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| Coastal Bancorp, Inc. Announces Third Quarter Earnings Up 26% From Prior Year |
| COASTAL BANCORP LOGO
Coastal Bancorp. logo. (PRNewsFoto)[DM] HOUSTON, TX USA | |||
HOUSTON, Oct. 16 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) today reported net income of $4.7 million for the quarter ended September 30, 2000, compared to net income for the quarter ended September 30, 1999, of $3.7 million, which is a $985,000, or 26.3%, increase. The increase in 2000 from 1999 was due to a $1.1 million increase in net interest income, a $460,000 decrease in the provision for loan losses, a $163,000 decrease in noninterest expense, offset by a $205,000 decrease in noninterest income and a $495,000 increase in the provision for Federal income taxes. Diluted earnings per share for the quarter ended September 30, 2000 were $0.71 compared to $0.48 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 5,791,472 and 6,468,412, respectively. The $1.1 million, or 5.4%, increase in net interest income in 2000 from the same period in 1999 was primarily due to the increase in net interest margin to 2.79% for the three months ended September 30, 2000 from 2.78% in 1999. Comparing the three months ended September 30, 2000 to the three months ended September 30, 1999, average net interest-earning assets increased by $3.4 million, the average yield on interest-earning assets increased 0.98% and the average rate paid on interest-bearing liabilities increased 1.02%. The increase in the average yield was due to the increase in the overall market rates and the continuing change in the composition of Coastal's balance sheet from mortgage-backed securities to loans receivable. The increase in the average rate paid on interest-bearing liabilities was due primarily to higher wholesale funding costs and a higher cost of deposits. On the asset side of the balance sheet, average interest-earning assets increased $147.8 million for the three months ended September 30, 2000 compared to the same period in 1999. This increase consisted of a $195.1 million increase in the average balance of loans receivable (which are higher yielding than the other interest-earning assets held by Coastal), partially offset by the $60.1 million decrease in the average balance of mortgage-backed securities. On the liability side, average interest-bearing liabilities increased $144.4 million, comprised of a $319.8 million increase in the average balance of securities sold under agreements to repurchase and a $17.5 million increase in deposits, offset by decreases of $192.3 million and $522,000 in the average balances of advances from the Federal Home Loan Bank of Dallas and senior notes payable, respectively. During the third quarter of 2000, Coastal recorded a provision for loan losses of $900,000 compared to $1.4 million during the same period in 1999. The decreased provision was primarily due to an additional provision recorded in the third quarter of 1999 specifically for a $10.0 million participation in a warehouse loan, which was eventually charged off by the end of 1999. Due to the continuing changes in the composition of Coastal's loan portfolio towards more commercial loans, Coastal's plan is to continue to 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. At September 30, 2000, Coastal had nonperforming loans totaling $19.5 million. Of these nonperforming loans, $14.1 million, or 72.2%, were first lien residential (single family) mortgage loans, $2.3 million were commercial, financial and industrial loans, $2.1 million were commercial real estate loans, with the balance in the residential construction, multifamily mortgage and consumer and other categories. Of the nonperforming first lien residential mortgage loans at September 30, 2000, 82% were purchased and 16% were originated. At September 30, 2000, the allowance for loan losses as a percentage of nonperforming loans was 72.9% compared to 61.3% at December 31, 1999. For the three months ended September 30, 2000 compared to the same period in 1999, noninterest income decreased $205,000 primarily due to the elimination of loan servicing income due to the sale of Coastal's mortgage servicing rights in the first quarter of 2000 as discussed below. In addition, noninterest expense decreased by $163,000, primarily due to a decrease in Federal deposit insurance premiums, and the provision for Federal income taxes increased $495,000 primarily due to the increased income before Federal income taxes and minority interest. An analysis of the 2000 quarterly results is as follows: September 30, 2000 June 30, 2000 March 31, 2000 (In Thousands, except per share data) Unaudited Income before the provision for loan losses and one-time items (net of tax effect) $5,315 $5,990 $4,636 Provision for loan losses, net of tax effect (585) (1,034) (1,560) FHLB special dividend as described below, net of tax effect --- 689 --- Gain on sale of mortgage servicing rights, net of tax effect --- --- 1,412 Net income $4,730 $5,645 $4,488 Diluted earnings per share $ 0.71 $ 0.83 $ 0.60 In 2000, Coastal has experienced increasing net interest income (as shown in the consolidated statements of income) and net interest margin compared to 1999, along with stable noninterest expense. Net income for the first nine months of 2000 was $14.9 million compared to $9.9 million for the same period in 1999. Diluted earnings per share for the nine months ended September 30, 2000 were $2.12 compared to $1.33 for the same period last year. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 6,110,021 and 6,702,001, respectively. The increase in net income for the nine months ended September 30, 2000 was comprised of the following: a $6.5 million increase in net interest income, a $2.0 million increase in noninterest income, offset by a $524,000 increase in the provision for loan losses, an $826,000 increase in noninterest expense (although it would have been a $315,000 decrease excluding the $1.1 million reversal of certain accrued liabilities in 1999) and a $2.1 million increase in the provision for Federal income taxes. The increase in net interest income was due primarily to the increase in net interest margin to 2.86% for the nine months ended September 30, 2000 from 2.71% for the same period in 1999, which includes the Federal Home Loan Bank of Dallas ("FHLB") special dividend declared equal to 1.625% of each members' FHLB stock (the "special dividend"). The special dividend amounted to $1.1 million for Coastal and was paid in the form of FHLB stock on April 28, 2000. Net interest margin without the effect of the special dividend was 2.81% for the nine months ended September 30, 2000. 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 first quarter of 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 $389.1 million of mortgage loans for third party investors, primarily the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. The increase in noninterest expense was primarily because of the reversal of certain accrued liabilities totaling $1.1 million during the first quarter of 1999 and a $291,000 increase in compensation, payroll taxes and other benefits, offset by a decrease of $460,000 in insurance premiums expense (primarily deposit insurance premiums), in addition to small changes in other expense categories. 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 each for up to 500,000 shares of the outstanding shares of common stock through an open-market repurchase program and privately negotiated repurchases, if any. As of September 30, 2000, 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. At September 30, 2000, Coastal had total assets of approximately $3.0 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 $105.3 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 (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 For the Nine Months Ended Ended September 30, September 30, 2000 1999 2000 1999 Diluted earnings per share $ 0.71 $ 0.48 $ 2.12 $ 1.33 Diluted cash earnings per share (A) $ 0.84 $ 0.60 $ 2.50 $ 1.67 Return (before minority interest) on average assets 0.70% 0.60% 0.73% 0.54% Return on average common stockholders' equity 15.80% 11.82% 16.54% 11.13% Net interest margin 2.79% 2.78% 2.86% 2.71% Noninterest expense to average total assets 1.86% 1.97% 1.90% 1.97% Charge-offs of loans receivable $ 533 $ 465 $ 1,545 $ 1,572 Net charge-offs of loans receivable $ 472 $ 380 $ 1,173 $ 1,360 Ratio of net charge-offs to average loans receivable 0.02% 0.02% 0.06% 0.08% Average balance sheet information Assets: Interest-earning assets: Loans receivable $1,892,757 $1,697,655 $1,874,732 $1,614,712 Mortgage-backed securities 998,364 1,058,459 1,007,279 1,124,182 Other 70,337 57,548 68,594 59,037 Total interest- earning assets 2,961,458 2,813,662 2,950,605 2,797,931 Noninterest-earning assets 98,637 109,961 102,910 113,313 Total assets $3,060,095 $2,923,623 $3,053,515 $2,911,244 Liabilities and stockholders' equity: Interest-bearing deposits $1,487,647 $1,470,180 $1,479,136 $1,498,789 Borrowings 1,194,260 1,066,841 1,196,910 1,043,141 Senior notes payable 46,900 47,422 46,900 47,911 Total interest- bearing liabilities 2,728,807 2,584,443 2,722,946 2,589,841 Noninterest-bearing liabilities 172,035 178,227 169,736 171,912 Preferred Stock of Coastal Banc ssb 28,750 28,750 28,750 28,750 Preferred stockholders' equity 27,500 27,500 27,500 13,750 Common stockholders' equity 103,003 104,703 104,583 106,991 Total liabilities and stockholders' equity $3,060,095 $2,923,623 $3,053,515 $2,911,244 (A) Cash earnings is calculated by adding back goodwill amortization to net income available to common stockholders. COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except share data) (unaudited) September 30, December 31, 2000 1999 Nonaccrual loans receivable: First lien residential $ 13,870 $ 13,344 Multifamily mortgage 139 --- Residential construction --- 184 Commercial real estate 1,145 104 Commercial, financial and industrial 1,266 694 Consumer and other 570 340 16,990 14,666 Loans greater than 90 days delinquent and still accruing: First lien residential 213 1,137 Residential construction 250 --- Commercial real estate 976 690 Commercial, financial and industrial 989 531 Consumer and other 77 94 2,505 2,452 Total nonperforming loans 19,495 17,118 Real estate owned and repossessed assets 3,981 4,531 Total nonperforming assets $ 23,476 $ 21,649 Allowance for loan losses $ 14,210 $ 10,493 Ratio of nonperforming loans to loans receivable 1.04% 0.99% Ratio of nonperforming assets to total assets 0.78% 0.73% Ratio of allowance for loan losses to nonperforming loans receivable 72.89% 61.30% Ratio of allowance for loan losses to loans receivable 0.76% 0.60% Book value per common share $ 18.06 $ 16.42 Tangible book value per common share 14.15 $ 12.53 Regulatory capital ratios: Tier 1 (Core) 5.98% 5.76% Tier 1 risk-based 9.93% 9.68% Total risk-based 10.71% 10.29% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) ASSETS September 30, December 31, 2000 1999 (unaudited) Cash and cash equivalents $ 32,963 $ 48,098 Federal funds sold 10,000 --- Loans receivable 1,881,763 1,735,081 Mortgage-backed securities held-to-maturity 891,967 917,212 Mortgage-backed securities available-for-sale, at market value 93,729 99,665 U.S. Treasury securities held-to-maturity 995 299 Accrued interest receivable 18,294 16,150 Property and equipment 28,628 30,708 Stock in the Federal Home Loan Bank of Dallas (FHLB) 29,470 56,753 Goodwill 25,360 27,636 Mortgage servicing rights --- 3,035 Prepaid expenses and other assets 11,453 13,315 $ 3,024,622 $ 2,947,952 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $1,649,027 $1,624,289 Advances from the FHLB 558,220 1,096,931 Securities sold under agreements to repurchase 579,371 --- Senior notes payable 46,900 46,900 Advances from borrowers for taxes and insurance 13,167 3,852 Other liabilities and accrued expenses 16,395 13,774 Total liabilities 2,863,080 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; 7,648,503 and 7,616,227 shares issued in 2000 and 1999 76 76 Additional paid-in capital 32,956 32,683 Retained earnings 106,928 95,508 Accumulated other comprehensive loss - unrealized loss on securities available-for- sale (3,323) (1,848) Treasury stock, at cost (2,000,000 and 1,283,679 shares in 2000 and 1999) (31,345) (20,463) Total stockholders' equity 132,792 133,456 $3,024,622 $2,947,952 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended September 30, June 30, March 31, September 30, 2000 2000 2000 1999 (Unaudited) Interest income: Loans receivable $43,199 $ 42,614 $ 38,506 $ 34,938 Mortgage-backed securities 16,398 15,811 15,433 15,144 FHLB stock, Federal funds sold and other interest- earning assets 1,158 2,173 975 788 60,755 60,598 54,914 50,870 Interest expense: Deposits 19,022 17,450 16,533 15,759 Other borrowed money 7,044 --- 1 1,391 Senior notes payable 1,172 1,172 1,173 1,186 Advances from the FHLB 12,894 19,394 17,095 12,973 40,132 38,016 34,802 31,309 Net interest income 20,623 22,582 20,112 19,561 Provision for loan losses 900 1,590 2,400 1,360 Net interest income after provision for loan losses 19,723 20,992 17,712 18,201 Noninterest income: Loan fees and service charges on deposit accounts 1,970 1,995 2,057 2,031 Loan servicing income, net --- 43 201 184 Other 395 486 96 355 Gain on sale of mortgage servicing rights --- --- 2,172 --- 2,365 2,524 4,526 2,570 Noninterest expense: Compensation, payroll taxes and other benefits 7,260 7,244 7,469 7,277 Office occupancy 2,822 2,874 2,806 2,856 Data processing 812 841 859 788 Amortization of goodwill 762 761 753 768 Insurance premiums 149 149 149 292 Real estate owned 138 82 127 56 Other 2,430 2,442 2,731 2,499 14,373 14,393 14,894 14,536 Income before provision for Federal income taxes and minority interest 7,715 9,123 7,344 6,235 Provision for Federal income taxes 2,338 2,831 2,209 1,843 Income before minority interest 5,377 6,292 5,135 4,392 Minority interest - preferred stock dividends of Coastal Banc ssb 647 647 647 647 Net income $ 4,730 $ 5,645 $ 4,488 $ 3,745 Net income available to common stockholders $ 4,103 $ 5,018 $ 3,861 $ 3,118 Basic earnings per share $ 0.73 $ 0.84 $ 0.61 $ 0.50 Diluted earnings per share $ 0.71 $ 0.83 $ 0.60 $ 0.48 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Nine Months Ended September 30, 2000 1999 (Unaudited) Interest income: Loans receivable $ 124,319 $ 98,766 Mortgage-backed securities 47,642 48,633 FHLB stock, Federal funds sold and other interest- earning assets 4,306 2,348 176,267 149,747 Interest expense: Deposits 53,005 48,637 Other borrowed money 7,045 5,482 Senior notes payable 3,517 3,600 Advances from the FHLB 49,383 35,204 112,950 92,923 Net interest income 63,317 56,824 Provision for loan losses 4,890 4,366 Net interest income after provision for loan losses 58,427 52,458 Noninterest income: Loan fees and service charges on deposit accounts 6,022 5,755 Loan servicing income, net 244 470 Other 977 1,198 Gain on sale of mortgage servicing rights 2,172 --- 9,415 7,423 Noninterest expense: Compensation, payroll taxes and other benefits 21,973 21,682 Office occupancy 8,502 8,495 Data processing 2,512 2,550 Amortization of goodwill 2,276 2,282 Insurance premiums 447 907 Real estate owned 347 333 Other 7,603 6,585 43,660 42,834 Income before provision for Federal income taxes and minority interest 24,182 17,047 Provision for Federal income taxes 7,378 5,242 Income before minority interest 16,804 11,805 Minority interest - preferred stock dividends of Coastal Banc ssb 1,941 1,941 Net income $ 14,863 $ 9,864 Net income available to common stockholders $ 12,982 $ 8,907 Basic earnings per share $ 2.17 $ 1.36 Diluted earnings per share $ 2.12 $ 1.33SOURCE 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
