CFHI Coast Finl Hldgs (MM)

Coast Financial Holdings Reports Record First Quarter Results Relocates Headquarters to Downtown Bradenton BRADENTON, Fla., April 22 /PRNewswire-FirstCall/ -- Coast Financial Holdings, Inc. (NASDAQ:CFHI), parent company of Coast Bank of Florida, today reported that strong loan and deposit growth contributed to a 29% increase in net interest income for the first quarter ended March 31, 2005, compared to the first quarter of 2004. Coast reported net income of $77,000, or $0.02 per diluted share in the first quarter of 2005, compared to $9,000, or $0.00 per diluted share in the first quarter of 2004. "We have generated both top and bottom line improvements, with revenues increasing 21%, loans expanding 37% and net income improving eight-fold from year ago levels," said Brian Peters, President and Chief Executive Officer. "We continue to focus on growing our franchise in key markets. During the first quarter we began the process of opening branches in Pinellas County, with two new branches in the St. Petersburg area. In addition, we announced plans to add 36 new stand alone kiosk ATM locations in Pinellas, Manatee and Sarasota Counties. Recently, we opened our third branch in Pinellas County in Kenneth City and moved our corporate offices to downtown Bradenton. We anticipate opening our fourth Pinellas County branch in Seminole by the end of May. These investments will increase costs in 2005 but we are confident they will contribute to future earnings." Income Statement Review Revenues (net interest income before the provision for loan losses plus other operating income) for the quarter ended March 31, 2005 increased 21% to $3.5 million, compared to $2.9 million for the first quarter of 2004. For the quarter, net interest income, a basic measure of bank profitability, grew 29% to $3.0 million, compared to $2.3 million in the like quarter of 2004. Net interest margin was 3.23% for the 2005 first quarter, compared to net interest margin of 3.24% for the fourth quarter of 2004, and net interest margin of 3.60% for the first quarter of 2004. "We experienced a compression in out net interest margin compared to the first quarter of 2004 as a result of exiting our high risk, high yielding car loan portfolio early last year. We are confident that with better management of our cost of funds we will be able to expand our margin going forward," said Peters. Non-interest income for the first quarter was $527,000, compared to $588,000 for the first quarter of 2004 and $642,000 for the fourth quarter of 2004. Non-interest expense increased by 18% to $3.0 million, compared to $2.5 million in the first quarter a year ago, due to the increased staffing and occupancy expenses associated with the Bank's expansion. "We have recently relocated our corporate offices to Coast Financial Center, a six-story building we purchased last year. This new building gives us a very visible presence in downtown Bradenton, and we will be able to consolidate all of our administrative and corporate operations to one facility, from the two widely separated offices currently in use. The consolidation should also provide us with operational efficiencies going forward," said Peters. "We opened a branch office on the ground floor of Coast Financial Center in May of last year, and it is ahead of plan regarding attracting new deposits." The Coast Financial Center building is located at 1301 6th Avenue West in Bradenton. It will house all operational departments as well as a Coast branch on the main level and a two-lane stand-alone drive-thru. The company still owns the Operations Center on Cortez Road, of which Coast Residential Division occupies half. The company has leased the other half of the building to a tenant who has the option to purchase the building, at which time the bank would then lease back half of the building to keep the Residential Lending division in place. The Cortez Road building was originally purchased in November 2002. Balance Sheet Review Assets increased 39% to a record $424 million at March 31, 2005, compared to $304 million a year earlier. Book value increased to $9.27 per share at March 31, 2005, from $9.06 per share a year earlier. Coast Financial increased its net loans 37%, to $323 million at March 31, 2005, from $235 million a year ago. "Over the past 12-months, we have expanded our loan portfolio and anticipate that because of the high growth throughout the Tampa Bay market, we should be able to continue at that rate this year," said Peters. "The economy across the Tampa Bay market remains strong. This loan demand has been funded by deposit growth at both our new and existing branches." Commercial real estate loans grew 74% and now comprise 34% of Coast's net loan portfolio at March 31, 2005, compared to 27% a year earlier. Residential construction and land loans grew 50% and now account for 49% of net loans, compared to 45% at March 31, 2004. Non-performing assets totaled $1.4 million, or 0.34% of total assets, compared to $1.5 million, or 0.38% of total assets at December 31, 2004, and $1.9 million, or 0.61% of total assets at March 31, 2004. The allowance for loan losses was $3.0 million, or 0.94% of total loans outstanding, at March 31, 2005, compared to $3.2 million, or 1.35% of total loans outstanding, a year earlier. "The decrease in allowance for loan losses was due to the write off of certain loans in 2004 that had been provided for at the end of 2003" said Peters. Consequently, the ratio of net charge-offs to average loans outstanding improved 21 basis points to 0.29% at March 31, 2005, compared to 0.50% a year ago. Core deposits, comprised of checking, savings and money market accounts, increased 46% to $125 million compared to $85 million a year ago. Certificate of deposits accounts have increased 36% to $221 million from $163 million at March 31, 2004. "Through our branch expansion, we are focusing on building core deposits, which provide lower cost funds needed for profitable loan growth," Peters added. "We are also introducing relationship checking products to expand our cross sell activities designed to garner new core deposits." About the Company As of March 31, 2005, Coast Financial Holdings, Inc. had $424 million in total assets and through its banking subsidiary, Coast Bank of Florida (http://www.coastfl.com/), operates nine full-service banking locations in Manatee and Pinellas County, Florida. Coast Bank of Florida is a general commercial bank that provides full-service banking operations to its customers from its headquarters location and from branch offices in Bradenton, Palmetto, Longboat Key and St. Petersburg. Through an arrangement with Raymond James Financial Services, Inc., Coast Bank makes asset and investment management services and insurance products available to its customers. 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-KSB for the fiscal year ended December 31, 2003 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 941-752-5900 941-752-5900 COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY Condensed Consolidated Statements of Earnings ($ in thousands, except per share amounts) Quarter Ended Mar 31, Dec 31, Mar 31, 2005 2004 2004 (Unaudited) (Unaudited) Interest income: Loans $4,841 4,555 3,604 Securities 452 354 238 Other interest-earning assets 7 10 12 Total interest income 5,300 4,919 3,854 Interest expense: Deposits 2,155 2,018 1,471 Borrowings 174 97 85 Total interest expense 2,329 2,115 1,556 Net interest income 2,971 2,804 2,298 Provision for loan losses 360 176 329 Net interest income after provision for loan losses 2,611 2,628 1,969 Noninterest income: Service charges on deposit accounts 122 114 96 Gain on sale of loans held for sale 441 428 283 Net loan servicing costs - - (58) Asset management (costs) fees - (2) 71 Other service charges and fees (costs) (32) 50 190 Other (4) 52 6 Total noninterest income 527 642 588 Noninterest expenses: Employee compensation and benefits 1,600 1,527 1,330 Occupancy and equipment 407 374 335 Data processing 211 225 248 Professional fees 97 67 176 Telephone, postage and supplies 234 172 138 Advertising 157 102 97 Other 300 273 218 Total noninterest expenses 3,006 2,740 2,542 Earnings before income taxes 132 530 15 Income taxes 55 212 6 Net earnings 77 318 9 Earnings per share, basic and diluted $0.02 0.08 0.00 Weighted-average number of common shares outstanding, basic 3,757,597 3,756,050 3,740,032 Weighted-average number of common shares outstanding, diluted 3,824,974 3,814,676 3,740,032 COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets ($ in thousands, except per share amounts) March 31, December 31, March 31, Assets 2005 2004 2004 (Unaudited) (Unaudited) Cash and due from banks $9,580 7,122 8,362 Federal funds sold 6,908 - 16,065 Cash and cash equivalents 16,488 7,122 24,427 Securities available for sale 56,683 55,490 27,686 Loans, net of allowance for loan losses of $3,040, $2,901 and $3,212 323,416 297,725 235,347 Federal Home Loan Bank stock, at cost 1,315 573 854 Premises and equipment, net 20,420 18,358 9,616 Accrued interest receivable 1,616 1,478 1,263 Deferred income taxes 1,909 1,846 2,417 Loan servicing rights - - 1,105 Other assets 1,852 2,031 1,019 Total assets $423,699 384,623 303,734 Liabilities and Stockholders' Equity Liabilities: Noninterest-bearing demand deposits 31,802 25,485 25,356 Savings, NOW and money-market deposits 92,992 99,394 60,125 Time deposits 221,468 201,410 162,827 Total deposits 346,262 326,289 248,308 Federal Home Loan Bank advances 16,100 1,000 2,500 Federal funds purchased - 3,790 - Other borrowings 23,484 15,867 16,148 Other liabilities 3,005 2,729 2,820 Total liabilities 388,851 349,675 269,776 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, 3,757,650, 3,756,050 and 3,747,450 shares issued and outstanding in 2005, December 2004 and March 2004 18,788 18,780 18,737 Additional paid-in capital 19,456 19,448 19,404 Accumulated deficit (3,147) (3,224) (4,046) Accumulated other comprehensive income (loss) (249) (56) (137) Total stockholders' equity 34,848 34,948 33,958 Total liabilities and stockholders' equity $423,699 384,623 303,734 ADDITIONAL FINANCIAL INFORMATION (in thousands) LOANS: Mar 31, Dec 31, Mar 31, 2005 2004 2004 (unaudited) (unaudited) Commercial $24,792 $32,020 $30,829 Commercial real estate 111,032 99,955 63,800 Installment 28,887 29,640 36,416 Residential real estate 49,947 47,157 42,184 Residential construction 109,775 89,716 63,624 324,433 298,488 236,853 Add (deduct): Deferred loan costs, net 2,023 2,138 1,706 Allowance for loan losses (3,040) (2,901) (3,212) Loans, net $323,416 $297,725 $235,347 Mar 31, Dec 31, Mar 31, NON - PERFORMING ASSETS : 2005 2004 2004 Loans on Non - Accrual Status $1,378 $1,444 $1,850 Delinquent Loans on Accrual Status -- -- -- Total Non - Performing Loans 1,378 1,444 1,850 Real Estate Owned (REO) / Repossessed assets 42 33 2 Total Non - Performing Assets $1,420 $1,477 $1,852 Total Non - Performing Assets / Total Assets 0.34% 0.38% 0.61% Quarter Ended CHANGE IN THE Mar 31, Dec 31, Mar 31, 2005 2004 2004 ALLOWANCE FOR LOAN LOSSES : Balance at beginning of period $2,901 $2,839 $3,163 Provision for loan losses 360 176 329 Recoveries 80 295 12 Charge offs (301) (409) (292) Net charge offs (221) (114) (280) Balance at end of period $3,040 $2,901 $3,212 Net Charge-offs / Average Loans Outstanding 0.29% 0.15% 0.50% Allowance for Loan Losses / Total Loans Outstanding 0.93% 0.96% 1.35% Allowance for Loan Losses / Non - Performing Loans 221% 201% 174% COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY Operating Performance ($ in thousands) March 31, Dec. 31, March 31, 2005 2004 2004 (Unaudited) (Unaudited) Average loans $314,226 293,154 223,949 Average securities and deposits 58,361 51,347 32,842 Average non - interest - earning assets 29,510 26,371 21,536 Total Average Assets $402,097 370,872 278,327 Average interest bearing deposits $303,209 287,365 200,086 Average borrowings 32,190 21,724 20,631 Average non - interest bearing liabilities 31,776 27,185 24,000 Total Average Liabilities 367,175 336,274 244,717 Total average equity 34,922 34,598 33,610 Total Average Liabilities And Equity $402,097 370,872 278,327 Interest rate yield on loans 6.25% 6.18% 6.47% Interest rate yield on securities and deposits 3.19% 2.82% 3.06% Interest Rate Yield On Interest Earning Assets 5.77% 5.68% 6.04% Interest rate expense on deposits 2.88% 2.79% 2.96% Interest rate expense on borrowings 2.19% 1.78% 1.66% Interest Rate Expense On Interest Bearing Liabilities 2.82% 2.72% 2.84% Interest rate spread 2.95% 2.96% 3.20% Net interest margin 3.23% 3.24% 3.60% Other operating income/Average assets 0.53% 0.69% 0.85% Other operating expense/Average assets 3.03% 2.94% 3.67% Efficiency ratio (non-interest expense/revenue) 85.93% 79.51% 88.07% Return on average assets 0.08% 0.34% 0.01% Return on average equity 0.89% 3.66% 0.11% Average equity/Average assets 8.68% 9.33% 12.08% DATASOURCE: Coast Financial Holdings, Inc. CONTACT: Brian P. Peters, President, and CEO, +1-941-752-5900, , or Brian F. Grimes, EVP and CFO, +1-941-752-5900, Web site: http://www.coastfl.com/

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