Coastal Banking Company Reports Second Quarter 2012 Results

BEAUFORT, SC – August 15, 2012 – Coastal Banking Company Inc. (OTC: 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 a net loss of $110,360, or a loss of $0.09 per diluted common share, for the quarter ended June 30, 2012. This compares to a net loss of $181,316, or a loss of $0.13 per diluted common share, in the second quarter of 2011.

Key highlights from the second quarter of 2012 include:

• Net interest income grew $148,788 compared the same period a year ago.
• Noninterest income grew $8.1 million from last year, due to a large increase in mortgage banking income.
• The company’s residential mortgage banking division originated approximately $494million in loans available for sale in the secondary market. Of this total, the company’s recently-formed National Retail Group generated approximately $226 million in loan production.
• Nonaccrual loans declined for the fourth consecutive quarter. Net charge-offs increased by approximately $785,000 from a year ago.
• Capital ratios at CBC National Bank remained strong with a total risk-based capital ratio of 19.28 percent and a Tier 1 risk-based capital ratio of 18.00 percent.

“We increased both net interest income and noninterest income during the second quarter, reflecting continued success in our strategy to grow mortgage banking income,” said Michael G. Sanchez, chief executive officer. “These increases were partially offset by higher costs associated with greater mortgage activity, as well as costs associated with higher net charge-offs in the second quarter. We remain confident in the overall health of our loan portfolio, though, as we are encouraged by three consecutive quarterly declines in loans on nonaccrual.”