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| Coastal Bancorp, Inc. Announces 1999 Fourth Quarter and Annual Earnings |
| COASTAL BANCORP LOGO
Coastal Bancorp. logo. (PRNewsFoto)[DM] HOUSTON, TX USA | |||
HOUSTON, Jan. 18 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) ("Coastal") today reported consolidated net income before the provision for loan losses specific to the MCA loan (as described below) of $4.7 million for the quarter ended December 31, 1999, which is $1.7 million or 57.1% higher than net income for the quarter ended December 31, 1998 of $3.0 million. Diluted earnings per share for the quarter ended December 31, 1999 before the provision for loan losses specific to the MCA loan were $0.63 compared to diluted earnings per share of $0.41 for the same period in 1998. Net income (including the provision for loan losses specific to the MCA loan) for the quarter ended December 31, 1999 was $1.2 million, or $0.08 per diluted share. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 6,516,189 and 7,319,302, respectively. Net income for the fourth quarter of 1999 was negatively impacted by the provision for loan losses specific to the MCA loan (as described below) of $3.6 million (net of tax effect), or $0.55 per diluted share. In December 1999, based upon updated information received, management made the decision to provide for and charge-off the remaining balance of the $10.0 million participation in the warehouse loan to MCA Financial Corp., of Southfield, Michigan, and certain of its affiliates (collectively "MCA"). During January 1999, this loan was placed on nonaccrual effective December 31, 1998, due to the fact that MCA was placed in receivership and subsequently filed for bankruptcy. Throughout 1999, Coastal worked with the lead lender and the bankruptcy trustee to determine the value of and sell the underlying collateral. As of December 31, 1999, Coastal had received only $1.1 million in proceeds from the MCA loan. In addition, on January 12, 2000, Coastal filed a lawsuit against the lead lender in the participation seeking to recover losses incurred as a result of actions or omissions of the lead lender related to the loan to MCA. Due to the uncertainty of the value of the remaining collateral, its marketability and the timing of recovery, if any, from the lawsuit, Coastal charged-off the remaining $8.9 million balance of this loan resulting in the additional provision for loan losses, net of tax, of $3.6 million during the quarter. Coastal will continue to work with the lead lender and the bankruptcy trustee to recover any funds, if possible, from the collateral or MCA. Aside from the impact of the provision for loan losses on net income, throughout 1999, Coastal experienced net interest margin growth, in addition to record growth of fee income, while general and administrative expenses were below expectations. Comparing the three months ended December 31, 1999 to the same period in 1998, net interest income increased $1.6 million and noninterest income increased $829,000, while noninterest expense remained consistent. The provision for Federal income taxes before the tax effect of the provision specific to the MCA loan increased $735,000 primarily due to increased income before Federal income taxes and minority interest, offset by the tax benefit received by Coastal for the dividends on the preferred stock issued in 1999. The increase in net interest income was primarily due to the increase in net interest margin to 2.89% for the three months ended December 31, 1999 from 2.57% for the same period in 1998. The increase in net interest margin was principally due to an overall increase of 0.23% in the average yield received on interest-earning assets and a decrease of 0.10% in the average rates paid on interest-bearing liabilities due to the lower cost deposits acquired in the 1998 branch acquisition, new pricing strategies for certificates of deposit that reduced Coastal's cost of retail deposits and lower wholesale funding costs. In addition, net interest margin was positively impacted by an increase in average net interest-earning assets of $29.4 million. The increase in noninterest income was a result of a $277,000 increase in loan fees and service charges on deposit accounts and a $139,000 increase in loan servicing income due to lower premium amortization due to the declining servicing portfolio and lower prepayments in the 1999 period. For the year ended December 31, 1999, net income before the provision for loan losses specific to the MCA loan was $15.5 million or $2.08 per diluted share, compared to 1998 net income before one-time charges and credits of $14.1 million, or $1.84 per diluted share. Net income (including the provision for loan losses specific to the MCA loan in 1999 and one-time charges and credits in 1998) was $11.0 million for the year ended December 31, 1999, or $1.42 per diluted share, compared to $16.7 million, or $2.18 per diluted share, for the year ended December 31, 1998. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 6,661,308 and 7,656,690, respectively. Before the effects of the provision for loan losses specific to the MCA loan in 1999 and one-time charges and credits in 1998, 1999 net income was up $1.4 million or 9.6%. This increase consisted of a $9.9 million increase in net interest income, a $2.8 million increase in noninterest income (before the 1998 writedown of purchased mortgage loan premium) offset by a $1.7 million increase in the provision for loan losses, a $9.4 million increase in noninterest expense and an increase of $221,000 in the provision for Federal income taxes. The increase in net interest income was primarily due to the increase in net interest margin to 2.75% for the year ended December 31, 1999 from 2.31% for 1998. The increase in net interest margin was principally due to an overall decrease of 0.44% in the average rates paid on interest-bearing liabilities due to the reasons discussed previously. In addition, average net interest-earning assets increased $14.3 million from 1998 to 1999. The increase in noninterest income was a result of the $2.1 million increase in loan fees and service charges on deposit accounts, primarily due to increases in service charges due to the greater number of transaction type deposit accounts. The $1.7 million increase in the provision for loan losses was due to the overall changes in the composition of and the growth in Coastal's loan portfolio. The increase in noninterest expense consisted primarily of a $5.7 million increase in compensation, payroll taxes and other benefits and a $2.1 million increase in office occupancy, due primarily to the staffing increases throughout 1998 related to the expansion of the loan product base and the continuing development of commercial business lending programs, in addition to a full year in 1999 of staffing and occupancy expenses related to the operation of the 12 branches acquired in August 1998. The increase in the provision for Federal income taxes (before the effect of the provision for loan losses specific to the MCA loan in 1999 and the one-time charges and credits in 1998) was due primarily to increased income before Federal income taxes and minority interest. Net income for the year ended December 31, 1999 was negatively impacted by the provision for loan losses specific to the MCA loan of $4.4 million (net of tax effect), or $0.66 per diluted share, that was determined necessary due to the specific situation discussed above. Net income for 1998 was positively affected by a one-time income benefit of $2.6 million (net) or 34 cents per diluted share. This benefit was the result of the resolution of an outstanding tax benefit issue with the Federal Deposit Insurance Corporation as manager of the Federal Savings and Loan Insurance Corporation Resolution Fund. The $3.7 million one-time tax benefit was offset by the recording of an additional provision for loan losses of $1.0 million and a writedown of purchased mortgage loan premium of $709,000. The resolution of the one-time tax benefit issue is also contributing an ongoing quarterly tax benefit of $226,000 or approximately 3 cents per diluted share which is estimated to continue through the end of 2002. On August 27, 1998, December 21, 1998 and February 25, 1999, the Board of Directors authorized three separate repurchase plans for up to 500,000 shares each of the outstanding shares of common stock through an open-market repurchase program and privately negotiated repurchases. As of December 31, 1999, 1,283,679 shares had been repurchased at an average repurchase price of $15.94 per share for a total cost of $20.5 million. On May 11, 1999, Coastal Bancorp, Inc. ("Bancorp") issued 1,100,000 shares of 9.12% Series A Cumulative Preferred Stock, no par value, to the public at a price of $25 per share. Dividends on the preferred stock are payable quarterly at the annual rate of $2.28 per share. The preferred stock is callable on May 15, 2003 at Bancorp's option. Pursuant to the tax benefit agreement with the Federal Deposit Insurance Corporation, Coastal receives a tax benefit for dividends on this Bancorp preferred stock. The ongoing quarterly tax benefit will be approximately $219,000, or 3 cents per diluted share, and is expected to continue through the end of 2002. At December 31, 1999, Coastal had total assets of $2.9 billion, deposits of $1.6 billion, preferred stock (Series A) of Coastal Banc ssb of $28.8 million, Series A Cumulative Preferred Stock of $27.5 million and common stockholders' equity of $106.0 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 50 branch offices in metropolitan Houston, Austin, Corpus Christi, the Rio Grande Valley and small cities in the southeast quadrant of Texas. You can visit Coastal Bancorp's web site at http://www.coastalbanc.com. "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 information with respect to plans, projections or future performance of the Company, the occurrence of which involve certain risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars In Thousands, except per share data) (unaudited) For the Three Months Ended For the Year Ended December 31, December 31, 1999 1998 1999 1998 1999 net income before the provision for loan losses specific to the MCA loan $ 4,724 --- $ 15,452 --- Provision for loan losses specific to the MCA loan (net of tax effect) (3,562) --- (4,426) --- 1998 income before one-time charges and credits --- $ 3,007 --- $ 14,099 One-time charges and credits: Provision for loan losses (net of tax effect) --- --- --- (650) Reversal of accrued income taxes --- --- --- 3,679 Writedown of purchased mortgage loan premium (net of tax effect) --- --- --- (460) Net income $ 1,162 $ 3,007 $ 11,026 $ 16,668 Net income available to common stockholders $ 535 $ 3,007 $ 9,442 $ 16,668 Diluted earnings per share from net income before the provision for loan losses specific to the MCA loan in 1999 and one-time charges and credits in 1998 $ 0.63 $ 0.41 $ 2.08 $ 1.84 Diluted earnings per share $ 0.08 $ 0.41 $ 1.42 $ 2.18 Diluted cash earnings per share from net income before the provision for loan losses specific to the MCA loan in 1999 and one-time charges and credits in 1998 $ 0.75 $ 0.52 $ 2.54 $ 2.14 Diluted cash earnings per share $ 0.20 $ 0.52 $ 1.88 $ 2.48 COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA, Continued (Dollars In Thousands, except per share data) (unaudited) For the Three Months Ended For the Year Ended December 31, December 31, 1999 1998 1999 1998 Return before the provision for loan losses specific to the MCA loan in 1999 and one-time charges and credits in 1998 (before minority interest) on average assets 0.72% 0.47% 0.62% 0.55% Return (before minority interest) on average assets 0.24% 0.47% 0.47% 0.64% Return before the provision for loan losses specific to the MCA loan in 1999 and one-time charges and credits in 1998 on average common equity 15.21% 10.56% 12.96% 12.65% Return on average common equity 1.99% 10.56% 8.83% 14.96% Net interest margin 2.89% 2.57% 2.75% 2.31% Noninterest expense to average total assets 2.02% 1.95% 1.98% 1.61% Charge-offs of loans receivable $ 10,258 $ 458 $ 11,830 $ 1,693 Net charge-offs of loans receivable $ 10,080 $ 435 $ 11,440 $ 1,411 Ratio of net charge-offs to average loans receivable 0.58% 0.03% 0.69% 0.10% Average balance sheet information Assets: Interest-earning assets: Loans receivable $1,743,228 $1,550,122 $1,647,535 $1,430,584 Mortgage-backed securities 1,027,546 1,317,552 1,099,420 1,431,105 Other 62,840 65,285 59,995 51,301 Total interest-earning assets 2,833,614 2,932,959 2,806,950 2,912,990 Noninterest-earning assets 113,718 123,385 113,406 94,857 Total assets $2,947,332 $3,056,344 $2,920,356 $3,007,847 Liabilities and stockholders' equity: Interest-bearing deposits $1,467,296 $1,552,060 $1,490,851 $1,371,078 Borrowings 1,090,914 1,131,816 1,055,183 1,292,908 Senior Notes payable 46,900 50,000 47,658 50,000 Total interest-bearing liabilities 2,605,110 2,733,876 2,593,692 2,713,986 Noninterest-bearing liabilities 179,112 180,783 173,990 153,663 Preferred Stock of Coastal Banc ssb 28,750 28,750 28,750 28,750 Preferred stockholders' equity 27,500 --- 16,923 --- Common stockholders' equity 106,860 112,935 107,001 111,448 Total liabilities and stockholders' equity $2,947,332 $3,056,344 $2,920,356 $3,007,847 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except share data) (unaudited) December 31, December 31, 1999 1998 Nonaccrual loans receivable $ 14,666 $ 22,837 Loans greater than 90 days delinquent and still accruing 2,452 1,704 Total nonperforming loans 17,118 24,541 Real estate owned and repossessed assets 4,531 4,927 Total nonperforming assets $ 21,649 $ 29,468 Allowance for loan losses $ 10,493 $ 11,358 Ratio of nonperforming loans to loans receivable 0.99% 1.60% Ratio of nonperforming assets to total assets 0.73% 0.99% Ratio of allowance for loan losses to nonperforming loans receivable 61.30% 46.28% Ratio of allowance for loan losses to loans receivable 0.60% 0.74% Book value per common share $ 16.42 $ 15.71 Tangible book value per common share $ 12.53 $ 11.75 Regulatory capital ratios: Tier 1 (Core) 5.76% 5.25% Tier 1 risk-based 9.68% 9.54% Total risk-based 10.29% 10.23% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) December 31, December 31, 1999 1998 (unaudited) ASSETS Cash and cash equivalents $ 48,098 $ 45,453 Loans receivable 1,735,081 1,538,149 Mortgage-backed securities held-to-maturity 917,212 1,154,116 Mortgage-backed securities available-for-sale, at market value 99,665 96,609 U.S. Treasury security held-to-maturity 299 --- U.S. Treasury security available-for-sale, at market value --- 2,016 Accrued interest receivable 16,150 15,518 Property and equipment 30,708 33,116 Stock in the Federal Home Loan Bank of Dallas (FHLB) 56,753 49,819 Goodwill 27,636 30,687 Mortgage servicing rights 3,035 4,049 Prepaid expenses and other assets 13,315 12,629 $2,947,952 $2,982,161 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $1,624,289 $1,705,004 Advances from the FHLB 1,096,931 966,720 Securities sold under agreements to repurchase --- 100,000 Senior notes payable 46,900 50,000 Advances from borrowers for taxes and insurance 3,852 3,340 Other liabilities and accrued expenses 13,774 15,583 Total liabilities 2,785,746 2,840,647 Minority interest - 9.0% noncumulative preferred stock of Coastal Banc ssb (Series A) 28,750 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 in 1999 27,500 --- Common stock, $0.01 par value; authorized shares 30,000,000; 7,616,227 and 7,568,255 shares issued in 1999 and 1998 76 76 Additional paid-in capital 32,683 33,696 Retained earnings 95,508 88,144 Accumulated other comprehensive loss - unrealized loss on securities available-for-sale (1,848) (1,374) Treasury stock, at cost (1,283,679 shares in 1999 and 499,600 shares in 1998) (20,463) (7,778) Total stockholders' equity 133,456 112,764 $2,947,952 $2,982,161 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended December 31, 1999 1998 (Unaudited) Interest income: Loans receivable $ 37,270 $ 32,786 Mortgage-backed securities 15,030 19,658 FHLB stock, federal funds sold and other interest-earning assets 896 930 53,196 53,374 Interest expense: Deposits 16,064 17,962 Other borrowed money 132 2,916 Senior notes payable 1,173 1,250 Advances from the FHLB: Short-term 3,111 4,475 Long-term 12,254 7,898 32,734 34,501 Net interest income 20,462 18,873 Provision for loan losses 6,209 750 Net interest income after provision for loan losses 14,253 18,123 Noninterest income: Loan fees and service charges on deposit accounts 2,135 1,858 Loan servicing income, net 210 71 Gain on sale of mortgage-backed securities available-for-sale --- 1 Other 604 190 2,949 2,120 Noninterest expense: Compensation, payroll taxes and other benefits 7,089 6,916 Office occupancy 2,927 2,883 Data processing 866 889 Amortization of goodwill 769 767 Insurance premiums 237 536 Real estate owned 106 182 Other 2,982 2,817 14,976 14,990 Income before provision for Federal income taxes and minority interest 2,226 5,253 Provision for Federal income taxes 417 1,599 Income before minority interest 1,809 3,654 Minority interest - preferred stock dividends of Coastal Banc ssb 647 647 Net income $ 1,162 $ 3,007 Net income available to common stockholders $ 535 $ 3,007 Basic earnings per share $ 0.08 $ 0.42 Diluted earnings per share $ 0.08 $ 0.41 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Year Ended December 31, 1999 1998 (Unaudited) Interest income: Loans receivable $ 136,036 $ 120,281 Mortgage-backed securities 63,663 87,596 FHLB stock, federal funds sold and other interest-earning assets 3,244 2,937 202,943 210,814 Interest expense: Deposits 64,701 66,128 Other borrowed money 5,614 32,723 Senior notes payable 4,773 5,000 Advances from the FHLB: Short-term 15,560 16,042 Long-term 35,009 23,511 125,657 143,404 Net interest income 77,286 67,410 Provision for loan losses 10,575 3,100 Net interest income after provision for loan losses 66,711 64,310 Noninterest income: Loan fees and service charges on deposit accounts 7,890 5,752 Loan servicing income, net 680 642 Gain on sale of mortgage-backed securities available-for-sale --- 1 Other 1,802 1,186 Writedown of purchased mortgage loan premium --- (709) 10,372 6,872 Noninterest expense: Compensation, payroll taxes and other benefits 28,771 23,072 Office occupancy 11,422 9,320 Data processing 3,416 2,695 Amortization of goodwill 3,051 2,284 Insurance premiums 1,144 1,448 Real estate owned 439 875 Other 9,567 8,689 57,810 48,383 Income before provision for Federal income taxes and minority interest 19,273 22,799 Provision for Federal income taxes 5,659 3,543 Income before minority interest 13,614 19,256 Minority interest - preferred stock dividends of Coastal Banc ssb 2,588 2,588 Net income $ 11,026 $ 16,668 Net income available to common stockholders $ 9,442 $ 16,668 Basic earnings per share $ 1.45 $ 2.24 Diluted earnings per share $ 1.42 $ 2.18SOURCE Coastal Bancorp, Inc.
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CONTACT:
Manuel J. Mehos, CEO, or Catherine N. Wylie,
CFO, 713-435-5327, or fax, 713-435-5106, both of Coastal Bancorp,
Inc.
