Coast Financial (NASDAQ:CFHI)
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Loan Portfolio Increases 32%, Deposits Grow 38% and Revenues Rise 29%
BRADENTON, Fla., April 25 /PRNewswire-FirstCall/ -- Coast Financial Holdings, Inc. (NASDAQ:CFHI), parent company of Coast Bank of Florida, today reported that its branch network expansion generated solid loan and deposit growth for the first quarter of 2006. In the first quarter, loans grew 32%, deposits increased 38% and net interest income increased 35% compared to the first quarter a year ago.
"We are focused on achieving the objectives outlined in our business plan. Naturally, with a business plan that includes significant branch expansion in an effort to gain market share, we expect to incur net losses until these new locations reach breakeven," said Brian Peters, president and CEO. "We believe our branch expansion is prudent and will yield significant improvement in shareholder value over the longer term." For the first quarter of 2006, the company reported a loss of $314,000 or $0.05 per diluted share, compared to earnings of $77,000, or $0.02 per diluted share, in the first quarter of 2005.
"We have been very busy the first few months of 2006 with the grand opening of three new branches in the greater Tampa Bay area," added Peters. "We recently opened the Dunedin and Northwood branches, both in Pinellas County, and we made our entrance into Hillsborough County with the Oakfield branch, located in Brandon. Already we are encouraged by the customer activity these locations have experienced. We also have plans to open nine additional branches this year, with six scheduled to open within the next 60 days. While the investments we are making in new branches, ATM locations and experienced banking professionals will reduce profitability this year, we are confident these efforts will produce significant shareholder value over the long term."
Income Statement Review
Revenues (net interest income before the provision for loan losses plus other operating income) grew 29% to $4.6 million in the first quarter compared to $3.5 million in the first quarter of 2005. For the first quarter of 2006, net interest income before the provision for loan loss increased 35% to $4.0 million compared to $3.0 million in the same quarter a year ago. Total noninterest income for the first quarter was $564,000 compared to $576,000 in same quarter last year.
Net interest margin was 3.13% in the first quarter of 2006 compared to 3.23% in the first quarter of 2005. The decline in the net interest margin was primarily a result of the higher cost of deposits associated with the branch expansion.
Noninterest expenses were $4.9 million in the first quarter of 2006, compared to $3.1 million in the first quarter a year ago, primarily due to the increase in staffing and occupancy expenses from the new branches. The ratio of other operating expense (expense ratio) to average assets was 3.55% in the first quarter of 2006 compared to 3.08% in the first quarter last year.
"We have made significant progress on six additional branch offices, which we expect to open in the next few months. In addition, we have plans to open three other branch offices later this year, and will continue to explore further branch expansion opportunities in the greater Tampa Bay area," said Peters. "While we expect to see higher expenses in future periods as a result of our expansion, over time these new branches should further improve our profitability by providing us low cost deposits to fund our loan growth."
Balance Sheet Review
Assets increased 37% to a record $582 million at March 31, 2006, compared to $424 million a year earlier. Book value per share improved to $11.25 at March 31, 2006, from $9.27 a year earlier, largely as a result of the follow- up offering completed in the fourth quarter of 2005.
Net loans increased 32%, to $427 million at March 31, 2006, compared to $323 million a year earlier. "Over the past 12 months, the major components of our loan portfolio have showed significant growth," said Peters. "We have increased residential construction loans 7% and commercial real estate loans 14% from a year ago. These components now make up 73% of the loan portfolio. In addition, we continue to let our installment loans drop off as they now represent just 8% of the loan portfolio compared to 9% a year ago."
Deposits grew 38% over the past 12 months to $478 million at March 31, 2006, compared to $346 million a year earlier. Noninterest-bearing demand deposits increased 12% at quarter-end compared to a year earlier and time deposits rose 59% compared to a year ago.
Asset quality continues to improve, with non-performing assets declining to $1.1 million, or 0.19% of total assets at March 31, 2006, compared to $1.4 million or 0.34% of total assets a year earlier. The provision for loan losses for the first quarter was $133,000, compared to $360,000 in the first quarter of 2005. The allowance for loan losses was $3.3 million, or 0.76% of total loans outstanding at quarter-end compared to $3.0 million, or 0.77% of total loans outstanding, at the end of the first quarter of 2005.
About the Company
Coast Financial Holdings, Inc. through its banking subsidiary, Coast Bank of Florida ( http://www.coastfl.com/ ), operates 15 full-service banking locations in Manatee, Pinellas and Hillsborough counties, Florida. Coast Bank of Florida is a commercial bank that provides full-service banking operations to its customers from its headquarters location and from branch offices in Bradenton, Palmetto, Longboat Key, Seminole, Dunedin, Clearwater, Kenneth City, St. Petersburg and Brandon.
This press release and other statements to be made by the Company contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including but not limited to statements relating to projections and estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of management's plans, strategies, and objectives for future operations, and management's expectations as to future performance and operations and the time by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry, or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "project," and conditional verbs such as "may," "could," and "would," and other similar expressions or verbs. Such forward-looking statements reflect management's current expectations, beliefs, estimates, and projections regarding the Company, its industry and future events, and are based upon certain assumptions made by management. These forward-looking statements are not guarantees of future performance and necessarily are subject to risks, uncertainties, and other factors (many of which are outside the control of the Company) that could cause actual results to differ materially from those anticipated. These risks, uncertainties, and other factors include, among others: changes in general economic or business conditions, either nationally or in the State of Florida, changes in the interest rate environment, the Company's ability to successfully open and operate new branches and collect on delinquent loans, changes in the regulatory environment, and other risks described in the Company's Form 10-K for the fiscal year ended December 31, 2005, in the Company's form 10-Q for the quarter ended March 31, 2006, and as described from time to time by the Company in other reports filed by it with the Securities and Exchange Commission. Any forward-looking statement speaks only to the date on which the statement is made, and the Company disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. If the Company does update any forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward- looking statements.
Contacts:
Brian P. Peters, President and CEO Brian F. Grimes, EVP and CFO
877-COASTFL 877-COASTFL
(tables follow)
COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations (Unaudited)
($ in thousands, except per share amounts)
Three Months Ended
March 31,
2006 2005
Interest income:
Loans $7,044 $4,841
Securities 925 452
Other interest-earning assets 292 7
Total interest income 8,261 5,300
Interest expense:
Deposits 4,059 2,155
Borrowings 179 174
Total interest expense 4,238 2,329
Net interest income 4,023 2,971
Provision for loan losses 133 360
Net interest income after
provision for loan losses 3,890 2,611
Noninterest income:
Service charges on deposit
accounts 124 122
Gain on sale of loans held for
sale 409 441
Other service charges and fees 18 13
Other 13 --
Total noninterest income 564 576
Noninterest expenses:
Employee compensation and benefits 2,461 1,600
Occupancy and equipment 932 407
Data processing 244 211
Professional fees 199 97
Telephone, postage and supplies 312 234
Advertising 436 157
Other 357 349
Total noninterest expenses 4,941 3,055
Earnings (loss) before income
taxes (benefit) (487) 132
Income tax provision (benefit) (173) 55
Net (loss) earnings $(314) $77
(Loss) earnings per share, basic $(0.05) $0.02
(Loss) earnings per share, diluted $(0.05) $0.02
Weighted-average number of common
shares outstanding, basic 6,506,659 3,757,597
Weighted-average number of common
shares outstanding, diluted 6,506,659 3,824,974
COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets (unaudited)
($ in thousands, except per share amounts)
March 31, December 31, March 31,
Assets 2006 2005 2005
(Unaudited) (Unaudited)
Cash and due from banks $13,821 $25,203 $9,580
Federal funds sold and securities
purchased under agreements to resell 17,140 22,810 6,908
Cash and cash equivalents 30,961 48,013 16,488
Securities available for sale 89,390 79,029 56,683
Loans, net of allowance for loan
losses of $3,271, $3,146 and
$3,040 427,257 390,867 323,416
Federal Home Loan Bank stock, at cost 1,620 1,289 1,315
Premises and equipment, net 24,056 24,780 20,420
Accrued interest receivable 2,668 2,218 1,616
Deferred income taxes 2,753 2,471 1,909
Other assets 3,030 1,627 1,852
Total assets $581,735 $550,294 $423,699
Liabilities and Stockholders'
Equity
Liabilities:
Noninterest-bearing demand
deposits $35,643 $33,302 $31,802
Savings, NOW and money-market
deposits 90,479 84,635 92,992
Time deposits 351,929 331,520 221,468
Total deposits 478,051 449,457 346,262
Federal Home Loan Bank advances 10,000 10,000 16,100
Repurchase agreement -- -- 5,220
Other borrowings 18,002 14,367 18,264
Other liabilities 2,455 2,707 3,005
Total liabilities 508,508 476,531 388,851
Stockholders' equity:
Preferred stock, $0.01 par value;
5,000,000 shares authorized,
no shares issued and outstanding -- -- --
Common stock, $5 par value;
20,000,000 shares authorized,
6,509,057, 6,503,600 and
3,757,650 shares issued and
outstanding in 2006, 2005 and
March 31, 2005 32,545 32,518 18,788
Additional paid-in capital 45,523 45,591 19,456
Accumulated deficit (4,152) (3,839) (3,147)
Accumulated other comprehensive
income (loss) (689) (507) (249)
Total stockholders' equity 73,227 73,763 34,848
Total liabilities and
stockholders' equity $581,735 $550,294 $423,699
ADDITIONAL FINANCIAL INFORMATION
(in thousands)
LOANS: Mar 31, 2006 Dec 31, 2005 Mar 31, 2005
(unaudited) (unaudited)
Commercial $16,485 $17,831 $24,794
Commercial real estate 126,210 119,814 111,032
Installment 33,059 29,048 28,887
Residential real estate 64,159 59,366 49,947
Residential construction 188,770 166,020 109,773
428,684 392,079 324,433
Add (deduct):
Deferred loan costs, net 1,844 1,934 2,023
Allowance for loan losses (3,271) (3,146) (3,040)
Loans, net $427,257 $390,867 $323,416
NON - PERFORMING ASSETS : Mar 31, 2006 Dec 31, 2005 Mar 31, 2005
(unaudited)
Loans on Non - Accrual Status $922 $1,378 $1,378
Past due 90 days or more, still
accrueing -- -- --
Total Non - Performing Loans 922 1,378 1,378
Real Estate Owned (REO) / Repossessed
assets 171 13 42
Total Non - Performing Assets $1,093 $1,391 $1,420
Total Non - Performing Assets / Total
Assets 0.19% 0.25% 0.34%
Three Months Ended
Mar 31, 2006 Mar 31, 2005
CHANGE IN THE (unaudited) (unaudited)
ALLOWANCE FOR LOAN LOSSES:
Balance at beginning of period $3,146 $2,901
Provision for loan losses 133 360
Recoveries 11 80
Charge offs (19) (301)
Net charge offs (8) (221)
Balance at end of period $3,271 $3,040
Net Charge-offs / Average Loans
Outstanding 0.01% 0.29%
Allowance for Loan Losses / Total
Loans Outstanding 0.76% 0.77%
Allowance for Loan Losses / Non -
Performing Loans 355.00% 221.00%
ADDITIONAL FINANCIAL INFORMATION
(in thousands) Three Months Ended
(Rates / Ratios Annualized) Mar 31, 2006 Mar 31, 2005
(unaudited) (unaudited)
OPERATING PERFORMANCE :
Average loans $409,417 $314,226
Average investment securities 85,824 57,178
Average other interest - earning
assets 26,605 1,183
Average non - interest - earning
assets 42,748 29,510
Total Average Assets $564,594 $402,097
Average interest bearing deposits $428,018 $303,209
Average borrowings 26,084 32,190
Average non - interest bearing
liabilities 37,100 31,776
Total Average Liabilities 491,202 367,175
Total average equity 73,392 34,922
Total Average Liabilities And Equity $564,594 $402,097
Interest rate yield on loans 6.98% 6.25%
Interest rate yield on investment
securities 4.37% 3.21%
Interest rate yield on other interest
- earning assets 4.46% 2.40%
Interest Rate Yield On Interest
Earning Assets 6.42% 5.77%
Interest rate expense on deposits 3.85% 2.88%
Interest rate expense on borrowings 2.78% 2.19%
Interest Rate Expense On Interest
Bearing Liabilities 3.78% 2.82%
Interest rate spread 2.64% 2.95%
Net interest margin 3.13% 3.23%
Other operating income / Average
assets 0.41% 0.58%
Other operating expense / Average
assets 3.55% 3.08%
Efficiency ratio (non-interest
expense / revenue) 107.72% 86.13%
Return on average assets -0.23% 0.08%
Return on average equity -1.73% 0.88%
Average equity / Average assets 13.00% 8.69%
DATASOURCE: Coast Financial Holdings, Inc.
CONTACT: Brian P. Peters, President and CEO, , or
Brian F. Grimes, EVP and CFO, , both of Coast Financial
Holdings, Inc., +1-877-COASTFL
Web site: http://www.coastfl.com/