Coastal Carolina Bancshares, Inc. Announces Third Quarter Results
Myrtle Beach, South Carolina – October 21, 2024 – 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 2024. The Company reported net income for the three months ended September 30, 2024 of $2,235,070 or $0.36 per share, compared to $1,956,948 or $0.31 per share for the prior quarter ended June 30, 2024 and $2,033,656 or $0.33 per share for the third quarter of 2023. The Company reported net income of $5,842,714 or $0.94 per share for the nine months ended September 30, 2024, compared to $6,139,004 or $0.99 per share for the same period ended September 30, 2023.
2024 Third Quarter Financial Highlights
- Quarterly net income of $2.24 million, an increase of 14% over the most recent linked quarter
- Diluted EPS of $0.36 per share for the quarter and $0.94 per share year-to-date
- Increased book value per share and tangible book value per share from $10.67 and $10.15 at December 31, 2023 to $11.87 and $11.37 at September 30, 2024
- Quarterly Loan growth of $23 million or 3% (12% annualized) from $793 million at June 30, 2024 to $816 million at September 30, 2024
- Quarterly Asset growth of $32 million or 3% (12% annualized) from $1,068 million at June 30, 2024 to $1,100 million at September 30, 2024
- Quarterly Deposit growth of $27 million or 3% (11% annualized) from $971 million at June 30, 2024 to $999 million at September 30, 2024
- Exceptional credit quality metrics with a non-performing assets ratio of 0.0% and no past due loans over the most recent eight consecutive quarter ends
Capital
At September 30, 2024, the Bank’s regulatory capital ratios (Leverage, Tier 1, and Total Risk-Based) were 8.55%, 11.68%, and 12.73%, 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, 2024 of $11.87 and $11.37, respectively, compared to $11.22 and $10.72 at June 30, 2024. Increased book value per share resulted from retained earnings accumulation and improvements in the Bank’s investment portfolio market values during the quarter.
Balance Sheet and Credit Quality
Net Loans increased $23 million or 3% during the third quarter (12% annualized), and $53 million or 7% (9% annualized) year-to-date to $816 million at September 30, 2024. Year-to-date loan growth continues to be concentrated in 1-4 family residential lending and non-owner occupied CRE which accounted for $25 million each in net growth. The Bank also had year-to-date loan growth in C&I and consumer lending offset by reductions in single family and commercial construction.
The Bank continued to experience solid deposit growth during the quarter, reporting $999 million in total deposits on September 30, 2024, compared to $971 million on June 30, 2024, and $828 million at December 31, 2023. Deposits increased 21% year-to-date and 3% on a linked quarter basis. The Bank’s $27 million in quarterly deposit growth resulted primarily from growth in non-interest checking and Money market accounts which increased $16 million and $11 million, respectively. Checking and savings balances represented 42% of the Bank’s total deposits at quarter end while money market accounts and time deposits represented 42% and 16% of total deposits, respectively.
Total Assets increased by 3% during the quarter and 17% during the first nine months of the year to $1,100 million at September 30, 2024. Asset growth was during the quarter was primarily driven by increased loan balances and cash and cash equivalents.
President and CEO of the Company and Bank, Laurence S. Bolchoz, Jr., commented, “We are very pleased with the Bank’s loan growth during the quarter of $23 million which represents an annualized growth rate of 12%. We are even more excited that this loan growth has been funded by continued core deposit growth of $170 million year-to-date. While seasonal deposit fluctuations have contributed to deposit growth during the year, we are pleased that our focus on deposit acquisition and retention is providing results.”
The Company continues to report excellent asset quality metrics at quarter end with no loans classified as non-accrual and no loans past due greater than 30 days. The Bank’s non-performing asset ratio as of September 30, 2024 was 0.00% and the Bank had no outstanding OREO property at quarter end.
The Bank had one small charge-off during the quarter of less than $7 thousand for a small unsecured consumer loan. Year to date the Bank has net recoveries of $41 thousand resulting in a positive adjustment to the Bank’s allowance for credit losses.
Mr. Bolchoz commented, “We remain encouraged by the strong local economies in each of our markets. Our credit quality metrics continue to be exceptional with no past dues and no nonaccruals for the eighth consecutive quarter which is a testament to the Bank’s entire loan and credit team.”
Income Statement
Net Interest Income
Net interest income increased $0.7 million or 9% to $8.2 million for the quarter ended September 30, 2024, compared to $7.5 million during the most recent linked quarter and $7.1 million in the prior year’s third quarter ended September 30, 2023. The Bank’s net interest margin was 3.22% for the quarter ended September 30, 2024, compared to 3.19% for the prior quarter ended June 30, 2024, and 3.31% during the third quarter of 2023.
The Bank’s net interest margin has increased each quarter throughout 2024. Net interest margin expansion was driven by increased yields on earning assets. The Bank’s yield on earning assets increased to 5.51% for the quarter ended September 30, 2024 compared to 5.41% during the most recent linked quarter, and 5.01% for the quarter ended September 30, 2023.
The Bank’s earning asset yield improved due to increased earnings on cash balances following the Bank’s significant deposit growth, and higher loan yields resulting from loan growth and repricing. The Bank’s loan yields increased to 5.84% during the third quarter of 2024 compared to 5.75% in the prior quarter.
Increased asset yields were partially offset by continued increases in the bank’s funding costs. The Bank’s cost of funds increased to 2.46% for the quarter ended September 30, 2024 compared to 2.38% during the second quarter of 2024, and 1.83% for the quarter ended September 30, 2023.
Mr. Bolchoz said, “We are very pleased with the Bank’s continued net interest margin expansion throughout 2024. However, the current interest rate environment presents opportunities and challenges as the market responds to the Federal Reserve’s recent and projected interest rate cuts. While we anticipate improved funding costs throughout the industry, the downward shift of the yield curve will pressure asset yields as well.”
Noninterest Income
Noninterest income totaled $655 thousand for the quarter ended September 30, 2024, compared to $558 thousand earned during the most recent quarter ended June 30, 2024 and $474 thousand
in the third quarter of 2023.
Increased noninterest income results primarily from increased deposit service charges, interchange income, reciprocal deposit fee income and secondary market mortgage revenues. Mortgage sales revenues improved when compared to both the most recent linked quarter and the third quarter of 2023. The Company recorded mortgage sales revenues of $109 thousand during the quarter ended September 30, 2024 compared to $92 thousand for the quarter ended June 30, 2024, and $36 thousand during the third quarter of 2023.
While mortgage sales volume remains somewhat muted, the Bank continues to originate a significant portion of its mortgage production through portfolio mortgage products. Portfolio mortgage products are primarily originated with adjustable rate mortgage (ARM) structures and provide an alternative to fixed rate mortgage loans.
Noninterest Expense
Noninterest expense totaled $5.7 million for the quarter ended September 30, 2024, compared to $5.5 million for the prior quarter ended June 30, 2024, and $4.9 million for the comparative quarter ended September 30, 2023. Linked quarter increases resulted from increased occupancy expenses related to the Bank’s recent expansion into the Orangeburg, SC market, and increased data processing and insurance costs linked to the Bank’s continued asset growth.
Provision for Loan Losses
During the quarter the Bank recorded a net provision of $305 thousand for changes in the CECL allowance for credit losses and reserve for unfunded commitments. At quarter end the Bank’s allowance for credit losses on loans increased to $8.3 million while the reserve on unfunded commitments increased to $401 thousand. The cumulative CECL reserve of $8.7 million was 1.07% of total loans outstanding at September 30, 2024.
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, Orangeburg, 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, Orangeburg, 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.
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