-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IAFeXE1QpgX51c9fascWyi9TOgSaA8nn+rVmkO8q4CLQFPBpf3wtB4bpvl0YurBz af0ffsCJ8vZyON/xSyHMDw== 0000919805-97-000013.txt : 19970811 0000919805-97-000013.hdr.sgml : 19970811 ACCESSION NUMBER: 0000919805-97-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COASTAL BANCORP INC CENTRAL INDEX KEY: 0000919805 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 760428727 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24526 FILM NUMBER: 97654396 BUSINESS ADDRESS: STREET 1: 5718 WESTHEIMER STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: (713) 435-5327 MAIL ADDRESS: STREET 1: 5718 WESTHEIMER STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77057 FORMER COMPANY: FORMER CONFORMED NAME: COASTAL BANC SAVINGS ASSOCIATION DATE OF NAME CHANGE: 19970110 FORMER COMPANY: FORMER CONFORMED NAME: COASTAL BANCORP INC/TX/ DATE OF NAME CHANGE: 19940718 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended JUNE 30, 1997 [ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Transition Period from _________ to _________ Commission File Number: 0-24526 COASTAL BANCORP, INC. (Exact name of Registrant as specified in its charter) Texas 76-0428727 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5718 Westheimer, Suite 600 Houston, Texas 77057 (Address of principal executive office) (713) 435-5000 (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. COMMON STOCK ISSUED AND OUTSTANDING: 4,971,532 AS OF JUNE 30, 1997 COASTAL BANCORP, INC. AND SUBSIDIARIES Table of Contents PART I. FINANCIAL INFORMATION
Item 1 Financial Statements Consolidated Statements of Financial Condition at June 30, 1997 (unaudited) and December 31, 1996 1 Consolidated Statements of Income for the Six-Month Periods Ended June 30, 1997 and 1996 (unaudited) 2 Consolidated Statements of Income for the Three-Month Periods Ended June 30, 1997 and 1996 (unaudited) 3 Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 1997 and 1996 (unaudited) 4 Notes to Consolidated Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 14
PART II. OTHER INFORMATION
Item 1 Legal Proceedings 20 Item 2 Changes in Securities 20 Item 3 Default upon Senior Securities 20 Item 4 Submission of Matters to a Vote of Securities Holders 20 Item 5 Other Information 20 Item 6 Exhibits and Reports on Form 8-K 20
SIGNATURES 5 ITEM 1. FINANCIAL STATEMENTS
COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (IN THOUSANDS, EXCEPT SHARE DATA) June 30, December 31, 1997 1996 ------------ ------------- ASSETS (Unaudited) - -------------- Cash and amounts due from depository institutions $ 27,807 $ 27,735 Federal funds sold 6,300 -- Loans receivable (note 4) 1,336,632 1,229,748 Mortgage-backed securities held-to-maturity (note 3) 1,322,884 1,344,587 Mortgage-backed securities available-for-sale, at market value 179,662 180,656 U.S. Treasury security available-for-sale, at market value -- 11 Mortgage loans held for sale 357 298 Accrued interest receivable 15,118 14,690 Property and equipment 20,401 14,987 Stock in the Federal Home Loan Bank of Dallas (FHLB) 20,171 25,971 Goodwill 16,648 15,596 Mortgage servicing rights 6,207 6,810 Prepaid expenses and other assets 11,895 14,818 ------------ ---------- $ 2,964,082 $ 2,875,907 ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Savings deposits (note 5) $1,364,759 $1,310,835 Advances from the FHLB (note 6) 397,936 409,720 Securities sold under agreements to repurchase (note 6) 998,399 966,987 Senior notes payable (note 7) 50,000 50,000 Advances from borrowers for taxes and insurance 10,482 4,676 Other liabilities and accrued expenses 15,062 10,791 ----------- ----------- Total liabilities 2,836,638 2,753,009 ----------- ----------- 9.0% noncumulative preferred stock of Coastal Banc ssb 28,750 28,750 Commitments and contingencies (notes 4 and 8) Stockholders' equity (notes 2 and 10): Preferred stock, no par value; authorized shares 5,000,000; no shares issued -- -- Common stock, $.01 par value; authorized shares 30,000,000; 4,971,532 and 4,966,941 shares issued and outstanding in 1997 and 1996 50 50 Additional paid-in capital 32,667 32,604 Retained earnings 69,561 64,597 Unrealized gain (loss) on securities available-for-sale (3,584) (3,103) ----------- ----------- Total stockholders' equity 98,694 94,148 ----------- ----------- $2,964,082 $2,875,907 =========== ===========
See accompanying Notes to Consolidated Financial Statements COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
Six Months Ended June 30, ------------------ 1997 1996 ----------- ---------- (Unaudited) Interest income: Mortgage-backed securities $ 46,401 $48,310 Loans receivable 52,430 47,738 Federal funds sold, certificates of deposit and other investments 671 706 ----------- -------- 99,502 96,754 ----------- -------- Interest expense: Savings deposits 30,545 29,767 Other borrowed money 27,776 27,026 Senior notes payable 2,500 2,500 Advances from the FHLB: Short-term 3,712 2,636 Long-term 6,057 6,680 ----------- -------- 70,590 68,609 --------- -------- Net interest income 28,912 28,145 Provision for loan losses 900 1,025 --------- -------- Net interest income after provision for loan losses 28,012 27,120 --------- -------- Noninterest income: Loan fees and service charges on deposit accounts 1,875 1,590 Loan servicing income, net 764 752 Gain on sale of branch office -- 521 Gain on sales of mortgage-backed securities available-for-sale, net -- (4) Other 380 246 ---------- -------- 3,019 3,105 ---------- -------- Noninterest expense: Compensation, payroll taxes and other benefits 9,318 8,106 Office occupancy 3,264 2,836 Insurance premiums 545 1,477 Data processing 1,110 1,294 Amortization of goodwill 882 897 Real estate owned 482 386 Other 3,850 4,041 --------- -------- 19,451 19,037 --------- -------- Income before provision for Federal income taxes 11,580 11,188 Provision for Federal income taxes 4,229 4,090 ---------- -------- Net income before preferred stock dividends 7,351 7,098 Preferred stock dividends of Coastal Banc ssb (Series A) 1,294 1,294 ---------- -------- Net income after preferred stock dividends $ 6,057 $ 5,804 ========== ======== Net earnings per share (note 9) $ 1.19 $ 1.16 ========== ========
See accompanying Notes to Consolidated Financial Statements COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended June 30, -------------------- 1997 1996 --------- ---------- (Unaudited) Interest income: Mortgage-backed securities $ 23,209 $23,813 Loans receivable 26,415 24,058 Federal funds sold, certificates of deposit and other investments 274 329 ---------- ------- 49,898 48,200 ---------- ------- Interest expense: Savings deposits 15,379 14,685 Other borrowed money 13,996 13,029 Senior notes payable 1,250 1,250 Advances from the FHLB: Short-term 1,856 1,517 Long-term 3,153 3,421 ---------- ------- 35,634 33,902 ---------- ------- Net interest income 14,264 14,298 Provision for loan losses 450 450 ---------- ------- Net interest income after provision for loan losses 13,814 13,848 ---------- ------- Noninterest income: Loan fees and service charges on deposit accounts 981 795 Loan servicing income, net 357 359 Gain on sale of branch office -- 521 Other 212 135 ---------- ------- 1,550 1,810 ---------- ------- Noninterest expense: Compensation, payroll taxes and other benefits 4,693 4,219 Office occupancy 1,653 1,419 Insurance premiums 274 731 Data processing 597 696 Amortization of goodwill 445 449 Real estate owned 243 133 Other 1,989 2,250 ------------ ------- 9,894 9,897 ------------ ------- Income before provision for Federal income taxes 5,470 5,761 Provision for Federal income taxes 2,004 2,103 ----------- ------- Net income before preferred stock dividends 3,466 3,658 Preferred stock dividends of Coastal Banc ssb (Series A) 647 647 ----------- ------- Net income after preferred stock dividends $ 2,819 $ 3,011 =========== ======= Net earnings per share (note 9) $ 0.55 $ 0.60 =========== =======
See accompanying Notes to Consolidated Financial Statements COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Six Months Ended June 30, ------------------ 1997 1996 ---------- ------------ (Unaudited) Cash flows from operating activities: Net income before preferred stock dividends $ 7,351 $ 7,098 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment, purchased loans servicing rights, capitalized excess servicing fees and prepaid expenses and other assets 3,397 2,796 Net premium amortization 516 719 Provision for loan losses 900 1,025 Amortization of goodwill 882 897 Originations and purchases of mortgage loans held for sale (6,549) (12,784) Sales of mortgage loans held for sale 6,490 11,547 Loss on sales of mortgage-backed securities available-for-sale -- 4 Gain on sale of branch office -- (521) Decrease (increase) in: Accrued interest receivable (428) 1,008 Other, net 8,936 818 Stock dividends from the FHLB (644) (537) -------- ------------ Net cash provided by operating activities 20,851 12,070 -------- ------------ Cash flows from investing activities: Net increase in federal funds sold (6,300) -- Purchases of mortgage-backed securities held-to-maturity (257) -- Purchase of U.S. Treasury security available-for-sale -- (11) Principal repayments on mortgage-backed securities 21,976 24,071 Principal repayments on mortgage-backed securities available-for-sale 255 395 Proceeds from maturity of U.S. Treasury security available-for-sale 11 4,000 Proceeds from sales of mortgage-backed securities available-for-sale -- 860 Purchases of loans receivable (113,194) (43,344) Net decrease in loans receivable 1,872 7,766 Net purchases of property and equipment (6,115) (2,056) Purchase of FHLB stock (2,556) (7,924) Proceeds from sales of FHLB stock 9,000 5,000 Cash and cash equivalents received (paid) in business combination transaction, net of disposition transaction 52,119 (13,622) --------- ------------ Net cash used by investing activities (43,189) (24,865) --------- ------------ (continued)
COASTAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED (IN THOUSANDS)
Six Months Ended June 30, ------------------ 1997 1996 ------- ------------ (Unaudited) Cash flows from financing activities: Net increase (decrease) in savings deposits $ (700) $ 6,690 Advances from the FHLB 2,087,700 1,587,709 Principal payments on advances from the FHLB (2,099,484) (1,465,999) Securities sold under agreements to repurchase 5,192,412 4,769,934 Purchases of securities sold under agreements to repurchase (5,161,000) (4,879,973) Exercise of stock options for purchase of common stock, net 63 51 Net increase in advances from borrowers for taxes and insurance 5,806 4,559 Dividends paid (2,387) (2,286) ----------- ------------ Net cash provided by financing activities 22,410 20,685 ----------- ------------ Net increase in cash and cash equivalents 72 7,890 Cash and cash equivalents at beginning of period 27,735 10,044 ----------- ------------ Cash and cash equivalents at end of period $ 27,807 $ 17,934 =========== ============ Supplemental schedule of cash flows-interest paid $ 69,390 $ 71,242 =========== ============ Supplemental schedule of noncash investing and financing activities: Foreclosures of loans receivable $ 3,065 $ 2,366 =========== ============ In connection with the purchase of a branch office in 1997, Coastal recorded the following assets and liabilities: Savings deposits acquired $ 54,563 $ -- Goodwill 1,935 -- Accrued interest payable and other liabilities acquired 184 -- Property and equipment acquired 693 -- =========== ============ In connection with the sale of a branch office in 1996, Coastal recorded the following reductions of assets and liabilities: Savings deposits sold $ -- $ 14,850 Accrued interest payable sold -- 65 Loans receivable sold -- 155 Property and equipment sold -- 438 Reduction of goodwill -- 179 ========== ============
See accompanying Notes to Consolidated Financial Statements COASTAL BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION The accompanying unaudited Consolidated Financial Statements were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles. All adjustments which are, in the opinion of management, of a normal recurring nature and are necessary for a fair presentation of the interim financial statements, have been included. The results of operations for the periods ended June 30, 1997 are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period. (2) PRINCIPLES OF CONSOLIDATION The accompanying unaudited Consolidated Financial Statements include the accounts of Coastal Bancorp, Inc. and its wholly-owned subsidiary, Coastal Banc Holding Company, Inc. and its wholly-owned subsidiary, Coastal Banc ssb and subsidiaries (collectively, Coastal). Coastal Banc ssb's subsidiaries include CoastalBanc Financial Corp., CBS Mortgage Corp., and CBS Asset Corp. (collectively with Coastal Banc ssb, the Bank). All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts within the accompanying consolidated financial statements and the related notes have been reclassified to conform to the current year presentation. Such reclassifications had no effect on net income or total stockholders' equity. (3) MORTGAGE-BACKED SECURITIES Mortgage-backed securities at June 30, 1997 (unaudited) were as follows (dollars in thousands):
Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value ---------- ---------- ---------- ------ Held-to-Maturity: REMICS - Agency $ 927,739 $ 4,326 $ (35,531) $ 896,534 REMICS - Non-agency 270,185 911 (10,064) 261,032 FNMA certificates 77,421 65 (1,280) 76,206 GNMA certificates 31,744 592 -- 32,336 Non-agency securities 15,767 425 (247) 15,945 Interest-only securities 28 -- -- 28 --------- ----- -------- ---------- $ 1,322,884 $ 6,319 $ (47,122) $ 1,282,081 ========= ===== ======== ========== Available-for-sale: REMICS - Agency $ 182,471 $ 1,102 $ (6,568) $ 177,005 REMICS - Non-agency 2,706 -- (49) 2,657 --------- ----- -------- --------- $ 185,177 $ 1,102 $ (6,617) $ 179,662 ========= ===== ======== =========
Mortgage-backed securities at December 31, 1996 were as follows (dollars in thousands):
Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ----------- --------- Held-to-maturity: REMICS - Agency $ 932,488 $ 4,730 $ (31,142) $ 906,076 REMICS - Non-agency 278,612 834 (9,958) 269,488 FNMA certificates 79,628 72 (1,072) 78,628 GNMA certificates 34,031 282 -- 34,313 Non-agency securities 19,790 363 (95) 20,058 Interest-only securities 38 -- (3) 35 --------- ---------- ----------- --------- $ 1,344,587 $ 6,281 $ (42,270) $ 1,308,598 ========= ========== =========== ========== Available-for-sale: REMICS - Agency $ 182,467 $ 1,207 $ (5,946) $ 177,728 REMICS - Non-agency 2,962 -- (34) 2,928 --------- ---------- ---------- --------- $ 185,429 $ 1,207 $ (5,980) $ 180,656 ========= ========== ========== =========
(4) LOANS RECEIVABLE Loans receivable at June 30, 1997 and December 31, 1996 were as follows (dollars in thousands):
June 30, 1997 December 31, 1996 -------------- ------------------ (Unaudited) Real estate mortgage loans: First-lien mortgage, primarily residential $ 824,233 $ 791,337 Multifamily 149,950 139,486 Residential construction 81,222 77,146 Acquisition and development 28,759 26,132 Commercial 149,153 119,004 Commercial construction 11,385 3,963 Commercial loans, secured by residential mortgage loans held for sale 70,948 53,573 Commercial loans, secured by mortgage servicing rights 32,619 21,380 Commercial, financial and industrial 23,229 21,965 Loans secured by savings deposits 8,603 8,849 Consumer and other loans 13,390 14,400 -------------- -------- 1,393,491 1,277,235 Loans in process (51,067) (38,742) Allowance for loan losses (6,862) (6,880) Unearned loan fees (2,574) (2,344) Premium to record purchased loans, net 3,644 479 -------------- ---------- $ 1,336,632 $ 1,229,748 ============== ========== Weighted average yield 8.38% 8.37% ============== ==========
At June 30, 1997, Coastal had outstanding commitments to originate or purchase $55.6 million of real estate mortgage and other loans and had commitments under lines of credit to originate primary construction and other loans of approximately $93.1 million. In addition, at June 30, 1997, Coastal had $2.1 million of outstanding letters of credit. Management anticipates the funding of these commitments through normal operations. At June 30, 1997 and December 31, 1996, the carrying value of loans that were considered to be impaired totaled approximately $795,000 and $725,000, respectively, (all of which are on nonaccrual) and the related allowance for loan losses on those impaired loans totaled $569,000 and $524,000, respectively. The average recorded investment in impaired loans during the six months ended June 30, 1997 and 1996 was $735,000 and $939,000, respectively. An analysis of activity in the allowance for loan losses for the six months ended June 30, 1997 and 1996 is as follows (in thousands):
Six months ended June 30, --------------------------- 1997 1996 --------- ------- (Unaudited) Balance, beginning of period $ 6,880 $5,703 Provision for loan losses 900 1,025 Charge-offs, net of recoveries (918) (385) ------------ ------- Balance, end of period $ 6,862 $6,343 ============ =======
Coastal services for others loans receivable which are not included in the Consolidated Financial Statements. The total amounts of such loans were $726.0 million and $776.7 million at June 30, 1997 and December 31, 1996, respectively. (5) SAVINGS DEPOSITS Savings deposits, their stated rates and the related weighted average interest rates at June 30, 1997 and December 31, 1996 are summarized as follows (dollars in thousands):
Stated Rate June 30, 1997 December 31, 1996 ---------------- -------------- ------------------ (Unaudited) Noninterest-bearing checking 0.00% $ 99,479 $ 85,259 NOW accounts 1.74 - 2.00 64,314 56,862 Savings accounts 2.28 - 2.75 26,265 22,135 Money market demand accounts 3.15 - 4.51 161,537 151,046 ---------- ------------ 351,595 315,302 ---------- ------------ Certificate accounts 2.00 - 2.99 6,957 12,930 3.00 - 3.99 2,268 1,905 4.00 - 4.99 85,786 95,087 5.00 - 5.99 820,574 776,765 6.00 - 6.99 85,131 91,128 7.00 - 7.99 7,986 12,964 8.00 - 8.99 3,371 3,515 9.00 - 9.99 966 1,171 10.00 - 10.99 245 249 11.00 - 11.99 17 17 ---------- ------------ 1,013,301 995,731 ---------- ------------ Discount to record savings deposits at fair value, net (137) (198) -------------- ------------ $ 1,364,759 $ 1,310,835 ============== ============ Weighted average rate 4.70% 4.67% ============== ============
The scheduled maturities of certificate accounts outstanding at June 30, 1997 were as follows (dollars in thousands):
June 30, 1997 -------------- (Unaudited) 0 to 12 months $ 717,502 12 to 24 months 244,868 24 to 36 months 36,939 36 to 48 months 8,618 48 to 60 months 5,222 Over 60 months 152 -------------- $ 1,013,301 ==============
(6) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND FHLB ADVANCES (a) The weighted average interest rates on securities sold under agreements to repurchase at June 30, 1997 and December 31, 1996 were 5.56% and 5.55%, respectively. The stated interest rates on securities sold under agreements to repurchase ranged from 5.27% to 5.66% at June 30, 1997. (b) The weighted average interest rate on advances from the FHLB at June 30, 1997 and December 31, 1996 were 5.69% and 5.61%, respectively. FHLB advances and related interest rates and maturities at June 30, 1997 and December 31, 1996 are summarized as follows (dollars in thousands):
Maturity Interest rates June 30, 1997 December 31, 1996 - -------- --------------- ------------- ----------------- (Unaudited) 1997 4.93 - 8.31% $ 180,630 $ 189,127 1998 5.25 - 6.96 19,598 19,674 1999 4.95 - 8.11 120,645 170,871 2000 5.57 - 7.76 8,167 8,320 2001 6.03 - 6.46 8,756 8,854 2002 5.60 47,600 -- 2004 6.52 3,031 3,201 2006 6.91 3,142 3,167 2007 6.80 - 7.94 480 488 2009 8.25 4,577 4,681 2011 6.35 - 7.24 1,310 1,337 ------------- ----------------- $ 397,936 $ 409,720 ============= =================
FHLB advances are secured by certain first-lien mortgage loans and mortgage-backed securities owned by Coastal. (7) SENIOR NOTES PAYABLE On June 30, 1995, Coastal issued $50.0 million of 10.0% Senior Notes due June 30, 2002. The Senior Notes are redeemable at Coastal's option, in whole or in part, on or after June 30, 2000, at par, plus accrued interest to the redemption date. Interest on the Senior Notes is payable quarterly. (8) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK Coastal is a party to financial instruments with off-balance sheet risk in the normal course of business to reduce its own exposure to fluctuations in interest rates. These financial instruments include interest rate swap agreements and interest rate cap agreements. Coastal is a party to interest rate swap and interest rate cap agreements in order to reduce its exposure to floating interest rates by altering the interest rate sensitivity of a portion of its variable-rate assets and borrowings. At June 30, 1997, Coastal had interest rate swap and cap agreements having notional principal amounts totaling $60.8 million and $306.7 million, respectively. The terms of the interest rate swap agreements outstanding at June 30, 1997 (unaudited) and December 31, 1996 are summarized as follows (dollars in thousands):
Floating Fair Value at Notional LIBOR Fixed Rate at End of Period Maturity Amount Index Rate End gain (loss) of Period - ----------------- ------- --------- ------ --------- ------------- At June 30, 1997: 1997 $ 5,000 One-month 4.990% 5.703% $ 1 6,000 Three-month 6.493 5.813 (14) 1998 4,400 Three-month 6.709 5.813 (29) 1999 14,600 Three-month 6.926 5.813 (170) 2000 4,800 Three-month 6.170 5.598 (39) 2,590 Three-month 6.000 5.750 36 2005 23,442 Three-month 6.500 5.539 134 -------- ---------- $ 60,832 $ (81) ======== ========== At December 31, 1996: 1997 $ 5,000 One-month 4.990% 5.633% $ 6 6,000 Three-month 6.493 5.500 (65) 1998 4,400 Three-month 6.709 5.500 (111) 1999 14,600 Three-month 6.926 5.500 (619) 2000 4,800 Three-month 6.170 5.543 (64) 2,660 Three-month 6.000 5.617 24 2005 23,442 Three-month 6.500 5.500 (15) -------- --------------- $ 60,902 $ (844) ======== ===============
The agreements provide for Coastal to make weighted average fixed interest payments and receive payments based on a floating LIBOR index, as defined in each agreement. The weighted average interest received rate on all of the interest rate swap agreements was approximately 5.61% and the weighted average interest payment rate on all of the interest rate swap agreements was approximately 6.42% for the six months ended June 30, 1997. Payments on the interest rate swap agreements are based on the notional principal amount of the agreements; no funds were actually borrowed or are to be repaid. The interest rate swap agreements are used to alter the interest rate sensitivity of a portion of Coastal's variable-rate borrowings. As such, Coastal records net interest expense or income related to these agreements on a monthly basis in "interest expense" in the accompanying consolidated statements of operations. The net interest expense related to these agreements was approximately $246,000 for the six months ended June 30, 1997 and approximately $309,000 for the six months ended June 30, 1996. Coastal had pledged approximately $6.8 million of mortgage-backed securities to secure interest rate swap agreements at June 30, 1997. Coastal has interest rate cap agreements with various counterparties. The agreements provide for the counterparties to make payments to Coastal whenever a defined floating rate exceeds rates ranging from 5.0% to 12.5%, depending on the agreement. Payments on the interest rate cap agreements are based on the notional principal amount of the agreements; no funds were actually borrowed or are to be repaid. The purchase prices of the interest rate cap agreements are capitalized and included in "prepaid expenses and other assets" in the accompanying consolidated statements of financial condition and are amortized over the life of the agreements using the straight-line method. The unamortized portion of the purchase price of the interest rate cap agreements was approximately $591,000 and $1.1 million at June 30, 1997 and December 31, 1996, respectively, with the estimated fair value of the agreements being $791,000 and $639,000 at June 30, 1997 and December 31, 1996, respectively. The interest rate cap agreements are used to alter the interest rate sensitivity of a portion of Coastal's mortgage-backed securities, loans receivable and their related funding sources. As such, the amortization of the purchase price and interest income from the interest rate cap agreements are recorded in "interest income on mortgage-backed securities or loans receivable," as appropriate, in the accompanying consolidated statements of operations. The net decrease in interest income related to the interest rate cap agreements was approximately $201,000 and $283,000 for the six months ended June 30, 1997 and 1996 respectively. Interest rate cap agreements outstanding at June 30, 1997 expire as follows (dollars in thousands):
Year of Strike rate Notional expiration range amount - ---------- -------------- --------- 1997 5.0 - 9.0% $ 86,650 1998 5.0 - 12.5 156,400 1999 7.25 - 11.0 52,422 2000 7.5 - 9.5 11,265 --------- $ 306,737 =========
Market risk, or the risk of loss due to movement in market prices or rates, is quantified by Coastal through a risk monitoring process of marking to market the mortgage-backed securities portfolio to expected market level changes in an instantaneous shock of plus and minus 200 basis points on a monthly basis and 300 basis points on a quarterly basis. This process discloses the effects on market values of the assets and liabilities, unrealized gains and losses, including off-balance sheet items, as well as potential changes in net interest income. The fluctuation in the market value, however, has no effect on the level of earnings of Coastal because the securities are categorized as "held-to-maturity" or "available-for-sale". Coastal is exposed to credit loss in the event of nonperformance by the counterparty to the swap or cap and controls this risk through credit monitoring procedures. The notional principal amount does not represent Coastal's exposure to credit loss. (9) NET EARNINGS PER SHARE Net earnings per share is calculated by dividing net income after preferred stock dividends by the weighted average number of common shares and common stock equivalents. Stock options outstanding are regarded as common stock equivalents and are, therefore, considered in earnings per share calculations if dilutive. Common stock equivalents are computed using the treasury stock method. The weighted average number of shares used in the computation of earnings per share is 5,122,618 and 5,022,070 for the three months ended June 30, 1997 and 1996, respectively (unaudited) and 5,110,292 and 5,016,086 for the six months ended June 30, 1997 and 1996, respectively (unaudited). In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (Statement 128). Statement 128 supersedes APB Opinion No. 15, "Earnings Per Share" and specifies the computation, presentation and disclosure requirements for earnings per share (EPS) for entities with publicly held common stock. Statement 128 replaces the presentation of primary and fully diluted EPS with basic EPS and diluted EPS, respectively. Statement 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997. After adoption, all prior-period EPS data presented will be restated to conform with Statement 128. The adoption of Statement 128 is not expected to have a material impact on Coastal's consolidated financial statements. (10) STATUTORY CAPITAL REQUIREMENTS The applicable regulations require federally insured institutions, which are not the highest rated, to have a minimum regulatory tier 1 (core) capital to total assets ratio equal to a minimum of 4.0%, a tier 1 risk-based capital to risk-weighted assets ratio of 4.0% and total risk-based capital to risk-weighted assets ratio of 8.0%. At June 30, 1997, the Bank's regulatory capital (unaudited) in relation to its current existing regulatory capital requirements were as follows (dollars in thousands):
Actual Requirement Excess Capital Requirement Dollar Percent Dollar Percent Dollar Percent - -------------------- -------- -------- ------- -------- ------- -------- Tier 1 (core) $156,185 5.49% $ 113,760 4.00% $ 42,425 1.49% Tier 1 risk-based 156,185 11.25 55,548 4.00 100,637 7.25 Total risk-based 163,047 11.74 111,097 8.00 51,950 3.74
At June 30, 1997, the Bank, according to certain capital requirements outlined by the FDIC, was categorized as "well capitalized". (11) BRANCH ACQUISITION On June 21, 1997, Coastal announced the completion of the acquisition of the Wells Fargo Bank (Texas) branch located at 441 Austin Avenue in Port Arthur, Texas. At the date of acquisition, the Port Arthur location had approximately $54.6 million in deposits which were assumed by Coastal, in addition, approximately $693,000 of operating assets were purchased in the transaction. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition Total assets increased 3.1% or $88.2 million from December 31, 1996 to June 30, 1997. The net increase resulted primarily from an increase in loans receivable of $106.9 million, an increase in Federal funds sold of $6.3 million, an increase in property and equipment of $5.4 million, offset by decreases of $21.7 million and $5.8 million in mortgage-backed securities held-to-maturity and stock in the Federal Home Loan Bank of Dallas, respectively. The increase in loans receivable was primarily due to a bulk loan purchase of residential mortgage loans totalling $97.5 million in June of 1997 (resulting from the investment of the cash received from the branch acquisition that closed on June 21, 1997) and the increase in Federal funds sold was due to Coastal's use of this overnight investment alternative for excess funds beginning in the second quarter of 1997. The increase in property and equipment was due primarily to the acquisition of assets related to the relocation of Coastal's corporate headquarters. The relocation, which will be finalized during the third quarter of 1997, will consolidate Coastal's administrative, primarily lending and mortgage servicing offices. The decrease in mortgage-backed securities held-to-maturity was due to principal payments received. Savings deposits increased slightly by 4.1% or $53.9 million from December 31, 1996 to June 30, 1997. This increase was primarily due to the branch acquisition of $54.6 million in deposits completed on June 21, 1997, offset by a slight decrease in existing deposits. Securities sold under agreements to repurchase increased 3.3% or $31.4 million and advances from the FHLB decreased by $11.8 million or 2.9% from December 31, 1996 to June 30, 1997. The reallocation of the borrowings outstanding during such period was directly attributable to Coastal's change in funding sources to take advantage of more favorable interest rates. Stockholders' equity increased 4.8% or $4.5 million from December 31, 1996 to June 30, 1997 as a result primarily of net income offset by a $481,000 increase in the unrealized loss on securities available-for-sale and by dividends declared. Results of Operations for the Six Months Ended June 30, 1997 and 1996 General For the six months ended June 30, 1997, net income before preferred stock dividends increased 3.6% to $7.4 million from $7.1 million for the six months ended June 30, 1996. Net interest income increased slightly by $767,000 for the six months ended June 30, 1997 as compared to the six months ended June 30, 1996. Noninterest income decreased during such period by $86,000 primarily due to the $521,000 nonrecurring gain on the sale of a branch office that was recorded during the six months ended June 30, 1996. Noninterest expense increased by $414,000 and the provision for Federal income taxes increased $139,000. Interest Income Interest income for the six months ended June 30, 1997 increased $2.7 million or 2.8% from the six months ended June 30, 1996. The increase was primarily due to an increase of $4.7 million in interest earned on loans receivable over the prior comparable period. The increase in interest income on loans receivable was due to a $119.2 million increase in the average balance of loans receivable offset by a slight decrease in the average yield from 8.50% for the six months ended June 30, 1996 to 8.44% for the six months ended June 30, 1997. This increase was offset by a $1.9 million decrease in interest income on mortgage-backed securities primarily due to a lower average balance and a decrease in the average yield on mortgage-backed securities from 6.15% for the six months ended June 30, 1996 to 6.09% for the six months ended June 30, 1997 and a $35,000 decrease in interest income on Federal funds sold, certificates of deposit and other investments. Total interest-earning assets for the six months ended June 30, 1997 averaged $2.8 billion as compared to $2.7 billion for the six months ended June 30, 1996. Interest Expense Interest expense on interest-bearing liabilities was $70.6 million for the six months ended June 30, 1997, as compared to $68.6 million for the same period in 1996. The increase in interest expense was due to a $73.2 million increase in the average balance of interest-bearing liabilities during such period at the average rate paid of 5.38% for both the six month periods ended June 30, 1997 and 1996. The increase in average interest-bearing liabilities consisted of a $37.7 million increase in interest-bearing savings deposits, a $21.6 million increase in securities sold under agreements to repurchase, a $13.6 million increase in FHLB advances and a $326,000 increase in Federal funds purchased. Net Interest Income Net interest income was $28.9 million for the six months ended June 30, 1997 as compared to $28.1 million for the same period in 1996. The increase in net interest income was due to the slightly improved net interest rate spread (Spread) percentage. Spread, defined to exclude noninterest-bearing deposits, increased from 1.73% for the six months ended June 30, 1996 to 1.75% for the six months ended June 30, 1997. Management also calculates an alternative Spread which includes noninterest-bearing deposits. Under this calculation, the alternative Spreads for the six months ended June 30, 1997 and 1996 were 1.91% and 1.90%, respectively. Net interest margin (Margin) was 2.07% for both the six month periods ended June 30, 1997 and 1996. Margin represents net interest income as a percentage of average interest-earning assets. Margin and Spread are affected by the changes in the amount and composition of interest-earning assets and interest-bearing liabilities. The increase in the Spread was primarily due to a slight increase in the average yield on interest-earning assets from 7.11% for the six months ended June 30, 1996 to 7.13% for the same period in 1997. In addition, average net interest-earning assets decreased $4.6 million from the six months ended June 30, 1996 to the six months ended June 30, 1997. The slight improvement in the Spread level is consistent with management's goal of achieving a more desirable asset/liability composition which is less vulnerable to market interest rate fluctuations, primarily through the addition of loans tied to variable rates such as the London Interbank Offered Rate (LIBOR) and local and regional prime rates. To continue the improvement in both the Margin and Spread levels, management intends to gradually increase commercial business loans to approximately 15% of total assets and commercial business (noninterest-bearing) deposits to approximately 10% of total deposits within three to five years. Provision for Loan Losses Provision for loan losses was $900,000 for the six months ended June 30, 1997 as compared to $1.0 million for the six months ended June 30, 1996. The decrease in the provision for loan losses was due to management's satisfaction with the current allowance for loan losses established based on Coastal's loan loss policy. The allowance for loan losses as a percentage of total loans was 0.51% at June 30, 1997 and 0.56% at June 30, 1996. Although no assurance can be given, management believes that the present allowance for loan losses is adequate considering historical loss experience, delinquency trends and current economic conditions. Management will continue to review its loan loss allowance policy as Coastal's loan portfolio grows and diversifies to determine if changes to the policy and resulting allowance for loan losses are necessary. Noninterest Income For the six months ended June 30, 1997, noninterest income decreased $86,000 or 2.8% to $3.0 million, compared to $3.1 million for the six months ended June 30, 1996. The decrease in noninterest income was primarily due to the $521,000 nonrecurring gain on the sale of a branch office recorded during the six months ended June 30, 1996. This decrease was somewhat offset by an increase of $285,000 in loan fees and service charges and a $134,000 increase in other noninterest income. The increase in loan fees and service charges was due primarily to an increase of $245,000 in service charges on deposit accounts. Noninterest Expense For the six months ended June 30, 1997, noninterest expense increased $414,000 or 2.2% to $19.5 million compared to $19.0 million for the six months ended June 30, 1996. Compensation, payroll taxes and other benefits as well as office occupancy expense increased $1.2 million and $428,000, respectively, from the six months ended June 30, 1996 to the six months ended June 30, 1997, primarily due to the staffing increases related to the expansion of the loan product base and the continuing development of commercial business lending programs. In addition, real estate owned expenses increased by $96,000. These increases were somewhat offset by a $932,000 decrease in insurance premiums. This decrease was due primarily to the decreased deposit insurance premiums as a result of the lower assessment rates applicable to Coastal in 1997 pursuant to the passage of the Deposit Insurance Funds Act of 1996. Other decreases included a $184,000 decrease in data processing expenses (due in part to the 1996 data processing conversion expenses incurred), a $15,000 decrease in the amortization of goodwill and a $191,000 decrease in other noninterest expenses. Provision for Federal Income Taxes For the six months ended June 30, 1997, the provision for Federal income taxes was $4.2 million compared to $4.0 million for the six months ended June 30, 1996 at an average effective rate of approximately 36.5%. Results of Operations for the Three Months Ended June 30, 1997 and 1996 General For the three months ended June 30, 1997, net income before preferred stock dividends decreased 5.3% to $3.5 million from $3.7 million for the three months ended June 30, 1996. Net interest income decreased $34,000 for the three months ended June 30, 1997 as compared to the three months ended June 30, 1996. Noninterest income decreased during such period by $260,000 primarily due to the $521,000 nonrecurring gain on the sale of a branch office that was recorded during the three months ended June 30, 1996. Noninterest expense decreased by $3,000 and the provision for federal income taxes decreased by $99,000. Interest Income Interest income for the three months ended June 30, 1997 increased $1.7 million or 3.5% from the three months ended June 30, 1996. The increase was primarily due to an increase of $2.4 million in interest earned on loans receivable over the prior comparable quarter. The increase in interest income on loans receivable was due to a $113.2 million increase in the average balance of loans receivable offset by a slight decrease in the average yield from 8.49% for the three months ended June 30, 1996 to 8.47% for the three months ended June 30, 1997. This increase was offset by a $604,000 decrease in interest income on mortgage-backed securities primarily due to a lower average balance and a $55,000 decrease in interest income on Federal funds sold, certificates of deposit and other investments. Total interest-earning assets for the three months ended June 30, 1997 averaged $2.8 billion as compared to $2.7 billion for the three months ended June 30, 1996. Interest Expense Interest expense on interest-bearing liabilities was $35.6 million for the three months ended June 30, 1997, as compared to $33.9 million for the same period in 1996. The increase in interest expense was due to a $68.8 million increase in the average balance of interest-bearing liabilities during such period and an increase in the average rate paid on interest-bearing liabilities from 5.32% for the three months ended June 30, 1996 to 5.45% for the three months ended June 30, 1997. The increase in average interest-bearing liabilities consisted of a $37.9 million increase in securities sold under agreements to repurchase, a $36.8 million increase in interest-bearing savings deposits, a $648,000 increase in Federal funds purchased offset by a $6.5 million decrease in FHLB advances. Net Interest Income Net interest income was $14.3 million for the three months ended June 30, 1997 and for the same period in 1996. Net interest margin (Margin) decreased from 2.10% for the three months ended June 30, 1996 to 2.05% for the three months ended June 30, 1997. Margin represents net interest income as a percentage of average interest-earning assets. Net interest rate spread (Spread), defined to exclude noninterest-bearing deposits, decreased from 1.76% for the three months ended June 30, 1996 to 1.71% for the three months ended June 30, 1997. Management also calculates an alternative Spread which includes noninterest-bearing deposits. Under this calculation, the alternative Spreads for the three months ended June 30, 1997 and 1996 were 1.88% and 1.93%, respectively. Margin and Spread are affected by the changes in the amount and composition of interest-earning assets and interest-bearing liabilities. The decrease in the Margin and Spread were primarily due to the increase in the average interest rates paid on interest-bearing liabilities from 5.32% for the three months ended June 30, 1996 to 5.45% for the same period in 1997, offset by an increase in the average yield on interest-earning assets from 7.08% for the three months ended June 30, 1996 to 7.16% for the same period in 1997. In addition, average net interest-earning assets decreased $6.3 million from the three months ended June 30, 1996 to the three months ended June 30, 1997. Management's goal is to achieve a more desirable asset/liability composition which is less vulnerable to market interest rate fluctuations, primarily through the addition of loans tied to variable rates such as the London Interbank Offered Rate (LIBOR) and local and regional prime rates. Management intends to gradually increase commercial business loans to approximately 15% of total assets and commercial business (noninterest-bearing) deposits to approximately 10% of total deposits within three to five years. Provision for Loan Losses Provision for loan losses was $450,000 for the three months ended June 30, 1997 and 1996. The allowance for loan losses as a percentage of total loans was 0.51% at June 30, 1997 and 0.56% at June 30, 1996. Although no assurance can be given, management believes that the present allowance for loan losses is adequate considering historical loss experience, delinquency trends and current economic conditions. Management will continue to review its loan loss allowance policy as Coastal's loan portfolio grows and diversifies to determine if changes to the policy and resulting allowance for loan losses are necessary. Noninterest Income For the three months ended June 30, 1997, noninterest income decreased $260,000 or 14.4% to $1.6 million, compared to $1.8 million for the three months ended June 30, 1996. The decrease in noninterest income was due to the $521,000 nonrecurring gain on the sale of a branch office recorded during the three months ended June 30, 1996. This decrease was somewhat offset by an increase of $186,000 in loan fees and service charges and a $77,000 increase in other noninterest income. The increase in loan fees and service charges was due to an increase of $141,000 in service charges on deposit accounts. Noninterest Expense For the three months ended June 30, 1997, noninterest expense decreased $3,000 from the three months ended June 30, 1996. Compensation, payroll taxes and other benefits as well as office occupancy expense increased $474,000 and $234,000, respectively, from the three months ended June 30, 1996 to the three months ended June 30, 1997, primarily due to the staffing increases related to the expansion of the loan product base and the continuing development of commercial business lending programs. In addition, real estate owned expenses increased by $110,000. These increases were somewhat offset by a $457,000 decrease in insurance premiums. This decrease from the prior related quarter was due primarily to the decreased deposit insurance premiums as a result of the lower assessment rates applicable to Coastal in 1997 pursuant to the passage of the Deposit Insurance Funds Act of 1996. Other decreases included a $99,000 decrease in data processing expenses (due in part to the 1996 data processing conversion expenses incurred), a $4,000 decrease in the amortization of goodwill and a $261,000 decrease in other noninterest expense. Provision for Federal Income Taxes For the three months ended June 30, 1997, the provision for Federal income taxes was $2.0 million compared to $2.1 million for the three months ended June 30, 1996 at an average effective rate of approximately 36.5%. Liquidity and Capital Resources Coastal's primary sources of funds consist of savings deposits bearing market rates of interest, securities sold under agreements to repurchase, advances from the FHLB, Federal funds purchased and principal payments on loans receivable and mortgage-backed securities. Coastal uses its funding resources principally to meet its ongoing commitments to fund maturing deposits and deposit withdrawals, repay borrowings, purchase loans receivable and mortgage-backed securities, fund existing and continuing loan commitments, maintain its liquidity, meet operating expenses and fund acquisitions of other banks and thrifts, either on a branch office or whole bank acquisition basis. At June 30, 1997, Coastal had binding commitments to originate or purchase loans totaling approximately $55.6 million and had $51.1 million of undisbursed loans in process. Scheduled maturities of certificates of deposit during the 12 months following June 30, 1997 totaled $717.5 million at June 30, 1997. Management believes that Coastal has adequate resources to fund all of its commitments. As of June 30, 1997, Coastal operated 37 retail banking offices in Texas cities, including Houston, Austin, Corpus Christi and small cities in the south east quadrant of Texas. Management's five year goal is to have over $5 billion in assets, over $3 billion in deposits, $2.5 billion in loans and 80 branches in cities throughout central and south Texas, although there can be no assurance that this goal can be accomplished through growth or acquisitions. Forward-Looking Information The above discussion should be read in conjunction with the information contained in the Consolidated Financial Statements and the Notes thereto. The above information contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), and are subject to the safe harbor created by that Reform Act. The words "estimate," "project," "anticipate," "expect," "intend," "believe," "plans," and similar expressions are intended to identify forward-looking statements. Because such forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors, all of which are difficult to predict and many of which are beyond the control of Coastal, that could cause actual results to differ materially include, but are not limited to: risks related to Coastal's acquisition strategy, including risks of adversely changing results of operations and factors affecting Coastal's ability to consummate further acquisitions; changes in general economic and business conditions; changes in market rates of interest; changes in the laws and regulations applicable to Coastal; the risks associated with the Bank's Non-Traditional lending (loans other than single-family residential mortgage loans such as multifamily, real estate acquisition and development, commercial, warehouse and mortgage servicing rights loans); and changes in business strategies and other factors as discussed in Coastal's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 26, 1997. PART II - OTHER INFORMATION Item 1. Legal Proceedings Coastal is involved in routine legal proceedings occurring in the ordinary course of business which, in the aggregate, are believed by management to be immaterial. Item 2. Changes in Securities a) Not applicable. b) Not applicable. Item 3. Default Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders On April 24, 1997, at the Annual Meeting of Stockholders of Coastal Bancorp, Inc. (the Company), the stockholders voted upon and approved the election of two directors and the ratification of the appointment of KPMG Peat Marwick LLP as the Company's independent auditors for the fiscal year ending December 31, 1997. With respect to such matters, the results of the votes were as follows: 1) Election of directors: Number of Votes In favor Withheld Manuel J. Mehos 3,568,294 4,500 James C. Niver 3,568,294 4,500 2) Ratification of KPMG Peat Marwick LLP as the Company's independent auditors: Number of votes in favor: 3,568,644 Number of votes against: 2,325 Number of votes abstaining: 1,825 Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K a) The following exhibits are filed as part of this report: Exhibit 27 - Financial Data Schedule (filed via EDGAR) Exhibit 99 - Forward-Looking Information b) Form 8-K filed on May 5, 1997 to disclose an increase in the dividends declared on common stock from $0.10 to $0.12 per common share for the first quarter of 1997 for shareholders of record on May 15, 1997, payable on June 15, 1997. SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: 8/8/97 By/s/ Manuel J. Mehos Manuel J. Mehos Chairman of the Board Chief Executive Officer Dated: 8/8/97 By/s/ Catherine N. Wylie Catherine N. Wylie Chief Financial Officer Exhibit 27 Financial Data Schedule (filed via EDGAR) Exhibit 99 Forward-Looking Information Forward-Looking Information The information included in Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations) should be read in conjunction with the information contained in the Consolidated Financial Statements and the Notes thereto. The information contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), and is subject to the safe harbor created by that Reform Act. The words "estimate," "project," "anticipate," "expect," "intend," "believe," "plans," and similar expressions are intended to identify forward-looking statements. Because such forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors, all of which are difficult to predict and many of which are beyond the control of Coastal, that could cause actual results to differ materially include, but are not limited to: risks related to Coastal's acquisition strategy, including risks of adversely changing results of operations and factors affecting Coastal's ability to consummate further acquisitions; changes in general economic and business conditions; changes in market rates of interest; changes in the laws and regulations applicable to Coastal; the risks associated with the Bank's Non-Traditional lending (loans other than single-family residential mortgage loans such as multifamily, real estate acquisition and development, commercial, warehouse and mortgage servicing rights loans); and changes in business strategies and other factors as discussed in Coastal's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 26, 1997. EX-27 2
9 This schedule contains summary financial information extracted from the consolidated statement of financial condition and the consolidated statement of operations and notes thereto found on pages 1 through 13 of the Company's Form 10-Q for year-to-date and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1997 JUN-30-1997 27,807 0 6,300 0 179,662 1,322,884 1,282,081 1,336,632 6,862 2,964,082 1,364,759 1,048,110 54,294 398,225 0 0 50 98,644 2,964,082 52,430 46,401 671 99,502 30,545 70,590 28,912 900 0 20,745 10,286 10,286 0 0 6,057 1.19 1.19 0 0 0 0 0 6,880 967 49 6,862 6,862 0 0
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