Southeastern Bank Financial Corp., the holding company for Georgia Bank & Trust Company of Augusta, Friday reported quarterly net income of $3.8 million for the three months ended March 31, 2014, or $0.57 in diluted earnings per share, compared to $3.8 million, or $0.57 in diluted earnings per share, in the first quarter of 2013.

"We are pleased to report an incremental increase in earnings over the year-ago period," said President and Chief Operating Officer Ronald L. Thigpen. "Our net interest margin remains compressed in a historically low interest rate environment, and we saw lower mortgage income due to significantly reduced origination volume. Our credit costs decreased further as asset quality continued to improve and noninterest expense decreased. Retail investment and trust income continue to improve, and our balance sheet grew, as we saw both core loan growth and solid deposit growth. Overall, we continue to perform well."

Total assets at March 31, 2014, were $1.7 billion, an increase of $57.9 million from December 31, 2013. Loans outstanding at the end of the first quarter were $940.3 million, an increase of $23.9 million from December 31, 2013, and an increase of $34.9 million from March 31, 2013. Total deposits were $1.5 billion at March 31, 2014, an increase of $48.4 million from December 31, 2013, and an increase of $36.0 million from March 31, 2013. Cash and cash equivalents totaled $82.5 million at the end of the first quarter of 2014.

Net interest income for the first quarter of 2014 totaled $12.6 million, a 4.7 percent decrease from $13.2 million for the same period in 2013. Noninterest income for the first quarter totaled $4.1 million, a decrease from $4.8 million for the same period a year ago, primarily due to significantly lower mortgage origination volume. Noninterest expense was $10.1 million in the first quarter of 2014, a 5.5 percent decrease from a year ago resulting from continued expense control.

The net interest margin was 3.16 percent for the quarter-ended March 31, 2014, compared to 3.21 percent at December 31, 2013, and 3.40 percent for the same period a year ago. Annualized return on average assets (ROA) was 0.91 percent for the first quarter of 2014, unchanged from the same period a year ago, and annualized return on average shareholder's equity (ROE) was 11.36 percent, an increase of 23 basis points from the first quarter of 2013.

Nonperforming assets at March 31, 2014, were 1.38 percent of total assets, compared to 1.58 percent at December 31, 2013, and 1.80 percent at March 31, 2013. Net charge-offs for the first quarter of 2014 totaled 0.52 percent of average loans on an annualized basis, compared to 0.68 percent annualized in the fourth quarter of 2013 and 0.77 percent annualized in the first quarter of 2013. The company held $1.3 million in OREO at March 31, 2014, compared to $1.0 million at December 31, 2013, and $2.4 million at March 31, 2013.

The company's loan-loss provision expense was $1.1 million in the first quarter of 2014, a 24.1 percent decrease from $1.4 million in the previous quarter, and a 39.4 percent decrease from $1.7 million in the first quarter a year ago. The allowance for loan losses at March 31, 2014, was $26.3 million, or 2.80 percent of loans outstanding, compared to $26.4 million, or 2.88 percent of loans outstanding, at December 31, 2013, and $28.9 million, or 3.20 percent of loans outstanding, at March 31, 2013.

"We have seen expected decreases in net interest margin, as well as mortgage income due to reduced origination volume," said Thigpen. "However, retail investment and trust income are on the upswing, and our balance sheet remains strong, as we are encouraged by core loan growth and solid deposit growth."

On April 23, 2014, the company's Board of Directors declared a regular quarterly cash dividend of $0.13 per share of common stock payable on May 23, 2014, to shareholders of record as of May 9, 2014. Based on the share price of $21.98 at the close of business on Thursday, April 24, 2014, this dividend represents an annualized yield to shareholders of 2.37 percent.