Central Coast Bancorp Announces a 22.7% Increase in First Quarter Earnings per Share

Market Wire, April, 2005

Central Coast Bancorp (NASDAQ: CCBN), the holding company for Community Bank of Central California, today announced a 22.7% increase in diluted earnings per share for the first quarter of 2005 as per share earnings were $0.27 versus $0.22 in the prior year period. The Company also achieved record quarterly net income of $3,845,000 for an increase of 20.5% over the $3,192,000 reported in the first quarter of 2004. As compared to the fourth quarter of 2004, net income increased 24.6% over the $3,086,000 reported in that quarter and diluted earnings per share increased 17.4% over the $0.23 reported. All earnings per share and applicable share data for the 2004 periods have been adjusted for the five-for-four stock split distributed on February 28, 2005.

The annualized return on average equity and a return on average assets were 15.0% and 1.34%, as compared to 14.0% and 1.27% for the same period in 2004.

The Company ended the first quarter with total assets of $1,168,457,000, for an increase of $4,036,000 (0.3%) from the 2004 year-end balance of $1,164,661 and an increase of $147,235,000 (14.4%) from the $1,021,222,000 balance at March 31, 2004. At the end of the first quarter of 2005, total loans were $927,739,000, a slight decrease of $3,777,000 (0.4%) from year-end, but an increase of $153,214,000 (19.8%) on a year-over-year basis. Deposits at quarter-end totaled $1,051,166,000, which was essentially flat from the 2004 year-end balance. On a year-over-year basis, deposits increased $133,580,000 (14.6%).

"Our year-over-year growth in the major balance sheet items of assets, loans and deposits has been achieved internally and is reflective of the continuing strength of our community based banking franchise," stated Nick Ventimiglia, Chairman and CEO. He continued, "We are pleased with the record quarterly earnings and the 22.7% increase in per share earnings in this first quarter of 2005. The continuing actions to raise interest rates taken by the Federal Reserve Board through its Federal Open Market Committee (FOMC) have had a favorable impact on the Company's net interest margin. The Company's balance sheet is positioned such that further rate increases should continue to have a favorable impact on earnings going forward."

Financial Summary:

Interest income, net interest income, net interest margin and the efficiency ratio are discussed below on a fully taxable equivalent basis. These items have been adjusted to give effect to $297,000 and $272,000 in taxable equivalent interest income on tax-free investments in the three-month periods ending March 31, 2005 and 2004.

Net interest income for the first quarter of 2005 was $13,292,000, an increase of $2,956,000 (28.6%) from the first quarter of 2004. Interest income for the first quarter of 2005 was $16,865,000, an increase of $3,813,000 (29.2%) from the first quarter of 2004. Increases in both the average earning assets and the yields earned on the assets contributed to the substantial improvement in interest income. In the first quarter of 2005, average earning assets were $159,322,000 (17.0%) over the prior year period. This increase in volume of earning assets added $2,441,000 to interest income. The average yield increased 63 basis points to 6.22%, which added $1,372,000 to interest income. The yield on earning assets reflected an increase of 19 basis points from the 6.03% earned in the fourth quarter of 2004.

Interest expense in the first quarter of 2005 totaled $3,573,000, which was an increase of $857,000 (31.6%) over the first quarter of 2004. Rates paid on interest bearing liabilities have begun to move up on a year-over-year basis. The average rate paid on interest bearing liabilities in the first quarter of 2005 increased 24 basis points to 1.88% as compared to 1.64% in the year earlier period and increased 21 basis points from 1.67% in the fourth quarter of 2004. The higher rates increased interest expense by $353,000 from the year earlier period. Average balances of interest bearing liabilities in the first quarter of 2005 increased by $106,605,000 (16.1%) over the prior year period, which added $504,000 to interest expense.

The net interest margin for the first quarter of 2005 was 4.90% as compared to 4.87% for the fourth quarter of 2004 and 4.42% in the first quarter of 2004. If the FOMC continues to raise the interest rates, we would expect the net interest margin to improve slightly during the second quarter.

The Company provided $1,150,000 for loan losses in the first quarter of 2005 as compared to $65,000 in the first quarter of 2004. At March 31, 2005, nonperforming and restructured loans totaled $1,041,000 as compared to $835,000 at December 31, 2004 and $10,520,000 at March 31, 2004. The ratio of the allowance for loan losses to total loans was 1.86% at March 31, 2005, 1.75% at December 31, 2004 and 2.15% at March 31, 2004.

Noninterest income increased $136,000 (14.8%) in the first quarter of 2005 as compared to the first quarter of 2004. Much of the change was due to realizing a $12,000 gain on the sale of securities in 2005 as compared to a loss of $104,000 in 2004.