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| Coastal Bancorp, Inc. Third Quarter Earnings Up 11.9% From Second Quarter |
HOUSTON, Oct. 18 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA) and subsidiaries ("Coastal") today reported net income of $3.7 million for the quarter ended September 30, 1999, which is up $398,000 or 11.9% from net income for the quarter ended June 30, 1999 of $3.3 million. Net income for the quarter ended September 30, 1998 was $3.7 million. Diluted earnings per share for the quarter ended September 30, 1999 were $0.48 and $0.48 for the same period in 1998. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 6,468,412 and 7,726,329, respectively. Analysis of 1999 year to date earnings per diluted share compared to the same period in 1998 shows that earnings, without the effects of the adjustment for the additional loan loss provision in the first quarter of 1999, the one time benefit in 1998 and the dividends on the newly issued 9.12% preferred stock in 1999, would have been $1.58 per diluted share as compared to $1.42. 1999 1998 (unaudited) Diluted EPS as stated $1.33 $1.75 One-time benefit, net --- (0.33) Additional loan loss provision 0.16 --- Dividends on new 9.12% preferred stock, net of tax 0.09 --- $ 1.58 $1.42 Based on the activity in the first nine months of 1999, Coastal has experienced net interest margin growth, in addition to record growth of fee income, while general and administrative expenses are below budget. 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. As of September 30, 1999, 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. On May 11, 1999, Coastal Bancorp, Inc. ("Bancorp") issued 1,100,000 shares of 9.12% Series A Cumulative Preferred Stock, no par value, to the public at a price of $25 per share. Dividends on the preferred stock are payable quarterly at the annual rate of $2.28 per share. The preferred stock is callable on May 15, 2003 at Bancorp's option. Pursuant to the tax benefit agreement with the Federal Deposit Insurance Corporation, Coastal receives a tax benefit for dividends on this Bancorp preferred stock. The ongoing quarterly tax benefit will be approximately $219,000, or 3 cents per diluted share, and is expected to continue through the end of 2002. Net interest income increased $2.3 million and noninterest income increased $518,000 from the three months ended September 30, 1998 to the three months ended September 30, 1999. These increases were offset by the increase in the provision for loan losses of $910,000 and the increase in noninterest expense of $2.1 million. The provision for federal income taxes decreased $151,000 primarily due to tax benefit received by Coastal for the dividends on the recently issued Bancorp preferred stock. The increase in net interest income was primarily due to the increase in net interest margin to 2.78% for the three months ended September 30, 1999 from 2.32% for the same period in 1998. The increase in net interest margin was principally due to an overall decrease of 0.55% in the average rates paid on interest-bearing liabilities due to the lower cost deposits acquired in the 1998 branch acquisition (the "Valley Acquisition"), the new pricing strategies for certificates of deposit that reduced Coastal's cost of retail deposits and the lower wholesale funding costs. This decrease in the average rate paid on interest-bearing liabilities was slightly offset by a 0.05% decrease in the average yield received on interest-earning assets. In addition, net interest margin was positively impacted by an increase in average net interest-earning assets of $15.9 million. The increase in noninterest income was due primarily to the $603,000 increase in loan fees and service charges on deposit accounts, primarily due to increases in service charges due to the increase in the transaction type deposit accounts. The increase in the provision for loan losses was due in part to a $10.0 million participation in a warehouse loan to MCA Financial Corp., of Southfield, Michigan, and certain of its affiliates, (collectively the "Mortgage Banker"), that, during January 1999, was placed on nonaccrual effective December 31, 1998, due to the fact that the Mortgage Banker ceased operations in late January 1999 and shortly thereafter was placed in receivership by the Michigan Bureau of Financial Institutions. Coastal, as of the date hereof, has been unable to verify the extent to which the collateral, if any, is sufficient to prevent Coastal from incurring a loss or the amount of any loss, should one occur. As of September 30, 1999, Coastal has allocated $3.4 million of the general allowance to this loan. Coastal is working with the lead lender in the participation to obtain the release of the collateral from the bankruptcy court and prepare the collateral for sale. To date, Coastal has received approximately $250,000 in principal reductions from the bankruptcy trustee. Coastal remains unable to determine the timing, probability, or the amount of any loss which might result from the default by the Mortgage Banker due to the limited information available from the bankruptcy trustee as to the value of the underlying collateral. Coastal is continuing to monitor this situation and will make additions to the overall allowance for loan losses as it deems necessary based on its existing policy. The increased provision for loan losses was also attributable to other changes and growth in Coastal's loan portfolio, including the loans acquired in the Valley Acquisition. The increase in noninterest expense for the three months ended September 30, 1999 compared to the same period in 1998 was primarily due to an increase in compensation, payroll taxes and other benefits of $1.2 million and an increase in office occupancy of $450,000, primarily due to the twelve branches acquired in the Valley Acquisition. In addition, the amortization of goodwill and data processing expenses increased $194,000 and $163,000, respectively, primarily due to the Valley Acquisition. Other noninterest expense also increased $345,000 which was partially offset by a $214,000 decrease in real estate owned expenses and a $95,000 decrease in insurance premiums. Net income for the first nine months of 1999 was $9.9 million compared to $13.7 million for the same period in 1998. Diluted earnings per share for the nine months ended September 30, 1999 was $1.33 compared to $1.75 for the same period last year. Net income before one-time charges and credits was $10.2 million for the nine months ended September 30, 1999, or $1.38 per diluted share, compared to $11.1 million, or $1.42 per diluted share, for the nine months ended September 30, 1998. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 6,702,001 and 7,787,834, respectively. Net income for the first nine months of 1999 was negatively impacted by a $1.7 million additional provision for loan losses recorded during the first quarter of the year, in addition to the overall quarterly increase in the provision from the comparable period in 1998. The additional provisions for loan losses were determined necessary due to the specific situation discussed above concerning the participation loan to the Mortgage Banker, in addition to the continuing changes and growth in Coastal's loan portfolio, including the loans acquired in the Valley Acquisition. Net income in the first nine months of 1998 was positively affected by a one-time income benefit of $2.6 million (net) or 33 cents per diluted share. This benefit was the result of 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. The $3.7 million one- time tax benefit was offset by the recording of an additional provision for loan losses of $1.0 million and a writedown of purchased mortgage loan premium of $709,000. The resolution of the one-time tax benefit issue is also contributing an ongoing quarterly tax benefit of $226,000 or approximately 3 cents per diluted share which is estimated to continue through the end of 2002. At September 30, 1999, 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 $106.3 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 web site at http://www.coastalbanc.com (which is not a part of this press release). Year 2000 Readiness: Coastal's Year 2000 program is on schedule. As of July 6, 1999, all of Coastal's mission critical core processing systems were confirmed as Year 2000 compliant. Coastal will continue to conduct additional testing on other systems and revise contingency plans through the end of 1999 as considered necessary. Year 2000 Readiness Disclosure: Notice is hereby given that the Year 2000 statements set forth in this press release are being designated as a Year 2000 Readiness Disclosure in accordance with Section 3(9) of the Year 2000 Information and Readiness Disclosure Act. "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 September 30, Ended September 30, 1999 1998 1999 1998 Net income before one-time charges and credits $3,745 $3,741 $10,199 $11,092 One-time charges and credits: Reversal of accrued income taxes --- --- --- 3,679 Provision for loan losses (net of tax effect) --- --- (1,077) (650) Writedown of purchased mortgage loan premium (net of tax effect) --- --- --- (460) Change in accrued liabilities (net of tax effect) --- --- 742 --- Net income $3,745 $3,741 $9,864 $13,661 Net income available to common stockholders $3,118 $3,741 $8,907 $13,661 Diluted earnings per share from net income before one-time charges and credits $0.48 $0.48 $1.38 $1.42 Diluted earnings per share $0.48 $0.48 $1.33 $1.75 Diluted cash earnings per share from net income before one-time charges and credits $0.60 $0.56 $1.72 $1.62 Diluted cash earnings per share $0.60 $0.56 $1.67 $1.95 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 September 30, Ended September 30, 1999 1998 1999 1998 Return before one-time charges and credits (before minority interest) on average assets 0.60% 0.57% 0.56% 0.58% Return (before minority interest) on average assets 0.60% 0.57% 0.54% 0.70% Return before one-time charges and credits on average common equity 11.82% 12.87% 11.55% 13.33% Return on average common equity 11.82% 12.87% 11.13% 16.42% Net interest margin 2.78% 2.32% 2.71% 2.23% Noninterest expense to average total assets 1.97% 1.61% 1.97% 1.49% Charge-offs of loans receivable $465 $543 $1,572 $1,235 Net charge-offs of loans receivable $380 $514 $1,360 $976 Ratio of net charge-offs to average loans receivable 0.02% 0.03% 0.08% 0.07% Average balance sheet information Assets: Interest-earning assets: Loans receivable $1,697,655 $1,486,915 $1,614,712 1,390,308 Mortgage-backed securities 1,058,459 1,421,475 1,124,182 1,469,371 Other 57,548 66,567 59,037 46,590 Total interest-earning assets 2,813,662 2,974,957 2,797,931 2,906,269 Noninterest-earning assets 109,961 101,659 113,313 85,242 Total assets $2,923,623 $3,076,616 $2,911,244 2,991,511 Liabilities and stockholders' equity: Interest-bearing deposits $1,470,180 $1,405,793 $1,498,789 1,310,221 Borrowings 1,066,841 1,305,880 1,043,141 1,347,195 Senior Notes payable 47,422 50,000 47,911 50,000 Total interest-bearing liabilities 2,584,443 2,761,673 2,589,841 2,707,416 Noninterest-bearing liabilities 178,227 170,909 171,912 144,095 Preferred Stock of the Bank 28,750 28,750 28,750 28,750 Preferred stockholders' equity 27,500 --- 13,750 --- Common stockholders' equity 104,703 115,284 106,991 111,250 Total liabilities and stockholders' equity $2,923,623 $3,076,616 $2,911,244 $2,991,511 COASTAL BANCORP, INC. AND SUBSIDIARIES OTHER FINANCIAL DATA (Dollars In Thousands, except share data) (unaudited) September 30, December 31, 1999 1998 Nonaccrual loans receivable $20,695 $22,837 Loans greater than 90 days delinquent and still accruing 2,289 1,704 Total nonperforming loans 22,984 24,541 Real estate owned and repossessed assets 5,172 4,927 Total nonperforming assets $28,156 $29,468 Allowance for loan losses $14,364 $11,358 Ratio of nonperforming loans to loans receivable 1.31% 1.60% Ratio of nonperforming assets to total assets 0.95% 0.99% Ratio of allowance for loan losses to nonperforming loans receivable 62.50% 46.28% Ratio of allowance for loan losses to loans receivable 0.82% 0.74% Book value per common share $16.54 $15.71 Tangible book value per common share $12.55 $11.75 Regulatory capital ratios: Tier 1 (Core) 5.79% 5.25% Tier 1 risk-based 9.54% 9.54% Total risk-based 10.36% 10.23% COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except share data) September 30, December 31, ASSETS 1999 1998 (unaudited) Cash and cash equivalents $ 31,375 $ 45,453 Federal funds sold 4,800 --- Loans receivable 1,749,303 1,538,149 Mortgage-backed securities held-to-maturity 931,179 1,154,116 Mortgage-backed securities available-for-sale, at market value 101,613 96,609 U.S. Treasury security held-to-maturity 299 --- U.S. Treasury security available-for-sale, at market value --- 2,016 Mortgage loans held for sale 3,880 --- Accrued interest receivable 15,952 15,518 Property and equipment 31,674 33,116 Stock in the Federal Home Loan Bank of Dallas (FHLB) 52,775 49,819 Goodwill 28,405 30,687 Mortgage servicing rights 3,215 4,049 Prepaid expenses and other assets 12,146 12,629 $ 2,966,616 $ 2,982,161 LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY Liabilities: Deposits $ 1,601,001 $ 1,705,004 Advances from the FHLB 1,029,853 966,720 Securities sold under agreements to repurchase 100,000 100,000 Senior notes payable 46,900 50,000 Advances from borrowers for taxes and insurance 10,269 3,340 Other liabilities and accrued expenses 16,009 15,583 Total liabilities 2,804,032 2,840,647 Minority interest - 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 in 1999 27,500 --- Common stock, $0.01 par value; authorized shares 30,000,000; 7,579,252 and 7,568,255 shares issued in 1999 and 1998 76 76 Additional paid-in capital 32,250 33,696 Retained earnings 95,478 88,144 Accumulated other comprehensive loss - unrealized loss on securities available-for-sale (1,007) (1,374) Treasury stock, at cost (1,283,679 shares in 1999 and 499,600 shares in 1998) (20,463) (7,778) Total stockholders' equity 133,834 112,764 $ 2,966,616 $ 2,982,161 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Three Months Ended September 30, 1999 1998 (Unaudited) Interest income: Loans receivable $ 34,938 $ 31,468 Mortgage-backed securities 15,144 21,740 FHLB stock, federal funds sold and other interest-earning assets 788 971 50,870 54,179 Interest expense: Deposits 15,759 17,167 Other borrowed money 1,391 6,766 Senior notes payable 1,186 1,250 Advances from the FHLB: Short-term 5,350 3,988 Long-term 7,623 7,753 31,309 36,924 Net interest income 19,561 17,255 Provision for loan losses 1,360 450 Net interest income after provision for loan losses 18,201 16,805 Noninterest income: Loan fees and service charges on deposit accounts 2,031 1,428 Loan servicing income, net 184 171 Other 355 453 2,570 2,052 Noninterest expense: Compensation, payroll taxes and other benefits 7,277 6,059 Office occupancy 2,856 2,406 Data processing 788 625 Amortization of goodwill 768 574 Insurance premiums 292 387 Real estate owned 56 270 Other 2,499 2,154 14,536 12,475 Income before provision for Federal income taxes and minority interest 6,235 6,382 Provision for Federal income taxes 1,843 1,994 Income before minority interest 4,392 4,388 Minority interest - preferred stock dividends of Coastal Banc ssb 647 647 Net income $ 3,745 $ 3,741 Net income available to common stockholders $ 3,118 $ 3,741 Basic earnings per share $ 0.50 $ 0.50 Diluted earnings per share $ 0.48 $ 0.48 COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except per share data) Nine Months Ended September 30, 1999 1998 (Unaudited) Interest income: Loans receivable $ 98,766 $ 87,495 Mortgage-backed securities 48,633 67,938 FHLB stock, federal funds sold and other interest-earning assets 2,348 2,007 149,747 157,440 Interest expense: Deposits 48,637 48,166 Other borrowed money 5,482 29,807 Senior notes payable 3,600 3,750 Advances from the FHLB: Short-term 12,449 11,567 Long-term 22,755 15,613 92,923 108,903 Net interest income 56,824 48,537 Provision for loan losses 4,366 2,350 Net interest income after provision for loan losses 52,458 46,187 Noninterest income: Loan fees and service charges on deposit accounts 5,755 3,894 Loan servicing income, net 470 571 Other 1,198 996 Writedown of purchased mortgage loan premium --- (709) 7,423 4,752 Noninterest expense: Compensation, payroll taxes and other benefits 21,682 16,156 Office occupancy 8,495 6,437 Data processing 2,550 1,806 Amortization of goodwill 2,282 1,517 Insurance premiums 907 912 Real estate owned 333 693 Other 6,585 5,872 42,834 33,393 Income before provision for Federal income taxes and minority interest 17,047 17,546 Provision for Federal income taxes 5,242 1,944 Income before minority interest 11,805 15,602 Minority interest - preferred stock dividends of Coastal Banc ssb 1,941 1,941 Net income $ 9,864 $ 13,661 Net income available to common stockholders $ 8,907 $ 13,661 Basic earnings per share $ 1.36 $ 1.81 Diluted earnings per share $ 1.33 $ 1.75SOURCE Coastal Bancorp, Inc.
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Company News On-Call:
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
