Southeastern Bank Financial Corp. Reports Third Quarter 2015 Earnings and Declares Dividend

AUGUSTA, Ga., Oct. 23, 2015 (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 $4.87 million for the three months ended September 30, 2015, or $0.72 in diluted earnings per share, compared to $4.38 million, or $0.65 in diluted earnings per share, in the third quarter of 2014, an increase of 11.0 percent.

“We are pleased to report a quarterly increase in earnings over the year-ago period,” said Ronald L. Thigpen, President and Chief Operating Officer. “Net interest income for the third quarter reflects both an improvement in total interest income and a reduction in total interest expense from the prior year quarter. Continuing improvement in credit quality allowed a lower provision for loan loss expense. Non-interest income reflected a 16.8 percent increase in gain on sale of loans from mortgage origination and increases in retail investment income and trust service fees. We had excellent growth in our balance sheet as we experienced solid deposit growth. Loan growth continues to remains lower than expected year to date and continues to be a major challenge. Overall, we continue to perform well reflecting an annualized 1.06 percent return on average assets and an annualized 11.69 percent return on average equity for the third quarter of 2015.”

Total assets at September 30, 2015, were $1.8 billion, an increase of $84.2 million or 4.9 percent from December 31, 2014. Total loans outstanding at the end of the third quarter were $962.4 million, a decrease of $3.9 million from December 31, 2014, and an increase of $19.9 million from June 30, 2015. Total deposits were $1.5 billion at September 30, 2015, an increase of $77.1 million from December 31, 2014, and an increase of $6.6 million from June 30, 2015. Cash and cash equivalents totaled $50.6 million at the end of the third quarter of 2015.

Net interest income for the third quarter of 2015 totaled $13.5 million, a 3.7 percent increase from $13.1 million for the same period in 2014. Noninterest income for the third quarter totaled $5.3 million, an increase from $5.2 million for the same period a year ago. Key increases were reflected from higher mortgage origination volume and increased retail investment income and trust service, partly offset by losses recognized in sales of investment securities. Noninterest expense was $11.6 million in the third quarter of 2015, an increase of 4.7 percent from a year ago primarily resulting from increased commission expense.

The net interest margin was 3.18 percent for the quarter-ended September 30, 2015, compared to 3.20 percent at December 31, 2014, and 3.16 percent for the same period a year ago. Annualized return on average assets (ROA) was 1.06 percent for the third quarter of 2015, an increase from 0.99 percent for the same period a year ago, and annualized return on average shareholder’s equity (ROE) was 11.69 percent, a slight decrease from 11.74 percent from the third quarter of 2014.

Nonperforming assets at September 30, 2015, were 0.77 percent of total assets, compared to 1.26 percent at December 31, 2014, and 1.09 percent at September 30, 2014. Net charge-offs for the third quarter of 2015 totaled 0.56 percent of average loans on an annualized basis, compared to 0.43 percent annualized in the third quarter of 2014. The company held $360 thousand in OREO at September 30, 2015, compared to $1.1 million at December 31, 2014, and $1.4 million at September 30, 2014.

The company’s loan loss provision expense was $132 thousand in the third quarter of 2015, compared to a credit of $2.7 million in the previous quarter, and $876 thousand in the third quarter a year ago. As noted in the second quarter earnings release, the $2.7 million credit in the previous quarter reflected the impact from a significant payoff and recovery. The allowance for loan losses at September 30, 2015, was $22.2 million, or 2.30 percent of loans outstanding, compared to $25.5 million, or 2.64 percent of loans outstanding, at December 31, 2014, and $26.7 million, or 2.79 percent of loans outstanding, at September 30, 2014.

“We are encouraged by the loan growth we experienced during the third quarter and the increasing pipeline for loans. We are also pleased with the increases in mortgage origination volume along with core deposit growth,” said Thigpen. “Our balance sheet remains strong and we look forward to supporting the needs of our customers. We remain excited about the growth prospects for the community related to the relocation of U. S. Army Cyber Command to Fort Gordon.”

On October 21, 2015, the company’s Board of Directors declared a regular quarterly cash dividend of $0.15 per share of common stock payable on November 20, 2015, to shareholders of record as of November 6, 2015.

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 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 Company’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
(Dollars in thousands, except share data)
  September 30,  
   2015  December 31,
Assets (Unaudited)  2014 
Cash and due from banks $ 42,870   $ 33,286  
Interest-bearing deposits in other banks   7,691     2,709  
Cash and cash equivalents   50,561     35,995  
Available-for-sale securities   696,994     644,465  
Loans held for sale, at fair value   32,339     18,365  
Loans   962,414     966,356  
Less allowance for loan losses   22,180     25,506  
Loans, net   940,234     940,850  
     
Premises and equipment, net   27,660     27,842  
Accrued interest receivable   6,283     5,898  
Bank-owned life insurance   42,832     36,908  
Restricted equity securities   4,361     4,398  
Other real estate owned   360     1,107  
Deferred tax asset   12,316     15,263  
Other assets   3,028     1,690  
  $ 1,816,968   $ 1,732,781  
  Liabilities and Stockholders’ Equity    
Deposits    
Noninterest-bearing $ 235,777   $ 196,624  
Interest-bearing:    
NOW accounts   385,455     354,038  
Savings   551,703     521,570  
Money management accounts   15,662     15,824  
Time deposits   352,383     375,808  
    1,540,980     1,463,864  
     
Securities sold under repurchase agreements   633     10,678  
Advances from Federal Home Loan Bank   66,000     64,000  
Accrued interest payable and other liabilities   20,232     18,953  
Subordinated debentures   20,000     20,000  
Total liabilities   1,647,845     1,577,495  
     
Stockholders’ equity:    
Preferred stock, no par value; 10,000,000 shares authorized;    
0 shares outstanding in 2015 and 2014, respectively        
Common stock, $3.00 par value; 10,000,000 shares    
authorized; 6,745,371 and 6,744,891 shares issued in    
2015 and 2014, respectively; 6,745,371 and 6,744,160    
shares outstanding in 2015 and 2014, respectively   20,236     20,235  
Additional paid-in capital   63,507     63,096  
Retained earnings   83,628     71,902  
Treasury stock, at cost; 0 and 731 shares in    
2015 and 2014, respectively       (18 )
Accumulated other comprehensive income, net   1,752     71  
Total stockholders’ equity   169,123     155,286  
  $ 1,816,968   $ 1,732,781  
           

 

 
SOUTHEASTERN BANK FINANCIAL CORPORATION
Consolidated Statements of Comprehensive Income
(Dollars in thousands, except share and per share data)
 
(Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
    2015     2014     2015     2014  
Interest income:        
Loans, including fees $ 11,584   $ 11,711   $ 35,296   $ 34,632  
Investment securities   3,945     3,518     11,390     10,670  
Interest-bearing deposits in other banks   20     14     54     47  
Total interest income   15,549     15,243     46,740     45,349  
Interest expense:        
Deposits   1,443     1,535     4,354     4,709  
Securities sold under repurchase agreements   6     1     11     4  
Other borrowings   562     651     1,826     1,978  
Total interest expense   2,011     2,187     6,191     6,691  
         
Net interest income   13,538     13,056     40,549     38,658  
Provision (Credit) for loan losses   132     876     (2,011 )   2,944  
Net interest income after provision for loan losses   13,406     12,180     42,560     35,714  
         
Noninterest income:        
Service charges and fees on deposits   1,831     1,903     5,418     5,324  
Gain on sales of loans   2,007     1,718     5,319     3,910  
Gain (loss) on sale of fixed assets, net   58     15     (3 )   27  
Investment securities (losses) gains, net (includes ($165) and $215 for the three        
months ended and ($1,005) and $492 for the nine months ended September 30, 2015        
and 2014 accumulated other comprehensive income reclassifications for        
unrealized gains (losses) on available-for-sale securities)   (165 )   215     (1,005 )   492  
Retail investment income   589     520     1,635     1,608  
Trust service fees   357     328     1,048     970  
Earnings from cash surrender value of        
bank-owned life insurance   365     317     924     876  
Miscellaneous income   265     200     709     623  
Total noninterest income   5,307     5,216     14,045     13,830  
Noninterest expense:        
Salaries and other personnel expense   6,719     6,291     19,968     18,205  
Occupancy expenses   1,040     1,027     3,088     2,958  
Other real estate losses (gains), net   10     239     (102 )   226  
Prepayment fees           955      
Other operating expenses   3,802     3,498     10,938     10,420  
Total noninterest expense   11,571     11,055     34,847     31,809  
         
Income before income taxes   7,142     6,341     21,758     17,735  
Income tax expense   2,277     1,959     6,997     5,503  
Net income $ 4,865   $ 4,382   $ 14,761   $ 12,232  
         
Other comprehensive income (loss):        
Unrealized loss on derivatives $ (502 ) $ (27 )   (260 )   (670 )
Unrealized gain (loss) on securities available-for-sale   5,472     (849 )   2,006     14,449  
Reclassification adjustment for realized loss (gain)        
on securities, net of OTTI   165     (215 )   1,005     (492 )
Tax effect   (1,997 )   424     (1,070 )   (5,169 )
Total other comprehensive income (loss)   3,138     (667 )   1,681     8,118  
Comprehensive income $ 8,003   $ 3,715   $ 16,442   $ 20,350  
         
Basic net income per share $ 0.73   $ 0.66   $ 2.20   $ 1.83  
         
Diluted net income per share   0.72     0.65     2.20     1.83  
         
Weighted average common shares outstanding   6,703,371     6,681,743     6,700,439     6,681,214  
         
Weighted average number of common and        
common equivalent shares outstanding   6,719,396     6,694,528     6,713,344     6,687,056  
           

 

 

 

 

CONTACT: For More Information: 
Ronald L. Thigpen
President and Chief Operating Officer
Southeastern Bank Financial Corp.
706-481-1014