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Southeastern Bank Financial Corp. Reports Second Quarter 2015 Earnings and Declares Dividend

AUGUSTA, Ga., July 24, 2015 (GLOBE NEWSWIRE) -- Southeastern Bank Financial Corp. (OTCQB:SBFC), the holding company for Georgia Bank & Trust Company of Augusta (GB&T), today reported quarterly net income of $5.7 million for the three months ended June 30, 2015, or $0.85 in diluted earnings per share, compared to $4.0 million, or $0.60 in diluted earnings per share, in the second quarter of 2014, an increase of 40.7 percent.

"We are pleased to report a significant increase in earnings over the year-ago period," said President and Chief Operating Officer Ronald L. Thigpen. "The second quarter net interest income reflects an extraordinary impact from a significant payoff and recovery on a problem credit. The resolution of this credit contributed to an increase in net interest income and the negative provision for loan losses. Non-interest income reflected a 2.8 percent increase in service charges and an increase in gain on sale of loans from mortgage origination of 28.0 percent. Credit costs decreased further as asset quality continued to improve. Our balance sheet grew, as we experienced solid deposit growth. Loan growth continues to be a major challenge. Overall, we continue to perform well reflecting an annualized 1.27 percent return on average assets and an annualized 14.15 percent return on average equity for the second quarter of 2015.”

Total assets at June 30, 2015, were $1.8 billion, an increase of $62.2 million or 3.6 percent from December 31, 2014. Loans outstanding at the end of the second quarter were $969.0 million, a decrease of $15.7 million from December 31, 2014, and a decrease of $15.7 million from June 30, 2014. Total deposits were $1.5 billion at June 30, 2015, an increase of $70.5 million from December 31, 2014, and an increase of $2.5 million from June 30, 2014. Cash and cash equivalents totaled $78.1 million at the end of the second quarter of 2015.

Net interest income for the second quarter of 2015 totaled $13.9 million, a 6.9 percent increase from $13.0 million for the same period in 2014. Noninterest income for the second quarter totaled $4.0 million, a decrease from $4.5 million for the same period a year ago, primarily due to investment securities losses taken. The negative impact of investment losses was partially offset by higher mortgage origination volume and increased service charges and fees on deposits. Noninterest expense was $12.2 million in the second quarter of 2015, a 14.8 percent increase from a year ago resulting from increased salary and other operating expense. The higher operating expense reflected the fee to pay off a high rate Federal Home Loan Bank borrowing.

The net interest margin was 3.32 percent for the quarter-ended June 30, 2015, compared to 3.20 percent for the quarter-ended December 31, 2014, and 3.18 percent for the same period a year ago. Annualized return on average assets (ROA) was 1.27 percent for the second quarter of 2015, an increase from 0.93 percent for the same period a year ago, and annualized return on average shareholder's equity (ROE) was 14.15 percent, an increase from 11.39 percent from the second quarter of 2014.

Nonperforming assets at June 30, 2015, were 0.86 percent of total assets, compared to 1.26 percent at December 31, 2014, and 1.28 percent at June 30, 2014. Net charge-offs for the second quarter of 2015 totaled negative 0.28 percent of average loans on an annualized basis (reflecting the large recovery), compared to 0.74 percent annualized in the fourth quarter of 2014 and 0.18 percent annualized in the second quarter of 2014. The company held $922 thousand in OREO at June 30, 2015, compared to $1.1 million at December 31, 2014, and $1.5 million at June 30, 2014.

The company's loan-loss provision expense was a negative $2.7 million in the second quarter of 2015, compared to $547 thousand in the previous quarter, and $1.0 million in the second quarter a year ago. The allowance for loan losses at June 30, 2015, was $23.4 million, or 2.41 percent of loans outstanding, compared to $25.5 million, or 2.59 percent of loans outstanding, at December 31, 2014, and $26.9 million, or 2.73 percent of loans outstanding, at June 30, 2014.

"We continue to be challenged by the low level of loan demand, but we are encouraged by the increases in mortgage origination volume along with core deposit growth. Also, we took advantage of the extraordinary recovery by taking steps to improve our future net interest margin," said Thigpen. "Our balance sheet remains strong and we are well positioned to support our customers and the community as loan demand continues to improve.”

On July 22, 2015, the company's Board of Directors declared a regular quarterly cash dividend of $0.15 per share of common stock payable on August 21, 2015, to shareholders of record as of August 7, 2015. Based on the share price of $29.75 at the close of business on Thursday, July 23, 2015, this dividend represents an annualized yield to shareholders of 2.02 percent.

About Southeastern Bank Financial Corp.

Southeastern Bank Financial Corp. is the $1.8 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 Company’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
(Dollars in thousands, except share data)
AssetsJune 30, 2015 (Unaudited) December 31, 2014
Cash and due from banks$ 74,602 $ 33,286
Interest-bearing deposits in other banks 3,541 2,709
Cash and cash equivalents 78,143 35,995
Available-for-sale securities 677,063 644,465
Loans held for sale, at fair value 26,469 18,365
Loans 942,537 966,356
Less allowance for loan losses 23,372 25,506
Loans, net 919,165 940,850
Premises and equipment, net 27,723 27,842
Accrued interest receivable 5,982 5,898
Bank-owned life insurance 37,467 36,908
Restricted equity securities 3,936 4,398
Other real estate owned 922 1,107
Deferred tax asset 15,722 15,263
Other assets 2,372 1,690
$ 1,794,964 $ 1,732,781
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing$ 227,261 $ 196,624
Interest-bearing:
NOW accounts 391,651 354,038
Savings 539,023 521,570
Money management accounts 14,623 15,824
Time deposits 361,777 375,808
1,534,335 1,463,864
Securities sold under repurchase agreements 649 10,678
Advances from Federal Home Loan Bank 56,000 64,000
Accrued interest payable and other liabilities 19,137 18,953
Due to broker 2,844 -
Subordinated debentures 20,000 20,000
Total liabilities 1,632,965 1,577,495
Stockholders' equity:
Preferred stock, no par value; 10,000,000 shares authorized; 0 shares outstanding in 2015 and 2014, respectively - -
Common stock, $3.00 par value; 10,000,000 shares authorized; 6,744,891 and 6,744,891 shares issued in 2015 and 2014, respectively; 6,744,843 and 6,744,160 shares outstanding in 2015 and 2014, respectively 20,235 20,235
Additional paid-in capital 63,377 63,096
Retained earnings 79,774 71,902
Treasury stock, at cost; 48 and 731 shares in 2015 and 2014, respectively (1) (18)
Accumulated other comprehensive (loss) income, net (1,386) 71
Total stockholders' equity 161,999 155,286
$ 1,794,964 $ 1,732,781

SOUTHEASTERN BANK FINANCIAL CORPORATION
Consolidated Statements of Comprehensive Income
(Dollars in thousands, except share and per share data)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
2015 2014 2015 2014
Interest income:
Loans, including fees$ 12,187 $ 11,641 $ 23,712 $ 22,921
Investment securities 3,798 3,618 7,445 7,152
Interest-bearing deposits in other banks 17 18 34 33
Total interest income 16,002 15,277 31,191 30,106
Interest expense:
Deposits 1,451 1,586 2,911 3,174
Securities sold under repurchase agreements 2 2 5 3
Other borrowings 626 659 1,264 1,327
Total interest expense 2,079 2,247 4,180 4,504
Net interest income 13,923 13,030 27,011 25,602
Provision (Credit) for loan losses (2,690) 1,011 (2,143) 2,068
Net interest income after provision for loan losses 16,613 12,019 29,154 23,534
Noninterest income:
Service charges and fees on deposits 1,843 1,792 3,587 3,421
Gain on sales of loans 1,758 1,373 3,312 2,192
Gain (loss) on sale of fixed assets, net (62) 13 (61) 12
Investment securities gains (losses), net (includes ($897) and $26 for the three months ended and ($840) and $277 for the six months ended June 30, 2015 and 2014 accumulated other comprehensive income reclassifications for unrealized gains (losses) on available-for-sale securities) (897) 26 (840) 277
Retail investment income 520 514 1,046 1,088
Trust service fees 355 319 691 642
Earnings from cash surrender value of bank-owned life insurance 281 281 559 559
Miscellaneous income 221 205 444 423
Total noninterest income 4,019 4,523 8,738 8,614
Noninterest expense:
Salaries and other personnel expense 6,662 6,148 13,249 11,914
Occupancy expenses 1,030 987 2,048 1,931
Other real estate losses (gains), net (46) 22 (112) (13)
Prepayment fees 955 - 955 -
Other operating expenses 3,610 3,484 7,136 6,922
Total noninterest expense 12,211 10,641 23,276 20,754
Income before income taxes 8,421 5,901 14,616 11,394
Income tax expense 2,732 1,857 4,720 3,544
Net income$ 5,689 $ 4,044 $ 9,896 $ 7,850
Other comprehensive income (loss):
Unrealized gain (loss) on derivatives$ 608 $ (288)$ 242 $ (643)
Unrealized gain (loss) on securities available-for-sale (7,729) 6,811 (3,466) 15,298
Reclassification adjustment for realized (gain) loss on securities, net of OTTI 897 (26) 840 (277)
Tax effect 2,421 (2,527) 927 (5,593)
Total other comprehensive income (loss) (3,803) 3,970 (1,457) 8,785
Comprehensive income $ 1,886 $ 8,014 $ 8,439 $ 16,635
Basic net income per share$ 0.85 $ 0.61 $ 1.48 $ 1.18
Diluted net income per share$ 0.85 $ 0.60 $ 1.47 $ 1.17
Weighted average common shares outstanding 6,702,843 6,681,253 6,698,948 6,680,945
Weighted average number of common and common equivalent shares outstanding 6,713,661 6,686,332 6,710,415 6,682,954


For More Information: Ronald L. Thigpen President and Chief Operating Officer Southeastern Bank Financial Corp. 706-481-1014

Source:Southeastern Bank Financial Corp.