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Southeastern Bank Financial Corp. Reports Record Third Quarter 2013 Earnings

Southeastern Bank Financial Corp. Reports Record Third Quarter 2013 Earnings

AUGUSTA, Ga., Oct. 25, 2013 (GLOBE NEWSWIRE) -- Southeastern Bank Financial
Corp. (OTCQB:SBFC), the holding company for Georgia Bank & Trust Company of
Augusta (GB&T), today reported record quarterly net income of $4.2 million for
the three months ended Sept. 30, 2013, or $0.63 in diluted earnings per share,
compared to $3.9 million, or $0.58 in diluted earnings per share, in the third
quarter of 2012.

"We achieved another record quarter of earnings driven by solid growth in our
core banking operations and effective expense controls," said President and
Chief Executive Officer R. Daniel Blanton. "Our performance has been very
consistent from quarter to quarter. Our net interest income has continued to
rise while our noninterest expenses have declined, leading to steady, healthy
margins and growth in our return on assets. Another area of stability has been
our asset quality, which continued to improve in the third quarter, enabling
us to further reduce our loan loss provision. As expected, our noninterest
income declined on a year-over-year basis resulting from a drop-off in demand
for mortgage refinancing due to higher interest rates."

Total assets at Sept. 30, 2013, were $1.7 billion, an increase of $28.5
million from Dec. 31, 2012. Loans outstanding at the end of the third quarter
were $900.6 million, a slight decrease from Dec. 31, 2012, and an increase of
$17.5 million from Sept. 30, 2012. Total deposits were $1.4 billion at Sept.
30, 2013, an increase of $20.4 million from Dec. 31, 2012, and an increase of
$5.3 million from Sept. 30, 2012. Cash and cash equivalents totaled $64.9
million at the end of the third quarter of 2013.

Net interest income for the third quarter of 2013 totaled $13.2 million, a
slight increase from $13.0 million for the same period in 2012. Noninterest
income for the third quarter totaled $4.9 million, a 16.5 percent decrease
from $5.8 million for the same period a year ago, resulting from a slowdown in
mortgage origination volume. Noninterest expense was $10.2 million in the
third quarter of 2013, a 4.4 percent decrease from a year ago, as a result of
reduced salary and benefit costs.

The net interest margin was 3.31 percent for the quarter-ended Sept. 30, 2013,
compared to 3.36 percent at the end of the second quarter of 2013, and 3.34
percent a year ago. Annualized return on average assets (ROA) was 0.99 percent
for the third quarter of 2013, an increase of 6 basis points from the same
period a year ago, and annualized return on average shareholder's equity (ROE)
was 12.84 percent, an increase of 95 basis points from the third quarter of
2012.

Nonperforming assets at Sept. 30, 2013, were 1.78 percent of total assets,
compared to 2.08 percent at June 30, 2013, and 2.03 percent at Sept. 30, 2012.
Net charge-offs for the third quarter of 2013 totaled 1.17 percent of average
loans on an annualized basis, compared to 1.87 percent annualized in the
second quarter of 2013 and 1.34 percent annualized in the third quarter of
2012. The company held $1.2 million in OREO at Sept. 30, 2013, compared to
$1.1 million at June 30, 2013, and $4.1 million at Sept. 30, 2012.

The company's loan-loss provision expense was $1.9 million in the third
quarter of 2013, compared to $2.4 million in the second quarter of 2013 and
$2.4 million in the third quarter a year ago. The allowance for loan losses at
Sept. 30, 2013, was $26.6 million, or 2.99 percent of loans outstanding,
compared to $27.3 million, or 3.12 percent of loans outstanding, at June 30,
2013, and $29.1 million, or 3.41 percent of loans outstanding, at Sept. 30,
2012.

Net income for the nine months ended Sept. 30, 2013, totaled $12.0 million,
compared to net income of $10.5 million from the same period of 2012. Diluted
earnings per share for the first nine months of 2013 were $1.79, a 13.3
percent increase from $1.58 per share earned in the same period a year ago.

Net interest income for the first nine months of 2013 was $39.7 million, a 2.9
percent increase from $38.6 million in the first nine months of 2012.
Noninterest income was $14.9 million for the first nine months of 2013, a 9.2
percent decrease from $16.4 million in the same period of 2012. Noninterest
expense was $31.3 million for the nine-month period ended Sept. 30, 2013, a 6
percent decrease from $33.2 million in the same period in 2012.

"While our profitability has been solid and steady, we expect the increase in
mortgage rates to have a negative impact on both re-finance and purchase
origination revenue resulting in lower levels for the near future," said
Blanton. "As such, we will continue to proceed with both optimism and caution,
maintaining a watchful eye for opportunities for growth and managing the risks
to our business."

About Southeastern Bank Financial Corp.

Southeastern Bank Financial Corp. is the $1.7 billion-asset bank holding
company of Georgia Bank & Trust Company of Augusta (GB&T). GB&T is the largest
locally owned and operated community bank in the Augusta metro market, with
nine full-service Augusta-area offices, three full-service offices in Aiken
County, S.C. operating as Southern Bank & Trust and one limited service Loan
Production Office in Athens, GA. The company also has mortgage operations in
Augusta and Savannah. The banks focus primarily on real estate, commercial and
consumer loans to individuals, small to medium-sized businesses and
professionals, and also provide wealth management and trust services. The
company's common stock is publicly traded under the symbol SBFC on OTCQB.
Investors can find Real-Time quotes and market information for the Company on
www.otcmarkets.com or by visiting the Company's Web site,
www.georgiabankandtrust.com.

Safe Harbor Statement – Forward-Looking Statements

Statements made in this release by Southeastern Bank Financial Corporation
(The Company) other than those concerning historical information, should be
considered forward-looking and subject to various risks and uncertainties.
Such forward-looking statements are made based upon management's belief as
well as assumptions made by, and information currently available to,
management pursuant to "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The Company's actual results may differ
materially from the results anticipated in forward-looking statements due to a
variety of factors, including: unanticipated changes in the Bank's local
economy and in the national economy; governmental monetary and fiscal
policies; deposit levels, loan demand, loan collateral values and securities
portfolio values; difficulties in interest rate risk management; difficulties
in operating in a variety of geographic areas; the effects of competition in
the banking business; changes in governmental regulation relating to the
banking industry, including regulations relating to branching and
acquisitions; failure of assumptions underlying the establishment of reserves
for loan losses, including the value of collateral underlying delinquent
loans; and other factors. The Company cautions that such factors are not
exclusive. The Company does not undertake to update any forward-looking
statement that may be made from time to time by, or on behalf of, the Company.



SOUTHEASTERN BANK FINANCIAL CORPORATION
                                                             
Consolidated Balance Sheets
                                                             
                                              September 30,   
                                              2013            December 31,
Assets                                         (Unaudited)     2012
                                                             
Cash and due from banks                        $62,301,687   $39,565,757
Interest-bearing deposits in other banks       2,554,290      4,322,317
Cash and cash equivalents                      64,855,977     43,888,074
                                                             
Available-for-sale securities                  655,525,261    654,738,964
                                                             
Loans held for sale                            13,816,847     30,051,204
                                                             
Loans                                          886,768,902    871,446,844
Less allowance for loan losses                26,558,065     28,846,336
Loans, net                                     860,210,837    842,600,508
                                                             
Premises and equipment, net                    26,145,132     26,145,378
Accrued interest receivable                    6,639,061      6,602,879
Bank-owned life insurance                      35,455,058     34,825,588
Restricted equity securities                   5,319,600      5,295,600
Other real estate owned                        1,154,541      3,489,887
Prepaid FDIC assessment                        --            2,023,977
Deferred tax asset                             18,798,247     10,406,187
Other assets                                   3,053,149      2,434,228
                                                             
                                              $1,690,973,710 $1,662,502,474
                                                             
Liabilities and Stockholders' Equity                          
                                                             
Deposits                                                      
Noninterest-bearing                           $176,502,843  $158,066,510
Interest-bearing:                                            
NOW accounts                                  342,244,341    349,531,376
Savings                                       524,179,994    504,193,793
Money management accounts                     18,755,629     18,032,530
Time deposits over $100,000                   267,180,250    280,870,648
Other time deposits                           112,798,796    110,576,827
                                              1,441,661,853  1,421,271,684
                                                             
Securities sold under repurchase agreements    697,981        976,433
Advances from Federal Home Loan Bank           74,000,000     64,000,000
Accrued interest payable and other liabilities 17,592,301     18,924,619
Due to broker                                  3,635,649      --
Subordinated debentures                        21,546,646     21,546,646
                                                             
Total liabilities                              1,559,134,430  1,526,719,382
                                                             
Stockholders' equity:                                         
Preferred stock, no par value; 10,000,000
shares authorized; 0 shares outstanding in     --            --
2013 and 2012, respectively
Common stock, $3.00 par value; 10,000,000
shares authorized; 6,680,225 and 6,680,225
shares issued in 2013 and 2012, respectively;  20,040,675     20,040,675
6,679,426 and 6,675,000 shares outstanding in
2013 and 2012, respectively
Additional paid-in capital                    62,858,518     62,835,122
Retained earnings                             55,272,952     45,028,153
Treasury stock, at cost; 799 and 5,225 shares (11,114)       (72,680)
in 2013 and 2012, respectively
Accumulated other comprehensive income        (6,321,751)    7,951,822
(loss), net
                                                             
Total stockholders' equity                     131,839,280    135,783,092
                                                             
                                              $1,690,973,710 $1,662,502,474


SOUTHEASTERN BANK FINANCIAL CORPORATION
                                                             
Consolidated Statements of Comprehensive Income
                                                             
(Unaudited)
                                                             
                     Three Months Ended          Nine Months Ended
                     September 30,               September 30,
                     2013          2012          2013           2012
Interest income:                                              
Loans, including     $11,668,193 $11,741,990 $35,103,130  $34,960,016
fees
Investment           3,874,708    4,134,441    11,753,961    12,801,516
securities
Interest-bearing
deposits in other     13,255       15,036       50,140        61,576
banks
Total interest income 15,556,156   15,891,467   46,907,231    47,823,108
                                                             
Interest expense:                                             
Deposits             1,637,737    2,227,312    5,150,259     7,318,465
Securities sold
under repurchase      3,924        738          5,625         9,408
agreements
Other borrowings     684,450      683,606      2,030,026     1,910,598
Total interest        2,326,111    2,911,656    7,185,910     9,238,471
expense
                                                             
Net interest income   13,230,045   12,979,811   39,721,321    38,584,637
                                                             
Provision for loan    1,887,354    2,401,386    6,046,046     6,567,098
losses
                                                             
Net interest income
after provision for   11,342,691   10,578,425   33,675,275    32,017,539
loan losses
                                                             
Noninterest income:                                           
Service charges and  1,849,000    1,732,609    5,316,563     5,028,932
fees on deposits
Gain on sales of     1,659,195    2,948,935    5,716,007     7,267,387
loans
Gain on sale of      --          4,000        21,704        10,459
fixed assets, net
Investment
securities gains      (162,619)    (36,333)     (191,945)     441,186
(losses), net
Other-than-temporary                                         
loss:
Total impairment     --          --          --           (13,314)
loss
Less loss recognized
in other              --          --          --           (4,268)
comprehensive income
Net impairment loss
recognized in         --          --          --           (9,046)
earnings
Retail investment    557,222      419,903      1,545,062     1,446,549
income
Trust service fees   300,529      279,808      889,784       857,084
Earnings from cash
surrender value of    326,514      304,892      896,963       830,875
bank-owned life
insurance
Miscellaneous income 332,527      169,543      707,940       535,274
Total noninterest     4,862,368    5,823,357    14,902,078    16,408,700
income
                                                             
Noninterest expense:                                          
Salaries and other   5,712,535    6,603,393    18,050,477    19,343,362
personnel expense
Occupancy expenses   940,349      1,014,315    2,814,485     3,111,118
Other real estate    10,508       (96,667)     627,808       1,252,269
losses (gains), net
Other operating      3,549,935    3,166,798    9,769,033     9,444,855
expenses
Total noninterest     10,213,327   10,687,839   31,261,803    33,151,604
expense
                                                             
Income before income  5,991,732    5,713,943    17,315,550    15,274,635
taxes
                                                             
Income tax expense    1,789,415    1,838,467    5,334,180     4,735,723
                                                             
Net income            $4,202,317  $3,875,476  $11,981,370  $10,538,912
                                                             
Other comprehensive                                           
income (loss):
Unrealized gain      179,133      30,034       1,304,103     (327,825)
(loss) on derivatives
Unrealized gain
(loss) on securities  (5,022,623)  4,467,565    (24,857,051)  9,194,471
available-for-sale
Reclassification
adjustment for
realized (gain) loss  162,619      36,333       191,945       (432,140)
on securities, net of
OTTI
Tax effect           1,820,859    (1,763,699)  9,087,430     (3,281,023)
Total other
comprehensive income  (2,860,012)  2,770,233    (14,273,573)  5,153,483
(loss)
                                                             
Comprehensive income  $1,342,305  $6,645,709  $(2,292,203) $15,692,395
(loss)
                                                             
Basic net income per  $0.63       $0.58       $1.79        $1.58
share
                                                             
Diluted net income    $0.63       $0.58       $1.79        $1.58
per share
                                                             
Weighted average
common shares         6,679,426    6,680,020    6,678,555     6,679,294
outstanding
                                                             
Weighted average
number of common and  6,679,426    6,680,020    6,678,555     6,679,294
common equivalent
shares outstanding

CONTACT: Ronald L. Thigpen
         Executive Vice President and COO
         Southeastern Bank Financial Corp.
         706-481-1014
 
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