Southeastern Bank Financial Corp. Reports Second Quarter 2009 Earnings

• Press Release
• Source: Southeastern Bank Financial Corp.
• On 10:00 am EDT, Friday July 31, 2009

AUGUSTA, Ga., July 31, 2009 (GLOBE NEWSWIRE) -- Southeastern Bank Financial Corp. (OTCBB:SBFC - News), the holding company for Georgia Bank & Trust Company of Augusta and Southern Bank & Trust of Aiken, S.C., today reported quarterly net income of $637,000 for the three months ended June 30, 2009, or $0.10 in diluted earnings per share, compared to $2.4 million, or $0.40 in diluted earnings per share, in the second quarter of 2008.

Related Quotes

Symbol	Price	Change
SBFC.OB	11.50	0.00

{"s" : "sbfc.ob","k" : "c10,l10,p20,t10","o" : "","j" : ""}

"We continued to be profitable in a tough environment during the second quarter, thanks to a solid performance from our core banking operations, sizeable gains in mortgage income from refinancing activity, and our ability to keep operating expenses under control," said President and Chief Executive Officer R. Daniel Blanton. "We also continued to work through our problem loans during the second quarter, raising our provision for loan losses to ensure that we maintain adequate coverage as our markets struggle to recover."

The company's loan-loss provision was $5.1 million in the second quarter of 2009, which compares to $4.7 million in the first quarter of 2009 and $1.7 million a year ago. The increase in provision for loan losses resulted in a rise in the allowance for loan losses to $16.0 million, or 1.63 percent of loans outstanding, compared to $15.2 million, or 1.52 percent of loans outstanding, at March 31, 2009.

Nonperforming assets at June 30, 2009, were 3.89 percent of total assets, compared to 2.11 percent at June 30, 2008, and 3.56 percent at March 31, 2009. Net charge-offs for the second quarter of 2009 totaled 0.43 percent of average loans, compared to 0.01 percent in the second quarter of 2008 and 0.43 percent in the first quarter of 2009. The company held $13.8 million in foreclosed property or other real estate owned (OREO) at June 30, 2009, compared to none at June 30, 2008, and $7.0 million at March 31, 2009.

Total assets at June 30, 2009, were $1.5 billion, an increase of $147.9 million from a year ago, and $50.8 million from Dec. 31, 2008. Assets at the company's SB&T subsidiary totaled $154.2 million at the close of the second quarter, an increase of $30.7 million, or 24.8 percent, compared to Dec. 31, 2008.

Loans outstanding at the end of the second quarter were $981.7 million, compared to $968.1 million a year ago. Total deposits were $1.2 billion at June 30, 2009, compared to $1.1 billion for the same period a year ago. Cash and cash equivalents totaled $124.2 million at the end of the second quarter, compared to $37.8 million at Dec. 31, 2008, and $119.4 million at the end of the first quarter.

Net interest income for the second quarter of 2009 totaled $10.7 million, a 6.6 percent increase from $10.0 million for the same period in 2008. This increase is a result of higher earning asset volumes despite a decrease in the company's net interest margin. The net interest margin was 3.18 percent at June 30, 2009, compared to 3.25 percent a year ago.

Noninterest income for the quarter totaled $5.9 million, an increase of 32.8 percent from a year ago, reflecting strong growth in mortgage revenue from the gain on sale of loans, as well as gains from the sales of investment securities.

Noninterest expense was $10.8 million, compared to $9.3 million a year ago. The increase included $670,000 of costs associated with the FDIC's special assessment on insured banks of 5 basis points of total assets, an increase of $700,000 in regular FDIC assessments as they increased from 6 to 14 basis points of total deposits, and the additional compensation expense resulting from significantly higher mortgage origination volume.

Annualized return on average assets (ROA) was 0.18 percent for the second quarter of 2009, and annualized return on average shareholder's equity (ROE) was 2.56 percent.

Net income for the six months ended June 30, 2009, totaled $693,000, compared to $5.0 million reported in the same period of 2008. Diluted earnings per share for the first six months of 2009 were $0.11, compared to $0.84 per share earned in the same period a year ago.

Net interest income for the first six months of 2009 was $20.8 million, compared to $20.3 million in the first six months of 2008. Noninterest income was $10.5 million for the first six months of 2009, an increase of 24.8 percent from $8.4 million in the same period of 2008. Noninterest expense was $20.6 million for the six-month period, compared to $18.2 million in 2008.

"We are focused on the safety and soundness of the company in this continuing unusual economic environment," said Blanton. "We remain cautious and we will keep a close eye on the economy and the performance of our loan portfolio. The good news is that we continue to be well-capitalized and have significant liquidity, which keeps us in a favorable position as we move forward."

About Southeastern Bank Financial Corp.

Southeastern Bank Financial Corp. is the $1.5 billion-asset bank holding company of Georgia Bank & Trust Company of Augusta (GB&T) and Southern Bank & Trust (SB&T). GB&T is the largest locally owned and operated community bank in the Augusta metro market, with nine full-service Augusta-area offices and offices in Athens, Ga., and Greenville, S.C. SB&T is a federally chartered thrift serving the Aiken County, S.C., market, with three full-service offices. 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 on the OTC Bulletin Board under the symbol SBFC. For more information, please visit 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 SUBSIDIARIES

                      Consolidated Balance Sheets
               (Dollars in thousands, except share data)

                                                 June 30,
                                                   2009       Dec. 31,
            Assets                              (Unaudited)     2008
                                                ----------   ----------

 Cash and due from banks                        $   91,490   $   24,860
 Federal funds sold                                  7,300        9,780
 Interest-bearing deposits in other banks           25,407        3,128
                                                ----------   ----------
           Cash and cash equivalents               124,197       37,768

 Investment securities
    Available-for-sale                             276,905      299,339
    Held-to-maturity, at cost (fair values of
     $485 and $698, respectively)                      490          689

 Loans held for sale                                23,975       18,955

 Loans                                             957,727      986,831
    Less allowance for loan losses                 (16,031)     (14,742)
                                                ----------   ----------
           Loans, net                              941,696      972,089

 Premises and equipment, net                        32,908       33,960
 Accrued interest receivable                         6,266        7,085
 Bank-owned life insurance                          22,762       17,368
 Restricted equity securities                        6,338        6,571
 Other real estate owned                            13,786        5,734
 Other assets                                       12,552       11,481
                                                ----------   ----------
                                                $1,461,875   $1,411,039
                                                ==========   ==========

 Liabilities and Stockholders' Equity

 Deposits
      Noninterest-bearing                       $  116,805   $  111,291
      Interest-bearing:
         NOW accounts                              173,262      166,561
         Savings                                   285,819      247,249
         Money management accounts                  42,858       50,404
         Time deposits over $100                   404,173      385,439
         Other time deposits                       168,360      178,608
                                                ----------   ----------
                                                 1,191,277    1,139,552

 Federal funds purchased and securities sold
   under repurchase agreements                      49,361       62,553
 Advances from Federal Home Loan Bank               84,000       84,000
 Other borrowed funds                                  700           --
 Accrued interest payable and other 
  liabilities                                       10,739       10,283
 Subordinated debentures                            22,947       20,000
                                                ----------   ----------
           Total liabilities                     1,359,024    1,316,388
                                                ----------   ----------

 Stockholders' equity:
   Common stock, $3.00 par value; 10,000,000
    shares authorized; 6,671,509 and
    5,987,674 shares issued in 2009 and 2008,
    respectively; 6,671,509 and 5,987,674
    shares outstanding in 2009 and 2008,
    respectively                                    20,014       17,963
   Preferred stock, no par value;
     10,000,000 shares authorized;
     0 shares outstanding in 2009 and
     2008, respectively                                 --           --
   Additional paid-in capital                       62,251       55,189
   Retained earnings                                21,370       21,455
   Accumulated other comprehensive
    (loss) income, net                                (784)          44
                                                ----------   ----------
           Total stockholders' equity              102,851       94,651
                                                ----------   ----------
                                                $1,461,875   $1,411,039
                                                ==========   ==========

       SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES

                   Consolidated Statements of Income
               (Dollars in thousands, except share data)

                              (Unaudited)


                          Three Months Ended       Six Months Ended
                               June 30,                June 30,
                       -----------------------  -----------------------
                          2009         2008        2009         2008
                       ----------   ----------  ----------   ----------
 Interest income:
    Loans, including
     fees              $   14,206   $   15,087  $   28,010   $   31,480
    Investment
     securities             3,595        3,337       7,669        6,598
    Federal funds
     sold                      16           96          41          187
    Interest-bearing
     deposits in
     other banks               18            6          22           12
                       ----------   ----------  ----------   ----------
      Total interest
       income              17,835       18,526      35,742       38,277
                       ----------   ----------  ----------   ----------

 Interest expense:
    Deposits                6,009        7,166      12,810       15,042
    Federal funds
     purchased and
     securities
     sold under
     repurchase
     agreements                95          324         206          864
    Other borrowings        1,023          993       1,919        2,063
                       ----------   ----------  ----------   ----------
      Total interest
       expense              7,127        8,483      14,935       17,969
                       ----------   ----------  ----------   ----------

      Net interest
       income              10,708       10,043      20,807       20,308

 Provision for loan
  losses                    5,114        1,652       9,863        2,923
                       ----------   ----------  ----------   ----------

      Net interest
       income after
       provision
       for loan
       losses               5,594        8,391      10,944       17,385
                       ----------   ----------  ----------   ----------

 Noninterest income:
    Service charges
     and fees on
     deposits               1,737        1,820       3,378        3,491
    Gain on sales
     of loans               2,461        1,576       4,697        2,836
    (Loss) gain on
      sale of
      fixed assets            (42)           5         (16)           8
    Investment
     securities
     gains, net             1,101           30       1,312           68
    Other-than-
     temporary
     impairment
     losses (less
     $572 recognized
     in other
     comprehensive
     income, before
     taxes)                  (244)          --        (619)          --
    Retail
     investment
     income                   318          276         527          564
    Trust service
     fees                     245          299         498          584
    Increase in
     cash surrender
     value of
     bank-owned
     life insurance           213          194         394          358
    Miscellaneous
     income                   123          252         286          473
                       ----------   ----------  ----------   ----------
      Total
       noninterest
       income               5,912        4,452      10,457        8,382
                       ----------   ----------  ----------   ----------

 Noninterest expense:
    Salaries and
     other personnel
     expense                5,800        5,383      11,458       10,554
    Occupancy
     expenses               1,140        1,005       2,281        2,030
    Other operating
     expenses               3,868        2,877       6,903        5,601
                       ----------   ----------  ----------   ----------
      Total
       noninterest
       expense             10,808        9,265      20,642       18,185
                       ----------   ----------  ----------   ----------

      Income before
       income taxes           698        3,578         759        7,582

 Income tax expense            61        1,170          66        2,539
                       ----------   ----------  ----------   ----------

      Net income       $      637   $    2,408  $      693   $    5,043
                       ==========   ==========  ==========   ==========
 Basic net income
  per share            $     0.10   $     0.40  $     0.11   $     0.85
                       ==========   ==========  ==========   ==========
 Diluted net income
  per share            $     0.10   $     0.40  $     0.11   $     0.84
                       ==========   ==========  ==========   ==========
 Weighted average
  common shares
  outstanding           6,348,312    5,965,978   6,169,125    5,962,471
                       ==========   ==========  ==========   ==========
 Weighted average
  number of common
  and common
  equivalent shares
  outstanding           6,354,344    6,020,119   6,177,569    6,021,581
                       ==========   ==========  ==========   ==========

Southeastern Bank Financial Corp.
Ronald L. Thigpen, Executive Vice President and COO
706-481-1014

Marsh Communications LLC
John Marsh, President
770-458-7553