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Gold Coast Bank Reports Earnings for Second Quarter of 2013

ISLANDIA, N.Y., Aug. 6, 2013 (GLOBE NEWSWIRE) -- Gold Coast Bank, known as Long Island's Community Banksm, announced today continued profitable results for the second quarter of 2013, marking its 12th consecutive quarter of profitability since opening in March 2008.

Gold Coast Bank's profitable second quarter results for 2013 mark several noteworthy gains achieved by the bank:

  • Core earnings (earnings excluding net gains on the sales of securities and the impact of tax expense and benefits) for the second quarter of 2013 were $213,000 compared to $132,000 for the second quarter of 2012, an increase of $81,000, or 61%. The bank recorded tax expense of $104,000 in the second quarter of 2013 compared to tax benefits of $112,000 in the second quarter of 2012. As a result, net income was $155,000 for the quarter ended June 30, 2013 compared to $244,000 for the quarter ended June 30, 2012.
  • Core earnings (excluding net gains on the sales of securities and the impact of tax expense and benefits) for the six months ended June 30, 2013 were $382,000 compared to $348,000 for the six months ended June 30, 2012, an increase of $34,000, or 10%. Net income was $257,000 for the six months ended June 30, 2013 compared to $550,000 for the six months ended June 30, 2012.
  • Total assets of $224 million at June 30, 2013, an increase of $49 million, or 28% from $175 million at June 30, 2012 and an increase of $22 million, or 11% from $202 million at December 31, 2012.
  • Total loans outstanding of $137 million, an increase of $24 million, or 21% from $113 million at June 30, 2012 and an increase of $10 million, or 8% from $127 million at December 31, 2012. Loan originations and draws were $29 million in the first half of 2013 compared to $41 million in the same period in 2012.
  • Total deposits of $200 million, an increase of $49 million, or 33% from $150 million at June 30, 2012 and an increase of $18 million, or 10% from $181 million at December 31, 2012. Although total deposits increased, non-interest bearing demand deposits declined to 35% of deposits at June 30, 2013 compared to 45% at June 30, 2012 and 42% at December 31, 2012. The change in our deposit portfolio is due to recent changes effected by the Dodd-Frank Act which permit the payment of interest on commercial checking accounts, which was previously prohibited.
  • Continued strong asset quality: allowance for loan losses was 1.13% of total loans at June 30, 2013. The bank had no nonperforming loans at June 30, 2013, marking its 10th consecutive quarter with no nonperforming loans.
  • Remaining "well capitalized" at June 30, 2013:

- Tier 1 leverage capital of 9.9%.
- Tier 1 risk-based capital of 14.7%
- Total risk-based capital of 15.7%

  • Increasing book value per share to $9.13, as of June 30, 2013, an increase of 6% compared to $8.63 per share at June 30, 2012.

The bank commenced an offering of up to 1,500,000 shares of its common stock at a price of $10.00 per share on March 15, 2013. To date, the bank has accepted subscriptions and issued shares for 604,000 shares of its common stock at $10 per share and has raised $6.0 million of new capital, net of $55,000 of offering expenses. The expiration date for the offering is expected to be December 31, 2013. The bank intends to use the proceeds to increase lending and provide additional capital to support continued growth, including the establishment of additional bank branches. In addition, a larger capital base will permit the bank to make larger loans and to better penetrate its market area.

"We thank and are encouraged by our original investors who continue to support our community bank as well as new investors who have come aboard in response to our bank's growth, profitability and stellar asset quality," stated Joseph G. Perri, president and chief executive officer. "We intend to use the proceeds to increase our lending capacity to our current customers and target markets and to expand our branch footprint. The additional capital will ensure we meet all regulatory capital requirements as well as increase our legal lending limit. We look forward to our next closing for additional investors who have indicated that they wish to subscribe. "

Net Earnings and Returns

Net income for the quarter ended June 30, 2013 was $155,000, or $0.07 per share, compared to $244,000, or $0.11 per share, for the same period in 2012. Core earnings (earnings excluding net gains on the sales of securities and the impact of tax expense and benefits) for the second quarter of 2013 were $213,000 compared to $132,000 in the second quarter of 2012.The difference in net income reflects the bank recognizing a $112,000 tax benefit in the second quarter of 2012, while the bank was fully taxable in 2013. The increase in core earnings was largely due to an increase in net interest income coupled with an increase in non-interest income, partially offset by a decrease in the provision for loan losses and an increase in non-interest expenses. Returns on average assets and equity for the second quarter of 2013 were 0.27% and 2.94%, respectively compared to 0.58% and 5.37% for the second quarter of 2012.

Net interest income grew $191,000, or 13% in the second quarter of 2013 compared to the second quarter of 2012, largely due to a 35% increase in average interest earning assets of $58 million, offsetting a decline in the net interest margin from 3.68% to 3.07%. The decline in the net interest margin reflected the impact of higher deposit balances and increased loan demand, offset by decreases in the yield on money market and investment securities due to the historically low interest rate environment. The decrease in our yield on interest earning assets was mitigated by our cost of funds, which remained stable between the periods and is below industry averages. The provision for loan losses was $58,000 for the quarter compared to $129,000 in the comparable quarter in 2012, reflecting the bank's continuing stable asset quality trends. Service charges and fee income totaled $139,000 in the second quarter of 2013 compared to $66,000 in the same quarter of 2012, largely as a result of our expanded deposit base and prepayment fees on loans. The bank realized $46,000 on the net sales of securities in the second quarter of 2013. There were no net gains on sales of securities in the 2012 second quarter. Non-interest expenses for the second quarter of 2013 increased $254,000, or 19% compared to the same period in 2012 largely due to expenses associated with our two new branches and the bank's stock offering. The bank recorded tax expense of $104,000 in the second quarter of 2013 compared to a tax benefit of $112,000 in the second quarter of 2012, a $216,000 increase. The tax benefits recorded in 2012 related to the reversal of the valuation allowance on the bank's deferred tax asset since the bank is generating sufficient taxable income. The bank incurred tax expense in the second quarter of 2013 since there was no remaining valuation allowance as of December 31, 2012. Because of this, the bank expects to recognize tax expense in all future periods.

Net income for the six months ended June 30, 2013 was $257,000, or $0.12 per share, compared to $550,000, or $0.26 per share, for the same period in 2012. Core earnings (earnings excluding net gains on the sales of securities and the impact of tax expense and benefits) for the six month period in 2013 was $382,000 compared to $348,000 in the same period of 2012. The difference in net income reflects the bank recognizing a $202,000 tax benefit in the first six months of 2012, while the bank was fully taxable in 2013. The increase in core earnings was largely due to an increase in net interest income coupled with an increase in non-interest income, partially offset by a decrease in the provision for loan losses and an increase in non-interest expenses. Returns on average assets and equity for the six months ended June 30, 2013 were 0.23% and 2.53%, respectively compared to 0.67% and 6.05 % for the six months ended June 30, 2012.

Net interest income grew $469,000, or 16% in the six month period ended June 30, 2013 compared to the six month period of 2012, largely due to a 37% increase in average interest earning assets of $59 million, offsetting a decline in the net interest margin from 3.50% to 3.08%.The provision for loan losses was $58,000 for the 2013 six month period compared to $129,000 in the comparable six month period in 2012. Service charges and fee income totaled $237,000 in the six months ended June 30, 2013 compared to $120,000 in the same period of 2012. The bank realized $46,000 on the net sales of securities in the six months ended June 30, 2013. There were no net gains on sales of securities in the first six months of 2012. Non-interest expenses for the first six months of 2013 increased $623,000, or 25% compared to the same period in 2012. The bank recorded tax expense of $171,000 in the six months ended June 30, 2013 compared to a tax benefit of $201,000 in the same period of 2012, a $373,000 increase.

Balance Sheet and Asset Quality

Total assets increased $21.7 million to $224 million at June 30, 2013 from $202.3 million at December 31, 2012, largely due to an increase in deposits of $18 million as a result of organic growth in the bank's five branches and $4.1 million in net proceeds from the secondary stock offering. The increase in deposits was primarily in interest bearing demand accounts and will be used to fund future loan demand, along with the proceeds of the stock offering. Investment securities increased $5.6 million, or 13% to $50.2 million and cash and cash equivalents increased $5.4 million to $33.8 million, pending allocation into newly originated loans. At June 30, 2013, the bank had no non-performing loans and its allowance for loan losses was 1.13% of total loans. Total stockholders' equity increased $3.6 million to $23.4 million at June 30, 2013 from $19.9 million at December 31, 2012, primarily as a result of the proceeds of the stock offering which was partially offset by a decrease in accumulated comprehensive income caused by the increase in interest rates.

About Gold Coast Bank

Headquartered in Islandia with additional individual branches located in Huntington, Setauket, Farmingdale and Mineola, Gold Coast Bank is a New York State chartered bank whose popularity and sterling reputation stems from the strong, long-term relationships cultivated among its large and diverse customer base. The bank's deposits are insured by the Federal Deposit Insurance Corporation (FDIC). The bank is one of Long Island's financially strongest de novo banks, and Gold Coast Bank prides itself on providing businesses and individuals with quality lending and banking services. Fulfilling a unique niche within the Long Island commercial banking sector, Gold Coast Bank delivers specialty lending capabilities in a variety of areas that include real estate, equipment finance, and lines of credit for privately owned businesses. For more information about Gold Coast Bank, please visit www.gcbny.com.

CONTACT: Media Contact: Kerry Gillick-Goldberg kerry@kggpr.com 516.455.3179 Bank Contact: Catherine Califano, SVP-CFO 631-233-8640 ccalifano@gcbny.com

Source:Gold Coast Bank