Southeastern Bank Financial CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - Southeastern Bank Financial CORP	t74253_8k.htm

EXHIBIT 99.1

For More Information:
Ronald L. Thigpen	Andy Mus
Executive Vice President and COO	Senior Vice President
Southeastern Bank Financial Corp.	Marsh Communications LLC
706-481-1014	770-621-2700

Southeastern Bank Financial Corp. Reports

Second Quarter 2012 Earnings

AUGUSTA, Ga., July 27, 2012 – Southeastern Bank Financial Corp. (OTCBB:SBFC), the holding company for Georgia Bank & Trust Company of Augusta (GB&T), today reported quarterly net income of $3.4 million for the three months ended June 30, 2012, or $0.50 in diluted earnings per share, compared to $2.8 million, or $0.42 in diluted earnings per share, in the second quarter of 2011.

“We generated record earnings in the second quarter, nearly a 20 percent gain from a year ago,” said President and Chief Executive Officer R. Daniel Blanton. “We also grew core earnings, deposits, total assets and saw a slight increase in core loans while maintaining a stable credit quality. Our performance reflects the ongoing success of our focus on executing the fundamentals of banking and providing an unparalleled level of customer service.”

Total assets at June 30, 2012, were $1.7 billion, an increase of $51.4 million from Dec. 31, 2011. Loans outstanding at the end of the second quarter were $875.0 million, a decrease of $669 thousand from Dec. 31, 2011, and a decrease of $14.8 million from June 30, 2011. Total deposits were $1.4 billion at June 30, 2012, an increase of $15.8 million at Dec. 31, 2011, and an increase of $33.0 million from June 30, 2011. Cash and cash equivalents totaled $59.3 million at the end of the second quarter of 2012.

Net interest income for the second quarter of 2012 totaled $13.0 million, a slight increase from $12.9 million for the same period in 2011. Noninterest income for the second quarter totaled $5.0 million, a 6.4 percent increase from $4.7 million for the same period a year ago, resulting from higher mortgage origination volume. Noninterest expense was $11.2 million in the second quarter of 2012, an increase of 10.9 percent from $10.1 million a year ago, resulting primarily from higher commission and benefit expenses as well as other real estate losses, though occupancy and operating expenses declined slightly in comparison to the second quarter of 2011.

The net interest margin was 3.38 percent for the quarter-ended June 30, 2012, compared to 3.34 percent at the end of the first quarter of 2012, and 3.44 percent a year ago. Annualized return on average assets (ROA) was 0.82 percent for the second quarter of 2012, an increase of 12 basis points from the same period a year ago, and annualized return on average shareholder’s equity (ROE) was 10.92 percent, an increase of 16 basis points from the second quarter of 2011.

Nonperforming assets at June 30, 2012, were 2.63 percent of total assets, compared to 2.92 percent at March 31, 2012, 3.19 percent at December 31, 2011 and 2.29 percent at June 30, 2011. Net charge-offs for the second quarter of 2012 totaled 0.97 percent of average loans on an annualized basis, compared to 0.78 percent annualized in the first quarter of 2012 and 0.85 percent annualized in the second quarter of 2011. The company held $7.8 million in OREO at June 30, 2012, compared to $6.2 million at December 31, 2011, and $8.6 million at June 30, 2011.

The company’s loan-loss provision expense was $1.9 million in the second quarter of 2012, compared to $2.2 million in the first quarter of 2012 and $3.4 million in the second quarter a year ago. The allowance for loan losses at June 30, 2012, was $29.6 million, or 3.49 percent of loans outstanding, compared to $29.0 million, or 3.43 percent of loans outstanding, at Dec. 31, 2011, and $28.4 million, or 3.25 percent of loans outstanding, at June 30, 2011.

Net income for the six months ended June 30, 2012, totaled $6.7 million, an increase of $1.6 million from the same period of 2011. Diluted earnings per share for the first six months of 2012 were $1.00, an increase of $0.24 per share earned from the same period a year ago.

Net interest income for the first six months of 2012 was $25.6 million, a 2.1 percent increase from $25.1 million in the first six months of 2011. Noninterest income was $10.3 million for the first six months of 2012, a 17.9 percent increase from $8.7 million in the same period of 2011. Noninterest expense was $22.2 million for the six-month period ended June 30, 2012, compared to $19.8 million in the same period in 2011.

“While we are very encouraged by our growth and profitability over the past two years, the state of the economy remains in flux, which is why we have built and maintained a “fortress” balance sheet.” said Blanton. “We will always position ourselves conservatively as we move forward.”

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 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 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.

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SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Balance Sheets

		June 30,
		2012		December 31,
	Assets	(Unaudited)		2011

Cash and due from banks		$	53,499,901	$	51,080,600
Interest-bearing deposits in other banks			5,820,026		18,760,812
	Cash and cash equivalents		59,319,927		69,841,412
Available-for-sale securities			665,369,199		603,758,999
Loans held for sale			27,197,419		29,615,131
Loans			847,758,800		846,010,275
Less allowance for loan losses			29,551,983		29,045,876
	Loans, net		818,206,817		816,964,399
Premises and equipment, net			26,787,235		27,608,118
Accrued interest receivable			6,507,878		6,246,880
Bank-owned life insurance			31,239,471		30,713,488
Restricted equity securities			5,399,000		5,086,000
Other real estate owned			7,772,867		6,208,720
Prepaid FDIC assessment			2,732,710		3,419,738
Deferred tax asset			11,523,343		12,723,238
Other assets			4,071,286		2,586,986
		$	1,666,127,152	$	1,614,773,109
	Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing		$	154,046,942	$	147,196,034
Interest-bearing:
NOW accounts			348,627,779		346,235,936
Savings			483,101,422		471,727,749
Money management accounts			38,980,229		42,977,515
Time deposits over $100,000			284,014,164		286,318,774
Other time deposits			126,244,548		124,766,377
			1,435,015,084		1,419,222,385
Securities sold under repurchase agreements			663,789		700,798
Advances from Federal Home Loan Bank			66,000,000		39,000,000
Accrued interest payable and other liabilities			16,784,572		15,874,526
Subordinated debentures			21,546,646		22,946,646
	Total liabilities		1,540,010,091		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; 6,679,381 and 6,677,667 shares issued and outstanding in 2012 and 2011, respectively			20,038,143		20,033,001
Additional paid-in capital			62,803,611		62,767,133
Retained earnings			37,256,617		30,593,180
Accumulated other comprehensive income, net			6,018,690		3,635,440
	Total stockholders' equity		126,117,061		117,028,754
		$	1,666,127,152	$	1,614,773,109

SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Interest income:
Loans, including fees	$	11,557,319		$	12,826,525		$	23,218,026		$	25,454,773
Investment securities		4,422,010			4,509,850			8,667,075			8,829,754
Interest-bearing deposits in other banks		21,638			34,955			46,540			70,429
Total interest income		16,000,967			17,371,330			31,931,641			34,354,956
Interest expense:
Deposits		2,377,509			3,839,590			5,091,153			7,907,393
Securities sold under repurchase
agreements		7,486			1,616			8,670			3,274
Other borrowings		630,538			662,819			1,226,992			1,377,397
Total interest expense		3,015,533			4,504,025			6,326,815			9,288,064
Net interest income		12,985,434			12,867,305			25,604,826			25,066,892
Provision for loan losses		1,949,700			3,423,114			4,165,712			6,663,518
Net interest income after provision for loan losses		11,035,734			9,444,191			21,439,114			18,403,374
Noninterest income:
Service charges and fees on deposits		1,685,451			1,750,095			3,296,323			3,327,837
Gain on sales of loans		2,003,180			1,720,503			4,022,474			2,927,137
Gain on sale of fixed assets		8,000			-			6,459			16,659
Investment securities gains (losses), net		100,519			(29,533	)		477,519			118,223
Other-than-temporary loss
Total impairment loss		(13,314	)		-			(13,314	)		(126,907	)
Less loss recognized in other comprehensive income		(4,268	)		-			(4,268	)		(65,422	)
Net impairment loss recognized in earnings		(9,046	)		-			(9,046	)		(61,485	)
Retail investment income		504,416			506,761			1,026,646			964,267
Trust service fees		288,439			292,174			577,276			565,238
Earnings from cash surrender value of bank-owned life insurance		265,462			248,103			525,983			465,980
Miscellaneous income		175,652			190,684			365,731			404,066
Total noninterest income		5,022,073			4,678,787			10,289,365			8,727,922
Noninterest expense:
Salaries and other personnel expense		6,542,556			5,653,375			12,739,969			11,217,731
Occupancy expenses		1,042,733			1,111,444			2,096,803			2,226,617
Other real estate losses, net		688,456			365,566			1,348,936			460,969
Other operating expenses		2,970,800			2,931,629			5,982,079			5,932,345
Total noninterest expense		11,244,545			10,062,014			22,167,787			19,837,662
Income before income taxes		4,813,262			4,060,964			9,560,692			7,293,634
Income tax expense		1,451,852			1,255,781			2,897,256			2,186,575
Net income	$	3,361,410		$	2,805,183		$	6,663,436		$	5,107,059
Comprehensive income	$	5,774,124		$	8,336,236		$	9,046,686		$	9,686,164
Basic net income per share	$	0.50		$	0.42		$	1.00		$	0.76
Diluted net income per share	$	0.50		$	0.42		$	1.00		$	0.76
Weighted average common shares outstanding		6,679,371			6,676,467			6,678,927			6,676,161
Weighted average number of common and common equivalent shares outstanding		6,679,371			6,676,467			6,678,927			6,676,161

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