SALINAS, CA -- 01/26/2005 -- Central Coast Bancorp (NASDAQ: CCBN), the holding company for Community Bank of Central California, today announced record net income for the year ended December 31, 2004. Net income for 2004 increased 10.6% to $12,801,000 from $11,569,000 in 2003. Diluted earnings per share for 2004 increased 10.9% to $1.12 from $1.01 in 2003. This is the 21st consecutive year of higher year-over-year earnings since the Bank's first year of operations in 1983. For 2004, the Company realized a return on average shareholders' equity of 13.54% and a return on average assets of 1.21%, as compared to 13.79% and 1.23% for 2003.
Net income for the fourth quarter of 2004 increased 11.6% to $3,086,000 from $2,766,000 in 2003. Diluted earnings per share for the quarter increased 8.0% to $0.27 from $0.25 in 2003. The earnings per share for the 2003 periods have been adjusted for the 10% stock dividend distributed in February 2004.
Adding to the billion-dollar in assets milestone attained in the fourth quarter of 2003, the Company reached the billion-dollar mark in deposits in the fourth quarter of 2004. During 2004, total assets increased $126,272,000 (12.2%) to $1,164,112,000 at year-end. At December 31, 2004, loans totaled $931,516,000, an increase of $148,775,000 (19.0%) from year-end 2003. At December 31, 2004, deposits totaled $1,051,369,000, an increase of $113,259,000 (12.1%) from year-end 2003.
"We continue to be proud of the Company's year-over-year accomplishments," stated Nick Ventimiglia, Chairman and CEO. "The Company opened two new branches, reached the billion-dollar plateau in deposits and above all achieved our 21st consecutive year of earnings growth. Our strong loan growth during 2004 demonstrates the Company's commitment to support and serve the economic development of our local businesses and communities. We will continue to seek opportunities to expand our franchise in our market places."
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 $1,136,000 and $1,099,000 in taxable equivalent interest income on tax-free investments for the years ending December 31, 2004 and 2003.
Net interest income for 2004 was $45,176,000, a $6,495,000 (16.8%) increase over 2003. The interest income component increased $6,207,000 in 2004. Average earning assets increased $106,827,000 (12.2%) in 2004, which added $6,169,000 in interest income. On a year-over-year basis, the average yield received on earning assets was essentially flat as it increased just 1 basis point to 5.76%. However, in the fourth quarter of 2004, the average yield was 6.03% as compared to 5.54% in the fourth quarter of 2003. So the 125 basis point increase in the prime rate during 2004 is beginning to have a positive effect on interest income.
While average balances of interest-bearing deposit liabilities increased $64,401,000 (10.3%), interest expense decreased $288,000 (2.5%) in 2004 from 2003 due to the repricing of the interest-bearing deposits throughout the year, reflecting the lower interest rate environment. The higher volume of interest-bearing liabilities increased interest expense $1,041,000 while the lower rates decreased the expense $1,329,000. In the fourth quarter 2004, we began to see deposit pricing pressure to increase rates especially on time certificates of deposit.
The net interest margin for 2004 increased 18 basis points to 4.61% from 4.43% in 2003. The net interest margin for the 4th quarter of 2004 was 4.87%, which was an increase of 52 basis points from 4.35% in the 4th quarter of 2003 and an increase of 31 basis points from the 3rd quarter of 2004. In a rising rate environment, management would expect the net interest margin to improve from its current level as the interest-earning assets should reprice more quickly than the interest-bearing liabilities.
The Bank provided $3,590,000 for loan losses in 2004 up from $1,475,000 in 2003. The significantly higher loan growth in 2004 coupled with a $3.3 million charge-off reported in the third quarter necessitated the higher provision. The ratio of the allowance for loan losses to total loans decreased from 2.12% at December 31, 2003 to 1.81% at December 31, 2004. Nonperforming assets totaled $835,000 at December 31, 2004, as compared to $10,441,000 at December 31, 2003 and $7,281,000 at September 30, 2004. The Company sold its only OREO property in the fourth quarter of 2004, which accounts for $5,250,000 of the decrease in nonperforming assets. The ratio of nonperforming and restructured loans to total loans at December 31, 2004 was 0.09% compared to 1.33% at December 31, 2003.
Noninterest income decreased $1,241,000 (21.9%) in 2004 from the year 2003. Two factors accounted for most of the decrease. In 2003, the Company realized gains of $590,000 on the sale of investment securities as compared to a loss of $130,000 in 2004. Revenues from operating OREO property decreased $404,000 in 2004 from 2003.
Noninterest expenses increased $1,505,000 (6.3%) in 2004 over 2003. The higher costs resulted from the opening of two new branches in 2004, normal salary increases and higher costs from the increased business activity. The efficiency ratio for 2004 was 51.0% as compared to 53.7% in 2003.
The Company did not repurchase any shares of stock under its repurchase plan during the fourth quarter of 2004. Under the plan there are 197,891 shares available for repurchase.
Central Coast Bancorp operates as a holding company for Community Bank of Central California. Community Bank, headquartered in Salinas, has 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 compliance 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 Twelve Months Ended Statement of December 31 December 31 Income Data 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Interest income Loans (including fees) $ 13,641 $ 10,948 $ 48,505 $ 43,924 Investment securities 1,709 1,466 6,660 4,921 Other 15 43 153 303 ------------ ------------ ------------ ------------ Total interest income 15,365 12,457 55,318 49,148 ------------ ------------ ------------ ------------ Interest expense Interest on deposits 2,915 2,638 10,947 11,148 Other 96 103 331 418 ------------ ------------ ------------ ------------ Total interest expense 3,011 2,741 11,278 11,566 ------------ ------------ ------------ ------------ Net interest income 12,354 9,716 44,040 37,582 Provision for loan losses 2,050 545 3,590 1,475 ------------ ------------ ------------ ------------ Net interest income after provision for loan losses 10,304 9,171 40,450 36,107 ------------ ------------ ------------ ------------ Noninterest income Service charges on deposits 760 790 3,106 3,120 Other 497 710 1,331 2,558 ------------ ------------ ------------ ------------ Total noninterest income 1,257 1,500 4,437 5,678 ------------ ------------ ------------ ------------ Noninterest expenses Salaries and benefits 3,826 3,469 14,717 13,506 Occupancy 764 717 2,791 2,555 Furniture and equipment 508 517 1,858 1,921 Other 1,749 1,535 5,949 5,828 ------------ ------------ ------------ ------------ Total noninterest expenses 6,847 6,238 25,315 23,810 ------------ ------------ ------------ ------------ Income before provision for income taxes 4,714 4,433 19,572 17,975 Provision for income taxes 1,628 1,667 6,771 6,406 ------------ ------------ ------------ ------------ Net income $ 3,086 $ 2,766 $ 12,801 $ 11,569 ============ ============ ============ ============ Common Share Data (adjusted for 10% stock dividend distributed on February 12, 2004) Earnings per share Basic $ 0.28 $ 0.26 $ 1.18 $ 1.06 Diluted $ 0.27 $ 0.25 $ 1.12 $ 1.01 Weighted average shares outstanding 10,940,000 10,918,000 10,889,000 10,912,000 Weighted average shares outstanding - diluted 11,527,000 11,421,000 11,437,000 11,402,000 Book value per share $ 9.21 $ 9.02 Tangible book value $ 9.21 $ 9.02 Shares outstanding 10,973,000 10,921,000 CENTRAL COAST BANCORP CONSOLIDATED CONDENSED FINANCIAL DATA (Unaudited) (Dollars in thousands) Dec. 31, Dec. 31, Balance Sheet Data 2004 2003 ---------- ---------- Assets Cash and due from banks $ 49,068 $ 54,446 Federal funds sold 9,029 47,017 Available-for-sale securities - at fair value 169,151 152,360 Loans: Commercial 261,408 236,836 Real estate-construction 61,366 46,266 Real estate-other 594,507 489,213 Consumer 15,463 11,540 Deferred loan fees, net (1,228) (1,114) ---------- ---------- Total loans 931,516 782,741 Allowance for loan losses (16,819) (16,590) ---------- ---------- Net loans 914,697 766,151 Premises and equipment, net 3,944 2,787 Accrued interest receivable and other assets 18,223 15,079 ---------- ---------- Total assets $1,164,112 $1,037,840 ========== ========== Liabilities and Shareholders' Equity Deposits: Demand, noninterest bearing $ 344,244 $ 321,980 Demand, interest bearing 141,191 113,215 Savings 259,319 232,610 Time 306,615 270,305 ---------- ---------- Total Deposits 1,051,369 938,110 Accrued interest payable and other liabilities 11,627 10,135 Shareholders' equity 101,116 89,595 ---------- ---------- Total liabilities and shareholders' equity $1,164,112 $1,037,840 ========== ========== Asset Quality Loans past due 90 days or more and accruing interest $ - $ - Nonaccrual loans 102 9,606 Restructured loans 733 835 Other real estate owned - - ---------- ---------- Total nonperforming assets $ 835 $ 10,441 ========== ========== Allowance for loan losses to total loans 1.81% 2.12% Allowance for loan losses to NPL's 2014% 159% Allowance for loan losses to NPA's 2014% 159% Regulatory Capital and Ratios Tier 1 capital 100,473 88,321 Total capital 113,111 99,038 Tier 1 capital ratio 10.0% 10.4% Total risk-based capital ratio 11.2% 11.6% Tier 1 leverage ratio 9.1% 9.0% CENTRAL COAST BANCORP CONSOLIDATED CONDENSED FINANCIAL DATA (Unaudited) (Dollars in thousands) Three Months Ended Twelve Months Ended December 31 December 31 Selected Financial Ratios 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Return on average total assets 1.11% 1.12% 1.21% 1.23% Return on average shareholders' equity 12.25% 12.48% 13.54% 13.79% Net interest margin (tax equivalent basis) 4.87% 4.35% 4.61% 4.43% Efficiency ratio (tax equivalent basis) 49.23% 54.30% 51.02% 53.68% Selected Average Balances Loans $ 853,619 $ 739,491 $ 795,743 $ 720,908 Taxable investments 117,594 106,336 119,581 76,976 Tax-exempt investments 55,333 48,172 52,495 48,622 Federal funds sold 3,152 17,947 13,024 27,510 Total earning assets $ 1,029,698 $ 911,946 $ 980,843 $ 874,016 ----------- ----------- ----------- ----------- Total assets $ 1,109,782 $ 984,165 $ 1,055,228 $ 943,207 ----------- ----------- ----------- ----------- Demand deposits - interest bearing $ 143,740 $ 133,115 $ 140,949 $ 124,877 Savings 260,845 234,679 256,393 222,403 Time deposits 302,011 268,863 284,869 272,249 Other borrowings 9,260 6,165 8,160 6,441 ----------- ----------- ----------- ----------- Total interest bearing liabilities $ 715,856 $ 642,822 $ 690,371 $ 625,970 ----------- ----------- ----------- ----------- Demand deposits - noninterest bearing $ 285,697 $ 242,577 $ 263,459 $ 226,699 ----------- ----------- ----------- ----------- Shareholders' equity $ 99,975 $ 87,898 $ 94,511 $ 83,874
Contact: Robert Stanberry Chief Financial Officer (831) 422-6642