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

Exhibit 99.1

FOR IMMEDIATE RELEASE
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
Positive Third Quarter 2010 Earnings

AUGUSTA, Ga., Oct. 29, 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 $1.8 million, or $0.27 in diluted earnings per share, for the three months ended Sept. 30, 2010, compared to net income of $740,000, or $0.11 in diluted earnings per share, in the third quarter of 2009.

“Our third consecutive quarter of income and earnings growth demonstrates that we are returning to solid profitability, despite continuing uncertainty in our markets and in the broader economy,” said R. Daniel Blanton, president and chief executive officer. “We are encouraged by the continued improvement in our asset quality and our ability to generate increases in net interest income despite the industry-wide lack of loan demand, which contributes to additional pressure on our net interest margin. That said, we still face many challenges related to the stagnant economy, which is why we have continued to build our loan loss reserve.”

At Sept. 30, 2010, total assets for the company were $1.6 billion, an increase of $155.6 million, or 10.4 percent, from Dec. 31, 2009.

Loans outstanding at the end of the third quarter of 2010 were $920.4 million, compared to $956.6 million at Dec. 31, 2009. Total deposits at Sept. 30, 2010, were $1.4 billion, a 12.1 percent increase from $1.3 billion at Dec. 31, 2009. The company held $118.0 million in cash and cash equivalents at the end of the third quarter.

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Net interest income for the third quarter of 2010 was $11.8 million, an increase of $972,926, or 9.0 percent, from the same period a year ago. Noninterest income for the third quarter increased 36.0 percent to $6.5 million, from $4.8 million in the third quarter of 2009, due primarily to a 47.9 percent increase in mortgage income from the third quarter of 2009, and a 52.3 percent improvement in retail investment income over that same period.

Noninterest expense in the third quarter of 2010 increased 7.0 percent to $11.0 million from a year ago, largely as a result of higher commission-related costs from mortgage origination and retail investments as well as an increase in the loss on the sale of Other Real Estate assets.

Nonperforming assets at Sept. 30, 2010, were 1.98 percent of total assets, a sizable improvement from 2.53 percent at June 30, 2010, and 3.83 percent at Sept. 30, 2009. Net charge-offs for the third quarter of 2010 totaled 1.36 percent of average loans, compared to 1.37 percent in the second quarter of 2010, and 0.41 percent in the third quarter of 2009. The company held $7.1 million in foreclosed property or other real estate owned (OREO) at Sept. 30, 2010, compared to $7.2 million at June 30, 2010, and $15.6 million at Sept. 30, 2009.

The provision for loan losses totaled $4.8 million for the third quarter of 2010, compared to $4.9 million in the same period a year ago. The allowance for loan losses at Sept. 30, 2010, was $25.5 million, or 2.87 percent of loans outstanding, compared to $22.3 million, or 2.38 percent, at Dec. 31, 2009.

“Our asset quality has steadily improved in 2010, reflecting the success of our decision to aggressively reduce problem assets in 2009 and convert nonearning assets to earning assets,” said Blanton. “We will continue to monitor our loan portfolio closely as we move forward.”

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Return on average assets (ROA) was 0.45 percent for the third quarter of 2010, and return on average shareholders’ equity (ROE) was 7.05 percent. The company’s net interest margin was 3.12 percent, compared to 3.19 percent at June 30, 2010, and 3.17 percent a year ago.

For the nine months ended Sept. 30, 2010, the company reported net income of $4.7 million, or $0.71 in diluted earnings per share, compared to net income of $1.4 million, or $0.23 in diluted earnings per share, in the same period a year ago.

Net interest income for the first nine months of 2010 was $33.7 million, up 6.5 percent from $31.6 million in the comparable period in 2009. Noninterest income was $15.7 million for the first nine months of 2010, compared to $15.3 million for the same period in 2009, an increase of 3.1 percent. Noninterest expense for the first three quarters of 2010 totaled $31.0 million, compared to $30.9 million for the comparable period in 2009.

“Looking ahead, our plan is maintain control of our expenses, manage our problem assets, and continue to find ways to generate revenue in a tough economy,” said Blanton.

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 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.

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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

	September 30,
	2010		December 31,
	(Unaudited)		2009
Assets
Cash and due from banks	$	80,321,874	$	123,660,855
Federal funds sold		—		7,300,000
Interest-bearing deposits in other banks		37,585,543		17,032,784
Cash and cash equivalents		117,907,417		147,993,639
Investment securities
Available-for-sale		541,549,460		306,216,156
Held-to-maturity, at cost (fair values of $311,848 and $491,860, respectively)		310,000		490,000
Loans held for sale		31,803,881		19,156,943
Loans		888,596,510		937,489,634
Less allowance for loan losses		25,540,308		22,338,255
Loans, net		863,056,202		915,151,379
Premises and equipment, net		29,970,723		31,702,655
Accrued interest receivable		6,226,124		6,090,791
Bank-owned life insurance		23,956,866		23,247,879
Restricted equity securities		5,911,800		6,337,700
Other real estate owned		7,106,477		7,973,830
Prepaid FDIC assessment		5,376,581		6,886,319
Deferred tax asset		9,685,032		11,159,725
Other assets		3,864,135		8,711,716
	$	1,646,724,698	$	1,491,118,732
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	120,700,178	$	114,780,339
Interest-bearing:
NOW accounts		368,994,416		210,437,831
Savings		408,550,797		343,739,778
Money management accounts		36,782,943		44,780,787
Time deposits over $100,000		357,564,244		418,750,941
Other time deposits		142,760,928		148,044,382
		1,435,353,506		1,280,534,058
Securities sold under repurchase agreements		437,768		3,187,807
Advances from Federal Home Loan Bank		67,000,000		77,000,000
Other borrowed funds		700,000		600,000
Accrued interest payable and other liabilities		16,033,829		13,106,706
Subordinated debentures		22,946,646		22,946,646
Total liabilities		1,542,471,749		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; 6,674,465 and 6,672,826 shares issued and outstanding in 2010 and 2009, respectively		20,023,395		20,018,478
Additional paid-in capital		62,552,739		62,359,597
Retained earnings		17,402,521		12,692,134
Treasury stock, at cost; 0 shares in 2010 and 2009, respectively		—		—
Accumulated other comprehensive income (loss), net		4,274,294		(1,326,694	)
Total stockholders’ equity		104,252,949		93,743,515
	$	1,646,724,698	$	1,491,118,732

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SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Interest income:
Loans, including fees	$	13,611,252		$	14,217,691		$	40,470,959		$	42,227,664
Investment securities		4,168,836			3,294,625			11,543,369			10,964,112
Federal funds sold		2,319			3,498			9,201			25,353
Interest-bearing deposits in other banks		111,635			86,140			293,802			126,841
Total interest income		17,894,042			17,601,954			52,317,331			53,343,970
Interest expense:
Deposits		5,186,817			5,658,474			15,872,983			18,468,660
Federal funds purchased and securities sold under repurchase agreements		1,642			114,023			17,499			320,259
Other borrowings		912,178			1,008,978			2,757,300			2,927,443
Total interest expense		6,100,637			6,781,475			18,647,782			21,716,362
Net interest income		11,793,405			10,820,479			33,669,549			31,627,608
Provision for loan losses		4,759,111			4,878,571			11,841,246			14,741,487
Net interest income after provision for loan losses		7,034,294			5,941,908			21,828,303			16,886,121
Noninterest income:
Service charges and fees on deposits		1,801,943			1,846,238			5,145,149			5,224,080
Gain on sales of loans		2,877,241			1,945,562			6,452,542			6,642,993
Gain (loss) on sale of fixed assets		(656	)		(80	)		26,368			(16,229	)
Investment securities gains (losses), net		775,171			380,512			937,115			1,692,842
Other-than-temporary loss
Total impairment loss		(96,258	)		(618,465	)		(96,258	)		(1,809,432	)
Loss recognized in other comprehensive income		258			262,540			258			834,648
Net impairment loss recognized in earnings		(96,000	)		(355,925	)		(96,000	)		(974,784	)
Retail investment income		497,232			326,434			1,248,321			853,572
Trust service fees		276,161			267,897			852,725			765,867
Increase in cash surrender value of bank-owned life insurance		256,867			255,628			708,987			649,263
Miscellaneous income		149,055			142,023			466,319			428,351
Total noninterest income		6,537,014			4,808,289			15,741,526			15,265,955
Noninterest expense:
Salaries and other personnel expense		6,115,266			5,469,234			17,524,143			16,927,335
Occupancy expenses		1,131,918			1,213,009			3,469,021			3,494,500
Other operating expenses		3,736,448			3,581,576			9,984,179			10,484,131
Total noninterest expense		10,983,632			10,263,819			30,977,343			30,905,966
Income before income taxes		2,587,676			486,378			6,592,486			1,246,110
Income tax expense (benefit)		752,584			(253,376	)		1,882,099			(187,011	)
Net income	$	1,835,092		$	739,754		$	4,710,387		$	1,433,121
Basic net income per share	$	0.27		$	0.11		$	0.71		$	0.23
Diluted net income per share	$	0.27		$	0.11		$	0.71		$	0.23
Weighted average common shares outstanding		6,674,465			6,672,118			6,673,912			6,338,632
Weighted average number of common and common equivalent shares outstanding		6,674,465			6,672,388			6,673,912			6,344,275

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