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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, 2002
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from ________ to ________
Commission file number 0-20099
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
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) (has been subject to such filing
requirements for the past 90 days.)
YES X NO ___________
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, 2002
Common Stock, $1 Par Value 3,300,000
SOUTHWEST GEORGIA FINANCIAL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
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 (unaudited) - September 30, 2002 and
December 31, 2001. 2
b. Consolidated statements of income (unaudited) - for the nine months
and the three months ended September 30, 2002 and 2001. 3
c. Consolidated statements of comprehensive income (unaudited) - for the
nine months and the three months ended September 30, 2002 and 2001. 4
d. Consolidated statements of cash flows (unaudited) for the nine months
ended September 30, 2002 and 2001. 5
e. Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 10
ITEM 4. CONTROLS AND PROCEDURES 11
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURE AND CERTIFICATIONS 13
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, 2002 and December 31, 2001
September 30, December 31,
ASSETS 2002 2001
Cash and due from banks $ 8,444,445 $ 9,211,645
Interest-bearing deposits with banks 1,446,735 1,143,211
Federal funds sold 1,325,000 1,130,000
Investment securities available for sale,
at fair value 39,057,065 27,911,564
Investment securities held to maturity
(estimated fair value of $63,823,309
and $63,019,613) 60,262,278 60,472,774
Total investment securities 99,319,343 88,384,338
Loans 111,543,900 121,608,690
Less: Unearned income (51,828) (59,798)
Allowance for loan losses (2,065,429) (1,883,171)
Loans, net 109,426,643 119,665,721
Premises and equipment 5,554,968 5,536,152
Foreclosed assets, net 2,086,915 3,545,388
Other assets 6,044,058 6,227,993
Total assets $233,648,107 $234,844,448
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest bearing $ 24,548,236 $ 25,760,282
NOW accounts 31,571,168 36,565,701
Money Market 12,643,505 14,338,066
Savings 16,927,651 12,270,166
Certificates of deposit $100,000 and over 26,329,209 28,211,756
Other time accounts 69,228,933 75,754,615
Total deposits 181,248,702 192,900,586
Federal funds purchased 0 0
Other borrowed funds 4,800,000 4,800,000
Long-term debt 11,159,825 3,391,511
Other liabilities 3,228,888 2,795,245
Total liabilities 200,437,415 203,887,342
Stockholders' equity:
Common stock - par value $1; authorized
5,000,000 shares; issued 3,000,000 shares 3,000,000 3,000,000
Capital surplus 2,033,551 2,033,551
Retained earnings 33,198,077 31,466,690
Accumulated other comprehensive income 1,371,839 161,400
Treasury stock 630,907 shares for 2002 and
592,407 shares for 2001, at cost (6,392,775) (5,704,535)
Total stockholders' equity 33,210,692 30,957,106
Total liabilities and stockholders' equity $233,648,107 $234,844,448
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For The Three Months
Ended September 30,
2002 2001
Interest income:
Interest and fees on loans $2,265,508 $2,941,534
Interest and dividend on securities
available for sale 267,953 386,438
Interest on taxable securities
held to maturity 901,064 968,670
Interest on tax exempt securities
available for sale 146,704 143,426
Interest on tax exempt securities
held to maturity 34,008 35,764
Interest on federal funds sold 6,698 0
Interest on deposits with banks 11,540 10,034
Total interest income 3,633,475 4,485,866
Interest expense:
Interest on deposits 914,863 1,796,589
Interest on federal funds purchased 294 6,029
Interest on other borrowings 34,991 125,333
Interest on long-term debt 98,654 0
Total interest expense 1,048,802 1,927,951
Net interest income 2,584,673 2,557,915
Provision for loan losses 120,000 75,000
Net interest income after
provision for loan losses 2,464,673 2,482,915
Noninterest income:
Service charges on deposit accounts 294,735 247,814
Income from trust services 58,492 71,050
Income from security sales 45,168 90,485
Income from insurance services 217,869 210,620
Income from mortgage banking services 797,125 5,981
Net gain(loss) on disposition of assets ( 7,941) 6,601
Net gain(loss) on sale of securities 0 0
Other income 22,323 30,769
Total noninterest income 1,427,771 663,320
Noninterest expense:
Salaries and employee benefits 1,536,352 1,190,348
Occupancy expense 158,850 128,205
Equipment expense 117,731 120,234
Data processing expense 126,718 142,579
Other operating expenses 611,100 551,252
Total noninterest expenses 2,550,751 2,132,618
Income before income taxes 1,341,693 1,013,617
Provision for income taxes 413,090 192,200
Net income $ 928,603 $ 821,417
Earnings per share of common stock:
Net income, basic & diluted $ 0.39 $ 0.34
Dividends paid, basic & diluted 0.13 0.13
Average shares outstanding 2,376,175 2,431,104
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For The Nine Months
Ended September 30,
2002 2001
Interest income:
Interest and fees on loans $7,100,459 $9,055,911
Interest and dividend on securities
available for sale 765,117 1,087,602
Interest on taxable securities
held to maturity 2,714,735 2,964,782
Interest on tax exempt securities
available for sale 433,789 430,445
Interest on tax exempt securities
held to maturity 101,449 115,282
Interest on federal funds sold 15,595 47,484
Interest on deposits with banks 34,881 215,511
Total interest income 11,166,025 13,917,017
Interest expense:
Interest on deposits 3,116,832 5,916,564
Interest on federal funds purchased 1,964 8,170
Interest on other borrowings 89,401 364,253
Interest on long-term debt 218,751 0
Total interest expense 3,426,948 6,288,987
Net interest income 7,739,077 7,628,030
Provision for loan losses 375,000 305,000
Net interest income after
provision for loan losses 7,364,077 7,323,030
Noninterest income:
Service charges on deposit accounts 800,655 703,996
Income from trust services 159,324 206,154
Income from security sales 191,245 347,400
Income from insurance services 676,444 680,147
Income from mortgage banking services 2,291,268 11,499
Net gain(loss) on disposition of assets ( 253,426) 4,186
Net gain(loss) on sale of securities 121,270 0
Other income 139,321 156,929
Total noninterest income 4,126,101 2,110,311
Noninterest expense:
Salaries and employee benefits 4,696,503 3,488,490
Occupancy expense 422,093 381,033
Equipment expense 352,614 363,133
Data processing expense 401,719 402,993
Other operating expenses 1,894,637 1,704,730
Total noninterest expenses 7,767,566 6,340,379
Income before income taxes 3,722,612 3,092,962
Provision for income taxes 1,062,469 702,700
Net income $2,660,143 $2,390,262
Earnings per share of common stock:
Net income, basic & diluted $ 1.11 $ 0.97
Dividends paid, basic & diluted 0.39 0.39
Average shares outstanding 2,387,892 2,457,419
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
For The Three Months
Ended September 30,
2002 2001
Net income $ 928,603 $ 821,417
Other comprehensive income, net of tax:
Unrealized holding gains(losses) arising
during the period 993,106 477,872
Federal income tax expense 337,656 162,476
Other comprehensive income, net of tax: 655,450 315,396
Total comprehensive income $1,584,053 $1,136,813
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
For The Nine Months
Ended September 30,
2002 2001
Net income $2,660,143 $2,390,262
Other comprehensive income, net of tax:
Unrealized holding gains(losses) arising
during the period 1,833,998 641,919
Federal income tax expense 623,559 218,252
Other comprehensive income, net of tax: 1,210,439 423,667
Total comprehensive income $3,870,582 $2,813,929
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The Nine Months
Ended September 30,
2002 2001
Cash flows from operating activities:
Net income $ 2,660,143 $ 2,390,262
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 375,000 305,000
Depreciation 380,613 382,815
Net amortization and accretion
of investment securities 39,553 31,183
Amortization of intangibles 242,944 34,540
Net loss (gain) on sale and disposal of assets 136,955 ( 4,187)
Changes in:
Other assets ( 480,335) 21,166
Other liabilities ( 189,916) 38,186
Net cash provided by operating activities 3,164,957 3,198,965
Investing activities:
Proceeds from maturities of securities held
to maturity 10,785,000 10,580,000
Proceeds from maturities of securities
available for sale 2,366,461 699,768
Proceeds from sale of securities
available for sale 483,270 0
Purchase of securities held to maturity (10,589,712) ( 7,007,615)
Purchase of securities available for sale (12,064,308) ( 7,137,069)
Net change in other short-term investments ( 195,000) 2,000,000
Net change in loans 9,645,131 491,913
Purchase of premises and equipment ( 399,718) ( 248,633)
Proceeds from sales of other assets 1,840,939 250,262
Net change in interest-bearing deposits with banks ( 303,524) 4,952,963
Net cash provided(used) for investing activities 1,568,539 4,581,589
Financing activities:
Net change in deposits (11,651,884) ( 9,695,968)
Net change in short-term borrowings 0 1,545,000
Increase in long-term borrowings 7,768,314 0
Cash dividends declared ( 928,886) ( 951,961)
Payment for common stock ( 688,240) ( 1,506,201)
Net cash provided(used) for financing activities ( 5,500,696) (10,609,130)
Increase(decrease) in cash and due from banks ( 767,200) ( 2,828,576)
Cash and due from banks - beginning of period 9,211,645 8,763,126
Cash and due from banks - end of period $ 8,444,445 $ 5,934,550
NONCASH ITEMS:
Increase in foreclosed properties
and decrease in loans $ 218,947 $ 158,358
Unrealized gain(loss) on securities
available for sale $ 1,210,438 $ 423,667
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SOUTHWEST GEORGIA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
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.
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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,
Southwest Georgia Financial Corporation's (the "Company") 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
Company strives to maintain an adequate liquidity position by managing the
balances and maturities of interest-earning assets and interest-earning
liabilities so that the balance it has in short-term investments at any
given time will adequately cover any reasonably anticipated immediate need
for funds. Additionally, the subsidiary Southwest Georgia Bank (the
"Bank") maintains relationships with correspondent banks which could
provide funds to it on short notice, if needed.
The liquidity and capital resources of the Company 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, 2002, were considered satisfactory. At
that date, the Bank's short-term investments were adequate to cover any
reasonably anticipated immediate need for funds. The Company is aware of
no events or trends likely to result in a material change in liquidity. At
September 30, 2002, the Company'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, 2002, total
capital increased $2.2 million to $33.2 million. The Company repurchased
38,500 shares of its common stock during the first nine months of 2002 at
an average price of $17.88 per share. Also, the Company continues to
maintain a healthy level of capital adequacy as measured by its equity-to-
asset ratio of 14.21 percent as of September 30, 2002. The Company is
aware of no events or trends likely to result in a material change in
capital resources other than normal operations resulting in the retention
of net earnings, repurchasing shares, and paying dividends to shareholders.
Also, the Company's management is not aware of any current recommendations
by the regulatory authorities which, if they were to be implemented, would
have a material effect on the Company's capital resources.
Results of Operations
The Company'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 Company, 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
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measure for net interest income is the interest margin or net yield, which
is taxable-equivalent net interest income divided by average earning
assets.
Business Consolidation
In the fourth quarter of 2001, the Company's subsidiary, Southwest Georgia
Bank (the "Bank"), acquired the remaining 50 percent of the common stock of
Empire Financial Services, Inc. ("Empire"), a commercial mortgage banking
firm located in Milledgeville, Georgia. The Bank had acquired half of the
outstanding common stock of Empire in 1997 and owned a fifty percent
interest in Empire until the fourth quarter of 2001. Due to acquiring all
of Empire stock, the Bank changed its method of accounting for Empire.
Prior to the acquisition of all of the Empire common stock, the investment
in Empire was accounted for by using the cost method and dividends received
were included in interest and dividends income. In the fourth quarter of
2001 Empire's operations were consolidated with the Company's operations.
Comparison of Statements of Income
The Company's net income after taxes for the three-month period ending
September 30, 2002, was $929 thousand compared with $821 thousand for the
same period in 2001, representing an increase of $108 thousand, or 13.2
percent. For the first nine months of 2002, the Company earned a net
income of $2.660 million or $1.11 per share, compared with $2.390 million,
or $ .97 per share in 2001. The increase in 2002 net income for the
quarter and nine-month periods is primarily due to the increase in
noninterest income from the acquisition of the remaining 50% of the common
stock of Empire Financial Services.
Revenue from the mortgage banking business in the third quarter was $797
thousand resulting in a contribution to the Company's net income of $218
thousand, or 73% more than the same period last year. For the nine-month
period revenue from the mortgage banking business was $2.3 million
resulting in a contribution to the Company's net income of $576 thousand,
or 53% over the same period last year. This, combined with year-to-date
increases in service charges on deposit accounts, gain on sale of
securities, and net interest income after provision for loan losses more
than offset declines in income from security brokerage services, trust
services, and net loss on sale of real property held for debt previously
contracted.
Total interest income decreased $852 thousand comparing the three months
ended September 30, 2002 with the same period in 2001. For the first nine
months of 2002, total interest income decreased $2.751 million comparing
the same period in 2001. The decrease for the nine-month period is the
result of decreases in interest and fees on loans, interest on deposits
with banks, and in interest and dividends on securities. This decrease in
interest income is primarily related to a decrease in loan rates and in
average volume of loans. The average yield on loans decreased 161 basis
points comparing the nine-month period with the same period in 2001. Since
the beginning of 2001, the prime rate decreased 450 basis points to 4.75
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percent and the Company's base rate dropped from 9.00 to 6.25 percent. For
the nine-month period, the average volume of loans decreased $7.8 million
compared with the same period last year.
The total interest expense decreased $879 thousand or 45.6 percent in the
third quarter of 2002 compared with the same period in 2001. The total
interest expense for the nine-month period ending September 30, 2002,
decreased $2.862 million or 45.5 percent compared with the same period in
2001. Over this period, the average balances on interest-bearing deposits
decreased $11.2 million or 6.5 percent. The decrease in interest expense
is primarily related to decreases in the rate on interest-bearing deposits.
The rate on time deposits decreased 263 basis points while the rate on
savings deposits decreased 81 basis points comparing the first nine months
of 2002 with the same period in 2001.
The primary source of revenue for the Company 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 2002 decreased $27 thousand, or 1.0 percent,
compared with the same period in 2001. Net interest income for the first
nine months of 2002 was $7.739 million compared with $7.628 million for the
same period in 2001. If Empire's operations as mentioned above were
consolidated during these periods in 2001, net interest income would have
reflected increases of $162 thousand for the third quarter and $516
thousand for the nine-month period when comparing 2002 with 2001. Net
interest income for the quarter is determined primarily by the volume of
earning assets and the various rate spreads between these assets and their
funding sources. The Company's net interest margin was 5.02 percent and
4.94 percent during the third quarter of 2002 and 2001, respectively, and
was 5.03 percent and 4.82 percent during the nine months ended September
30, 2002 and 2001.
Noninterest income increased $764 thousand, or 115.2 percent, for the three
months ended September 30, 2002 compared with the same period a year ago.
Noninterest income for the nine months ended September 30, 2002, increased
$2.016 million compared with the same period in 2001. The majority of this
increase was primarily attributable to increases in income from mortgage
banking services. Income from mortgage banking services was $797 thousand
in the third quarter of 2002 and was $2.291 million for the first nine
months of 2002. The inclusion of income from mortgage banking services in
noninterest income was due to the acquisition of the remaining 50 percent
of the common stock of Empire as mentioned above. During the nine-month
period this year, the Company incurred a $121 thousand gain on the sale of
equity securities. Also, this increase in noninterest income compared with
the previous year was partially offset by a $253 thousand loss on
disposition of assets.
Total noninterest expenses increased by $418 thousand for the three months
ended September 30, 2002 and increased $1.427 million for the nine months
ended September 30, 2002 compared with the same periods in 2001. The
majority, $415 thousand and $1.325 million, of this increase in noninterest
expense was attributable to the expenses relating to the Empire operations
for the third quarter and the nine-month period, respectively. Excluding
Empire's operating expenses, noninterest expenses for the nine-month period
of 2002 increased $102 thousand compared with the same period in 2001.
Primarily, this increase occurred in salary and employee benefits and was
partially offset by a reduction in expenses related to carrying real estate
held for debt previously contracted. Other increases in noninterest
expense compared with the same period a year ago occurred in the normal
course of operations. Management will continue to monitor expenses closely
in an effort to achieve all cost efficiencies available.
-9-
Comparison of Financial Condition Statements
During the first nine months of 2002, total assets decreased $1.2 million,
or 0.5 percent, from December 31, 2001, and increased $807 thousand, or
less than 1.0 percent, from September 30, 2001.
The Company's loan portfolio of $111.5 million decreased 8.3 percent from
the December 31, 2001, level of $121.6 million. Loans, the major use of
funds, represent 47.7 percent of total assets.
Investment securities and other short-term investments represent 43.7
percent of total assets. Investment securities increased $10.9 million
since December 31, 2001. Other short-term investments increased $499
thousand since December 31, 2001. This resulted in an overall increase in
investments of $11.4 million.
Deposits, the primary source of the Company's funds, decreased from $192.9
million at December 31, 2001, to $181.2 million at September 30, 2002. At
September 30, 2002, total deposits represented 77.6 percent of total
assets.
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 management's assumptions about the local and national economy.
The allowance for loan losses was 1.85 percent of total loans outstanding at
September 30, 2002, compared with 1.55 percent of loans outstanding at December
31, 2001. Management considers the allowance for loan losses as of September
30, 2002, adequate to cover potential losses in the loan portfolio.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk lies within its exposure to interest rate
movement. The Company has no foreign currency exchange rate risk,
commodity price risk, or any other material market risk. The Company 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
which is characterized by volatile short-term movements in interest rates.
Also, the Company has no interest rate swaps or other derivative
instruments that are either designated and effective as hedges or which
modify the interest rate characteristics of specified assets or
liabilities. The Company's primary source of earnings, net interest
income, can fluctuate with significant interest rate movements. To lessen
the impact of these movements, the Company seeks to maximize net interest
income while remaining within prudent ranges of risk by practicing sound
interest rate sensitivity management. The Company attempts to accomplish
this objective by structuring the balance sheet so that the differences in
-10-
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
Company's interest rate risk management is carried out by the
Asset/Liability Management Committee which operates under policies and
guidelines established by management. The Company maintains an investment
portfolio that staggers maturities and provides flexibility over time in
managing exposure to changes in interest rates. Any imbalances in the
repricing opportunities at any point in time constitute a financial
institution's interest rate sensitivity.
The Company uses a number of tools to measure interest rate risk. One of
the indicators for the Company's interest rate sensitivity position is the
measurement of the difference between its rate-sensitive assets and rate-
sensitive liabilities, which is 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, 2002, the Company's one-year cumulative rate-sensitive assets
represented 74 percent of the cumulative rate-sensitive liabilities
compared to 72 percent for the same period in 2001. This change in the
cumulative gap is a result of the Company's management of its exposure to
interest rate risk. 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 Company's asset and liability mix is monitored to
ensure that the effects of interest rate movements in either direction are
not significant over time.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation of the Company's disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act)
was carried out under the supervision and with the participation of the
Company's management, including the chief executive and chief financial
officers, within 90 days preceding the filing of this Quarterly Report on
Form 10-Q. Based on that evaluation, the chief executive and chief
financial officers have concluded that the Company's disclosure controls
and procedures were effective as of the date of that evaluation.
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to
the date of their evaluation.
-11-
PART II. - OTHER INFORMATION
ITEM 5 OTHER INFORMATION
The Board of Directors on September 25, 2002, declared a 10% stock dividend
and its regular quarterly cash dividend of $.13 per share. The stock and
cash dividends are payable on October 31, 2002, to shareholders of record
on October 7, 2002.
In January of this year, the Company announced its decision to continue
with its share repurchase program where it may repurchase up to 150,000
shares, or approximately 6%, of its common stock from time to time through
January 31, 2003. The Board of Directors approved this common stock
repurchase program in view of the strong capital position of Southwest
Georgia Financial Corporation and its subsidiary, Southwest Georgia Bank.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. There have been no reports filed on Form 8-K for the quarter ended
September 30, 2002.
b. Exhibit 99.1 Certification of Periodic Financial Report by Chief
Executive Officer.
c. Exhibit 99.2 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: October 14, 2002
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CERTIFICATIONS
I, DeWitt Drew, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southwest Georgia
Financial Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
(6) The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 14, 2002
By: /s/DeWitt Drew
---------------------------------------
DeWitt Drew
President and Chief Executive Officer
Southwest Georgia Financial Corporation
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CERTIFICATIONS
I, George R. Kirkland, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southwest Georgia
Financial Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
(6) The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
By: /s/George R. Kirkland
---------------------------------------
George R. Kirkland
Senior Vice-President and Treasurer
Southwest Georgia Financial Corporation
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