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| Coastal Bancorp, Inc. Announces Fourth Quarter Earnings of $1.05 Per Share And Annual Earnings of $2.99 Per Share |
| COASTAL BANCORP LOGO
Coastal Bancorp logo. (PRNewsFoto)[DM TC] HOUSTON, TX USA | |||
HOUSTON, Jan. 15 /PRNewswire-FirstCall/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income available to common stockholders of $5.7 million for the quarter ended December 31, 2002, compared to $4.3 million for the same period in 2001, which is a $1.4 million, or 31.9% increase. The increase was comprised of the following: a $5.8 million increase in noninterest income, of which $4.4 million represents the gain on the sale of five branch offices (see discussion below), and a $647,000 decrease in the expense for minority interest (related to preferred stock of Coastal Banc ssb which was redeemed on July 15, 2002), offset by a decrease of $2.3 million in net interest income, an increase in the provision for loan losses of $2.2 million, an increase in noninterest expense of $158,000 and an increase in the provision for federal income taxes of $426,000. Diluted earnings per share for the quarter ended December 31, 2002 were $1.05 compared to $0.70 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 5,394,484 and 6,109,355, respectively. For the quarter ended December 31, 2002, diluted earnings per share would have been $0.79 without the gain on the sale of the branch offices and had the provision for loan losses for the quarter been $900,000 as budgeted. Basic earnings per share for the quarter ended December 31, 2002 were $1.10 compared to $0.74 for the same period in 2001. Fourth Quarter 2002 Activity During the fourth quarter of 2002, Coastal sold five of its branches in Central Texas (located in Llano, Burnet, Mason, Kingsland and Marble Falls, Texas) to First State Bank Central Texas. The sale included deposit accounts of $75.3 million and resulted in a gain of $4.4 million. The branches sold had limited growth potential for Coastal. Coastal continually monitors the market and performance of its branch network and opens, purchases or sells branches based on this analysis. In addition, during the fourth quarter of 2002, Coastal entered into an agreement with a third party to sell approximately $77.0 million of single- family mortgage loans. As of December 31, 2002, $74.4 million of these loans had been sold, $70.1 million of which were sold servicing retained and $4.3 million (which were considered nonperforming loans) were sold servicing released. The remaining $2.6 million, which are under a contract for sale, were reclassified to the held for sale category as of the end of the year. In connection with this sale and the reclassification of the remaining loans to the held for sale category, the loans were written down to fair value through a charge-off to the allowance for loan losses of $309,000. In addition, Coastal recorded a gain of $359,000 on the sale of these loans as a result of Coastal recording the estimated fair value of the mortgage servicing rights retained. Comparison for the Three Months ended December 31, 2002 and 2001 Noninterest Income Noninterest income increased by $5.8 million for the quarter ended December 31, 2002 compared to the quarter ended December 31, 2001. As discussed previously, this increase was primarily due to Coastal's sale of five of its branches in Central Texas that resulted in a gain of $4.4 million and the $359,000 gain on the sale of the group of loans with servicing rights retained during the period. In addition, service charges on deposit accounts increased by $1.0 million and other noninterest income increased $370,000. The increase in service charges on deposit accounts was due to Coastal's continued focus on increasing transaction-type accounts and the related fee income, including Coastal's new Free Checking and Bounce Protection features on retail checking accounts introduced during August 2002. The increase in other noninterest income was due primarily to a $229,000 gain recorded on the sale of branch real estate properties and a $84,000 increase in the gain on sale of loans held for sale. These increases were somewhat offset by a $48,000 decrease in loan fees, a $22,000 decrease in the gain on derivative instruments and a $68,000 decrease in the gain on sale of real estate owned. Net Interest Income Due to Coastal's smaller asset size, the lower interest rate environment, the loan sale mentioned previously and continuing higher than expected principal payments received on Coastal's mortgage-backed securities and mortgage loan portfolios, Coastal experienced decreased net interest income of $2.3 million when comparing the quarter ended December 31, 2002 to the same period in 2001. When comparing the two quarters, average interest-earning assets decreased $230.0 million to $2.5 billion. The $230.0 million decrease in average interest-earning assets consisted primarily of a $288.1 million decrease in the average balance of mortgage-backed securities, somewhat offset by a $87.8 million increase in the average balance of loans receivable. The decrease in average interest-earning assets was largely due to the reduction in Coastal's asset size in late November 2001. To strategically restructure a portion of its asset base to make it less vulnerable to market interest rate and price fluctuations, Coastal sold $845 million of mortgage-backed securities and purchased $512 million of primarily pass-through securities at a premium. This transaction had the effect of shortening the duration of the mortgage-backed securities portfolio, thereby lessening the extension risk to Coastal. In addition to the reduction in Coastal's asset size due to the restructuring and the loan sale, during the fourth quarter of 2002 as a consequence of the extraordinary high levels of refinancings, Coastal continued to experience higher principal paydowns of $36.0 million (or approximately 30% on an annualized basis) on its mortgage-backed securities portfolio and $93.3 million (or approximately 40% on an annualized basis) on its single-family mortgage loan portfolio, which resulted in greater premium amortization on those assets originally purchased at a premium. Net interest margin decreased to 2.87% for the three months ended December 31, 2002 from 2.97% for the three months ended December 31, 2001. This decrease in net interest margin was a result of the 1.05% decrease in the average yield on interest-earning assets, which was partially offset by the 1.00% decrease in the average rate paid on interest-bearing liabilities, both due to the decrease in general market interest rates which started in 2001 and continued through 2002. Comparing the same periods, average interest-bearing liabilities decreased $221.5 million as a result of the strategic restructuring. Provision for Loan Losses During the quarter ended December 31, 2002, Coastal recorded a provision for loan losses of $3.1 million compared to $900,000 for the same period in 2001. This increase in the provision for loan losses was due to management's reevaluation of the overall allowance for loan losses and the changes that have occurred within the mix of Coastal's loan portfolio, in addition to certain specific loans in the portfolio that have warranted greater attention and specific allocations of the allowance for loan losses. While management believes that it has adequately provided for loan losses, it will continue to monitor the loan portfolio and make adjustments to its allowance for loan losses as it considers necessary. Noninterest Expense and Provision for Federal Income Taxes Noninterest expense was up $158,000 when comparing the quarter ended December 31, 2002 to the same period in 2001. The net increase was comprised of the following: increases of $233,000 in compensation, payroll taxes and other benefits, $195,000 in advertising and $720,000 in other noninterest expense, offset by decreases of $292,000 in office occupancy and $702,000 in the amortization of goodwill, respectively. The $233,000 increase in compensation, payroll taxes and other benefits was due to normal merit increases for existing staff and additional personnel needed to continue Coastal's focus on commercial banking products, lending and providing other services to commercial business customers. The increase in advertising expense was primarily due to Coastal's continued focus on increasing transaction type deposit accounts. The increase in other noninterest expense was primarily due to the $401,000 reversal of an accrued franchise tax liability during the 2001 period and changes in various other categories. The decrease in office occupancy was primarily due to certain assets becoming fully depreciated during 2002. The decrease in the amortization of goodwill was due to the implementation of FASB Statements 141, 142 and 147 effective January 1, 2002 (see discussion below). The provision for Federal income taxes increased $426,000 primarily due to the increased income before Federal income taxes and minority interest, with the effective tax rate being approximately 31% for the 2002 period and 30% for the 2001 period. Asset Quality As shown in the "Other Financial Data" table attached, at December 31, 2002, Coastal's nonperforming loans decreased, when compared to December 31, 2001, by $6.2 million or 25%, to $18.5 million. Nonperforming loans are those loans on nonaccrual status as well as those loans greater than ninety (90) days delinquent and still accruing interest. The decrease in nonperforming loans is mainly due to Coastal's decision to liquidate a portion of its single-family mortgage loan portfolio during 2002. The first loan sale was on March 22, 2002 when Coastal sold $10.8 million of its under-performing loans to a third party investor. The second sale was in December 2002 when Coastal sold $4.3 million of nonperforming loans as previously discussed. The ratio of nonperforming assets to total assets was 0.91% at December 31, 2002 and 1.13% as of December 31, 2001. At December 31, 2002, $9.2 million, or 50%, of nonperforming loans were first lien residential (single-family) mortgage loans, $5.5 million were acquisition and development loans, $1.7 million were commercial, financial and industrial loans, $1.6 million were commercial real estate loans with the balance in other loan categories. At December 31, 2002, the allowance for loan losses as a percentage of nonperforming loans (excluding nonperforming loans held for sale which are recorded at the lower of cost or fair value) was 97.7% compared to 62.3% at December 31, 2001. Redemption of Senior Notes On February 1, 2002, Coastal redeemed all of its 10.0 % Senior Notes ($43.9 million) outstanding, at par plus accrued interest. Issuance of Trust Preferred Securities and Redemption of Coastal Banc ssb's Noncumulative Preferred Stock On June 18, 2002, Coastal, through Coastal Capital Trust I (a consolidated trust subsidiary) (the "Trust"), issued 2,000,000 in trust preferred securities ("Trust Preferred Securities") with a liquidation preference of $25 per security. The Trust Preferred Securities represent undivided beneficial interests in the Trust, which was established and is guaranteed by Coastal Bancorp, Inc. The Trust is the lender on the junior subordinated debentures to Coastal whose interest payments fund the dividends on the Trust Preferred Securities. The debentures have the same payment terms as the Trust Preferred Securities. Dividends on the securities are payable quarterly at the annual rate of 9.0%. The proceeds from the issuance of the Trust Preferred Securities were used to repurchase 500,000 shares of common stock for $15.0 million from a director of the Company in June and $28.8 million was used on July 15, 2002 to redeem Coastal Banc ssb's 9.0% Series A Noncumulative Preferred Stock (CBSAP) through a capital contribution to Coastal Banc ssb. Implementation of FASB Statements 141, 142 and 147 In July 2001, Statement of Financial Accounting Standards No. 141, "Business Combinations" ("Statement 141") and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("Statement 142") were issued. Statement 141 required, effective January 1, 2002, that Coastal evaluate its existing intangible assets and goodwill and make any necessary reclassifications in order to conform with the new criteria in Statement 141 for recognition apart from goodwill. Statement 141 also required that Coastal reclassify amounts originally recorded as goodwill pursuant to Statement of Financial Accounting Standards No. 72, "Accounting for Certain Acquisitions of Banking or Thrift Institutions" ("Statement 72") to other intangible assets, as those amounts, under Statement 142, were not subject to the non-amortization provisions. As of January 1, 2002, Coastal had unamortized goodwill that was subject to the non-amortization provisions of Statements 141 and 142 of $5.5 million. As of that same date, Coastal reclassified $16.3 million to other intangible assets and continued to amortize these amounts in 2002. On October 1, 2002, Statement of Accounting Standards No. 147, "Acquisitions of Certain Financial Institutions" ("Statement 147") was issued. Statement 147 amended Statement 72, to exclude from its scope, the acquisitions of financial institutions (other than transactions between two or more mutual enterprises) and provide certain transition provisions for existing intangible assets. Under Statement 147 transition provisions, if the transaction that gave rise to an unidentifiable other intangible asset was considered a business combination, the carrying amount of that asset amount would now be reclassified to goodwill and be subject to the non-amortization provisions as of the effective date of the implementation of Statement 142, which in Coastal's case was January 1, 2002. Based on the implementation of Statement 147, Coastal has reclassified as of January 1, 2002, the $16.3 million mentioned above to goodwill and removed the amortization expense recorded in 2002, through restatement of its 2002 financial statements as required by Statement 147. Coastal implemented these statements effective January 1, 2002 and has tested for impairment in accordance with the provisions of Statement 142 and did not recognize any transitional impairment losses as the cumulative effect of a change in accounting principle during the period. As restated (due to the implementation of Statement 147), diluted earnings per share for the quarter ended June 30, 2002 were $0.72 (as compared to $0.66 previously reported) and for the quarter ended March 31, 2002 were $0.57 (as compared to $0.51 previously reported). Comparison for the Years Ended December 31, 2002 and 2001 Net income available to common stockholders for the year ended December 31, 2002 was $17.2 million compared to $19.3 million for 2001. Diluted earnings per share for the year ended December 31, 2002 were $2.99 compared to $3.17 for last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 5,750,531 and 6,078,334, respectively. Basic earnings per share for the year ended December 31, 2002 were $3.13 compared to $3.34 for 2001. When comparing the year ended December 31, 2002 to the year ended December 31, 2001, the primary contributor to the decrease in net income available to common stockholders was decreased net interest income. Net interest income decreased $11.8 million from 2001 to 2002, as a result of Coastal's smaller asset size as compared to 2001, lower market interest rates and record high principal payments received on Coastal's mortgage-backed securities and mortgage loan portfolios, as discussed previously. In addition to the decreased net interest income, the provision for loan losses increased $1.9 million. These decreases to net income available to common stockholders were only somewhat offset by an increase of $6.1 million in noninterest income, a $2.6 million decrease in noninterest expense, a $1.7 million decrease in the provision for Federal income taxes and a $1.1 million decrease in the expense for minority interest (preferred stock dividends of Coastal Banc ssb). The increase in noninterest income was primarily due to the $4.4 million gain on the 2002 sale of the five branches and the $359,000 gain recorded in 2002 on the loans sold as discussed previously. The increase is also due to a $2.1 million increase in service charges on deposit accounts and the $422,000 fair value loss on derivative instruments recorded in 2001 (compared to a $12,000 fair value loss recorded during 2002). These increases were partially offset by a $100,000 decrease in loan fees, a $702,000 decrease in the gain on the sale of real estate owned, a $169,000 decrease in the gain on mortgage- backed securities and a $218,000 decrease in other noninterest income (primarily due to $300,000 in insurance proceeds received in 2001 for reimbursement of certain deposit losses in prior years). The decrease in noninterest expense was primarily due to the $2.8 million decrease in the amortization of goodwill as discussed previously. In addition, Coastal experienced decreases of $869,000 and $1.3 million in office occupancy and data processing, respectively. The decrease in office occupancy was primarily due to certain assets becoming fully depreciated during 2001 and 2002. The decrease in data processing expense was due to the conversion of the Rio Grande Valley Region branches to Coastal's primary deposit and loan data processing system and the item processing functions brought in-house during the third quarter of 2001. These decreases were partially offset by an increase of $1.1 million in compensation, payroll taxes and other benefits, a $519,000 increase in advertising expense, a $153,000 increase in postage and delivery expense and a $599,000 increase in other noninterest expense. The increase in compensation, payroll taxes and other benefits was due to the increase in staff needed to bring the item processing functions in-house during the third quarter of 2001, normal merit increases for existing staff and additional personnel needed to continue Coastal's focus on commercial banking products, lending and providing other services to commercial business customers. The increase in advertising and postage and delivery expenses were primarily due to Coastal's continued focus on increasing transaction type deposit accounts. The increase in other noninterest expense was primarily due to the $401,000 reversal of an accrued franchise tax liability during the 2001 period and changes in various other categories. Common Stock Repurchase During the year ended December 31, 2002, Coastal repurchased 729,575 shares of common stock at an average repurchase price of $29.82 per share. As of December 31, 2002, a total of 2,726,019 shares were held in treasury at an average price of $19.45 per share for a total cost of $53.0 million. The Company At December 31, 2002, Coastal had total assets of approximately $2.5 billion, deposits of approximately $1.6 billion, Series A Cumulative Preferred Stock of $27.5 million and common stockholders' equity of approximately $125.4 million. Coastal Bancorp, Inc. owns, through its wholly-owned subsidiary, Coastal Banc Holding Company, Inc., 100 percent of the voting stock of Coastal Banc ssb, a Texas-chartered FDIC insured, state savings bank headquartered in Houston. Coastal Banc ssb operates 43 branch offices in metropolitan Houston, Austin, Corpus Christi, the Rio Grande Valley and small cities in the southeast quadrant of Texas. You can visit our website at http://www.coastalbanc.com (which is not part of this release). Notice under the Private Securities Litigation Reform Act of 1995 "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts contain forward looking statements with respect to plans, projections or future performance of the Company, the occurrence of which involve certain risks and uncertainties. Additional information concerning factors that could cause actual results to materially differ from those in the forward looking statements is contained in Coastal Bancorp Inc.'s Securities and Exchange Commission filings. Investors are cautioned that any such forward looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward looking statements. Furthermore, Coastal does not intend (and is not obligated) to update publicly any forward looking statement. COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars In Thousands, except per share data) (unaudited) For the Three Months For the Year Ended Ended December 31, December 31, 2002 2001 2002 2001 Basic earnings per share before the cumulative effect of accounting change $ 1.10 $ 0.74 $ 3.13 $ 3.36 Basic earnings per share - reported $ 1.10 $ 0.74 $ 3.13 $ 3.34 Basic earnings per share - as adjusted (A) $ 1.10 $ 0.83 $ 3.13 $ 3.69 Diluted earnings per share before the cumulative effect of accounting change $ 1.05 $ 0.70 $ 2.99 $ 3.19 Diluted earnings per share - reported $ 1.05 $ 0.70 $ 2.99 $ 3.17 Diluted earnings per share - as adjusted (A) $ 1.05 $ 0.79 $ 2.99 $ 3.51 Return (before minority interest) on average assets 0.96% 0.78% 0.83% 0.81% Return on average common equity 18.44% 13.26% 13.71% 15.92% Net interest margin 2.87% 2.97% 3.04% 2.97% Noninterest expense to average total assets 2.20% 2.00% 2.19% 1.94% Charge-offs of loans receivable $ 1,093 $ 1,109 $ 3,878 $ 4,073 Net charge-offs of loans receivable $ 986 $ 868 $ 3,067 $ 3,022 Ratio of net charge-offs to average loans receivable 0.20% 0.18% 0.16% 0.16% (A) Pursuant to the transition provisions of Statement 142, presented are as adjusted earnings per share numbers to exclude amortization expense (net of any tax effect) recognized in those periods prior to the implementation related to goodwill that is no longer being amortized. COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (In Thousands) (unaudited) For the Three Months Ended For the Year Ended December 31, December 31, 2002 2001 2002 2001 Average balance sheet information Assets: Interest-earning assets: Loans receivable $ 1,987,865 $ 1,900,113 $ 1,931,931 $ 1,942,701 Mortgage-backed securities 468,931 757,041 467,744 905,441 Other 53,691 83,303 59,846 63,183 Total interest-earning assets 2,510,487 2,740,457 2,459,521 2,911,325 Noninterest-earning assets 95,219 100,696 90,900 98,487 Total assets $ 2,605,706 $ 2,841,153 $ 2,550,421 $ 3,009,812 Liabilities and stockholders' equity: Interest-bearing deposits $ 1,470,521 $ 1,517,944 $ 1,477,648 $ 1,531,004 Borrowings 730,842 911,030 683,454 1,078,631 Company obligated mandatorily redeemable 9.0% trust preferred securities of Coastal Capital Trust I 50,000 --- 26,986 --- Senior notes payable --- 43,916 3,726 45,868 Total interest-bearing liabilities 2,251,363 2,472,890 2,191,814 2,655,503 Noninterest-bearing liabilities 204,669 183,190 190,260 176,861 Preferred stock of Coastal Banc ssb --- 28,750 15,359 28,750 Preferred stockholders' equity 27,500 27,500 27,500 27,500 Common stockholders' equity 122,174 128,823 125,488 121,198 Total liabilities and stockholders' equity $ 2,605,706 $ 2,841,153 $ 2,550,421 $ 3,009,812 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except per share data) (unaudited) December 31, December 31, 2002 2001 Nonaccrual loans receivable: First lien residential $ 9,184 $ 21,744 Residential construction 49 218 Multifamily real estate --- 82 Commercial real estate 1,323 1,174 Acquisition and development 5,485 6 Commercial, financial and industrial 1,609 499 Consumer and other 128 141 17,778 23,864 Loans greater than 90 days delinquent and still accruing: First lien residential --- 62 Residential construction 83 755 Multifamily real estate 282 --- Acquisition and development 59 --- Commercial real estate 302 --- Commercial, financial and industrial 43 31 Consumer and other --- 1 769 849 Total nonperforming loans 18,547 24,713 Real estate owned and repossessed assets 4,433 4,607 Total nonperforming assets $ 22,980 $ 29,320 Allowance for loan losses $ 18,118 $ 15,385 Ratio of nonperforming loans to total loans receivable and loans receivable held for sale 1.00% 1.33% Ratio of nonperforming assets to total assets 0.91% 1.13% Ratio of allowance for loan losses to nonperforming loans receivable (excluding nonperforming loans held for sale) 97.69% 62.26% Ratio of allowance for loan losses to loans receivable (excluding loans receivable held for sale) 1.00% 0.83% Book value per common share $ 23.47 $ 21.54 Tangible book value per common share $ 19.74 $ 18.15 Regulatory capital ratios of Coastal Banc ssb: Tier 1 (Core) 6.88% 7.27% Tier 1 risk-based 10.32% 11.90% Total risk-based 11.38% 12.79% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) December 31, December 31, ASSETS 2002 2001 (Unaudited) Cash and cash equivalents $ 39,766 $ 41,537 Federal funds sold 27,755 16,710 Loans receivable held for sale 49,886 --- Loans receivable 1,812,785 1,863,601 Mortgage-backed securities available-for-sale, at market value 475,022 514,068 Other securities available-for-sale, at market value 1,788 42,827 Accrued interest receivable 9,781 13,243 Property and equipment 27,341 27,461 Stock in the Federal Home Loan Bank of Dallas (FHLB) 41,221 40,032 Goodwill 21,429 21,811 Prepaid expenses and other assets 19,370 16,601 $ 2,526,144 $ 2,597,891 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $ 1,614,368 $ 1,660,386 Advances from the FHLB 696,085 690,877 Company obligated mandatorily redeemable 9.0% trust preferred securities of Coastal Capital Trust I 50,000 --- Senior notes payable --- 43,875 Advances from borrowers for taxes and insurance 2,407 4,259 Other liabilities and accrued expenses 10,399 12,310 Total liabilities 2,373,259 2,411,707 9.0% noncumulative preferred stock of Coastal Banc ssb (Series A) --- 28,750 Commitments and contingencies Stockholders' equity Preferred stock, no par value; authorized shares 5,000,000; 9.12% Cumulative, Series A, 1,100,000 shares issued and outstanding 27,500 27,500 Common stock, $0.01 par value; authorized shares 30,000,000; 7,867,029 shares issued and 5,141,010 shares outstanding at December 31, 2002; 7,835,178 shares issued and 5,835,178 shares outstanding at December 31, 2001 79 78 Additional paid-in capital 35,736 35,366 Retained earnings 141,986 127,425 Accumulated other comprehensive income (loss) - unrealized gain (loss) on securities available-for-sale 619 (1,590) Treasury stock, at cost (2,726,019 shares in 2002 and 2,000,000 shares in 2001) (53,035) (31,345) Total stockholders' equity 152,885 157,434 $ 2,526,144 $ 2,597,891 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended December 31, 2002 2001 (Unaudited) Interest income: Loans receivable $ 28,613 $ 33,386 Mortgage-backed securities 4,054 9,227 FHLB stock, federal funds sold and other interest-earning assets 336 561 33,003 43,174 Interest expense: Deposits 8,966 13,738 Advances from the FHLB 4,870 6,207 Other borrowed money --- 1,766 Senior notes payable --- 1,098 Company obligated mandatorily redeemable trust preferred securities 1,125 --- 14,961 22,809 Net interest income 18,042 20,365 Provision for loan losses 3,100 900 Net interest income after provision for loan losses 14,942 19,465 Noninterest income: Service charges on deposit accounts 3,162 2,147 Loan fees 260 308 Gain on sale of branch offices 4,395 --- Gain on sale of loans receivable 359 --- Gain on sale of mortgage-backed securities available-for-sale --- 169 Gain (loss) on derivative instruments 6 28 Gain (loss) on sale of real estate (90) (22) Other 600 230 8,692 2,860 Noninterest expense: Compensation, payroll taxes and other benefits 8,093 7,860 Office occupancy 2,415 2,707 Data processing 456 477 Amortization of goodwill --- 702 Advertising 557 362 Postage and delivery 448 423 Other 2,509 1,789 14,478 14,320 Income before provision for Federal income taxes and minority interest 9,156 8,005 Provision for Federal income taxes 2,851 2,425 Income before minority interest 6,305 5,580 Minority interest - preferred stock dividends of Coastal Banc ssb --- 647 Net income - reported $ 6,305 $ 4,933 Net income - as adjusted (A) $ 6,305 $ 5,444 Net income available to common stockholders - reported $ 5,678 $ 4,306 Net income available to common stockholders - as adjusted (A) $ 5,678 $ 4,817 Basic earnings per share - reported $ 1.10 $ 0.74 Basic earnings per share - as adjusted (A) $ 1.10 $ 0.83 Diluted earnings per share - reported $ 1.05 $ 0.70 Diluted earnings per share - as adjusted (A) $ 1.05 $ 0.79 (A) "As adjusted" excludes the amortization expense (net of any tax effect) recognized in the period prior to the implementation of Statement 142 related to the goodwill that is no longer being amortized. COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Year Ended December 31, 2002 2001 (Unaudited) Interest income: Loans receivable $ 118,970 $ 155,214 Mortgage-backed securities 17,114 52,873 FHLB stock, federal funds sold and other interest-earning assets 1,539 2,525 137,623 210,612 Interest expense: Deposits 39,825 69,828 Advances from the FHLB 20,173 38,917 Other borrowed money --- 10,682 Senior notes payable 378 4,588 Company obligated mandatorily redeemable trust preferred securities 2,400 --- 62,776 124,015 Net interest income 74,847 86,597 Provision for loan losses 5,800 3,900 Net interest income after provision for loan losses 69,047 82,697 Noninterest income: Service charges on deposit accounts 9,894 7,803 Loan fees 1,148 1,248 Gain on sale of branch offices 4,395 --- Gain on sale of loans receivable 359 --- Gain on sale of mortgage-backed securities available-for-sale --- 169 Gain (loss) on derivative instruments (12) (422) Gain (loss) on sale of real estate owned 117 819 Other 1,308 1,526 17,209 11,143 Noninterest expense: Compensation, payroll taxes and other benefits 31,914 30,785 Office occupancy 10,044 10,913 Data processing 1,691 3,008 Amortization of goodwill --- 2,800 Advertising 1,953 1,434 Postage and delivery 1,654 1,501 Other 8,637 8,038 55,893 58,479 Income before provision for Federal income taxes, minority interest and cumulative effect of accounting change 30,363 35,361 Provision for Federal income taxes 9,140 10,867 Income before minority interest and cumulative effect of accounting change 21,223 24,494 Minority interest - preferred stock dividends of Coastal Banc ssb 1,507 2,588 Income before cumulative effect of accounting change 19,716 21,906 Cumulative effect of change in accounting for derivative instruments, net of tax --- (104) Net income - reported $ 19,716 $ 21,802 Net income - as adjusted (A) $ 19,716 $ 23,838 Net income available to common stockholders - reported $ 17,208 $ 19,294 Net income available to common stockholders - as adjusted (A) $ 17,208 $ 21,330 Basic earnings per share before cumulative effect of accounting change $ 3.13 $ 3.36 Basic earnings per share - reported $ 3.13 $ 3.34 Basic earnings per share - as adjusted (A) $ 3.13 $ 3.69 Diluted earnings per share before cumulative effect of accounting change $ 2.99 $ 3.19 Diluted earnings per share - reported $ 2.99 $ 3.17 Diluted earnings per share - as adjusted (A) $ 2.99 $ 3.51 (A) "As adjusted" excludes the amortization expense (net of any tax effect) recognized in the period prior to the implementation of Statement 142 related to the goodwill that is no longer being amortized.SOURCE Coastal Bancorp, Inc.
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