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| Coastal Bancorp, Inc. Announces 1998 Annual Core Earnings Up 22% From Prior Year |
HOUSTON, Jan. 19 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income available to common stockholders for the year ended December 31, 1998 of $16.7 million compared to $11.6 million for the same period in 1997. Diluted earnings per share for the year ended December 31, 1998 was $2.18 compared to $1.50 for 1997. For the year ended December 31, 1998, diluted earnings per share from ongoing core operations was $1.84 and diluted earnings per share from nonrecurring items was $0.34. The weighted average common shares outstanding used in the diluted earnings per share calculations for 1998 and 1997 were 7,656,690 and 7,722,645, respectively. On April 23, 1998, Coastal declared a 3:2 stock split that was paid on June 15, 1998 to stockholders of record on May 15, 1998. Accordingly, all common stock share data have been adjusted to include the effect of the stock split. On September 1, 1998, Coastal announced that the Board of Directors had authorized the repurchase of up to 6.6% (approximately 500,000 shares) of the outstanding shares of common stock. As of December 31, 1998, 499,600 shares had been repurchased at an average repurchase price of $15.57 per share for a total cost of $7.8 million. On December 21, 1998 the Board of Directors authorized an additional repurchase plan for up to 500,000 shares of the outstanding shares of common stock through an open-market repurchase program and privately negotiated repurchases, if any. Repurchases will be made from time to time when deemed appropriate by the Chief Executive Officer and Chief Financial Officer of Coastal. The timing and volume of the repurchase transactions will depend on market conditions. The 21.9% increase in core net income for the year ended December 31, 1998 was due to an increase in net interest income of $10.5 million, or 18.4%, and an increase in noninterest income (excluding the writedown of purchased mortgage loan premium) of $1.2 million or 18.8%. The increase in net interest income was due to an increase in net interest margin from 2.02% for the year ended December 31, 1997 to 2.31% for the same period in 1998 and an increase in average net interest-earning assets of $21.2 million. The average balance of loans receivable increased $149.1 million with the average yield increasing from 8.35% in 1997 to 8.41% in 1998. The average balance of mortgage-backed securities decreased $83.4 million with the average yield remaining at 6.12%. The average balance of interest-bearing liabilities and noninterest-bearing savings deposits increased $91.1 million and the average rate paid on those liabilities decreased 21 basis points from 5.28% to 5.07% from the year ended December 31, 1997 to the year ended December 31, 1998. The decrease in this average rate paid was due primarily to the overall decrease in wholesale funding costs. The increase in noninterest income was due to the $1.7 million increase in loan fees and service charges on deposit accounts, the $463,000 increase in other noninterest income offset by the $764,000 decrease in loan servicing income and the $236,000 decrease in the gain on sales of mortgage- backed securities available-for-sale. These increases were somewhat offset by the $8.8 million increase in noninterest expense which was primarily due to increases in compensation, payroll taxes and other benefits of $4.3 million and office occupancy of $2.0 million for the year ended December 31, 1998 compared to the year ended December 31, 1997. Compensation, payroll taxes and other benefits increased due to the overall increase in personnel hired for the expansion of the loan products offered and due to the acquisition of the twelve Rio Grande Valley branches of The San Benito Bank and Trust Company on August 17, 1998 (the "Valley Acquisition"). Office occupancy expense increased due to the Valley Acquisition, in addition to the acquisition of assets and other expenses related to the relocation of Coastal's corporate headquarters in the third quarter of 1997. Other categories of noninterest expense also increased from 1997 to 1998 due primarily to the Valley Acquisition. During the year ended December 31, 1998, approximately $257,000, or 3 cents per diluted share, were nonrecurring expenses incurred due to the Valley Acquisition. A one-time income benefit of $2.6 million (net) or 34 cents per diluted share occurred during the first quarter of 1998. 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 until the second quarter of 2001. Excluding the net benefit from these nonrecurring items, net income available to common stockholders from ongoing core operations was $14.1 million or $1.84 per diluted share for the year ended December 31, 1998, compared to the $11.6 million or $1.50 per diluted share for the year ended December 31, 1997. Net income available to common stockholders for the quarter ended December 31, 1998 was $3.0 million. Net income for the current quarter increased to $3.0 million from $2.8 million, or by 7.8%, from the quarter ended December 31, 1997. Diluted earnings per share for the quarter ended December 31, 1998 were $0.41 compared to $0.36 for the same period in 1997. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 7,319,302 and 7,770,849, respectively. Net interest income increased $5.1 million and noninterest income increased $498,000 from the three months ended December 31, 1997 to the three months ended December 31, 1998. These increases were offset by the increase in noninterest expense of $5.1 million. The increase in net interest income was primarily due to an increase in net interest margin from 1.95% for the three months ended December 31, 1997 to 2.57% for the same period in 1998 and an increase in average net interest- earning assets of $7.4 million. The average balance of loans receivable increased $256.1 million from the three months ended December 31, 1997 to the three months ended December 31, 1998 with the average yield increasing from 8.26% to 8.46%. The average balance of mortgage-backed securities decreased $193.6 million from the three months ended December 31, 1997 to three months ended December 31, 1998, while the average yield decreased from 6.18% to 5.97%. The average balance of interest-bearing liabilities and noninterest- bearing savings deposits increased $131.2 million and the average rate paid on those liabilities decreased 52 basis points from 5.30% to 4.78% from the three months ended December 31, 1997 to the three months December 31, 1998. The decrease in the average rate paid was due primarily to the overall decrease in wholesale funding costs. The increase in noninterest income was due to the $753,000 increase in loan fees and service charges on deposit accounts offset by the $238,000 decrease in loan servicing income. The increase in noninterest expense was primarily due to increases in compensation, payroll taxes and other benefits of $2.2 million and office occupancy of $859,000 for the three months ended December 31, 1998, compared to the three months ended December 31, 1997, due to the overall increase in personnel hired for the expansion of the loan products offered and due to the acquisition of assets and other expenses related to the relocation of Coastal's corporate headquarters in the third quarter of 1997, respectively, in addition to the Valley Acquisition. During the three months ended December 31, 1998, approximately $137,000, or 2 cents per diluted share, were nonrecurring expenses incurred due to the Valley Acquisition. At December 31, 1998, Coastal had total assets of approximately $3.0 billion, deposits of approximately $1.7 billion, preferred stock (Series A) of Coastal Banc ssb of approximately $28.8 million and total common stockholders' equity of approximately $112.8 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, state savings bank headquartered in Houston. Coastal Banc ssb operates 49 branch offices in metropolitan Houston, Austin, Corpus Christi, the Rio Grande Valley and small cities in the south east quadrant of Texas. COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars In Thousands, except per share data) (unaudited) For the Three Months For the Year Ended December 31, Ended December 31, 1998 1997 1998 1997 Net income available to common stockholders attributable to: Ongoing core operations $ 3,007 $ 2,789 $ 14,099 $ 11,563 Reversal of accrued income taxes --- --- 3,679 --- Additional provision for loan losses (net of tax effect) --- --- (650) --- Writedown of purchased mortgage loan premium (net of tax effect) --- --- (460) --- Net income available to common stockholders $ 3,007 $ 2,789 $ 16,668 $ 11,563 Diluted earnings per share from ongoing core operations $ 0.41 $ 0.36 $ 1.84 $ 1.50 Diluted earnings per share $ 0.41 $ 0.36 $ 2.18 $ 1.50 Diluted cash earnings per share from ongoing core operations $ 0.52 $ 0.42 $ 2.14 $ 1.74 Diluted cash earnings per share $ 0.52 $ 0.42 $ 2.48 $ 1.74 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, 1998 1997 1998 1997 Return (before preferred stock dividends) on average assets 0.47% 0.47% 0.64% 0.49% Return on average equity 10.56% 10.77% 14.96% 11.68% Net interest margin 2.57% 1.95% 2.31% 2.02% Noninterest expense to average total assets 1.95% 1.34% 1.61% 1.36% Charge-offs of loans receivable$ 458 $ 158 $ 1,693 $ 1,417 Net charge-offs of loans receivable $ 435 $ 121 $ 1,411 $ 1,269 Ratio of net charge-offs to average loans receivable 0.03% 0.01% 0.10% 0.10% Average balance sheet information Assets: Interest-earning assets: Loans receivable $1,550,122 $1,294,052 $1,430,584 $1,281,493 Mortgage-backed securities 1,317,552 1,511,191 1,431,105 1,514,541 Other 65,285 34,204 51,301 28,106 Total interest-earning assets 2,932,959 2,839,447 2,912,990 2,824,140 Noninterest-earning assets 123,385 91,342 94,857 81,400 Total assets $3,056,344 $2,930,789 $3,007,847 $2,905,540 Liabilities and stockholders' equity: Interest-bearing savings deposits $1,552,060 $1,281,225 $1,371,078 $1,253,142 Borrowings 1,131,816 1,316,567 1,292,908 1,343,193 Senior Notes payable 50,000 50,000 50,000 50,000 Total interest-bearing liabilities 2,733,876 2,647,792 2,713,986 2,646,335 Noninterest-bearing liabilities 180,783 151,559 153,663 131,431 Preferred Stock of the Bank 28,750 28,750 28,750 28,750 Stockholders' equity 112,935 102,688 111,448 99,024 Total liabilities and stockholders' equity $3,056,344 $2,930,789 $3,007,847 $2,905,540 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except share data) (unaudited) December 31, December 31, 1998 1997 Non-performing loans receivable $12,837 $17,351 Real estate owned and repossessed assets 4,927 3,198 Total non-performing assets $17,764 $20,549 Allowance for loan losses $11,358 $7,412 Ratio of non-performing loans to loans receivable 0.83% 1.38% Ratio of non-performing assets to total assets 0.60% 0.71% Ratio of allowance for loan losses to non-performing loans receivable 88.48% 42.72% Ratio of allowance for loan losses to loans receivable 0.74% 0.59% Book value per common share $15.71 $13.78 Tangible book value per common share $11.75 $11.83 Regulatory capital ratios: Tier 1 (Core) 5.25% 5.52% Tier 1 risk-based 9.54% 11.46% Total risk-based 10.23% 11.98% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) December 31, December 31, 1998 1997 (unaudited) ASSETS Cash and cash equivalents $ 45,453 $ 37,096 Loans receivable 1,538,149 1,261,435 Mortgage-backed securities held-to-maturity 1,154,116 1,345,090 Mortgage-backed securities available-for-sale, at market value 96,609 169,997 U.S. Treasury security available-for-sale, at market value 2,016 --- Accrued interest receivable 15,518 14,813 Property and equipment 33,116 22,250 Stock in the Federal Home Loan Bank of Dallas (FHLB) 49,819 27,801 Goodwill 30,687 15,717 Mortgage servicing rights 4,049 5,653 Prepaid expenses and other assets 12,629 11,558 $ 2,982,161 $ 2,911,410 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Savings deposits $ 1,705,004 $ 1,375,060 Advances from the FHLB 966,720 540,475 Securities sold under agreements to repurchase 100,000 791,760 Senior notes payable 50,000 50,000 Advances from borrowers for taxes and insurance 3,340 3,975 Other liabilities and accrued expenses 15,583 16,560 Total liabilities 2,840,647 2,777,830 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; no shares issued --- --- Common stock, $.00667 par value; authorized shares 45,000,000; 7,568,255 and 7,513,389 shares issued in 1998 and 1997 50 50 Additional paid-in capital 33,722 33,186 Retained earnings 88,144 73,868 Accumulated other comprehensive income (loss) - unrealized loss on securities available-for-sale (1,374) (2,274) Treasury stock at cost (499,600 shares in 1998) (7,778) --- Total stockholders' equity 112,764 104,830 $ 2,982,161 $ 2,911,410 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended December 31, 1998 1997 (Unaudited) Interest income: Loans receivable $ 32,786 $ 26,713 Mortgage-backed securities 19,658 23,360 FHLB stock, federal funds sold and other interest-earning assets 930 530 53,374 50,603 Interest expense: Savings deposits 17,962 16,253 Other borrowed money 2,916 13,204 Senior notes payable 1,250 1,250 Advances from the FHLB: Short-term 4,475 2,764 Long-term 7,898 3,310 34,501 36,781 Net interest income 18,873 13,822 Provision for loan losses 750 450 Net interest income after provision for loan losses 18,123 13,372 Noninterest income: Loan fees and service charges on deposit accounts 1,858 1,105 Loan servicing income, net 71 309 Gain on sale of mortgage-backed securities available-for-sale 1 --- Other 190 208 2,120 1,622 Noninterest expense: Compensation, payroll taxes and other benefits 6,916 4,730 Office occupancy 2,883 2,024 Data processing 889 569 Amortization of goodwill 767 479 Insurance premiums 536 272 Real estate owned 182 274 Other 2,817 1,570 14,990 9,918 Income before provision for Federal income taxes 5,253 5,076 Provision for Federal income taxes 1,599 1,640 Net income before preferred stock dividends 3,654 3,436 Preferred stock dividends of Coastal Banc ssb (Series A) 647 647 Net income available to common stockholders $ 3,007 $ 2,789 Basic earnings per share $ 0.42 $ 0.37 Diluted earnings per share $ 0.41 $ 0.36 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Year Ended December 31, 1998 1997 (Unaudited) Interest income: Loans receivable $ 120,281 $ 106,962 Mortgage-backed securities 87,596 92,755 FHLB stock, federal funds sold and other interest-earning assets 2,937 1,639 210,814 201,356 Interest expense: Savings deposits 66,128 62,912 Other borrowed money 32,723 55,189 Senior notes payable 5,000 5,000 Advances from the FHLB: Short-term 16,042 8,562 Long-term 23,511 12,760 143,404 144,423 Net interest income 67,410 56,933 Provision for loan losses 3,100 1,800 Net interest income after provision for loan losses 64,310 55,133 Noninterest income: Loan fees and service charges on deposit accounts 5,752 4,018 Loan servicing income, net 642 1,406 Gain on sale of mortgage-backed securities available-for-sale 1 237 Other 1,186 723 Writedown of purchased mortgage loan premium (709) --- 6,872 6,384 Noninterest expense: Compensation, payroll taxes and other benefits 23,072 18,754 Office occupancy 9,320 7,312 Data processing 2,695 2,245 Amortization of goodwill 2,284 1,840 Insurance premiums 1,448 1,091 Real estate owned 875 902 Other 8,689 7,400 48,383 39,544 Income before provision for Federal income taxes 22,799 21,973 Provision for Federal income taxes 3,543 7,822 Net income before preferred stock dividends 19,256 14,151 Preferred stock dividends of Coastal Banc ssb (Series A) 2,588 2,588 Net income available to common stockholders $ 16,668 $ 11,563 Basic earnings per share $ 2.24 $ 1.55 Diluted earnings per share $ 2.18 $ 1.50SOURCE Coastal Bancorp, Inc.
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800-758-5804, ext. 118190
CONTACT:
Manuel J. Mehos, CEO, or Catherine N. Wylie,
CFO, both of Coastal Bancorp, Inc., 713-435-5327, or fax,
713-435-5106
