Southeastern Banking Corporation Reports Fourth Quarter and Record Full Year 2023 Results
Celebrates 135 Years of Community Banking
Declares Quarterly Cash Dividend of $0.19 Per Share
Darien, GA — February 15, 2024 – Southeastern Banking Corporation (OTCPINK:SEBC), the “Company”, the parent of Southeastern Bank, the “Bank”, today reported financial results for the fourth quarter and full year of 2023. Financial highlights are shown below.
The Bank recently celebrated two significant milestones in its history. On December 8, 1888, the State of Georgia issued the banking charter for The Darien Bank, making ours the oldest, active banking charter issued by the State. Shortly thereafter, on January 23, 1889, the Bank commenced operations in Darien, marking the start of 135 faithful years of community banking.
Additionally, the Board of Directors declared a quarterly dividend of $0.19 per share, to be paid March 7, 2024, to shareholders of record on February 29, 2024. This is a one cent per share increase in the quarterly dividend, and equates to an annualized yield of 4.00% based on our year-end closing stock price of $19.00.
Commenting on the Company’s results, Donald “Jay” Torbert, Jr., President and Chief Executive Officer, said, “We are pleased to report record earnings and a solid overall performance for 2023. Our annual earnings surpassed the $10 million mark for the first time; we posted year-over-year loan growth of 6.4%; and we were able to expand and maintain our net interest margin by holding cost of funds at a relatively low level, all while undertaking a momentous systems conversion that drew heavily on our resources.”
Earnings
- For the year ended December 31, 2023, we posted net income of $10.6 million, an increase of $1.5 million, or 16.8%, compared to 2022.
- Net income was $2.8 million (or $0.89 per share) for the fourth quarter of 2023, compared to $2.1 million (or $0.65 per share) for the third quarter of 2023 and $2.8 million (or $0.90 per share) for the fourth quarter of 2022. Third quarter earnings included $745 thousand (pretax) in nonrecurring charges related to our banking systems conversion.
- During the fourth quarter we repositioned a portion of our investment portfolio selling $7.2 million in bonds yielding 1.41% with a duration of 3.9 years, incurring a pretax loss of $1.0 million. Proceeds from the sale were reinvested in bonds yielding 5.40% with a duration of 0.7 years. This trade led to an increased yield of 399 basis points on those funds and improved liquidity in the portfolio.
- The securities loss was offset by a pretax gain of $1.1 million on the sale of other real estate owned during the quarter.
- Core operating earnings for the fourth quarter totaled $3.6 million compared to $3.3 million for the third quarter of 2023 and $3.8 million for the fourth quarter of 2022. Core operating earnings for the year totaled $14.2 million, representing a 27.3% increase from 2022.
- The return on average assets for the fourth quarter of 2023 was 1.90%, compared to 1.39% for the third quarter of 2023 and 1.74% for the fourth quarter of 2022. The return on average assets for the year was 1.75% compared to 1.39% for 2022.
- The return on average equity was 17.43% versus 12.74% for the third quarter of 2023 and 19.72% for the fourth quarter of 2022. For the year, return on average equity was 16.69% compared to 14.87% for 2022.
- Net interest margin was 4.44% in the fourth quarter versus 4.38% for the third quarter of 2023 and 4.07% in the fourth quarter of 2022. Net interest margin for the year was 4.37%, equating to an increase of 96bps from 2022.
Balance Sheet
- Total assets increased 4.2%, or $24.8 million, during the fourth quarter to end at $617.4 million. This expansion is attributed to net deposit inflows, largely driven by seasonal government deposits. Over the last twelve months, however, total assets declined 8.1%, or $54.6 million.
- Deposits rose 3.3%, or $17.4 million, during the fourth quarter to end at $544.5 million. Yet, deposits contracted 10.8%, or $66.1 million, year-over-year. Net deposit placements off balance sheet to a third party network increased $20.1 million and deposits held by local municipalities decreased $32.1 million, accounted for the bulk of the decline over the year.
- Loans, net of unearned income, increased by 3.0%, or $10.1 million, during the fourth quarter to end at $348.3 million. Year-over-year, loans outstanding increased 6.4%, or $21.0 million.
- Total loan production through commercial and retail lending activities was $29.1 million during the fourth quarter, down from $32.5 million in the third quarter and the $41.4 million generated during the fourth quarter of 2022. We continue to see softening loan demand which we attribute in large part to higher interest rates.
Capital
- Capital continues to exceed regulatory thresholds required to be considered “well-capitalized.”
- Consolidated Tier 1 leverage capital ratio was 12.79% at December 31, 2023, down 4bps during the quarter but up 201bps over the last twelve months.
- Book value per share was $22.16 at December 31, 2023, a $3.22 increase over the last twelve months.
Asset Quality
- Asset quality concerns remained relatively low throughout 2023.
- Nonperforming assets were $2.1 million, or 0.34% of total assets, at December 31, 2023, up $821 thousand compared to a year ago.
- The allowance for credit losses related to loans aggregated $7.6 million, or 2.17% of total loans, at December 31, 2023, compared to $7.2 million, or 2.21% of total loans, at the end of 2022.
- Based on credit quality metrics and our evaluation of expected environmental conditions, a provision for credit losses was not considered necessary during the 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