Southeastern Banking Corporation Reports First Quarter 2023 Results
Declares Quarterly Cash Dividend of $0.17 Per Share
Darien, Ga. — May 18, 2023 – Southeastern Banking Corporation (OTCPINK:SEBC; the “Company”), the parent of Southeastern Bank, today reported financial results for the first quarter of 2023. Financial highlights are shown below.
Additionally, the Board of Directors declared a quarterly dividend of $0.17 per share, to be paid on June 8, 2023, to shareholders of record on June 1, 2023.
Commenting on the Company’s results, Donald “Jay” Torbert, Jr., President and Chief Executive Officer, said, “We are pleased to report a strong start to 2023 in terms of earnings, loan growth and capital as the momentum created in 2022 carried over into the new year. I remain encouraged by the long-term prospects for growth within our markets. However, concerns for a slowing economy and higher interest rates will create challenges in generating new loan production in the coming quarters. Additionally, we expect expenses to rise as we make new investments in technology and facilities through the remainder this year.”
Earnings
- Net income increased to $3.0 million ($0.96 per diluted share) for the first quarter of 2023, compared to $2.8 million ($0.90 per diluted share) for the fourth quarter of 2022 and $1.7 million ($0.55 per diluted share) for the first quarter of 2022. Rising interest rates combined with loan production drove a $42 thousand increase in net interest income compared to the fourth quarter of 2022, and a $2.1 million increase compared to the first quarter of 2022. Income gains from rising rates were partially offset by higher rates paid to depositors and continued escalation in personnel and other operating costs.
- Core operating earnings for the first quarter totaled $3.7 million compared to $3.8 million for the fourth quarter of 2022 and $2.0 million for the first quarter of 2022.
- The return on average assets for the first quarter of 2023 totaled 1.91%, compared to 1.74% for the fourth quarter of 2022 and 1.07% for the first quarter of 2022.
- The return on average equity was 19.84% versus 19.72% for the fourth quarter of 2022 and 10.72% for the first quarter of 2022.
- Net interest margin improved to 4.26% in the first quarter versus 4.07% for the fourth quarter of 2022 and 2.94% in the first quarter of 2022.
Balance Sheet
- Total assets decreased 5.9%, or $39.5 million, during the first quarter to end at $632.5 million. This reduction is attributed to net deposit outflows. Over the last twelve months total assets declined 2.7% or $17.4 million.
- Deposits declined 7.4%, or $45.2 million, during the first quarter to end at $565.4 million. The quarterly decrease is primarily related to a seasonal decline in local government deposits, down $34.1 million during the period. Deposits contracted 3.6%, or $21.3 million, year-over-year.
- Uninsured deposits comprised 25% of total deposits at March 31, 2023, compared to 24% at year-end 2022.
- Loans, net of unearned income, increased 2.7%, or $8.8 million, during the first quarter to end at $336.2 million. Year-over-year, loans increased 14.3%, or $42.0 million.
Capital
- Capital continues to exceed regulatory thresholds required to be considered “well-capitalized.”
- Consolidated Tier 1 leverage capital ratio was 11.21% at March 31, 2023, up 43bps during the quarter and 106bps over the last twelve months.
- Book value per share grew $1.31 to $20.25 during the quarter.
- Overall, capital increased by $4.1 million during the first quarter due to earnings and a $2.6 million improvement in unrealized losses on investment securities stemming from variations in interest rates.
- The Current Expected Credit Losses (CECL) accounting standard was implemented during the first quarter. With implementation, one-time adjustments were made to increase the allowance for credit losses on loans by $356 thousand and establish allowances for credit losses related to unfunded loan commitments (included in other liabilities) and HTM investment securities of $895 thousand and $8 thousand, respectively. Offsetting these reserve adjustments were a $995 thousand reduction in capital and a $264 thousand increase in deferred tax assets.
Asset Quality
- Asset quality remained stable through the first quarter of 2023.
- Nonperforming assets totaled $1.2 million, or 0.19% of total assets, at March 31, 2023 compared to $1.3 million, or 0.19% of total assets at the end of 2022.
- The allowance for credit losses related to loans aggregated $7.7 million, or 2.28% of total loans, at March 31, 2023, compared to $7.2 million, or 2.21% of total loans, at December 31, 2022. The increase was driven by the CECL implementation outlined earlier as well as net recoveries of previously charged-off amounts.
- Based on credit quality metrics, a provision for credit losses was not necessary during the first quarter.
About Southeastern Banking Corporation
Southeastern Banking Corporation is the bank holding company for Southeastern Bank. Established in 1888, Southeastern Bank has a long history of serving its customers and communities through its 10 branch locations in coastal Georgia and northeast Florida, including Brunswick, Callahan (FL), Darien, Eulonia, Folkston, Hilliard (FL), Kingsland, Nahunta, Richmond Hill and St. Simons Island. In addition to these full service branches, the Bank has a loan production office in Hinesville, Georgia. The Bank is headquartered in Darien, Georgia.
Southeastern Banking Corporation’s common stock is traded on the OTC Markets PINK under the symbol “SEBC.”
For more information, please visit www.southeasternbank.com.
Forward-Looking Statements
Certain statements contained in this release may not be based on historical facts and are forward-looking statements. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “may,” “might,” “will,” “would,” “could” or “intend.” We caution you not to place undue reliance on the forward-looking statements contained in this news release, as actual results could differ materially from those indicated in such forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this news release.
Explanation of Certain Unaudited Non-GAAP Financial Measures
The measure entitled core operating earnings is not a measure recognized under U.S. generally accepted accounting principles (GAAP) and therefore is considered to be a non-GAAP financial measure. The most comparable GAAP measure is net income before taxes. Core operating earnings exclude select revenues and expenditures not considered core to the Company’s daily operations.
Management uses this non-GAAP financial measure in its analysis of the Company's performance and believes these presentations provide useful supplemental information and a clearer understanding of the Company's operating performance. These disclosures should not be considered an alternative to GAAP. The computations of core operating earnings are set forth in the Quarterly Financial Highlights table.
CONTACT:
Robert M. Eidson, Jr.
Treasurer
912-437-4141