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Southeastern Bank Financial Corp. Reports Positive Earnings for the Fourth Quarter and Year-End 2012

AUGUSTA, Ga., Jan. 25, 2013 (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 $3.9 million for the three months ended Dec. 31, 2012, or $0.58 in diluted earnings per share, compared to $3.0 million, or $0.45 in diluted earnings per share, in the fourth quarter of 2011. For the full year, the company reported net income of $14.4 million, or $2.16 per diluted share, compared to net income of $11.0 million, or $1.65 per diluted share, for 2011.

"We are pleased to have ended 2012 on a strong note, generating a 29.3 percent gain in quarterly net income over the fourth quarter of last year and a 30.7 percent increase in earnings for 2012 over 2011," said President and Chief Executive Officer R. Daniel Blanton. "Our effort and performance over the entire year have been solid and our success is reflected in the fact that we increased net interest income in a historically low interest rate environment, improved our deposit mix, grew loans in a market of low demand and improved our asset quality in what continues to be a challenging economic environment."

Total assets at Dec. 31, 2012, were $1.7 billion, an increase of $47.7 million from Dec. 31, 2011. Loans outstanding at the end of the fourth quarter were $901.5 million, an increase of $25.9 million from Dec. 31, 2011. Total deposits were $1.4 billion at Dec. 31, 2012, an increase of $2.0 million from Dec. 31, 2011. Cash and cash equivalents totaled $43.9 million at the end of the fourth quarter of 2012.

Net interest income for the fourth quarter of 2012 totaled $13.1 million, a 5.2 percent increase from $12.4 million for the same period in 2011. Noninterest income for the fourth quarter totaled $5.5 million, a decrease from $5.7 million for the same period a year ago, due to a reduction in investment securities gains as compared to 2011. Noninterest expense was $11.3 million in the fourth quarter of 2012, a 2.6 percent decrease from a year ago resulting from lower losses on other real estate.

The net interest margin was 3.30 percent for the quarter-ended Dec. 31, 2012, compared to 3.34 percent for the third quarter of 2012, and 3.28 percent for the same period a year ago. Annualized return on average assets (ROA) was 0.92 percent for the fourth quarter of 2012, an increase of 18 basis points from the same period a year ago, and annualized return on average shareholder's equity (ROE) was 11.52 percent, an increase of 115 basis points from the fourth quarter of 2011.

Nonperforming assets at Dec. 31, 2012, were 2.08 percent of total assets, compared to 2.03 percent at Sept. 30, 2012, and 3.19 percent at Dec. 31, 2011. Net charge-offs for the fourth quarter of 2012 totaled 0.84 percent of average loans on an annualized basis, compared to 0.93 percent annualized in the third quarter of 2012 and 1.26 percent annualized in the fourth quarter of 2011. The company held $3.5 million in OREO at Dec. 31, 2012, compared to $6.2 million at December 31, 2011.

The company's loan-loss provision expense was $1.6 million in the fourth quarter of 2012, a 33.3 percent decrease from $2.4 million in the third quarter of 2012, and a 34.1 percent decrease from $2.4 million in the fourth quarter a year ago. The allowance for loan losses at Dec. 31, 2012, was $28.9 million, or 3.20 percent of loans outstanding, compared to $29.0 million, or 3.32 percent of loans outstanding, at Dec. 31, 2011.

Net interest income for the 12 months ended Dec. 31, 2012, was $51.6 million, a 2.1 percent increase from $50.6 million in the full year 2011. Noninterest income was $21.5 million for the 12 months ended Dec. 31, 2012, a 9.3 percent increase from $19.7 million in the same period of 2011, primarily as a result of a 32.4 percent increase in mortgage income for the year. Noninterest expense was $44.1 million for the full year 2012, compared to $42.0 million in the same period in 2011.

"We significantly reduced our provision for loan losses due to the growing strength and stability of our loan portfolio," said Blanton. "We will continue to monitor our assets closely, however, keeping in line with our conservative approach to banking."

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 provides 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 AND SUBSIDIARY
Consolidated Balance Sheets
December 31,
2012
December 31,
2011
Assets (Unaudited)
Cash and due from banks $ 39,565,757 $ 51,080,600
Interest-bearing deposits in other banks 4,322,317 18,760,812
Cash and cash equivalents 43,888,074 69,841,412
Available-for-sale securities 654,738,964 603,758,999
Loans held for sale 30,051,204 29,615,131
Loans 871,446,844 846,010,275
Less allowance for loan losses 28,846,336 29,045,876
Loans, net 842,600,508 816,964,399
Premises and equipment, net 26,145,378 27,608,118
Accrued interest receivable 6,602,879 6,246,880
Bank-owned life insurance 34,825,588 30,713,488
Restricted equity securities 5,295,600 5,086,000
Other real estate owned 3,489,887 6,208,720
Prepaid FDIC assessment 2,023,977 3,419,738
Deferred tax asset 10,406,187 12,723,238
Other assets 2,434,228 2,586,986
$1,662,502,474 $1,614,773,109
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 158,066,510 $ 147,196,034
Interest-bearing:
NOW accounts 349,531,376 346,235,936
Savings 504,193,793 471,727,749
Money management accounts 18,032,530 42,977,515
Time deposits over $100,000 280,870,648 286,318,774
Other time deposits 110,576,827 124,766,377
1,421,271,684 1,419,222,385
Securities sold under repurchase agreements 976,433 700,798
Advances from Federal Home Loan Bank 64,000,000 39,000,000
Accrued interest payable and other liabilities 18,924,619 15,874,526
Subordinated debentures 21,546,646 22,946,646
Total liabilities 1,526,719,382 1,497,744,355
Stockholders' equity:
Preferred stock, no par value; 10,000,000 shares authorized; 0 shares outstanding in 2012 and 2011, respectively -- --
Common stock, $3.00 par value; 10,000,000 shares authorized; 6,680,225 and 6,677,667 shares issued in 2012 and 2011, respectively; 6,675,000 and 6,677,667 shares outstanding in 2012 and 2011, respectively 20,040,675 20,033,001
Additional paid-in capital 62,835,122 62,767,133
Retained earnings 45,028,153 30,593,180
Treasury stock, at cost; 5,225 and 0 shares in 2012 and 2011, respectively (72,680) --
Accumulated other comprehensive income, net 7,951,822 3,635,440
Total stockholders' equity 135,783,092 117,028,754
$1,662,502,474 $1,614,773,109
SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Interest income:
Loans, including fees $ 11,732,583 $11,945,592 $ 46,692,599 $50,036,221
Investment securities 4,093,654 4,204,477 16,895,170 17,484,345
Interest-bearing deposits in other banks 20,272 26,834 81,848 119,728
Total interest income 15,846,509 16,176,903 63,669,617 67,640,294
Interest expense:
Deposits 2,106,626 3,154,118 9,425,091 14,443,074
Securities sold under repurchase agreements 2,602 1,808 12,010 6,296
Other borrowings 686,102 614,666 2,596,700 2,629,082
Total interest expense 2,795,330 3,770,592 12,033,801 17,078,452
Net interest income 13,051,179 12,406,311 51,635,816 50,561,842
Provision for loan losses 1,573,465 2,385,948 8,140,563 12,584,033
Net interest income after provision for loan losses 11,477,714 10,020,363 43,495,253 37,977,809
Noninterest income:
Service charges and fees on deposits 1,819,570 1,691,869 6,848,502 6,749,018
Gain on sales of loans 2,472,172 2,050,637 9,367,753 7,074,950
Gain on sale of fixed assets -- 54,049 10,459 70,708
Investment securities gains (losses), net (120,192) 750,143 320,994 1,118,880
Other-than-temporary loss
Total impairment loss -- -- (13,314) (191,618)
Less loss recognized in other comprehensive income -- -- (4,268) (89,494)
Net impairment loss recognized in earnings -- -- (9,046) (102,124)
Retail investment income 494,764 443,446 1,941,313 1,851,570
Trust service fees 288,611 278,876 1,145,695 1,128,234
Earnings from cash surrender value of bank-owned life insurance 281,225 266,956 1,112,100 1,034,854
Miscellaneous income 221,217 172,131 756,491 745,649
Total noninterest income 5,457,367 5,708,107 21,494,261 19,671,739
Noninterest expense:
Salaries and other personnel expense 6,546,113 6,015,029 25,889,475 23,222,936
Occupancy expenses 982,430 1,044,877 4,093,548 4,359,701
Other real estate losses, net 532,348 865,460 1,784,617 1,898,672
Other operating expenses 3,227,502 3,655,851 12,300,551 12,560,027
Total noninterest expense 11,288,393 11,581,217 44,068,191 42,041,336
Income before income taxes 5,646,688 4,147,253 20,921,323 15,608,212
Income tax expense 1,750,627 1,134,151 6,486,350 4,563,638
Net income $ 3,896,061 $ 3,013,102 $ 14,434,973 $11,044,574
Comprehensive income $ 3,058,960 $ 1,589,769 $ 18,751,355 $16,913,531
Basic net income per share $ 0.58 $ 0.45 $ 2.16 $ 1.65
Diluted net income per share $ 0.58 $ 0.45 $ 2.16 $ 1.65
Weighted average common shares outstanding 6,675,000 6,677,697 6,678,215 6,676,774
Weighted average number of common and common equivalent shares outstanding 6,675,000 6,677,697 6,678,215 6,676,774

CONTACT: For More Information: Ronald L. Thigpen Executive Vice President and COO Southeastern Bank Financial Corp. 706-481-1014 Andy Mus Vice President Ketchum Inc. 404-879-9075Source:Southeastern Bank Financial Corp.