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| Coastal Bancorp, Inc. First Quarter Earnings Up 83.5 Percent from Prior Year |
HOUSTON, April 15 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income available to common stockholders of $5.9 million for the quarter ended March 31, 1998. Net income for the current quarter increased to $5.9 million from $3.2 million, or by 83.5%, from the quarter ended March 31, 1997. Diluted earnings per share for the quarter ended March 31, 1998 were $1.14 compared to $0.63 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 5,199,458 and 5,107,957, respectively. The increase in net income in the first quarter of 1998 was primarily due to 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 resolution of the issue resulted in Coastal recording a $3.7 million, or 71 cents per diluted share, reversal of accrued income taxes; therefore a one-time positive effect on net income. The resolution of the tax benefit issue also contributes an ongoing quarterly tax benefit of $226,000 or approximately 4 cents per diluted share; which is expected to continue for approximately 3 to 4 years. The positive effect of the tax benefit issue resolution was somewhat offset by the recording in the first quarter of 1998 of an additional provision for loan losses of $1.0 million and a writedown of purchased mortgage loan premium of $709,000. The additional provision for loan losses of $1.0 million, or 13 cents per diluted share after tax, was recorded to increase the allowance for loan losses due to the continuing change in the composition of the loans receivable portfolio. This change is occurring as a result of management's focus on business lending. The writedown of the purchased mortgage loan premium of $709,000, or 9 cents per diluted share after tax, was related to the adjustable rate whole loan package purchased in the second quarter of 1997, of which Coastal experienced high prepayments during 1997 and continuing into 1998. The net benefit of recording the resolution of the tax issue after these adjustments (net of their applicable income tax effects) amounted to $2.6 million or approximately 49 cents per diluted share. Excluding the net benefit from these nonrecurring items recorded during the three months ended March 31, 1998, net income available to common stockholders from ongoing core operations was $3.4 million or 65 cents per diluted share. Net interest income increased $352,000 and noninterest income (excluding the writedown of purchased mortgage loan premium) increased $287,000 from the three months ended March 31, 1997 to the three months ended March 31, 1998. These increases were offset by the increase in noninterest expense of $778,000. The provision (benefit) for federal income taxes (excluding the one-time effect of the $3.7 million reversal of accrued income taxes) decreased $872,000 due to the ongoing quarterly benefit attributable to the tax benefit issue and the tax benefit effect of the recording of the additional provision for loan losses and the writedown of the purchased mortgage loan premium during the first quarter of 1998. The increase in net interest income was primarily due to an increase in average net interest-earning assets of $27.6 million, offset by a decrease in net interest spread from 1.79% for the three months ended March 31, 1997 to 1.74% for the same period in 1998. The decrease in net interest spread was primarily due to additional amortization expense of approximately $749,000 (or 9 cents per diluted share after tax) of purchased mortgage loan premium due to the continued prepayments on the whole loan package mentioned above. In addition, interest paid on interest-bearing liabilities increased by 6 basis points for the quarter. Net interest margin was 2.10% for the three month periods ended March 31, 1998 and 1997. The increase in noninterest income (excluding the writedown of purchased mortgage loan premium) was due to the $430,000 increase in loan fees and service charges on deposit accounts offset by the $167,000 decrease in loan servicing income. The increase in noninterest expense was primarily due to increases in compensation, payroll taxes and other benefits and office occupancy 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. At March 31, 1998, Coastal had total assets of approximately $3.0 billion, deposits of approximately $1.4 billion, preferred stock (Series A) of Coastal Banc ssb of approximately $28.8 million and total common stockholders' equity of approximately $110.5 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 37 branch offices in metropolitan Houston, Austin, Corpus Christi and small cities in the south east quadrant of Texas. At March 31, 1998, Coastal Banc ssb was considered to be a "well capitalized" institution according to FDIC guidelines. COASTAL BANCORP, INC. AND SUBSIDIARIES Selected Financial Data (Dollars In Thousands, except per share data) (unaudited) For the Three Months Ended March 31, 1998 1997 Net income available to common stockholders attributable to: Ongoing core operations $ 3,372 $ 3,238 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 $ 5,941 $ 3,238 Diluted earnings per share from ongoing core operations $ 0.65 $ 0.63 Diluted earnings per share $ 1.14 $ 0.63 Diluted cash earnings per share from ongoing core operations $ 0.74 $ 0.72 Diluted cash earnings per share $ 1.23 $ 0.72 Return on average assets 0.91% 0.55% Return on average equity 22.57% 13.72% Net interest spread including noninterest-bearing deposits 1.92% 1.94% Net interest spread 1.74% 1.79% Net interest margin 2.10% 2.10% Noninterest expense to average total assets 1.43% 1.35% Charge-offs of loans receivable $ 350 $ 442 Net charge-offs of loans receivable $ 177 $ 424 Ratio of net charge-offs to average loans receivable 0.01% 0.03% Average interest-earning assets $2,861,186 $2,794,264 Average total assets $2,941,291 $2,868,473 Average loans receivable $1,312,440 $1,238,974 Average common stockholders' equity $ 106,744 $ 95,707 COASTAL BANCORP, INC. AND SUBSIDIARIES Other Financial Data (Dollars In Thousands, except share data) (unaudited) March 31, December 31, 1998 1997 Non-performing loans receivable $ 13,254 $ 17,351 Real estate owned and repossessed assets 3,574 3,198 Total non-performing assets $ 16,828 $ 20,549 Allowance for loan losses $ 8,684 $ 7,412 Ratio of non-performing loans to loans receivable 0.99% 1.38% Ratio of non-performing assets to total assets 0.57% 0.71% Ratio of allowance for loan losses to non-performing loans receivable 65.52% 42.72% Ratio of allowance for loan losses to loans receivable 0.65% 0.59% Book value per common share $ 21.65 $ 20.67 Tangible book value per common share $ 18.81 $ 17.74 Regulatory capital ratios: Tier 1 (Core) 5.69% 5.52% Tier 1 risk-based 11.24% 11.46% Total risk-based 11.82% 11.98% COASTAL BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Financial Condition (In Thousands, except share data) ASSETS March 31, December 31, 1998 1997 (unaudited) Cash and amounts due from depository institutions $ 25,026 $ 37,096 Federal funds sold 3,500 -- Loans receivable 1,335,955 1,261,435 Mortgage-backed securities held-to-maturity 1,325,249 1,345,090 Mortgage-backed securities available-for-sale, at market value 169,783 169,997 Mortgage loans held for sale 7,154 -- Accrued interest receivable 15,219 14,813 Property and equipment 22,955 22,250 Stock in the Federal Home Loan Bank of Dallas (FHLB) 30,162 27,801 Goodwill 15,248 15,717 Mortgage servicing rights 5,279 5,653 Prepaid expenses and other assets 10,672 11,558 $2,966,202 $2,911,410 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Savings deposits $1,367,371 $1,375,060 Advances from the FHLB 556,805 540,475 Securities sold under agreements to repurchase 829,202 791,760 Senior notes payable 50,000 50,000 Advances from borrowers for taxes and insurance 7,116 3,975 Other liabilities and accrued expenses 16,451 16,560 Total liabilities 2,826,945 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, $.01 par value; authorized shares 30,000,000; 5,035,493 and 5,008,926 shares issued and outstanding in 1998 and 1997 50 50 Additional paid-in capital 33,556 33,186 Retained earnings 79,204 73,868 Unrealized gain (loss) on securities available-for-sale (2,303) (2,274) Total stockholders' equity 110,507 104,830 $2,966,202 $2,911,410 COASTAL BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Income (In Thousands, except per share data) Three Months Ended March 31, 1998 1997 (Unaudited) Interest income: Mortgage-backed securities $23,446 $23,192 Loans receivable 26,940 26,015 Federal funds sold, certificates and time deposits and other investments 502 397 50,888 49,604 Interest expense: Savings deposits 15,507 15,166 Other borrowed money 11,229 13,780 Senior notes payable 1,250 1,250 Advances from the FHLB: Short-term 3,955 1,856 Long-term 3,947 2,904 35,888 34,956 Net interest income 15,000 14,648 Provision for loan losses 1,450 450 Net interest income after provision for loan losses 13,550 14,198 Noninterest income: Loan fees and service charges 1,324 894 Loan servicing income, net 240 407 Other 192 168 Writedown of purchased mortgage loan premium (709) -- 1,047 1,469 Noninterest expense: Compensation, payroll taxes and other benefits 4,940 4,625 Office occupancy 1,989 1,611 Insurance premiums 265 271 Data processing 608 513 Amortization of goodwill 469 437 Real estate owned 252 239 Other 1,812 1,861 10,335 9,557 Income before provision (benefit) for Federal income taxes 4,262 6,110 Provision (benefit) for Federal income taxes (2,326) 2,225 Net income before preferred stock dividends 6,588 3,885 Preferred stock dividends of Coastal Banc ssb (Series A) 647 647 Net income available to common stockholders $ 5,941 $ 3,238 Basic earnings per share $ 1.18 $ 0.65 Diluted earnings per share $ 1.14 $ 0.63SOURCE Coastal Bancorp, Inc.
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Company News On-Call:
fax, 800-758-5804, ext. 118190
CONTACT:
Manuel J. Mehos, CEO, or Catherine N. Wylie,
CFO, both of Coastal Bancorp, 713-435-5000, or fax, 713-435-5106
