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| Coastal Bancorp, Inc. Announces First Quarter Earnings |
HOUSTON, April 15 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income available to common stockholders of $2.8 million for the quarter ended March 31, 1999. Net income for the quarter ended March 31, 1998 was $5.9 million. For the three months ended March 31, 1999, net income available to common stockholders attributable to ongoing core operations was $3.1 million compared to $3.4 million for the three months ended March 31, 1998. Diluted earnings per share for the quarter ended March 31, 1999 were $0.40 compared to $0.76 for the same period last year. Diluted earnings per share from ongoing core operations for the quarter ended March 31, 1999 were $0.44 compared to $0.43 for the same period in 1998. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 7,011,671 and 7,799,187, respectively. 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, if any. As of March 31, 1999, 1,160,679 shares had been repurchased at an average repurchase price of $15.88 per share for a total cost of $18.4 million. During the first quarter of 1999, net income was reduced by a $1.7 million additional provision for loan losses (above the planned quarterly provision of $675,000). The additional provision for loan losses was due in part to a $10.0 million participation in a warehouse loan to MCA Financial Corp., and certain of its affiliates, of Southfield, Michigan (collectively the "Mortgage Banker"), that, during January 1999, was placed on nonaccrual effective December 31, 1998, due to the fact that the Mortgage Banker ceased operations in late January 1999 and shortly thereafter was seized by the Michigan Bureau of Financial Institutions. Coastal, as of the date hereof, has been unable to verify the extent to which the collateral, if any, is sufficient to prevent Coastal from incurring a loss or the amount of any loss, should one occur. At this time, Coastal is unable to determine the timing, probability, or the amount of any loss which might result from the default by the Mortgage Banker. Coastal is continuing to monitor this situation and will make additions to the overall allowance for loan losses as it deems necessary based on its existing policy. The additional provision for loan losses is also attributable to other changes and growth in Coastal's loan portfolio, including the loans acquired in the 1998 branch acquisition (the "Valley Acquisition"). Net income in the first quarter of 1998 was affected by a one-time income benefit of $2.6 million (net) or 33 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 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 $3.4 million or $0.43 per diluted share for the three months ended March 31, 1998. Net interest income increased $3.4 million and noninterest income (excluding the writedown of purchased mortgage loan premium in 1998) increased $684,000 from the three months ended March 31, 1998 to the three months ended March 31, 1999. These increases were offset by the increase in the provision for loan losses of $881,000 and the increase in noninterest expense of $3.1 million. The provision (benefit) for federal income taxes (excluding the one-time effect of the $3.7 million reversal of accrued income taxes in 1998) increased $273,000 due to the increased income before provision for federal income taxes. The increase in net interest income was primarily due to the increase in net interest margin from 2.10% for the three months ended March 31, 1998 to 2.64% for the same period in 1999. The increase in net interest margin was primarily due to an overall decrease of 56 basis points in the average rates paid on interest-bearing liabilities due to the lower cost deposits acquired in the 1998 Valley Acquisition, the new pricing strategies for certificates of deposit that reduced Coastal's cost of retail deposits and the lower wholesale funding costs. This increase in net interest margin was slightly offset by a decrease in average net interest-earning assets of $6.4 million. The increase in noninterest income (excluding the writedown of purchased mortgage loan premium in 1998) was due to the $490,000 increase in loan fees and service charges on deposit accounts and the $300,000 increase in other noninterest income, offset by the $106,000 decrease in loan servicing income. The increase in the provision for loan losses was primarily attributable to the $10.0 million warehouse loan participation placed on nonaccrual effective December 31, 1998, as discussed previously, as well as other changes and growth in Coastal's loan portfolio, including the loans acquired in the 1998 Valley Acquisition. The increase in noninterest expense was primarily due to an increase in compensation, payroll taxes and other benefits of $2.2 million and an increase in office occupancy of $813,000, primarily due to the twelve branches acquired in the 1998 Valley Acquisition. In addition, data processing expenses and the amortization of goodwill increased $291,000 and $284,000, respectively, primarily due to the Valley Acquisition. At March 31, 1999, 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 $104.7 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 50 branch offices in metropolitan Houston, Austin, Corpus Christi, the Rio Grande Valley and small cities in the southeast quadrant of Texas. COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars In Thousands, except per share data) (unaudited) For the Three Months Ended March 31, 1999 1998 Net income available to common stockholders attributable to: Ongoing core operations $3,107 $3,372 Reversal of accrued income taxes --- 3,679 Provision for loan losses (net of tax effect) (1,077) (650) Writedown of purchased mortgage loan premium (net of tax effect) --- (460) Change in accrued liabilities (net of tax effect) 742 --- Net income available to common stockholders $2,772 $5,941 Diluted earnings per share from ongoing core operations $0.44 $0.43 Diluted earnings per share $0.40 $0.76 Diluted cash earnings per share from ongoing core operations $0.55 $0.49 Diluted cash earnings per share $0.50 $0.82 COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA, Continued (Dollars In Thousands, except per share data) (unaudited) For the Three Months Ended March 31, 1999 1998 Return from ongoing core operations (before preferred stock dividends) on average assets 0.52% 0.55% Return (before preferred stock dividends) on average assets 0.48% 0.91% Return from ongoing core operations on average equity 11.42% 12.81% Return on average equity 10.19% 22.57% Net interest margin 2.64% 2.10% Noninterest expense to average total assets 1.88% 1.43% Charge-offs of loans receivable $553 $350 Net charge-offs of loans receivable $533 $177 Ratio of net charge-offs to average loans receivable 0.04% 0.01% Average balance sheet information Assets: Interest-earning assets: Loans receivable $1,521,560 $1,313,553 Mortgage-backed securities 1,206,418 1,510,979 Other 58,539 36,654 Total interest-earning assets 2,786,517 2,861,186 Noninterest-earning assets 126,076 80,105 Total assets $2,912,593 $2,941,291 Liabilities and stockholders' equity: Interest-bearing deposits $1,528,109 $1,264,270 Borrowings 1,028,226 1,358,970 Senior Notes payable 48,600 50,000 Total interest-bearing liabilities 2,604,935 2,673,240 Noninterest-bearing liabilities 168,529 132,557 Preferred Stock of the Bank 28,750 28,750 Stockholders' equity 110,379 106,744 Total liabilities and stockholders' equity $2,912,593 $2,941,291 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except share data) (unaudited) March 31, December 31, 1999 1998 Nonaccrual loans receivable $23,756 $22,837 Loans greater than 90 days delinquent and still accruing 2,596 1,704 Total nonperforming loans 26,352 24,541 Real estate owned and repossessed assets 3,399 4,927 Total nonperforming assets $29,751 $29,468 Allowance for loan losses $13,157 $11,358 Ratio of nonperforming loans to loans receivable 1.64% 1.60% Ratio of nonperforming assets to total assets 1.00% 0.99% Ratio of allowance for loan losses to nonperforming loans receivable 49.93% 46.28% Ratio of allowance for loan losses to loans receivable 0.82% 0.74% Book value per common share $16.04 $15.71 Tangible book value per common share $11.81 $11.75 Regulatory capital ratios: Tier 1 (Core) 5.59% 5.25% Tier 1 risk-based 9.39% 9.54% Total risk-based 10.15% 10.23% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) March 31, December 31, ASSETS 1999 1998 (unaudited) Cash and cash equivalents $47,801 $45,453 Federal funds sold 18,000 --- Loans receivable 1,603,898 1,538,149 Mortgage-backed securities held-to-maturity 1,062,264 1,154,116 Mortgage-backed securities available-for-sale, at market value 85,878 96,609 U.S. Treasury security available-for-sale, at market value 2,009 2,016 Mortgage loans held for sale 2,381 --- Accrued interest receivable 15,186 15,518 Property and equipment 32,618 33,116 Stock in the Federal Home Loan Bank of Dallas (FHLB) 50,505 49,819 Goodwill 29,934 30,687 Mortgage servicing rights 3,721 4,049 Prepaid expenses and other assets 10,720 12,629 $2,964,915 $2,982,161 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $1,665,176 $1,705,004 Advances from the FHLB 996,576 966,720 Securities sold under agreements to repurchase 100,000 100,000 Senior notes payable 47,900 50,000 Advances from borrowers for taxes and insurance 5,546 3,340 Other liabilities and accrued expenses 16,312 15,583 Total liabilities 2,831,510 2,840,647 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, $0.00667 par value; authorized shares 45,000,000; 7,570,043 and 7,568,255 shares issued in 1999 and 1998 50 50 Additional paid-in capital 33,740 33,722 Retained earnings 90,360 88,144 Accumulated other comprehensive loss - unrealized loss on securities available-for-sale (1,058) (1,374) Treasury stock, at cost (1,160,679 shares in 1999 and 499,600 shares in 1998) (18,437) (7,778) Total stockholders' equity 104,655 112,764 $2,964,915 $2,982,161 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended March 31, 1999 1998 (Unaudited) Interest income: Loans receivable $31,004 $26,940 Mortgage-backed securities 17,750 23,446 FHLB stock, federal funds sold and other interest-earning assets 772 502 49,526 50,888 Interest expense: Deposits 16,810 15,507 Other borrowed money 1,518 11,229 Senior notes payable 1,217 1,250 Advances from the FHLB: Short-term 4,006 3,955 Long-term 7,559 3,947 31,110 35,888 Net interest income 18,416 15,000 Provision for loan losses 2,331 1,450 Net interest income after provision for loan losses 16,085 13,550 Noninterest income: Loan fees and service charges on deposit accounts 1,814 1,324 Loan servicing income, net 134 240 Other 492 192 Writedown of purchased mortgage loan premium --- (709) 2,440 1,047 Noninterest expense: Compensation, payroll taxes and other benefits 7,115 4,940 Office occupancy 2,802 1,989 Data processing 899 608 Amortization of goodwill 753 469 Insurance premiums 303 265 Real estate owned 154 252 Other 1,454 1,812 13,480 10,335 Income before provision (benefit) for Federal income taxes 5,045 4,262 Provision (benefit) for Federal income taxes 1,626 (2,326) Net income before preferred stock dividends 3,419 6,588 Preferred stock dividends of Coastal Banc ssb (Series A) 647 647 Net income available to common stockholders $2,772 $5,941 Basic earnings per share $0.40 $0.79 Diluted earnings per share $0.40 $0.76SOURCE Coastal Bancorp, Inc.
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Company News On-Call:
800-758-5804, ext. 118190
CONTACT:
Manuel J. Mehos, CEO, and Catherine N. Wylie,
CFO, both of Coastal Bancorp, Inc., 713-435-5000, or fax,
713-435-5106
