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| Coastal Bancorp, Inc. Third Quarter Earnings Up 37.7 Percent From Prior Year |
HOUSTON, Oct. 15 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income available to common stockholders of $3.7 million for the quarter ended September 30, 1998. Net income for the current quarter increased to $3.7 million from $2.7 million, or by 37.7%, from the quarter ended September 30, 1997. Diluted earnings per share for the quarter ended September 30, 1998 were $0.48 compared to $0.35 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 7,726,329 and 7,766,705, 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. On September 1, 1998, Coastal announced that the Board of Directors had authorized the repurchase of up to 6.6% (approximately 500,000 shares) of the outstanding shares of common stock. As of September 30, 1998, 205,000 shares had been repurchased at a cost of $3.3 million and as of this date 460,600 shares have been repurchased at a total cost of $7.2 million. On August 17, 1998, Coastal announced that it had completed the acquisition of the Valley Branches of Pacific Southwest Bank, also known as San Benito Bank and Trust Company, a unit of Pacific Southwest Bank. The acquisition added twelve branches, approximately $355 million in deposits and $177 million in loans to Coastal's existing organization. Net interest income increased $3.1 million and noninterest income increased $309,000 from the three months ended September 30, 1997 to the three months ended September 30, 1998. These increases were offset by the increase in noninterest expense of $2.3 million. The increase in net interest income was primarily due to an increase in average net interest-earning assets of $24.6 million and an increase in net interest margin from 1.98% for the three months ended September 30, 1997 to 2.32% for the same period in 1998. The average balance of loans receivable increased $142.5 million from the three months ended September 30, 1997, to the three months ended September 30, 1998, with the average yield increasing from 8.28% to 8.47%. The average balance of mortgage-backed securities decreased $80.3 million from the three months ended September 30, 1997 to three months ended September 30, 1998, while the average yield remained at 6.12%. The average balance of interest-bearing liabilities increased $74.8 million and the average rate paid on those liabilities decreased 14 basis points from 5.47% to 5.33% from the three months ended September 30, 1997 to the three months September 30, 1998. The decrease in the average rate paid on interest-bearing liabilities was due primarily to the overall decrease in wholesale funding costs. The increase in noninterest income was due to the $390,000 increase in loan fees and service charges on deposit accounts offset by the $162,000 decrease in loan servicing income. The increase in noninterest expense was primarily due to increases in compensation, payroll taxes and other benefits of $1.4 million and office occupancy of $382,000 for the three months ended September 30, 1998 compared to the three months ended September 30, 1997 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, in addition to the acquisition of the twelve branches in August 1998. During the three months ended September 30, 1998, approximately $120,000, or 1.5 cents per diluted share, were nonrecurring expenses incurred due to the acquisition of the Valley Branches of San Benito Bank and Trust Company on August 17, 1998. Net income available to common stockholders for the first nine months of 1998 was $13.7 million compared to $8.8 million for the same period in 1997. Diluted earnings per share for the nine months ended September 30, 1998 was $1.75 compared to $1.14 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 7,787,834 and 7,706,210, respectively. The increase in net income for the nine months ended September 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 years. During the nine months ended September 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 $11.1 million or $1.42 per diluted share for the nine months ended September 30, 1998, compared to the $8.8 million or $1.14 per diluted share for the nine months ended September 30, 1997. At September 30, 1998, Coastal had total assets of approximately $3.1 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 $115.4 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 49 branch offices in metropolitan Houston, Austin, Corpus Christi, the Rio Grande Valley and small cities in the south east quadrant of Texas. COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (Dollars In Thousands, except per share data) (unaudited) For the Three Months For the Nine Months Ended Ended September 30, September 30, 1998 1997 1998 1997 Net income available to common stockholders attributable to: Ongoing core operations $ 3,741 $ 2,717 $11,092 $ 8,774 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 $ 3,741 $ 2,717 $13,661 $ 8,774 Diluted earnings per share from ongoing core operations $ 0.48 $ 0.35 $ 1.42 $ 1.14 Diluted earnings per share $ 0.48 $ 0.35 $ 1.75 $ 1.14 Diluted cash earnings per share from ongoing core operations $ 0.56 $ 0.41 $ 1.62 $ 1.32 Diluted cash earnings per share $ 0.56 $ 0.41 $ 1.95 $ 1.32 COASTAL BANCORP, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA, Continued (Dollars In Thousands, except per share data) (unaudited) For the Three Months For the Nine Months Ended Ended September 30, September 30, 1998 1997 1998 1997 Return on average assets 0.57% 0.45% 0.70% 0.49% Return on average equity 12.87% 10.78% 16.42% 11.99% Net interest margin 2.32% 1.98% 2.23% 2.07% Noninterest expense to average total assets 1.61% 1.36% 1.49% 1.37% Charge-offs of loans receivable $ 543 $ 292 $ 1,235 $ 1,259 Net charge-offs of loans receivable $ 514 $ 230 $ 976 $ 1,148 Ratio of net charge-offs to average loans receivable 0.03% 0.02% 0.07% 0.09% Average balance sheet information Assets: Interest-earning assets: Loans receivable $1,486,915 $1,344,428 $1,390,308 $1,232,261 Mortgage-backed securities 1,421,475 1,501,822 1,469,371 1,515,668 Other 66,567 29,366 46,590 26,052 Total interest-earning assets 2,974,957 2,875,616 2,906,269 2,773,981 Noninterest-earning assets 101,659 85,352 85,242 123,048 Total assets $3,076,616 $2,960,968 $2,991,511 $2,897,029 Liabilities and stockholders' equity: Interest-bearing savings deposits $1,405,793 $1,271,939 $1,310,221 $1,246,678 Borrowings 1,305,880 1,364,947 1,347,195 1,352,167 Senior Notes payable 50,000 50,000 50,000 50,000 Total interest-bearing liabilities 2,761,673 2,686,886 2,707,416 2,648,845 Noninterest-bearing liabilities 170,909 145,363 144,095 121,612 Preferred Stock of the Bank 28,750 28,750 28,750 28,750 Stockholders' equity 115,284 99,969 111,250 97,822 Total liabilities and stockholders' equity $3,076,616 $2,960,968 $2,991,511 $2,897,029 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except share data) (unaudited) September 30, December 31, 1998 1997 Non-performing loans receivable $ 12,902 $ 17,351 Real estate owned and repossessed assets 4,488 3,198 Total non-performing assets $ 17,390 $ 20,549 Allowance for loan losses $ 11,043 $ 7,412 Ratio of non-performing loans to loans receivable 0.83% 1.38% Ratio of non-performing assets to total assets 0.56% 0.71% Ratio of allowance for loan losses to non-performing loans receivable 85.59% 42.72% Ratio of allowance for loan losses to loans receivable 0.71% 0.59% Book value per common share $ 15.47 $ 13.78 Tangible book value per common share $ 11.58 $ 11.83 Regulatory capital ratios: Tier 1 (Core) 5.10% 5.52% Tier 1 risk-based 9.29% 11.46% Total risk-based 9.95% 11.98% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) ASSETS September 30, December 31, 1998 1997 (unaudited) Cash and amounts due from depository institutions $ 56,200 $ 37,096 Federal funds sold 4,300 --- Loans receivable 1,545,507 1,261,435 Mortgage-backed securities held-to-maturity 1,234,840 1,345,090 Mortgage-backed securities available-for-sale, at market value 125,787 169,997 U.S. Treasury security available-for-sale, at market value 2,008 --- Accrued interest receivable 17,075 14,813 Property and equipment 33,452 22,250 Stock in the Federal Home Loan Bank of Dallas (FHLB) 49,107 27,801 Goodwill 31,455 15,717 Mortgage servicing rights 4,490 5,653 Prepaid expenses and other assets 22,065 11,558 $ 3,126,286 $ 2,911,410 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Savings deposits $ 1,704,571 $ 1,375,060 Advances from the FHLB 952,247 540,475 Securities sold under agreements to repurchase 244,712 791,760 Senior notes payable 50,000 50,000 Advances from borrowers for taxes and insurance 11,192 3,975 Other liabilities and accrued expenses 19,401 16,560 Total liabilities 2,982,123 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; 7,566,757 and 7,513,389 shares issued in 1998 and 1997 50 50 Additional paid-in capital 33,703 33,186 Retained earnings 85,714 73,868 Accumulated other comprehensive income (loss) - unrealized loss on securities available-for-sale (783) (2,274) Treasury stock (205,000 shares at September 30, 1998) at cost (3,271) --- Total stockholders' equity 115,413 104,830 $ 3,126,286 $ 2,911,410 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended September 30, 1998 1997 (Unaudited) Interest income: Mortgage-backed securities $ 21,740 $ 22,994 Loans receivable 31,468 27,819 Federal funds sold, certificates and time deposits and other investments 971 438 54,179 51,251 Interest expense: Savings deposits 17,167 16,114 Other borrowed money 6,766 14,209 Senior notes payable 1,250 1,250 Advances from the FHLB: Short-term 3,988 2,086 Long-term 7,753 3,393 36,924 37,052 Net interest income 17,255 14,199 Provision for loan losses 450 450 Net interest income after provision for loan losses 16,805 13,749 Noninterest income: Loan fees and service charges on deposit accounts 1,428 1,038 Loan servicing income, net 171 333 Gain on sale of mortgage-backed securities available-for-sale --- 237 Other 453 135 2,052 1,743 Noninterest expense: Compensation, payroll taxes and other benefits 6,059 4,706 Office occupancy 2,406 2,024 Data processing 625 566 Amortization of goodwill 574 479 Insurance premiums 387 274 Real estate owned 270 146 Other 2,154 1,980 12,475 10,175 Income before provision for Federal income taxes 6,382 5,317 Provision for Federal income taxes 1,994 1,953 Net income before preferred stock dividends 4,388 3,364 Preferred stock dividends of Coastal Banc ssb (Series A) 647 647 Net income available to common stockholders $ 3,741 $ 2,717 Basic earnings per share $ 0.50 $ 0.36 Diluted earnings per share $ 0.48 $ 0.35 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Nine Months Ended September 30, 1998 1997 (Unaudited) Interest income: Mortgage-backed securities $ 67,938 $ 69,395 Loans receivable 87,495 80,249 Federal funds sold, certificates and time deposits and other investments 2,007 1,109 157,440 150,753 Interest expense: Savings deposits 48,166 46,659 Other borrowed money 29,807 41,985 Senior notes payable 3,750 3,750 Advances from the FHLB: Short-term 11,567 5,798 Long-term 15,613 9,450 108,903 107,642 Net interest income 48,537 43,111 Provision for loan losses 2,350 1,350 Net interest income after provision for loan losses 46,187 41,761 Noninterest income: Loan fees and service charges on deposit accounts 3,894 2,913 Loan servicing income, net 571 1,097 Gain on sale of mortgage-backed securities available-for-sale --- 237 Other 996 515 Writedown of purchased mortgage loan premium (709) --- 4,752 4,762 Noninterest expense: Compensation, payroll taxes and other benefits 16,156 14,024 Office occupancy 6,437 5,288 Data processing 1,806 1,676 Amortization of goodwill 1,517 1,361 Insurance premiums 912 819 Real estate owned 693 628 Other 5,872 5,830 33,393 29,626 Income before provision for Federal income taxes 17,546 16,897 Provision for Federal income taxes 1,944 6,182 Net income before preferred stock dividends 15,602 10,715 Preferred stock dividends of Coastal Banc ssb (Series A) 1,941 1,941 Net income available to common stockholders $ 13,661 $ 8,774 Basic earnings per share $ 1.81 $ 1.18 Diluted earnings per share $ 1.75 $ 1.14SOURCE Coastal Bancorp, Inc.
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CONTACT:
Manuel J. Mehos, CEO, or Catherine N. Wylie,
CFO, both of Coastal Bancorp, Inc., 713-435-5000, or Fax:
713-435-5106
