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

Exhibit 99.1

FOR IMMEDIATE RELEASE
For More Information:
Ronald L. Thigpen	Andy Mus
Executive Vice President and COO	Senior Vice President
Southeastern Bank Financial Corp.	Marsh Communications LLC
706-481-1014	770-621-2700

Southeastern Bank Financial Corp. Reports Positive Earnings

for the Fourth Quarter and Year-End 2011

AUGUSTA, Ga., Jan. 27, 2012– Southeastern Bank Financial Corp. (OTCBB:SBFC), the holding company for Georgia Bank & Trust Company of Augusta (GB&T), today reported quarterly net income of $3.0 million, or $0.45 in diluted earnings per share, for the three months ended Dec. 31, 2011, compared to quarterly net income of $2.1 million, or $0.32 in diluted earnings per share, in the fourth quarter of 2010. For the full year, the company reported net income of $11.0 million, or $1.65 per diluted share, compared to net income of $6.9 million, or $1.03 per diluted share, for 2010.

“It was a very positive fourth quarter and full year for our company,” said R. Daniel Blanton, president and chief executive officer. “We increased net income and earnings in each quarter in 2011, we grew our net interest margin by 23 basis points year over year, our credit quality remained stable throughout the year, enabling us to lower our provision for loan losses by 20.4 percent for the year, and we were successful in our efforts to keep costs in line as evidenced by our noninterest expense, which grew only 0.5 percent for the full year. All of which gives us solid momentum as we enter 2012.”

“We still must contend with weak loan demand, however,” said Blanton. “Our mortgage revenue in 2011 was 18 percent lower than in 2010 and our core loans were down $28.1 million. This will continue to be a point of focus for us as we move forward.”

At Dec. 31, 2011, total assets were $1.6 billion, an increase of $7.7 million from Dec. 31, 2010. Loans outstanding at the end of the fourth quarter of 2011 were $875.1 million, compared to $886.9 million at Dec. 31, 2010. Total deposits at Dec. 31, 2011, were $1.4 billion, an increase of $8.5 million from a year ago. Cash and cash equivalents totaled $69.8 million at the end of the fourth quarter.

Net interest income for the fourth quarter of 2011 was $12.4 million, an increase of $199,000 from the same period a year ago. Noninterest income for the quarter was $5.7 million, an increase of $364,000 from the fourth quarter of 2010. Noninterest expense in the fourth quarter of 2011 totaled $11.6 million, an increase of $744,000 from the same period a year ago.

Nonperforming assets at Dec. 31, 2011, were 3.19 percent of total assets, compared to 2.34 percent at Sept. 30, 2011, and 2.12 percent at Dec. 31, 2010. Net charge-offs for the fourth quarter of 2011 totaled 1.26 percent of average loans on an annualized basis, compared to 1.20 percent annualized in the third quarter of 2011 and 1.27 percent annualized in the fourth quarter of 2010. Net charge-offs for the year totaled 1.18 percent of average loans, compared to 1.24 percent for 2010. The company held $6.2 million in other real estate owned (OREO) at Dec. 31, 2011, compared to $7.9 million at Sept. 30, 2011, and $7.8 million at Dec. 31, 2010.

The provision for loan losses totaled $2.4 million for the fourth quarter of 2011, compared to $3.5 million in the third quarter of 2011 and $4.0 million in the fourth quarter of 2010. Allowance for loan losses totaled $29.0 million, or 3.43 percent of loans outstanding, at Dec. 31, 2011, compared to $29.3 million, or 3.50 percent of loans outstanding, at Sept. 30, 2011, and $26.7 million, or 3.05 percent of loans outstanding, at Dec. 31, 2010.

The company’s net interest margin was 3.28 percent at Dec. 31, 2011, compared to 3.51 percent at Sept. 30, 2011, and 3.17 percent a year ago. Return on average assets (ROA) was 0.74 percent for the fourth quarter of 2011, an increase of 22 basis points from the same period a year ago, and return on average shareholders’ equity (ROE) was 10.37 percent, an increase of 221 basis points from the same period a year ago.

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Net interest income for the 12 months ended Dec. 31, 2011, was $50.6 million, an increase of $4.7 million from the same period in 2010. Noninterest income for the full year 2011 was $19.7 million, compared to $21.1 million in 2010. Noninterest expense in 2011 totaled $42.0 million, an increase of $226,000 from 2010. The company’s net interest margin was 3.41 percent for the full year, compared to 3.18 percent for 2010.

On December 5, 2011, the Company’s South Carolina bank subsidiary, Southern Bank & Trust (SB&T) merged with and into GB&T, with GB&T surviving the merger. SB&T continues to operate as a division of GB&T under the trade name of Southern Bank & Trust in South Carolina.

“We enter 2012 in a good position,” said Blanton. “Our goal is to build on the foundation we laid in 2011, while exploring ways of generating additional revenue growth to help offset the lack of loan demand.”

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). 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 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”

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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 SUBSIDIARY

Consolidated Balance Sheets

	December 31, 2011		December 31,
	(Unaudited)		2010
Assets
Cash and due from banks	$	51,080,600	$	42,304,774
Federal funds sold		—		—
Interest-bearing deposits in other banks		18,760,812		22,810,141
Cash and cash equivalents		69,841,412		65,114,915
Investment securities
Available-for-sale		603,758,999		586,301,633
Held-to-maturity, at cost (fair values of $0 and $310,753, respectively)		—		310,000
Loans held for sale		29,045,533		12,774,806
Loans		846,010,275		874,095,184
Less allowance for loan losses		29,045,876		26,656,672
Loans, net		816,964,399		847,438,512
Premises and equipment, net		27,608,118		29,415,853
Accrued interest receivable		6,246,880		6,382,121
Bank-owned life insurance		30,713,488		24,178,634
Restricted equity securities		5,086,000		5,706,900
Other real estate owned		6,208,720		7,750,552
Prepaid FDIC assessment		3,419,738		4,784,587
Deferred tax asset		12,723,238		14,594,554
Other assets		3,156,584		2,352,138
	$	1,614,773,109	$	1,607,105,205
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	147,196,034	$	120,138,486
Interest-bearing:
NOW accounts		346,235,936		356,266,740
Savings		471,727,749		409,583,995
Money management accounts		42,977,515		36,937,485
Time deposits over $100,000		286,318,774		346,721,403
Other time deposits		124,766,377		141,088,967
		1,419,222,385		1,410,737,076
Securities sold under repurchase agreements		700,798		817,574
Advances from Federal Home Loan Bank		39,000,000		60,000,000
Other borrowed funds		—		—
Accrued interest payable and other liabilities		15,874,526		12,646,021
Subordinated debentures		22,946,646		22,946,646
Total liabilities		1,497,744,355		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; 6,677,667 and 6,675,147 shares issued and outstanding in 2011 and 2010, respectively		20,033,001		20,025,441
Additional paid-in capital		62,767,133		62,617,358
Retained earnings		30,593,180		19,548,606
Treasury stock, at cost; 0 shares in 2011 and 2010, respectively		—		—
Accumulated other comprehensive income (loss), net		3,635,440		(2,233,517	)
Total stockholders’ equity		117,028,754		99,957,888
	$	1,614,773,109	$	1,607,105,205

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SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

			September 30,		September 30,			September 30,			September 30,
		Three Months Ended December 31,					Twelve Months Ended December 31,
		2011		2010			2011			2010
Interest income:
Loans, including fees		$	11,945,592	$	13,235,719		$	50,036,221		$	53,706,678
Investment securities			4,204,477		4,237,833			17,484,345			15,781,202
Federal funds sold			—		—			—			9,201
Interest-bearing deposits in other banks	��		26,834		83,557			119,728			377,359
Total interest income			16,176,903		17,557,109			67,640,294			69,874,440
Interest expense:
Deposits			3,154,118		4,591,650			14,443,074			20,464,633
Securities sold under repurchase agreements			1,808		2,209			6,296			19,708
Other borrowings			614,666		756,212			2,629,082			3,513,512
Total interest expense			3,770,592		5,350,071			17,078,452			23,997,853
Net interest income			12,406,311		12,207,038			50,561,842			45,876,587
Provision for loan losses			2,385,948		3,959,639			12,584,033			15,800,885
Net interest income after provision for loan losses			10,020,363		8,247,399			37,977,809			30,075,702
Noninterest income:
Service charges and fees on deposits			1,691,869		1,780,474			6,749,018			6,925,623
Gain on sales of loans			2,050,637		2,171,421			7,074,950			8,623,963
Gain on sale of fixed assets			54,049		—			70,708			26,368
Investment securities gains, net			750,143		334,160			1,118,880			1,271,275
Other-than-temporary loss
Total impairment loss			—		—			(191,618	)		(96,258	)
Less loss recognized in other comprehensive income			—		—			(89,494	)		(258	)
Net impairment loss recognized in earnings			—		—			(102,124	)		(96,000	)
Retail investment income			443,446		413,966			1,851,570			1,662,287
Trust service fees			278,876		274,636			1,128,234			1,127,361
Increase in cash surrender value of
bank-owned life insurance			266,956		221,768			1,034,854			930,755
Miscellaneous income			172,131		147,950			745,649			614,269
Total noninterest income			5,708,107		5,344,375			19,671,739			21,085,901
Noninterest expense:
Salaries and other personnel expense			6,015,029		5,938,076			23,222,936			23,462,219
Occupancy expenses			1,044,877		1,112,034			4,359,701			4,581,055
Other real estate losses (gains), net			865,460		574,518			1,898,672			1,609,999
Other operating expenses			3,655,851		3,213,048			12,560,027			12,161,746
Total noninterest expense			11,581,217		10,837,676			42,041,336			41,815,019
Income before income taxes			4,147,253		2,754,098			15,608,212			9,346,584
Income tax expense			1,134,151		608,012			4,563,638			2,490,111
Net income		$	3,013,102	$	2,146,086		$	11,044,574		$	6,856,473
Comprehensive income (loss)		$	1,589,769	$	(4,361,725	)	$	16,913,531		$	5,949,650
Basic net income per share		$	0.45	$	0.32		$	1.65		$	1.03
Diluted net income per share		$	0.45	$	0.32		$	1.65		$	1.03
Weighted average common shares outstanding			6,677,697		6,675,147			6,676,774			6,674,224
Weighted average number of common and common equivalent shares outstanding			6,677,697		6,675,147			6,676,774			6,674,224

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