Southwest Georgia Financial Corp. (NYSE MKT:SGB) Q3 2018 Earnings Conference Call - Final Transcript

Oct 30, 2018 • 01:00 pm ET


Southwest Georgia Financial Corp. (NYSE MKT:SGB) Q3 2018 Earnings Conference Call - Final Transcript


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Greetings and welcome to Southwest Georgia Financial Corporation Third Quarter 2018 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions).

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Craig Mychajluk, Investor Relations. Thank you. You may begin.

Craig Mychajluk

Thank you and good afternoon everyone. We certainly appreciate your time today, as well as your interest in Southwest Georgia Financial Corporation. Joining me on the call is DeWitt Drew, our President and CEO and Karen Boyd, our Senior Vice President and Treasurer.

We'll start with DeWitt's formal remarks on the third quarter and then open up the call for Q&A. You should have a copy of our financial results that were released this morning, and if not, you can find them on our website at

(Forward-Looking Cautionary Statements)

So, with that, I would like to turn the call over to DeWitt to begin the discussion.

DeWitt Drew

Thank you, Craig. Good afternoon everyone and thank you for being with us today. Before getting to this quarter's results, as we mentioned in our press release, we experienced a significant weather event as Hurricane Michael affected a portion of our operating area in mid-October, resulting in some agricultural product loss.

While still dealing with the aftermath, thankfully our employees are safe and our branch network was down for only a few days due to no power. We live in a resilient area, and overall, we are quite fortunate.

Turning to the third quarter, our results were strong with continued loan and deposit growth, sound asset quality and improving earnings. Net income increased 20% to $1.14. On a per diluted share basis, earnings were $0.45, up $0.08 over the third quarter of 2017. That was 1.14 million earlier in our quarterly earnings.

We are particularly pleased with our year-to-date performance of $1.38 per share in earnings, which while benefiting from lower corporate tax rates, also replaced the investments that we made in people to enhancing our products and processes and to our infrastructure.

Net interest margin did contract 6 basis points to 4.08% in the quarter and 8 basis points to 4.01% for the year-to-date period. Those declines can be attributed to a decrease in the tax equivalency adjustment to our tax free bond portfolio necessitated by lower tax rates as well as an increase in volume and rate of interest-bearing liabilities.

Our balance sheet is well structured and well positioned for increased rates though there is a lag effect of rising interest rates on our variable rate and balloon loans. Strong loan growth drove higher net interest income, which increased over 9% or 386,000 to $4.8 million and was up 8% for the 9-month period.

Higher provisions were necessary due to continued levels of loan growth we've experienced. Our overall net interest income was up slightly quarter-over-quarter led by higher insurance services revenue of 12% or 42,000.

For the year-to-date period,