Coastal Carolina Bancshares, Inc. Announces Third Quarter Results

MYRTLE BEACH, SC / ACCESSWIRE / October 25, 2023 / Coastal Carolina Bancshares, Inc. (the "Company") (OTCQX:CCNB), parent of Coastal Carolina National Bank (the "Bank"), reported unaudited financial results for the third quarter of 2023. The Company reported net income of $6,139,003 or $0.99 per share for the nine months ended September 30, 2023, compared to $4,869,031 or $0.79 per share for the same period ended September 30, 2022, a 26% increase. Net income for the three months ended September 30, 2023 was $2,033,656 or $0.33 per share, compared to $2,009,804 or $0.32 per share for the same period in the prior year and $1,984,571 or $0.32 per share for the prior quarter ended June 30, 2023.

2023 Third Quarter and YTD Financial Highlights

• Quarterly net income of $2,033,656 or $0.33 per share
• Year-to-date net income of $6,139,003, an increase of 26% over the same period in 2022
• Diluted EPS of $0.33 per share for the quarter and $0.99 per share year-to-date
• Quarterly Deposit growth of $33 million or 4% (17% annualized) from $792 million at June 30, 2023 to $825 million at September 30, 2023
• Year to date deposit growth of $82 million or 11% (15% annualized) from $742 million at December 31, 2022 to $825 million at September 30, 2023
• Quarterly Loan growth of $17 million or 2% (9% annualized)
• Year to date loan growth of $99 million or 15% (21% annualized) from $649 million at December 31, 2022 to $748 million at September 30, 2023
• Key credit quality metrics remained strong with a non-performing assets ratio of 0.0% and no past due loans over the most recent four consecutive quarter ends

"We are very pleased with our continued strong performance in 2023 in spite of the challenges we face with pressure on our net interest margin. We are especially pleased with our third quarter and YTD deposit growth results in a very competitive deposit environment. Our team continues to execute on our disciplined growth strategy which again resulted in solid quarterly loan and deposit growth in the third quarter. A majority of our loan portfolio growth once again in this quarter was in 1-4 family residential mortgages and owner occupied commercial real estate. Our credit quality metrics continue to be exceptional with no past dues and a non-performing assets ratio of 0.0% for the fourth consecutive quarter. We remain encouraged by the strong local economies in all of our markets and feel we are positioned well for additional growth while also focusing on gaining operating efficiencies," says Laurence S. Bolchoz, Jr., President and Chief Executive Officer of the Company and the Bank.

Coastal Carolina Bancshares, Inc.
Selected Financial Highlights
(unaudited)

(1) - Total shares outstanding excludes unvested restricted stock awards

Capital

At September 30, 2023, the Bank's regulatory capital ratios (Leverage, Tier 1, and Total Risk-Based) were 9.13%, 11.16%, and 12.16%, respectively. Each of these ratios exceed the regulatory minimums to be considered well capitalized.

The Company reported book value per share and tangible book value per share at September 30, 2023 of $9.83 and $9.31, respectively, compared to $9.78 and $9.27 at June 30, 2023. The increase in book value per share during the quarter resulted from retained earnings partially offset by Accumulated Other Comprehensive Losses (AOCL) from the Bank's investment portfolio.

Balance Sheet and Credit Quality

Net Loans increased $17 million or 2% during the third quarter, and $99 million or 15% year-to-date to $748 million at September 30, 2023. Year-to-date loan growth continues to be concentrated in 1-4 family residential and owner occupied CRE which accounted for $44 million and $21 million in net growth, respectively, which equates to 66% of the Bank's 2023 net loan growth.

The Company continued to experience solid deposit growth during the quarter, reporting $825 million in total deposits on September 30, 2023, compared to $792 million on June 30, 2023, and $649 million at December 31, 2022. Deposits increased 11% year-to-date and 4% on a linked quarter basis. Total checking and savings balances were relatively flat for the quarter; however, noninterest checking balances increased $10 million during the third quarter to $173 million. Total checking and savings represented 43% of the Bank's total deposits at quarter end while money market accounts and time deposits represented 41% and 16% of total deposits, respectively.

Total Assets increased by 1% during the quarter and 11% during the first nine months of the year to $918 million at September 30, 2023. Asset growth was primarily driven by increased loan balances partially offset by minor reductions in securities and cash and cash equivalents.

The Bank maintains on balance sheet and contingent liquidity sources necessary to fund its ongoing operations. In addition to cash and equivalents of $39 million, the Bank maintains additional sources of liquidity which can be used if necessary. The Bank has correspondent fed funds purchased lines of credits totaling $31 million, all of which were undrawn at quarter end.

The Bank also has borrowing capacity at the Federal Home Loan Bank (FHLB) of Atlanta of up to 25% of total assets or approximately $229 million at quarter end. The Bank had outstanding FHLB advances of $6 million as of September 30, 2023 leaving $223 million in remaining available credit, subject to collateral pledging requirements.

The Bank has access to additional funding as needed through the brokered deposit market, national market CDs (Qwickrate), and Fed discount window.

Asset quality metrics remain pristine with no loans classified as non-accrual and no loans past due greater than 30 days at September 30, 2023. This is the fourth consecutive quarter end where the Bank has reported zero non-accrual and past due loans. Additionally, the Bank's non-performing asset ratio as of September 30, 2023 was 0.00% excluding TDRs and 0.02% when including performing TDRs. The Bank had no charge-offs during the quarter and no outstanding OREO property at September 30, 2023.

Income Statement

Net Interest Income

Net interest income increased $0.2 million or 3% to $7.1 million for the quarter ended September 30, 2023, compared to $6.9 million during the prior quarter ended June 30, 2023, and net interest income decreased $0.1 million or 2% when compared to the third quarter of 2022. The Bank's net interest margin was 3.31% for the quarter ended September 30, 2023, compared to 3.35% for the prior quarter ended June 30, 2023, and 3.91% during the third quarter of 2022.

Linked and comparative quarter margin decline resulted primarily from increased funding costs in a very competitive deposit environment. The Bank's cost of funds increased to 1.83% during the third quarter of 2023 from 1.60% during the second quarter of 2023, and 0.27% during the third quarter of 2022.

Increased funding costs were partially offset by increased yields on earning assets resulting from loan growth and the rising rate environment. The Bank's yield on earning assets increased to 5.01% during the third quarter of 2023 from 4.83% during the second quarter of 2023, and 4.16% during the third quarter of 2022.

Noninterest Income

Noninterest income totaled $474 thousand for the quarter ended September 30, 2023, compared to $495 thousand earned during the most recent quarter ended June 30, 2023 and $551 thousand
in the third quarter of 2022.

Decreasing noninterest income primarily resulted from decreased mortgage revenues partially offset by increasing deposit service charge and interchange income. Mortgage sales volume continues to be negatively impacted by the rising rate environment and low housing inventories. Third quarter 2023 mortgage sales revenues were $36 thousand compared to $51 thousand for the most recent linked quarter, and $175 thousand for the same period in the prior year.

Noninterest Expense

Noninterest expense totaled $4.9 million for the quarter ended September 30, 2023, compared to $4.7 million for the prior quarter ended June 30, 2023, and $4.7 million for the comparative quarter ended September 30, 2022. Quarter over quarter increased noninterest expense resulted primarily from increased salaries and benefits expense and FDIC insurance costs.

Provision for Loan Losses

During the quarter the Bank recorded a net provision of $95 thousand for the changes in CECL allowance for credit losses. At quarter end the Bank's allowance for credit losses on loans increased to $7.8 million while the reserve on unfunded commitments decreased to $394 thousand. The cumulative CECL reserve of $8.2 million was 1.09% of total loans at September 30, 2023.

About Coastal Carolina Bancshares, Inc. Coastal Carolina Bancshares, Inc. is the Bank holding Company of Coastal Carolina National Bank, a Myrtle Beach-based community bank serving Horry, Georgetown, Aiken, Richland, Greenville, Spartanburg, and Brunswick (NC) counties. Coastal Carolina National Bank is a locally operated financial institution focused on providing personalized service. It offers a full range of banking services designed to meet the specific needs of individuals and small and medium-sized businesses. Headquartered in Myrtle Beach, SC, the Bank also has branches in Garden City, North Myrtle Beach, Conway, Aiken, Columbia, Greenville, and Spartanburg, South Carolina. Through the substantial experience of our local management and Board of Directors, Coastal Carolina Bancshares, Inc. seeks to enhance value for our shareholders, build lasting customer relationships, benefit our communities and give our employees a meaningful career opportunity. To learn more about the Company and its subsidiary bank, please visit our website at www.myccnb.com.

Forward-Looking Statements Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include, without limitation: the effects of future economic conditions; governmental fiscal and monetary policies; legislative and regulatory changes; the risks of changes in interest rates; successful merger integration; management of growth; fluctuations in our financial results; reliance on key personnel; our ability to compete effectively; privacy, security and other risks associated with our business. Coastal Carolina Bancshares, Inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

CONTACT:

Russell Vedder
Title: EVP/CFO
Phone: (843) 839-5662
Fax: (843) 839-5699
1012 38 ^th Ave. North
Myrtle Beach, SC 29577
www.myccnb.com

SOURCE: Coastal Carolina Bancshares, Inc.