BEAUFORT, S.C., Aug. 12, 2009 (GLOBE NEWSWIRE) -- Coastal Banking Company Inc. (OTCBB:CBCO), the holding company of CBC National Bank, which operates divisions including Lowcountry National Bank in Beaufort, S.C., and First National Bank of Nassau County in Fernandina Beach, Fla., today reported a net loss of $244,632 before preferred stock dividends, or a loss of $0.15 per diluted common share, for the quarter ended June 30, 2009.
This compares to a net loss of $1.9 million, or a loss of $0.81 per diluted common share, for the first quarter of 2009, which included a non-recurring charge of $507,366, and to a loss of $577,356, or a loss of $0.23 per diluted share, in the second quarter of 2008, which included a non-recurring charge of $508,000.
Key highlights from the second quarter of 2009 include:
* Capital levels at the holding company remained strong, as did liquidity. * Net loan charge-offs as a percentage of average loans declined by 57 basis points from the first quarter. * Allowance for loan losses as a percentage of loans increased by 30 basis points over the previous quarter. * Net interest margin expanded by 17 basis points over the previous quarter. * The wholesale mortgage banking division continued its strong growth pattern, originating approximately $251 million in loans available for sale in the secondary market.
"We continued to see positive trends in key areas of our core business during the second quarter, including income growth, expansion of our net interest margin and a reduction in net charge-offs," said Michael G. Sanchez, chief executive officer. "As a result, we narrowed our loss significantly in the quarter despite increasing our allowance for loan losses by nearly $1 million, while maintaining solid capital and liquidity positions.
"We still have our work cut out for us as we move forward," Sanchez continued. "Sluggish economic conditions continue to impact all banks, large and small. In response, we are taking deliberate and strategic steps to maintain our capital and liquidity, improve our loan portfolio and control costs. Though we expect some bumps in the months ahead, we are encouraged by the positive strides we are making and the momentum we are generating."
At June 30, 2009, CBC National Bank had a total risk-based capital ratio of 14.07 percent and a Tier 1 risk-based capital ratio of 12.81 percent, which exceed the 10 percent and 6 percent respective thresholds for being classified as "well capitalized" by federal regulators. The company also continued to have ample liquidity, with $78 million in excess funding available from multiple sources at June 30, 2009.
Net charge-offs for the second quarter of 2009 totaled $473,000, or 0.15 percent of average loans, compared $2.2 million, or 0.72 percent in the first quarter of 2009, and $6.2 million, or 2.04 percent at Dec. 31, 2008.
The company's provision for loan losses totaled $1.5 million for the second quarter of 2009, $977,000 in excess of net charge-offs, compared to $2.9 million in the first quarter of 2009, or $742,000 in excess of net charge-offs, and $6.6 million at Dec. 31, 2008, which was $359,000 in excess of net charge-offs. The company increased its allowance for loan losses to $6.5 million, or 2.13 percent of loans outstanding at June 30, 2009, from $5.6 million, or 1.83 percent of loans outstanding, at March 31, 2009.
Nonaccrual loans as a percentage of total assets at the end of the second quarter were 5.31 percent, compared to 5.11 percent at the end of the previous quarter and 3.82 percent at Dec. 31, 2008, reflecting a decline in the rate of increase over the past several quarters. Other real estate owned at June 30, 2009, totaled $6.8 million, compared to $5.8 million at Dec. 31, 2008.
"Although we believe that asset quality is beginning to stabilize, we increased our allowance for loan losses in response to the constant, ongoing pressure and strains that the stagnant economy is placing on customers of all banks," said Sanchez. "We expect this stress to continue for some time."
Total assets at June 30, 2009, were $487.9 million, a 2.3 percent increase from $476.8 million at Dec. 31, 2008. Total shareholders' equity was $50.0 million at June 30, 2009, compared to $52.0 million at Dec. 31, 2008.
Total deposits were $368.4 million at June 30, 2009, compared to $363.1 million at the end of the first quarter of 2009, and $362.7 million at Dec. 31, 2008. Total loans were $305.7 million at the end of the second quarter of 2009, compared to $305.2 million at the end of the first quarter of 2009, and $304.4 million at the end of 2008.
Commercial real estate construction loans at $81.1 million continued to decline as a percentage of the company's overall loan portfolio, from 29 percent at Dec. 31, 2008 to 27 percent, at June 30, 2009. Residential real estate mortgage loans totaled $108.0 million at the end of the second quarter of 2009, compared to $107.2 million at the end of the previous quarter and $103.6 million at Dec. 31, 2008.
The bulk of the company's loan growth continued to come from its wholesale mortgage banking division, which originated approximately $251 million in loans available for sale in the secondary market during the second quarter of 2009. This compares to $235 million in loans originated for sale in the secondary market during the first quarter of 2009.
"The performance of our wholesale banking division has been outstanding," said Sanchez. "More than half of the revenue it generated in the second quarter was from sources other than re-financing. That bodes well for the long-term success of this division."
Net interest income before provision for loan losses totaled $2.7 million in the second quarter of 2009, an increase from $2.4 million earned in the first quarter of 2009 and $2.6 million earned in the second quarter of 2008. Noninterest income was $2.3 million at June 30, 2009, compared to $2.2 million in the first quarter of 2009 and $806,192 in the second quarter of 2008.
The year-over-year gain in noninterest income is due primarily to the significant improvement in mortgage banking income, which increased from $349,000 in the second quarter of 2008 to $1.8 million for the quarter ended June 30, 2009. Noninterest expense for the second quarter of 2009 totaled $3.9 million compared to $4.3 million in the previous quarter and $3.5 million in second quarter of 2008. Excluding the impact of the wholesale mortgage banking division, noninterest expense was down by $459,000, or 14 percent, for the second quarter of 2009 when compared to the same quarter in 2008.
The company's net interest margin at the end of the second quarter of 2009 was 2.38 percent, an increase of 17 basis points from 2.21 percent at March 31, 2009, and an increase of 36 basis points from 2.02 percent at Dec. 31, 2008. This improvement is largely a reflection of the company's successful efforts to reduce deposit and other borrowing costs during the quarter.
Net loss for the six months ended June 30, 2009, was $2.2 million, compared to a net loss of $189,583 for the same period in 2008. Diluted loss per common share for the first six months of 2009 was $0.96, compared to a diluted loss per common share of $0.07 in the same period a year ago.
Net interest income for the first six months of 2009 was $5.1 million, compared to $5.2 million in the first six months of 2008. Noninterest income was $4.4 million for the first six months of 2009, compared to $1.9 million in the same period of 2008. Noninterest expense was $8.2 million for the first half of 2009, compared to $6.5 million for the same period in 2008. The year over year increase in noninterest expense reflects the activity of the wholesale mortgage banking group. Excluding the impact of wholesale mortgage banking, noninterest expense decreased by $249,000, or 4 percent, in the first half of 2009 when compared to the first half of 2008.
About Coastal Banking Company Inc.
Coastal Banking Company Inc., based in Beaufort, S.C., is the $487.9 million-asset bank holding company of CBC National Bank, which operates as Lowcountry National Bank in Beaufort, S.C., First National Bank of Nassau County in Fernandina Beach, Fla., and The Georgia Bank in Meigs, Ga. CBC National Bank, which is headquartered in Fernandina Beach, provides a full range of consumer and business banking services through full-service banking offices in Beaufort, Fernandina Beach, Meigs, Hilton Head, S.C., and Port Royal, S.C. The company also operates a wholesale lending division based in Atlanta and commercial loan production offices in Jacksonville, Fla., and Savannah, Ga. The company's common stock is publicly traded on the OTC Bulletin Board under the symbol CBCO. For more information, please visit the company's Web site, www.coastalbanking.com.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK FACTORS
This release contains forward-looking statements including statements relating to present or future trends or factors generally affecting the banking industry and specifically affecting Coastal's operations, markets and products. Without limiting the foregoing, the words "believes," "anticipates," "intends," "expects," or similar expressions are intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties. Actual results could differ materially from those projected for many reasons, including, without limitation, changing events and trends that have influenced Coastal's assumptions, but that are beyond Coastal's control. These trends and events include (i) changes in the interest rate environment which may reduce margins, (ii) not achieving expected growth, (iii) less favorable than anticipated changes in the national and local business environments and securities markets, (iv) adverse changes in the regulatory requirements affecting Coastal, (v) greater competitive pressures among financial institutions in Coastal's markets, (vi) greater loan losses than historic levels, and (vii) difficulties in expanding our banking operations into a new geographic market. Additional information and other factors that could affect future financial results are included in Coastal's filings with the Securities and Exchange Commission.
All written or oral forward-looking statements are expressly qualified in their entirety by these cautionary statements. Please also read the additional risks and factors described from time to time in reports and registration statements filed with the Securities and Exchange Commission. Coastal Banking Company, Inc. undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
COASTAL BANKING COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30 December 31
2009 2008
------------- -------------
Assets
Cash and due from banks $ 5,018,080 $ 4,790,625
Interest-bearing deposits in banks 195,143 110,748
Federal funds sold 356,948 464,724
Securities available for sale,
at fair value 74,272,010 81,438,389
Securities held to maturity, at cost 2,000,000 3,022,621
Restricted equity securities, at cost 4,978,250 4,793,916
Loans held for sale, at fair value 37,951,920 31,404,990
Loans, net of unearned income 305,668,889 304,418,704
Less allowance for loan losses 6,525,005 4,833,491
------------- -------------
Loans, net 299,143,884 299,585,213
Premises and equipment, net 7,726,399 7,849,316
Cash surrender value of life insurance 7,254,471 7,107,522
Intangible assets 191,761 260,641
Goodwill 10,411,914 10,411,914
Foreclosed assets 6,772,530 5,750,973
Other assets 31,624,281 19,838,157
------------- -------------
Total assets $ 487,897,591 $ 476,829,749
------------- -------------
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $ 19,940,230 $ 18,639,212
Interest-bearing 348,476,569 344,017,033
------------- -------------
Total deposits 368,416,799 362,656,245
------------- -------------
Other borrowings 57,974,585 51,692,588
Junior subordinated debentures 7,217,000 7,217,000
Other liabilities 4,274,541 3,259,236
------------- -------------
Total liabilities 437,882,925 424,825,069
------------- -------------
Shareholders' Equity:
Preferred stock, par value $.01;
10,000,000 shares authorized; 9,950
shares issued and outstanding in 2009
and 2008 9,484,208 9,453,569
Common stock, par value $.01; 10,000,000
shares authorized; 2,568,707 shares
issued and outstanding in 2009 and 2008 25,687 25,687
Additional paid-in capital 41,081,613 41,037,403
Retained earnings (deficit) (1,293,169) 1,165,630
Accumulated other comprehensive income 716,327 322,391
------------- -------------
Total shareholders' equity 50,014,666 52,004,680
------------- -------------
Total liabilities and shareholders'
equity $ 487,897,591 $ 476,829,749
------------- -------------
COASTAL BANKING COMPANY, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
For the three months For the six months
ended June 30 ended June 30
-------------------------- --------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Interest income:
Interest and
fees on loans $ 4,522,375 $ 5,197,769 $ 8,972,514 $ 10,606,162
Interest on
taxable
securities 778,762 846,349 1,620,069 1,750,596
Interest on
nontaxable
securities 155,404 162,659 314,946 325,758
Interest on
deposits in
other banks 56 6,387 187 19,667
Interest on
federal funds
sold 427 20,349 521 96,753
------------ ------------ ------------ ------------
Total interest
income 5,457,024 6,233,513 10,908,237 12,798,936
------------ ------------ ------------ ------------
Interest expense:
Interest on
deposits 2,355,472 3,183,826 4,907,984 6,692,156
Interest on
junior
subordinated
debentures 104,196 120,209 213,559 248,029
Interest on other
borrowings 336,168 352,690 691,272 639,243
------------ ------------ ------------ ------------
Total interest
expense 2,795,836 3,656,725 5,812,815 7,579,428
------------ ------------ ------------ ------------
Net interest
income 2,661,188 2,576,788 5,095,422 5,219,508
Provision for
loan losses 1,450,000 896,251 4,380,000 1,018,751
------------ ------------ ------------ ------------
Net interest
income after
provision for
loan losses 1,211,188 1,680,537 715,422 4,200,757
------------ ------------ ------------ ------------
Non-interest
income:
Service charges
on deposit
accounts 130,492 184,156 288,741 354,610
Other service
charges, commis-
sions and fees 79,010 62,305 154,127 122,116
Income from
investment in
life insurance
contracts 74,040 70,013 149,071 142,125
Mortgage banking
income 1,819,971 349,342 4,124,632 780,654
SBA loan income 40,410 137,951 83,745 273,808
Gain on sale of
securities avail-
able for sale -- -- -- 206,811
Gain on tender of
securities held
to maturity 98,996 -- 98,996 --
Loss on Silverton
Financial
Services stock -- -- (507,366) --
Other income 8,436 2,425 15,775 4,558
------------ ------------ ------------ ------------
Total other
income 2,251,355 806,192 4,407,721 1,884,682
------------ ------------ ------------ ------------
Non-interest
expenses:
Salaries and
employee
benefits 1,927,952 2,003,852 4,300,598 3,639,159
Occupancy and
equipment
expense 292,392 299,334 581,283 581,825
Advertising fees 31,157 72,498 53,828 138,366
Amortization of
intangible
assets 34,440 54,687 68,880 109,374
Audit fees 97,603 60,686 160,171 119,849
Data processing
fees 241,833 228,130 465,105 442,924
Director fees 44,900 66,560 85,300 142,034
FDIC insurance
premiums 207,373 67,222 586,082 102,967
Legal and other
professional
fees 163,879 199,824 354,325 375,042
Mortgage loan
expense 109,737 85,883 295,003 152,988
OCC examination
fees 30,846 28,215 61,692 62,285
Other real estate
expenses 149,149 63,948 206,559 78,629
Other operating
expense 527,737 304,871 937,129 590,580
------------ ------------ ------------ ------------
Total other
expenses 3,858,998 3,535,710 8,155,955 6,536,022
------------ ------------ ------------ ------------
Loss before
income tax
benefit (396,455) (1,048,981) (3,032,812) (450,583)
Income tax
benefit (151,823) (471,625) (853,400) (261,000)
------------ ------------ ------------ ------------
Net loss $ (244,632) $ (577,356) $ (2,179,412) $ (189,583)
------------ ------------ ------------ ------------
Preferred stock
dividends 139,806 -- 279,387 --
------------ ------------ ------------ ------------
Net loss avail-
able to common
shareholders $ (384,438) $ (577,356) $ (2,458,799) $ (189,583)
------------ ------------ ------------ ------------
Basic and diluted
loss per common
share $ (0.15) $ (0.23) $ (0.96) $ (0.07)
------------ ------------ ------------ ------------