Coast Bancorp Earnings Announcement

SAN LUIS OBISPO, CA -- (MARKET WIRE) -- 03/20/08 -- Coast Bancorp (OTCBB: CTBP), the holding company for Coast National Bank, announced the audited financial results for the year ended December 31, 2007.

Total assets at December 31, 2007 were $183.8 million, a 1.7% increase from $180.7 million at December 31, 2006.

Net loans at December 31, 2007 were $142.3 million, an increase of $7.2 million or 5.3% from $135.1 million at December 31, 2006. The recorded investment in impaired loans as of December 31, 2007 was $4.2 million, an increase of $1.7 million or 68% from $2.5 million at December 31, 2006. The allowance for loan and lease losses, which covers credit losses pertaining to the loan portfolio, was $1,487,000 or 1.03% of total loans at December 31, 2007. The Company also carried an additional $55,000 allowance for credit losses pertaining to its unfunded commitments in the liability section of its balance sheet. Collectively, the total allowance for all types of credit losses was $1,542,000 at December 31, 2007 as compared to $1,443,000 at December 31, 2006. Total interest income recognized for cash payments on impaired loans for the twelve months ended December 31, 2007 was $92,000, an $87,000 increase over the $5,000 received during the twelve months ended December 31, 2006.

Deposits as of December 31, 2007 were $162.1 million, a $0.4 million, or 0.3% decrease from $162.5 million at December 31, 2006.

Total stockholders' equity increased 11.0% to $14.1 million as of December 31, 2007 as compared to $12.7 million at December 31, 2006. The Company remained "well capitalized" by regulatory standards, with a Tier 1 Leverage Capital Ratio of 10.2%, a Tier 1 Risk Based Capital Ratio of 12.4% and a Total Risk Based Capital Ratio of 15.0%.

Net interest income before the provision for loan losses for the twelve months ended December 31, 2007 was $8,379,000, a decrease of 7.0% when compared to $9,007,000 in the same period in 2006. The decrease in net interest income was primarily attributable to a decreased net interest margin, partially offset by an increase in earning assets.

Noninterest income for the twelve months ending December 31, 2007 was $538,000, a decrease of 38.6% compared to $876,000 for the same period in 2006, primarily due to a decrease in SBA loan sales.

Noninterest expense for the twelve months ending December 31, 2007 was $7,001,000, a decrease of 4.8% compared to $7,354,000 for the same period in 2006, primarily due to decreases in marketing and personnel expenses.

Net income for the year ended December 31, 2007 was $1,008,000, or $1.40 per diluted share, a 26.6% decrease from $1,374,000, or $1.93 per diluted share for the twelve months ended December 31, 2006. The decrease is primarily the result of a lower net interest margin and a decrease in noninterest income.

Coast National Bank opened for business on June 16, 1997. The Bank is an independent community bank with five banking offices and a loan production office. With a focus on delivering unsurpassed customer service, the Bank provides small business loans, home loans and other loans, as well as an array of business and personal banking deposit products and other services. The Bank is a wholly-owned subsidiary of Coast Bancorp, a $184 million bank holding company, headquartered in San Luis Obispo, California. Coast Bancorp stock trades under the ticker symbol "CTBP.OB." For more information, visit www.coastnationalbank.com or call 805.541.0400.

Please refer to the following Consolidated Balance Sheets as of December 31, 2007 and 2006 and Consolidated Statements of Income for the twelve months ended December 31, 2007 and 2006 for specific information regarding the Company's financials.

Coast Bancorp and Subsidiary Consolidated Balance Sheets December 31, 2007 and 2006

ASSETS 2007 2006 ------------- ------------- Cash and due from banks $ 6,923,496 $ 7,173,159 Federal funds sold 14,350,000 17,800,000 ------------- -------------TOTAL CASH AND CASH EQUIVALENTS 21,273,496 24,973,159

Investment securities available for sale 7,694,486 7,925,950

Loans: Commercial 41,498,791 41,725,900 Real estate - construction 41,044,155 28,126,176 Real estate - other 58,050,610 62,298,552 Consumer 3,339,550 4,705,259 ------------- -------------TOTAL LOANS 143,933,106 136,855,887

Net deferred loan fees (162,696) (352,195) Allowance for credit losses (1,487,131) (1,388,310) ------------- -------------NET LOANS 142,283,279 135,115,382

Premises and equipment 8,733,401 9,739,660 Deferred taxes 485,000 472,000 Federal Reserve Bank and Federal Home Loan Bank stock, at cost 991,350 945,650 Other Real Estate Owned 770,000 -Accrued interest and other assets 1,520,398 1,567,341 ------------- -------------TOTAL ASSETS $ 183,751,410 $ 180,739,142 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest-bearing demand $ 42,989,733 $ 39,556,425 Money market and NOW 45,959,276 50,035,815 Savings 6,454,025 6,673,615 Time deposits of $100,000 or more 49,012,877 50,708,688 Other time deposits 17,648,933 15,555,896 ------------- -------------TOTAL DEPOSITS 162,064,844 162,530,439

Junior subordinated debt securities 7,217,000 5,155,000 Other liabilities 338,924 342,474 ------------- -------------TOTAL LIABILITIES 169,620,768 168,027,913 ------------- -------------Commitments and contingencies - Notes #4 and #12 - -Stockholders' equity: Preferred stock - 10,000,000 authorized, none outstanding - - Common stock no par value; 10,000,000 shares authorized; issued and outstanding: 713,000 in 2007 and 679,600 in 2006 7,443,847 7,035,163 Additional paid-in capital 184,780 76,416 Retained earnings 6,462,202 5,610,760 Accumulated other comprehensive income - net of unrealized gains (losses) on available-for-sale securities, net of taxes of $27,666 in 2007 and ($7,720) in 2006 39,813 (11,110) ------------- -------------TOTAL STOCKHOLDERS' EQUITY 14,130,642 12,711,229 ------------- -------------TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 183,751,410 $ 180,739,142 ============= ============ Coast Bancorp and Subsidiary Consolidated Statements of Income For the Years Ended December 31, 2007 and 2006

2007 2006 ------------ -------------INTEREST INCOME Interest and fees on loans $ 12,530,114 $ 12,776,501 Interest on investment securities 423,211 243,553 Interest on federal funds sold 866,810 792,308 Other interest income 76,038 54,896 ------------ -------------TOTAL INTEREST INCOME 13,896,173 13,867,258 ------------ -------------INTEREST EXPENSE Interest on money market and NOW accounts 1,562,697 1,420,141 Interest on savings deposits 145,494 129,492 Interest on time deposits 3,320,882 2,836,756 Interest on junior subordinated debt securities 487,931 474,048 Interest on other borrowings - 155 ------------ -------------TOTAL INTEREST EXPENSE 5,517,004 4,860,592 ------------ -------------NET INTEREST INCOME 8,379,169 9,006,666

Provision for credit losses 160,000 236,000 ------------ -------------NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 8,219,169 8,770,666 ------------ -------------NON-INTEREST INCOME Service charges on deposits accounts and other noninterest income 387,227 341,283 Gain on sale of loans, servicing fees, and amortization of servicing assets 83,000 426,121 Mortgage packaging fees 73,179 88,367 Gain (loss) on sale of premises and equipment (5,316) 19,772 ------------ -------------TOTAL NON-INTEREST INCOME 538,090 875,543 ------------ -------------NON-INTEREST EXPENSE Salaries and benefits 3,818,194 4,047,582 Net occupancy expenses 507,709 501,087 Equipment expenses 317,606 327,585 Data processing 536,316 470,131 Director fees and expenses 127,165 148,000 Insurance 55,825 61,486 Marketing and business promotion 627,560 845,924 Other professional expenses 210,968 232,660 Office expenses 235,865 253,514 Regulatory assessments 183,994 86,289 Other expenses 379,455 379,312 ------------ -------------TOTAL NON-INTEREST EXPENSE 7,000,657 7,353,570 ------------ -------------INCOME BEFORE INCOME TAXES 1,756,602 2,292,639

Income taxes 748,300 918,500 ------------ -------------NET INCOME $ 1,008,302 $ 1,374,139 ============ ============Per Share Data Net income - basic $ 1.44 $ 2.03 Net income - diluted $ 1.40 $ 1.93

This news release contains forward-looking statements with respect to the financial condition, results of operation and business of Coast Bancorp and its subsidiaries. All financial results are unaudited and therefore subject to change. These include, but are not limited to, statements that relate to or are dependent on estimates or assumptions relating to the prospects of loan growth, credit quality and certain operating efficiencies resulting from the operations Coast National Bank. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressure among financial services companies increases significantly; (2) changes in the interest rate environment on interest margins; (3) general economic conditions, internationally, nationally or in the State of California are less favorable than expected; (4) legislation or regulatory requirements or changes adversely affect the business in which the combined organization will be engaged.

Contact: Coast National Bank (805)541-0400

2008-03-20 18:44:23 0317681 MARKETWIRE