Southeastern Bank Financial (SBFC) 8-K Southeastern Bank Financial Corp. Reports Record Earnings

Exhibit 99.1

FOR IMMEDIATE RELEASE

For More Information:

Ronald L. Thigpen

Executive Vice President and COO

Southeastern Bank Financial Corp.

706-481-1014

Southeastern Bank Financial Corp. Reports Record Earnings

for the Fourth Quarter and Year-End 2013

AUGUSTA, Ga., Jan. 31, 2014– Southeastern Bank Financial Corp. (OTCQB:SBFC), the holding company for Georgia Bank & Trust Company of Augusta (GB&T), today reported record quarterly net income of $4.4 million for the three months ended Dec. 31, 2013, or $0.65 in diluted earnings per share, compared to $3.9 million, or $0.58 in diluted earnings per share, in the fourth quarter of 2012. For the full year, the company reported record net income of $16.3 million, or $2.45 per diluted share, compared to net income of $14.4 million, or $2.16 per diluted share, for 2012.

"We are pleased to have continued our consistently solid performance for 2013 with record earnings for both the fourth quarter and the year," said President and Chief Executive Officer R. Daniel Blanton. "We continued to grow net interest income in a historically low interest rate environment and grew loans in a market with lingering low demand. Another reflection of our strong performance is our improved asset quality, with healthy reductions in nonperforming assets allowing for a continued reduction in our provision for loan losses."

Total assets at Dec. 31, 2013, were $1.7 billion, an increase of $26.8 million from Dec. 31, 2012. Loans outstanding at the end of the fourth quarter were $916.4 million, an increase of $14.9 million from Dec. 31, 2012. Total deposits were $1.5 billion at Dec. 31, 2013, an increase of $33.5 million from Dec. 31, 2012. Cash and cash equivalents totaled $47.3 million at the end of the fourth quarter of 2013.

Net interest income for the fourth quarter of 2013 totaled $13.1 million, a slight increase from the same period in 2012. Noninterest income for the fourth quarter totaled $3.6 million, a decrease from $5.5 million for the same period a year ago, due to lower mortgage origination volume and bond losses taken to improve the Banks’ interest rate risk profile in anticipation of rising rates. Noninterest expense was $9.1 million in the fourth quarter of 2013, a 19.3 percent decrease from a year ago resulting from reduced salary and other real estate expenses.

The net interest margin was 3.21 percent for the quarter-ended Dec. 31, 2013, compared to 3.31 percent for the third quarter of 2013, and 3.30 percent for the same period a year ago. Annualized return on average assets (ROA) was 1.01 percent for the fourth quarter of 2013, an increase of 9 basis points from the same period a year ago, and annualized return on average shareholder's equity (ROE) was 13.02 percent, an increase of 150 basis points from the fourth quarter of 2012.

Nonperforming assets at Dec. 31, 2013, were 1.58 percent of total assets, compared to 1.78 percent at Sept. 30, 2013, and 2.08 percent at Dec. 31, 2012. Net charge-offs for the fourth quarter of 2013 totaled 0.68 percent of average loans on an annualized basis, compared to 1.17 percent annualized in the third quarter of 2013 and 0.84 percent annualized in the fourth quarter of 2012. The company held $1.0 million in OREO at Dec. 31, 2013, compared to $3.5 million at December 31, 2012.

The company's loan-loss provision expense was $1.4 million in the fourth quarter of 2013, a 26.3 percent decrease from $1.9 million in the third quarter of 2013, and a 11.50 percent decrease from $1.6 million in the fourth quarter a year ago. The allowance for loan losses at Dec. 31, 2013, was $26.4 million, or 2.92 percent of loans outstanding, compared to $28.8 million, or 3.31 percent of loans outstanding, at Dec. 31, 2012.

Net interest income for the 12 months ended Dec. 31, 2013, was $52.8 million, a 2.3 percent increase from $51.6 million in the full year 2012. Noninterest income was $18.5 million for the 12 months ended Dec. 31, 2013, a 15.4 percent decrease from $21.9 million in the same period of 2012, as a result of a decrease in mortgage income for the year and intentionally taken bond losses. Noninterest expense was $40.4 million for the full year 2013, compared to $44.4 million in the same period in 2012.

"We saw expected decreases in noninterest income for the fourth quarter and the year," said Blanton. "We have actively worked to position the balance sheet for increasing interest rates, and we maintain strong loan loss reserves, in keeping with our consistent long term approach to our business."

On January 15, 2014, the Board of Directors of Southeastern Bank Financial Corp. declared a regular quarterly cash dividend of $0.13 per share of common stock payable on February 14, 2014, to shareholders of record as of January 31, 2014. Based on the share price of $21.18 at the close of business on Thursday, January 30, 2014, this dividend represents an annualized yield to shareholders of 2.46%.

About Southeastern Bank Financial Corp.

Southeastern Bank Financial Corp. is the $1.7 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 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
Consolidated Balance Sheets
		December 31,
		2013			December 31,
Assets		(Unaudited)			2012
Cash and due from banks	$	36,766,420		$	39,565,757
Interest-bearing deposits in other banks		10,570,222			4,322,317
Cash and cash equivalents		47,336,642			43,888,074
Available-for-sale securities		649,979,319			654,738,964
Loans held for sale		10,638,179			30,051,204
Loans		905,712,691			871,446,844
Less allowance for loan losses		26,408,723			28,846,336
Loans, net		879,303,968			842,600,508
Premises and equipment, net		27,002,697			26,145,378
Accrued interest receivable		6,221,061			6,602,879
Bank-owned life insurance		35,744,649			34,825,588
Restricted equity securities		4,869,600			5,295,600
Other real estate owned		1,013,563			3,489,887
Prepaid FDIC assessment		—			2,023,977
Deferred tax asset		21,022,576			10,406,187
Other assets		6,193,363			2,434,228
	$	1,689,325,617		$	1,662,502,474
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing	$	187,287,015		$	158,066,510
Interest-bearing:
NOW accounts		351,798,554			349,531,376
Savings		521,656,334			504,193,793
Money management accounts		16,065,409			18,032,530
Time deposits of $100,000 or more		293,003,961			280,870,648
Other time deposits		84,991,883			110,576,827
		1,454,803,156			1,421,271,684
Securities sold under repurchase agreements		808,311			976,433
Advances from Federal Home Loan Bank		64,000,000			64,000,000
Accrued interest payable and other liabilities		16,598,876			18,924,619
Subordinated debentures		21,546,646			21,546,646
Total liabilities		1,557,756,989			1,526,719,382
Stockholders' equity:
Preferred stock, no par value; 10,000,000 shares
authorized; 0 shares outstanding in 2013 and
2012, respectively		—			—
Common stock, $3.00 par value; 10,000,000 shares
authorized; 6,680,225 and 6,680,225 shares issued in
2013 and 2012, respectively; 6,679,982 and 6,675,000
shares outstanding in 2013 and 2012, respectively		20,040,675			20,040,675
Additional paid-in capital		62,863,774			62,835,122
Retained earnings		58,768,914			45,028,153
Treasury stock, at cost; 243 and 5,225 shares in
2013 and 2012, respectively		(3,380	)		(72,680	)
Accumulated other comprehensive income (loss), net		(10,101,355	)		7,951,822
Total stockholders' equity		131,568,628			135,783,092
	$	1,689,325,617		$	1,662,502,474

SOUTHEASTERN BANK FINANCIAL CORPORATION
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2013			2012			2013			2012
Interest income:
Loans, including fees	$	11,375,646		$	11,732,583		$	46,478,776		$	46,692,599
Investment securities		4,009,862			4,093,654			15,763,823			16,895,170
Interest-bearing deposits in other banks		20,945			20,272			71,085			81,848
Total interest income		15,406,453			15,846,509			62,313,684			63,669,617
Interest expense:
Deposits		1,643,282			2,106,626			6,793,541			9,425,091
Securities sold under repurchase agreements		640			2,602			6,265			12,010
Other borrowings		684,095			686,102			2,714,121			2,596,700
Total interest expense		2,328,017			2,795,330			9,513,927			12,033,801
Net interest income		13,078,436			13,051,179			52,799,757			51,635,816
Provision for loan losses		1,391,745			1,573,465			7,437,791			8,140,563
Net interest income after provision for loan losses		11,686,691			11,477,714			45,361,966			43,495,253
Noninterest income:
Service charges and fees on deposits		1,838,583			1,819,570			7,155,146			6,848,502
Gain on sales of loans		1,127,436			2,471,324			6,843,443			9,738,712
Gain on sale of fixed assets, net		4,194			—			25,898			10,459
Investment securities gains (losses), net		(703,259	)		(120,192	)		(895,204	)		320,994
Other-than-temporary loss:
Total impairment loss		—			—			—			(13,314	)
Less loss recognized in other comprehensive income		—			—			—			(4,268	)
Net impairment loss recognized in earnings		—			—			—			(9,046	)
Retail investment income		553,959			494,764			2,099,021			1,941,313
Trust service fees		294,690			288,611			1,184,474			1,145,695
Earnings from cash surrender value of bank-owned life insurance		289,590			281,225			1,186,553			1,112,100
Miscellaneous income		189,424			221,217			897,364			756,491
Total noninterest income		3,594,617			5,456,519			18,496,695			21,865,220
Noninterest expense:
Salaries and other personnel expense		5,028,984			6,546,113			23,079,461			25,889,475
Occupancy expenses		907,097			982,430			3,721,582			4,093,548
Other real estate losses, net		13,969			532,348			641,777			1,784,617
Other operating expenses		3,153,867			3,226,654			12,922,900			12,671,510
Total noninterest expense		9,103,917			11,287,545			40,365,720			44,439,150
Income before income taxes		6,177,391			5,646,688			23,492,941			20,921,323
Income tax expense		1,813,032			1,750,627			7,147,212			6,486,350
Net income	$	4,364,359		$	3,896,061		$	16,345,729		$	14,434,973
Other comprehensive income (loss):
Unrealized gain (loss) on derivatives		343,754			173,776			1,647,857			(154,049	)
Unrealized gain (loss) on securities available-for-sale		(7,232,944	)		(1,664,019	)		(32,089,995	)		7,530,452
Reclassification adjustment for realized (gain) loss
on securities, net of OTTI		703,259			120,192			895,204			(311,948	)
Tax effect		2,406,327			532,950			11,493,757			(2,748,073	)
Total other comprehensive income (loss)		(3,779,604	)		(837,101	)		(18,053,177	)		4,316,382
Comprehensive income (loss)	$	584,755		$	3,058,960		$	(1,707,448	)	$	18,751,355
Basic net income per share	$	0.65		$	0.58		$	2.45		$	2.16
Diluted net income per share	$	0.65		$	0.58		$	2.45		$	2.16
Weighted average common shares outstanding		6,679,982			6,675,000			6,678,914			6,678,215
Weighted average number of common and
common equivalent shares outstanding		6,679,982			6,675,000			6,678,914			6,678,215