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 ----------- ----------- ----------- -----------
Contact: Jayme C. Fields Chief Financial Officer (831) 422-6642