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| Coastal Bancorp, Inc. Announces First Quarter Results of 76 Cents Per Share |
| COASTAL BANCORP LOGO
Coastal Bancorp. logo. (PRNewsFoto)[DM] HOUSTON, TX USA | |||
HOUSTON, April 16 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income available to common stockholders of $4.6 million for the quarter ended March 31, 2001, compared to $3.9 million for the same period in 2000, which is a $692,000, or 17.9%, increase. The increase was primarily due to a $2.2 million increase in net interest income, a $1.5 million decrease in the provision for loan losses and a $212,000 decrease in noninterest expense. These increases were somewhat offset by a $2.7 million decrease in noninterest income (which includes a $564,000 fair value loss on derivative instruments due to the change in accounting principle adopted effective January 1, 2001 (see below)), a $405,000 increase in the provision for Federal income taxes and a $104,000 (net of tax) cumulative transition adjustment loss due to the change in accounting for derivative instruments (see below). Diluted earnings per share for the quarter ended March 31, 2001 were $0.76 compared to $0.60 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 6,001,821 and 6,475,801, respectively. Change in Accounting Principle Effective January 1, 2001, Coastal adopted Statement of Financial Accounting Standards No. 133 ("Statement 133.") The adoption of Statement 133 had two effects on Coastal's earnings for the first quarter of 2001. The implementation of Statement 133 caused Coastal to record a $104,000 loss (net of tax), (or $0.02 per diluted share), as the cumulative effect of the change in accounting for derivative instruments. The transition adjustment loss represents the impact of Coastal's derivative contracts that did not qualify for hedge accounting as of January 1, 2001. The derivative instruments held by Coastal include interest rate swap agreements where Coastal makes fixed interest payments and receives payments based on a floating index and interest rate cap agreements. In addition, pursuant to Statement 133, any subsequent changes in the fair value of these derivative contracts are to be recorded in current period earnings. For the quarter ended March 31, 2001, Coastal recorded a fair value loss of $564,000 (or $0.06 per diluted share net of the tax effect), which is included as part of the decrease in noninterest income when comparing the 2001 and 2000 periods. In total for the first quarter of 2001, the adoption of Statement 133 had a negative impact on Coastal's earnings of $0.08 per diluted share. Net Interest Income As noted previously, the most significant contributor to increased net income available to common stockholders was increased net interest income. This increase in net interest income continues to show the progress of Coastal's strategic focus on commercial banking business. The $2.2 million, or 10.9%, increase in net interest income from 2000 to 2001 was primarily due to the increase in net interest margin to 2.98% for the quarter ended March 31, 2001 from 2.78% for the same period in 2000. The increase in net interest margin was primarily due to the 0.46% increase in the average yield on interest-earning assets, primarily on loans receivable, offset by a 0.36% increase in the average rate paid on interest-bearing liabilities, due primarily to higher wholesale funding costs. In addition, net interest margin was positively impacted by a $17.7 million increase in average net interest- earning assets. Comparing the quarter ended March 31, 2001 to the same period in 2000, average interest-earning assets increased $94.4 million. This increase consisted primarily of a $129.3 million increase in the average balance of loans receivable (which are higher yielding than the other interest-earning assets held by Coastal), somewhat offset by the $36.6 million decrease in the average balance of mortgage-backed securities. Comparing the same periods, average interest-bearing liabilities increased $76.6 million. This increase was primarily comprised of a $55.5 million increase in interest- bearing deposits and a $21.2 million increase in the average balance of advances from the Federal Home Loan Bank of Dallas. Provision for Loan Losses During the first quarter of 2001, Coastal recorded a provision for loan losses of $900,000 compared to $2.4 million during the same period in 2000. Overall during 2000 and continuing in 2001, Coastal continues to focus on increasing the size of Coastal's commercial loan portfolio. As such, Coastal continues to execute on its plan to eventually build the allowance for loan losses to a benchmark of approximately 100% of nonperforming loans. Nonperforming loans are those loans on nonaccrual status as well as those loans greater than ninety (90) days delinquent and still accruing interest. At March 31, 2001, Coastal had nonperforming loans totaling $22.0 million. Of these nonperforming loans, $17.1 million, or 78%, were first lien residential (single family) mortgage loans, $2.7 million were commercial real estate loans, $1.3 million were commercial financial and industrial loans with the balance in the residential construction and consumer and other categories. At March 31, 2001, the allowance for loan losses as a percentage of nonperforming loans was 64.4% compared to 68.3% at December 31, 2000. Noninterest Expense, Noninterest Income and Provision for Federal Income Taxes The $212,000 decrease in noninterest expense was primarily due to decreases of $160,000 and $130,000 in other noninterest expense and office occupancy, respectively, partially offset by a $129,000 increase in compensation, payroll taxes and other benefits, in addition to small changes in other categories. The decrease in noninterest income was primarily due to the $2.2 million non-recurring gain recorded on the sale of Coastal's mortgage servicing rights during the quarter ended March 31, 2000 and the related loss of the servicing income and loan fees, during the periods subsequent to the sale. In addition to the servicing sale, the effect of the fair value loss of $564,000 recorded pursuant to Statement 133 as mentioned previously was a factor in the decrease in total noninterest income. The provision for Federal income taxes increased $405,000 primarily due to the increased income before Federal income taxes, minority interest and cumulative effect of accounting change. Common Stock Repurchase On August 27, 1998, December 21, 1998, February 25, 1999, April 27, 2000 and July 27, 2000, the Board of Directors authorized five 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, 2001, 2,000,000 shares had been repurchased at an average repurchase price of $15.67 per share for a total cost of $31.3 million, with no shares from the July 27, 2000 authorization having been repurchased to date. Book value per common share at March 31, 2001 was $19.60. The Company At March 31, 2001, Coastal had total assets of approximately $3.2 billion, deposits of approximately $1.7 billion, preferred stock (Series A) of Coastal Banc ssb of approximately $28.8 million, Series A Cumulative Preferred Stock of $27.5 million and common stockholders' equity of approximately $116.3 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 our website 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 March 31, 2001 2000 Basic earnings per share without the adoption of Statement 133 $ 0.88 $ 0.61 Basic earnings per share before the cumulative effect of accounting change $ 0.81 $ 0.61 Basic earnings per share $ 0.80 $ 0.61 Diluted earnings per share without the adoption of Statement 133 $ 0.84 $ 0.60 Diluted earnings per share before the cumulative effect of accounting change $ 0.78 $ 0.60 Diluted earnings per share $ 0.76 $ 0.60 Net change in diluted earnings per share due to the adoption of Statement 133 $ 0.08 $ 0.00 Diluted cash earnings per share (A) $ 1.00 $ 0.71 Return (before minority interest) on average assets 0.76% 0.68% Return on average common equity 16.31% 14.54% Net interest margin 2.98% 2.78% Noninterest expense to average total assets 1.93% 1.99% Charge-offs of loans receivable $ 1,260 $ 283 Net charge-offs (recoveries) of loans receivable $ 1,225 $ (1) Ratio of net charge-offs to average loans receivable 0.06% 0.00% (A) Cash earnings is calculated by adding back goodwill amortization and the fair value losses recorded pursuant to the adoption of Statement 133 in 2001. COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA, continued (Dollars In Thousands, except per share data) (unaudited) For the Three Months Ended March 31, 2001 2000 Average balance sheet information Assets: Interest-earning assets: Loans receivable $ 1,946,887 $ 1,817,596 Mortgage-backed securities 978,991 1,015,624 Other 65,770 64,075 Total interest-earning assets 2,991,648 2,897,295 Noninterest-earning assets 98,688 110,912 Total assets $ 3,090,336 $ 3,008,207 Liabilities and stockholders' equity: Interest-bearing deposits $ 1,531,216 $ 1,475,721 Borrowings 1,176,980 1,155,861 Senior Notes payable 46,900 46,900 Total interest-bearing liabilities 2,755,096 2,678,482 Noninterest-bearing liabilities 165,742 166,967 Preferred Stock of Coastal Banc ssb 28,750 28,750 Preferred stockholders' equity 27,500 27,500 Common stockholders' equity 113,248 106,508 Total liabilities and stockholders' equity $ 3,090,336 $ 3,008,207 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars in Thousands, except per share data) (unaudited) March 31, December 31, 2001 2000 Nonaccrual loans receivable: First lien residential $ 16,958 $ 16,062 Residential construction 312 390 Commercial real estate 2,691 1,134 Commercial, financial and industrial 691 1,152 Consumer and other 539 496 21,191 19,234 Loans greater than 90 days delinquent and still accruing: First lien residential 118 475 Commercial real estate --- 736 Commercial, financial and industrial 647 634 Consumer and other 52 153 817 1,998 Total nonperforming loans 22,008 21,232 Real estate owned and repossessed assets 3,628 4,095 Total nonperforming assets $ 25,636 $ 25,327 Allowance for loan losses $ 14,182 $ 14,507 Ratio of nonperforming loans to loans receivable 1.10% 1.12% Ratio of nonperforming assets to total assets 0.81% 0.82% Ratio of allowance for loan losses to nonperforming loans receivable 64.44% 68.32% Ratio of allowance for loan losses to loans receivable 0.71% 0.77% Book value per common share $ 19.60 $ 18.89 Tangible book value per common share $ 15.90 $ 15.08 Regulatory capital ratios: Tier 1 (Core) 6.23% 6.22% Tier 1 risk-based 9.85% 9.94% Total risk-based 10.59% 10.72% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) ASSETS March 31, December 31, 2001 2000 (unaudited) Cash and cash equivalents $ 40,861 $ 69,730 Federal funds sold 8,150 869 Loans receivable 1,997,286 1,896,228 Mortgage-backed securities held-to-maturity 878,096 885,565 Mortgage-backed securities available-for-sale, at market value 93,300 94,673 U.S. Treasury security held-to-maturity 1,398 1,497 Accrued interest receivable 18,283 18,772 Property and equipment 27,196 28,086 Stock in the Federal Home Loan Bank of Dallas (FHLB) 61,729 58,005 Goodwill 23,909 24,611 Prepaid expenses and other assets 11,906 13,575 $ 3,162,114 $ 3,091,611 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $ 1,697,162 $ 1,674,981 Advances from the FHLB 1,218,145 1,150,305 Senior notes payable 46,900 46,900 Advances from borrowers for taxes and insurance 6,806 5,050 Other liabilities and accrued expenses 20,542 47,154 Total liabilities 2,989,555 2,924,390 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 27,500 27,500 Common stock, $0.01 par value; authorized shares 30,000,000; 7,737,526 shares issued and 5,737,526 shares outstanding at March 31, 2001; 7,677,622 shares issued and 5,677,622 shares outstanding at December 31, 2000 83 77 Additional paid-in capital 34,058 33,312 Retained earnings 114,773 110,794 Accumulated other comprehensive loss - unrealized loss on securities available-for-sale (1,260) (1,867) Treasury stock, at cost (2,000,000 shares in 2001 and 2000) (31,345) (31,345) Total stockholders' equity 143,809 138,471 $ 3,162,114 $ 3,091,611 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended March 31, 2001 2000 (Unaudited) Interest income: Loans receivable $ 43,001 $ 38,506 Mortgage-backed securities 16,258 15,433 FHLB stock, federal funds sold and other interest-earning assets 906 975 60,165 54,914 Interest expense: Deposits 19,921 16,533 Other borrowed money 3 1 Senior notes payable 1,173 1,173 Advances from the FHLB 16,763 17,095 37,860 34,802 Net interest income 22,305 20,112 Provision for loan losses 900 2,400 Net interest income after provision for loan losses 21,405 17,712 Noninterest income: Service charges on deposit accounts 1,761 1,709 Loan fees 240 348 Loan servicing income, net --- 201 Gain (loss) on derivative instruments (564) --- Other 385 96 Gain on sale of mortgage servicing rights --- 2,172 1,822 4,526 Noninterest expense: Compensation, payroll taxes and other benefits 7,598 7,469 Office occupancy 2,676 2,806 Data processing 854 859 Amortization of goodwill 702 753 Insurance premiums 154 149 Other 2,698 2,858 14,682 14,894 Income before provision for Federal income taxes, minority interest and cumulative effect of accounting change 8,545 7,344 Provision for Federal income taxes 2,614 2,209 Income before minority interest and cumulative effect of accounting change 5,931 5,135 Minority interest - preferred stock dividends of Coastal Banc ssb 647 647 Income before cumulative effect of accounting change 5,284 4,488 Cumulative effect of change in accounting for derivative instruments, net of tax (104) --- Net income $ 5,180 $ 4,488 Net income available to common stockholders $ 4,553 $ 3,861 Basis earnings per share before cumulative effect of accounting change $ 0.81 $ 0.61 Basic earnings per share $ 0.80 $ 0.61 Diluted earnings per share before cumulative effect of accounting change $ 0.78 $ 0.60 Diluted earnings per share $ 0.76 $ 0.60SOURCE Coastal Bancorp, Inc.
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CONTACT:
Manuel J. Mehos, CEO, or Catherine N. Wylie,
CFO, both of Coastal Bancorp, Inc., 713-435-5327, or fax,
713-435-5106
