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| Coastal Bancorp, Inc. Second Quarter Earnings up 41.2 Percent from Prior Year |
HOUSTON, July 15 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income available to common stockholders of $4.0 million for the quarter ended June 30, 1998. Net income for the current quarter increased to $4.0 million from $2.8 million, or by 41.2%, from the quarter ended June 30, 1997. Diluted earnings per share for the quarter ended June 30, 1998 were $0.51 compared to $0.37 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 7,837,484 and 7,688,841, respectively. On April 23, 1998, Coastal declared a 3:2 stock split that was paid on June 15, 1998 to stockholders of record on May 15, 1998. Accordingly, all common stock share data have been adjusted to include the effect of the stock split. Net interest income increased $2.0 million and noninterest income increased $103,000 from the three months ended June 30, 1997 to the three months ended June 30, 1998. These increases were offset by the increase in noninterest expense of $689,000. The increase in net interest income was primarily due to an increase in average net interest-earning assets of $25.1 million and an increase in net interest spread from 1.71% for the three months ended June 30, 1997 to 1.92% for the same period in 1998. Net interest spread including noninterest- bearing deposits increased from 1.88% for the three months ended June 30, 1997 to 2.08% for the same period in 1998. The overall increase in net interest spread was primarily due to an increase in the average yield on interest- earning assets of 11 basis points and a decrease in the average rate paid on interest-bearing liabilities of 10 basis points. The average balance of loans receivable increased $121.5 million from the three months ended June 30, 1997 to the three months ended June 30, 1998 with the average yield increasing from 8.47% to 8.50%. The average balance of mortgage-backed securities decreased $42.0 million from the three months ended June 30, 1997 to three months ended June 30, 1998, while the average yield increased from 6.11% to 6.16%. The decrease in the average rate paid on interest-bearing liabilities was due primarily to the overall decrease in wholesale funding costs. Net interest margin was 2.26% for the three months ended June 30, 1998 and 2.05% for the three months ended June 30, 1997. The increase in noninterest income was due to the $161,000 increase in loan fees and service charges on deposit accounts offset by the $197,000 decrease in loan servicing income. The increase in noninterest expense was primarily due to increases in compensation, payroll taxes and other benefits of $464,000 and office occupancy of $389,000 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. Net income available to common stockholders for the first six months of 1998 was $9.9 million compared to $6.1 million for the same period in 1997. Diluted earnings per share for the six months ended June 30, 1998 was $1.27 compared to $0.79 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 7,815,640 and 7,675,463, respectively. The increase in net income for the six months ended June 30, 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 during the first quarter of 1998. The resolution of the issue resulted in Coastal recording a $3.7 million, or 47 cents per diluted share, reversal of accrued income taxes in the first quarter 1998 resulting in a one-time positive effect on net income. The resolution of the tax benefit issue is also contributing an ongoing quarterly tax benefit of $226,000 or approximately 3 cents per diluted share which is expected to continue for approximately 3 to 4 years. During the six months ended June 30, 1998, 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 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 33 cents per diluted share. Excluding the net benefit from these nonrecurring items, net income available to common stockholders from ongoing core operations was $7.4 million or 94 cents per diluted share for the six months ended June 30, 1998. On May 4, 1998, Coastal announced the execution of a definitive agreement to purchase the Valley Branches of Pacific Southwest Bank, also known as San Benito Bank and Trust Company, a unit of Pacific Southwest Bank. The acquisition will add twelve branches, approximately $357 million in deposits and $175 million in loans to Coastal's existing organization. The acquisition is pending regulatory approval and is expected to close in the third quarter of 1998. At June 30, 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 $114.7 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 37 branch offices in metropolitan Houston, Austin, Corpus Christi and small cities in the south east quadrant of Texas. At June 30, 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 For the Six Months Ended June 30, June 30, 1998 1997 1998 1997 Net income available to common stockholders attributable to: Ongoing core operations $3,979 $2,819 $7,351 $6,057 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 $3,979 $2,819 $9,920 $6,057 Diluted earnings per share from ongoing core operations (adjusted to include the effect of the stock split) $0.51 $0.37 $0.94 $0.79 Diluted earnings per share (adjusted to include the effect of the stock split) $0.51 $0.37 $1.27 $0.79 Diluted cash earnings per share from ongoing core operations (adjusted to include the effect of the stock split) $0.57 $0.42 $1.06 $0.90 Diluted cash earnings per share (adjusted to include the effect of the stock split) $0.57 $0.42 $1.39 $0.90 Diluted earnings per share from ongoing core operations prior to effect of the stock split $0.76 $0.55 $1.41 $1.18 Diluted earnings per share prior to effect of the stock split $0.76 $0.55 $1.90 $1.18 Diluted cash earnings per share from ongoing core operations prior to effect of the stock split $0.85 $0.64 $1.59 $1.36 Diluted cash earnings per share prior to effect of the stock split $0.85 $0.64 $2.08 $1.36 COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA, Continued (Dollars In Thousands, except per share data) (unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, 1998 1997 1998 1997 Return on average assets 0.63% 0.49% 0.77% 0.52% Return on average equity 14.20% 11.55% 18.28% 12.63% Net interest spread including noninterest- bearing deposits 2.08% 1.88% 2.00% 1.91% Net interest spread 1.92% 1.71% 1.82% 1.75% Net interest margin 2.26% 2.05% 2.18% 2.07% Noninterest expense to average total assets 1.44% 1.39% 1.43% 1.37% Charge-offs of loans receivable $342 $525 $692 $967 Net charge-offs of loans receivable $285 $494 $462 $918 Ratio of net charge-offs to average loans receivable 0.02% 0.04% 0.03% 0.07% Average interest- earning assets $2,881,545 $2,786,142 $2,871,332 $2,790,126 Average total assets $2,956,387 $2,860,551 $2,948,229 $2,864,523 Average loans receivable $1,368,699 $1,247,192 $1,341,184 $1,243,050 Average common stockholders' equity $112,401 $97,953 $109,439 $96,719 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except share data) (unaudited) June 30, December 31, 1998 1997 Non-performing loans receivable $12,250 $17,351 Real estate owned and repossessed assets 2,239 3,198 Total non-performing assets $14,489 $20,549 Allowance for loan losses $8,850 $7,412 Ratio of non-performing loans to loans receivable 0.87% 1.38% Ratio of non-performing assets to total assets 0.49% 0.71% Ratio of allowance for loan losses to non-performing loans receivable 72.24% 42.72% Ratio of allowance for loan losses to loans receivable 0.63% 0.59% Book value per common share $15.00 $13.78 Tangible book value per common share $13.17 $11.83 Regulatory capital ratios: Tier 1 (Core) 5.78% 5.52% Tier 1 risk-based 11.30% 11.46% Total risk-based 11.89% 11.98% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) June 30, December 31, 1998 1997 (unaudited) ASSETS Cash and amounts due from depository institutions $25,824 $37,096 Loans receivable 1,413,328 1,261,435 Mortgage-backed securities held-to-maturity 1,283,521 1,345,090 Mortgage-backed securities available-for-sale, at market value 159,677 169,997 Accrued interest receivable 15,349 14,813 Property and equipment 22,513 22,250 Stock in the Federal Home Loan Bank of Dallas (FHLB) 31,694 27,801 Goodwill 14,774 15,717 Mortgage servicing rights 4,865 5,653 Prepaid expenses and other assets 8,983 11,558 $2,980,528 $2,911,410 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Savings deposits $1,358,899 $1,375,060 Advances from the FHLB 624,838 540,475 Securities sold under agreements to repurchase 777,712 791,760 Senior notes payable 50,000 50,000 Advances from borrowers for taxes and insurance 9,438 3,975 Other liabilities and accrued expenses 16,181 16,560 Total liabilities 2,837,068 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, $.0067 par value; authorized shares 45,000,000; 7,562,535 and 7,513,389 shares issued and outstanding in 1998 and 1997 50 50 Additional paid-in capital 33,657 33,186 Retained earnings 82,579 73,868 Accumulated other comprehensive income (loss) -- unrealized loss on securities available-for-sale (1,576) (2,274) Total stockholders' equity 114,710 104,830 $2,980,528 $2,911,410 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended June 30, 1998 1997 (Unaudited) Interest income: Mortgage-backed securities $22,752 $23,209 Loans receivable 29,087 26,415 Federal funds sold, certificates and time deposits and other investments 534 274 52,373 49,898 Interest expense: Savings deposits 15,492 15,379 Other borrowed money 11,812 13,996 Senior notes payable 1,250 1,250 Advances from the FHLB: Short-term 3,624 1,856 Long-term 3,913 3,153 36,091 35,634 Net interest income 16,282 14,264 Provision for loan losses 450 450 Net interest income after provision for loan losses 15,832 13,814 Noninterest income: Loan fees and service charges 1,142 981 Loan servicing income, net 160 357 Other 351 212 1,653 1,550 Noninterest expense: Compensation, payroll taxes and other benefits 5,157 4,693 Office occupancy 2,042 1,653 Insurance premiums 260 274 Data processing 573 597 Amortization of goodwill 474 445 Real estate owned 171 243 Other 1,906 1,989 10,583 9,894 Income before provision for Federal income taxes 6,902 5,470 Provision for Federal income taxes 2,276 2,004 Net income before preferred stock dividends 4,626 3,466 Preferred stock dividends of Coastal Banc ssb (Series A) 647 647 Net income available to common stockholders $3,979 $2,819 Basic earnings per share $0.53 $0.38 Diluted earnings per share $0.51 $0.37 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Six Months Ended June 30, 1998 1997 (Unaudited) Interest income: Mortgage-backed securities $46,198 $46,401 Loans receivable 56,027 52,430 Federal funds sold, certificates and time deposits and other investments 1,036 671 103,261 99,502 Interest expense: Savings deposits 30,999 30,545 Other borrowed money 23,041 27,776 Senior notes payable 2,500 2,500 Advances from the FHLB: Short-term 7,579 3,712 Long-term 7,860 6,057 71,979 70,590 Net interest income 31,282 28,912 Provision for loan losses 1,900 900 Net interest income after provision for loan losses 29,382 28,012 Noninterest income: Loan fees and service charges 2,466 1,875 Loan servicing income, net 400 764 Other 543 380 Writedown of purchased mortgage loan premium (709) --- 2,700 3,019 Noninterest expense: Compensation, payroll taxes and other benefits 10,097 9,318 Office occupancy 4,031 3,264 Insurance premiums 525 545 Data processing 1,181 1,110 Amortization of goodwill 943 882 Real estate owned 423 482 Other 3,718 3,850 20,918 19,451 Income before provision (benefit) for Federal income taxes 11,164 11,580 Provision (benefit) for Federal income taxes (50) 4,229 Net income before preferred stock dividends 11,214 7,351 Preferred stock dividends of Coastal Banc ssb (Series A) 1,294 1,294 Net income available to common stockholders $9,920 $6,057 Basic earnings per share $1.31 $0.81 Diluted earnings per share $1.27 $0.79SOURCE Coastal Bancorp, Inc.
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fax, 800-758-5804, ext. 118190
CONTACT:
Manuel J. Mehos, CEO, or Catherine N. Wylie,
CFO, both of Coastal Bancorp, Inc., 713-435-5000, or Fax:
713-435-5106
