MYRTLE BEACH, SC / ACCESSWIRE / July 26, 2023 / Coastal Carolina Bancshares, Inc. (the "Company") (OTCQX:CCNB), parent of Coastal Carolina National Bank (the "Bank"), reported unaudited financial results for the second quarter of 2023. The Company reported net income of $4,105,348 or $0.66 per share for the six months ended June 30, 2023, compared to $2,859,227 or $0.46 per share for the same period ended June 30, 2022, a 43% increase. Net income for the three months ended June 30, 2023 was $1,984,571 or $0.32 per share, compared to $1,493,066 or $0.24 per share for the same period in the prior year and $2,120,777 or $0.34 per share for the prior quarter ended March 31, 2023.
2023 Second Quarter Financial Highlights
- Quarterly net income of $1,984,571, an increase of 33% over the same period in the prior year
- Year-to-date net income of $4,105,348, an increase of 43% over the same period in 2022
- Diluted EPS of $0.32 per share for the quarter and $0.66 year-to-date
- Quarterly Deposit growth of $24 million or 3% (13% annualized) from $767 million at March 31, 2023 to $792 million at June 30, 2023
- Consecutive quarters of 3% deposit growth (13% annualized) totaling $49 million year-to-date in an extremely competitive deposit environment
- Quarterly Loan growth of $46 million or 7% (27% annualized)
- Key credit quality metrics remained strong during the quarter with a
non-performing assets ratio of 0.0% and no past due loans
"We are very pleased with our strong performance in the second quarter of 2023. Our team continues to execute on our disciplined growth strategy which resulted in solid quarterly loan and deposit growth. 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 third 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)
| June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | ||||||||||||
Balance Sheet (In Thousands) | ||||||||||||||||
Total Assets | $ | 908,839 | $ | 868,409 | $ | 824,817 | $ | 805,482 | $ | 801,475 | ||||||
Investment Securities | 103,394 | 105,390 | 107,075 | 106,930 | 111,175 | |||||||||||
Loans, net of unearned income (total loans) | 731,429 | 685,251 | 648,509 | 595,854 | 551,994 | |||||||||||
Deposits | 791,679 | 767,408 | 742,389 | 720,672 | 717,296 | |||||||||||
Shareholders' Equity | 60,583 | 59,404 | 56,897 | 53,578 | 53,891 | |||||||||||
Total Shares Outstanding (1) | 6,193,138 | 6,171,970 | 6,162,470 | 6,162,470 | 6,156,470 | |||||||||||
Book Value per Share | $ | 9.78 | $ | 9.62 | $ | 9.23 | $ | 8.69 | $ | 8.75 | ||||||
Tangible Book Value Per Share | $ | 9.27 | $ | 9.11 | $ | 8.71 | $ | 8.17 | $ | 8.23 | ||||||
Selected % Increases | 2nd Qtr 2023 | 1st Qtr 2023 | 4th Qtr 2022 | 3rd Qtr 2022 | 2nd Qtr 2022 | |||||||||||
Total Assets | 5 | % | 5 | % | 2 | % | 0 | % | 1 | % | ||||||
Total Loans | 7 | % | 6 | % | 9 | % | 8 | % | 12 | % | ||||||
Total Deposits | 3 | % | 3 | % | 3 | % | 0 | % | 1 | % | ||||||
Selected Ratios | ||||||||||||||||
Loan Loss Reserve to Total Loans | 1.04 | % | 1.08 | % | 1.02 | % | 1.02 | % | 1.00 | % | ||||||
Non-Performing Assets (excl TDRs) to Total Assets | 0.00 | % | 0.00 | % | 0.00 | % | 0.05 | % | 0.05 | % | ||||||
Net Charge-Offs to Avg Total Loans (annualized) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
| For the | For the | For the | For the | For the | ||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | ||||||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | ||||||||||||
Earnings Breakdown (In Thousands) | ||||||||||||||||
Total Interest Income | $ | 10,245 | $ | 9,217 | $ | 6,756 | $ | 19,462 | $ | 12,643 | ||||||
Total Interest Expense | 3,384 | 2,191 | 646 | 5,576 | 1,225 | |||||||||||
Net Interest Income | 6,861 | 7,026 | 6,110 | 13,886 | 11,418 | |||||||||||
Total Noninterest Income | 495 | 405 | 622 | 900 | 1,209 | |||||||||||
Total Noninterest Expense | 4,689 | 4,650 | 4,457 | 9,339 | 8,627 | |||||||||||
Provision for Loan Losses | 170 | 125 | 450 | 295 | 525 | |||||||||||
Income Before Taxes | 2,497 | 2,656 | 1,825 | 5,152 | 3,475 | |||||||||||
Taxes | 512 | 535 | 332 | 1,047 | 616 | |||||||||||
Net Income | $ | 1,985 | $ | 2,121 | $ | 1,493 | $ | 4,105 | $ | 2,859 | ||||||
Basic Earnings Per Share | $ | 0.32 | $ | 0.34 | $ | 0.24 | $ | 0.67 | $ | 0.46 | ||||||
Diluted Earnings Per Share | $ | 0.32 | $ | 0.34 | $ | 0.24 | $ | 0.66 | $ | 0.46 | ||||||
Weighted Average Shares Outstanding - Basic | 6,177,981 | 6,165,492 | 6,156,030 | 6,171,771 | 6,154,857 | |||||||||||
Weighted Average Shares Outstanding - Diluted | 6,199,209 | 6,208,159 | 6,203,507 | 6,203,406 | 6,205,863 | |||||||||||
Selected Ratios | ||||||||||||||||
Return On Average Assets | 0.89 | % | 1.00 | % | 0.75 | % | 0.95 | % | 0.73 | % | ||||||
Return On Average Equity | 13.23 | % | 14.59 | % | 10.78 | % | 13.90 | % | 10.07 | % | ||||||
Efficiency Ratio | 63.58 | % | 62.41 | % | 65.98 | % | 63.00 | % | 68.09 | % | ||||||
Net Interest Margin - Bank Level | 3.35 | % | 3.61 | % | 3.34 | % | 3.48 | % | 3.18 | % | ||||||
(1) - Total shares outstanding excludes unvested restricted stock awards
Capital
At June 30, 2023, the Bank's regulatory capital ratios (Leverage, Tier 1, and Total Risk-Based) were 9.21%, 10.93%, and 11.92%, respectively. 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 June 30, 2023 of $9.78 and $9.27, respectively compared to $9.62 and $9.11 at March 31, 2023. The increase in book value per share during the quarter resulted from retained earnings partially offset by changes in unrealized gains and losses in the Bank's investment portfolio.
Balance Sheet and Credit Quality
Total Assets increased by 5% during the quarter and 10% during the first six months of the year to $909 million at June 30, 2023. Asset growth was primarily concentrated in increased loan balances partially offset by minor decreases in securities and cash and cash equivalents.
Net Loans increased $46 million or 7% during the second quarter, and $83 million or 13% year-to-date to $731 million at June 30, 2023. Year-to-date loan growth was concentrated primarily in 1-4 family residential, owner occupied CRE, and C&I lending with net growth of $34 million, $18 million and $11 million, respectively.
The Company continued to experience deposit growth during the quarter, reporting $792 million in total deposits on June 30, 2023, compared to $767 million at March 31, 2023, and $649 million at December 31, 2022. Deposits increased 7% year-to-date and 3% on a linked quarter basis. Checking and savings balances increased $7 million during the second quarter and represented 45% of the Bank's total deposits at quarter end. Money market accounts and time deposits increased $10 million and $7 million during the quarter, and represented 39% and 16% of total deposits, respectively. The Bank experienced some migration during the period from non-interest bearing deposits to interest bearing deposits as evidenced by a year-to-date reduction of $6 million in non-interest bearing deposit balances.
The Bank maintains on balance sheet and contingent liquidity sources necessary to fund its ongoing operations. In addition to cash and equivalents of $42 million, the Bank has additional sources of liquidity, if necessary. The Bank has correspondent fed funds purchased lines of credits totaling $26 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 $227 million at quarter end. The Bank had outstanding FHLB advances of $31 million as of June 30, 2023 leaving $196 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 June 30, 2023. The Bank's non-performing asset ratio as of June 30, 2023 was 0.00% excluding TDRs and 0.02% with performing TDRs included. The Bank had no charge-offs during the quarter and no outstanding OREO property at June 30, 2023.
Income Statement
Net Interest Income
Net interest income increased $0.8 million or 12% to $6.9 million for the quarter ended June 30, 2023, compared to $6.1 million during the prior year's second quarter ended June 30, 2022, and net interest income decreased $0.2 million or 2% on a linked quarter basis. The Bank's net interest margin was 3.35% for the quarter ended June 30, 2023, compared to 3.61% for the prior quarter ended March 31, 2023, and 3.34% during the second quarter of 2022.
The linked quarter interest income and margin decline resulted primarily from increased funding costs in a very competitive deposit environment. The Bank's cost of funds increased to 1.60% during the second quarter of 2023 from 1.03% during the first quarter of 2023, and 0.22% during the second 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 4.83% during the second quarter of 2023 from 4.57% during the first quarter of 2023, and 3.55% during the second quarter of 2022.
Noninterest Income
Noninterest income totaled $495 thousand for the quarter ended June 30, 2023, compared to $405 thousand earned during the most recent quarter ended March 31, 2023 and $622 thousand
in the second quarter of 2022.
Increasing noninterest income on a linked quarter basis resulted primarily from moderately increased mortgage revenues and interchange income during the quarter. Similarly, decreased noninterest income, when compared to the second quarter of 2022, resulted from reduced mortgage revenues. Second quarter 2023 mortgage sales revenues were $51 thousand compared to $29 thousand for the most recent linked quarter, and $267 thousand for the same period in the prior year.
Noninterest Expense
Noninterest expense totaled $4.7 million for the quarter ended June 30, 2023, compared to $4.7 million for the prior quarter ended March 31, 2023, and $4.5 million for the comparative quarter ended June 30, 2022. Quarter over quarter moderately increased noninterest expense resulted primarily from increased FDIC insurance costs.
Provision for Loan Losses
On January 1, 2023, the Company adopted the Current Expected Credit Loses (CECL) accounting standard. The CECL adoption resulted in a day one increase in the Bank's allowance for credit losses on loans of $504 thousand and a day one increase in the Bank's allowance for credit losses on unfunded commitments of $631 thousand. This adjustment also resulted in an increase in the Bank's deferred tax asset of $241 thousand and a decrease in retained earnings of $894 thousand.
During the quarter the Bank recorded a net provision of $170 thousand for the changes in CECL allowance for credit losses throughout the second quarter. At quarter end the Bank's allowance for credit losses on loans increased to $7.6 million while the reserve on unfunded commitments decreased to $462 thousand.
The cumulative CECL reserve of $8.1 million was 1.10% of total loans at June 30, 2023, while the Bank's allowance for loan losses to total loans was 1.02% at December 31, 2022 using the previous allowance methodology.
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.
SOURCE: Coastal Carolina National Bank