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| Coastal Bancorp, Inc. First Quarter Earnings Up 61.9% From 1999 |
| COASTAL BANCORP LOGO
Coastal Bancorp. logo. (PRNewsFoto)[DM] HOUSTON, TX USA | |||
HOUSTON, April 17 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income of $4.5 million for the quarter ended March 31, 2000, compared to net income for the quarter ended March 31, 1999 of $2.8 million which is a $1.7 million, or 61.9% increase. The increase was due to a $1.7 million increase in net interest income, a $2.1 million increase in noninterest income, offset by a $1.4 million increase in noninterest expense and a $583,000 increase in the provision for income taxes. The increase in noninterest income was due to a $2.2 million nonrecurring gain on the sale of Coastal's mortgage servicing rights in 2000, although this gain was somewhat offset by a provision for loan losses of $1.5 million in excess of the planned quarterly provision. Diluted earnings per share for the quarter ended March 31, 2000 were $0.60 compared to $0.40 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 6,475,801 and 7,011,671, respectively. The increase in net interest income continues to show the success of Coastal's strategic focus on commercial banking business. The $1.7 million, or 9.2%, increase in net interest income from 1999 to 2000 was primarily due to the increase in net interest margin from 2.64% for the three months ended March 31, 1999 to 2.78% for the same period in 2000. The increase in net interest margin was primarily due to the 0.47% increase in the average yield on interest-earning assets, primarily on loans receivable, offset by a 0.37% 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 $37.2 million increase in average net interest- earning assets. On the asset side of the balance sheet, average interest- earning assets increased $110.8 million from the three months ended March 31, 1999 to the same period in 2000. This increase consisted of a $296.0 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 $190.8 million decrease in the average balance of mortgage-backed securities. On the liability side, average interest-bearing liabilities increased $73.5 million which was comprised of a $240.2 million increase in the average balance of advances from the Federal Home Loan Bank of Dallas, offset by decreases of $112.6 million, $52.4 million and $1.7 million in the average balances of securities sold under agreements to repurchase, interest- bearing deposits and senior notes payable, respectively. As mentioned previously, the increase in noninterest income was primarily due to the $2.2 million gain recorded on the sale of Coastal's mortgage servicing rights during the three months ended March 31, 2000. Due to the declining servicing portfolio (with an average loan life of approximately seven years), management decided to take the opportunity to sell Coastal's entire servicing rights portfolio based on the current market conditions for loan servicing rights and the expected declining income benefits of that servicing portfolio on an ongoing basis. Pursuant to a purchase and sale agreement, Coastal sold its rights to service approximately $391.9 million of mortgage loans for third party investors, primarily the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. As part of this business decision to sell the mortgage servicing rights, management also decided to purchase a $230.6 million package of single family mortgage loans. This package will not only utilize existing servicing staff once the loan servicing is transferred to Coastal, but will also provide expected net interest income of approximately $750,000 per quarter (or $490,000 net of tax) for the next four quarters. This positive earnings impact offsets the expected ongoing negative impact on earnings of the March 2000 servicing sale. Once the transfer of the servicing to the purchaser has been completed, management expects the sale of the servicing to have an ongoing slightly negative impact on earnings, net of tax of approximately $150,000 per quarter for the next four quarters. In addition to the nonrecurring gain, comparing the first quarter 1999 to the first quarter in 2000, loan fees and service charges on deposit accounts increased $243,000, loan servicing income increased slightly by $67,000 and other noninterest income decreased $396,000. During the first quarter of 2000, Coastal recorded a provision for loan losses of $2.4 million compared to $2.3 million during the same period in 1999. In both periods, the provision recorded was greater than the planned quarterly provision due to continuing changes in the composition of Coastal's loan portfolio. For the remainder of 2000, Coastal's planned quarterly provision is $900,000, although no assurance can be given that provisions in excess of this amount will not be required based on Coastal's then current policy, the composition of the loans receivable portfolio, the existing nonperforming assets, delinquency trends and current economic conditions at the time. At March 31, 2000, Coastal's nonperforming loans as a percentage of total loans was 1.1%, the allowance for loan losses as a percentage of nonperforming loans was 63.9% and the allowance for loan losses to total loans receivable was 0.7%. The increase in noninterest expense was due to a $1.3 million increase in other noninterest expenses primarily because of the reduction of certain accrued liabilities totaling $1.1 million during the first quarter of 1999 and a $354,000 increase in compensation, payroll taxes and other benefits, offset by decreases of $154,000, $40,000 and $27,000 in insurance premiums expense, including deposit insurance premiums, data processing expense and real estate owned expense, respectively. The provision for Federal income taxes increased $583,000 primarily due to the increased income before Federal income taxes and minority interest, offset somewhat by the tax benefit received from the dividends declared on the 9.12% Series A Cumulative Preferred Stock issued in May 1999. 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, 2000, 1,283,679 shares had been repurchased at an average repurchase price of $15.94 per share for a total cost of $20.5 million. At March 31, 2000, Coastal had total assets of approximately $3.1 billion, deposits of approximately $1.6 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 $107.6 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 (which is not part of this release). "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, 2000 1999 Diluted earnings per share $ 0.60 $ 0.40 Diluted cash earnings per share $ 0.71 $ 0.50 Return (before minority interest) on average assets 0.68% 0.48% Return on average common equity 14.54% 10.19% Net interest margin 2.78% 2.64% Noninterest expense to average total assets 1.99% 1.88% Charge-offs of loans receivable $ 283 $ 553 Net charge-offs (recoveries) of loans receivable $ (1) $ 532 Ratio of net charge-offs to average loans receivable 0.00% 0.04% Average balance sheet information Assets: Interest-earning assets: Loans receivable $1,817,596 $1,521,560 Mortgage-backed securities 1,015,624 1,206,418 Other 64,075 58,539 Total interest-earning assets 2,897,295 2,786,517 Noninterest-earning assets 110,912 126,076 Total assets $3,008,207 $2,912,593 Liabilities and stockholders' equity: Interest-bearing deposits $1,475,721 $1,528,109 Borrowings 1,155,861 1,028,226 Senior Notes payable 46,900 48,600 Total interest-bearing liabilities 2,678,482 2,604,935 Noninterest-bearing liabilities 166,967 168,529 Preferred Stock of Coastal Banc ssb 28,750 28,750 Preferred stockholders' equity 27,500 --- Common stockholders' equity 106,508 110,379 Total liabilities and stockholders' equity $3,008,207 $2,912,593 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except share data) (unaudited) March 31, December 31, 2000 1999 Nonaccrual loans receivable $ 17,800 $ 14,666 Loans greater than 90 days delinquent and still accruing 2,388 2,452 Total nonperforming loans 20,188 17,118 Real estate owned and repossessed assets 3,767 4,531 Total nonperforming assets $ 23,955 $ 21,649 Allowance for loan losses $ 12,894 $ 10,493 Ratio of nonperforming loans to loans receivable 1.06% 0.99% Ratio of nonperforming assets to total assets 0.77% 0.73% Ratio of allowance for loan losses to nonperforming loans receivable 63.87% 61.30% Ratio of allowance for loan losses to loans receivable 0.68% 0.60% Book value per common share $ 16.63 $ 16.42 Tangible book value per common share $ 12.83 $ 12.53 Regulatory capital ratios: Tier 1 (Core) 5.77% 5.76% Tier 1 risk-based 9.51% 9.68% Total risk-based 10.22% 10.29% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) March 31, December 31, ASSETS 2000 1999 (unaudited) Cash and cash equivalents $ 36,879 $ 48,098 Federal funds sold 9,200 --- Loans receivable 1,902,021 1,735,081 Mortgage-backed securities held-to-maturity 909,557 917,212 Mortgage-backed securities available-for-sale, at market value 95,864 99,665 U.S. Treasury security held-to-maturity 992 299 Accrued interest receivable 18,467 16,150 Property and equipment 29,704 30,708 Stock in the Federal Home Loan Bank of Dallas (FHLB) 65,276 56,753 Goodwill 26,883 27,636 Mortgage servicing rights --- 3,035 Prepaid expenses and other assets 15,318 13,315 $3,110,161 $2,947,952 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $1,636,489 $1,624,289 Advances from the FHLB 1,240,581 1,096,931 Senior notes payable 46,900 46,900 Advances from borrowers for taxes and insurance 5,709 3,852 Other liabilities and accrued expenses 16,592 13,774 Total liabilities 2,946,271 2,785,746 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; 7,643,453 and 7,616,227 shares issued in 2000 and 1999 76 76 Additional paid-in capital 32,912 32,683 Retained earnings 98,861 95,508 Accumulated other comprehensive loss - unrealized loss on securities available-for-sale (3,746) (1,848) Treasury stock, at cost (1,283,679 shares in 2000 and 1999) (20,463) (20,463) Total stockholders' equity 135,140 133,456 $3,110,161 $2,947,952 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended March 31, 2000 1999 (Unaudited) Interest income: Loans receivable $ 38,506 $ 31,004 Mortgage-backed securities 15,433 17,750 FHLB stock, federal funds sold and other interest-earning assets 975 772 54,914 49,526 Interest expense: Deposits 16,533 16,810 Other borrowed money 1 1,518 Senior notes payable 1,173 1,217 Advances from the FHLB 17,095 11,565 34,802 31,110 Net interest income 20,112 18,416 Provision for loan losses 2,400 2,331 Net interest income after provision for loan losses 17,712 16,085 Noninterest income: Loan fees and service charges on deposit accounts 2,057 1,814 Loan servicing income, net 201 134 Other 96 492 Gain on sale of mortgage servicing rights 2,172 --- 4,526 2,440 Noninterest expense: Compensation, payroll taxes and other benefits 7,469 7,115 Office occupancy 2,806 2,802 Data processing 859 899 Amortization of goodwill 753 753 Insurance premiums 149 303 Real estate owned 127 154 Other 2,731 1,454 14,894 13,480 Income before provision for Federal income taxes and minority interest 7,344 5,045 Provision for Federal income taxes 2,209 1,626 Income before minority interest 5,135 3,419 Minority interest - preferred stock dividends of Coastal Banc ssb 647 647 Net income $ 4,488 $ 2,772 Net income available to common stockholders $ 3,861 $ 2,772 Basic earnings per share $ 0.61 $ 0.40 Diluted earnings per share $ 0.60 $ 0.40SOURCE 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
