AUGUSTA, Ga., July 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 $4.0 million, or $0.60 in diluted earnings per share, for the three months ended June 30, 2014, compared to $4.0 million, or $0.60 in diluted earnings per share, in the second quarter of 2013.
"We are pleased to report incremental increases in net income for both the quarter and first six months of 2014," said President and Chief Operating Officer Ronald L. Thigpen. "The ongoing historically low interest rate environment continues to squeeze our net interest margin and net interest income. Our loan-loss provision has decreased significantly owing to continued asset quality improvement. Noninterest income is down due primarily to lower mortgage lending volume. But we also saw quarterly improvement in both retail investment and trust income, as well as excellent loan and total deposit growth. We continued our steady performance in the quarter."
Total assets at June 30, 2014, were $1.8 billion, an increase of $91.3 million from Dec. 31, 2013. Total loans outstanding at the end of the second quarter were $984.7 million, an increase of $54.0 million from Dec. 31, 2013, and an increase of $81.3 million from June 30, 2013. Total deposits were $1.5 billion at June 30, 2014, an increase of $77.0 million from Dec. 31, 2013, and an increase of $88.9 million from June 30, 2013. Cash and cash equivalents totaled $81.0 million at the end of the second quarter of 2014.
Net interest income for the second quarter of 2014 totaled $13.0 million, a 2.0 percent decrease from $13.3 million for the same period in 2013, resulting from lower spreads in the ongoing compressed interest rate environment. Noninterest income for the second quarter totaled $4.5 million, a 13.5 percent decline from the same period a year ago, due primarily to lower mortgage lending volume. Noninterest expense was $10.6 million in the second quarter of 2014, a 3.4 percent increase from a year ago, kept in check by significantly lower losses related to Other Real Estate.
The net interest margin was 3.18 percent for the quarter ended June 30, 2014, compared to 3.16 percent at March 31, 2014, and 3.36 percent for the same period a year ago. Annualized return on average assets (ROA) was 0.93 percent for the second quarter of 2014, a decrease of 2 basis points from the same period a year ago, and annualized return on average shareholder's equity (ROE) was 11.39 percent, a decrease of 3 basis points from the second quarter of 2013.
Nonperforming assets at June 30, 2014, were 1.28 percent of total assets, compared to 1.38 percent at March 31, 2014, and 2.08 percent at June 30, 2013. Net charge-offs for the second quarter of 2014 totaled 0.18 percent of average loans on an annualized basis, compared to 0.52 percent annualized in the first quarter of 2014 and 1.87 percent annualized in the second quarter of 2013. The company held $1.5 million in OREO at June 30, 2014, compared to $1.3 million at March 31, 2014, and $1.1 million at June 30, 2013.
The company's loan-loss provision expense was $1.0 million in the second quarter of 2014, a 1.0 percent decrease from $1.1 million in the previous quarter, and a 41.9 percent decrease from $2.4 million in the second quarter a year ago. The allowance for loan losses at June 30, 2014, was $26.9 million, or 2.79 percent of loans outstanding, compared to $26.3 million, or 2.80 percent of loans outstanding, at March 31, 2014, and $27.3 million, or 3.12 percent of loans outstanding, at June 30, 2013.
"We continue to see growth in the balance sheet, with significant core loan and deposit growth," said Thigpen. "We expect ongoing margin pressure from this low interest rate environment to contribute to lower net interest income and we continue to be focused on increasing noninterest income and controlling noninterest expense."
On July 23, 2014, the company's Board of Directors declared a regular quarterly cash dividend of $0.13 per share of common stock payable on August 22, 2014, to shareholders of record as of August 8, 2014. Based on the share price of $23.80 at the close of business on Thursday, July 24, 2014, this dividend represents an annualized yield to shareholders of 2.19 percent.
About Southeastern Bank Financial Corp.
Southeastern Bank Financial Corp. is the $1.8 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 primary focus is on real estate, commercial and consumer loans to individuals, small to medium-sized businesses and professionals, and also provides wealth management, trust and retail investment 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 | ||
| June 30, | ||
| 2014 | December 31, | |
| Assets | (Unaudited) | 2013 |
| Cash and due from banks | $ 71,979,967 | $ 36,766,420 |
| Interest-bearing deposits in other banks | 9,054,964 | 10,570,222 |
| Cash and cash equivalents | 81,034,931 | 47,336,642 |
| Available-for-sale securities | 647,599,251 | 649,979,319 |
| Loans held for sale | 24,499,481 | 10,638,179 |
| Loans | 960,230,782 | 905,712,691 |
| Less allowance for loan losses | 26,882,652 | 26,408,723 |
| Loans, net | 933,348,130 | 879,303,968 |
| Premises and equipment, net | 27,379,247 | 27,002,697 |
| Accrued interest receivable | 5,987,039 | 6,221,061 |
| Bank-owned life insurance | 36,304,149 | 35,744,649 |
| Restricted equity securities | 4,398,400 | 4,869,600 |
| Other real estate owned | 1,500,002 | 1,013,563 |
| Deferred tax asset | 15,919,575 | 21,022,576 |
| Other assets | 2,606,648 | 6,193,363 |
| $ 1,780,576,853 | $ 1,689,325,617 | |
| Liabilities and Stockholders' Equity | ||
| Deposits | ||
| Noninterest-bearing | $ 196,701,793 | $ 187,287,015 |
| Interest-bearing: | ||
| NOW accounts | 392,968,835 | 351,798,554 |
| Savings | 522,861,133 | 521,656,334 |
| Money management accounts | 15,370,461 | 16,065,409 |
| Time deposits of $100,000 or more | 322,844,870 | 293,003,961 |
| Other time deposits | 81,065,197 | 84,991,883 |
| 1,531,812,289 | 1,454,803,156 | |
| Securities sold under repurchase agreements | 653,273 | 808,311 |
| Advances from Federal Home Loan Bank | 64,000,000 | 64,000,000 |
| Accrued interest payable and other liabilities | 17,470,680 | 16,598,876 |
| Subordinated debentures | 20,000,000 | 21,546,646 |
| Total liabilities | 1,633,936,242 | 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; 6,744,253 and 6,680,225 shares issued in 2014 and 2013, respectively; 6,744,253 and 6,679,982 shares outstanding in 2014 and 2013, respectively | 20,232,759 | 20,040,675 |
| Additional paid-in capital | 62,850,459 | 62,863,774 |
| Retained earnings | 64,873,818 | 58,768,914 |
| Treasury stock, at cost; 0 and 243 shares in 2014 and 2013, respectively | -- | (3,380) |
| Accumulated other comprehensive loss, net | (1,316,425) | (10,101,355) |
| Total stockholders' equity | 146,640,611 | 131,568,628 |
| $ 1,780,576,853 | $ 1,689,325,617 | |
| SOUTHEASTERN BANK FINANCIAL CORPORATION | ||||
| Consolidated Statements of Comprehensive Income (Loss) | ||||
| (Unaudited) | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Interest income: | ||||
| Loans, including fees | $ 11,640,560 | $ 11,744,176 | $ 22,921,062 | $ 23,434,937 |
| Investment securities | 3,618,401 | 3,897,515 | 7,152,006 | 7,879,253 |
| Interest-bearing deposits in other banks | 17,914 | 20,662 | 32,912 | 36,885 |
| Total interest income | 15,276,875 | 15,662,353 | 30,105,980 | 31,351,075 |
| Interest expense: | ||||
| Deposits | 1,584,877 | 1,683,039 | 3,173,693 | 3,512,522 |
| Securities sold under repurchase agreements | 2,249 | 813 | 3,008 | 1,701 |
| Other borrowings | 659,125 | 676,209 | 1,326,975 | 1,345,576 |
| Total interest expense | 2,246,251 | 2,360,061 | 4,503,676 | 4,859,799 |
| Net interest income | 13,030,624 | 13,302,292 | 25,602,304 | 26,491,276 |
| Provision for loan losses | 1,010,384 | 2,413,949 | 2,067,704 | 4,158,692 |
| Net interest income after provision for loan losses | 12,020,240 | 10,888,343 | 23,534,600 | 22,332,584 |
| Noninterest income: | ||||
| Service charges and fees on deposits | 1,792,581 | 1,793,770 | 3,421,475 | 3,467,563 |
| Gain on sales of loans | 1,372,632 | 2,155,303 | 2,192,092 | 4,056,812 |
| Gain on sale of fixed assets, net | 12,604 | 16,204 | 11,522 | 21,704 |
| Investment securities gains (losses), net | 26,341 | 14,903 | 276,980 | (29,326) |
| Retail investment income | 514,071 | 487,132 | 1,087,992 | 987,840 |
| Trust service fees | 318,537 | 284,369 | 641,658 | 589,255 |
| Earnings from cash surrender value of bank-owned life insurance | 281,092 | 287,915 | 559,500 | 570,449 |
| Miscellaneous income | 204,818 | 186,758 | 422,723 | 375,413 |
| Total noninterest income | 4,522,676 | 5,226,354 | 8,613,942 | 10,039,710 |
| Noninterest expense: | ||||
| Salaries and other personnel expense | 6,147,991 | 6,140,533 | 11,914,142 | 12,337,942 |
| Occupancy expenses | 986,592 | 939,055 | 1,930,784 | 1,874,136 |
| Other real estate losses (gains), net | 21,831 | 207,571 | (13,234) | 617,300 |
| Other operating expenses | 3,484,540 | 3,000,886 | 6,922,355 | 6,219,098 |
| Total noninterest expense | 10,640,954 | 10,288,045 | 20,754,047 | 21,048,476 |
| Income before income taxes | 5,901,962 | 5,826,652 | 11,394,495 | 11,323,818 |
| Income tax expense | 1,857,714 | 1,824,018 | 3,544,355 | 3,544,765 |
| Net income | $ 4,044,248 | $ 4,002,634 | $ 7,850,140 | $ 7,779,053 |
| Other comprehensive income (loss): | ||||
| Unrealized gain (loss) on derivatives | (288,200) | 780,581 | (643,311) | 1,124,970 |
| Unrealized gain (loss) on securities available-for-sale | 6,811,549 | (18,927,847) | 15,298,245 | (19,834,428) |
| Reclassification adjustment for realized (gain) loss on securities, net of OTTI | (26,341) | (14,903) | (276,980) | 29,326 |
| Tax effect | (2,527,336) | 7,065,083 | (5,593,024) | 7,266,571 |
| Total other comprehensive income (loss) | 3,969,672 | (11,097,086) | 8,784,930 | (11,413,561) |
| Comprehensive income (loss) | $ 8,013,920 | $ (7,094,452) | $ 16,635,070 | $ (3,634,508) |
| Basic net income per share | $ 0.61 | $ 0.60 | $ 1.18 | $ 1.16 |
| Diluted net income per share | $ 0.60 | $ 0.60 | $ 1.17 | $ 1.16 |
| Weighted average common shares outstanding | 6,681,253 | 6,678,807 | 6,680,945 | 6,678,112 |
| Weighted average number of common and common equivalent shares outstanding | 6,686,332 | 6,678,807 | 6,682,954 | 6,678,112 |
| Southeastern Bank Financial Corporation | ||
| June 2014 Ratios | ||
| QTD 2014 | YTD 2014 | |
| RETURN ON AVERAGE ASSETS* | 0.93% | 0.92% |
| RETURN ON AVERAGE EQUITY* | 11.39% | 11.38% |
| NET INTEREST MARGIN* | 3.18% | 3.17% |
| Note: Excludes Bank Owned Life Insurance | ||
| CHARGE OFFS / GROSS AVG LOANS* | 0.18% | 0.35% |
| Note: Excludes Loans Held for Sale | ||
| * Annualized | ||