BEAUFORT, S.C., Feb. 8, 2008 (PRIME NEWSWIRE) -- Coastal Banking Company Inc. (OTCBB:CBCO), the holding company for Lowcountry National Bank in Beaufort, S.C., and First National Bank of Nassau County in Fernandina Beach, Fla., reported net income of $777,490 for the quarter ended Dec. 31, 2007, compared to $843,820, in the fourth quarter of 2006. Diluted earnings per share in the fourth quarter of 2007 were $0.29, compared to $0.41 in the same period in 2006.
The company's credit quality remained strong in the fourth quarter of 2007, with net charge-offs as a percentage of total loans of 0.05 percent, compared to 0.04 percent in both the third quarter of 2007 and in the fourth quarter of 2006. Allowance for loan losses in the fourth quarter of 2007 totaled $3.7 million, or 1.30 percent of loans outstanding, compared to $3.5 million, or 1.26 percent of loans outstanding, in the previous quarter, and $3.5 million, or 1.19 percent of loans outstanding, in the same period a year ago. Nonaccrual loans as a percentage of total loans at the end of the fourth quarter of 2007 were 0.72 percent, compared to 1.01 percent at the end of the third quarter of 2007 and 0.03 percent at the end of 2006.
"Coastal Banking Company performed relatively well in the fourth quarter, given the fact that it was one of the most difficult markets the banking industry has seen in some time," said Michael G. Sanchez, chief executive officer. "We maintained our credit quality, modestly increased our loan loss allowance and generated a substantial increase in fee income thanks to the stellar performance of our wholesale mortgage unit, which launched in early September 2007."
Total assets at Dec. 31, 2007, were $431.6 million, a 1.3 percent increase from $426.2 million at Dec. 31, 2006. Total loans at the end of the fourth quarter were $281.3 million, compared to $291.8 million for the same period a year ago. Total deposits were $345.8 million at the end of the fourth quarter, compared to $340.1 million at the end of the fourth quarter of 2006. Total shareholders' equity was $46.8 million at Dec. 31, 2007, compared to $43.2 million at the end of 2006.
Net interest income in the fourth quarter of 2007 totaled $3.0 million, compared to $3.4 million a year ago. Noninterest income for the fourth quarter totaled $870,959, nearly double the $438,405 recorded in the fourth quarter of 2006. Noninterest expense was $2.9 million in the fourth quarter of 2007, compared to $2.8 million in the previous quarter and $2.4 million during the forth quarter of 2006.
The increase in noninterest income in the fourth quarter was due primarily to the increase in the gain on sale of residential mortgage loans by the company's wholesale mortgage division. The wholesale operations funded $53.8 million in loans available for sale during its four months of operation in 2007, and at the end of 2007 the wholesale division had a pipeline of loans in process of nearly $23.0 million. The wholesale division originates primarily full-documentation, conforming mortgage loans that are pre-sold into the secondary market.
Net income for the year ended Dec.31, 2007, was $2.6 million, or $0.97 in diluted earnings per share, compared to $3.4 million, or $1.24 in diluted earnings per share, for 2006, which included a one-time gain on the sale of real estate that contributed $0.08 to diluted earnings per share. Net interest income totaled $12.6 million for the year ended Dec.31, 2007, compared to $13.3 million last year. Noninterest income for the full year 2007 was $2.3 million, compared to $2.0 million in 2006. Noninterest expense for the year ended Dec.31, 2007, was $10.9 million, compared to $9.6 million in 2006. Net interest margin for the year ended Dec. 31, 2007, was 3.20 percent, a decline of 53 basis points from the net interest margin of 3.73 percent for the year ended Dec. 31, 2006.
"Despite the tumbling of housing markets and loan demand across the U.S. in 2007, we achieved a number of milestones during the year and undertook several important initiatives aimed at generating a new level of growth and profitability for the company, including expanding our presence in existing markets, reaffirming our coastal footprint growth strategy, starting our wholesale lending group and strengthening our management team," said Sanchez. "These accomplishments give us confidence and optimism about our future as a company and as an investment."
About Coastal Banking Company Inc.
Coastal Banking Company Inc., based in Beaufort, S.C., is the $431.6 million-asset bank holding company of Lowcountry National Bank (LNB) in Beaufort, and First National Bank (FNB) of Nassau County in Fernandina Beach, Fla., both of which provide a full range of consumer and business banking services. LNB serves coastal South Carolina through full-service banking offices in Beaufort, Hilton Head and Port Royal. FNB operates two full-service banking offices in Fernandina Beach, Fla., and Meigs, Ga., the later operating under the name of The Georgia Bank. In addition to its banking offices, FNB operates a wholesale lending division based in Atlanta and three commercial loan production offices in Jacksonville, Fla., Savannah, Ga., and Atlanta. 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
December 31,
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2007 2006
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Assets
Cash and due from banks $ 4,997,928 $ 4,774,561
Interest-bearing deposits
in banks 2,063,813 1,928,601
Federal funds sold 4,710,397 18,967,745
Securities available for sale,
at fair value 87,171,416 60,372,740
Securities held to maturity,
at cost -- 16,998,209
Restricted equity securities,
at cost 3,683,416 3,710,217
Loans held for sale 20,553,409 1,039,976
Loans, net of unearned income 281,290,645 291,819,946
Less allowance for loan losses 3,653,017 3,474,640
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Loans, net 277,637,628 288,345,306
Premises and equipment, net 8,176,488 7,383,595
Cash surrender value of life insurance 6,830,388 6,553,009
Intangible assets 459,144 740,073
Goodwill 10,411,914 10,215,607
Other assets 4,878,469 5,180,430
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Total assets $ 431,574,410 $ 426,210,069
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Liabilities and Shareholders' Equity
Deposits:
Non-interest-bearing $ 25,147,412 $ 24,366,771
Interest-bearing 320,699,704 315,691,850
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Total deposits 345,847,116 340,058,621
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Securities sold under agreements
to repurchase 2,000,000 2,000,000
Other borrowings 26,772,798 29,973,051
Junior subordinated debentures 7,217,000 7,217,000
Other liabilities 2,990,744 3,789,911
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Total liabilities 384,827,658 383,038,583
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Commitments and contingencies
Shareholders' Equity:
Preferred stock, $.01 par value;
10,000,000 shares authorized;
no shares issued and outstanding -- --
Common stock, par value $.01;
10,000,000 shares authorized;
2,402,594 and 2,369,263 shares
issued and outstanding in
2006 and 2005, respectively 25,706 24,026
Additional paid-in capital 40,279,194 39,661,823
Retained earnings 6,464,290 3,836,130
Accumulated other
comprehensive loss (22,438) (350,493)
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Total shareholders' equity 46,746,752 43,171,486
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Total liabilities and
shareholders' equity $ 431,574,410 $ 426,210,069
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See accompanying notes to consolidated financial statements.
COASTAL BANKING COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the years ended December 31,
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2007 2006
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Interest income:
Interest and fees on loans $ 23,584,022 $ 22,629,425
Interest on taxable securities 4,022,456 3,053,776
Interest on nontaxable
securities 603,004 420,027
Interest on deposits in other
banks 88,516 91,647
Interest on federal funds sold 601,528 537,208
---------------- ----------------
Total interest income 28,899,526 26,732,083
---------------- ----------------
Interest expense:
Interest on deposits 14,478,538 11,845,450
Interest on junior subordinated
debentures 560,194 391,932
Interest on other borrowings 1,254,342 1,223,424
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Total interest expense 16,293,074 13,460,806
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Net interest income 12,606,452 13,271,277
Provision for loan losses 301,500 726,700
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Net interest income after
provision for loan losses 12,295,952 12,544,577
---------------- ----------------
Non-interest income:
Service charges on deposit
accounts 508,354 381,098
Other service charges,
commissions and fees 225,583 190,450
Gain on sale of loans 1,157,008 910,558
Gain on sale of real estate -- 321,038
Gain (loss) on sale of securities
available for sale 121,041 (13,460)
Income from investment
in life insurance contracts 287,404 239,944
Other income 21,623 10,167
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Total other income 2,321,013 2,039,795
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Non-interest expenses:
Salaries and employee benefits 6,339,984 5,400,276
Occupancy and equipment expense 1,077,486 821,727
Advertising fees 277,707 270,773
Amortization of intangible assets 280,929 373,125
Audit fees 322,513 280,424
Data processing fees 817,982 661,301
Director fees 272,674 269,812
Legal and other professional fees 357,150 181,715
Other operating 1,133,269 1,318,650
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Total other expenses 10,879,694 9,577,803
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Income before income taxes 3,737,271 5,006,569
Income tax expense 1,105,445 1,647,032
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Net income $ 2,631,826 $ 3,359,537
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Basic earnings per share $ 1.04 $ 1.34
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Diluted earnings per share $ 0.97 $ 1.24
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