BEAUFORT, SC -- (Marketwired) -- 07/09/13 -- Coastal Banking Company Inc. (OTCQB: CBCO), the holding company of CBC National Bank, which operates branches in Beaufort and Port Royal, S.C., Fernandina Beach, Fla., and Meigs, Ga., today reported that effective Jun. 30, 2013 it has reversed its deferred tax asset ("DTA") valuation allowance of approximately $1.73 million. As a result, net income for the second quarter of 2013 will be increased by approximately $0.66 per share. The DTA valuation allowance recovery is the result of sustained profitability by the Company driven by a combination of lower credit costs and strong non-interest income.
In addition to the recovery of the DTA valuation allowance, the Company also announced several other key events that occurred in the second quarter of 2013.
In connection with the original issuance of the TARP preferred stock in Dec. 2008, the Company issued a warrant to the U.S. Treasury to purchase 205,579 shares of the Company's common stock at a price of $7.26 per share. As previously announced, the Company completed a partial repurchase of 60,000 warrant shares from the Treasury on Apr. 10, 2013 at a price of $1.65 per share. On May 7, 2013 the Company received a non-objection from the Federal Reserve Bank of Richmond ("FRB") to allow the Company to accept a dividend from CBC National Bank and to use those funds to repurchase the remaining warrants from Treasury. On Jun. 12, 2013 the Company completed the repurchase of the remaining 145,579 warrant shares from the Treasury at a price of $1.55 per share.
With the repurchase of the remaining warrants the Company has now fully exited the U.S. Treasury TARP Capital Purchase Program. "We were proud to be part of the TARP Capital Purchase Program and the role that program played in stabilizing the U.S. banking system during the credit crisis," said Paul R. Garrigues, Chief Financial Officer. "The U.S. Treasury, and ultimately the American taxpayer, recovered the entire original investment in the Company of $9.95 million plus an additional return on that investment of just over $1.3 million."
During the second quarter of 2013 the Company received two cash dividends from its Banking subsidiary, CBC National Bank. The Company obtained non-objections from the FRB to accept these dividends in the amounts of $500,000 received on May 15, 2013 and $200,000 received on Jun. 12, 2013. The Company used these funds for the payment of preferred stock dividends and the previously described warrant repurchase.
On Jun. 26, 2013 the Board of Directors of the Bank declared a cash dividend of $500,000 payable to the Company on Aug. 15, 2013. Acceptance of this dividend by the Company is subject to consent or non-objection by the FRB which has not yet been obtained.
Series A Preferred Stock Dividends
On May 15, 2013, the Company paid the holders of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A ("Preferred Stock") the amount of $38.43 per share representing the current dividend due May 15, 2013, the deferred dividends due Aug. 15, 2011, and Nov. 15, 2011, as well as accrued interest payable through May 15, 2013, on all six previously deferred preferred stock dividends. As a result of the payment of this dividend, the Company now has four remaining quarterly preferred stock dividends in deferral.
On Jun. 26, 2013 the Board of Directors of the Company declared a dividend payable on Aug. 15, 2013 to preferred stock shareholders of record on Aug. 5, 2013 in the amount of $38.14 per share of the preferred stock. This payment represents the current dividend due Aug. 15, 2013, the deferred dividends due Feb. 15, 2012 and May 15, 2012 as well as accrued interest payable through Aug. 15, 2013 on all four previously deferred preferred stock dividends. Payment of this dividend by the Company is subject to consent or non-objection by the FRB which has not yet been obtained.
Coastal Banking Company has operated under a Memorandum of Understanding ("MOU") with the FRB since November 2010, which requires the company to obtain consent or non-objection from the FRB prior to the payment of stock dividends or Trust Preferred securities interest. The company will continue to seek consent or non-objection from the FRB each quarter to pay Preferred stock dividends and the regular quarterly interest due on its Trust Preferred securities, as long as the MOU remains in force and to the extent that the Company's operating results support continued payment of these dividends and interest.
About Coastal Banking Company Inc.
Coastal Banking Company Inc. is the $405.3 million-asset bank holding company of CBC National Bank, headquartered in Fernandina Beach, Fla., which provides a full range of consumer and business banking services through full-service banking offices in Beaufort, S.C., Fernandina Beach, Meigs, Ga., and Port Royal, S.C., and commercial loan production offices in Jacksonville, Fla., and Savannah, Ga. The Company's residential mortgage banking division, headquartered in Atlanta, includes an Internet-based retail mortgage operation as well as a National Retail Group that has lending offices in Florida, Georgia, Arizona, Maryland, New York and Ohio. The Company's Small Business Administration lending division originates SBA loans primarily in Jacksonville, Orlando, Naples and Vero Beach, Fla., Atlanta, Ga., Greensboro, N.C., Memphis, Ten., and Beaufort. The Company's common stock is publicly traded on the OTCQB Markets under the symbol CBCO. A current CBCO stock price quote and recent stock trading activity is available at http://www.otcmarkets.com/stock/CBCO/quote.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK FACTORS
This release contains forward-looking statements including statements relating to present or future trends or factors generally affecting the banking industry and specifically affecting Coastal's operations, markets and products. Without limiting the foregoing, the words "believes," "anticipates," "intends," "expects," or similar expressions are intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties. Actual results could differ materially from those projected for many reasons, including, without limitation, changing events and trends that have influenced Coastal's assumptions, but that are beyond Coastal's control. These trends and events include (i) changes in the interest rate environment which may reduce margins, (ii) not achieving expected growth, (iii) less favorable than anticipated changes in the national and local business environments and securities markets, (iv) adverse changes in the regulatory requirements affecting Coastal, (v) greater competitive pressures among financial institutions in Coastal's markets, (vi) greater loan losses than historic levels, and (vii) difficulties in expanding our banking operations into a new geographic market.
All written or oral forward-looking statements are expressly qualified in their entirety by these cautionary statements. Coastal Banking Company, Inc. undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
For More Information:
Paul R. Garrigues
Chief Financial Officer
Coastal Banking Company Inc.
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