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
Contact: Robert Stanberry Chief Financial Officer (831) 422-6642