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Southeastern Bank Financial Corp. Reports First Quarter Earnings

AUGUSTA, Ga., April 29, 2016 (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 $4.7 million for the three months ended March 31, 2016, or $0.70 in diluted earnings per share, compared to $4.2 million, or $0.63 in diluted earnings per share, in the first quarter of 2015, an increase of 11.1 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. "Our net interest income increased based on loan growth. Noninterest income increased and included an 8.6 percent increase in gain on sale of loans from our mortgage operations. Credit costs continued to decline along with further improvement in asset quality. Growth in our balance sheet reflected increases in core loans and deposits. Overall, we continue to perform very well reflecting an annualized 1.03 percent return on average assets and an annualized 10.82 percent return on average equity.”

Total assets at March 31, 2016, were $1.9 billion, an increase of $36.9 million from December 31, 2015. Loans outstanding at the end of the first quarter were $1.05 billion, an increase of $20.7 million from December 31, 2015, and an increase of $59.9 million from March 31, 2015. Total deposits were $1.6 billion at March 31, 2016, an increase of $39.4 million from December 31, 2015, and an increase of $31.4 million from March 31, 2015. Cash and cash equivalents totaled $90.7 million at the end of the first quarter of 2016.

Net interest income for the first quarter of 2016 totaled $13.8 million, a 5.7 percent increase from $13.1 million for the same period in 2015. Noninterest income for the first quarter totaled $5.2 million, an increase from $4.7 million for the same period a year ago, primarily due to higher mortgage origination volume and investment securities gains. Noninterest expense was $11.7 million in the first quarter of 2016, a 5.9 percent increase from a year ago resulting from higher salary and personnel expenses, including commissions, as well as increased marketing and processing expenses.

The net interest margin was 3.23 percent for the quarter-ended March 31, 2016, compared to 3.14 percent at December 31, 2015, and 3.22 percent for the same period a year ago. Annualized return on average assets (ROA) was 1.03 percent for the first quarter of 2016, an increase from 0.97 percent for the same period a year ago, and annualized return on average shareholder's equity (ROE) was 10.82 percent, remaining the same as the first quarter of 2015.

Nonperforming assets at March 31, 2016, were 0.84 percent of total assets, compared to 0.97 percent at December 31, 2015, and 1.11 percent at March 31, 2015. Net charge-offs for the first quarter of 2016 totaled 0.10 percent of average loans on an annualized basis, compared to 0.48 percent annualized in the fourth quarter of 2015 and 0.28 percent annualized in the first quarter of 2015. The company held $655 thousand in OREO at March 31, 2016, compared to $360 thousand at December 31, 2015, and $1.0 million at March 31, 2015.

The company's loan-loss provision expense was $428 thousand in the first quarter of 2016, compared to $382 thousand in the fourth quarter of 2015 and $547 thousand in the first quarter of 2015. The allowance for loan losses at March 31, 2016, was $21.5 million, or 2.06 percent of loans outstanding, compared to $21.4 million, or 2.08 percent of loans outstanding, at December 31, 2015, and $25.4 million, or 2.57 percent of loans outstanding, at March 31, 2015.

"This low interest rate environment continues to challenge our net interest margin but we are pleased with core loan and deposit growth and the increases in our mortgage origination volume," said Thigpen. "Our balance sheet remains strong and we are well positioned to handle increased loan growth and meet the needs of our community.”

About Southeastern Bank Financial Corp.
Southeastern Bank Financial Corp. is the $1.9 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)
March 31,
2016 December 31,
Assets (Unaudited) 2015
Cash and due from banks $61,396 $40,181
Interest-bearing deposits in other banks 29,321 2,736
Cash and cash equivalents 90,717 42,917
Available-for-sale securities 662,265 691,563
Loans held for sale, at fair value 18,588 18,647
Loans 1,029,936 1,009,149
Less allowance for loan losses 21,548 21,367
Loans, net 1,008,388 987,782
Premises and equipment, net 26,959 27,398
Accrued interest receivable 6,237 6,331
Bank-owned life insurance 43,496 43,167
Restricted equity securities 5,478 5,169
Other real estate owned 655 360
Deferred tax asset 11,094 13,958
Other assets 3,398 3,073
$1,877,275 $1,840,365
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $254,356 $229,002
Interest-bearing:
NOW accounts 406,553 401,674
Savings 548,413 548,729
Money management accounts 16,154 16,330
Time deposits 342,977 333,345
1,568,453 1,529,080
Securities sold under repurchase agreements 763 15,684
Advances from Federal Home Loan Bank 90,000 85,000
Accrued interest payable and other liabilities 19,866 20,688
Subordinated debentures 20,000 20,000
Total liabilities 1,699,082 1,670,452
Stockholders' equity:
Preferred stock, no par value; 10,000,000 shares authorized;
0 shares outstanding in 2016 and 2015, respectively
- -
Common stock, $3.00 par value; 10,000,000 shares
authorized; 6,746,328 and 6,745,818 shares issued in
2016 and 2015, respectively; 6,746,328 and 6,745,818
shares outstanding in 2016 and 2015, respectively
20,239 20,237
Additional paid-in capital 63,869 63,637
Retained earnings 90,867 87,250
Treasury stock, at cost; 0 shares in 2016 and
2015, respectively
- -
Accumulated other comprehensive income (loss), net 3,218 (1,211)
Total stockholders' equity 178,193 169,913
$1,877,275 $1,840,365

SOUTHEASTERN BANK FINANCIAL CORPORATION
Consolidated Statements of Comprehensive Income
(Dollars in thousands, except share and per share data)
(Unaudited)
Three Months Ended
March 31,
2016 2015
Interest income:
Loans, including fees $11,954 $11,525
Investment securities 3,849 3,647
Interest-bearing deposits in other banks 37 17
Total interest income 15,840 15,189
Interest expense:
Deposits 1,375 1,460
Securities sold under repurchase agreements 10 3
Other borrowings 626 638
Total interest expense 2,011 2,101
Net interest income 13,829 13,088
Provision for loan losses 428 547
Net interest income after provision for loan losses 13,401 12,541
Noninterest income:
Service charges and fees on deposits 1,765 1,744
Gain on sales of loans 1,688 1,554
Investment securities gains (losses), net 236 57
Retail investment income 538 526
Trust service fees 354 336
Earnings from cash surrender value of
bank-owned life insurance
329 278
Miscellaneous income 305 224
Total noninterest income 5,215 4,719
Noninterest expense:
Salaries and other personnel expense 6,772 6,587
Occupancy expenses 1,091 1,018
Other real estate losses (gains), net - (66)
Other operating expenses 3,849 3,526
Total noninterest expense 11,712 11,065
Income before income taxes 6,904 6,195
Income tax expense 2,208 1,989
Net income $4,696 $4,206
Other comprehensive income:
Unrealized loss on derivatives $(643) $(366)
Unrealized gain on securities available-for-sale 8,128 4,263
Reclassification adjustment for realized gain
on securities, net of OTTI
(236) (57)
Tax effect (2,820) (1,494)
Total other comprehensive income 4,429 2,346
Comprehensive income $9,125 $6,552
Basic net income per share $0.70 $0.63
Diluted net income per share 0.70 0.63
Weighted average common shares outstanding 6,718,157 6,695,011
Weighted average number of common and
common equivalent shares outstanding
6,731,088 6,707,037

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

Source:Southeastern Bank Financial Corp.