Southeastern Banking Corporation Reports Second Quarter 2023 Results
Declares Quarterly Cash Dividend of $0.18 Per Share
Darien, Ga. — August 17, 2023 – Southeastern Banking Corporation (OTCPINK:SEBC; the “Company”), the parent of Southeastern Bank, today reported financial results for the second quarter of 2023. Financial highlights are shown below.
Additionally, the Board of Directors declared a quarterly dividend of $0.18 per share, to be paid on September 7, 2023, to shareholders of record on August 31, 2023. This dividend level represents a penny per share, or 5.8%, increase from the prior quarter.
Commenting on the Company’s results, Donald “Jay” Torbert, Jr., President and Chief Executive Officer, said, “Overall, the Bank is performing very well. Earnings were in line with our expectations for the quarter, and we are pleased to provide another increase in dividends for our shareholders. We are optimistic about new business growth opportunities in the second half of 2023. However, we expect earnings to dip as we make investments to complete a major systems migration, and we see a potential narrowing of our net interest margin as our cost of funds may rise at a pace faster than the repricing of our earning assets.”
Earnings
- Net income was $2.7 million ($0.86 per diluted share) for the second quarter of 2023, compared to $3.0 million ($0.96 per diluted share) for the first quarter of 2023 and $1.9 million ($0.60 per diluted share) for the second quarter of 2022. Rising interest rates combined with loan production drove a $13 thousand increase in net interest income compared to the first quarter of 2023, and a $1.7 million increase compared to the second 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 second quarter totaled $3.6 million compared to $3.7 million for the first quarter of 2023 and $2.4 million for the second quarter of 2022.
- The return on average assets for the second quarter of 2023 was 1.78%, compared to 1.91% for the first quarter of 2023 and 1.16% for the second quarter of 2022.
- The return on average equity was 16.92% versus 19.84% for the first quarter of 2023 and 12.58% for the second quarter of 2022.
- Net interest margin improved to 4.46% in the second quarter versus 4.26% for the first quarter of 2023 and 3.10% in the second quarter of 2022.
Balance Sheet
- Total assets decreased 4.9%, or $31.0 million, during the second quarter to end at $601.5 million. This reduction is attributed to net deposit outflows. Over the last twelve months total assets declined 8.9%, or $58.8 million.
- Deposits declined 5.4%, or $30.5 million, during the second quarter to end at $534.9 million. Deposits contracted 10.9%, or $65.2 million, year-over-year. The net deposit outflows reflect a release of pandemic surge deposits, yet we still remain above pre-pandemic deposit levels. Declines were led by commercial demand (down $10.5 million for the quarter and $13.0 million year-over-year) and public deposits (down $7.0 million for the quarter and $3.4 million year-over-year). Despite the dollar decline in deposits, we have had continued growth in the number of core deposit accounts, both during the quarter and over the last twelve months.
- Balance sheet and deposit contraction over the last twelve months also occurred as we facilitated the placement of deposits through a third party network. Net placements totaled $8.0 million during the second quarter and $44.1 million over the last twelve months.
- Loans, net of unearned income, declined due to some large loan pay-downs by 0.6%, or $2.0 million, during the second quarter to end at $334.2 million. Year-over-year, loans increased 16.8%, or $48.1 million. We continue to have a healthy loan production pipeline.
- Total loan production was in excess of $38.5 million through commercial and retail lending activities during the second quarter, up from $30.5 million in the first quarter but below the $43.1 million generated during the second quarter of 2022.
Capital
- Capital continues to exceed regulatory thresholds required to be considered “well-capitalized.”
- Consolidated Tier 1 leverage capital ratio was 12.16% at June 30, 2023, up 95bps during the quarter and 194bps over the last twelve months.
- Book value per share grew $0.04 to $20.29 during the quarter, and has increased by $1.59 over the last twelve months.
Asset Quality
- Asset quality remained stable through the second quarter of 2023.
- Nonperforming assets ticked up slightly to $1.3 million, or 0.22% of total assets, at June 30, 2023 compared to $1.2 million, or 0.19% of total assets at the end of the first quarter.
- The allowance for credit losses related to loans aggregated $7.6 million, or 2.28% of total loans, at June 30, 2023, compared to $7.7 million, or 2.28% of total loans, at March 31, 2023.
- Based on credit quality metrics, a provision for credit losses was not necessary during the first half of the year.
Community Support
- In addition to our ongoing support for community activities, we made two noteworthy donations during the second quarter:
- We contributed $100 thousand to support a local, rural hospital under the Georgia HEART program, and
- We established a scholarship fund in memory of former CEO Edward R. Gray, Jr. with a $50 thousand donation to a local college for business students from counties served by the Bank.
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