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Coast National Bank Selling Morro Bay Branch Office and Related Deposits to Heritage Oaks Bank


October 1, 2012 - San Luis Obispo, CA

San Luis Obispo-based Coast National Bank, the wholly owned subsidiary of Coast Bancorp (OTCQB: CTBP), today announced that it entered into a definitive agreement for the sale of Coast National Bank's Morro Bay branch location to Heritage Oaks Bank. The transaction includes the sale of approximately $30 million in deposit accounts at the Morro Bay branch together with the fixed assets and real estate. Heritage Oaks Bank will pay market value for the building and the physical assets, and a blended deposit premium of 2.2% for the deposits which includes approximately 35.5% non-interest bearing demand deposits. No loans will be transferred in connection with the sale of the branch.

Anita Robinson, President and CEO of Coast National Bank, said that Coast conducted a process to ensure it was receiving the best price possible for this branch sale. Heritage Oaks Bank's bid was the best one of several received by Coast. Robinson, who became President and CEO of Coast in late January of this year, said that after careful consideration the Board made a decision that selling the Morro Bay branch and focusing operations on Coast's three remaining locations was in the best interest of the Bank and its shareholders. Ms. Robinson stated, "This sale helps strengthen the Bank financially by both increasing Coast's capital ratios and further reducing the Bank's operating expenses, which in turn will help increase its profitability."

Robinson said timing and opportunity created an ideal circumstance for Heritage Oaks Bank to acquire the Morro Bay location. "Coast National Bank has been focused on its rebound from the economic problems of the last few years. This transaction will make a great contribution to the positive progress underway." Ms. Robinson further stated, "We are pleased that Heritage Oaks Bank is the successor because they know the community and also share a commitment to community banking. We know they will take care of our customers, and provide them with great service. Change is tough, but this transaction will keep community banking in Morro Bay, will retain jobs, support customers and will benefit both Coast National Bank and Heritage Oaks Bank."

Simone Lagomarsino, president and CEO of Heritage Oaks Bancorp and Heritage Oaks Bank, echoed Robinsons' sentiments and expressed her excitement about returning to Morro Bay. "It's gratifying when a turn of events offers a positive outcome not only for one party, but many parties," she said. "Heritage Oaks Bank is honored to return to Morro Bay and we will work hard to prove it to Coast National Bank customers and the Morro Bay community." Lagomarsino noted that she and Robinson are hard at work determining how to integrate current Coast National Bank's Morro Bay customers into Heritage Oaks Bank operations. "We share a goal of creating as seamless a transition as possible," she said.

The sale is subject to regulatory approval by the regulators of each bank, and is expected to close before the end of 2012. After the sale is completed, Coast National Bank will continue operations from three strategic office locations in San Luis Obispo County, in San Luis Obispo, Arroyo Grande and Paso Robles.

Established in 1997, Coast National Bank is an independent commercial bank serving consumers and businesses through four local offices serving San Luis Obispo County. With a focus on delivering unsurpassed 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 www.coastnationalbank.com 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 ongoing financial crisis in the United States 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.

Contact:
James M. Kaney
Director of Finance
805-541-0400

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