Southeastern Bank Financial (SBFC) 8-K Southeastern Bank Financial Corp. Reports Second Quarter 2010 Earnings

Exhibit 99.1

For More Information:
Ronald L. Thigpen	John Marsh
Executive Vice President and COO	President
Southeastern Bank Financial Corp.	Marsh Communications LLC
706-481-1014	770-458-7553

Southeastern Bank Financial Corp. Reports
Second Quarter 2010 Earnings

AUGUSTA, Ga., July 30, 2010— Southeastern Bank Financial Corp. (OTCBB:SBFC), the holding company for Georgia Bank & Trust Company of Augusta (GB&T) and Southern Bank & Trust of Aiken, S.C.(SB&T) , today reported quarterly net income of $1.6 million for the three months ended June 30, 2010, or $0.24 in diluted earnings per share, compared to $637,000, or $0.10 in diluted earnings per share, in the second quarter of 2009.

“We made good progress during the second quarter of 2010, building on the momentum and profitability we achieved in the first quarter,” said President and Chief Executive Officer R. Daniel Blanton. “Our income and earnings are up solidly from a year ago, with strong growth in core deposits and significant increases in retail investment and trust income, including substantial contributions from our SB&T subsidiary. Although credit quality remained relatively stable, our loan loss reserves continued to increase, based primarily on economic factors. And while our mortgage income is less than it was a year ago, it is holding up relatively well given the depressed housing market.”

Total assets at June 30, 2010, were $1.6 billion, an increase of $89.8 million from Dec. 31, 2009. Assets at the company’s SB&T subsidiary totaled $175.7 million at the close of the second quarter, an increase of $16.1 million, or 10.1 percent, from Dec. 31, 2009. Assets at GB&T increased to $1.404 billion at June 30 from $1.328 billion at Dec 31, 2009, an increase of $76.1 million or 5.7%.

Loans outstanding at the end of the second quarter were $933.3 million, compared to $981.7 million a year ago. Total deposits were $1.4 billion at June 30, 2010, an increase of 15.1 percent from $1.2 billion for the same period a year ago. Cash and cash equivalents totaled $123.8 million at the end of the second quarter, compared to $112.2 million at the end of the first quarter and $148.0 million at Dec. 31, 2009.

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Net interest income for the second quarter of 2010 totaled $11.4 million, a 6.0 percent increase from $10.7 million for the same period in 2009. The net interest margin was 3.19 percent at June 30, 2010, compared to 3.18 percent a year ago.

Noninterest income for the second quarter totaled $5.2 million, compared to $5.9 million a year ago, due to decreases in gains on sales of investment securities and mortgage loans. Despite the year-over-year decline in noninterest income, retail investment income increased 30.8 percent, and trust income increased 18.3 percent from a year ago. Noninterest expense was $10.6 million in the second quarter, a decrease of 2.3 percent from $10.8 million a year ago, resulting from lower problem loan-related expenses and increased efficiency in the company’s operations.

The company’s loan-loss provision was $3.8 million in the second quarter of 2010, which compares to $3.3 million in the first quarter of 2010 and $5.1 million a year ago. The allowance for loan losses at June 30, 2010, were $23.8 million, or 2.65 percent of loans outstanding, compared to $23.1 million, or 2.52 percent of loans outstanding, at March 31, 2010, and $22.3 million, or 2.38 percent, at Dec. 31, 2009.

Nonperforming assets at June 30, 2010, were 2.53 percent of total assets, compared to 2.52 percent at March 31, 2010, and 3.65 percent at June 30, 2009. Net charge-offs for the second quarter of 2010 totaled 1.37 percent of average loans, compared to 1.07 percent in the first quarter of 2010 and 0.43 percent in the second quarter of 2009. The company held $7.2 million in foreclosed property or other real estate owned (OREO) at June 30, 2010, compared to $8.0 million at December 31, 2010, and $13.8 million at June 30, 2009.

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Annualized return on average assets (ROA) was 0.42 percent for the second quarter of 2010, and annualized return on average shareholder’s equity (ROE) was 6.55 percent.

Net income for the six months ended June 30, 2010, totaled $2.9 million, compared to $693,000 for the same period of 2009. Diluted earnings per share for the first six months of 2010 were $0.43, compared to $0.11 per share earned in the same period a year ago.

Net interest income for the first six months of 2010 was $21.9 million, compared to $20.8 million in the first six months of 2009. Noninterest income was $9.2 million for the first six months of 2010, compared to $10.5 million in the same period of 2009. Noninterest expense was $20.0 million for the six-month period ended June 30, 2010, compared to $20.6 million in the same period in 2009.

“We are pleased with the improvements we have made in our operations to this point in the year,” said Blanton. “Having resolved a substantial amount of our problem assets in 2009, we have been able to focus on the basics of banking — making sound loans, attracting deposits, and generating income and earnings while serving our communities. That said, given the continuing uncertainty in real estate markets and the broader economy, we will continue to keep a watchful eye on our problem assets and expenses as we work to further enhance our core banking operations, profitability and shareholder value.”

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 an office in Athens, Ga. 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.

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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.

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SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

	June 30,
	2010		December 31,
	(Unaudited)		2009
Assets
Cash and due from banks	$	99,209,845	$	123,660,855
Federal funds sold		7,300,000		7,300,000
Interest-bearing deposits in other banks		17,275,839		17,032,784
Cash and cash equivalents		123,785,684		147,993,639
Investment securities
Available-for-sale		455,049,756		306,216,156
Held-to-maturity, at cost (fair values of $311,535 and $491,860, respectively)		310,000		490,000
Loans held for sale		33,142,457		19,156,943
Loans		900,166,618		937,489,634
Less allowance for loan losses		23,826,118		22,338,255
Loans, net		876,340,500		915,151,379
Premises and equipment, net		30,524,166		31,702,655
Accrued interest receivable		5,631,645		6,090,791
Bank-owned life insurance		23,699,999		23,247,879
Restricted equity securities		6,337,700		6,337,700
Other real estate owned		7,204,735		7,973,830
Prepaid FDIC assessment		5,870,757		6,886,319
Deferred tax asset		8,839,482		11,159,725
Other assets		4,191,410		8,711,716
	$	1,580,928,291	$	1,491,118,732
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	118,211,971	$	114,780,339
Interest-bearing:
NOW accounts		318,982,247		210,437,831
Savings		382,696,678		343,739,778
Money management accounts		36,478,822		44,780,787
Time deposits over $100,000		370,040,787		418,750,941
Other time deposits		145,031,757		148,044,382
		1,371,442,262		1,280,534,058
Securities sold under repurchase agreements		448,503		3,187,807
Advances from Federal Home Loan Bank		72,000,000		77,000,000
Other borrowed funds		900,000		600,000
Accrued interest payable and other liabilities		11,383,744		13,106,706
Subordinated debentures		22,946,646		22,946,646
Total liabilities		1,479,121,155		1,397,375,217
Stockholders’ equity:
Preferred stock, no par value; 10,000,000 shares authorized; 0 shares outstanding in 2010 and 2009, respectively		—		—
Common stock, $3.00 par value; 10,000,000 shares authorized; 6,673,925 and 6,672,826 shares issued and outstanding in 2010 and 2009, respectively		20,021,775		20,018,478
Additional paid-in capital		62,488,234		62,359,597
Retained earnings		15,567,428		12,692,134
Treasury stock, at cost; 0 shares in 2010 and 2009, respectively		—		—
Accumulated other comprehensive income (loss), net		3,729,699		(1,326,694	)
Total stockholders’ equity		101,807,136		93,743,515
	$	1,580,928,291	$	1,491,118,732

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SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2010		2009			2010		2009
Interest income:
Loans, including fees	$	13,516,261	$	14,205,517		$	26,859,707	$	28,009,973
Investment securities		3,955,152		3,595,108			7,374,533		7,669,487
Federal funds sold		3,460		9,572			6,882		21,855
Interest-bearing deposits in other banks		93,496		24,695			182,167		40,701
Total interest income		17,568,369		17,834,892			34,423,289		35,742,016
Interest expense:
Deposits		5,319,108		6,009,384			10,686,166		12,810,186
Federal funds purchased and securities sold under repurchase agreements		5,019		94,767			15,857		206,236
Other borrowings		890,582		1,022,528			1,845,122		1,918,465
Total interest expense		6,214,709		7,126,679			12,547,145		14,934,887
Net interest income		11,353,660		10,708,213			21,876,144		20,807,129
Provision for loan losses		3,793,636		5,113,619			7,082,135		9,862,916
Net interest income after provision for loan losses		7,560,024		5,594,594			14,794,009		10,944,213
Noninterest income:
Service charges and fees on deposits		1,748,757		1,737,117			3,343,206		3,377,842
Gain on sales of loans		2,222,022		2,460,735			3,575,301		4,697,431
Gain (loss) on sale of fixed assets		—		(42,284	)		27,024		(16,149	)
Investment securities gains (losses), net		149,269		1,101,311			161,944		1,312,330
Other-than-temporary loss
Total impairment loss		—		(815,967	)		—		(1,190,967	)
Loss recognized in other comprehensive loss		—		572,108			—		572,108
Net impairment loss recognized in earnings		—		(243,859	)		—		(618,859	)
Retail investment income		416,077		317,986			751,089		527,138
Trust service fees		289,410		244,626			576,564		497,970
Increase in cash surrender value of bank-owned life insurance		223,044		213,421			452,120		393,635
Miscellaneous income		156,145		123,054			317,264		286,328
Total noninterest income		5,204,724		5,912,107			9,204,512		10,457,666
Noninterest expense:
Salaries and other personnel expense		5,914,348		5,800,167			11,408,877		11,458,101
Occupancy expenses		1,166,058		1,140,367			2,337,103		2,281,491
Other real estate (gains) losses		413,680		179,248			328,487		291,190
Other operating expenses		3,067,433		3,688,904			5,919,244		6,611,365
Total noninterest expense		10,561,519		10,808,686			19,993,711		20,642,147
Income before income taxes		2,203,229		698,015			4,004,810		759,732
Income tax expense		582,600		60,772			1,129,515		66,365
Net income	$	1,620,629	$	637,243		$	2,875,295	$	693,367
Basic net income per share	$	0.24	$	0.10		$	0.43	$	0.11
Diluted net income per share	$	0.24	$	0.10		$	0.43	$	0.11
Weighted average common shares outstanding		6,673,925		6,348,312			6,673,631		6,169,125
Weighted average number of common and common equivalent shares outstanding		6,673,968		6,354,344			6,673,631		6,177,569

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