Central Coast Bancorp Announces a 30.6% Increase in Second Quarter Earnings
SALINAS, CA -- 07/19/2005 -- Central Coast Bancorp (NASDAQ: CCBN), the
holding company for Community Bank of Central California, today announced
record quarterly net income of $4,258,000 for the second quarter of 2005.
Net income increased 30.6% over the $3,260,000 reported for the second
quarter of 2004. Diluted earnings per share for the second quarter of 2005
increased 26.1% to $0.29 from $0.23 in the prior year period. The
annualized return on average equity (ROAE) and the return on average assets
(ROAA) for the second quarter of 2005 were 15.9% and 1.40% as compared to
14.3% and 1.27% for the same period in 2004.
Net income for the six months ended June 30, 2005 increased 25.6% to
$8,103,000 from $6,452,000 for the six months ended June 30, 2004. Diluted
earnings per share increased to $0.56 from $0.45 for the comparative
periods. For the first six months of 2004, the annualized ROAE was 15.5%
and the ROAA was 1.37% up from 14.2% and 1.27% for the same period in 2004.
All earnings per share and applicable share data for the 2004 periods have
been adjusted for the five-for-four stock split distributed in February
2005.
The Company experienced continued growth in its balance sheet in the first
six months of 2005. At June 30, 2005, total assets were $1,248,599,000, an
increase of $80,142,000 (6.9%) from March 31, 2005 and an increase of
$83,938,000 (7.2%) from year-end 2004. Most of the asset growth has been
deployed into the investment portfolio and Fed Funds Sold as year-to-date
loan growth has been relatively flat. Loans at June 30, 2005, totaled
$933,423,000, an increase of $1,907,000 (0.2%) from year-end 2004. At June
30, 2005, deposits had grown to $1,121,544,000, an increase of $70,378,000
(6.7%) from March 31, 2005 and an increase of $70,176,000 (6.7%) from
year-end 2004. On a year-over-year basis, the Company's focus on internal
growth and de novo branch expansion has generated an increase in total
assets of $199,114,000 (19.0%); an increase in loans of $133,571,000
(16.7%); and an increase in deposits of $173,826,000 (18.3%).
"We are very pleased with the Company's growth in earnings during the first
half of 2005. Year-over-year increases in earning assets coupled with a
stronger economy and a rising rate environment have been the driving
factors in the Company's excellent earnings performance," stated Nick
Ventimiglia, Chairman and CEO. "While there is deposit pricing pressure
which is impacting expansion of the net interest margin, we anticipate
continued growth in net interest income if the Federal Reserve Board
through its Federal Open Market Committee (FOMC) continues to raise
interest rates. In addition to enhancing the earnings growth, the stronger
economic conditions have contributed to very good asset quality as the
ratio of nonperforming loans to total loans was just 0.07% at June 30,
2005."
Financial Summary:
Interest income, net interest income, net interest margin and the
efficiency ratio are discussed below on a fully taxable equivalent basis.
These items have been adjusted to give effect to $310,000 and $281,000 in
taxable equivalent interest income on tax-free investments for the
three-month periods ending June 30, 2005 and 2004.
Net interest income for the second quarter of 2005 was $14,092,000, which
was an increase of $3,273,000 (30.3%) over the second quarter of 2004.
Interest income for the second quarter of 2005 was $18,235,000, an increase
of $4,718,000 (34.9%) from the second quarter of 2004. Average earning
assets in the second quarter of 2005 increased $185,204,000 (19.3%) over
the prior year period. This increase in the volume of earning assets added
$2,314,000 to interest income. The average yield on earning assets in the
second quarter of 2005 increased 72 basis points to 6.38% from 5.66% in the
year earlier period and increased 16 basis points from 6.22% in the first
quarter of 2005. The 72 basis point increase in the average yield received
resulted in a $2,404,000 increase in interest income. Thus, the increase
in interest income on the quarter-over-quarter basis was nearly equally
split between higher volume and higher rates.
Interest expense in the second quarter of 2005 totaled $4,143,000, which
was an increase of $1,445,000 (53.6%) over the second quarter of 2004.
Rates paid on interest bearing liabilities continued to move up on a
year-over-year basis. The average rate paid on interest bearing
liabilities in the second quarter of 2005 increased 45 basis points to
2.04% from 1.59% in the year earlier period and increased 16 basis points
from 1.88% in the first quarter of 2005. The higher rates increased
interest expense by $831,000 from the year earlier period. Average
balances of
interest-bearing liabilities in the second quarter of 2005 increased by
$133,186,000 (19.5%) over the prior year period, which added $614,000 to
interest expense.
The net interest margin for the second quarter of 2005 was 4.93% up from
4.90% for the first quarter of 2005 and 4.53% for the second quarter of
2004. Since the beginning of 2005, deposit pricing pressures have resulted
in a slowing of the favorable impact on net interest margin from the
year-long process of rising rates.
The Company provided $250,000 for loan losses in the second quarter of 2005
as compared to $590,000 in the second quarter of 2004. At June 30, 2005,
nonperforming and restructured loans totaled $676,000 as compared to
$835,000 at December 31, 2004 and $10,570,000 at June 30, 2004. The ratio
of the allowance for loan losses to total loans was 1.88% at June 30, 2005,
1.75% at December 31, 2004 and 2.15% at June 30, 2004.
Noninterest income increased $80,000 (7.1%) in the second quarter of 2005
as compared to the second quarter of 2004 due to various changes in types
and levels of business activity.
Noninterest expenses increased $1,696,000 (27.8%) to $7,793,000 in the
second quarter of 2005 as compared to the second quarter of 2004.
Noninterest expenses were generally higher due to increased staffing,
higher health insurance premiums, the two new branches added in the second
half of 2004, higher activity levels and normal cost increases. The
efficiency ratio for the quarter ended June 30, 2005 was 50.9% as compared
to 51.0%, in the year earlier period.
Central Coast Bancorp operates as a holding company for Community Bank of
Central California. Community Bank, headquartered in Salinas, has fourteen
branch offices located in: the Monterey County communities of Salinas (2),
Monterey (2), Seaside, Marina, Castroville, Gonzales, Soledad and King
City; the Santa Clara County community of Gilroy; the Santa Cruz County
communities of Santa Cruz and Watsonville; and in the San Benito County
community of Hollister. The Bank provides traditional deposit, lending,
mortgage and commercial products and services to business and retail
customers throughout the California Central Coast area.
Information on the Company and its subsidiary Bank may be obtained from the
Company's website www.community-bnk.com. Copies of the Company's annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and all amendments thereto are available free of charge on the
website as soon as they are filed with the SEC. To access these reports
through a link to the Edgar reporting system simply select the "Central
Coast Bancorp - Corporate Profile" menu item, then click on the "Central
Coast Bancorp SEC Filings" link. Section 16 insider filings can also be
accessed through the website. Follow the same instructions and select
"Central Coast Bancorp SEC Section 16 Reports."
Forward-Looking Statements
In addition to the historical information contained herein, this press
release contains certain forward-looking statements. The reader of this
press release should understand that all such forward-looking statements
are subject to risks and uncertainties that could cause actual results to
differ materially from those projected. Changes to such risks and
uncertainties, which could impact future financial performance, include,
among others, (1) competitive pressures in the banking industry; (2)
changes in the interest rate environment; (3) general economic conditions,
nationally, regionally and in operating market areas, including a decline
in real estate values in the Company's market areas; (4) the effects of
terrorism, the threat of terrorism or the impact of potential military
conflicts; (5) changes in the regulatory environment; (6) changes in
business conditions and inflation; (7) changes in securities markets; (8)
data processing problems; (9) variances in the actual versus projected
growth in assets; (10) return on assets; (11) loan losses; (12) expenses;
(13) rates charged on loans and earned on securities investments; (14)
rates paid on deposits; and (15) fee and other noninterest income earned,
as well as other factors. This entire press release and the Company's
periodic reports on Forms 10-K, 10-Q and 8-K should be read to put such
forward-looking statements in context and to gain a more complete
understanding of the uncertainties and risks involved in the Company's
business.
CENTRAL COAST BANCORP
CONSOLIDATED CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
Statement of Income Data 2005 2004 2005 2004
---------- ---------- ---------- ----------
Interest income
Loans (including fees) $ 15,769 $ 11,547 $ 30,459 $ 22,684
Investment securities 1,828 1,674 3,593 3,252
Other 328 15 441 80
---------- ---------- ---------- ----------
Total interest income 17,925 13,236 34,493 26,016
---------- ---------- ---------- ----------
Interest expense
Interest on deposits 4,039 2,605 7,540 5,252
Other 104 93 176 162
---------- ---------- ---------- ----------
Total interest expense 4,143 2,698 7,716 5,414
---------- ---------- ---------- ----------
Net interest income 13,782 10,538 26,777 20,602
Provision for loan losses 250 590 1,400 655
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 13,532 9,948 25,377 19,947
Noninterest income
Service charges
on deposits 797 807 1,513 1,547
Other 417 327 755 505
---------- ---------- ---------- ----------
Total noninterest
income 1,214 1,134 2,268 2,052
Noninterest expenses
Salaries and benefits 4,543 3,618 8,667 7,182
Occupancy 792 685 1,560 1,323
Furniture and equipment 640 402 1,172 885
Other 1,818 1,392 3,097 2,743
---------- ---------- ---------- ----------
Total noninterest
expenses 7,793 6,097 14,496 12,133
---------- ---------- ---------- ----------
Income before provision
for income taxes 6,953 4,985 13,149 9,866
Provision for
income taxes 2,695 1,725 5,046 3,414
---------- ---------- ---------- ----------
Net income $ 4,258 $ 3,260 $ 8,103 $ 6,452
========== ========== ========== ==========
Common Share Data
Earnings per share
(adjusted for 5/4 stock
split distributed on
February 28, 2005)
Basic $ 0.30 $ 0.24 $ 0.58 $ 0.47
Diluted $ 0.29 $ 0.23 $ 0.56 $ 0.45
Weighted average
shares outstanding 14,147,000 13,550,000 14,072,000 13,590,000
Weighted average
shares outstanding
-diluted 14,585,000 14,225,000 14,560,000 14,266,000
Book value per share $ 7.77 $ 6.76
Shares outstanding 14,063,000 13,513,000
CENTRAL COAST BANCORP
CONSOLIDATED CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
June December June
Balance Sheet Data 2005 2004 2004
----------- ----------- -----------
Assets
Cash and due from banks $ 48,564 $ 49,068 $ 68,579
Federal funds sold 68,871 9,029 2,810
Available-for-sale
securities - at
fair value 191,796 169,151 173,798
Loans:
Commercial 240,351 261,408 224,533
Real estate-construction 63,489 61,366 39,206
Real estate-other 617,629 594,507 525,011
Consumer 13,325 15,463 12,262
Deferred loan fees, net (1,371) (1,228) (1,160)
----------- ----------- -----------
Total loans 933,423 931,516 799,852
Allowance for loan losses (17,514) (16,270) (17,232)
----------- ----------- -----------
Net loans 915,909 915,246 782,620
Premises and equipment, net 3,643 3,944 2,826
Accrued interest
receivable and other
assets 19,816 18,223 18,852
----------- ----------- -----------
Total assets $ 1,248,599 $ 1,164,661 $ 1,049,485
=========== =========== ===========
Liabilities and
Shareholders' Equity
Deposits:
Demand, noninterest
bearing $ 293,348 $ 344,244 $ 262,330
Demand, interest bearing 178,262 141,190 146,986
Savings 284,814 259,319 259,038
Time 365,120 306,615 279,364
----------- ----------- -----------
Total Deposits 1,121,544 1,051,368 947,718
Accrued interest payable
and other liabilities 17,782 12,177 10,364
Shareholders' equity 109,273 101,116 91,403
----------- ----------- -----------
Total liabilities and
shareholders' equity $ 1,248,599 $ 1,164,661 $ 1,049,485
=========== =========== ===========
Asset Quality
Loans past due 90 days
or more and accruing
interest $ - $ - $ 207
Nonaccrual loans - 102 9,583
Restructured loans 676 733 780
----------- ----------- -----------
Total nonperforming
assets $ 676 $ 835 $ 10,570
=========== =========== ===========
Allowance for loan
losses to total loans 1.88% 1.75% 2.15%
Allowance for loan
losses to NPL's 2591% 1949% 163%
Allowance for loan
losses to NPA's 2591% 1949% 163%
Regulatory Capital
and Ratios
Tier 1 capital $ 109,141 $ 100,473 $ 92,493
Total capital $ 121,886 $ 113,104 $ 103,416
Tier 1 capital ratio 10.8% 10.0% 10.7%
Total risk based
capital ratio 12.0% 11.2% 11.9%
Tier 1 leverage ratio 9.0% 9.1% 8.9%
CENTRAL COAST BANCORP
CONSOLIDATED CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
Selected Financial Ratios 2005 2004 2005 2004
----------- ----------- ----------- -----------
Return on average
total assets 1.40% 1.27% 1.37% 1.27%
Return on average
shareholders' equity 15.91% 14.27% 15.48% 14.16%
Net interest margin
(tax equivalent basis) 4.93% 4.53% 4.92% 4.48%
Efficiency ratio
(tax equivalent basis) 50.91% 51.01% 48.89% 52.28%
Selected Average
Balances
Loans $ 920,210 $ 775,284 $ 913,541 $ 762,999
Taxable investments 122,841 127,636 120,543 120,400
Tax-exempt
investments 58,257 51,931 56,775 50,675
Federal funds sold 44,868 6,121 31,871 16,269
----------- ----------- ----------- -----------
Total earning
assets $ 1,146,176 $ 960,972 $ 1,122,730 $ 950,343
----------- ----------- ----------- -----------
Total assets $ 1,216,384 $ 1,034,576 $ 1,191,295 $ 1,021,357
----------- ----------- ----------- -----------
Demand deposits -
interest bearing $ 159,667 $ 144,725 $ 149,467 $ 138,061
Savings 286,270 250,653 287,327 251,590
Time deposits 360,786 273,533 349,853 274,636
Other borrowings 8,873 13,499 6,640 8,982
----------- ----------- ----------- -----------
Total interest
bearing
liabilities $ 815,596 $ 682,410 $ 793,287 $ 673,269
----------- ----------- ----------- -----------
Demand deposits -
noninterest
bearing $ 285,046 $ 254,122 $ 283,801 $ 246,302
----------- ----------- ----------- -----------
Shareholders' equity $ 107,357 $ 91,879 $ 105,550 $ 91,641
----------- ----------- ----------- -----------
301 Main Street, Salinas, California 93924