CFHI Coast Finl Hldgs (MM)

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/

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