Southwest Georgia Financial Corporation Reports Results for First Quarter of 2010

• 7.6% loan growth driven by expansion into Valdosta market

• Total assets grew 9.4% to $298.2 million

• Total risk-based capital ratio of 16.34% significantly exceeds regulatory guidelines

Southwest Georgia Financial Corporation (NYSE Amex: SGB), a full- service community bank holding company, today reported net income of $407 thousand, or $0.16 per diluted share, for the first quarter of 2010, up $26 thousand, or 6.9%, from net income of $381 thousand, or $0.15 earnings per diluted share, for the first quarter of 2009. The increase in net income in the first quarter of 2010 was mainly due to higher net interest income resulting from lower interest paid on interest bearing liabilities, and a lower loan loss provision compared with the first quarter of 2009.   DeWitt Drew, President and CEO commented, “Despite the prolonged economic pressures that grip our region, we have realized measurable growth in loans, deposits, and earnings by continuing to meet the banking needs of the communities we serve and taking advantage of opportunities that arise while expanding our reach into new markets.  Our first quarter results reflect that continued success.” Return on average equity for the first quarter of 2010 was 6.26% compared with 6.48% for the first quarter of 2009. Return on average assets for the quarter was 0.55% compared with 0.56% for the same period in 2009.

Balance Sheet Trends and Asset Quality

At March 31, 2010, total assets were $298.2 million, an increase of $25.7 million, or 9.4%, when compared with $272.5 million in the same quarter last year and up $7.2 million, or 2.5% from $291.0 million at December 31, 2009. The year-over-year increase was primarily due to solid loan growth and higher interest-bearing balances.  Although total loans were relatively flat when compared with the previous quarter, total loans increased $11.4 million, or 7.6%, to $160.7 million when compared with $149.3 million at March 31, 2009.  Loan growth was driven primarily by our expansion into the Valdosta market.  The Corporation’s new full-service banking center in Valdosta, Georgia is scheduled to open for business in the second quarter of 2010.  The loan loss reserve coverage to total loans was 1.64% at the end of the first quarter 2010, consistent with the first quarter of 2009 at 1.63%.  Net charge offs in the first quarter of 2010 were $47 thousand compared with net charge offs of $126 thousand in the first quarter of a year ago.  Nonperforming loans to total loans in the current period declined to 1.31%.

Nonperforming assets are comprised mainly of $3.8 million of foreclosed properties and $2.1 million of nonperforming loans for a total of $6.1 million at March 31, 2010 up from $2.6 million of a year ago.  The higher level of nonperforming assets was primarily due to fully funding a large foreclosed commercial property in 2009.  Mr. Drew noted, “The southeastern United States, and Georgia in particular, continue to be challenged by depressed real estate prices and lower levels of economic activity.  Our Corporation’s higher levels of nonperforming assets reflect the struggles our region faces.”   Total deposits were $242.0 million at the end of the first quarter of 2010, up $17.3 million, or 7.7% from the end of

the first quarter of 2009, and up $6.5 million, or 2.8%, when compared with the fourth quarter of 2009.  The increase over both periods was primarily due to higher money market and interest-bearing transaction balances. Shareholders’ equity was $26.2 million as of March 31, 2010, compared with $24.0 million at March 31, 2009.  On a per share basis, book value per common share was $10.29 at the end of the first quarter, up from $9.41 at the end of the first quarter in 2009.  The Corporation maintains a strong capital position with a total risk-based capital ratio of 16.34% at March 31, 2010, which was in excess of the minimum regulatory guidelines of 10% for a well capitalized financial institution.  The Corporation has approximately 2.5 million shares of common stock outstanding.

Revenue

Net interest income before provision for loan losses improved to $2.5 million for the first quarter of 2010 compared with $2.4 million for the same period in 2009.  The provision for loan losses decreased to $150 thousand in the first quarter of 2010 compared with a $186 thousand provision reported in the same period last year.  Total interest income decreased $86 thousand to $3.3 million when compared with the first quarter of 2009, reflecting lower interest income from investment securities of $200 thousand, partially offset by higher interest and fees earned on loans.  The Corporation’s net interest margin was 3.93% for the first quarter of 2010, down 14 basis points from the same period last year.  The decline in net interest margin was mainly impacted from the reinvestment of securities which were either called, matured, and/or sold into overnight balances carried at the Federal Reserve Bank.  Some longer term mortgage-backed securities were sold in November 2009 to shorten the duration of our portfolio.  Total investment securities yields dropped 86 basis points compared with the same quarter a year ago.  Also, the total yield on loans decreased 20 basis points comparing year-over-year.   Total interest expense was  $787 thousand for the first quarter of 2010, down $197 thousand from the same period a year ago, primarily due to a lower interest rate environment.  The average rate paid on interest-bearing time deposits decreased 89 basis points for the quarter compared with the same period a year ago. Noninterest income was $1.2 million for the first quarter of 2010, down $66 thousand, or 5.4% from the same period in 2009.  The quarterly decline was primarily due to a $93 thousand loss on the sale of securities which removed below investment grade corporate notes from our portfolio. Also, the Corporation saw a decrease of  $11 thousand in service charges on deposit accounts when compared with the prior year first quarter.    Partially offsetting these decreases was revenue from insurance services which increased $20 thousand, or 6.7% to  $319 thousand, and an increase of $15 thousand, or 4.8% from mortgage banking services revenue when compared with the first quarter of 2009.   Total noninterest expense remained flat at $2.9 million for the first quarter of 2010 compared with the first quarter

of 2009.  The largest component of noninterest expense, salaries and employee benefits, increased $52 thousand to $1.7 million for the first quarter compared with $1.6 million in the same period last year.  The increase was mainly due to accruals for performance incentives and benefit plan expenses. Other operating expense decreased  $57 thousand to $650 thousand in the first quarter of 2010 due to lower legal expenses.

Dividends and Share Repurchases

In February 2010, the Corporation paid a cash dividend of $0.10 per common share, an increase from $0.07 per common share that was paid in the first quarter of 2009.  The Corporation had suspended its quarterly cash dividend in March of 2009 to retain sufficient equity required to support efforts to capture greater market share and expand outside of its historic footprint.  Conditions will continue to be evaluated quarterly, and, when appropriate, Southwest Georgia Financial plans to return to the more regular dividend payout schedule to which shareholders have become accustomed.