BEAUFORT, SC / ACCESSWIRE / May 2, 2017 / Coastal Banking Company Inc. (OTCQX: CBCO), the holding company of CBC National Bank, which operates branches in Beaufort and Port Royal, S.C., and in Fernandina Beach, Ocala, and The Villages, Fla., today reported net income of $1.45 million, or $0.38 diluted earnings per common share, for the three months ended March 31, 2017. This compares to $1.22 million, or $0.44 in diluted earnings per common share, for the first quarter of 2016, an increase of $230,000. The decline in diluted earnings per common share was due to the additional common shares issued in April 2016 for the acquisition of First Avenue National Bank (FANB) in Ocala, Fla
On a linked-quarter basis, the $1.45 million of net income in the first quarter of 2017 declined from fourth-quarter 2016 net income of $2.21 million, or $0.59 diluted earnings per common share. Coupled with the uncertainty surrounding interest rates in the first quarter of 2017, Coastal's mortgage segment historically experiences lower volume during the first quarter consistent with the industry.
Key performance highlights for the first quarter of 2017 include:
- Continued strong profitability. First-quarter 2017 net income increased by 18.9 percent over the first quarter of 2016. First quarter results featured more balanced net income for all three of the Company's operating segments: Community Banking earned $812,000 in 2017's first quarter, up from $528,000 in 2016, SBA Lending earned $638,000 in 2017, up from $354,000 earned in 2016, and Mortgage Banking earned $574,000 in 2017, down from $760,000 in 2016. All three segments outperformed the Company's 2017 budget for the first quarter
- Continued shareholder value creation. Driven by strong earnings over the last five quarters, book value per share has risen to $14.58 per share at March 31, 2017, from $14.18 per share at Dec. 31, 2016, and $12.88 at March 31, 2016. The CBCO closing market price on March 31, 2017, was $17.20, up from $15.01 at Dec. 31, 2016.
- Increased mortgage banking income on lower volume. For the first quarter of 2017, $346.6 million in residential mortgage loans were sold and $3.41 million in total mortgage banking income generated, down in volume from $379.7 million, but up in income from $2.93 million, from the first quarter of 2016. Mortgage banking generated enhanced yields on sold loans in first-quarter 2017 compared to the same period in 2016 as a result of strategic changes in its loan origination mix.
- Strong SBA originations and loan sales. For the first quarter of 2017, SBA Lending originated $10.3 million in loans and sold $8.9 million into the secondary market. The balance of SBA loans available for sale at March 31, 2017, has grown to $38 million.
- Robust balance sheet and Community Banking loan growth. Year-over-year growth in the balance sheet of $87.8 million, or 18.5 percent, with total assets of $562.6 million at March 31, 2017. The asset growth was driven by increased portfolio loan balances and the FANB acquisition. Since March 31, 2016, SBA portfolio loans grew $8.2 million and Community Banking portfolio loans grew $95.2 million, of which $81.4 million were added as part of the acquisition. The growth in portfolio loans was offset by a decline in loans held for sale of $28.5 million from March 31, 2016, to March 31, 2017.
- Strong quarterly and year-over-year deposit growth. Deposits have grown from $319.8 million at March 31, 2016, to $431.7 million at March 31, 2017, an increase of 35.0 percent. During the first quarter of 2017, deposits grew by $14.4 million, predominantly in non-interest bearing and low-cost NOW accounts.
- Steady credit quality. Related to credit quality, the ratio of non-performing assets to assets decreased from 1.73 percent at March 31, 2016, to 1.50 percent at March 31, 2017. The ratio was 1.98 percent at Dec. 31, 2016. The allowance for loan losses was 1.39 percent of loans outstanding (excluding loans held for sale) at the end of March 2017, slightly down from 1.48 percent at the end of March 2016. The allowance for loan losses was 1.47 percent at Dec. 31, 2016. Other real estate owned (OREO) declined $1.3 million, or 21.2 percent, from March 31, 2016, to March 31, 2017. Net charge-offs were $667,000 for the first three months of 2017 compared to net charge-offs of $869,000 for the first three months in 2016.
- Strong capital ratios. Capital ratios for the Company remained strong, with a total risk-based capital ratio of 20.83 percent and a Tier 1 risk-based capital ratio of 19.56 percent at March 31, 2017, up from 20.11 percent and 19.21 percent, respectively, at March 31, 2016.
- Continued steady efficiency ratio. The Company's efficiency ratio for the first quarter of 2017 was 73.2 percent, compared to 74.3 percent for first-quarter 2016. The Company's efficiency ratio for the year 2016 was 70.5 percent.
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