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| Coastal Bancorp, Inc. Announces First Quarter Results of 57 Cents Per Share |
| COASTAL BANCORP LOGO
Coastal Bancorp logo. (PRNewsFoto)[DM TC] HOUSTON, TX USA | |||
HOUSTON, April 15 /PRNewswire-FirstCall/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income available to common stockholders of $3.1 million for the quarter ended March 31, 2003, compared to $3.5 million for the same period in 2002, which is a $396,000, or 11.5%, decrease. The decrease in net income available to common stockholders was primarily due to a $2.5 million decrease in net interest income, as a result of a 0.39% decrease in net interest margin (due primarily to the overall lower interest rate environment) and a $14.0 million decrease in average net interest-earning assets when comparing the first quarter of 2003 to the same period in 2002. In addition, noninterest expense increased $204,000. These decreases in net income available to common stockholders were partially mitigated by a $1.5 million increase in noninterest income, a $225,000 decrease in the provision for Federal income taxes 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). Diluted earnings per share for the quarter ended March 31, 2003 were $0.57, unchanged from $0.57 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 5,386,566 and 6,110,822, respectively. Basic earnings per share for the quarter ended March 31, 2003 were $0.59, also unchanged from $0.59 for the same period in 2002. Net Interest Income As noted previously, due to the overall lower interest rate environment, the most significant contributor to the decrease in net income available to common stockholders was lower net interest income. When comparing the two periods, net interest margin decreased 0.39% to 2.71%. The decrease in net interest margin was comprised of a 0.93% decrease in the average yield on interest-earning assets (1.07% on loans receivable and 0.85% on mortgage- backed securities), offset somewhat by the 0.62% decrease in the average rate on interest-bearing liabilities. As in 2002, during 2003 Coastal has continued to experience significant principal paydowns on its mortgage-backed securities and single family mortgage loans receivable portfolios (on an annualized basis, approximately 40% on mortgage-backed securities and 40% on single family mortgage loans) due to the continuing low market rates of interest and the resulting refinancings of mortgage assets. These paydowns resulted in greater premium amortization on those mortgage assets originally purchased at a premium. Noninterest Income, Noninterest Expense and Provision for Federal Income Taxes The $1.5 million increase in noninterest income was primarily due to the $907,000 increase in service charges on deposit accounts and a $734,000 gain on the sale of loans receivable held for sale. The increased income from service charges on deposit accounts is due to Coastal's continued focus on increasing transaction-type accounts and the related fee income, including Coastal's Free Checking and Bounce Protection features on retail checking accounts introduced during August 2002. The gain on the sale of mortgage loans held for sale was due to routine sales transactions by Coastal Banc ssb (the "Bank"), which were facilitated by Coastal Banc Mortgage Corp. ("CBMC"), an affiliate of the Bank. The loans sold were purchased by the Bank in packages with the intention to resell all or part of the loans in the packages to third parties. CBMC was formed during the third quarter of 2002 for the purpose of facilitating the purchase and sale of whole loans and participations to third parties. When comparing the first quarter of 2003 to the same period in 2002, the $204,000 net increase in noninterest expense was comprised primarily of an increase in compensation, payroll taxes and benefits of $147,000, and an increase in other noninterest expense of $513,000, offset by decreases of $263,000, $154,000 and $49,000 in office occupancy, advertising and postage and delivery expenses, respectively. The $513,000 increase in other noninterest expense was comprised of a $120,000 increase in audit and accounting fees related to the outsourcing of the internal audit department, a $120,000 increase in legal fees and insurance premiums, and a $201,000 increase in expenses related to loans and real estate owned. The increase in compensation expense was due primarily to compensation paid to Coastal Banc Mortgage Corp. employees for brokerage commissions related to the loan sales mentioned previously, offset by a decrease due to the internal audit department being outsourced during 2002. The decrease in office occupancy was primarily due to certain assets becoming fully depreciated in 2002 and 2003. The decrease in advertising expense was due to management's continued work to monitor and reduce this type of expense, when possible. The provision for Federal income taxes decreased $225,000 primarily due to the lower amount of income before Federal income taxes and minority interest, with the effective tax rate being approximately 31% for the quarter ended March 31, 2003 and 32% for the same period in 2002 (when taking into account the tax benefit for the minority interest expense in 2002). Asset Quality As shown in the "Other Financial Data" table attached, at March 31, 2003, Coastal had nonperforming loans totaling $15.5 million, which is a $3.0 million decrease, or 16%, when compared to December 31, 2002. Nonperforming loans are those loans on nonaccrual status as well as those loans greater than ninety (90) days delinquent and still accruing interest. The ratio of nonperforming assets to total assets was 0.77% at March 31, 2003. At March 31, 2003, $6.2 million, or 40%, of nonperforming loans were first lien residential (single family) mortgage loans, $5.5 million were acquisition and development loans, $2.2 million were commercial real estate loans, $1.3 million were commercial, financial and industrial loans, with the balance in other loan categories. At March 31, 2003, 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 117.9% compared to 97.7% at December 31, 2002. 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 On June 18, 2002, Coastal Bancorp, Inc. ("Bancorp"), 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 an interest in Bancorp's junior subordinated debentures, which were purchased by the Trust. The junior subordinated debentures are the only assets of the Trust and interest payments from the debentures finance the distributions paid on the Trust Preferred Securities. The debentures have the same payment terms as the Trust Preferred Securities. Distributions on the securities are payable quarterly at the annual rate of 9.0%. The Company At March 31, 2003, 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 $127.7 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 FDIC insured, state savings bank headquartered in Houston. Coastal Banc ssb operates 44 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 Ended March 31, 2003 2002 Basic earnings per share $0.59 $0.59 Diluted earnings per share $0.57 $0.57 Return (before minority interest) on average assets 0.60% 0.77% Return on average common equity 9.91% 10.73% Net interest margin 2.71% 3.10% Noninterest expense to average total assets 2.28% 2.22% Charge-offs of loans receivable (A) $908 $1,890 Net charge-offs of loans receivable $717 $1,800 Ratio of net charge-offs to average loans receivable 0.04% 0.10% (A) $1.5 million of the charge-offs during the first quarter of 2002 were due to the write-down of certain under-performing single family mortgage loans that were either sold or reclassified to the held for sale category as of March 31, 2002. COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA, continued (Dollars In Thousands) (unaudited) For the Three Months Ended March 31, 2003 2002 Average balance sheet information Assets: Interest-earning assets: Loans receivable $1,871,027 $1,834,514 Mortgage-backed securities 468,165 498,365 Other 51,368 79,384 Total interest-earning assets 2,390,560 2,412,263 Noninterest-earning assets 89,013 92,347 Total assets $2,479,573 $2,504,610 Liabilities and stockholders' equity: Interest-bearing deposits $1,418,473 $1,479,698 Borrowings 665,265 646,594 Company obligated mandatorily redeemable 9.0% trust preferred securities of Coastal Capital Trust I 50,000 --- Senior Notes payable --- 15,113 Total interest-bearing liabilities 2,133,738 2,141,405 Noninterest-bearing liabilities 193,133 176,428 Preferred Stock of Coastal Banc ssb --- 28,750 Preferred stockholders' equity 27,500 27,500 Common stockholders' equity 125,202 130,527 Total liabilities and stockholders' equity $2,479,573 $2,504,610 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars in Thousands, except per share data) (unaudited) March 31, December 31, 2003 2002 Nonaccrual loans receivable: First lien residential $6,156 $9,184 First lien residential - loans held for sale 11 --- Residential construction --- 49 Commercial real estate 1,177 1,323 Acquisition and development 5,542 5,485 Commercial, financial and industrial 1,208 1,609 Consumer and other 188 128 14,282 17,778 Loans greater than 90 days delinquent and still accruing: Residential construction 75 83 Multifamily real estate --- 282 Acquisition and development 7 59 Commercial real estate 1,025 302 Commercial, financial and industrial 138 43 1,245 769 Total nonperforming loans 15,527 18,547 Real estate owned and repossessed assets 3,880 4,433 Total nonperforming assets $19,407 $22,980 Allowance for loan losses $18,301 $18,118 Ratio of nonperforming loans to total loans receivable and loans receivable held for sale 0.82% 1.00% Ratio of nonperforming assets to total assets 0.77% 0.91% Ratio of allowance for loan losses to nonperforming loans receivable (excluding nonperforming loans held for sale) 117.95% 97.69% Ratio of allowance for loan losses to loans receivable (excluding loans receivable held for sale) 0.97% 1.00% Book value per common share $23.86 $23.47 Tangible book value per common share $20.13 $19.74 Regulatory capital ratios of Coastal Banc ssb: Tier 1 (Core) 7.30% 6.88% Tier 1 risk-based 10.49% 10.32% Total risk-based 11.57% 11.38% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) March 31, December 31, ASSETS 2003 2002 (unaudited) Cash and cash equivalents $38,120 $39,766 Federal funds sold 8,400 27,755 Loans receivable held for sale 3,723 49,886 Loans receivable 1,893,351 1,812,785 Mortgage-backed securities available-for-sale, at market value 466,841 475,022 Other securities available-for-sale, at market value 1,781 1,788 Accrued interest receivable 9,742 9,781 Property and equipment 27,986 27,341 Stock in the Federal Home Loan Bank of Dallas (FHLB) 41,475 41,221 Goodwill 21,429 21,429 Prepaid expenses and other assets 16,989 19,370 $2,529,837 $2,526,144 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $1,621,087 $1,614,368 Advances from the FHLB 687,659 696,085 Company obligated mandatorily redeemable 9.0% trust preferred securities of Coastal Capital Trust I 50,000 50,000 Advances from borrowers for taxes and insurance 4,246 2,407 Other liabilities and accrued expenses 11,627 10,399 Total liabilities 2,374,619 2,373,259 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; 7,872,206 shares issued and 5,147,120 shares outstanding at March 31, 2003; 7,867,029 shares issued and 5,141,010 shares outstanding at December 31, 2002 79 79 Additional paid-in capital 35,796 35,736 Retained earnings 144,426 141,986 Accumulated other comprehensive income - unrealized gain on securities available-for-sale 434 619 Treasury stock, at cost (2,725,086 shares in 2003 and 2,726,019 shares in 2002) (53,017) (53,035) Total stockholders' equity 155,218 152,885 $2,529,837 $2,526,144 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended March 31, 2003 2002 (Unaudited) Interest income: Loans receivable $25,612 $29,967 Mortgage-backed securities 3,667 4,964 FHLB stock, federal funds sold and other interest-earning assets 290 475 29,569 35,406 Interest expense: Deposits 8,048 11,041 Advances from the FHLB 4,225 5,268 Senior notes payable --- 378 Company obligated mandatorily redeemable trust preferred securities 1,125 --- 13,398 16,687 Net interest income 16,171 18,719 Provision for loan losses 900 900 Net interest income after provision for loan losses 15,271 17,819 Noninterest income: Service charges on deposit accounts 2,902 1,995 Loan fees 219 307 Gain on sale of loans receivable held for sale 734 --- Gain (loss) on derivative instruments 6 (24) Gain (loss) on sale of real estate owned (130) 22 Other 262 209 3,993 2,509 Noninterest expense: Compensation, payroll taxes and other benefits 8,008 7,861 Office occupancy 2,317 2,580 Data processing 433 423 Advertising 275 429 Postage and delivery 379 428 Other 2,508 1,995 13,920 13,716 Income before provision for Federal income taxes and minority interest 5,344 6,612 Provision for Federal income taxes 1,659 1,884 Income before minority interest 3,685 4,728 Minority interest - preferred stock dividends of Coastal Banc ssb --- 647 Net income $3,685 $4,081 Net income available to common stockholders $3,058 $3,454 Basic earnings per share $0.59 $0.59 Diluted earnings per share $0.57 $0.57SOURCE Coastal Bancorp, Inc.
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CONTACT:
Manuel J. Mehos, CEO, or Catherine N. Wylie,
CFO, both of Coastal Bancorp, Inc., +1-713-435-5327, or fax,
+1-713-435-5106
