CFHI Coast Finl Hldgs (MM)

BRADENTON, Fla., May 2 /PRNewswire-FirstCall/ -- Coast Financial Holdings, Inc. (NASDAQ:CFHI), parent company of Coast Bank of Florida today reported financial results for the quarter ended March 31, 2007. The company reported growth in loans, deposits and total assets in comparison to the fourth quarter of 2006. For the quarter ended March 31, 2007 the company recorded a loss of $2.4 million, or $0.37 per share, as compared to a loss of $314,000 or $0.05 per share reported for the quarter ended March 31, 2006. According to Coast Bank President & CEO, Brian F. Grimes, the increase in net loss is primarily attributable to extraordinary circumstances. "For the past several months, Coast Bank has been operating under difficult circumstances and the earnings report is reflective of the situation." Grimes continued, "As previously disclosed we have a large number of customers who have been negatively impacted by their builder filing for bankruptcy in the midst of their new home construction. This situation has generated large extraordinary expenses, negatively impacting the performance of Coast Bank." For the quarter ended March 31, 2007 the company reported professional fees, which includes legal and consulting expenses, of $726,000 as compared to $199,000 reported for the quarter ended March 31, 2006, an increase of $527,000, or 264.8%. Also for the quarter ended March 31, 2007 the company increased the reserve for potential loan losses by $1.4 million. A significant portion of this amount is a provision for a single commercial real estate loan in the process of foreclosure. The bank took the additional provision on this loan in recognition of the depressed real estate market for such properties. Income Statement Review For the quarter ended March 31, 2007 net interest income before the provision for loan loss decreased 5.67% to $3.8 million, as compared to $4.0 million reported for the quarter ended March 31, 2006. Revenues (net interest income before the provision for loan losses plus other operating income) decreased 3.75% to $4.4 million in the quarter ended March 31, 2007 from the $4.6 million reported for the quarter ended March 31, 2006. A contributing factor in this decrease in revenue is the large number of residential construction-permanent loans classified as non-performing. Net interest margin continued to compress in the first quarter of 2007. For the quarter ended March 31, 2007 net interest margin was 2.06%, as compared to the 3.13% net interest margin reported for the quarter ended March 31, 2006. "Cost of deposits reflects the market impact of rising rates and the increased premium the bank has paid for new deposits," stated Grimes. Non-interest expenses (including the professional fees previously described) also increased in the first quarter. For the quarter ended March 31, 2007 non-interest expenses totaled $6.8 million; a 37.7% increase in comparison to the $4.9 million reported for the quarter ended March 31, 2006. Balance Sheet Review Deposits increased 22.8%, or $137.8 million, during the quarter to $742.4 million, from $604.6 million reported at December 31, 2006. The increase in deposits took place primarily as a part of our liquidity management program and includes $40.7 million in brokered deposits. During the first quarter, non-interest bearing demand deposits, savings, NOW and money-market deposits decreased 28.0% while time deposits rose 42.4% when compared to December 31, 2006. Loans also increased during the past three months. As of March 31, 2007 net loans totaled $567.0 million, representing an increase of $4.4 million, or 0.8%, compared to $562.6 million at December 31, 2006. Total assets increased during the past three months. As of March 31, 2007 assets totaled $834.1 million. This total is an increase of $114.4 million, or 15.9%, compared to $719.7 million at December 31, 2006. Total Shareholder Equity stood at $55.0 million as of March 31, 2007, a decrease of $2.2 million compared to $57.2 million reported at December 31, 2006. The bank maintains the classification of "adequately capitalized" for regulatory purposes. Credit Quality Review Non-performing assets increased during the past three months. Grimes stated, "The majority of the increase of non-performing assets was a result of the migration of approximately $31.6 million in builder affected loans." As of March 31, 2007 non-performing assets totaled $38.3 million, an increase of $32.1 million compared to $6.2 million at December 31, 2006. While a number of loans have been placed on non-accrual status, the company has made progress in addressing the issues the individual Coast Bank borrowers face with the contractor in bankruptcy and their homes unfinished. According to Grimes, "Coast Bank management is working diligently on a customer-by-customer basis to improve this situation for the borrowers as well as the bank." Grimes continued, "While many loans are on non-accrual status, Coast Bank has managed to resolve a number of these issues." Further information will be included in the Form 10-Q filing for Coast Financial Holdings, Inc., to be filed on or before May 10, 2007. For Further Information Contact: Tramm Hudson 941/752-5900 COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY Condensed Consolidated Statements of Earnings (Unaudited) ($ in thousands, except per share amounts) Three Months Ended March 31, 2007 2006 Interest income: Loans $10,015 $7,044 Securities 1,221 925 Other interest-earning assets 644 292 Total interest income 11,880 8,261 Interest expense: Deposits 7,627 4,059 Borrowings 458 179 Total interest expense 8,085 4,238 Net interest income 3,795 4,023 Provision for loan losses 1,426 133 Net interest income after provision for loan losses 2,369 3,890 Noninterest income: Service charges on deposit accounts 142 124 Gain on sale of loans held for sale 466 409 Other service charges and fees 12 18 Other - 13 Total noninterest income 620 564 Noninterest expenses: Employee compensation and benefits 2,962 2,461 Occupancy and equipment 1,316 932 Data processing 290 244 Professional fees 726 199 Telephone, postage and supplies 384 312 Advertising 363 436 Other 761 357 Total noninterest expenses 6,802 4,941 Loss before income tax benefit (3,813) (487) Income tax benefit (1,409) (173) Net loss $(2,404) $(314) Loss per share, basic $(0.37) $(0.05) Loss per share, diluted $(0.37) $(0.05) Weighted-average number of common shares outstanding, basic 6,509,057 6,506,659 Weighted-average number of common shares outstanding, diluted 6,509,057 6,506,659 COAST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets ($ in thousands, except per share amounts) March 31, December 31, March 31, Assets 2007 2006 2006 (Unaudited) (Unaudited) Cash and due from banks $14,346 $13,952 $13,821 Federal funds sold and securities purchased under agreements to resell 1,394 385 17,140 Cash and cash equivalents 15,740 14,337 30,961 Securities available for sale 201,646 92,013 89,390 Loans, net of allowance for loan losses of $26,818, $25,710 and $3,271 566,972 562,574 427,257 Federal Home Loan Bank stock, at cost 2,219 3,035 1,620 Premises and equipment, net 27,130 27,598 24,056 Accrued interest receivable 4,192 4,119 2,668 Deferred income taxes 13,753 12,465 2,753 Other assets 2,402 3,528 3,030 Total assets $834,054 $719,669 $581,735 Liabilities and Stockholders' Equity Liabilities: Noninterest-bearing demand deposits $ 30,457 $34,345 $35,643 Savings, NOW and money-market deposits 90,565 133,819 90,479 Time deposits 621,339 436,408 351,929 Total deposits 742,361 604,572 478,051 Federal Home Loan Bank advances 20,000 41,000 10,000 Federal funds purchased - - - Repurchase agreement - - - Other borrowings 13,404 14,108 18,002 Other liabilities 3,276 2,813 2,456 Total liabilities 779,041 662,493 508,509 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, 6,509,057, and 6,509,057 shares issued and outstanding in 2007 and 2006 32,545 32,545 32,545 Additional paid-in capital 46,031 45,992 45,524 Accumulated deficit (23,523) (21,119) (4,153) Accumulated other comprehensive loss (40) (242) (690) Total stockholders' equity 55,013 57,176 73,226 Total liabilities and stockholders' equity $834,054 $719,669 $581,735 ADDITIONAL FINANCIAL INFORMATION (in thousands) LOANS: Mar 31, 2007 Dec 31, 2006 Mar 31, 2006 (unaudited) (unaudited) Commercial $13,945 $13,585 $16,485 Commercial real estate 134,416 138,912 126,210 Installment 55,859 52,894 33,060 Residential real estate 209,748 145,268 66,520 Residential construction 177,344 235,197 186,410 591,312 585,856 428,685 Add (deduct): Deferred loan costs, net 2,478 2,428 1,843 Allowance for loan losses (26,818) (25,710) (3,271) Loans, net $ 566,972 $ 562,574 $ 427,257 NON - PERFORMING ASSETS : Mar 31, 2007 Dec 31, 2006 Mar 31, 2006 (unaudited) (unaudited) Loans on Non - Accrual Status $38,139 $6,043 $ 922 Delinquent Loans on Accrual Status - - - - - - Total Non - Performing Loans 38,139 6,043 922 Real Estate Owned (REO)/ Repossessed assets 167 167 171 Total Non - Performing Assets $38,306 $6,210 $1,093 Total Non - Performing Assets/ Total Assets 4.59 % 0.86 % 0.19 % Three Months Ended Mar 31, 2007 Mar 31, 2006 CHANGE IN THE (unaudited) (unaudited) ALLOWANCE FOR LOAN LOSSES : Balance at beginning of period $25,710 $3,146 Provision for loan losses 1,426 133 Recoveries 21 11 Charge offs (339) (19) Net charge offs (318) (8) Balance at end of period $26,818 $3,271 Net Charge-offs/Average Loans Outstanding 0.22 % 0.01 % Allowance for Loan Losses/Total Loans Outstanding 4.54 % 0.76 % Allowance for Loan Losses/Non- Performing Loans 70.00 % 355.00 % ADDITIONAL FINANCIAL INFORMATION (in thousands) (Rates / Ratios Annualized) Three Months Ended Mar 31, 2007 Mar 31, 2006 (unaudited) (unaudited) OPERATING PERFORMANCE : Average loans $596,355 $409,417 Average investment securities 99,554 85,824 Average other interest-earning assets 49,796 26,605 Average non - interest - earning assets 35,266 42,748 Total Average Assets $780,971 $564,594 Average interest bearing deposits $646,546 $428,018 Average borrowings 42,194 26,084 Average non - interest bearing liabilities 35,947 37,100 Total Average Liabilities 724,687 491,202 Total average equity 56,284 73,392 Total Average Liabilities And Equity $780,971 $564,594 Interest rate yield on loans 6.81 % 6.98 % Interest rate yield on investment securities 4.97 % 4.37 % Interest rate yield on other interest-earning assets 5.25 % 4.46 % Interest Rate Yield On Interest Earning Assets 6.46 % 6.42 % Interest rate expense on deposits 4.78 % 3.85 % Interest rate expense on borrowings 4.40 % 2.78 % Interest Rate Expense On Interest Bearing Liabilities 4.76 % 3.78 % Interest rate spread 1.70 % 2.64 % Net interest margin 2.06 % 3.13 % Other operating income / Average assets 0.32 % 0.41 % Other operating expense / Average assets 3.53 % 3.55 % Efficiency ratio (non-interest expense/ revenue) 154.07 % 107.72 % Return on average assets (1.25) % (0.23)% Return on average equity (17.32) % (1.73)% Average equity/ Average assets 7.21 % 13.00 % About the Coast Financial Holdings: Coast Financial Holdings, Inc. through its banking subsidiary, Coast Bank of Florida (http://www.coastfl.com/), operates 20 full-service banking locations in Manatee, Pinellas, Hillsborough and Pasco 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, Longboat Key, Seminole, Dunedin, Clearwater, Kenneth City, Brandon, St. Petersburg, Lutz, Largo and Pinellas Park. 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, 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. Further information may be obtained by contacting Tramm Hudson at 941/752- 5900. DATASOURCE: Coast Financial Holdings, Inc. CONTACT: Tramm Hudson for Coast Financial Holdings, Inc., +1-941-752-5900 Web site: http://www.coastfl.com/

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