Coastal Carolina Bancshares, Inc. Reports First Quarter Earnings
Myrtle Beach, South Carolina – April 24, 2024 – Coastal Carolina Bancshares, Inc. (the “Company”) (OTCQX: CCNB), parent of Coastal Carolina National Bank (the “Bank”), reported unaudited financial results for the first quarter of 2024. The Company reported net income of $1,650,696 or $0.26 per share for the three months ended March 31, 2024, compared to $1,990,916 or $0.32 per share for the three months ended December 31, 2023, and $2,120,777 or $0.34 per share for the three months ended March 31, 2023.
2024 First Quarter Financial Highlights
- Quarterly net income of $1.7 million and diluted EPS of $0.26 per share
- Increased book value per share and tangible book value per share from $10.67 and $10.15 at December 31, 2023 to $10.90 and $10.39 at March 31, 2024
- Quarterly Asset growth of $33 million or 4% (14% annualized) from $937 million at December 31, 2023 to $970 million at March 31, 2024
- Quarterly Deposit growth of $48 million or 6% (23% annualized) from $828 million at December 31, 2023 to $876 million at March 31, 2024
- Quarterly Loan growth of $19 million or 2% (10% annualized) from $764 million at December 31, 2023 to $783 million at March 31, 2024
- Key credit quality metrics remained strong with a non-performing assets ratio of 0.0% and no past due loans over the most recent six consecutive quarter ends
“We are pleased with our first quarter results as we continued to demonstrate solid growth in Deposits, Loans and Total Assets. Our credit quality metrics remain pristine as we had no past dues or loans on non-accrual for the sixth consecutive quarter, a significant accomplishment and atestament to our team. Although pressure on our cost of funds in the current rate environment persists and may likely continue in the short term, we remain encouraged by the strong local economies in all of our markets and feel we are positioned well for additional growth this year,” says Laurence S. Bolchoz, Jr., President and Chief Executive Officer of the Company and the Bank.
Capital
At March 31, 2024, the Bank’s regulatory capital ratios (Leverage, Tier 1, and Total Risk-Based) were 9.17%, 11.51%, and 12.54%, 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 March 31, 2024 of $10.90 and $10.39, respectively, compared to $10.67 and $10.15 at December 31, 2023. Increased book value per share resulted from retained earnings accumulation during the quarter.
Balance Sheet and Credit Quality
Total Assets increased by 4% during the quarter to $970 million at March 31, 2024, compared to $937 million at December 31, 2023. Asset growth was supported by strong deposit growth during the quarter and consisted primarily of increases in loans and cash equivalents offset by a decrease in the Bank’s securities portfolio of approximately $10 million due to contractual bond maturities.
Net Loans increased $19 million or 2% (10% annualized) from $764 million at December 31, 2023 to $783 million at March 31, 2024. First quarter loan growth was concentrated in 1-4 family residential and non-owner occupied CRE which accounted for $12 million and $17 million in net growth, respectively, offset by a decrease of $11 million in commercial and residential construction balances.
The Company experienced considerable deposit growth during the quarter with quarterly deposit growth of $48 million or 6% (23% annualized) from $828 million at December 31, 2023 to $876 million at March 31, 2024. At quarter end, checking and savings accounts represented 39% of the Bank’s total deposit balances while money market accounts and time deposits represented 43% and 18% of total deposits, respectively.
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. This is the sixth consecutive quarter where the Bank has reported zero non-accrual and past due loans. Additionally, the Bank’s non-performing asset ratio as of March 31, 2024 was 0.00%. The Bank had loan loss recoveries of $47 thousand during the quarter and no charge-offs. In addition, the Bank had no outstanding OREO property at March 31, 2024.
Income Statement
Net Interest Income
Net interest income was relatively flat at $6.9 million for the quarter ended March 31, 2024, compared to the linked quarter ended December 31, 2023, and slightly under the $7.0 million net interest income earned in the first quarter of 2023. The Bank’s net interest margin was 3.08% for the quarter ended March 31, 2024, compared to 3.17% for the prior quarter ended December 31, 2023, and 3.61% during the first quarter of 2023.
Net interest margin compression was driven by continued increases in market funding costs. The Bank’s cost of funds increased to 2.30% for the quarter ended March 31, 2024 compared to 2.15% during the fourth quarter of 2023, and 1.03% for the quarter ended March 31, 2023. On a positive note, funding costs remained relatively stable within a range of 2.27% to 2.31% during the most recent four months from December 2023 through March 2024.
Increased funding costs were partially offset by increased yields on earning assets resulting primarily from loan growth and loan repricing in a rising rate environment. The Bank’s yield on earning assets increased to 5.22% for the quarter ended March 31, 2024 compared to 5.17% during the fourth quarter of 2023, and 4.57% for the quarter ended March 31, 2023.
Noninterest Income
Noninterest income totaled $507 thousand for the quarter ended March 31, 2024, compared to $515 thousand earned during the most recent quarter ended December 31, 2023 and $405 thousand
in the first quarter of 2023.
Increased noninterest income when compared to the first quarter of 2023 results primarily from increased deposit service charges, interchange income, and secondary market mortgage revenues. The slight decrease in noninterest income compared to the most recent linked quarter resulted from nonrecurring noninterest income during December of 2023.
While still weak in comparison to historical norms, mortgage sales revenues improved when compared to both the most current linked quarter and the first quarter of 2023. The Company recorded mortgage sales revenues of $62 thousand during the quarter ended March 31, 2024 compared to $42 thousand for the quarter ended December 31, 2023, and $29 thousand for during the first quarter of 2023.
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 $5.2 million for the quarter ended March 31, 2024, compared to $4.9 million for the prior quarter ended December 31, 2023, and $4.7 million for the comparative quarter ended March 31, 2023. Linked quarter increases resulted primarily from higher compensation and benefits expense due to the addition of new production team members in the Bank’s Columbia market, increased mortgage commissions, and incentive compensation.
Provision for Loan Losses
During the quarter the Bank recorded a net provision of $95 thousand for changes in CECL allowance for credit losses. At quarter end the Bank’s allowance for credit losses on loans increased to $8.0 million while the reserve on unfunded commitments decreased slightly to $383 thousand. The cumulative CECL reserve of $8.3 million was 1.07% of total loans outstanding at March 31, 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, 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.
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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