Coast National Bank Announces Third Quarter Earnings Results

SAN LUIS OBISPO, CA--(Marketwired - Nov 15, 2013) - Coast National Bank, a wholly owned subsidiary of Coast Bancorp (OTCBB: CTBP), reported net profits of $145,000 for the nine months ended September 30, 2013, a significant improvement over the $118,000 loss reported for the same period in 2012.

"Throughout 2013, the bank has continued its positive progress in its turnaround efforts. 

"The success of our Small Business Lending focus bank-wide continues to be a contributor to the profitability of the bank as we continue to rebuild and strive to accomplish our strategic objectives," said President and Chief Executive Officer Anita M. Robinson.

"Our customer loyalty and the support from our community has been a tremendous influence in our ability to accomplish significant positive progress in the past year. A strong core customer base and recognizing the greater need for the small banks in our community has provided fuel for our team."

Highlights:

Total assets at September 30, 2013 totaled $123.8 million compared to $142.0 million at September 30, 2012. This change is primarily due to the sale of the Bank's Morro Bay Branch Office to Heritage Oaks Bank which closed in December 2012. The sale included deposits and real property with limited furniture and equipment.

Net loans at September 30, 2013 were $66.9 million compared to $71.0 million for the same period of 2012. This reflects the aggressive work to resolve troubled loan assets and the resultant reduction in problem loans. The Bank is now positioned to rebuild the portfolio through healthy lending and underwriting practices, and to continue demonstrating its expertise in small business lending.

Total deposits declined from $134.6 million at September 30, 2012 to $116.1 million at September 30, 2013. This decline reflects the sale of $27.0 million in deposits for the Morro Bay Branch Office in December 2012. Excluding this sale, deposits actually increased by $8.6 million over the past twelve months. The most significant portion of the reduction was in time certificates of deposits, which contributed to the Bank's lower cost of funds. Core deposit relationships continue to grow.

The Bank continues to be very liquid. At September 30, 2013 cash and other liquid assets were $46.9 million compared to $60.1 million one year ago.

Net interest income was lower in the nine months ended September 30, 2013 compared to the same period in 2012. This was primarily the result of the decline in loans outstanding and the low rates earned on interest-bearing deposits with other banks. With the bank's focus on loan growth, this decline should not continue.

Non-interest income increased 37% in the nine months ended September 30, 2013 compared to the same period in 2012, as a result of the Bank's emphasis on small business lending, and the subsequent gains on sales of SBA-guaranteed loans.

Non-interest expense declined by 7% in the first nine months of 2013 compared to the same period in 2012, as a result of the Bank's efforts to streamline operations and reduce overhead costs.

Coast National Bank continues to improve its capital ratios through increased profitability and the reduction in total assets. At September 30, 2013, the Bank's Tier I leverage ratio was 6.1% compared to 5.0% one year ago. Its total risk-based capital ratio was 11.6% at September 30, 2013 compared to 10.7% at September 30, 2012. Although not in compliance with the Tier I leverage ratio of 9.0% requirement under its Consent Order, it is considered to be "Well Capitalized." Management and the Board of Directors are executing a well-ordered capital plan to bring the Bank into compliance in this area.

Established in 1997, Coast National Bank is a locally owned community bank, serving consumers and businesses through four local offices in San Luis Obispo County. With a focus on delivering quality customer service, Coast National Bank provides small business loans, deposit products, and numerous other business and personal banking products and services. For further information, visit www.coastnationalbank.com or call 805.541.0400.

Coast National Bank is an equal housing lender and member FDIC.

Statements concerning future performance, developments or events, expectations for growth, income forecasts, sales activity for collateral, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to the ongoing financial crisis in the United States and the markets in which Coast National Bank operates, and the response of the federal and state government and our regulators thereto, continued growth, Coast National Bank's beliefs as to the adequacy of its existing and anticipated allowances for loan losses, beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of Coast National Bank's operations, interest rates and financial policies of the United States government, continued weakness in the real estate markets within which we operate and general economic conditions. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Coast Bancorp's results could differ materially from those expressed in, implied or projected by such forward-looking statements. Coast National Bank assumes no obligation to update such forward-looking statements.

COAST NATIONAL BANK
CONDENSED BALANCE SHEETS
(In thousands)
		September 30,
		2013				2012
ASSETS		Unaudited				Unaudited
Cash and due from banks		$	3,168			$	51,083
Interest-bearing deposits at FRB and other banks			43,772				9,021
Federal funds sold			100				100
Investment securities			392				-
Federal Reserve and Federal Home Loan Bank stock, at cost			602				825
Loans, net			66,947				70,967
Premises and equipment, net			6,235				7,207
Other real estate owned, net			1,456				1,701
Accrued interest receivable and other assets			1,103				1,092
	Total assets	$	123,775			$	141,996
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing demand		$	46,763			$	48,630
Money market and NOW			38,280				40,265
Savings			6,681				8,004
Time			24,403				37,655
	Total deposits		116,127				134,554
Accrued interest payable and other liabilities			256				403
	Total liabilities		116,383				134,957
Common stock - no par value, 846,881 shares outstanding at September 30, 2013 and 2012, respectively			3,162				3,162
Additional paid-in capital			9,835				9,835
Retained earnings			(5,605	)			(5,958	)
Unrealized gains on AFS securities, net			-				-
	Total stockholders' equity		7,392				7,039
	Total liabilities and stockholders' equity	$	123,775			$	141,996

CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
		Nine Months Ended							Three Months Ended
		September 30,							September 30,
		2013			2012				2013				2012
		Unaudited			Unaudited				Unaudited				Unaudited
Total interest income		$	3,210		$	3,764			$	1,007			$	1,245
Total interest expense			197			343				65				111
	Net interest income		3,013			3,421				942				1,134
Provision for loan losses			-			-				-				-
	Net interest income after provision for loan losses		3,013			3,421				942				1,134
Noninterest income			1,245			907				282				280
Noninterest expense			4,111			4,444				1,259				1,445
	Income before income taxes		147			(116	)			(35	)			(31	)
Income taxes			2			2				-				-
	Net profit (loss)	$	145		$	(118	)		$	(35	)		$	(31	)
Basic and diluted profit (loss) per share		$	0.17		$	(0.14	)		$	(0.04	)		$	(0.04	)
Average basic and diluted shares outstanding			847			847				847				847

Contact: Anita Robinson Coast National Bank 500 Marsh Street San Luis Obispo, CA 93401 805-547-6135 Email Contact