Southwest Georgia Financial Corporation, a full-service community bank holding company, today reported its results of operations for the second quarter ended June 30, 2012.

Second Quarter Highlights

• Net income was $305 thousand in the 2012 second quarter or $0.12 per diluted share. The second quarter decline in net income was primarily due to a large pension contribution. Excluding the $850 thousand quarter-to-date pension contribution, net income would have been $866 thousand for the second quarter 2012.
• For the six months ended June 30, 2012, net income was $876 thousand, or $0.34 per diluted share, compared with $966 thousand for the same period last year, or $0.38 per diluted share.
• Net interest margin grew to 4.24% for the second quarter of 2012 and 4.17% for the first six months of 2012, up 3 and 16 basis points, respectively, compared with the prior year. Strengthened net interest margin was mainly attributed to continued loan growth.
• Noninterest income expanded primarily as the result of a $150 thousand quarterly increase in gains from the sale of securities.

DeWitt Drew, President and CEO, commented, "Earnings were impacted by the $850 thousand contribution to the Company's frozen pension plan during the second quarter. While the plan has earned an average of over 6.3% for the past three years, the discount rate used in funding calculations continues to drop dramatically, causing large increases in future plan liabilities. It will require higher interest rates to reverse this trend. In the meantime, we are committed to making sufficient contributions to keep the plan adequately funded until the discount rate rises and plan liabilities decrease."

Balance Sheet Trends and Asset Quality

• Total assets at June 30, 2012 were $315.5 million, up $14.1 million from June 30, 2011.
• Total loans increased $17.7 million, or 10.0%, to $194.3 million when compared with the same period last year. The growth in loans was funded by decreases in the investment securities portfolio.
• Total deposits grew $16.2 million year-over-year to $259.3 million at June 30, 2012.
• Nonperforming assets increased to 1.69% of total assets compared with 1.15% at the end of the second quarter 2011. The increase was due to one large loan placed on nonaccrual during the quarter. The collateral securing the loan has been placed under contract for sale and closing is scheduled in August.
• Shareholders' equity grew to $28.9 million as of June 30, 2012, up from $27.9 million at June 30, 2011.

Mr. Drew added, "We remain steadfast in our commitment to increasing our presence in growing communities. Our growth in deposits and loans is a direct reflection of our growing presence in Valdosta. This market has grown rapidly over the last decade and is a central part of our growth and diversification strategy."

Dividends

In June 2012, the Corporation paid a second quarter cash dividend of $0.04 per common share. Southwest Georgia Financial Corporation or its predecessor, Southwest Georgia Bank, has paid cash dividends for 84 consecutive years.