Central Coast Bancorp Announces a 63.7% Increase in Third Quarter Earnings
SALINAS, CA -- 10/24/2005 -- Central Coast Bancorp (NASDAQ: CCBN), the
holding company for Community Bank of Central California, today announced
record quarterly net income of $5,340,000 for the third quarter of 2005.
Net income increased 63.7% over the $3,263,000 reported for the third
quarter of 2004. Diluted earnings per share for the third quarter of 2005
increased 56.5% to $0.36 from $0.23 in the prior year period. The
annualized return on average equity (ROAE) and the return on average assets
(ROAA) for the third quarter of 2005 were 18.89% and 1.69% as compared to
13.66% and 1.22% for the same period in 2004.
Net income for the nine months ended September 30, 2005 increased 38.4% to
$13,443,000 from $9,715,000 for the nine months ended September 30, 2004.
Diluted earnings per share increased to $0.92 from $0.68 for the
comparative
nine-month periods. For the first nine months of 2005, the annualized ROAE
was 16.68% and the ROAA was 1.48% up from 13.99% and 1.25%, respectively,
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 largely maintained the growth it achieved in its balance sheet
in the first half of 2005, ending the third quarter with total assets of
$1,233,327,000 as of September 30, 2005, a slight decrease of $15,272,000
(-1.2%) from June 30, 2005 and an increase of $68,666,000 (5.9%) from
year-end 2004. Most of the asset growth since year-end has been deployed
into the investment portfolio and Fed Funds Sold, as
year-to-date loan growth has been relatively flat. Loans at September 30,
2005, totaled $926,306,000, a decrease of $7,117,000 (-0.7%) from June 30,
2005 and $5,210,000 (-0.6%) from year-end 2004. At September 30, 2005,
deposits were slightly lower at $1,096,391,000 from June 30, 2005, a
decrease of $25,153,000 (-2.2%), but were higher by $45,023,000 (4.3%) from
year-end 2004 balances. 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 $159,193,000
(14.8%); an increase in loans of $85,757,000 (10.2%); and an increase in
deposits of $142,232,000 (14.9%) compared to those balances as of September
30, 2004.
"We are pleased to announce yet another quarter of record-breaking
earnings. Focusing on quality loan and deposit relationships, we are
building on a strong beginning of the year," stated Nick Ventimiglia,
Chairman and CEO. "In addition, while there continues to be deposit
pricing pressure, the Bank has continued to realize a net benefit from the
rising interest rate environment."
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 $369,000 and $244,000,
respectively, in taxable equivalent interest income on tax-free investments
for the three-month periods ended September 30, 2005 and 2004.
Net interest income for the third quarter of 2005 was $15,084,000, which
was an increase of $3,713,000 (32.7%) over the third quarter of 2004.
Interest income for the third quarter of 2005 was $19,603,000, an increase
of $5,379,000 (37.8%) from the third quarter of 2004. Average earning
assets in the third quarter of 2005 increased $190,463,000 (19.2%) over the
prior year period. This increase in the volume of earning assets added
$2,222,000 to interest income. The average yield on earning assets in the
third quarter of 2005 increased 87 basis points to 6.57% from 5.70% in the
year earlier period and increased 19 basis points from 6.38% in the second
quarter of 2005. The 87 basis point increase in the average yield received
resulted in a $3,157,000 increase in interest income.
Interest expense in the third quarter of 2005 totaled $4,519,000, which was
an increase of $1,666,000 (58.4%) over the third quarter of 2004. Rates
paid on interest-bearing liabilities continued to move upward. The average
rate paid on
interest-bearing liabilities in the third quarter of 2005 increased 53
basis points to 2.15% from 1.62% in the year earlier period and increased
11 basis points from 2.04% in the second quarter of 2005. The higher rates
increased interest expense for the third quarter by $932,000 from the year
earlier period. Average balances of interest-bearing liabilities in the
third quarter of 2005 increased by $135,033,000 (19.3%) over the prior year
period, which added $734,000 to interest expense.
The net interest margin for the third quarter of 2005 was 5.06%, an
increase of 13 basis points from 4.93% for second quarter of 2005, and an
increase of 52 basis points from 4.56% for the third 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 current
rising rate environment.
The Company made no provision for loan losses in the third quarter of 2005
as compared to $885,000 in the third quarter of 2004. At September 30,
2005, nonperforming and restructured loans totaled $2,993,000 as compared
to $835,000 at December 31, 2004 and $2,031,000 at September 30, 2004. The
ratio of the allowance for loan losses to total loans was 1.89% at
September 30, 2005, 1.75% at December 31, 2004 and 1.76% at September 30,
2004.
Noninterest income increased $64,000 (5.9%) to $1,192,000 in the third
quarter of 2005 as compared to the third quarter of 2004 due to various
changes in types and levels of business activity.
Noninterest expenses increased $1,045,000 (16.5%) to $7,380,000 in the
third quarter of 2005 as compared to the third 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 September 30, 2005 improved to 45.5%
as compared to 50.7% 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.
On October 13, 2005, Central Coast Bancorp issued a press release and
subsequently filed a Form 8-K with the Securities and Exchange Commission
to announce the proposed acquisition of Central Coast Bancorp and its bank
subsidiary, Community Bank of Central California, pursuant to a definitive
agreement dated October 12, 2005, entered into by and between Central Coast
Bancorp and VIB Corp, located in El Centro, California. The acquisition
transaction is subject to approvals of applicable regulatory authorities
and the favorable vote of shareholders of Central Coast Bancorp.
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 Nine Months Ended
September 30, September 30,
Statement of Income
Data 2005 2004 2005 2004
----------- ----------- ----------- -----------
Interest income
Loans (including
fees) $ 16,529 $ 12,180 $ 46,988 $ 34,864
Investment securities 2,080 1,699 5,673 4,951
Other 625 58 1,066 138
----------- ----------- ----------- -----------
Total interest
income 19,234 13,937 53,727 39,953
----------- ----------- ----------- -----------
Interest expense
Interest on deposits 4,374 2,780 11,914 8,032
Other 145 73 321 235
----------- ----------- ----------- -----------
Total interest
expense 4,519 2,853 12,235 8,267
----------- ----------- ----------- -----------
Net interest income 14,715 11,084 41,492 31,686
Provision for loan
losses 0 885 1,400 1,540
----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses 14,715 10,119 40,092 30,146
----------- ----------- ----------- -----------
Noninterest income
Service charges
on deposits 814 799 2,327 2,346
Other 378 329 1,133 834
----------- ----------- ----------- -----------
Total noninterest
income 1,192 1,128 3,460 3,180
----------- ----------- ----------- -----------
Noninterest expenses
Salaries and benefits 4,392 3,709 13,059 10,891
Occupancy 841 704 2,401 2,027
Furniture and
equipment 599 465 1,771 1,350
Other 1,548 1,457 4,645 4,200
----------- ----------- ----------- -----------
Total noninterest
expenses 7,380 6,335 21,876 18,468
----------- ----------- ----------- -----------
Income before provision
for income taxes 8,527 4,992 21,676 14,858
Provision for income
taxes 3,187 1,729 8,233 5,143
----------- ----------- ----------- -----------
Net income $ 5,340 $ 3,263 $ 13,443 $ 9,715
=========== =========== =========== ===========
Common Share Data
Earnings per share
(adjusted for 5/4
stock split
distributed on
February 28, 2005)
Basic $ 0.37 $ 0.25 $ 0.95 $ 0.72
Diluted $ 0.36 $ 0.23 $ 0.92 $ 0.68
Weighted average
shares
outstanding 14,160,000 13,579,000 14,102,000 13,586,000
Weighted average
shares
outstanding -
diluted 14,665,000 11,406,000 14,585,000 14,260,000
Book value per share $ 8.14 $ 7.18
Shares outstanding 14,099,000 13,608,000
CONSOLIDATED CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
September December September
Balance Sheet Data 2005 2004 2004
---------- ---------- ----------
Assets
Cash and due from banks $ 48,861 $ 49,068 $ 46,345
Federal funds sold 39,062 9,029 -
Available-for-sale
securities - at fair value 212,528 169,151 175,545
Loans:
Commercial 251,875 261,408 230,198
Real estate-construction 37,339 61,366 41,599
Real estate-other 624,718 594,507 556,771
Consumer 13,586 15,463 13,189
Deferred loan fees, net (1,212) (1,228) (1,208)
---------- ---------- ----------
Total loans 926,306 931,516 840,549
Allowance for loan losses (17,550) (16,270) (14,779)
---------- ---------- ----------
Net loans 908,756 915,246 825,770
Premises and equipment, net 3,523 3,944 3,313
Accrued interest receivable
and other assets 20,597 18,223 22,792
---------- ---------- ----------
Total assets $1,233,327 $1,164,661 $1,073,765
========== ========== ==========
Liabilities and Shareholders' Equity
Deposits:
Demand, noninterest
bearing $ 295,220 $ 344,244 $ 260,703
Demand, interest bearing 151,564 141,190 137,631
Savings 256,616 259,319 259,550
Time 392,991 306,615 296,275
---------- ---------- ----------
Total Deposits 1,096,391 1,051,368 954,159
Accrued interest payable
and other liabilities 22,192 12,177 21,856
Shareholders' equity 114,744 101,116 97,750
---------- ---------- ----------
Total liabilities and
shareholders' equity $1,233,327 $1,164,661 $1,073,765
========== ========== ==========
Asset Quality
Loans past due 90 days
or more and accruing
interest $ - $ - $ 355
Nonaccrual loans - 102 924
Restructured loans 2,993 733 752
Other real estate owned - - 5,250
---------- ---------- ----------
Total nonperforming
assets $ 2,993 $ 835 $ 7,281
========== ========== ==========
Allowance for loan losses
to total loans 1.89% 1.75% 1.76%
Allowance for loan losses
to NPL's 586% 1949% 728%
Allowance for loan losses
to NPA's 586% 1949% 203%
Regulatory Capital and Ratios
Tier 1 capital $ 114,824 $ 100,473 $ 96,590
Total capital $ 127,468 $ 113,104 $ 108,158
Tier 1 capital ratio 11.4% 10.0% 10.5%
Total risk based
capital ratio 12.7% 11.2% 11.7%
Tier 1 leverage ratio 9.1% 9.1% 9.1%
CENTRAL COAST BANCORP
CONSOLIDATED CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
Selected Financial
Ratios 2005 2004 2005 2004
----------- ----------- ----------- -----------
Return on average
total assets 1.69% 1.22% 1.48% 1.25%
Return on average
shareholders' equity 18.89% 13.66% 16.68% 13.99%
Net interest margin
(tax equivalent
basis) 5.06% 4.56% 4.95% 4.50%
Efficiency ratio
(tax equivalent
basis) 45.51% 50.68% 48.02% 51.72%
Selected Average
Balances
Loans $ 909,733 $ 802,659 $ 912,258 $ 776,315
Taxable investments 135,148 119,950 125,465 120,249
Tax-exempt investments 69,964 53,255 61,220 51,542
Federal funds sold 68,278 16,796 44,140 16,446
----------- ----------- ----------- -----------
Total earning
assets $ 1,183,123 $ 992,660 $ 1,143,083 $ 964,552
----------- ----------- ----------- -----------
Total assets $ 1,257,264 $ 1,063,935 $ 1,213,528 $ 1,033,960
----------- ----------- ----------- -----------
Demand deposits -
interest bearing $ 166,620 $ 143,870 $ 155,248 $ 140,011
Savings 269,500 261,444 281,319 254,899
Time deposits 386,350 287,973 362,152 279,114
Other borrowings 11,283 5,433 8,205 7,790
----------- ----------- ----------- -----------
Total interest
bearing
liabilities $ 833,753 $ 698,720 $ 806,924 $ 681,814
----------- ----------- ----------- -----------
Demand deposits -
noninterest bearing $ 294,259 $ 267,033 $ 283,604 $ 255,992
----------- ----------- ----------- -----------
Shareholders' equity $ 112,134 $ 95,043 $ 107,769 $ 92,748
----------- ----------- ----------- -----------