were down to $287.4 million from $308.7
million at mid-year 2006. Total loans increased over 7.5% to $130.6 million
compared with $121.4 million at June 30, 2006, and increased $5.1 million
from the end of 2006. Deposits declined slightly to $225.3 million at the end
of the second quarter of 2007, from $227.2 million from the same period in
2006.
The Corporation's loan portfolio of $130.6 million increased 4.1% from the
December 31, 2006, level of $125.5 million. Some of this loan growth was
originated from strong local economic development due to affordability of
real estate and abundance of natural resources. The Corporation continues to
be conservative in its lending practices in order to maintain a quality loan
portfolio. Loans, a major use of funds, represent 45.4% of total assets.
Investment securities and other short-term investments which include federal
funds sold and interest-bearing deposits in banks represent 46.2% of total
assets. Investment securities decreased $6.3 million and short-term
investments increased $1.1 million since December 31, 2006. This resulted in
an overall decrease in investments of $5.2 million.
Deposits decreased to $225.3 million at the end of the second quarter of 2007
down $1.9 million from the same period in 2006 and down $1.4 million from the
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end of last year. At June 30, 2007, total deposits represented 78.4% of
total assets.
The following table shows the major contractual obligations for the
Corporation.
Long-term debt consists of the following:
June 30, December 31, June 30,
2007 2006 2006
Advance from Federal Home Loan Bank with
a 3.21% fixed rate of interest maturing
June 29, 2015. (convertible to a variable
rate at option of Federal Home Loan Bank
on June 29, 2007). $ 0 $ 0 $ 5,000,000
Advance from Federal Home Loan Bank with
a 2.85% fixed rate of interest maturing
March 11, 2013. (convertible to a variable
rate at option of Federal Home Loan Bank
on March 11, 2008). 5,000,000 5,000,000 5,000,000
Advance from Federal Home Loan Bank with
a 4.00% fixed rate of interest maturing
August 6, 2012, (convertible to a variable
rate at option of Federal Home Loan Bank
on August 6, 2007). 0 0 5,000,000
Advance from Federal Home Loan Bank with
a 3.85% fixed rate of interest maturing
April 30, 2014, (convertible to a variable
rate at option of Federal Home Loan Bank
on April 30, 2009). 10,000,000 10,000,000 10,000,000
Advance from Federal Home Loan Bank with
a 3.08% fixed rate of interest maturing
August 13, 2014, (convertible to a
variable rate at option of Federal Home
Loan Bank on August 13, 2007). 0 0 5,000,000
Advance from Federal Home Loan Bank with
a 5.24% fixed rate of interest maturing
February 6, 2009. 5,000,000 0 0
Advance from Federal Home Loan Bank with
a 5.21% fixed rate of interest due in
annual installments maturing
December 17, 2008. 228,571 228,571 342,857
Total long-term debt $20,228,571 $15,228,571 $30,342,857
The allowance for loan losses represents a reserve for potential losses in
the loan portfolio. The adequacy of the allowance for loan losses is
evaluated monthly based on a review of all significant loans, with a
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particular emphasis on nonaccruing, past due, and other loans that management
believes require attention.
Other factors used in determining the adequacy of the reserve are
management's judgment about factors affecting loan quality and their
assumptions about the local and national economy. The allowance for loan
losses was 1.85% of total loans outstanding at June 30, 2007, compared with
1.93% of loans outstanding at December 31, 2006. Non-performing assets as a
percentage of total assets were .84%, an 81 basis point increase over last
year. The increase in non-performing assets is primarily related to one
large commercial real estate loan that was foreclosed on in July and is
expected to be liquidated in the third quarter without a loss to the
Corporation. Management considers the allowance for loan losses as of
June 30, 2007, adequate to cover potential losses in the loan portfolio.
Off-Balance Sheet Arrangements
In the normal course of business, we are a party to financial instruments
with off-balance-sheet risk to meet the financing needs of our customers and
reduce risk exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit in the form of loans or
through letters of credit. The instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amounts recognized
in the financial statements. Since many of the commitments to extend credit
and standby letters of credit are expected to expire without being drawn
upon, the contractual or notional amounts do not represent future cash
requirements.
Financial instruments whose contract
amounts represent credit risk (dollars
in thousands): June 30, June 30,
2007 2006
Commitments to extend credit $ 19,299 $ 24,741
Standby letters of credit and
financial guarantees $ 36 $ 142
The Corporation does not have any special purpose entities or off-balance
sheet financing arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Corporation's primary market risk lies within its exposure to interest
rate movement. The Corporation has no foreign currency exchange rate risk,
commodity price risk, or any other material market risk. The Corporation
has no trading investment portfolio. As a result, it does not hold any
market risk-sensitive instruments, which would be subject to a trading
environment characterized by volatile short-term movements in interest rates.
Also, the Corporation has no interest rate swaps, or other derivative
instruments, that are both designated and effective as hedges or modify the
interest rate characteristics of specified assets or liabilities. The
Corporation's primary source of earnings, net interest income, can fluctuate
with significant interest rate movements. To lessen the impact of these
movements, the Corporation seeks to maximize net interest income while
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remaining within prudent ranges of risk by practicing sound interest rate
sensitivity management. The Corporation attempts to accomplish this
objective by structuring the balance sheet so differences in repricing
opportunities between assets and liabilities are minimized. Interest rate
sensitivity refers to the responsiveness of earning assets and interest-
bearing liabilities to changes in market interest rates. The Corporation's
interest rate risk management is carried out by the Asset/Liability
Management Committee operating under policies and guidelines established by
Management. The principal objective of asset/liability management is to
manage the levels of interest-sensitive assets and liabilities to minimize
net interest income fluctuations in times of fluctuating market interest
rates. To effectively measure and manage interest rate risk, the Corporation
uses computer simulations that determine the impact on net interest income of
numerous interest rate scenarios, balance sheet trends and strategies. These
simulations cover the following financial instruments: short-term financial
instruments, investment securities, loans, deposits, and borrowings. These
simulations incorporate assumptions about balance sheet dynamics, such as
loan and deposit growth and pricing, changes in funding mix, and asset and
liability repricing and maturity characteristics. Simulations are run under
various interest rate scenarios to determine the impact on net income and
capital. From these computer simulations, interest rate risk is quantified
and appropriate strategies are developed and implemented. The Corporation
maintains an investment portfolio that staggers maturities and provides
flexibility over time in managing exposure to changes in interest rates. At
any point in time, any imbalances in the repricing opportunities constitute a
financial institution's interest rate sensitivity.
The Corporation uses a number of tools to measure interest rate risk. One of
the indicators for the Corporation's interest rate sensitivity position is
the measurement of the difference between its rate-sensitive assets and rate-
sensitive liabilities, referred to as the "gap." A gap analysis displays the
earliest possible repricing opportunity for each asset and liability category
based upon contractual maturities and repricing. As of June 30, 2007, the
Corporation's one-year cumulative rate-sensitive assets represented 79% of
the cumulative rate-sensitive liabilities. This ratio declined 17 percent
when compared to the same period in 2006. Year over year, we have remained
liability-sensitive at the one year gap position because a large amount of
our long-term debt will be repaid to the Federal Home Loan Bank within the
next 12 months. This liability sensitive position will increase the
Corporation's exposure to rising interest rates. All interest rates and
yields do not adjust at the same velocity; therefore, the interest rate
sensitivity gap is only a general indicator of the potential effects of
interest rate changes on net interest income. The Corporation's asset and
liability mix is monitored ensuring the effects of interest rate movements in
either direction are not significant over time.
ITEM 4. CONTROLS AND PROCEDURES
The Corporation's management, including the Chief Executive Officer and Chief
Financial Officer, supervised and participated in an evaluation of the
effectiveness of its disclosure controls and procedures (as defined in
federal securities rules) as of the end of the period covered by this report.
Based on, and as of the date of, that evaluation, the Corporation's Chief
Executive Officer and Chief Financial Officer have concluded that the
Corporation's disclosure controls and procedures were effective in
accumulating and communicating information to management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
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decisions regarding required disclosures of that information under the
Securities and Exchange Commission's rules and forms and that the
Corporation's disclosure controls and procedures are designed to ensure that
the information required to be disclosed in reports that are filed or
submitted by the Corporation under the Securities Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.
No changes were made to the Corporation's internal control over financial
reporting during this quarter that materially affected or could reasonably
likely to materially affect the Corporation's internal controls over
financial reporting.
PART II. - OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the shareholders of the Corporation was held on May 22,
2007. Total shares eligible to vote amounted to 2,614,143. A total of
1,984,053 shares (75.9%) were represented by shareholders in attendance or by
proxy.
The following directors were elected to serve one year until the next annual
meeting.
Director Votes For Votes Withheld
Cecil H. Barber 1,979,277 4,776
John J. Cole, Jr. 1,979,677 4,376
DeWitt Drew 1,979,677 4,376
Michael J. McLean 1,979,677 4,376
Richard L. Moss 1,979,677 4,376
Roy H. Reeves 1,974,397 9,656
Johnny R. Slocumb 1,960,975 23,078
C. Broughton Williams, Jr. 1,979,575 4,478
Marcus R. Wells 1,970,710 13,343
Lane M. Wear 1,979,577 4,476
Director Emeritus:
Albert W. Barber
Leo T. Barber, Jr.
Mrs. Kenneth V. Cope
Robert M. Duggan
E. J. McLean, Jr.
Earl D. Moore
Jack Short
Mrs. Hugh Turner
Violet K. Weaver
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ITEM 6 EXHIBITS
Exhibit 31.1 Section 302 Certification of Periodic Financial
Report by Chief Executive Officer.
Exhibit 31.2 Section 302 Certification of Periodic Financial
Report by Chief Financial Officer.
Exhibit 32.1 Section 906 Certification of Periodic Financial
Report by Chief Executive Officer.
Exhibit 32.2 Section 906 Certification of Periodic Financial
Report by Chief Financial Officer.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SOUTHWEST GEORGIA FINANCIAL CORPORATION
BY: /s/ George R. Kirkland
GEORGE R. KIRKLAND
SENIOR VICE-PRESIDENT AND TREASURER
(FINANCIAL AND ACCOUNTING OFFICER)
Date: August 13, 2007
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