Southwest Georgia Financial Corp. (NYSE MKT:SGB) Q1 2019 Earnings Conference Call - Final Transcript

Apr 23, 2019 • 01:00 pm ET


Southwest Georgia Financial Corp. (NYSE MKT:SGB) Q1 2019 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the Southwest Georgia Financial Corporation First Quarter 2019 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.

Craig Mychajluk

Yeah, thank you. Good afternoon, everyone. 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 first quarter and then we'll 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 As you are aware, we may make some forward-looking statements during the formal discussion as well as during the Q&A. These statements apply to future events that are subject to risk and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call. These risk and uncertainties and other factors are provided in the earnings release as well as with other documents filed by the company with the Securities and Exchange Commission. You can find these documents on our website or at

So with that, let me 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. Coming off of a strong year where we had record results, we delivered mixed results in the first quarter. We experienced higher net interest income, sound asset quality and solid deposit growth, those achievements are reflective of our team's continued hard work and dedication to meeting the needs of our customers. We are, however, finding challenges in deposit pricing and labor cost, particularly, in the cost of hourly wages.

Our pretax income for the quarter was up $241,000, or nearly 20%, to $1.5 million. Net income of $1.2 million was comparable with last year's first quarter, largely due to prior years benefiting from an adjustment to estimated tax accruals. On a per diluted share basis, earnings were $0.48. We have seen some contraction in our net interest margin, which on a tax equivalent basis was 3.82%. After four rate increases last year, the overall cost of interest-bearing deposits increased 46 basis points as customers migrated to higher yielding accounts.

During the prior year, both mix and pricing moved in ways unfavorable to the bank. We continued to reprice balloon loans at higher rates to help offset this, and believe our continued focus on managing asset and liability mix will allow us to maintain healthy levels in net interest income.

For the quarter, net interest income was $318,000, up to $4.8 million, which reflects higher interest in fees on loans of $828,000, partially offset by