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Southeastern Bank Financial Corp. Reports Record Net Income for the Second Quarter 2013

AUGUSTA, Ga., July 26, 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 $4.0 million, or $0.60 in diluted earnings per share, for the three months ended June 30, 2013, compared to $3.4 million, or $0.50 in diluted earnings per share, in the second quarter of 2012.

"We achieved a record high in net income in the second quarter thanks to continued growth in our core banking operations and a decrease in expenses," said President and Chief Executive Officer R. Daniel Blanton. "Increases in loans, deposits and net interest income helped drive double-digit growth in income and earnings, while improvement in our deposit mix helped lower our funding costs. Loan growth was slight, however, due to low loan demand resulting from a lackluster economy and uncertainty among consumers and small businesses."

Total assets at June 30, 2013, were $1.7 billion, an increase of $31.4 million from Dec. 31, 2012. Loans outstanding at the end of the second quarter were $903.4 million, an increase of $1.9 million from Dec. 31, 2012, and an increase of $28.5 million from June 30, 2012. Total deposits were $1.4 billion at June 30, 2013, an increase of $21.6 million from Dec. 31, 2012, and an increase of $7.9 million from June 30, 2012. Cash and cash equivalents totaled $44.3 million at the end of the second quarter of 2013.

Net interest income for the second quarter of 2013 totaled $13.3 million, a 2.4 percent increase from $13.0 million for the same period in 2012, resulting from a lower cost of funds. Noninterest income for the second quarter totaled $5.2 million, a 3 percent decline from the same period a year ago, due to slower mortgage volumes as well as a decrease in gains on the sale of investment securities. Noninterest expense was $10.3 million in the second quarter of 2013, an 11.3 percent decrease from a year ago resulting primarily from lower expenses on other real estate and operating costs, though decreases were seen across all expense categories.

The net interest margin was 3.36 percent for the quarter ended June 30, 2013, compared to 3.40 percent at March 31, 2013, and 3.38 percent for the same period a year ago. Annualized return on average assets (ROA) was 0.95 percent for the second quarter of 2013, an increase of 13 basis points from the same period a year ago, and annualized return on average shareholder's equity (ROE) was 11.42 percent, an increase of 50 basis points from the second quarter of 2012.

Nonperforming assets at June 30, 2013, were 2.08 percent of total assets, compared to 1.80 percent at March 31, 2013, and 2.63 percent at June 30, 2012. Net charge-offs for the second quarter of 2013 totaled 1.87 percent of average loans on an annualized basis, compared to 0.77 percent annualized in the first quarter of 2013 and 0.97 percent annualized in the second quarter of 2012. The company held $1.1 million in OREO at June 30, 2013, compared to $2.4 million at March 31, 2013, and $7.8 million at June 30, 2012.

The company's loan-loss provision expense was $2.4 million in the second quarter of 2013, a 38.4 percent increase from $1.7 million in the previous quarter, and a 23.8 percent increase from $2.0 million in the second quarter a year ago. The allowance for loan losses at June 30, 2013, was $27.3 million, or 3.12 percent of loans outstanding, compared to $28.9 million, or 3.28 percent of loans outstanding, at March 31, 2013, and $29.6 million, or 3.50 percent of loans outstanding, at June 30, 2012.

"We increased our provision for loan losses in the second quarter to accommodate the resolution of several problem credits," said Blanton. "Our overall asset quality ratios remained solid, however, and have been stable throughout the past year. Though we have generated consistent growth in income and earnings in recent quarters, we will continue to keep a close watch on assets and maintain our conservative approach to banking."

On July 17, 2013, the holding company's board of directors declared a regular quarterly cash dividend of $0.13 per share of common stock payable on August 16, 2013, to shareholders of record as of August 2, 2013. Based on the share price of $19.80 at the close of business on Thursday, July 25, 2013, this dividend represents an annualized yield to shareholders of 2.63 percent.

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
June 30,
2013 December 31,
Assets (Unaudited) 2012
Cash and due from banks $ 40,978,509 $ 39,565,757
Interest-bearing deposits in other banks 3,346,330 4,322,317
Cash and cash equivalents 44,324,839 43,888,074
Available-for-sale securities 678,569,925 654,738,964
Loans held for sale 30,904,991 30,051,204
Loans 872,523,298 871,446,844
Less allowance for loan losses 27,254,204 28,846,336
Loans, net 845,269,094 842,600,508
Premises and equipment, net 25,967,480 26,145,378
Accrued interest receivable 6,671,268 6,602,879
Bank-owned life insurance 35,396,037 34,825,588
Restricted equity securities 4,869,600 5,295,600
Other real estate owned 1,095,670 3,489,887
Prepaid FDIC assessment 24,292 2,023,977
Deferred tax asset 17,363,829 10,406,187
Other assets 3,444,289 2,434,228
$1,693,901,314 $1,662,502,474
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 177,005,347 $ 158,066,510
Interest-bearing:
NOW accounts 349,119,604 349,531,376
Savings 517,454,418 504,193,793
Money management accounts 16,530,853 18,032,530
Time deposits over $100,000 274,512,679 280,870,648
Other time deposits 108,269,897 110,576,827
1,442,892,798 1,421,271,684
Securities sold under repurchase agreements 10,718,272 976,433
Advances from Federal Home Loan Bank 64,000,000 64,000,000
Accrued interest payable and other liabilities 16,911,959 18,924,619
Due to broker 6,480,000 --
Subordinated debentures 21,546,646 21,546,646
Total liabilities 1,562,549,675 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; 6,678,807 and 6,675,000 shares outstanding in 2013 and 2012, respectively 20,040,675 20,040,675
Additional paid-in capital 62,853,466 62,835,122
Retained earnings 51,938,961 45,028,153
Treasury stock, at cost; 1,418 and 5,225 shares in 2013 and 2012, respectively (19,724) (72,680)
Accumulated other comprehensive income (loss), net (3,461,739) 7,951,822
Total stockholders' equity 131,351,639 135,783,092
$1,693,901,314 $1,662,502,474
SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Interest income:
Loans, including fees $ 11,744,176 $ 11,557,319 $ 23,434,937 $ 23,218,026
Investment securities 3,897,515 4,422,010 7,879,253 8,667,075
Interest-bearing deposits in other banks 20,662 21,638 36,885 46,540
Total interest income 15,662,353 16,000,967 31,351,075 31,931,641
Interest expense:
Deposits 1,683,039 2,377,509 3,512,522 5,091,153
Securities sold under repurchase agreements 813 7,486 1,701 8,670
Other borrowings 676,209 630,538 1,345,576 1,226,992
Total interest expense 2,360,061 3,015,533 4,859,799 6,326,815
Net interest income 13,302,292 12,985,434 26,491,276 25,604,826
Provision for loan losses 2,413,949 1,949,700 4,158,692 4,165,712
Net interest income after provision for loan losses 10,888,343 11,035,734 22,332,584 21,439,114
Noninterest income:
Service charges and fees on deposits 1,793,770 1,685,451 3,467,563 3,296,323
Gain on sales of loans 2,155,303 2,362,780 4,056,812 4,318,452
Gain on sale of fixed assets, net 16,204 8,000 21,704 6,459
Investment securities gains (losses), net 14,903 100,519 (29,326) 477,519
Other-than-temporary loss
Total impairment loss -- (13,314) -- (13,314)
Less loss recognized in other comprehensive income -- (4,268) -- (4,268)
Net impairment loss recognized in earnings -- (9,046) -- (9,046)
Retail investment income 487,132 504,416 987,840 1,026,646
Trust service fees 284,369 288,439 589,255 577,276
Earnings from cash surrender value of bank-owned life insurance 287,915 265,462 570,449 525,983
Miscellaneous income 186,758 175,652 375,413 365,731
Total noninterest income 5,226,354 5,381,673 10,039,710 10,585,343
Noninterest expense:
Salaries and other personnel expense 6,140,533 6,542,556 12,337,942 12,739,969
Occupancy expenses 939,055 1,042,733 1,874,136 2,096,803
Other real estate losses, net 207,571 688,456 617,300 1,348,936
Other operating expenses 3,000,886 3,330,400 6,219,098 6,278,057
Total noninterest expense 10,288,045 11,604,145 21,048,476 22,463,765
Income before income taxes 5,826,652 4,813,262 11,323,818 9,560,692
Income tax expense 1,824,018 1,451,852 3,544,765 2,897,256
Net income $ 4,002,634 $ 3,361,410 $ 7,779,053 $ 6,663,436
Comprehensive income (loss) $ (7,094,452) $ 5,774,124 $ (3,634,508) $ 9,046,686
Basic net income per share $ 0.60 $ 0.50 $ 1.16 $ 1.00
Diluted net income per share $ 0.60 $ 0.50 $ 1.16 $ 1.00
Weighted average common shares outstanding 6,678,807 6,679,371 6,678,112 6,678,927
Weighted average number of common and common equivalent shares outstanding 6,678,807 6,679,371 6,678,112 6,678,927

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