CFHI Coast Finl Hldgs (MM)

BRADENTON, Fla., Jan. 27 /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 32% increase in net interest income for the year ended December 31, 2005, compared to the prior year. For the fourth quarter of 2005, the company earned $160,000 or $0.02 per diluted share, compared to $318,000, or $0.08 per diluted share, in the fourth quarter a year ago. The company reported a net loss of $615,000, or $0.14 per diluted share in 2005, compared to earnings of $831,000, or $0.22 per diluted share in 2004. In 2005, the company opened five new branches, including four branches in Pinellas County. The new locations include branches in Downtown St. Petersburg, Kenneth City, Seminole and Pasadena. Coast also moved its corporate offices to downtown Bradenton and added 83 new stand-alone kiosk ATM locations in Pinellas, Pasco, Polk, Manatee and Sarasota Counties. "The expansion of our branch network in the greater Tampa Bay area is beginning to pay off, which is demonstrated by our strong loan and deposit growth in 2005," said Brian Peters, president and CEO. "The decision we made last year to enter Pinellas County was timely, giving us a good foothold in one of the most attractive demographics in Florida and providing more opportunities for growth. "We are also moving forward with our plans to lease eight branch sites in Hillsborough, Pasco, Polk, Pinellas and Manatee counties, marking our entrance into Hillsborough, Pasco and Polk counties and increasing our presence in Pinellas and Manatee counties. These eight new locations, which we expect to open in 2006, will bring Coast's branch total to 20 offices in the greater Tampa Bay area. While these new locations will temporarily decrease short- term profitability, they should provide solid contributions to earnings in future periods," Peters added. Income Statement Review Revenues (net interest income before the provision for loan losses plus other operating income) for the fourth quarter increased 23% to $4.2 million, from $3.4 million in the fourth quarter of 2004. For the year ended December 31, 2005 revenues increased 20% to $15.5 million, compared to $12.9 million in 2004. Net interest margin was 3.03% in the fourth quarter of 2005 compared to 3.06% in the previous quarter, and 3.26% in the fourth quarter of 2004. For the year, net interest margin was 3.10%, compared to 3.25% in 2004. The decline in the net interest margin was primarily a result of the higher cost of deposits associated with the branch expansion. In the fourth quarter of 2005, net interest income before the provision for loan loss increased 32% to $3.7 million, compared to $2.8 million in the fourth quarter of 2004. For the full year, net interest income increased 32% to $13.2 million, compared to $10.0 million in 2004. Net interest income increased for both the fourth quarter and year ending December 31, 2005, as a result of increased net interest earning assets, which offset the impact of the decrease in net interest margin. Total noninterest income was $531,000 in the fourth quarter of 2005, compared to $642,000 in the fourth quarter of 2004. For the year 2005, noninterest income was $2.4 million, compared to $2.9 million in 2004. The decrease was largely due to the gain associated with the 2004 sale of the bank's credit card portfolio and merchant services portfolio. Due to the increased staffing and occupancy expenses associated with the bank's growth, noninterest expense was $4.0 million in the fourth quarter of 2005, compared to $2.7 million in the fourth quarter a year ago. For the year 2005, noninterest expense was $14.6 million, compared to $10.2 million in 2004. "One of the primary purposes of this rapid branch expansion has been to take advantage of opportunities as they become available in attractive markets," said Peters. "Although these new locations have increased overhead expenses, we are confident they will contribute to profitability within the next few years." Balance Sheet Review Assets increased 43% to a record $550 million at year-end compared to $385 million a year ago. Deposits grew 38% over the past 12 months to $449 million at December 31, 2005, compared to $326 million at December 31, 2004. Book value was $11.34 per share at December 31, 2005, up from $9.30 per share a year earlier, largely as a result of the follow-up offering completed in the fourth quarter. "Over the past 12 months, we have expanded our loan portfolio and anticipate that because of the high growth throughout the Tampa Bay area we should be able to continue at that rate this year," said Peters. Net loans increased 31%, to $391 million at December 31, 2005, from $298 million a year ago. Commercial real estate loans now comprise 30.6% of the company's net loan portfolio at December 31, 2005, compared to 33.5% a year earlier. Residential construction loans account for 42.3% of net loans compared to 30.1% at December 31, 2004. Residential real estate loans represent 15.1% of net loans at December 31, 2005, compared to 15.8% a year earlier and installment loans now comprise just 7.4% of net loans compared to $15.8% of net loans at December 31, 2004. At December 31, 2005, non-performing assets totaled $1.3 million, or 0.24% of total assets, compared to $1.5 million, or 0.38% of total assets a year earlier. The allowance for loan losses was $3.1 million, or 0.80% of total loans outstanding, at December 31, 2005, compared to $2.9 million, or 0.96% of total loans outstanding, a year earlier. About the Company As of December 31, 2005, Coast Financial Holdings, Inc. had $550 million in total assets and through its banking subsidiary, Coast Bank of Florida (http://www.coastfl.com/ ), operates 12 full-service banking locations in Manatee and Pinellas 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, Kenneth City and St. Petersburg. 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, 2004 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. (tables follow) COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY Condensed Consolidated Statements of Earnings (Unaudited) ($ in thousands, except per share amounts) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 Interest income: Loans $6,387 $4,555 $22,717 $16,142 Securities 729 354 2,281 1,145 Other interest-earning assets 349 10 429 50 Total interest income 7,465 4,919 25,427 17,337 Interest expense: Deposits 3,567 2,018 11,462 7,017 Borrowings 195 97 813 365 Total interest expense 3,762 2,115 12,275 7,382 Net interest income 3,703 2,804 13,152 9,955 Provision for loan losses (69) 176 1,815 1,315 Net interest income after provision for loan losses 3,772 2,628 11,337 8,640 Noninterest income: Service charges on deposit accounts 134 114 498 434 Gain on sale of loans held for sale 388 255 1,806 1,462 Gain on sale of credit card portfolio -- 173 -- 173 Gain on sale of securities available for sale -- -- -- 4 Gain on sale of mortgage loan servicing rights -- -- -- 118 Gain on sale of merchant services -- -- -- 212 Net loan servicing fees (costs) -- -- 1 (159) Asset management fees (costs) -- (2) -- 69 Other service charges and fees 9 50 48 547 Other -- 52 -- 85 Total noninterest income 531 642 2,353 2,945 Noninterest expenses: Employee compensation and benefits 2,047 1,527 7,308 5,477 Occupancy and equipment 701 374 2,269 1,412 Data processing 269 225 932 922 Professional fees 119 67 689 486 Telephone, postage and supplies 286 172 1,068 676 Advertising 337 102 1,205 348 Other 282 273 1,176 905 Total noninterest expenses 4,041 2,740 14,647 10,226 Earnings (loss) before income taxes (benefit) 262 530 (957) 1,359 Income tax provision (benefit) 102 212 (342) 528 Net earnings (loss) $160 $318 $(615) $831 Earnings (loss) per share basic $0.02 0.08 $(0.14) 0.22 Earnings (loss) per share diluted $0.02 0.08 $(0.14) 0.22 Weighted-average number of common shares outstanding, basic 6,503,600 3,756,050 4,354,994 3,749,343 Weighted-average number of common shares outstanding, diluted 6,552,148 3,814,676 4,354,994 3,783,661 COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY Consolidated Balance Sheets (unaudited) ($ in thousands, except per share amounts) December 31, Assets 2005 2004 (unaudited) Cash and due from banks $25,203 7,122 Federal funds sold and securities purchased under agreements to resell 22,810 -- Cash and cash equivalents 48,013 7,122 Securities available for sale 79,029 55,490 Loans, net of allowance for loan losses of $3,146 and $2,901 390,867 297,725 Federal Home Loan Bank stock, at cost 1,289 573 Premises and equipment, net 24,780 18,358 Accrued interest receivable 2,218 1,478 Deferred income taxes 2,471 1,846 Loan servicing rights -- -- Other assets 1,627 2,031 Total assets $550,294 384,623 Liabilities and Stockholders' Equity Liabilities: Noninterest-bearing demand deposits 33,302 25,485 Savings, NOW and money-market deposits 84,635 99,394 Time deposits 331,520 201,410 Total deposits 449,457 326,289 Federal Home Loan Bank advances 10,000 1,000 Federal Funds Purchased -- 3,790 Repo Agreements 14,367 15,867 Other liabilities 2,707 2,729 Total liabilities 476,531 349,675 Commitments and contingencies 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, 6,503,600 and 3,756,050 shares issued and outstanding in 2005 and 2004 32,518 18,780 Additional paid-in capital 45,591 19,448 Accumulated deficit (3,839) (3,224) Accumulated other comprehensive loss (507) (56) Total stockholders' equity 73,763 34,948 Total liabilities and stockholders' equity $550,294 384,623 ADDITIONAL FINANCIAL INFORMATION (in thousands) LOANS: Dec 31, 2005 Dec 31, 2004 (unaudited) Commercial $17,831 $32,020 Commercial real estate 119,814 99,955 Installment 29,048 29,640 Residential real estate 59,366 47,157 Residential construction 166,020 89,716 392,079 298,488 Add (deduct): Deferred loan costs, net 1,934 2,138 Allowance for loan losses (3,146) (2,901) Loans, net $390,867 $297,725 NON-PERFORMING ASSETS: Dec 31, 2005 Dec 31, 2004 (unaudited) Loans on Non-Accrual Status $1,319 $1,444 Delinquent Loans on Accrual Status -- -- Total Non-Performing Loans 1,319 1,444 Real Estate Owned (REO)/ Repossessed assets 13 33 Total Non-Performing Assets $1,332 $1,477 Total Non-Performing Assets/Total Assets 0.24% 0.38% Three Months Ended Twelve Months Ended Dec 31, 2005 Dec 31, 2004 Dec 31, 2005 Dec 31, 2005 CHANGE IN THE (unaudited) (unaudited) (unaudited) ALLOWANCE FOR LOAN LOSSES: Balance at beginning of period $3,183 $2,839 $2,901 $3,163 Provision for loan losses (69) 176 1,815 1,315 Recoveries 88 295 203 331 Charge-offs (56) (409) (1,773) (1,908) Net charge-offs 32 (114) (1,570) (1,577) Balance at end of period $3,146 $2,901 $3,146 $2,901 Net Charge-offs/Average Loans Outstanding -0.03% 0.15% 0.45% 0.60% Allowance for Loan Losses/Total Loans Outstanding 0.80% 0.97% 0.80% 0.97% Allowance for Loan Losses/ Non-Performing Loans 239% 201% 239% 201% ADDITIONAL FINANCIAL INFORMATION (in thousands) (Rates/Ratios Annualized) Three Months Ended Twelve Months Ended Dec 31, Dec 31, Dec 31, Dec 31, 2005 2004 2005 2004 (unaudited) (unaudited (unaudited) OPERATING PERFORMANCE: Average loans $377,914 $293,154 $350,397 $260,739 Average investment securities 72,364 49,629 63,205 40,644 Average other interest-earning assets 34,629 1,718 11,104 4,668 Average noninterest-earning assets 40,873 26,371 35,726 24,002 Total Average Assets $525,780 $370,872 $460,432 $330,053 Average interest-bearing deposits $393,692 $287,364 $350,857 $248,179 Average borrowings 28,629 21,724 32,170 21,746 Average noninterest-bearing liabilities 35,401 27,185 34,483 26,096 Total Average Liabilities 457,722 336,273 417,510 296,021 Total average equity 68,058 34,599 42,922 34,032 Total Average Liabilities And Equity $525,780 $370,872 $460,432 $330,053 Interest rate yield on loans 6.71% 6.18% 6.48% 6.19% Interest rate yield investment securities 4.00% 2.84% 3.61% 2.82% Interest rate yield on other interest-earning assets 4.00% 2.32% 3.86% 1.07% Interest Rate Yield On Interest- Earning Assets 6.11% 5.68% 5.99% 5.66% Interest rate expense on deposits 3.59% 2.79% 3.27% 2.83% Interest rate expense on borrowings 2.70% 1.78% 2.53% 1.68% Interest Rate Expense On Interest-Bearing Liabilities 3.53% 2.72% 3.20% 2.73% Interest rate spread 2.58% 2.96% 2.79% 2.93% Net interest margin 3.03% 3.26% 3.10% 3.25% Other operating income/Average assets 0.40% 0.69% 0.51% 0.89% Other operating expense/Average assets 3.05% 2.94% 3.18% 3.10% Efficiency ratio (noninterest expense/revenue) 95.44% 79.49% 94.46% 79.27% Return on average assets 0.12% 0.34 -1.43% 2.44% Average equity/Average assets 12.94% 9.33% 9.32% 10.31% Contacts: Brian P. Peters, President and CEO Brian F. Grimes, EVP and CFO 877-COASTFL 877-COASTFL DATASOURCE: Coast Financial Holdings, Inc. CONTACT: Brian P. Peters, President and CEO, , or Brian F. Grimes, EVP and CFO, , both of Coast Financial Holdings, +1-877-COASTFL Web site: http://www.coastbankflorida.com/

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