Southeastern Bank Financial Corp. Reports Earnings for the First Quarter 2014

        Print
| Source: Southeastern Bank Financial Corp.

AUGUSTA, Ga., April 25, 2014 (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 $3.8 million for the three months ended March 31, 2014, or $0.57 in diluted earnings per share, compared to $3.8 million, or $0.57 in diluted earnings per share, in the first quarter of 2013.

"We are pleased to report an incremental increase in earnings over the year-ago period," said President and Chief Operating Officer Ronald L. Thigpen. "Our net interest margin remains compressed in a historically low interest rate environment, and we saw lower mortgage income due to significantly reduced origination volume. Our credit costs decreased further as asset quality continued to improve and noninterest expense decreased. Retail investment and trust income continue to improve, and our balance sheet grew, as we saw both core loan growth and solid deposit growth. Overall, we continue to perform well."

Total assets at March 31, 2014, were $1.7 billion, an increase of $57.9 million from December 31, 2013. Loans outstanding at the end of the first quarter were $940.3 million, an increase of $23.9 million from December 31, 2013, and an increase of $34.9 million from March 31, 2013. Total deposits were $1.5 billion at March 31, 2014, an increase of $48.4 million from December 31, 2013, and an increase of $36.0 million from March 31, 2013. Cash and cash equivalents totaled $82.5 million at the end of the first quarter of 2014.

Net interest income for the first quarter of 2014 totaled $12.6 million, a 4.7 percent decrease from $13.2 million for the same period in 2013. Noninterest income for the first quarter totaled $4.1 million, a decrease from $4.8 million for the same period a year ago, primarily due to significantly lower mortgage origination volume. Noninterest expense was $10.1 million in the first quarter of 2014, a 5.5 percent decrease from a year ago resulting from continued expense control.

The net interest margin was 3.16 percent for the quarter-ended March 31, 2014, compared to 3.21 percent at December 31, 2013, and 3.40 percent for the same period a year ago. Annualized return on average assets (ROA) was 0.91 percent for the first quarter of 2014, unchanged from the same period a year ago, and annualized return on average shareholder's equity (ROE) was 11.36 percent, an increase of 23 basis points from the first quarter of 2013.

Nonperforming assets at March 31, 2014, were 1.38 percent of total assets, compared to 1.58 percent at December 31, 2013, and 1.80 percent at March 31, 2013. Net charge-offs for the first quarter of 2014 totaled 0.52 percent of average loans on an annualized basis, compared to 0.68 percent annualized in the fourth quarter of 2013 and 0.77 percent annualized in the first quarter of 2013. The company held $1.3 million in OREO at March 31, 2014, compared to $1.0 million at December 31, 2013, and $2.4 million at March 31, 2013.

The company's loan-loss provision expense was $1.1 million in the first quarter of 2014, a 24.1 percent decrease from $1.4 million in the previous quarter, and a 39.4 percent decrease from $1.7 million in the first quarter a year ago. The allowance for loan losses at March 31, 2014, was $26.3 million, or 2.80 percent of loans outstanding, compared to $26.4 million, or 2.88 percent of loans outstanding, at December 31, 2013, and $28.9 million, or 3.20 percent of loans outstanding, at March 31, 2013.

"We have seen expected decreases in net interest margin, as well as mortgage income due to reduced origination volume," said Thigpen. "However, retail investment and trust income are on the upswing, and our balance sheet remains strong, as we are encouraged by core loan growth and solid deposit growth."

On April 23, 2014, the company's Board of Directors declared a regular quarterly cash dividend of $0.13 per share of common stock payable on May 23, 2014, to shareholders of record as of May 9, 2014. Based on the share price of $21.98 at the close of business on Thursday, April 24, 2014, this dividend represents an annualized yield to shareholders of 2.37 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 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
     
  March 31,  
  2014 December 31,
Assets (Unaudited) 2013
     
Cash and due from banks  $ 59,276,252  $ 36,766,420
Interest-bearing deposits in other banks  23,210,306  10,570,222
Cash and cash equivalents  82,486,558  47,336,642
     
Available-for-sale securities  654,738,139  649,979,319
     
Loans held for sale  13,524,561  10,638,179
     
Loans  926,754,248  905,712,691
Less allowance for loan losses  26,300,086  26,408,723
Loans, net  900,454,162  879,303,968
     
Premises and equipment, net  27,313,152  27,002,697
Accrued interest receivable  6,356,711  6,221,061
Bank-owned life insurance  36,023,057  35,744,649
Restricted equity securities  4,398,400  4,869,600
Other real estate owned  1,287,329  1,013,563
Deferred tax asset  18,104,786  21,022,576
Other assets  2,538,781  6,193,363
     
   $1,747,225,636  $1,689,325,617
     
Liabilities and Stockholders' Equity    
     
Deposits    
Noninterest-bearing  $ 196,656,868  $ 187,287,015
Interest-bearing:    
NOW accounts  374,094,581  351,798,554
Savings  522,224,262  521,656,334
Money management accounts  16,323,630  16,065,409
Time deposits of $100,000 or more  311,483,175  293,003,961
Other time deposits  82,384,019  84,991,883
   1,503,166,535  1,454,803,156
     
Securities sold under repurchase agreements  712,488  808,311
Advances from Federal Home Loan Bank  64,000,000  64,000,000
Accrued interest payable and other liabilities  15,920,327  16,598,876
Due to broker  2,506,055  -- 
Subordinated debentures  21,546,646  21,546,646
     
Total liabilities  1,607,852,051  1,557,756,989
     
Stockholders' equity:    
Preferred stock, no par value; 10,000,000 shares authorized; 0 shares outstanding in 2014 and 2013, respectively  --   -- 
Common stock, $3.00 par value; 10,000,000 shares authorized; 6,743,641 and 6,680,225 shares issued in 2014 and 2013, respectively; 6,743,641 and 6,679,982 shares outstanding in 2014 and 2013, respectively  20,230,923  20,040,675
Additional paid-in capital  62,722,437  62,863,774
Retained earnings  61,706,322  58,768,914
Treasury stock, at cost; 0 and 243 shares in 2014 and 2013, respectively  --   (3,380)
Accumulated other comprehensive loss, net  (5,286,097)  (10,101,355)
     
Total stockholders' equity  139,373,585  131,568,628
     
   $1,747,225,636  $1,689,325,617
SOUTHEASTERN BANK FINANCIAL CORPORATION
     
Consolidated Statements of Comprehensive Income
     
(Unaudited)
     
  Three Months Ended
  March 31,
  2014 2013
Interest income:    
Loans, including fees  $ 11,280,502  $ 11,690,761
Investment securities  3,533,605  3,981,738
Interest-bearing deposits in other banks  14,998  16,223
Total interest income  14,829,105  15,688,722
     
Interest expense:    
Deposits  1,588,816  1,829,483
Securities sold under repurchase agreements  759  888
Other borrowings  667,850  669,367
Total interest expense  2,257,425  2,499,738
     
Net interest income  12,571,680  13,188,984
     
Provision for loan losses  1,057,320  1,744,743
     
Net interest income after provision for loan losses  11,514,360  11,444,241
     
Noninterest income:    
Service charges and fees on deposits  1,628,894  1,673,793
Gain on sales of loans  819,460  1,839,840
(Loss) gain on sale of fixed assets, net  (1,082)  5,500
Investment securities gains (losses), net  250,639  (44,229)
Retail investment income  573,921  500,708
Trust service fees  323,121  304,886
Earnings from cash surrender value of bank-owned life insurance  278,408  282,534
Miscellaneous income  217,905  188,655
Total noninterest income  4,091,266  4,751,687
     
Noninterest expense:    
Salaries and other personnel expense  5,766,151  6,197,409
Occupancy expenses  944,192  935,081
Other real estate losses (gains), net  (35,065)  409,729
Other operating expenses  3,437,815  3,156,545
Total noninterest expense  10,113,093  10,698,764
     
Income before income taxes  5,492,533  5,497,164
     
Income tax expense  1,686,641  1,720,747
     
Net income  $ 3,805,892  $ 3,776,417
     
Other comprehensive income (loss):    
Unrealized gain (loss) on derivatives  (355,111)  344,389
Unrealized gain (loss) on securities available-for-sale  8,486,696  (906,580)
Reclassification adjustment for realized (gain) loss on securities, net of OTTI  (250,639)  44,229
Tax effect  (3,065,688)  201,487
Total other comprehensive income (loss)  4,815,258  (316,475)
     
Comprehensive income  $ 8,621,150  $ 3,459,942
     
Basic net income per share  $ 0.57  $ 0.57
     
Diluted net income per share  $ 0.57  $ 0.57
     
Weighted average common shares outstanding  6,680,634  6,677,409
     
Weighted average number of common and common equivalent shares outstanding  6,680,717  6,677,409
For More Information:
Ronald L. Thigpen
President and Chief Operating Officer
Southeastern Bank Financial Corp.
706-481-1014