Southeastern Bank Financial Corp., 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, 2013, compared to $3.4 million, or $0.50 in diluted earnings per share, in the second quarter of 2012.

"We achieved a record high in net income in the second quarter thanks to continued growth in our core banking operations and a decrease in expenses," said President and Chief Executive Officer R. Daniel Blanton. "Increases in loans, deposits and net interest income helped drive double-digit growth in income and earnings, while improvement in our deposit mix helped lower our funding costs. Loan growth was slight, however, due to low loan demand resulting from a lackluster economy and uncertainty among consumers and small businesses."

Total assets at June 30, 2013, were $1.7 billion, an increase of $31.4 million from Dec. 31, 2012. Loans outstanding at the end of the second quarter were $903.4 million, an increase of $1.9 million from Dec. 31, 2012, and an increase of $28.5 million from June 30, 2012. Total deposits were $1.4 billion at June 30, 2013, an increase of $21.6 million from Dec. 31, 2012, and an increase of $7.9 million from June 30, 2012. Cash and cash equivalents totaled $44.3 million at the end of the second quarter of 2013.

Net interest income for the second quarter of 2013 totaled $13.3 million, a 2.4 percent increase from $13.0 million for the same period in 2012, resulting from a lower cost of funds. Noninterest income for the second quarter totaled $5.2 million, a 3 percent decline from the same period a year ago, due to slower mortgage volumes as well as a decrease in gains on the sale of investment securities. Noninterest expense was $10.3 million in the second quarter of 2013, an 11.3 percent decrease from a year ago resulting primarily from lower expenses on other real estate and operating costs, though decreases were seen across all expense categories.

The net interest margin was 3.36 percent for the quarter ended June 30, 2013, compared to 3.40 percent at March 31, 2013, and 3.38 percent for the same period a year ago. Annualized return on average assets (ROA) was 0.95 percent for the second quarter of 2013, an increase of 13 basis points from the same period a year ago, and annualized return on average shareholder's equity (ROE) was 11.42 percent, an increase of 50 basis points from the second quarter of 2012.

Nonperforming assets at June 30, 2013, were 2.08 percent of total assets, compared to 1.80 percent at March 31, 2013, and 2.63 percent at June 30, 2012. Net charge-offs for the second quarter of 2013 totaled 1.87 percent of average loans on an annualized basis, compared to 0.77 percent annualized in the first quarter of 2013 and 0.97 percent annualized in the second quarter of 2012. The company held $1.1 million in OREO at June 30, 2013, compared to $2.4 million at March 31, 2013, and $7.8 million at June 30, 2012.

The company's loan-loss provision expense was $2.4 million in the second quarter of 2013, a 38.4 percent increase from $1.7 million in the previous quarter, and a 23.8 percent increase from $2.0 million in the second quarter a year ago. The allowance for loan losses at June 30, 2013, was $27.3 million, or 3.12 percent of loans outstanding, compared to $28.9 million, or 3.28 percent of loans outstanding, at March 31, 2013, and $29.6 million, or 3.50 percent of loans outstanding, at June 30, 2012.

"We increased our provision for loan losses in the second quarter to accommodate the resolution of several problem credits," said Blanton. "Our overall asset quality ratios remained solid, however, and have been stable throughout the past year. Though we have generated consistent growth in income and earnings in recent quarters, we will continue to keep a close watch on assets and maintain our conservative approach to banking."

On July 17, 2013, the holding company's board of directors declared a regular quarterly cash dividend of $0.13 per share of common stock payable on August 16, 2013, to shareholders of record as of August 2, 2013. Based on the share price of $19.80 at the close of business on Thursday, July 25, 2013, this dividend represents an annualized yield to shareholders of 2.63 percent.