updated 4/29/2011 10:17:34 AM ET 2011-04-29T14:17:34

AUGUSTA, Ga., April 29, 2011 (GLOBE NEWSWIRE) -- Southeastern Bank Financial Corp. (OTCBB:SBFC), the holding company for Georgia Bank & Trust Company of Augusta (GB&T) and Southern Bank & Trust (SB&T), today reported quarterly net income of $2.3 million, or $0.34 in diluted earnings per share, for the three months ended March 31, 2011, compared to $1.3 million, or $0.19 in diluted earnings per share, in the first quarter of 2010.

"We experienced a significant decrease in deposit costs that increased net interest income and our net interest margin the first quarter of 2011," said R. Daniel Blanton, president and chief executive officer. "It marks our fifth consecutive quarter of income and earnings growth, which is a considerable achievement given the weak economy and lack of loan demand. At the same time, our asset quality remained stable during the first quarter. Overall, we are pleased with how our company has performed, though we are maintaining a conservative posture with regards to our provision for loan losses."

Total assets at March 31, 2011, were $1.6 billion, an increase of $27.7 million from Dec. 31, 2010.

Loans outstanding at the end of the first quarter were $881.7 million, a decrease of $5.2 million from Dec. 31, 2010, and a decline of $57.8 million from March 31, 2010. Total deposits were $1.4 billion at March 31, 2011, an increase of $27.4 million from Dec. 31, 2010, and an increase of $147.3 million from the same period a year ago. Cash and cash equivalents totaled $125.4 million at the end of the first quarter, compared to $65.1 million at Dec. 31, 2010.

Net interest income for the first quarter of 2011 was $12.2 million, a 15.9 percent increase from $10.5 million in the same period a year ago. The increase was driven by a $1.3 million decrease in deposit costs, which also led to an expansion of the company's net interest margin. Noninterest income for the first quarter was $4.0 million, a 1.2 percent increase from the first quarter of 2010. Noninterest expense in the first quarter of 2011 totaled $9.8 million, a 3.6 percent increase compared to the same period a year ago a year ago, due primarily to higher problem loan-related expenses and other operating expenses.

The company's net interest margin grew to 3.28 percent in the first quarter of 2011, compared to 3.17 percent for the three months ended Dec. 31, 2010, and 3.07 percent for the same period a year ago. Return on average assets (ROA) was 0.58 percent for the first quarter of 2011, an increase of 24 basis points from the same period a year ago. Return on average shareholders' equity (ROE) was 9.37 percent for the first quarter of 2011, an increase of 406 basis points from the first quarter of 2010.

The provision for loan losses totaled $3.2 million for the first quarter of 2011, compared to $4.0 million in the fourth quarter of 2010 and $3.3 million in the first quarter of 2010. Allowance for loan losses totaled $26.8 million, or 3.08 percent of loans outstanding at March 31, 2011, compared to $26.7 million, or 3.05 percent of loans outstanding, at Dec. 31, 2010, and $23.1 million, or 2.52 percent of loans outstanding, at March 31, 2010.

Nonperforming assets at March 31, 2011, were 2.20 percent of total assets, compared to 2.12 percent at Dec. 31, 2010, and 2.52 percent at March 31, 2010. Net charge-offs for the first quarter of 2011 totaled 1.43 percent of average loans on an annualized basis, compared to 1.27 percent annualized in the fourth quarter of 2010, and 1.10 percent annualized in the first quarter of 2010. The company held $7.6 million in other real estate owned (OREO) at March 31, 2011, compared to $7.8 million at Dec. 31, 2010, and $5.9 million at March 31, 2010.

"Our strategic plan has remained unchanged – we are maintaining control of our expenses, managing our problem assets, and finding ways to generate revenue in a tough economy," said Blanton. "Our aim is to continue on this path as we move forward, building on our positive momentum and preserving our overall safety and soundness."

About Southeastern Bank Financial Corp.

Southeastern Bank Financial Corp. is the $1.6 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 one limited service Loan Production Office in Athens, GA. SB&T is a state charted bank 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
     
  March 31,  
  2011 December 31,
Assets (Unaudited) 2010
     
Cash and due from banks  $ 60,119,714  $ 42,304,774
Federal funds sold  --   -- 
Interest-bearing deposits in other banks  65,250,838  22,810,141
Cash and cash equivalents  125,370,552  65,114,915
     
Investment securities    
 Available-for-sale  558,306,124  586,301,633
 Held-to-maturity, at cost (fair values of    
 $0 and $310,753, respectively)  --   310,000
     
Loans held for sale  10,699,992  12,774,806
     
Loans  871,017,145  874,095,184
 Less allowance for loan losses  26,820,623  26,656,672
Loans, net  844,196,522  847,438,512
     
Premises and equipment, net  29,103,466  29,415,853
Accrued interest receivable  6,576,315  6,382,121
Bank-owned life insurance  24,396,511  24,178,634
Restricted equity securities  5,745,000  5,706,900
Other real estate owned  7,565,099  7,750,552
Prepaid FDIC assessment  4,221,219  4,784,587
Deferred tax asset  15,682,706  14,594,554
Other assets  2,938,915  2,352,138
     
   $ 1,634,802,421  $ 1,607,105,205
     
Liabilities and Stockholders' Equity    
     
Deposits    
 Noninterest-bearing  $ 135,219,451  $ 120,138,486
 Interest-bearing:    
 NOW accounts  363,309,166  356,266,740
 Savings  433,636,180  409,583,995
 Money management accounts  37,650,142  36,937,485
 Time deposits over $100,000  332,876,329  346,721,403
 Other time deposits  135,484,822  141,088,967
   1,438,176,090  1,410,737,076
     
Securities sold under repurchase agreements  609,791  817,574
Advances from Federal Home Loan Bank  60,000,000  60,000,000
Other borrowed funds  --   -- 
Accrued interest payable and other liabilities  11,722,933  12,646,021
Subordinated debentures  22,946,646  22,946,646
     
Total liabilities  1,533,455,460  1,507,147,317
     
Stockholders' equity:    
 Preferred stock, no par value; 10,000,000 shares    
 authorized; 0 shares outstanding in 2011 and    
 2010, respectively  --   -- 
 Common stock, $3.00 par value; 10,000,000 shares    
 authorized; 6,675,851 and 6,675,147 shares issued    
 and outstanding in 2011 and 2010, respectively  20,027,553  20,025,441
 Additional paid-in capital  62,654,391  62,617,358
 Retained earnings  21,850,482  19,548,606
 Treasury stock, at cost; 0 shares in    
 2011 and 2010, respectively  --   -- 
 Accumulated other comprehensive loss, net  (3,185,465)  (2,233,517)
     
Total stockholders' equity  101,346,961  99,957,888
     
   $ 1,634,802,421  $ 1,607,105,205
 
SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES
     
Consolidated Statements of Income
     
(Unaudited)
     
  Three Months Ended
  March 31,
  2011 2010
Interest income:    
 Loans, including fees  $ 12,628,248  $ 13,343,446
 Investment securities  4,319,904  3,419,381
 Federal funds sold  --   3,421
 Interest-bearing deposits in other banks  47,503  88,672
Total interest income  16,995,655  16,854,920
     
Interest expense:    
 Deposits  4,079,832  5,367,058
 Securities sold under repurchase    
 agreements  1,658  10,838
 Other borrowings  714,578  954,540
Total interest expense  4,796,068  6,332,436
     
Net interest income  12,199,587  10,522,484
     
Provision for loan losses  3,240,404  3,288,499
     
Net interest income after provision    
 for loan losses  8,959,183  7,233,985
     
Noninterest income:    
 Service charges and fees on deposits  1,577,742  1,594,449
 Gain on sales of loans  1,206,634  1,353,279
 Gain on sale of fixed assets  16,659  27,024
 Investment securities gains, net  147,756  12,675
 Other-than-temporary loss    
 Total impairment loss  (126,907)  -- 
 Loss recognized in other comprehensive loss  65,422  -- 
Net impairment loss recognized in earnings  (61,485)  -- 
 Retail investment income  457,506  335,012
 Trust service fees  273,064  287,154
 Increase in cash surrender value of    
 bank-owned life insurance  217,877  229,076
 Miscellaneous income  213,382  161,119
Total noninterest income  4,049,135  3,999,788
     
Noninterest expense:    
 Salaries and other personnel expense  5,564,356  5,494,529
 Occupancy expenses  1,115,173  1,171,045
 Other real estate losses (gains), net  95,403  (85,193)
 Other operating expenses  3,000,716  2,851,811
Total noninterest expense  9,775,648  9,432,192
     
Income before income taxes  3,232,670  1,801,581
     
Income tax expense  930,794  546,915
     
Net income  $ 2,301,876  $ 1,254,666
     
Basic net income per share  $ 0.34  $ 0.19
     
Diluted net income per share  $ 0.34  $ 0.19
     
Weighted average common shares outstanding  6,675,851  6,673,334
     
Weighted average number of common and    
 common equivalent shares outstanding  6,676,015  6,673,334
CONTACT: Ronald L. Thigpen
         Executive Vice President and COO
         Southeastern Bank Financial Corp.
         706-481-1014
         
         John Marsh
         President
         Marsh Communications LLC
         770-458-7553

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