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Coastal Banking Company Announces Lifting of the Formal Agreement Between OCC and CBC National Bank

BEAUFORT, S.C., Aug. 12, 2013 (GLOBE NEWSWIRE) -- Coastal Banking Company Inc. (OTCQB:CBCO), the holding company of CBC National Bank (the "Bank"), which operates branches in Beaufort and Port Royal, S.C., Fernandina Beach, Fla., and Meigs, Ga., announced today that the Office of the Comptroller of the Currency (OCC) has lifted its formal written agreement with CBC National Bank effective Aug. 8, 2013. As such, the bank is no longer considered to be in troubled condition by the OCC or Federal Deposit Insurance Corporation (FDIC), and this action brings to a conclusion the agreements that the bank entered into with the OCC in August 2009.

"The lifting of the formal agreement reflects the culmination of a successful, multi-year effort by the directors, officers and employees of the company to address and correct the issues identified by the OCC that largely resulted from the credit crisis and the great recession," said Michael G. Sanchez, chief executive officer. "We are delighted to have reached this milestone in the rehabilitation of the bank and look forward to future growth and opportunities to further increase the value of our banking franchise."

In complying with the terms of the formal agreement, the bank lowered its credit risk, reduced its level of criticized assets, implemented a profit plan that has generated sustained earnings and maintained its limited reliance on brokered deposits.

"We are proud of our efforts to restore the bank to health and financial stability, which included diligently working down problem assets and generating substantial levels of non-interest income from mortgage banking and small business lending," said Sanchez. "We earned our way back to health rather than having to seek out additional dilutive capital as so many other banks were forced to do in order to survive. This was the best possible outcome for our shareholders, our customers and our employees."

Bank Dividends

On Jun. 26, 2013, CBC National Bank's board of directors 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 Federal Reserve Bank of Richmond (FRB), which was received on Aug. 9, 2013.

Series A Preferred Stock Dividends

On Jun. 26, 2013, the company's board of directors 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 was received on Aug. 9, 2013.

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 lifting of the bank's formal agreement by the OCC will trigger an evaluation by the FRB to assess the continued need for the MOU. If the FRB decides to lift the MOU, the company will no longer need FRB consent or non-objection prior to paying Trust Preferred interest or dividends on its common or preferred stock. Until the MOU is lifted, 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 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.

CONTACT: For More Information: Paul R. Garrigues Chief Financial Officer Coastal Banking Company Inc. 904-321-0400Source:Coastal Banking Company