CFHI Coast Finl Hldgs (MM)

Coast Financial Reports Profit for First Quarter as Loan Portfolio Grows 63% and Deposits Increase 50% BRADENTON, Fla., April 22 /PRNewswire-FirstCall/ -- Coast Financial Holdings, Inc. , parent company of Coast Bank of Florida, today reported that strong loan growth contributed to a 70% increase in net interest income for the first quarter of 2004, compared to a year earlier. For the first quarter ended March 31, 2004, net income was $9,000, or less than one cent per basic and diluted share. For the first quarter of 2003, which included a non-recurring recovery of $400,000 on a defaulted bond that had been previously written off, net income was $134,000 or $0.10 per basic and diluted share. Excluding the $400,000 recovery, the net loss for the first quarter of 2003 was $115,000 or $0.09 per basic and diluted share. "We are focused on our strategic plan and are on the right track for 2004," said Brian P. Peters, President and CEO of Coast Financial Holdings, Inc. "We ended the quarter in the black and expect to bring even more profitability to the bottom line as the year continues. We have substantially increased loans and deposits, while managing our risk-reward profile and limiting increases in non-interest expense." Income Statement Review Revenues (net interest income before the provision for loan losses plus other operating income) for the quarter ended March 31, 2004 increased 46% to $2.9 million, compared to $2.0 million for the first quarter of 2003. For the quarter, net interest income, a basic measure of bank profitability, grew 70% to $2.3 million, compared to $1.4 million in the like quarter of 2003. Net interest margin was 3.60% for the 2004 first quarter, a 26 basis point improvement from net interest margin of 3.34% for the fourth quarter of 2003, and a 43 basis point improvement from net interest margin of 3.17% for the first quarter of 2003. "We have made the strategic decision to sell our residential servicing portfolio. During the first quarter we began selling residential loans servicing released, reducing the potential risk associated with retained servicing. We have entered into a contract to sell our existing servicing portfolio of approximately $112 million, which should close around the end of the second quarter. We expect that it will sell at about book value, generating little or no gain," said Peters. "As previously announced, we have recently inactivated our subsidiary, Coast Financial Partners. The services it was providing were replaced with the same services directly from Raymond James Financial Services, Inc., and our customers are working with the same asset and investment management staff. As a result, we have created an income stream from commissions and rents, and have limited any potential liability related to offering these products through a subsidiary of the bank. "During February, we opened our sixth branch. Already, we have generated strong loans and deposits from the new location, and it continues to perform well, particularly for a new branch," continued Peters. "Just after the end of the quarter, we completed the purchase of a building in downtown Bradenton. This building will house our headquarters and our seventh Coast Bank branch. We have received regulatory approval and expect to open the branch in mid-May. The corporate offices will relocate to the new building later in the year. The remainder of the building is fully leased with a number of long-term tenants. We will sell our existing 10,000-square-foot operations center located at 6205 Cortez Road. We are focused on our plan to expand the franchise through profitable branching and have two additional locations in the planning stages. One of those locations was previously acquired and the other is under contract. We expect, subject to regulatory approval, to open those locations in 2005." Non-interest income for the first quarter was $588,000, compared to $555,000 for the fourth quarter of 2003 and $620,000 for the first quarter of 2003. Non-interest expense totaled $2.5 million for the first quarter of 2004, about level with expenses for the fourth quarter of 2003. For the first quarter of 2003, when the company was operating three branches, non-interest expense was $1.6 million. Balance Sheet Review Assets increased 51% to $304 million at March 31, 2004, compared to $202 million a year earlier. Stockholders' equity more than doubled to $34 million, from a year earlier, primarily as a result of the initial public offering completed in November 2003. Book value increased 17% to $9.06 per share at March 31, 2004, from $7.72 per share a year earlier. "In building deposits as a new bank, we focused significant attention on drawing new time deposits, which represented about 67.6% of total deposits as of December 31, 2003. As of March 31, 2004, that ratio has declined to 65.6%. We are intent on building core deposits for the long-term, which enhance customer retention, and anticipate the mix of deposits to shift throughout the remainder of 2004," said Peters. "Our loan portfolio continues to shift according to our strategic plan. We are focusing on quality commercial and commercial real estate credits, and are letting installment loans, primarily related to our discontinued auto lending programs, run-off." Deposits grew 50% over the past twelve months to $248 million at March 31, 2004, compared to $165 million at March 31, 2003. Net loans jumped 63% to total $235 million at March 31, 2004, from $144 million a year earlier. Commercial real estate loans grew 137% and now comprise 27% of Coast's net loan portfolio at March 31, 2004, compared to 19% a year earlier. Residential construction and land loans more than doubled and now account for 26% of net loans, compared to 21% at March 31, 2003. Commercial business loans grew 28% and represent 13% of net loans at December 31, 2003, compared to 17% a year earlier. The ratio of net charge-offs to average loans outstanding improved 32 basis points to 0.13% at March 31, 2004, compared to 0.45% at December 31, 2003. At March 31, 2004, non-performing assets totaled $1.9 million, or 0.61% of total assets, compared to $1.1 million, or 0.42% of total assets at December 31, 2003, and $641,000, or 0.32% of total assets at March 31, 2003. The allowance for loan losses was $3.2 million, or 1.36% of total loans outstanding, at March 31, 2004, compared to $1.5 million, or 1.04% of total loans outstanding, a year earlier. About the Company Coast Financial Holdings, Inc. through its banking subsidiary, Coast Bank of Florida (http://www.coastbankflorida.com/), operates six full-service banking locations in Manatee County, Florida. Coast Bank of Florida is a general commercial bank that provides full-service banking operations to its customers from branch offices in Bradenton, Palmetto and Longboat Key. Through an arrangement with Raymond James Financial Services, Inc., Coast 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 941-752-5900 Brian F. Grimes, EVP and CFO 941-752-5900 (tables follow) RESULTS OF OPERATIONS Quarter Ended (In thousands except shares and per Mar 31, Dec 31, Mar 31, share data) 2004 2003 2003 (unaudited) Interest income: Loans receivable $3,604 $3,143 $2,418 Securities 238 211 276 Other interest-earning assets 12 14 23 3,854 3,368 2,717 Interest expense: Deposits 1,471 1,377 1,279 Borrowings 85 79 87 1,556 1,456 1,366 Net Interest Income Before Provision For Loan Losses 2,298 1,913 1,351 Provision for loan losses: 329 2,424 181 Net Interest Income After Provision For Loan Losses 1,969 (511) 1,170 Non-interest income: Service charges on deposit accounts 96 83 65 Gain on sale of loans 283 260 269 Gain on sale of securities available for sale -- -- 36 Net loan servicing (costs) fees (58) (42) (12) Asset management fees 71 98 117 Other 196 156 145 588 555 620 Non-interest expense: Salary and employee benefits 1,330 1,307 1,137 Occupancy and equipment 335 309 227 Data processing 248 236 202 Professional fees 176 90 87 Telephone, postage, and supplies 168 159 119 Advertising 97 167 73 Settlement on impaired security -- -- (400) Other 188 197 130 2,542 2,465 1,575 Income Before Provision For Income Taxes 15 (2,422) 215 Income tax expense (benefit): 6 (897) 81 Net income (loss) 9 (1,525) 134 Dividends on preferred stock -- -- -- Net income (loss) applicable to common stockholders $9 $(1,525) $134 Earnings (loss) per share, basic and diluted $0.00 $(0.56) $0.10 Weighted average shares outstanding, basic and diluted 3,740,032 2,698,493 1,350,450 FINANCIAL CONDITION (In thousands except shares and per share data) Mar 31, Dec 31, Mar 31, 2004 2003 2003 (unaudited) ASSETS Cash and due from banks $8,362 $4,667 $6,855 Federal funds sold 16,065 3,000 9,560 Cash and cash equivalents 24,427 7,667 16,415 Securities available for sale 27,686 26,972 28,822 Loans, net of allowance for loan losses of $3,212, $3,163, and $1,499, at 3/31/04, 12/31/03, and 3/31/03 respectively 235,347 214,240 143,975 Foreclosed real estate -- -- 338 Federal Home Loan Bank stock, at cost 854 592 592 Premesis and equipment, net 9,616 8,614 6,438 Accrued interest receivable 1,263 1,187 919 Deferred income taxes 2,417 2,525 1,323 Loan servicing rights 1,105 1,134 863 Other assets 1,019 952 1,860 $303,734 $263,883 $201,545 LIABILITIES Deposits: Non-interest bearing demand deposits $25,356 $20,293 $17,678 Savings, NOW and money-market deposits 60,125 46,934 39,954 Time deposits 162,827 140,513 107,507 Total deposits 248,308 207,740 165,139 Federal Home Loan Bank advances 2,500 7,500 2,500 Other borrowings 16,148 12,097 16,106 Other liabilities 2,820 2,881 1,379 269,776 230,218 185,125 STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; $11 liquidation value; 5,000,000 shares authorized -- -- 5,995 Common stock, $5 par value; 20,000,000 shares authorized 18,737 18,677 6,752 Additional paid-in capital 19,404 19,351 5,896 Accumulated deficit (4,046) (4,055) (2,191) Accumulated other comprehensive income (137) (308) (32) 33,958 33,665 16,421 Total liabilities and stockholders' equity $303,734 $263,883 $201,545 Preferred shares issued and outstanding at end of period -- -- 545,000 Common shares issued and outstanding at end of period 3,747,450 3,735,450 1,350,450 Book value per common share at end of period $9.06 $9.01 $7.72 ADDITIONAL FINANCIAL INFORMATION (Dollars in thousands) LOANS: Mar 31, 2004 Dec 31, 2003 Mar 31, 2003 (unaudited) Commercial $30,829 $30,321 $23,995 Commercial real estate 63,801 55,506 26,953 Installment 36,416 36,687 31,245 Residential construction 63,624 49,635 30,662 Add (deduct): Deferred loan costs, net 1,705 1,508 795 Allowance for loan losses (3,212) (3,163) (1,499) Loans, net $235,347 $214,240 $143,975 NON - PERFORMING ASSETS: Mar 31, 2004 Dec 31, 2003 Mar 31, 2003 Loans on Non - Accrual Status $1,850 $1,055 $242 Delinquent Loans on Accrual Status -- -- 30 Total Non - Performing Loans 1,850 1,055 272 Real Estate Owned (REO)/ Repossessed assets 2 62 369 Total Non - Performing Assets $1,852 $1,117 $641 Total Non - Performing Assets/Total Assets 0.61% 0.42% 0.32% Quarter Ended CHANGE IN THE Mar 31, 2004 Dec 31, 2003 Mar 31, 2003 ALLOWANCE FOR LOAN LOSSES : Balance at beginning of period $3,163 $1,631 $1,350 Provision for loan losses 329 2,424 181 Recoveries 12 2 1 Charge-offs (292) (894) (33) Net charge-offs (280) (892) (32) Balance at end of period $3,212 $3,163 $1,499 Net Charge-offs/Average Loans Outstanding 0.13% 0.45% 0.02% Allowance for Loan Losses/ Total Loans Outstanding 1.36% 1.48% 1.04% Allowance for Loan Losses/ Non - Performing Loans 174% 300% 551% ADDITIONAL FINANCIAL INFORMATION (Dollars in thousands) (Rates/Ratios Annualized) Quarter Ended Mar 31, Dec 31, Mar 31, 2004 2003 2003 (unaudited) OPERATING PERFORMANCE: Average loans $223,949 $194,609 $136,172 Average securities and deposits 32,842 32,614 36,595 Average non - interest - earning assets 21,536 18,601 15,354 Total Average Assets $278,327 $245,825 $188,121 Average interest bearing deposits $200,086 $179,234 $142,016 Average borrowings 20,631 17,653 13,332 Average non - interest bearing liabilities 24,000 22,648 16,641 Total Average Liabilities 244,717 219,535 171,989 Total average equity 33,610 26,289 16,132 Total Average Liabilities And Equity $278,327 $245,825 $188,121 Interest rate yield on loans 6.47% 6.41% 7.20% Interest rate yield on securities and deposits 3.06% 2.74% 3.31% Interest Rate Yield On Interest Earning Assets 6.04% 5.88% 6.38% Interest rate expense on deposits 2.96% 3.05% 3.65% Interest rate expense on borrowings 1.66% 1.77% 2.65% Interest Rate Expense On Interest Bearing Liabilities 2.84% 2.93% 3.57% Interest rate spread 3.20% 2.95% 2.81% Net interest margin 3.60% 3.34% 3.17% Other operating income/Average assets 0.85% 0.90% 1.34% Other operating expense/Average assets 3.67% 3.98% 3.39% Efficiency ratio (non-interest expense/revenue) 88.07% 99.91% 79.92% Return on average assets 0.01% -2.46% 0.29% Return on average equity 0.11% -23.01% 3.37% Average equity/Average assets 12.08% 10.69% 8.58% DATASOURCE: Coast Financial Holdings, Inc. CONTACT: Brian P. Peters, President and CEO, , or Brian F. Grimes, EVP and CFO, , both of Coast Financial Holdings, +1-941-752-5900 Web site: http://www.coastbankflorida.com/

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