SOURCE: Coast Bancorp

November 12, 2008 18:30 ET

Coast Bancorp Third Quarter 2008 Earnings Announcement

SAN LUIS OBISPO, CA--(Marketwire - November 12, 2008) - Coast Bancorp (OTCBB: CTBP), the holding company for Coast National Bank, announced the unaudited financial results for the quarter ended September 30, 2008.

Total assets at September 30, 2008 were $190.4 million, a 3.6% increase from $183.8 million at December 31, 2007.

Net loans at September 30, 2008 were $143.8 million, an increase of $1.5 million or 1.1% from $142.3 million at December 31, 2007.

The recorded investment in impaired loans as of September 30, 2008 was $12.1 million, an increase of $0.4 million or 3.4% from $11.7 million at June 30, 2008, or an increase of $7.9 million or 188.1% from $4.2 million at December 31, 2007. Impaired loans as a percentage of total loans as of September 30 2008, June 30, 2008 and December 31, 2007 were 8.2%, 7.8% and 2.9% respectively. The allowance for loan and lease losses, which covers potential credit losses pertaining to the loan portfolio, was $2.8 million or 1.9% of total loans at September 30, 2008. The Company also carried an additional $55,000 allowance for credit losses pertaining to its unfunded commitments in the liability section of its balance sheet. Collectively, the total allowance for all types of credit losses was $2.9 million at September 30, 2008 as compared to $1.5 million at December 31, 2007, a 93.3% increase.

Deposits as of September 30, 2008 were $147.7 million, a $14.4 million, or 8.9% decrease from $162.1 million at December 31, 2007.

Total stockholders' equity decreased 2.8% to $13.7 million as of September 30, 2008 as compared to $14.1 million at December 31, 2007. The decrease was a result of the March 31, 2008 $1.5 million provision to the allowance for loan and lease losses. Despite the decrease in stockholders' equity, the Company remained "well capitalized" by regulatory standards. The Tier 1 Leverage Capital Ratio was 9.9% at September 30, 2008, or 4.4% above the "well capitalized" regulatory requirement of 5%. The Tier 1 Risk Based Capital Ratio was 11.5% at September 30, 2008, or 5.5% above the "well capitalized" regulatory requirement of 6%. The Total Risk Based Capital Ratio was 14.2% at September 30, 2008, or 4.2% above the "well capitalized" regulatory requirement of 10%.

Net interest income before the provision for loan losses for the three months ended September 30, 2008 was $1.6 million, a decrease of 23.8% when compared to $2.1 million for the three months ended September 30, 2007. Net interest income before the provision for loan losses for the nine months ended September 30, 2008 was $4.9 million, a decrease of 23.4% when compared to $6.4 million for the nine months ended September 30, 2007. The decrease in net interest income was primarily attributable to a decreased net interest margin, partially offset by the increase in total loans. The net interest margin for the three months ended September 30, 2008 was 3.5% compared to 4.9% for the three months ended September 30, 2007. The net interest margin for the nine months ended September 30, 2008 was 3.8% compared to 5.1% for the nine months ended September 30, 2007.

Non-interest income for the three months ending September 30, 2008 was $129,000, a decrease of 22.8%, compared to $167,000 for the three months ended September 30, 2007. The decrease was primarily due to more third quarter sales of SBA loans in 2007 than in 2008. Non-interest income for the nine months ending September 30, 2008 was $554,000, an increase of 31.6%, compared to $421,000 for the nine months ended September 30, 2007. The increased income was primarily derived from gains on the sale of SBA loans and of investments which was somewhat offset by a decrease of mortgage packaging fees.

Non-interest expense for the three months ending September 30, 2008 was $1,692,000, a decrease of 3.3% compared to $1,749,000 for the three months ended September 30, 2007. Non-interest expense for the nine months ending September 30, 2008 was $4,998,000, a decrease of 6.4% compared to $5,341,000 for the nine months ended September 30, 2007. These reductions were primarily due to decreases in marketing and personnel expenses.

Net income for the three months ending September 30, 2008 was $63,000, or $0.09 per diluted share, a 76.7% decrease from $270,000, or $0.36 per diluted share, for the three months ended September 30, 2007. The net loss for the nine months ending September 30, 2008 was $639,000, or ($0.97) per diluted share, a 180.6% decrease from net income of $793,000, or $0.72 per diluted share for the nine months ended September 30, 2007. The decrease is primarily due to the additional provision for loan losses made at March 31, 2008.

Coast National Bank opened for business on September 16, 1997. The Bank is an independent community bank with five banking offices and a loan production office. With a focus on delivering unsurpassed customer service, the Bank provides small business loans, home loans and other loans, as well as an array of business and personal banking deposit products and other services. The Bank is a wholly owned subsidiary of Coast Bancorp, a $190 million bank holding company, headquartered in San Luis Obispo, California. Coast Bancorp stock trades under the ticker symbol "CTBP.OB." For more information, visit www.coastnationalbank.com or call 805.541.0400.

Please refer to the following Consolidated Balance Sheets (unaudited) as of September 30, 2008 and December 31, 2007 and Consolidated Statements of Income (unaudited) for the three months ended September 30, 2008 and 2007 for specific information regarding the Company's financials.

                       Coast Bancorp and Subsidiary
                  Consolidated Balance Sheets (Unaudited)
                 September 30, 2008 and December 31, 2007


                       ASSETS                 September 30,   December 31,
                                                   2008           2007
                                              -------------  -------------
Cash and due from banks                       $  12,020,426  $   6,923,496
Federal funds sold                               14,100,000     14,350,000
                                              -------------  -------------
            TOTAL CASH AND CASH EQUIVALENTS      26,120,426     21,273,496

Interest bearing deposits with other banks        5,000,000              -
Investment securities available for sale          1,660,678      7,694,486

Loans:
   Commercial                                    61,850,172     41,498,791
   Real estate - construction                    45,954,064     41,044,155
   Real estate - other                           35,486,124     58,050,610
   Consumer                                       3,570,884      3,339,550
                                              -------------  -------------
                                TOTAL LOANS     146,861,243    143,933,106
Net deferred loan fees                             (191,518)      (162,696)
Allowance for credit losses                      (2,834,197)    (1,487,131)
                                              -------------  -------------
                                  NET LOANS     143,835,528    142,283,279
Premises and equipment                            8,488,962      8,733,401
Deferred taxes                                    1,506,359        485,000
Federal Reserve Bank stock and Federal Home
 Loan Bank stock, at cost                         1,736,600        991,350
Other Real Estate Owned                             770,000        770,000
Accrued interest and other assets                 1,272,677      1,520,398
                                              -------------  -------------
                               TOTAL ASSETS   $ 190,391,229  $ 183,751,410
                                              =============  =============

     LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
   Non-interest-bearing demand                $  36,394,353  $  42,989,733
   Money market and NOW                          42,154,527     45,959,276
   Savings                                        7,410,773      6,454,025
   Time deposits of $100,000 or more             43,285,816     49,012,877
   Other time deposits                           18,416,813     17,648,933
                                              -------------  -------------
                             TOTAL DEPOSITS     147,662,282    162,064,844
   FHLB advances                                 20,000,000              -
   Junior subordinated debt securities            7,217,000      7,217,000
   Other liabilities                              1,853,554        338,924
                                              -------------  -------------
                          TOTAL LIABILITIES     176,732,836    169,620,768
                                              -------------  -------------

Commitments and contingencies                             -              -
Stockholders' equity:
   Preferred stock - 10,000,000 authorized,
    none outstanding                                      -              -
   Common stock no par value; 10,000,000
    shares authorized; issued and outstanding:
    723,700 at September 30, 2008 and 713,000
    at December 31, 2007                          7,599,311      7,443,847
   Additional paid-in capital                       227,574        184,780
   Retained earnings                              5,823,242      6,462,202
   Accumulated other comprehensive income -
    net unrealized gains (losses) on
    available-for-sale securities, net of
    taxes of $5,744 at September 30, 2008
    and $27,666 at December 31, 2007                  8,266         39,813
                                              -------------  -------------
                 TOTAL STOCKHOLDERS' EQUITY      13,658,393     14,130,642
                                              -------------  -------------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 190,391,229  $ 183,751,410
                                              =============  =============




                       Coast Bancorp and Subsidiary
              Consolidated Statements of Income (Unaudited)
      For the Three and Nine Months Ended September 30, 2008 and 2007


                             For the Three Months     For the Nine Months
                                    Ended                   Ended
                                September 30,           September 30,
                            ----------------------  ----------------------
                               2008        2007        2008        2007
                            ----------  ----------- ----------  ----------
Interest income:
  Interest and fees on
   loans                    $2,345,706  $ 3,146,832 $7,293,669  $9,526,037
  Interest on investment
   securities                   34,424      128,483    182,031     323,758
  Interest on federal funds
   sold                         98,944      223,340    250,870     668,821
  Other interest income         56,378       16,837     93,252      59,019
                            ----------  ----------- ----------  ----------
      TOTAL INTEREST INCOME  2,535,453    3,515,492  7,819,823  10,577,635

Interest expense:
  Interest on money market
   and NOW accounts            147,235      394,778    562,094   1,224,390
  Interest on savings
   deposits                     15,720       38,404     65,988     110,971
  Interest on time deposits    480,298      882,650  1,715,411   2,512,132
  Interest on FHLB advances    199,109            -    240,355           -
  Interest on junior
   subordinated debt
   securities                  115,255      129,539    345,766     371,395
                            ----------  ----------- ----------  ----------
     TOTAL INTEREST EXPENSE    957,618    1,445,371  2,929,615   4,218,888

  Net interest income        1,577,834    2,070,121  4,890,207   6,358,747
  Provision for loan losses          -       25,000  1,605,000      50,000
                            ----------  ----------- ----------  ----------
        NET INTEREST INCOME
         AFTER PROVISION FOR
         CREDIT LOSSES       1,577,834    2,045,121  3,285,207   6,308,747

Non-interest income:
  Service charges on
   deposit accounts and
   other                       102,708      107,720    296,377     287,204
  Gain on sale of
   investments                   2,188            -     74,292           -
  Gain on sale of loans and
   servicing fees               16,303       44,383    157,631      86,093
  Mortgage packaging fees        7,963       15,243     25,791      52,773
  Gain on sale of premises
   and equipment                     -            -          -      (4,970)
                            ----------  ----------- ----------  ----------

  TOTAL NON-INTEREST INCOME    129,162      167,346    554,091     421,100

Non-interest expense:
  Salaries and benefits        949,024      939,927  2,737,953   2,852,311
  Net occupancy expense
   (net of rental income)      135,504      122,197    421,302     372,200
  Equipment expense             55,309       75,875    176,138     232,295
  Other expense                552,197      611,033  1,662,762   1,884,226
                            ----------  ----------- ----------  ----------

         TOTAL NON-INTEREST
          EXPENSE            1,692,034    1,749,032  4,998,155   5,341,032

        INCOME BEFORE TAXES     14,963      463,435 (1,158,856)  1,388,815
  Income taxes                 (48,200)     193,100   (519,896)    595,400
                            ----------  ----------- ----------  ----------
                 NET INCOME $   63,164  $   270,335 $ (638,959) $  793,415
                            ==========  =========== ==========  ==========

Per share data
  Earnings per share -
   Basic                    $     0.09  $      0.38 $    (0.89) $     1.14
                            ==========  =========== ==========  ==========
  Earnings per share -
   Diluted                  $     0.09  $      0.36 $    (0.88) $     1.09
                            ==========  =========== ==========  ==========

Coast Bancorp and Subsidiary

This news release contains forward-looking statements with respect to the financial condition, results of operation and business of Coast Bancorp and its subsidiaries. All financial results are unaudited and therefore subject to change. These include, but are not limited to, statements that relate to or are dependent on estimates or assumptions relating to the prospects of loan growth, credit quality and certain operating efficiencies resulting from the operations Coast National Bank. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressure among financial services companies increases significantly; (2) changes in the interest rate environment on interest margins; (3) general economic conditions, internationally, nationally or in the State of California are less favorable than expected; (4) legislation or regulatory requirements or changes adversely affect the business in which the combined organization will be engaged.

Contact Information

  • Contact:
    Coast National Bank
    805.541.0400