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Coast National Bank Announces Fourth Quarter Earnings Results

SAN LUIS OBISPO, CA -- (Marketwired) -- 02/12/14 -- Coast National Bank, a wholly owned subsidiary of Coast Bancorp (OTCBB: CTBP) today reported net profits of $1,000,000 for the year ended December 31, 2013, a significant improvement over the $88,000 net profit for 2012.

"As we wrap up 2013, the balance sheet improvement and positive 'turnaround' progress continued," said President and Chief Executive Officer Anita M. Robinson. "This positive success allowed the bank to recapture some of the provisions for loan losses from prior periods. While core earnings were below target, it was a direct result of reduced volume of Net Loans Outstanding and, resulting lower yields in earning assets. However, this trend began to reverse in 2013, as loan volume began to improve and new loan activity improved significantly. It is expected the bank will begin to reduce the excess liquidity through increased loan funding, thus improving the Net Interest Margin and future profitability."

"With the ongoing focus on community and small business lending, Coast National Bank is poised to move into an era of rebuilding and growth. Once again, the loyalty and commitment from our strong core customer base will be the foundation of future success in the coming years."

Coast National Bank Highlights:

Total assets at December 31, 2013 were $120.0 million, or 6.9% higher compared to $112.2 million at December 31, 2012. Total deposits increased to $111.6 million or 6.7% at year-end 2013 compared to $104.7 million at year-end 2012. Net loans were $64.4 million, down 8.7% at December 31, 2013 compared to $70.6 million at December 31, 2012. The decline in loans reflects the aggressive work in the resolution of troubled loan assets. Non-performing assets were $2.4 million at December 31, 2013 compared to $3.6 million at December 31, 2012.

In the fourth quarter, the bank posted a reverse provision for loan losses of $1.2 million, which reduced the Allowance for Loan Losses from 3.76% of gross loans outstanding at September 30, 2013 to 2.45% at December 31, 2013. At this level, the Allowance for Loan Losses is adequate in light of the bank's low level of non-performing loans of $1.0 million compared to $1.9 million at December 31, 2012.

Deposits ending December 31, 2013 increased from prior year by $7.1 million or 6.7%. Core deposits represent 93% of total deposits and demand deposits representing 36% of total deposits. The bank continues to drive a strong core customer base together with low cost of deposits averaging .22%, reduced from .33% in 2012.

At December 31, 2013 the bank's Tier I leverage ratio was 6.8% compared to 5.2% one year ago. Its total risk-based capital ratio was 12.9% at December 31, 2013 compared to 11.5% at December 31, 2012. Although not in compliance with the Tier I leverage ratio of 9.0% requirement under its Consent Order, it is considered to be "Well Capitalized." Management and the board of directors are executing its capital plan to bring the bank into compliance in this area.

Coast Bancorp Highlights:

Coast Bancorp reported net profits of $806,000 or $0.95 per basic and diluted share for the year ended December 31, 2013 compared to a loss of $457,000 or $0.54 per basic and diluted share for 2012. Total stockholder's equity continues to reflect a deficit of $868,200, an improvement of 46% over 2012. Total consolidated assets were $120.3 million at December 31, 2013 compared to $112.5 million at December 31, 2012. Total consolidated liabilities of $121.1 million were centered in total deposits held in the bank of $111.6 million and Junior Subordinated Debt Securities of $7.2 million due in 2027, as well as Accrued and unpaid Dividends on these debt securities of $2.3 million which is due June 2014 in order to avoid a default.

The board of directors of the company continues to explore a capital raise. New capital will be utilized to satisfy the payment of unpaid dividends on the debt securities due by June 2014. Additionally, a portion of the proceeds will be invested into the subsidiary bank to supplement current capital levels and bring the Tier 1 Leverage ratio in excess of 9.0%, in satisfaction of required capital levels by the regulator.

Established in 1997, Coast National Bank is a locally owned community bank serving consumers and businesses through four local offices serving San Luis Obispo County. With a focus on delivering quality customer service, Coast National Bank provides small business loans and an array of business and personal banking deposit products and other services. For further information, visit or call 805.541.0400.

Coast National Bank is an equal housing lender and member FDIC.

Statements concerning future performance, developments or events, expectations for growth, income forecasts, sales activity for collateral, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to the current economic trends and the markets in which Coast National Bank operates, and the response of the federal and state government and our regulators thereto, continued growth, Coast National Bank's beliefs as to the adequacy of its existing and anticipated allowances for loan losses, beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of Coast National Bank's operations, interest rates and financial policies of the United States government, continued weakness in the real estate markets within which we operate and general economic conditions. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Coast Bancorp's results could differ materially from those expressed in, implied or projected by such forward-looking statements. Coast National Bank assumes no obligation to update such forward-looking statements.

                            COAST NATIONAL BANK
                          CONDENSED BALANCE SHEETS
                               (In thousands)
                                                          December 31,
                                                        2013        2012
ASSETS                                                Unaudited    Audited
                                                     ----------  ----------
Cash and due from banks                              $   29,510  $   24,800
Interest-bearing deposits with other banks               10,047       7,307
Federal funds sold                                          100         100
Investment securities                                     6,932           -
Loans, net                                               64,445      70,551
Premises and equipment, net                               6,192       5,998
Federal Reserve and Federal Home Loan Bank stock, at
 cost                                                       533         768
Other real estate owned, net                              1,365       1,694
Accrued interest receivable and other assets                851       1,017
                                                     ----------  ----------
  Total assets                                       $  119,975  $  112,235
                                                     ==========  ==========

Non-interest bearing demand                          $   42,747  $   40,568
Money market and NOW                                     37,612      34,030
Savings                                                   8,209       7,366
Time                                                     23,061      22,691
                                                     ----------  ----------
  Total deposits                                        111,629     104,655
Accrued interest payable and other liabilities              166         335
                                                     ----------  ----------
  Total liabilities                                     111,795     104,990
                                                     ----------  ----------
Common stock - no par value, 846,881 shares
 outstanding at December 31, 2013 and 2012,
 respectively                                             3,162       3,162
Additional paid-in capital                                9,835       9,835
Retained earnings                                        (4,750)     (5,752)
Unrealized loss on AFS securities, net                      (67)          -
                                                     ----------  ----------
  Total stockholders' equity                              8,180       7,245
                                                     ----------  ----------
  Total liabilities and stockholders' equity         $  119,975  $  112,235
                                                     ==========  ==========

                             COAST NATIONAL BANK
                  (In thousands, except per share amounts)

                                    For the Years Ended  Three Months Ended
                                       December 31,         December 31,
                                      2013       2012      2013       2012
                                   Unaudited   Audited  Unaudited   Audited
                                   ---------  --------- ---------  ---------
Total interest income              $   4,205  $   4,957 $     995  $   1,193
Total interest expense                   257        441        60         97
                                   ---------  --------- ---------  ---------
  Net interest income                  3,948      4,516       935      1,096
Provision for loan losses             (1,200)         -    (1,200)         -
                                   ---------  --------- ---------  ---------
  Net interest income after
   provision for loan losses           5,148      4,516     2,135      1,096

Noninterest income                     1,354      1,589       109        682
Noninterest expense                    5,500      6,015     1,389      1,572
                                   ---------  --------- ---------  ---------
  Income before income taxes           1,002         90       855        206
Income taxes                               2          2         -          -
                                   ---------  --------- ---------  ---------
  Net profit                       $   1,000  $      88 $     855  $     206
                                   =========  ========= =========  =========

Basic and diluted profit per share $    1.18  $    0.10 $    1.01  $    0.24
                                   =========  ========= =========  =========

Weighted average basic and diluted
 shares outstanding                      847        847       847        847

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