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Coastal Carolina Bancshares, Inc. Announces Fourth Quarter and Annual Earnings

MYRTLE BEACH, SC / / January 24, 2025 / Coastal Carolina Bancshares, Inc. (the "Company") (OTCQX:CCNB), parent of Coastal Carolina National Bank (the "Bank"), reported unaudited financial results for the fourth quarter and year end 2024. The Company reported net income of $8,506,711 or $1.36 per share for the year ended December 31, 2024, compared to $8,129,920 or $1.31 per share for the same period ended December 31, 2023, representing a 5% increase. Net income for the three months ended December 31, 2024 was $2,663,997 or $0.42 cents per share which represents a 19% increase when compared to prior quarter income of $2,235,070 and a 34% increase compared to quarterly net income of $1,990,916 during the fourth quarter of 2023.

2024 Fourth Quarter and Annual Financial Highlights

• Quarterly net income of $2.7 million, an increase of 19% over the prior quarter and 34% over the same period in 2023

• Diluted EPS of $0.42 per share for the quarter and $1.36 per share for the year

• Annual and quarterly Return on Average Equity of 12.05% and 14.26%, respectively

• Increased book value per share and tangible book value per share from $11.87 and $11.37 at September 30, 2024 to $12.07 and $11.56 at December 31, 2024

• Annual deposit growth of $160 million or 19% from $828 million at December 31, 2023 to $989 million at December 31, 2024

• Annual loan growth of $74 million or 10% from $764 million at December 31, 2023 to $837 million at December 31, 2024

• Key credit quality metrics remained strong with a non-performing assets ratio of 0.0%

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

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

Capital

At December 31, 2024, the Bank's regulatory capital ratios (Leverage, Tier 1, and Total Risk-Based) were 8.78%, 11.83%, and 12.89%, 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 December 31, 2024 of $12.07 and $11.56, respectively, compared to $11.87 and $11.37 at September 30, 2024 and $10.67 and $10.15 at December 31, 2023. Increased book value per share during the quarter resulted from retained earnings accumulation partially offset by reductions in investment portfolio valuations.

Balance Sheet and Credit Quality

Net Loans increased $21 million or 3% during the fourth quarter (10% annualized), and $74 million or 10% year-to-date to $837 million at December 31, 2024. 2024 loan growth was concentrated in 1-4 family residential lending, non-owner occupied CRE, and C&I lending which accounted for $33 million, $25 million, and $11 million in net growth, respectively.

The Company achieved $160 million in deposit growth during the year, reporting $989 million in total deposits on December 31, 2024, compared to $828 million on December 31, 2023. Deposits increased 19% during the year and were relatively flat on a linked quarter basis with a 1% decline during the fourth quarter of 2024. A reduction in brokered CDs contributed to the minor decline in deposits during the quarter. Approximately $8 million of the Bank's $14 million in brokered CDs were either called or matured during the fourth quarter of 2024. The Bank experienced growth in all deposit categories during the year with the most significant increases in checking and money markets. At December 31, 2024, checking and savings represented 44% of the Bank's total deposits while money market accounts and time deposits represented 40% and 16% of total deposits, respectively.

Total Assets increased by $153 million or 16% during the year to $1.1 billion at December 31, 2024, compared to $937 million at December 31, 2023. Total assets decreased by 1% during the fourth quarter of 2024.

President and CEO of the Company and Bank, Laurence S. Bolchoz, Jr., commented, "We are very proud of the Bank's continued growth this year. Loan and deposit growth of 10% and 19%, respectively is a representation of the hard work and dedication of our entire team. We are pleased with the strong finish to the year with back to back quarters of double digit annualized loan growth, and excited to set a new bank record with annual deposit growth of $160 million."

The Company continues to report excellent asset quality metrics at year end with no loans classified as non-accrual, a non-performing asset ratio of 0.00%, and a past due loan ratio of 0.01%. Additionally, the Bank had no outstanding OREO property at year end.

During 2024, the Bank had net recoveries of $41 thousand resulting in a positive adjustment to the Bank's allowance for credit losses.

Mr. Bolchoz commented, "The Bank's credit quality metrics continue to be pristine at year end with no OREO properties, no nonaccrual loans and only one past due loan with a balance of $109 thousand. The economic climates in our local economies remain strong, and we continue to focus on originating quality loans within the communities we serve."

Income Statement

Net Interest Income

Net interest income increased $3.4 million or 12% to $31.2 million for the year ended December 31, 2024, compared to $27.8 million during the year ended December 31, 2023. Net interest income increased $0.4 million or 5% to $8.6 million for the quarter ended December 31, 2024, compared to $8.2 million during the most recent linked quarter and increased 25% when compared to prior year's fourth quarter net interest income of $6.9 million. The Bank's net interest margin was 3.35% for the quarter ended December 31, 2024, compared to 3.22% for the prior quarter ended September 30, 2024 and 3.17% during the fourth quarter of 2023.

The Bank's net interest margin increased during the quarter and has increased each quarter throughout 2024. Net interest margin expansion throughout the first three quarters of 2024 was driven by increasing earning asset yields; however, fourth quarter margin improvement was driven primarily by a reduction in the Bank's funding costs as the Federal Reserve rate cuts begin to take effect.

The Bank's yield on earning assets decreased slightly to 5.50% for the quarter ended December 31, 2024 compared to 5.51% during the most recent linked quarter, and increased when compared to the 5.17% earning asset yield achieved in the fourth quarter of 2023. The Bank's loan yields continue to improve; however, yields on interest bearing cash have declined during the quarter with Fed rate reductions. The Bank's loan yields increased to 5.91% during the fourth quarter of 2024 compared to 5.84% in the prior quarter.

As referenced above, the Bank's cost of funds had its first quarterly decrease in recent history decreasing to 2.30% for the quarter ended December 31, 2024 compared to 2.46% during the third quarter of 2024.

Mr. Bolchoz said, "We are very pleased with the Bank's earnings results achieving new records in both annual and quarterly net income. These results were achieved in part due to the Bank's improvement in interest margin throughout the year. As we look forward, we feel that the Bank is well positioned to navigate the uncertain interest rate environment in the year ahead."

Noninterest Income

Noninterest income totaled $868 thousand for the quarter ended December 31, 2024, compared to $655 thousand earned during the most recent quarter ended September 30, 2024 and $515 thousand
in the fourth quarter of 2023. Noninterest income increased year over year from $1.9 million for the year ended December 31, 2023 to $2.6 million for the year ended December 31, 2024.

Increased noninterest income during the fourth quarter and year resulted 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 fourth quarter of 2023. The Company recorded mortgage sales revenues of $113 thousand during the quarter ended December 31, 2024 compared to $109 thousand for the quarter ended September 30, 2024, and $42 thousand during the fourth 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 $5.9 million for the quarter ended December 31, 2024, compared to $5.7 million for the prior quarter ended September 30, 2024, and $4.9 million for the comparative quarter ended December 31, 2023. Noninterest expense increased year over year from $19.1 million for the year ended December 31, 2023 to $22.4 million for the year ended December 31, 2024. Increases resulted primarily from higher compensation and benefits expense, increased data processing and business development costs, and higher regulatory assessments/insurance supporting the Company's continued growth and expansion into new markets.

Provision for Loan Losses

During the quarter the Bank recorded a net provision of $205 thousand for changes in CECL allowance for credit losses. At quarter end the Bank's allowance for credit losses on loans increased to $8.6 million while the reserve on unfunded commitments decreased slightly to $386 thousand. The cumulative CECL reserve of $8.9 million was 1.07% of total loans at December 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, Orangeburg 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, Spartanburg, South Carolina, and Ocean Isle Beach, North 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 .

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

SOURCE: Coastal Carolina Bancshares, Inc.