News Column

Southeastern Bank Financial Corp. Reports Record Earnings for the Fourth Quarter and Year-End 2013

January 31, 2014

AUGUSTA, Ga. , Jan. 31, 2014 (GLOBE NEWSWIRE) -- Southeastern Bank Financial Corp. (OTCQB:SBFC), the holding company for Georgia Bank & Trust Company of Augusta (GB&T), today reported record quarterly net income of $4.4 million for the three months ended Dec. 31, 2013 , or $0.65 in diluted earnings per share, compared to $3.9 million , or $0.58 in diluted earnings per share, in the fourth quarter of 2012. For the full year, the company reported record net income of $16.3 million , or $2.45 per diluted share, compared to net income of $14.4 million , or $2.16 per diluted share, for 2012. "We are pleased to have continued our consistently solid performance for 2013 with record earnings for both the fourth quarter and the year," said President and Chief Executive Officer R. Daniel Blanton . "We continued to grow net interest income in a historically low interest rate environment and grew loans in a market with lingering low demand. Another reflection of our strong performance is our improved asset quality, with healthy reductions in nonperforming assets allowing for a continued reduction in our provision for loan losses." Total assets at Dec. 31, 2013 , were $1.7 billion , an increase of $26.8 million from Dec. 31, 2012 . Loans outstanding at the end of the fourth quarter were $916.4 million , an increase of $14.9 million from Dec. 31, 2012 . Total deposits were $1.5 billion at Dec. 31, 2013 , an increase of $33.5 million from Dec. 31, 2012 . Cash and cash equivalents totaled $47.3 million at the end of the fourth quarter of 2013. Net interest income for the fourth quarter of 2013 totaled $13.1 million , a slight increase from the same period in 2012. Noninterest income for the fourth quarter totaled $3.6 million , a decrease from $5.5 million for the same period a year ago, due to lower mortgage origination volume and bond losses taken to improve the Banks' interest rate risk profile in anticipation of rising rates. Noninterest expense was $9.1 million in the fourth quarter of 2013, a 19.3 percent decrease from a year ago resulting from reduced salary and other real estate expenses. The net interest margin was 3.21 percent for the quarter-ended Dec. 31, 2013 , compared to 3.31 percent for the third quarter of 2013, and 3.30 percent for the same period a year ago. Annualized return on average assets (ROA) was 1.01 percent for the fourth quarter of 2013, an increase of 9 basis points from the same period a year ago, and annualized return on average shareholder's equity (ROE) was 13.02 percent, an increase of 150 basis points from the fourth quarter of 2012. Nonperforming assets at Dec. 31, 2013 , were 1.58 percent of total assets, compared to 1.78 percent at Sept. 30, 2013 , and 2.08 percent at Dec. 31, 2012 . Net charge-offs for the fourth quarter of 2013 totaled 0.68 percent of average loans on an annualized basis, compared to 1.17 percent annualized in the third quarter of 2013 and 0.84 percent annualized in the fourth quarter of 2012. The company held $1.0 million in OREO at Dec. 31, 2013 , compared to $3.5 million at December 31, 2012 . The company's loan-loss provision expense was $1.4 million in the fourth quarter of 2013, a 26.3 percent decrease from $1.9 million in the third quarter of 2013, and a 11.50 percent decrease from $1.6 million in the fourth quarter a year ago. The allowance for loan losses at Dec. 31, 2013 , was $26.4 million , or 2.92 percent of loans outstanding, compared to $28.8 million , or 3.31 percent of loans outstanding, at Dec. 31, 2012 . Net interest income for the 12 months ended Dec. 31, 2013 , was $52.8 million , a 2.3 percent increase from $51.6 million in the full year 2012. Noninterest income was $18.5 million for the 12 months ended Dec. 31, 2013 , a 15.4 percent decrease from $21.9 million in the same period of 2012, as a result of a decrease in mortgage income for the year and intentionally taken bond losses. Noninterest expense was $40.4 million for the full year 2013, compared to $44.4 million in the same period in 2012. "We saw expected decreases in noninterest income for the fourth quarter and the year," said Blanton. "We have actively worked to position the balance sheet for increasing interest rates, and we maintain strong loan loss reserves, in keeping with our consistent long term approach to our business." On January 15, 2014 , the Board of Directors of Southeastern Bank Financial Corp. declared a regular quarterly cash dividend of $0.13 per share of common stock payable on February 14, 2014 , to shareholders of record as of January 31, 2014 . Based on the share price of $21.18 at the close of business on Thursday, January 30, 2014 , this dividend represents an annualized yield to shareholders of 2.46%. 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. SOUTHEASTERN BANK FINANCIAL CORPORATION Consolidated Balance Sheets December 31 , 2013 December 31 , Assets (Unaudited) 2012 Cash and due from banks $ 36,766,420 $ 39,565,757 Interest-bearing deposits in other banks 10,570,222 4,322,317 Cash and cash equivalents 47,336,642 43,888,074 Available-for-sale securities 649,979,319 654,738,964 Loans held for sale 10,638,179 30,051,204 Loans 905,712,691 871,446,844 Less allowance for loan losses 26,408,723 28,846,336 Loans, net 879,303,968 842,600,508 Premises and equipment, net 27,002,697 26,145,378 Accrued interest receivable 6,221,061 6,602,879 Bank-owned life insurance 35,744,649 34,825,588 Restricted equity securities 4,869,600 5,295,600 Other real estate owned 1,013,563 3,489,887 Prepaid FDIC assessment -- 2,023,977 Deferred tax asset 21,022,576 10,406,187 Other assets 6,193,363 2,434,228 $1,689,325,617 $1,662,502,474 Liabilities and Stockholders' Equity Deposits Noninterest-bearing $ 187,287,015 $ 158,066,510 Interest-bearing: NOW accounts 351,798,554 349,531,376 Savings 521,656,334 504,193,793 Money management accounts 16,065,409 18,032,530 Time deposits of $100,000 or more 293,003,961 280,870,648 Other time deposits 84,991,883 110,576,827 1,454,803,156 1,421,271,684 Securities sold under repurchase agreements 808,311 976,433 Advances from Federal Home Loan Bank 64,000,000 64,000,000 Accrued interest payable and other liabilities 16,598,876 18,924,619 Subordinated debentures 21,546,646 21,546,646 Total liabilities 1,557,756,989 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; 6,679,982 and 6,675,000 shares outstanding in 2013 and 2012, respectively 20,040,675 20,040,675 Additional paid-in capital 62,863,774 62,835,122 Retained earnings 58,768,914 45,028,153 Treasury stock, at cost; 243 and 5,225 shares in 2013 and 2012, respectively (3,380) (72,680) Accumulated other comprehensive income (loss), net (10,101,355) 7,951,822 Total stockholders' equity 131,568,628 135,783,092 $1,689,325,617 $1,662,502,474 SOUTHEASTERN BANK FINANCIAL CORPORATION Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three Months Ended Twelve Months Ended December 31 , December 31 , 2013 2012 2013 2012 Interest income: Loans, including fees $ 11,375,646 $ 11,732,583 $ 46,478,776 $ 46,692,599 Investment securities 4,009,862 4,093,654 15,763,823 16,895,170 Interest-bearing deposits in other banks 20,945 20,272 71,085 81,848 Total interest income 15,406,453 15,846,509 62,313,684 63,669,617 Interest expense: Deposits 1,643,282 2,106,626 6,793,541 9,425,091 Securities sold under repurchase agreements 640 2,602 6,265 12,010 Other borrowings 684,095 686,102 2,714,121 2,596,700 Total interest expense 2,328,017 2,795,330 9,513,927 12,033,801 Net interest income 13,078,436 13,051,179 52,799,757 51,635,816 Provision for loan losses 1,391,745 1,573,465 7,437,791 8,140,563 Net interest income after provision for loan losses 11,686,691 11,477,714 45,361,966 43,495,253 Noninterest income: Service charges and fees on deposits 1,838,583 1,819,570 7,155,146 6,848,502 Gain on sales of loans 1,127,436 2,471,324 6,843,443 9,738,712 Gain on sale of fixed assets, net 4,194 -- 25,898 10,459 Investment securities gains (losses), net (703,259) (120,192) (895,204) 320,994 Other-than-temporary loss: Total impairment loss -- -- -- (13,314) Less loss recognized in other comprehensive income -- -- -- (4,268) Net impairment loss recognized in earnings -- -- -- (9,046) Retail investment income 553,959 494,764 2,099,021 1,941,313 Trust service fees 294,690 288,611 1,184,474 1,145,695 Earnings from cash surrender value of bank-owned life insurance 289,590 281,225 1,186,553 1,112,100 Miscellaneous income 189,424 221,217 897,364 756,491 Total noninterest income 3,594,617 5,456,519 18,496,695 21,865,220 Noninterest expense: Salaries and other personnel expense 5,028,984 6,546,113 23,079,461 25,889,475 Occupancy expenses 907,097 982,430 3,721,582 4,093,548 Other real estate losses, net 13,969 532,348 641,777 1,784,617 Other operating expenses 3,153,867 3,226,654 12,922,900 12,671,510 Total noninterest expense 9,103,917 11,287,545 40,365,720 44,439,150 Income before income taxes 6,177,391 5,646,688 23,492,941 20,921,323 Income tax expense 1,813,032 1,750,627 7,147,212 6,486,350 Net income $ 4,364,359 $ 3,896,061 $ 16,345,729 $ 14,434,973 Other comprehensive income (loss): Unrealized gain (loss) on derivatives 343,754 173,776 1,647,857 (154,049) Unrealized gain (loss) on securities available-for-sale (7,232,944) (1,664,019) (32,089,995) 7,530,452 Reclassification adjustment for realized (gain) loss on securities, net of OTTI 703,259 120,192 895,204 (311,948) Tax effect 2,406,327 532,950 11,493,757 (2,748,073) Total other comprehensive income (loss) (3,779,604) (837,101) (18,053,177) 4,316,382 Comprehensive income (loss) $ 584,755 $ 3,058,960 $ (1,707,448) $ 18,751,355 Basic net income per share $ 0.65 $ 0.58 $ 2.45 $ 2.16 Diluted net income per share $ 0.65 $ 0.58 $ 2.45 $ 2.16 Weighted average common shares outstanding 6,679,982 6,675,000 6,678,914 6,678,215 Weighted average number of common and common equivalent shares outstanding 6,679,982 6,675,000 6,678,914 6,678,215 CONTACT: For More Information: Ronald L. Thigpen Executive Vice President and COO Southeastern Bank Financial Corp. 706-481-1014 Source: Southeastern Bank Financial Corp.


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