Sidoti Fall Conference September 27, 2018 Southwest Georgia Financial Corporation DeWitt Drew President and CEO 2018 Southwest Georgia Financial Corporation
Safe Harbor Statement This presentation contains forward-looking statements, as defined by federal securities laws, including statements about the Company s financial outlook. These statements are based on current expectations and are provided to assist in the understanding of future financial performance. Such performance involves risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. Important factors that could cause actual results to differ materially from those contemplated today include a change in the Company s capital structure, new or expanded regulatory requirements, the success of the Company s growth strategy, customer preferences, the interest rate environment and other factors described in the Company s filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q under the sections entitled Forward-Looking Statements and Risk Factors. The Company undertakes no obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law. 2
Southwest Georgia Financial Corporation Established in 1928 Diverse revenue mix Lower-risk balance sheet with solid capital base Strong market share 84% Interest income 6% Insurance Income 10% Other Noninterest Income Q2 2018 TTM Revenue: $24.2 million Recent Price $22.84 52 week range $19.28 26.04 Market Capitalization $58 million Total Shares Outstanding 2.55 million Ownership Insider 20% Institutional 3% Dividend Yield * 2.1% Total Assets $508 million Total Loans $346 million Total Deposits $415 million Total Common Equity $42 million Book Value $16.47 Market data as of September 17, 2018 [Source: S&P Capital IQ]; Financial data as of June 30, 2018; Ownership as of most recent filing *Annualized dividend 3
Market Overview Banking assets concentrated in southwest Georgia Stable farm-based economy in rural areas Diversified economy in metro areas Headquarters: Moultrie (Colquitt) Branch offices: Colquitt, Baker, Worth, Lowndes, Tift Baker Colquitt Lowndes Worth Tift 4
Market Expansion 1 st or 2 nd in market share in Colquitt, Worth and Baker counties 35% market share in Colquitt Steady loan growth High asset quality Expansion opportunity 1999 Entered the insurance business 2001 Acquired Empire Financial Services, Inc. 2004 Acquired Sylvester Banking Company 2008 Developed banking operation in Valdosta 2016 Entered Tift market New full service branch in Tifton 5
Improved Earnings (in millions, except per share data) $2.90 $3.37 Net Income $4.03 $3.81 $4.05 Impressive results despite $419 thousand writedown of deferred tax asset due to recent tax reform in Q4 17 10% CAGR (2014 Q2 18 TTM) TTM $1.14 $1.32 $1.58 $1.49 $1.58 EPS impact of $0.17 from writedown in Q4 2017 Earnings per Diluted Share 6
Crossed Half Billion Asset Mark (in millions) $489.1 $508.2 8% YOY Q2 2018 vs Q2 2017 $374.3 $414.9 $448.5 Driven by strong loan growth 9% CAGR (2014 Q2 2018) Added key personnel to aid expansion 7
Robust Loan Growth (in millions) $224.4 9% $250.8 $292.5 $330.2 $345.9 23% 1% 30% 7% 30% 13% CAGR (2014 Q2 2018) Q2 2018 Loan Portfolio Construction loans Commercial mortgage loans Residential loans Agricultural RE loans Commercial, financial and agricultural loans Consumer & other loans Real estate loans 7% YOY Q2 2018 vs Q2 2017 Strong customer relationships and underwriting discipline Diversified loan portfolio LTD Ratio 83% 8
Solid Credit Fundamentals NPAs to Total Assets 0.28% 0.39% 0.50% 0.35% 0.08% Net Charge Offs to Average Loans 0.13% 0.09% 0.02% 0.12% 0.14% SGB Peer Group <$500M in assets 9
Total Deposit Growth (in millions) $310.0 $339.0 $371.5 $397.0 $415.4 6% YOY Q2 2018 vs Q2 2017 9% CAGR (2014 Q2 2018) Q2 2018 Deposit Composition New interest bearing business checking product Strong retention tool ~$30M in balances 44% 35% Savings & Money Market Time Deposits Demand Deposits Cost of interest bearing funds: 0.81% 21% 10
Net Interest Margin +14 bps over peer group 3.99 % 4.04 % 4.14 % 4.09 % 3.96 % Recent decrease reflects tax equivalency adjustment to our tax free bond portfolio SGB Peer Group <$500M in assets Disciplined in placing floors on variable loans 11
Driving Operating Efficiencies Efficiency Ratio 75.4% 73.0% 70.6% 70.8% 71.1% Return on Average Equity Return on Average Total Assets 8.7% 9.4% 10.5% 9.4% 11.0% 0.76% 0.85% 0.94% 0.80% 0.91% SGB Peer Group <$500M in assets 12
Increasing Shareholder Value Total Risk-based Capital Book Value per Share 13.5% 13.6% $13.48 $14.17 $15.08 $16.19 $16.47 10% Regulatory Guideline 6% CAGR (2014 Q2 2018) Q2 2017 Q2 2018 13
Returning Capital to Shareholders $0.32 Dividend Payment History $0.44 $0.40 $0.42 $0.47 9% dividend increase in June 2018 Current dividend yield: 2.1% 2014 2015 2016 2017 2018 Annualized* 90 consecutive years of cash dividends *Paid quarterly cash dividend of $0.12 per share in June 2018 14
Strategic Focus for Continued Growth Lead with people Focused on relationship building Investment in our community Focused on higher growth areas North Office, Valdosta, Lowndes Improving our products and services Low-cost core funding Focused on long-term shareholder return Commercial Banking Center, Valdosta, Lowndes 15
Growth Engine: Valdosta Loan production office in 2008 Full service branch in 2010 Growing market and gaining market share Achieved top 10 deposit status in Lowndes county Significant contribution to our higher loan originations and healthy pipeline Baker Colquitt Lowndes Worth Tift Baytree Office, Valdosta, Lowndes 16
New Opportunity: Tifton Adjacency to primary market, Colquitt Strong agricultural community Major transportation hub (Interstate 75, U.S. Highway 82 and U.S. Highway 319 all intersect) Opened loan production office in 2016 Added to Tifton staff during 2017 Planning to combine management with Sylvester operation Full service branch opened in mid-2018 Expected to be contributor to growth going forward Baker Colquitt Lowndes Worth Tift 17
Investment Considerations Long history of efficient and profitable operations 90 years of cash dividends Diversified Disciplined sources look of for revenue opportunities Opportunity to grow earnings from all sources Solid community commitment and involvement 18
Sidoti Fall Conference September 27, 2018 Southwest Georgia Financial Corporation For additional information, contact: Deborah Pawlowski, Investor Relations (716) 843-3908 dpawlowski@keiadvisors.com 2018 Southwest Georgia Financial Corporation