Southwest Georgia Financial Corp. (NYSE MKT:SGB) Q3 2019 Earnings Conference Call - Final Transcript

Oct 22, 2019 • 01:00 pm ET


Southwest Georgia Financial Corp. (NYSE MKT:SGB) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings and welcome to the Southwest Georgia Financial Corporation Third Quarter 2019 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Craig Mychajluk, Investor Relations. Thank you, sir. You may begin.

Craig Mychajluk

Yeah, 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, President and CEO; and Karen Boyd, Senior Vice President and Treasurer. We'll start with DeWitt's formal remarks on the third quarter, and then we'll open up the call for Q&A.

You should have a copy of our financial results that we 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 risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call. These risks 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

With that, I'd like to turn the call over to DeWitt to begin the discussion.

George DeWitt Drew

Thank you, Craig. Afternoon, everyone, and thank you for being with us today. Our customer-focused strategy continues to differentiate us in our markets as we are seeing benefit from our investments in talent, geographic expansion and customer service-enhancing initiatives.

Loan and deposit growth continue at a healthy pace despite some chaos in the local agricultural economy. And while cost to operate continue to be a challenge, we believe we are prudently managing our operating cost.

Net income was up 25% to $1.4 million, and on a per diluted share basis, earnings were $0.56, which was up $0.11 over the third quarter of last year. If you recall, in 2018, we achieved record results. And on a year-to-date basis, we're well on track to beat last year's earnings.

We're keenly focusing on managing our asset and liability mix. The rate environment is challenging, and we're being disciplined in pricing both sides of the balance sheet. Efforts are paying off, and we've been able to maintain a healthy net interest margin. At 4.08%, net interest margin is up 2 basis points since the second quarter of 2019.

The average cost of all interest-bearing liabilities has increased 24 basis points year-over-year to 1.19%. Interest-bearing deposit cost increased 30 basis points to 1.10%, and we are left relying on Federal Home Loan Bank funding.

Movements in interest rates this year gave us the opportunity to reposition a portion of our Federal Home Loan Bank advances and the investments for securities portfolio, which helped offset increased credit cost.

For the quarter, net interest income was up