Coastal Carolina Bancshares, Inc.

Where It Passes

Where It Falls Short

• Profitability0% pass✓ 4✗ 31▾

  No clean pass — all 16 investors flag at least one profitability criterion

  Positive EPS (10 years)1/6 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)1/6 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-7.4%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$0.1M

  ✓BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)P/E 603.3x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE0.5%

  ✗Lynch> 15%

  Net Income / Total Assets0.07%

  ✓PiotroskiROA > 0

  ROA Change YoY-1.35% -> 0.07% (delta: +1.43%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=-0.75%, ROA=0.07%

  ✗PiotroskiCFO/Assets > ROA

  Pre-Tax Income / Revenue

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity0.5%

  ✗Dreman> 12%

  Return on Equity0.5%

  ✗Munger> 15%✗AkreROE > 20% (3-year avg)

  Margin of SafetyP/E=603.3x, P/TBV=2.7x

  ✗PabraiP/TBV < 1.5 or P/E < 15

  ROE (high and growing)FY2010: ROE=-13.6%; FY2011: ROE=-9.1%; FY2012: ROE=0.5%

  ✗AkreLatest 3 consecutive FYs: ROE > 15% in each

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency1/3 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue

  ✗Ackman>= 15%

  Net Income / Shareholders Equity0.5%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trend

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  ROE (5-year)0/3 years above 12% (latest 0.5%)

  ✗SleepROE > 12% in a majority of years

  Net income / market capitalization+0.05%; #3170/6340 (top 50.0%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+0.51%; #2868/5226 (top 54.9%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0117; #939/5884 (top 16.0%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Valuation0% pass✗ 26▾

  All 12 investors flag CCNB's valuation

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Tangible-Book Ratio2.7x

  ✗Graham<= 1.5x

  P/E x P/TBV

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)P/E 603.3x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  Price / EPS603.3x

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  Price / Tangible Book Value per Share2.7x

  ✗Dreman< 1.2x✗SchlossP/TBV <= 1.00x (app cutoff)

  Valuation ReasonablenessP/E=603.3x, OE Yield=-0.8%

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldP/E=603.3x, FCF Yield=-0.9%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=603.3x, P/B=2.7x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Price vs. Trailing Low165% of trailing low ($10.94)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Price / Book Value per Share2.7x

  ✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Net income / market capitalization+0.05%; #3170/6340 (top 50.0%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+0.1046; #4719/6449 (top 73.2%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS603.3x

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Book Value per Share Change

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-0.91%; #2657/4519 (top 58.8%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+29.38%; #1037/6202 (top 16.7%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth0% pass✓ 1✗ 11▾

  No clean pass — all 8 investors flag at least one growth criterion

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)P/E 603.3x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  EPS Growth Direction$-0.92 (2010) -> $0.03 (2012)

  ✓DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency1/3 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth

  ✗Ackman>= 5%

  Positive EPS Growth Frequency2/2 years with positive EPS growth

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trend

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency0% pass✗ 3▾

  All 3 investors flag CCNB's efficiency

  Revenue / Total Assets Change YoY

  ✗PiotroskiImproved YoY

  Reinvestment Rate x ROIC0.5% (RR=100% x ROIC=0.5%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROE (5-year)0/3 years above 12% (latest 0.5%)

  ✗SleepROE > 12% in a majority of years
• Valuation models0% pass✗ 2▾

  CCNB overvalued: all 2 models price fair value below $18.10 (median $1.26)

  Graham fair value$2.11

  ✗Graham-756.0% margin vs $18.10

  Buffett fair value$0.40

  ✗Buffett-4425.0% margin vs $18.10
• Verdicts7% pass✓ 1✗ 13▾

  Split decision: 13 FAIL · 2 NEUTRAL · 1 PASS

  Overall verdict

  ✗GrahamFAIL (0/7)✗BuffettFAIL (1/6)✗LynchFAIL (0/4)✓PiotroskiPASS (F-Score 4)✗DremanFAIL (1/9)✗MungerFAIL (1/3)✗PabraiFAIL (0/3)✗AkreFAIL (0/5)✗MarksFAIL (0/4)✗AckmanFAIL (0/8)✗TempletonFAIL (1/8)✗SleepFAIL (1/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (0/6)✗SchlossFAIL (0/7)•OshaughnessyNEUTRAL (Not ranked)
• Cash Flow10% pass✓ 1✗ 11▾

  9 of 10 flag CCNB's cash flow — Lynch, Piotroski, Dreman +6 more

  Free Cash Flow Proxy$0.1M

  ✓BuffettPositive and growing

  FCF Positive and Growing$-1.3M

  ✗LynchPositive and growing

  Operating Cash Flow$-0.8M

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=-0.75%, ROA=0.07%

  ✗PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  P/E or FCF YieldP/E=603.3x, FCF Yield=-0.9%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive0/3 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap-3.2%

  ✗Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency0/3 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$-1.3M

  ✗Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization-0.91%; #2657/4519 (top 58.8%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Debt & Leverage25% pass✓ 1✗ 4▾

  3 of 4 flag CCNB's debt & leverage — Templeton, Asness and Schloss

  LT Debt / Total Assets Change0.00% -> 0.00%

  ✓PiotroskiDecreased YoY

  Total Debt / Shareholders' Equity

  ✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗SchlossD/E < 1.00x

  Negative debt-to-equity (higher means less debt)

  ✗AsnessTop 30% of eligible cross-section

  Current Assets / Current Liabilities

  ✗SchlossCurrent ratio >= 1.50x (app cutoff)