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

AUGUSTA, Ga., Oct. 23, 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 $4.87 million for the three months ended September 30, 2015, or $0.72 in diluted earnings per share, compared to $4.38 million, or $0.65 in diluted earnings per share, in the third quarter of 2014, an increase of 11.0 percent.

"We are pleased to report a quarterly increase in earnings over the year-ago period," said Ronald L. Thigpen, President and Chief Operating Officer. "Net interest income for the third quarter reflects both an improvement in total interest income and a reduction in total interest expense from the prior year quarter. Continuing improvement in credit quality allowed a lower provision for loan loss expense. Non-interest income reflected a 16.8 percent increase in gain on sale of loans from mortgage origination and increases in retail investment income and trust service fees. We had excellent growth in our balance sheet as we experienced solid deposit growth. Loan growth continues to remains lower than expected year to date and continues to be a major challenge. Overall, we continue to perform well reflecting an annualized 1.06 percent return on average assets and an annualized 11.69 percent return on average equity for the third quarter of 2015.”

Total assets at September 30, 2015, were $1.8 billion, an increase of $84.2 million or 4.9 percent from December 31, 2014. Total loans outstanding at the end of the third quarter were $962.4 million, a decrease of $3.9 million from December 31, 2014, and an increase of $19.9 million from June 30, 2015. Total deposits were $1.5 billion at September 30, 2015, an increase of $77.1 million from December 31, 2014, and an increase of $6.6 million from June 30, 2015. Cash and cash equivalents totaled $50.6 million at the end of the third quarter of 2015.

Net interest income for the third quarter of 2015 totaled $13.5 million, a 3.7 percent increase from $13.1 million for the same period in 2014. Noninterest income for the third quarter totaled $5.3 million, an increase from $5.2 million for the same period a year ago. Key increases were reflected from higher mortgage origination volume and increased retail investment income and trust service, partly offset by losses recognized in sales of investment securities. Noninterest expense was $11.6 million in the third quarter of 2015, an increase of 4.7 percent from a year ago primarily resulting from increased commission expense.

The net interest margin was 3.18 percent for the quarter-ended September 30, 2015, compared to 3.20 percent at December 31, 2014, and 3.16 percent for the same period a year ago. Annualized return on average assets (ROA) was 1.06 percent for the third quarter of 2015, an increase from 0.99 percent for the same period a year ago, and annualized return on average shareholder's equity (ROE) was 11.69 percent, a slight decrease from 11.74 percent from the third quarter of 2014.

Nonperforming assets at September 30, 2015, were 0.77 percent of total assets, compared to 1.26 percent at December 31, 2014, and 1.09 percent at September 30, 2014. Net charge-offs for the third quarter of 2015 totaled 0.56 percent of average loans on an annualized basis, compared to 0.43 percent annualized in the third quarter of 2014. The company held $360 thousand in OREO at September 30, 2015, compared to $1.1 million at December 31, 2014, and $1.4 million at September 30, 2014.

The company's loan loss provision expense was $132 thousand in the third quarter of 2015, compared to a credit of $2.7 million in the previous quarter, and $876 thousand in the third quarter a year ago. As noted in the second quarter earnings release, the $2.7 million credit in the previous quarter reflected the impact from a significant payoff and recovery. The allowance for loan losses at September 30, 2015, was $22.2 million, or 2.30 percent of loans outstanding, compared to $25.5 million, or 2.64 percent of loans outstanding, at December 31, 2014, and $26.7 million, or 2.79 percent of loans outstanding, at September 30, 2014.

"We are encouraged by the loan growth we experienced during the third quarter and the increasing pipeline for loans. We are also pleased with the increases in mortgage origination volume along with core deposit growth,” said Thigpen. "Our balance sheet remains strong and we look forward to supporting the needs of our customers. We remain excited about the growth prospects for the community related to the relocation of U. S. Army Cyber Command to Fort Gordon.”

On October 21, 2015, the company's Board of Directors declared a regular quarterly cash dividend of $0.15 per share of common stock payable on November 20, 2015, to shareholders of record as of November 6, 2015.

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)
September 30,
2015 December 31,
Assets(Unaudited) 2014
Cash and due from banks$42,870 $33,286
Interest-bearing deposits in other banks 7,691 2,709
Cash and cash equivalents 50,561 35,995
Available-for-sale securities 696,994 644,465
Loans held for sale, at fair value 32,339 18,365
Loans 962,414 966,356
Less allowance for loan losses 22,180 25,506
Loans, net 940,234 940,850
Premises and equipment, net 27,660 27,842
Accrued interest receivable 6,283 5,898
Bank-owned life insurance 42,832 36,908
Restricted equity securities 4,361 4,398
Other real estate owned 360 1,107
Deferred tax asset 12,316 15,263
Other assets 3,028 1,690
$1,816,968 $1,732,781
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing$235,777 $196,624
Interest-bearing:
NOW accounts 385,455 354,038
Savings 551,703 521,570
Money management accounts 15,662 15,824
Time deposits 352,383 375,808
1,540,980 1,463,864
Securities sold under repurchase agreements 633 10,678
Advances from Federal Home Loan Bank 66,000 64,000
Accrued interest payable and other liabilities 20,232 18,953
Subordinated debentures 20,000 20,000
Total liabilities 1,647,845 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; 6,745,371 and 6,744,891 shares issued in
2015 and 2014, respectively; 6,745,371 and 6,744,160
shares outstanding in 2015 and 2014, respectively 20,236 20,235
Additional paid-in capital 63,507 63,096
Retained earnings 83,628 71,902
Treasury stock, at cost; 0 and 731 shares in
2015 and 2014, respectively - (18)
Accumulated other comprehensive income, net 1,752 71
Total stockholders' equity 169,123 155,286
$1,816,968 $1,732,781

SOUTHEASTERN BANK FINANCIAL CORPORATION
Consolidated Statements of Comprehensive Income
(Dollars in thousands, except share and per share data)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2015 2014 2015 2014
Interest income:
Loans, including fees$11,584 $11,711 $35,296 $34,632
Investment securities 3,945 3,518 11,390 10,670
Interest-bearing deposits in other banks 20 14 54 47
Total interest income 15,549 15,243 46,740 45,349
Interest expense:
Deposits 1,443 1,535 4,354 4,709
Securities sold under repurchase agreements 6 1 11 4
Other borrowings 562 651 1,826 1,978
Total interest expense 2,011 2,187 6,191 6,691
Net interest income 13,538 13,056 40,549 38,658
Provision (Credit) for loan losses 132 876 (2,011) 2,944
Net interest income after provision for loan losses 13,406 12,180 42,560 35,714
Noninterest income:
Service charges and fees on deposits 1,831 1,903 5,418 5,324
Gain on sales of loans 2,007 1,718 5,319 3,910
Gain (loss) on sale of fixed assets, net 58 15 (3) 27
Investment securities (losses) gains, net (includes ($165) and $215 for the three
months ended and ($1,005) and $492 for the nine months ended September 30, 2015
and 2014 accumulated other comprehensive income reclassifications for
unrealized gains (losses) on available-for-sale securities) (165) 215 (1,005) 492
Retail investment income 589 520 1,635 1,608
Trust service fees 357 328 1,048 970
Earnings from cash surrender value of
bank-owned life insurance 365 317 924 876
Miscellaneous income 265 200 709 623
Total noninterest income 5,307 5,216 14,045 13,830
Noninterest expense:
Salaries and other personnel expense 6,719 6,291 19,968 18,205
Occupancy expenses 1,040 1,027 3,088 2,958
Other real estate losses (gains), net 10 239 (102) 226
Prepayment fees - - 955 -
Other operating expenses 3,802 3,498 10,938 10,420
Total noninterest expense 11,571 11,055 34,847 31,809
Income before income taxes 7,142 6,341 21,758 17,735
Income tax expense 2,277 1,959 6,997 5,503
Net income$4,865 $4,382 $14,761 $12,232
Other comprehensive income (loss):
Unrealized loss on derivatives$(502)$(27) (260) (670)
Unrealized gain (loss) on securities available-for-sale 5,472 (849) 2,006 14,449
Reclassification adjustment for realized loss (gain)
on securities, net of OTTI 165 (215) 1,005 (492)
Tax effect (1,997) 424 (1,070) (5,169)
Total other comprehensive income (loss) 3,138 (667) 1,681 8,118
Comprehensive income$8,003 $3,715 $16,442 $20,350
Basic net income per share$0.73 $0.66 $2.20 $1.83
Diluted net income per share 0.72 0.65 2.20 1.83
Weighted average common shares outstanding 6,703,371 6,681,743 6,700,439 6,681,214
Weighted average number of common and
common equivalent shares outstanding 6,719,396 6,694,528 6,713,344 6,687,056





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

Source:Southeastern Bank Financial Corp.