Southeastern Bank Financial (SBFC) 8-K Southeastern Bank Financial Corp. Reports Earnings for the Second Quarter 2014 and Declares Dividend

Exhibit 99.1

FOR IMMEDIATE RELEASE

For More Information:

Ronald L. Thigpen

President and Chief Operating Officer

Southeastern Bank Financial Corp.

706-481-1014

Southeastern Bank Financial Corp. Reports Earnings
for the Second Quarter 2014 and Declares Dividend

AUGUSTA, Ga., July 25, 2014 – Southeastern Bank Financial Corp. (OTCQB:SBFC), the holding company for Georgia Bank & Trust Company of Augusta (GB&T), today reported quarterly net income of $4.0 million, or $0.60 in diluted earnings per share, for the three months ended June 30, 2014, compared to $4.0 million, or $0.60 in diluted earnings per share, in the second quarter of 2013.

“We are pleased to report incremental increases in net income for both the quarter and first six months of 2014,” said President and Chief Operating Officer Ronald L. Thigpen. “The ongoing historically low interest rate environment continues to squeeze our net interest margin and net interest income. Our loan-loss provision has decreased significantly owing to continued asset quality improvement. Noninterest income is down due primarily to lower mortgage lending volume. But we also saw quarterly improvement in both retail investment and trust income, as well as excellent loan and total deposit growth. We continued our steady performance in the quarter.”

Total assets at June 30, 2014, were $1.8 billion, an increase of $91.3 million from Dec. 31, 2013. Total loans outstanding at the end of the second quarter were $984.7 million, an increase of $68.4 million from Dec. 31, 2013, and an increase of $81.3 million from June 30, 2013. Total deposits were $1.5 billion at June 30, 2014, an increase of $77.0 million from Dec. 31, 2013, and an increase of $88.9 million from June 30, 2013. Cash and cash equivalents totaled $81.0 million at the end of the second quarter of 2014.

Net interest income for the second quarter of 2014 totaled $13.0 million, a 2.0 percent decrease from $13.3 million for the same period in 2013, resulting from lower spreads in the ongoing compressed interest rate environment. Noninterest income for the second quarter totaled $4.5 million, a 13.5 percent decline from the same period a year ago, due primarily to lower mortgage lending volume. Noninterest expense was $10.6 million in the second quarter of 2014, a 3.4 percent increase from a year ago, kept in check by significantly lower losses related to Other Real Estate.

The net interest margin was 3.18 percent for the quarter ended June 30, 2014, compared to 3.16 percent at March 31, 2014, and 3.36 percent for the same period a year ago. Annualized return on average assets (ROA) was 0.93 percent for the second quarter of 2014, a decrease of 2 basis points from the same period a year ago, and annualized return on average shareholder’s equity (ROE) was 11.39 percent, a decrease of 3 basis points from the second quarter of 2013.

Nonperforming assets at June 30, 2014, were 1.28 percent of total assets, compared to 1.38 percent at March 31, 2014, and 2.08 percent at June 30, 2013. Net charge-offs for the second quarter of 2014 totaled 0.18 percent of average loans on an annualized basis, compared to 0.52 percent annualized in the first quarter of 2014 and 1.87 percent annualized in the second quarter of 2013. The company held $1.5 million in OREO at June 30, 2014, compared to $1.3 million at March 31, 2014, and $1.1 million at June 30, 2013.

The company’s loan-loss provision expense was $1.0 million in the second quarter of 2014, a 4.4 percent decrease from $1.1 million in the previous quarter, and a 58.1 percent decrease from $2.4 million in the second quarter a year ago. The allowance for loan losses at June 30, 2014, was $26.9 million, or 2.80 percent of loans outstanding, compared to $26.3 million, or 2.84 percent of loans outstanding, at March 31, 2014, and $27.3 million, or 3.12 percent of loans outstanding, at June 30, 2013.

“We continue to see growth in the balance sheet, with significant core loan and deposit growth,” said Thigpen. “We expect ongoing margin pressure from this low interest rate environment to contribute to lower net interest income and we continue to be focused on increasing noninterest income and controlling noninterest expense.

On July 23, 2014, the company’s Board of Directors declared a regular quarterly cash dividend of $0.13 per share of common stock payable on August 22, 2014, to shareholders of record as of August 8, 2014. Based on the share price of $23.80 at the close of business on Thursday, July 24, 2014, this dividend represents an annualized yield to shareholders of 2.18 percent.

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 primary focus is on real estate, commercial and consumer loans to individuals, small to medium-sized businesses and professionals, and also provides wealth management, trust and retail investment 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.

SOUTHEASTERN BANK FINANCIAL CORPORATION

Consolidated Balance Sheets

	June 30,
	2014			December 31,
Assets	(Unaudited)			2013
Cash and due from banks	$	71,979,967		$	36,766,420
Interest-bearing deposits in other banks		9,054,964			10,570,222
Cash and cash equivalents		81,034,931			47,336,642
Available-for-sale securities		647,599,251			649,979,319
Loans held for sale		24,499,481			10,638,179
Loans		960,230,782			905,712,691
Less allowance for loan losses		26,882,652			26,408,723
Loans, net		933,348,130			879,303,968
Premises and equipment, net		27,379,247			27,002,697
Accrued interest receivable		5,987,039			6,221,061
Bank-owned life insurance		36,304,149			35,744,649
Restricted equity securities		4,398,400			4,869,600
Other real estate owned		1,500,002			1,013,563
Deferred tax asset		15,919,575			21,022,576
Other assets		2,606,648			6,193,363
	$	1,780,576,853		$	1,689,325,617
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	196,701,793		$	187,287,015
Interest-bearing:
NOW accounts		392,968,835			351,798,554
Savings		522,861,133			521,656,334
Money management accounts		15,370,461			16,065,409
Time deposits of $100,000 or more		322,844,870			293,003,961
Other time deposits		81,065,197			84,991,883
		1,531,812,289			1,454,803,156
Securities sold under repurchase agreements		653,273			808,311
Advances from Federal Home Loan Bank		64,000,000			64,000,000
Accrued interest payable and other liabilities		17,470,680			16,598,876
Subordinated debentures		20,000,000			21,546,646
Total liabilities		1,633,936,242			1,557,756,989
Stockholders’ equity:
Preferred stock, no par value; 10,000,000 shares authorized; 0 shares outstanding in 2014 and 2013, respectively		—			—
Common stock, $3.00 par value; 10,000,000 shares authorized; 6,744,253 and 6,680,225 shares issued in 2014 and 2013, respectively; 6,744,253 and 6,679,982 shares outstanding in 2014 and 2013, respectively		20,232,759			20,040,675
Additional paid-in capital		62,850,459			62,863,774
Retained earnings		64,873,818			58,768,914
Treasury stock, at cost; 0 and 243 shares in 2014 and 2013, respectively		—			(3,380	)
Accumulated other comprehensive loss, net		(1,316,425	)		(10,101,355	)
Total stockholders’ equity		146,640,611			131,568,628
	$	1,780,576,853		$	1,689,325,617

SOUTHEASTERN BANK FINANCIAL CORPORATION

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Interest income:
Loans, including fees	$	11,640,560		$	11,744,176		$	22,921,062		$	23,434,937
Investment securities		3,618,401			3,897,515			7,152,006			7,879,253
Interest-bearing deposits in other banks		17,914			20,662			32,912			36,885
Total interest income		15,276,875			15,662,353			30,105,980			31,351,075
Interest expense:
Deposits		1,584,877			1,683,039			3,173,693			3,512,522
Securities sold under repurchase agreements		2,249			813			3,008			1,701
Other borrowings		659,125			676,209			1,326,975			1,345,576
Total interest expense		2,246,251			2,360,061			4,503,676			4,859,799
Net interest income		13,030,624			13,302,292			25,602,304			26,491,276
Provision for loan losses		1,010,384			2,413,949			2,067,704			4,158,692
Net interest income after provision for loan losses		12,020,240			10,888,343			23,534,600			22,332,584
Noninterest income:
Service charges and fees on deposits		1,792,581			1,793,770			3,421,475			3,467,563
Gain on sales of loans		1,372,632			2,155,303			2,192,092			4,056,812
Gain on sale of fixed assets, net		12,604			16,204			11,522			21,704
Investment securities gains (losses), net		26,341			14,903			276,980			(29,326	)
Retail investment income		514,071			487,132			1,087,992			987,840
Trust service fees		318,537			284,369			641,658			589,255
Earnings from cash surrender value of bank-owned life insurance		281,092			287,915			559,500			570,449
Miscellaneous income		204,818			186,758			422,723			375,413
Total noninterest income		4,522,676			5,226,354			8,613,942			10,039,710
Noninterest expense:
Salaries and other personnel expense		6,147,991			6,140,533			11,914,142			12,337,942
Occupancy expenses		986,592			939,055			1,930,784			1,874,136
Other real estate losses (gains), net		21,831			207,571			(13,234	)		617,300
Other operating expenses		3,484,540			3,000,886			6,922,355			6,219,098
Total noninterest expense		10,640,954			10,288,045			20,754,047			21,048,476
Income before income taxes		5,901,962			5,826,652			11,394,495			11,323,818
Income tax expense		1,857,714			1,824,018			3,544,355			3,544,765
Net income	$	4,044,248		$	4,002,634		$	7,850,140		$	7,779,053
Other comprehensive income (loss):
Unrealized gain (loss) on derivatives		(288,200	)		780,581			(643,311	)		1,124,970
Unrealized gain (loss) on securities available-for-sale		6,811,549			(18,927,847	)		15,298,245			(19,834,428	)
Reclassification adjustment for realized (gain) loss on securities, net of OTTI		(26,341	)		(14,903	)		(276,980	)		29,326
Tax effect		(2,527,336	)		7,065,083			(5,593,024	)		7,266,571
Total other comprehensive income (loss)		3,969,672			(11,097,086	)		8,784,930			(11,413,561	)
Comprehensive income (loss)	$	8,013,920		$	(7,094,452	)	$	16,635,070		$	(3,634,508	)
Basic net income per share	$	0.61		$	0.60		$	1.18		$	1.16
Diluted net income per share	$	0.60		$	0.60		$	1.17		$	1.16
Weighted average common shares outstanding		6,681,253			6,678,807			6,680,945			6,678,112
Weighted average number of common and common equivalent shares outstanding		6,686,332			6,678,807			6,682,954			6,678,112