Coast Financial (NASDAQ:CFHI)
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Loan Portfolio Increases 33%, Deposits Grow 33% and Revenues Rise 26%
BRADENTON, Fla., July 28 /PRNewswire-FirstCall/ -- Coast Financial Holdings, Inc. (NASDAQ:CFHI), parent company of Coast Bank of Florida, today reported solid loan and deposit growth for the second quarter of 2006. In the second quarter, loans grew 33%, deposits increased 33% and net interest income increased 34% compared to the second quarter a year ago. Coast has experienced strong growth in assets of 33% compared to the second quarter a year ago.
"Our business plan objective is to increase our share of the fast-growing Florida market through continued branch expansion. We are confident this strategy will significantly improve shareholder value in the long term, although in the short term we will continue to incur losses until these new branches become established," said Brian Grimes, recently promoted to president and CEO. "In 2006, we have already opened six branches in Pinellas, Hillsborough, Manatee and Pasco counties. These six branches now bring our franchise to 18 locations in the greater Tampa Bay area. In addition, we have two acquired and two de novo branches scheduled to open later this year."
For the second quarter of 2006, the company reported a loss of $704,000, or $0.11 per diluted share, compared to a loss of $958,000, or $0.25 per diluted share, in the second quarter of 2005. For the first six months of 2006, the company reported a loss of $1.0 million, or $0.16 per share, compared to a loss of $881,000, or $0.23 per share, in the first six months of 2005. "Even though losses were experienced, results were in line with the Company's 2006 business plan," said Grimes.
Income Statement Review
Revenues (net interest income before the provision for loan losses plus other operating income) increased 26% to $4.8 million in the second quarter compared to $3.8 million in the second quarter of 2005. For the first six months of the year, revenues increased 28% to $9.3 million compared to $7.3 million in the first six months of 2005. Second quarter net interest income before the provision for loan loss increased 34% to $4.2 million, compared to $3.1 million in the same quarter a year ago. Year-to-date, net interest income before the provision for loan losses increased 34% to $8.2 million compared to $6.1 million in the like period a year ago.
Net interest margin was 3.06% in the second quarter of 2006 compared to 3.09% in the second quarter a year ago and 3.13% in the first quarter of 2006. "In the quarter, our net interest margin came under pressure as deposit costs increased faster than loan yields," said Grimes. "We expect out net interest margin to continue to tighten during the remainder of the year as pricing remains competitive and the higher costs of deposits associated with other branch expansion." For the first six months of 2006, net interest margin was 3.09% compared to 3.16% in the first six months of 2005.
"Our new branches are proving to be very successful in helping us to reach new customers and grow deposits," said Grimes. "Although they initially put pressure on expenses, primarily due to the increase in staffing and occupancy expenses, we expect that over time they will add to our profitability by providing us low cost deposits to fund loan growth." Noninterest expenses were $5.6 million in the second quarter of 2006 compared to $3.8 million in the second quarter a year ago. For the first six months of 2006, noninterest expenses were $10.6 million compared to $6.8 million in the first six months of 2005, primarily due to the additional eight branches opened during the same period.
Balance Sheet Review
"Our lending team has done an excellent job of growing the loan portfolio and adding to the loan pipeline while maintaining loan quality," said Anne Lee, Chief Operating Officer. "We anticipate continued high growth throughout the greater Tampa Bay area, which should continue to fuel double digit growth in our loan portfolio." Net loans increased 33%, to $479 million at June 30, 2006, compared to $360 million a year earlier.
"Over the past 12 months, the major components of our loan portfolio have showed significant growth," Lee continued. "We have increased residential construction loans 66%, commercial real estate loans 4% and residential real estate loans 48% from a year ago. These components now make up 89% of the loan portfolio."
Deposits grew 33% over the past 12 months to $523 million at June 30, 2006, compared to $395 million a year earlier. Savings, NOW and money-market deposits increased 12% and time deposits rose 47% compared to a year ago, while noninterest-bearing demand deposits decreased slightly. "We are very fortunate to have been able to recruit such a seasoned, experienced staff to operate our new branches," noted Lee
Assets increased 33% to a record $625 million at June 30, 2006, compared to $468 million a year earlier. Book value per share improved to $11.11 at June 30, 2006, from $9.08 a year earlier, largely as a result of the public offering completed in the fourth quarter of 2005.
Asset quality continues to improve, with non-performing assets at $1.3 million, or 0.20% of total assets at June 30, 2006, compared to $1.3 million or 0.27% of total assets a year earlier. The provision for loan losses for the second quarter was $174,000, compared to $1.5 million in the second quarter of 2005 when Coast charged off $1.1 million for certain loans that were originated before February 2004. The allowance for loan losses totals $3.4 million, or 0.71% of total loans outstanding at quarter-end compared to $3.2 million, or 0.88% of total loans outstanding, at the end of the second quarter of 2005.
About the Company
Coast Financial Holdings, Inc. through its banking subsidiary, Coast Bank of Florida ( http://www.coastfl.com/ ), operates 18 full-service banking locations in Manatee, Pinellas, Hillsborough and Pasco 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, Longboat Key, Seminole, Dunedin, Clearwater, Kenneth City, Brandon, St. Petersburg and Lutz.
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 June 30, 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 F. Grimes, President and CEO
877-COASTFL
THE CEREGHINO GROUP
CORPORATE INVESTOR RELATIONS
1809 7TH Avenue, Suite 1414
Seattle, WA 981081
206.388-5785
http://www.stockvalues.com/
(tables follow)
COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Earnings (Unaudited)
($ in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Interest income:
Loans $8,098 $5,476 $15,143 $10,317
Securities 1,020 522 1,945 974
Other interest-earning
assets 97 8 389 15
Total interest income 9,215 6,006 17,477 11,306
Interest expense:
Deposits 4,815 2,630 8,875 4,785
Borrowings 208 237 387 411
Total interest expense 5,023 2,867 9,262 5,196
Net interest income 4,192 3,139 8,215 6,110
Provision for loan losses 174 1,522 307 1,882
Net interest income after
provision for loan losses 4,018 1,617 7,908 4,228
Noninterest income:
Service charges on deposit
accounts 115 125 239 247
Gain on sale of loans held
for sale 433 486 843 927
Other service charges and
fees 15 13 32 26
Other -- 4 13 4
Total noninterest income 563 628 1,127 1,204
Noninterest expenses:
Employee compensation and
benefits 2,700 1,746 5,161 3,346
Occupancy and equipment 1,121 546 2,052 953
Data processing 238 220 482 431
Professional fees 235 347 434 444
Telephone, postage and
supplies 378 261 690 495
Advertising 505 354 941 511
Other 461 300 818 649
Total noninterest expenses 5,638 3,774 10,578 6,829
Loss before income tax
benefit (1,057) (1,529) (1,543) (1,397)
Income tax benefit (353) (571) (526) (516)
Net loss $(704) $(958) $(1,017) $(881)
Loss per share, basic and
diluted $(0.11) (0.25) $(0.16) (0.23)
Weighted-average number of
common shares outstanding,
basic and diluted 6,509,057 3,757,650 6,507,703 3,757,623
COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets (unaudited)
($ in thousands, except per share amounts)
June 30, December 31, June 30,
2006 2005 2005
Assets (Unaudited) (Unaudited)
Cash and due from banks 16,649 25,203 12,050
Federal funds sold and securities
purchased under agreements to resell 4,930 22,810 7,420
Cash and cash equivalents 21,579 48,013 19,470
Securities available for sale 86,977 79,029 58,935
Loans, net of allowance for loan
losses of $3,446, $3,146, and
$3,187 479,173 390,867 359,645
Federal Home Loan Bank stock, at
cost 1,640 1,289 1,289
Premises and equipment, net 26,161 24,780 23,466
Accrued interest receivable 2,941 2,218 1,782
Deferred income taxes 3,289 2,471 2,352
Other assets 2,913 1,627 1,361
Total assets $624,673 550,294 $468,300
Liabilities and Stockholders'
Equity
Liabilities:
Noninterest-bearing demand
deposits $31,248 33,302 $37,507
Savings, NOW and money-market
deposits 101,007 84,635 90,227
Time deposits 391,075 331,520 267,010
Total deposits 523,330 449,457 394,744
Federal Home Loan Bank advances 10,000 10,000 11,000
Federal funds purchased -- -- --
Repurchase agreement -- -- 4,731
Other borrowings 15,928 14,367 20,423
Other liabilities 3,116 2,707 3,300
Total liabilities 552,374 476,531 434,198
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 June 30, 2006,
December 31, 2005 and June
30, 2005 32,545 32,518 18,788
Additional paid-in capital 45,597 45,591 19,456
Accumulated deficit (4,856) (3,839) (4,105)
Accumulated other comprehensive
loss (987) (507) (37)
Total stockholders'
equity 72,299 73,763 34,102
Total liabilities and
stockholders' equity $624,673 550,294 $468,300
ADDITIONAL FINANCIAL INFORMATION
(in thousands)
Jun 30, Mar 31, Jun 30,
LOANS: 2006 2006 2005
(unaudited)
Commercial $13,645 $16,485 23,447
Commercial real estate 131,688 126,210 126,201
Installment 39,800 33,059 27,292
Residential real estate 74,404 64,159 49,672
Residential construction 221,326 188,770 134,283
480,863 428,684 360,895
Add (deduct):
Deferred loan costs, net 1,756 1,844 1,937
Allowance for loan losses (3,446) (3,271) (3,187)
Loans, net $479,173 $427,257 359,645
NON - PERFORMING ASSETS: Jun 30, Mar 31, Jun 30,
2006 2006 2005
(unaudited)
Loans on Non-Accrual Status $1,088 $922 1,072
Delinquent Loans on Accrual Status -- -- --
Total Non-Performing Loans 1,088 922 1,072
Real Estate Owned (REO) / Repossessed
assets 173 171 181
Total Non-Performing Assets $1,261 $1,093 1,253
Total Non-Performing Assets / Total
Assets 0.20% 0.19% 0.27%
Three Months Ended Six Months Ended
Jun 30, Jun 30, Jun 30, Jun 30,
2006 2005 2006 2005
CHANGE IN THE ALLOWANCE (unaudited) (unaudited) (unaudited) (unaudited)
FOR LOAN LOSSES:
Balance at beginning of
period $3,271 $3,040 $3,146 $2,901
Provision for loan losses 174 1,522 307 1,882
Recoveries 14 16 25 95
Charge offs (13) (1,391) (32) (1,691)
Net charge offs 1 (1,375) (7) (1,596)
Balance at end of period $3,446 $3,187 $3,446 $3,187
Net Charge-offs / Average
Loans Outstanding -- % 1.59 % -- % 0.98 %
Allowance for Loan Losses /
Total Loans Outstanding 0.71 % 0.88 % 0.71 % 0.88 %
Allowance for Loan Losses /
Non - Performing Loans 317.00 % 297.00 % 317.00 % 297.00 %
ADDITIONAL FINANCIAL INFORMATION
(in thousands)
(Rates / Ratios Annualized)
Three Months Ended Six Months Ended
Jun 30, Jun 30, Jun 30, Jun 30,
2006 2005 2006 2005
(unaudited) (unaudited) (unaudited) (unaudited)
OPERATING PERFORMANCE :
Average loans $452,021 $346,547 $430,837 $330,476
Average investment
securities 89,925 59,503 87,886 58,347
Average other interest-
earning assets 7,787 1,239 17,143 1,211
Average non-interest -
earning assets 43,824 34,798 43,289 32,169
Total Average Assets $593,557 $442,087 $579,155 $422,203
Average interest bearing
deposits $459,204 $334,873 $443,697 $319,129
Average borrowings 26,985 36,940 26,537 34,578
Average non-interest
bearing liabilities 34,735 35,704 35,911 33,751
Total Average Liabilities 520,924 407,517 506,145 387,458
Total average equity 72,139 34,570 72,762 34,745
Total Average Liabilities
And Equity $593,063 $442,087 $578,907 $422,203
Interest rate yield on
loans 7.19 % 6.34 % 7.09 % 6.30 %
Interest rate yield on
investment securities 4.55 % 3.52 % 4.46 % 3.37 %
Interest rate yield on
other interest-earning
assets 4.99 % 2.59 % 4.58 % 2.50 %
Interest Rate Yield On
Interest Earning Assets 6.72 % 5.91 % 6.58 % 5.85 %
Interest rate expense on
deposits 4.21 % 3.15 % 4.03 % 3.02 %
Interest rate expense on
borrowings 3.09 % 2.57 % 2.94 % 2.40 %
Interest Rate Expense On
Interest Bearing
Liabilities 4.14 % 3.09 % 3.97 % 2.96 %
Interest rate spread 2.58 % 2.82 % 2.61 % 2.89 %
Net interest margin 3.06 % 3.09 % 3.09 % 3.16 %
Other operating income /
Average assets 0.38 % 0.57 % 0.39 % 0.58 %
Other operating expense /
Average assets 3.81 % 3.42 % 3.68 % 3.26 %
Efficiency ratio (non-
interest expense /
revenue) 118.57 % 100.19 % 113.23 % 93.37 %
Return on average assets (0.48)% (0.87)% (0.35)% (0.42)%
Return on average equity (3.89)% (11.12)% (2.81)% (5.11)%
Average equity / Average
assets 12.24 % 7.82 % 12.61 % 8.23 %
DATASOURCE: Coast Financial Holdings, Inc.
CONTACT: Brian F. Grimes, President and CEO, Coast Financial Holdings,
Inc., +1-877-COASTFL, or ; or investor relations, The
Cereghino Group, +1-206-388-5785, for Coast Financial Holdings
Web site: http://www.coastfl.com/