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 September 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 October 15, 2007
Common Stock, $1 Par Value 4,293,835
SOUTHWEST GEORGIA FINANCIAL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 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 - September 30, 2007 (unaudited) and
December 31, 2006 (audited). 2
b. Consolidated statements of income (unaudited) - for the three months
and the nine months ended September 30, 2007 and 2006. 3
c. Consolidated statements of comprehensive income (unaudited) - for the
three months and the nine months ended September 30, 2007 and 2006. 4
d. Consolidated statements of cash flows (unaudited) for the nine months
ended September 30, 2007 and 2006. 5
e. Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 21
ITEM 4. CONTROLS AND PROCEDURES 22
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS 23
SIGNATURE 24
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 2007 and December 31, 2006
(Unaudited) (Audited)
September 30, December 31,
2007 2006
ASSETS
Cash and due from banks $ 10,057,671 $ 11,969,567
Interest-bearing deposits in banks 131,755 83,210
Federal funds sold 0 332,000
Investment securities available for sale,
at fair value 31,389,212 33,322,855
Investment securities held to maturity (fair
value approximates $97,451,095 and $100,283,068) 98,235,717 102,232,804
Federal Home Loan Bank stock, at cost 1,945,300 1,966,900
Total investment securities 131,570,229 137,522,559
Loans 127,264,537 125,535,755
Less: Unearned income (39,801) (43,963)
Allowance for loan losses (2,411,861) (2,417,140)
Loans, net 124,812,875 123,074,652
Premises and equipment, net 6,362,602 6,578,997
Foreclosed assets, net 2,346,510 0
Intangible assets 1,386,376 1,750,511
Other assets 7,446,291 7,204,926
Total assets $284,114,309 $288,516,422
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
NOW accounts $ 50,099,540 $ 55,013,082
Money Market 15,426,589 24,376,607
Savings 21,112,073 22,228,442
Certificates of deposit $100,000 and over 29,933,016 25,725,026
Other time accounts 66,439,282 65,977,976
Total interest-bearing deposits 183,010,500 193,321,133
Noninterest-bearing deposits 33,183,102 33,387,979
Total deposits 216,193,602 226,709,112
Federal funds purchased 5,125,000 0
Other borrowed funds 16,500,000 15,000,000
Long-term debt 15,228,571 15,228,571
Other liabilities 3,064,808 3,621,820
Total liabilities 256,111,981 260,559,503
Stockholders' equity:
Common stock - $1 par value, 5,000,000 shares
authorized, 4,291,855 and 4,288,555 shares
issued, respectively 4,291,855 4,288,555
Capital surplus 31,678,763 31,644,063
Retained earnings 18,088,206 16,763,299
Accumulated other comprehensive income (382,476) (482,588)
Treasury stock, at cost 1,722,012 shares for
2007 and 1,648,912 shares for 2006 (25,674,020) (24,256,410)
Total stockholders' equity 28,002,328 27,956,919
Total liabilities and stockholders' equity $284,114,309 $288,516,422
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For The Three Months
Ended September 30,
(Unaudited) (Unaudited)
2007 2006
Interest income:
Interest and fees on loans $2,722,715 $2,527,731
Interest on taxable securities available for sale 178,683 318,443
Interest on taxable securities held to maturity 958,825 1,022,457
Interest on tax exempt securities available for sale 146,938 158,692
Interest on tax exempt securities held to maturity 50,713 50,723
Dividends 29,542 32,672
Interest on federal funds sold 0 16,570
Interest on deposits in banks 5,767 17,974
Total interest income 4,093,183 4,145,262
Interest expense:
Interest on deposits 1,412,038 1,404,663
Interest on federal funds purchased 77,565 19,297
Interest on other short-term borrowings 156,080 101,566
Interest on long-term debt 182,332 200,276
Total interest expense 1,828,015 1,725,802
Net interest income 2,265,168 2,419,460
Provision for loan losses 0 0
Net interest income after provision for loan losses 2,265,168 2,419,460
Noninterest income:
Service charges on deposit accounts 453,973 438,645
Income from trust services 67,602 76,202
Income from retail brokerage services 81,492 68,193
Income from insurance services 256,806 236,993
Income from mortgage banking services 607,165 944,019
Net gain(loss) on disposition of assets 1,562 9,970
Net gain(loss) on sale of credit card portfolio 247,531 0
Net gain(loss) on sale of securities 0 (564,455)
Other income 63,162 36,617
Total noninterest income 1,779,293 1,246,184
Noninterest expense:
Salaries and employee benefits 1,671,310 1,761,564
Occupancy expense 222,627 220,584
Equipment expense 163,856 160,106
Data processing expense 180,078 183,044
Amortization of intangible assets 121,379 550,234
Other operating expenses 635,994 778,859
Total noninterest expenses 2,995,244 3,654,391
Income before income taxes 1,049,217 11,253
Provision for income taxes 271,430 (186,553)
Net income $ 777,787 $ 197,806
Earnings per share of common stock:
Net income, basic $ 0.30 $ 0.06
Net income, diluted $ 0.30 $ 0.06
Dividends declared $ 0.14 $ 0.13
Weighted average shares outstanding 2,574,964 3,233,782
Diluted average shares outstanding 2,584,309 3,246,158
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For The Nine Months
Ended September 30,
(Unaudited) (Unaudited)
2007 2006
Interest income:
Interest and fees on loans $7,873,655 $6,807,930
Interest on taxable securities available for sale 556,165 982,162
Interest on taxable securities held to maturity 2,900,135 3,149,551
Interest on tax exempt securities available for sale 453,053 476,051
Interest on tax exempt securities held to maturity 152,148 152,175
Dividends 91,388 93,191
Interest on federal funds sold 427 149,274
Interest on deposits in banks 108,447 123,813
Total interest income 12,135,418 11,934,147
Interest expense:
Interest on deposits 4,179,449 3,713,123
Interest on federal funds purchased 86,610 25,497
Interest on other short-term borrowings 414,818 162,654
Interest on long-term debt 557,585 733,199
Total interest expense 5,238,462 4,634,473
Net interest income 6,896,956 7,299,674
Provision for loan losses 0 0
Net interest income after provision for loan losses 6,896,956 7,299,674
Noninterest income:
Service charges on deposit accounts 1,291,770 1,272,450
Income from trust services 207,579 225,320
Income from retail brokerage services 253,492 206,278
Income from insurance services 887,903 882,166
Income from mortgage banking services 2,444,974 3,490,334
Net gain(loss) on disposition of assets 12,951 15,047
Net gain(loss) on sale of credit card portfolio 247,531 0
Net gain(loss) on sale of securities 0 (564,455)
Other income 192,884 167,846
Total noninterest income 5,539,084 5,694,986
Noninterest expense:
Salaries and employee benefits 5,377,530 5,431,356
Occupancy expense 635,431 635,123
Equipment expense 475,748 479,314
Data processing expense 515,145 526,631
Amortization of intangible assets 364,136 795,676
Other operating expenses 1,794,190 1,966,936
Total noninterest expenses 9,162,180 9,835,036
Income before income taxes 3,273,860 3,159,624
Provision for income taxes 863,946 658,710
Net income $2,409,914 $2,500,914
Earnings per share of common stock:
Net income, basic $ 0.93 $ 0.77
Net income, diluted $ 0.93 $ 0.76
Dividends declared $ 0.42 $ 0.39
Weighted average shares outstanding 2,592,786 3,246,386
Diluted average shares outstanding 2,602,783 3,267,627
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For The Three Months
Ended September 30,
(Unaudited) (Unaudited)
2007 2006
Net income $ 777,787 $ 197,806
Other comprehensive income, net of tax:
Unrealized gain(loss) on securities
available for sale, net of tax benefit of
$142,746 and $442,614 for the quarter
277,095 859,191
Total comprehensive income $1,054,882 $1,056,997
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For The Nine Months
Ended September 30,
(Unaudited) (Unaudited)
2007 2006
Net income $2,409,914 $2,500,914
Other comprehensive income, net of tax:
Unrealized gain(loss) on securities
available for sale, net of tax benefit of
$51,573 and $149,073 for the year 100,112 289,375
Total comprehensive income $2,510,026 $2,790,289
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine Months
Ended September 30,
(Unaudited) (Unaudited)
2007 2006
Cash flows from operating activities:
Net income $ 2,409,914 $ 2,500,914
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 556,196 584,263
Net amortization and accretion of
investment securities (8,390) (355)
Amortization of intangibles 364,136 795,676
Net loss(gain) on sale of credit card portfolio (247,531) 0
Net loss(gain) on sale and disposal of assets (12,952) 559,078
Net change in funds related to mortgage banking
activities (402,054) 2,397,269
Change in other assets (241,368) (439,451)
Change in other liabilities (206,531) (237,289)
Net cash provided by operating activities 2,211,420 6,160,105
Cash flows from investing activities:
Proceeds from maturities of securities
held to maturity 4,090,806 5,000,000
Proceeds from maturities of securities
available for sale 1,533,900 130,511
Proceeds from sale of securities available for sale 1,000,000 13,435,545
Purchase of securities held to maturity 0 (2,000,000)
Purchase of securities available for sale (512,300) 0
Net change in other short-term investments 332,000 (7,967,622)
Proceeds from sale of credit card portfolio 1,805,006 0
Net change in loans (5,792,971) (22,314,119)
Purchase of premises and equipment (343,586) (370,518)
Proceeds from sales of other assets 167,500 29,638
Net change in interest-bearing deposits in banks (48,545) 6,769,299
Net cash provided(used) for investing activities 2,231,810 (7,287,266)
Cash flows from financing activities:
Net change in deposits (10,515,510) 4,457,978
Increase in federal funds purchased 5,125,000 0
Payment of short-term debt (15,000,000) 0
Proceeds from issuance of short-term debt 11,500,000 0
Proceeds from issuance of long-term debt 5,000,000 0
Cash dividends declared (1,085,006) (1,187,418)
Proceeds from the exercise of stock options 38,000 183,206
Payment for common stock (1,417,610) (720,393)
Net cash provided(used) for financing activities (6,355,126) 2,733,373
Increase(decrease) in cash and due from banks (1,911,896) 1,606,212
Cash and due from banks - beginning of period 11,969,567 11,699,277
Cash and due from banks - end of period $10,057,671 $13,305,489
NONCASH ITEMS:
Increase in foreclosed properties
and decrease in loans $ 2,497,273 $ 0
Unrealized gain(loss) on securities
available for sale $ 100,112 $ 289,375
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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 inter-company 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.
Accounts at the financial institutions are secured by the Federal Deposit
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Insurance Corporation up to $100,000. Uninsured deposits aggregate to
$2,670,510 at September 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
evaluated at each balance sheet date or whenever events or changes in
circumstances indicate that the carrying amount should be assessed.
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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.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
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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.
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
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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 third quarter 2007 were $53,326 and
$149,230 for the nine-month period.
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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 lowered short-term rates to 4.75%. From July 2004 to
September 2007, short-term rates were increased seventeen times, or 4.25%,
and in September 2007 the rate was decreased 50 basis points.
Our profitability, as in any business, 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 economic factors. Some
specific factors include changes in population, demographics of the
population, competition among lenders, interest rate conditions and
prevailing market rates on competing 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 79% of third quarter 2007 net interest
income and 30% of third 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 September
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
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cash flows are generated from interest and fee income as well as from loan
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 September 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
September 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 nine months ended September 30, 2007, total capital
increased $45 thousand to $28 million. Under a share repurchase program
adopted by the Board in January 2000, the Corporation repurchased 73,100
shares of its common stock during the first nine months of 2007 at an average
price of $19.39 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 9.86% as of September 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
September 30, 2007, was $778 thousand compared with a net income of $198
thousand for the same period in 2006, representing an increase of $580
thousand. Last year's third quarter was negatively impacted by a $564
thousand loss on the sale of securities and expenses of approximately $160
thousand associated with a repurchase of 575,000 shares through a stock
tender. Additionally during that quarter, large payoffs in the loan servicing
portfolio increased the amortization of intangible assets by $429 thousand.
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On a per share basis, net income for the third quarter increased to $.30 per
diluted share compared with $.06 per diluted share for the same quarter in
2006. The weighted average common diluted shares outstanding for the quarter
were 2.584 million, down 20% 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 nine months of 2007, net income was $2.410 million compared
with net income of $2.501 million for the same period in 2006. Earnings per
diluted share for the first nine months of 2007 were $0.93, up 22% compared
with earnings per diluted share of $.76 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 nine-month period.
We measure our performance on selected key ratios, which are provided for the
previous five quarterly periods ended September 30, 2007.
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
2007 2007 2007 2006 2006
Return on average total assets 1.09% 0.85% 1.38% .73% .26%
Return on average total equity 11.17% 8.92% 14.57% 6.92% 1.95%
Average shareholders' equity to
Average total assets 9.76% 9.57% 9.45% 10.49% 13.15%
Net interest margin
(tax equivalent) 3.71% 3.72% 3.68% 3.65% 3.62%
Comparison of Statements of Income for the Quarter
Noninterest income was $1.779 million for the third quarter, compared with
$1.810 million for the same period in 2006, adjusted for the $564 thousand
loss on the sale of securities to fund the tender offer. During the current
quarter, we sold the retail credit card portfolio which increased noninterest
income by a gain on sale of $248 thousand. The largest contributor to
noninterest income, mortgage banking services, had $607 thousand in revenue,
a 35.7% decrease compared with the third quarter of 2006. 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. Quarterly income from service charges on deposit accounts was $454
thousand, up 3.5% compared with the same period in 2006. Revenue from
insurance services for the quarter was $257 thousand, up 8.4% compared with
the same period last year. Revenue from trust and brokerage services for the
quarter was $149 thousand, up 3.3% compared with the third quarter of 2006.
Total interest income decreased $52 thousand, or 1.3%, for the three months
ended September 30, 2007 compared with the same period in 2006. This
decrease for the three-month period resulted from a reduction in interest on
a lower volume of investment securities resulting from last year's sale of
securities to fund the stock tender offer. This decrease was partially offset
by an increase of $195 thousand in interest and fees on loans for the third
quarter 2007 when compared to the same period in 2006.
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Total interest expense increased $102 thousand, or 5.9%, in the third quarter
of 2007 compared with the same period in 2006. Interest on deposits
increased $7 thousand, or .5%, during the third quarter of 2007. While
interest on federal funds purchased increased $59 thousand and interest on
the short-term portion of long-term debt increased $54 thousand, it was
partially offset by a decrease of $18 thousand in interest on long-term debt
during the period. This temporary short-term borrowings need resulted from
repaying some Federal Home Loan Bank debt and reaching a low point in our
seasonal deposit level. Looking ahead, the challenge will be to manage
funding costs in a declining rate environment. Our focus on cost discipline,
retaining and expanding customer relationships, and identifying acquisition
opportunities are 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 third quarter of 2007 was $2.265 million compared with $2.419 million
for the same period in 2006. The decrease was due primarily to funding costs
increasing at a faster rate than increases in interest income on loans and
short term investments. Total interest expense was $1.828 million for the
third quarter, up $102 thousand from the same period a year ago. The increase
in total interest expense was primarily higher interest expense on federal
funds purchased and the Federal Home Loan Bank debt. These increases were due
to $4.3 million larger average balance of federal funds purchased and 81
basis points higher average rate paid on Federal Home Loan Bank debt for this
quarter compared with the same period a year ago. The Corporation's net interest
margin improved to 3.71% for the third quarter of 2007 compared with 3.62%
from the same period a year ago, and down slightly when compared with 3.72%
for the second quarter 2007. The average rate paid on interest-bearing
deposits increased 16 basis points and the average volume of interest-bearing
deposits declined $9 million for the quarter compared with the same period a
year ago. Higher funding costs have impacted our ability to grow net
interest income, and our challenge continues to be managing these costs in a
declining rate environment.
No provision for loan losses was recorded for the third quarters 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 $2.995 million from $3.654 million for the
third quarter of last year. The bulk of this decrease occurred in the
amortization of intangible assets which had a one-time adjustment of $429
thousand in the third quarter of 2006. This additional amortization of
intangible assets resulted from large payoffs in the loan servicing portfolio
last year. Also, the Corporation incurred expenses of $160 thousand associated
with the repurchase of shares through a stock tender during the third quarter
of 2006. The decrease in salary and employee benefits is due to declines in
performance incentives when compared with the same quarter a year ago. All
other major categories of noninterest expense were relatively flat for the
quarter when compared with the third quarter of 2006.
Comparison of Statements of Income for the Nine-month Period
Total noninterest income was $5.539 million for the first nine months of
2007, down 2.7% from the same period in 2006. Mortgage banking services
decreased $1.045 million to $2.445 million from the same period last year.
Service charges on deposit accounts increased 1.5% to $1.292 million, income
from insurance services increased .7% to $888 thousand and revenue from trust
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services and retail brokerage services increased 7% to $461 thousand when
comparing the first nine months of 2007 to the same period last year.
For the first nine months of 2007, total interest income increased $201
thousand when comparing it with the same period in 2006. The bulk of the
increase was in interest and fees on loans resulting from $11.6 million
growth in average volume of loans for the nine-month period 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 nine-month period ended September 30, 2007
increased $604 thousand, or 13%, compared with the same period in 2006. Over
this period, the average balances on interest-bearing deposits decreased $2.5
million. However, the increase in interest expense was primarily related to
higher rates paid on interest-bearing deposits and increased interest expense
on a larger average volume of short and long-term debt. The rate on time
deposits increased 107 basis points comparing the first nine months of 2007
with the same period in 2006. Interest on both the short-term portion of
long-term and long-term debt increased $76 thousand, or 8.5%, for the first
nine months of 2007 compared with 2006, while interest on federal funds
purchased increased $62 thousand for the first nine 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 nine months of 2007 declined 5.5% to $6.897
million compared with the same period in 2006. During the nine-month period
ended September 30, 2007, the Corporation's net interest margin was 3.70%
compared with 3.65% for the same period in 2006.
The nine-month provision for loan losses of $0 remained unchanged from the
comparable period of 2006. Noninterest expense decreased $673 thousand for
the first nine months of 2007 compared with the same period last year. The
bulk of this decrease occurred in the amortization of intangible assets which
had a one-time adjustment of $429 thousand in the third quarter of 2006. This
additional amortization of intangible assets resulted from large payoffs in
the loan servicing portfolio last year. Also, the Corporation incurred expenses
of $160 thousand associated with the repurchase of shares through a stock
tender during the third quarter of 2006. The decrease in salary and employee
benefits is due to declines in performance incentives when compared with the
same quarter a year ago. All other major categories of noninterest expense
were relatively flat for the first nine months when compared with the same
period last year.
Comparison of Financial Condition Statements
At September 30, 2007, total assets were $284.1 million, a 1.5% decrease from
December 31, 2006. The majority of the decrease in assets occurred in
investment securities of $5.9 million, federal funds sold of $332 thousand,
and in cash and due from banks of $1.9 million. These decreases were
partially offset by increases of $1.7 million in loans and $2.3 million in
foreclosed assets.
The Corporation's loan portfolio of $127.2 million increased 1.4% 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
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be conservative in its lending practices in order to maintain a quality loan
portfolio. Loans, a major use of funds, represent 44.8% of total assets.
Investment securities and other short-term investments which include federal
funds sold and interest-bearing deposits in banks represent 46.4% of total
assets. Investment securities decreased $5.9 million and short-term
investments have remained relatively flat since December 31, 2006.
Deposits decreased to $216.2 million at the end of the third quarter of 2007,
down $10.1 million from the same period in 2006 and down $10.5 million from
the end of last year. The majority of the deposits decreases occurred in
money market accounts. At September 30, 2007, total deposits represented
76.1% of total assets.
The following table shows the major contractual obligations for the
Corporation.
Long-term debt consist of the following:
September December September
30, 2007 31, 2006 30, 2006
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),
(transferred to short-term borrowings). 0 5,000,000 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 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 $15,228,571 $15,228,571 $15,342,857
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
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 1.90% of total loans outstanding at September 30, 2007, compared
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with 1.93% of loans outstanding at December 31, 2006. Non-performing assets
as a percentage of total assets was .87%, an 86 basis point increase from
last year. Management considers the allowance for loan losses as of
September 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):
September 30, September 30,
2007 2006
Commitments to extend credit $ 11,957 $ 21,338
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 either 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
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
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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 September 30, 2007,
the Corporation's one-year cumulative rate-sensitive assets represented 88%
of the cumulative rate-sensitive liabilities compared with 83% for the same
period in 2006. This change in the cumulative gap is a result of the
Corporation's management of its exposure to interest rate risk. We are
slightly liability-sensitive at the one year gap position. This improved
change to a more balanced position is mainly due to the Corporation's
increasing amount of maturing investment securities coming due in the next
twelve months. This balanced position will decrease the Corporation's
exposure to changing 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
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.
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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.
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PART II. - OTHER INFORMATION
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: November 13, 2007
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