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.
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