EX-99 3 exhibit99.htm EXHIBIT 99 Exhibit 99

NEWS RELEASE
FOR IMMEDIATE RELEASE
Coastal Bancorp, Inc. Announces First Quarter Results of $0.75 per share

HOUSTON (April 15, 2004) - Coastal Bancorp, Inc. (NASDAQ: CBSA) and subsidiaries ("Coastal") today reported net income available to common stockholders of $4.1 million for the quarter ended March 31, 2004, compared to $3.1 million for the same period in 2003. The $1.0 million increase in net income available to common stockholders was primarily due to the following: a $277,000 increase in net interest income, a $450,000 decrease in the provision for loans losses and a $222,000 decrease in noninterest expense, offset by a $567,000 increase in the provision for Federal income taxes. In addition, dividends on preferred stock decreased $627,000 due to the July 31, 2003 redemption of the 9.12% Series A Cumulative Preferred Stock of Coastal Bancorp, Inc. (“Bancorp”). Diluted earnings per share for the quarter ended March 31, 2004 were $0.75, compared to $0.57 for the same period in 2003. The weighted average common shares outstanding used in the diluted earnings per share calculations for the periods were 5,508,796 and 5,386,566, respectively. Basic earnings per share for the quarter ended March 31, 2004 were $0.78 compared to $0.59 for the same period in 2003.
 
On December 2, 2003 Coastal announced that it had signed a definitive merger agreement with Hibernia Corporation (NYSE: HIB) (“Hibernia”) pursuant to which Hibernia would acquire Coastal by means of a merger and pay cash in the amount of $41.50 per share for each outstanding share of Coastal common stock and $41.50 less the exercise price for each option to acquire a share of Coastal common stock. The required regulatory approvals have been granted. The merger is subject to the approval of Coastal’s shareholders and will be voted on at the annual meeting to be held on April 22, 2004. If Coastal’s shareholders vote in favor of the merger and all other customary conditions are met, the merger is expected to close on May 12, 2004.
 
Net Interest Income
When comparing the two periods, net interest income increased $277,000, due to a decrease of $1.3 million in interest expense, offset by a $1.0 million decrease in interest income. Net interest margin decreased 0.18% to 2.53% for the quarter ended March 31, 2004, from 2.71% for the same period in 2003. The average balance of interest-bearing liabilities increased $208.4 million from the quarter ended March 31, 2003 to the same period in 2004, while the average rate paid decreased 0.46%, to 2.07% for the quarter ended March 31, 2004, from 2.53% for the same period in 2003. The increase in liabilities is due to deposit growth, borrowings to fund purchases of mortgage loans and mortgage-backed securities and the $10.3 million in subordinated debentures issued in June of 2003. The average balance of interest-earning assets increased $209.6 million from the quarter ended March 31, 2003 to the same period in 2004, while the average yield decreased 0.58% to 4.39% from 4.97%. When comparing the first quarter of 2004 to the same period in 2003, the average yield on loans decreased to 4.90% from 5.50% and the average yield on mortgage-backed securities decreased to 2.80% from 3.14%.
 
Provision for Loan Losses
During the quarter ended March 31, 2004, Coastal recorded a provision for loan losses of $450,000 compared to $900,000 for the same period in 2003. As in the fourth quarter of 2003, the provision recorded in the first quarter of 2004 is less than previous quarters based upon the current level of unallocated reserves. At March 31, 2004, the allowance for loan losses as a percentage of total loans (excluding loans held for sale which are recorded at the lower of cost or fair value) was 1.00% compared to 0.98% at December 31, 2003. While management believes that it has adequately provided for loan losses, it will continue to monitor the loan portfolio and make adjustments to the allowance for loan losses as it considers necessary.
 
Noninterest Income, Noninterest Expense and Provision for Federal Income Taxes
Noninterest income increased slightly by $45,000 when comparing the first quarter of 2004 to the same period in 2003. This increase was comprised of the following: a $244,000 increase in the gain on sale of real estate owned, a $200,000 gain on the sale of mortgage-backed securities available for sale, a $188,000 increase in the gain on sale of repossessed assets due to the sale of one asset during the first quarter of 2004 and a $113,000 increase in other noninterest income, largely offset by a $716,000 decrease in the gain on sale of loans held for sale, due to gains of $734,000 in the quarter ended March 31, 2003, compared to $18,000 in the current period.
 
When comparing the first quarter of 2004 to the same period a year earlier, the $222,000 decrease in noninterest expense was comprised primarily of a decrease in compensation, payroll taxes and benefits of $174,000 and a decrease of $201,000 in other noninterest expense, due largely to a decrease of $119,000 in expenses related to loans, repossessed assets and real estate owned. These decreases were somewhat offset by smaller increases of $72,000 in office occupancy, $46,000 in data processing and $39,000 in advertising. The provision for Federal income taxes increased $567,000 due to the increased amount of income before Federal income taxes, with the effective tax rate being approximately 35% for the quarter ended March 31, 2004 and 31% for the same period in 2003. The provision for Federal income taxes for the quarter ended March 31, 2003 included a tax benefit of $219,000 received from the dividends on the Series A Preferred Stock of Coastal Bancorp, Inc. This benefit ceased upon redemption of the Bancorp Preferred Stock on July 31, 2003.
 
Asset Quality
As shown in the "Other Financial Data" table attached, at March 31, 2004, Coastal had nonperforming loans totaling $14.9 million, which is a $5.3 million, or 26%, decrease when compared to December 31, 2003. Nonperforming loans are those loans on nonaccrual status as well as those loans greater than ninety (90) days delinquent and still accruing interest. This decrease was primarily a result of the decrease in nonperforming first lien residential (single-family) mortgage loans. At March 31, 2004, nonperforming assets (which include nonperforming loans, real estate owned and repossessed assets) were $17.4 million and the ratio of nonperforming assets to total assets was 0.64%. At December 31, 2003, nonperforming assets were $22.8 million and the ratio of nonperforming assets to total assets was 0.85%. At March 31, 2004, $7.8 million, or 52%, of nonperforming loans were first lien residential (single-family) mortgage loans, $5.5 million, or 37%, were acquisition and development loans, $604,000, or 4%, were commercial real estate loans, $947,000, or 6%, were commercial, financial and industrial loans, with the balance in other loan categories. Of the nonperforming acquisition and development loans outstanding at December 31, 2003 and March 31, 2004, two loans to the same borrower made up $5.4 million of the total at each date. These two loans have been paid off subsequent to March 31, 2004. At March 31, 2004, the allowance for loan losses as a percentage of nonperforming loans (excluding nonperforming loans held for sale which are recorded at the lower of cost or fair value) was 131.07% compared to 95.66% at December 31, 2003.
 
Common Stock Repurchase
As of March 31, 2004, a total of 2,746,110 shares of common stock were held in treasury at an average price of $19.53 per share for a total cost of $53.6 million.
 
The Company
At March 31, 2004, Coastal had total assets of approximately $2.7 billion, deposits of approximately $1.7 billion and common stockholders' equity of approximately $139.8 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 44 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 www.coastalbanc.com (which is not part of this release).
 
Notice under the Private Securities Litigation Reform Act of 1995
"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 statements with respect to plans, projections or future performance of Coastal, the occurrence of which involve certain risks and uncertainties. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in Coastal Bancorp, Inc.'s Securities and Exchange Commission filings. Investors are cautioned that any such forward looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward looking statements. Furthermore, Coastal does not intend (and is not obligated) to update publicly any forward-looking statement.

     
 


COASTAL BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(Dollars In Thousands, except per share data)
(unaudited)

 
  
For the Three Months Ended
 
  
March 31,
 
  
2004
2003
   
 
  
 
 
Basic earnings per share
  
$
0.78
  
$
0.59
  
 
    
 
    
 
  
Diluted earnings per share
  
$
0.75
  
$
0.57
  
 
    
 
    
 
  
Return (before minority interest) on average assets
    
0.61
%
  
0.60
%
 
    
 
    
 
  
Return on average common equity
    
12.13
%
  
9.91
%
 
    
 
    
 
  
Net interest margin
   
2.53
%
  
2.71
%
 
    
 
    
 
  
Noninterest expense to average total assets
    
2.04
%
  
2.28
%
 
    
 
    
 
  
Charge-offs of loans receivable
  
$
392
  
$
908
  
 
    
 
    
 
  
Net charge-offs of loans receivable
  
$
254
  
$
717
  
 
    
 
    
 
  
Ratio of net charge-offs to average loans receivable
    
0.01
%
  
0.04
%

     
 


COASTAL BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(In Thousands)
(unaudited)

 
  
For the Three Months Ended
 
  
March 31,
 
  
2004
2003
   
 
  
 
 
Average balance sheet information
  
 
 
      
Assets:
  
 
 
Interest-earning assets:
  
 
 
Loans receivable
  
$
2,013,178
  
$
1,871,027
  
Mortgage-backed securities
    
521,536
    
468,165
  
Other
    
67,076
    
53,001
  
   
 
 
Total interest-earning assets
    
2,601,790
    
2,392,193
  
Noninterest-earning assets
    
93,529
    
89,013
  
   
 
 
Total assets
  
$
2,695,319
  
$
2,481,206
  
   
 
 
 
    
 
    
 
  
Liabilities and stockholders' equity:
    
 
    
 
  
Interest-bearing deposits
  
$
1,463,421
  
$
1,418,473
  
Borrowings
    
818,427
    
665,265
  
Subordinated debentures
    
61,856
    
51,546
  
   
 
 
Total interest-bearing liabilities
    
2,343,704
    
2,135,284
  
Noninterest-bearing deposits
    
202,736
    
179,763
  
Other noninterest-bearing liabilities
    
12,912
    
13,457
  
Preferred stockholders' equity
    
--
    
27,500
  
Common stockholders' equity
    
135,967
    
125,202
  
   
 
 
Total liabilities and stockholders' equity
  
$
2,695,319
  
$
2,481,206
  
   
 
 


     
 


COASTAL BANCORP, INC. AND SUBSIDIARIES
OTHER FINANCIAL DATA
(Dollars in Thousands, except per share data)
(unaudited)

 
  
March 31,
2004
December 31,
2003
   
 
  
 
 
 
 
Nonaccrual loans receivable:
  
 
 
 
 
First lien residential
        
$
7,737
        
$
10,312
  
Residential construction
    
 
    
103
    
 
    
--
  
Commercial real estate
    
 
    
517
    
 
    
714
  
Acquisition and development
    
 
    
5,467
    
 
    
5,497
  
Commercial, financial and industrial
    
 
    
900
    
 
    
1,111
  
Consumer and other
    
 
  

 51

    
 
    
68
  
     
   
 
 
    
 
     14,775    
 
    
17,702
  
         
       
 
 
    
 
    
 
    
 
    
 
  
Loans greater than 90 days delinquent and still accruing:
    
 
    
 
    
 
    
 
  
First lien residential
    
 
    
33
    
 
    
--
  
Residential construction
    
 
    
--
    
 
    
136
  
Acquisition and development
    
 
    
--
    
 
    
454
  
Commercial real estate
    
 
    
87
    
 
    
188
  
Commercial, financial and industrial
    
 
    
47
    
 
    
1,789
  
     
   
 
 
    
 
    
167
    
 
    
2,567
  
         
       
 
 
    
 
    
 
    
 
    
 
  
Total nonperforming loans
    
 
    
14,942
    
 
    
20,269
  
Real estate owned and repossessed assets
    
 
    
2,452
    
 
    
2,524
  
         
       
 
Total nonperforming assets
        
$
17,394
        
$
22,793
  
         
       
 
 
    
 
    
 
    
 
    
 
  
 
    
 
    
 
    
 
    
 
  
Allowance for loan losses
        
$
19,585
        
$
19,389
  
 
    
 
    
 
    
 
    
 
  
Ratio of nonperforming loans to total loans receivable and loans
    
 
    
 
    
 
    
 
  
receivable held for sale
    
 
    
0.75
%
  
 
    
1.02
%
 
    
 
    
 
    
 
    
 
  
Ratio of nonperforming assets to total assets
    
 
    
0.64
%
  
 
    
0.85
%
 
    
 
    
 
    
 
    
 
  
Ratio of allowance for loan losses to nonperforming loans
receivable (excluding nonperforming loans held for sale)
    
 
    
 
131.07
%
  
 
    
 
95.66
%
 
    
 
    
 
    
 
    
 
  
Ratio of allowance for loan losses to loans receivable
   
 
    
 
    
 
    
 
  
(excluding loans receivable held for sale)
    
 
    
1.00
%
  
 
    
0.98
%
 
    
 
    
 
    
 
    
 
  
Book value per common share
        
$
25.66
        
$
24.78
  
 
    
 
    
 
    
 
    
 
  
Tangible book value per common share
        
$
21.62
        
$
20.71
  
 
    
 
    
 
    
 
    
 
  
Regulatory capital ratios of Coastal Banc ssb:
    
 
    
 
    
 
    
 
  
Tier 1 (Core)
    
 
    
6.35
%
  
 
    
6.26
%
Tier 1 risk-based
    
 
    
9.28
%
  
 
    
9.23
%
Total risk-based
    
 
    
10.36
%
  
 
    
10.31
%


     
 


COASTAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, except share data)


 
ASSETS
  
March 31,
2004
December 31,
2003
  
 
  
(unaudited)
 
 
 
  
 
 
 
 
Cash and cash equivalents
        
$
35,389
        
$
40,814
  
Federal funds sold
    
 
    
24,732
    
 
    
10,440
  
Loans receivable held for sale
    
 
    
35,341
    
 
    
8,078
  
Loans receivable
    
 
    
1,967,328
    
 
    
1,981,924
  
Mortgage-backed securities available-for-sale, at fair value
    
 
    
501,543
    
 
    
504,402
  
Other securities available-for-sale, at fair value
    
 
    
4,855
    
 
    
6,787
  
Accrued interest receivable
    
 
    
8,762
    
 
    
9,198
  
Property and equipment
    
 
    
33,174
    
 
    
32,563
  
Stock in the Federal Home Loan Bank of Dallas (FHLB)
    
 
    
45,641
    
 
    
45,471
  
Goodwill
    
 
    
21,429
    
 
    
21,429
  
Prepaid expenses and other assets
    
 
    
20,165
    
 
    
21,884
  
         
       
 
         
$
2,698,359
        
$
2,682,990
  
         
       
 
 
    
 
    
 
    
 
    
 
  
 
    
 
    
 
    
 
    
 
  
LIABILITIES AND STOCKHOLDERS' EQUITY
    
 
    
 
    
 
    
 
  
                          
Liabilities:
    
 
    
 
    
 
    
 
  
Deposits
        
$
1,680,116
        
$
1,676,131
  
Advances from the FHLB
    
 
    
801,512
    
 
    
799,875
  
Subordinated debentures
    
 
    
61,856
    
 
    
61,856
  
Advances from borrowers for taxes and insurance
    
 
    
4,023
    
 
    
2,482
  
Other liabilities and accrued expenses
    
 
    
11,066
    
 
    
8,954
  
         
       
 
   Total liabilities
    
 
    
2,558,573
    
 
    
2,549,298
  
         
       
 
 
    
 
    
 
    
 
    
 
  
Commitments and contingencies
    
 
    
 
    
 
    
 
  
 
    
 
    
 
    
 
    
 
  
Stockholders' equity
    
 
    
 
    
 
    
 
  
Common stock, $0.01 par value; authorized shares
   30,000,000; 8,043,802 shares issued and 5,297,692 shares
   outstanding at March 31, 2004; 7,981,434 shares issued
    
 
    
 
    
 
    
 
  
   and 5,235,324 shares outstanding at December 31, 2003
    
 
    
80
    
 
    
80
  
Additional paid-in capital
    
 
    
38,187
    
 
    
37,179
  
Retained earnings
    
 
    
154,485
    
 
    
151,167
  
Accumulated other comprehensive income (loss) - unrealized
    
 
    
 
    
 
    
 
  
   gain (loss) on securities available-for-sale
    
 
    
664
    
 
    
(1,104
)
Treasury stock, at cost (2,746,110 shares in 2004 and 2003)
    
 
    
(53,630
)
  
 
    
(53,630
)
         
       
 
   Total stockholders' equity
    
 
    
139,786
    
 
    
133,692
  
         
       
 
         
$
2,698,359
        
$
2,682,990
  
         
       
 

     



COASTAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share data)




 
 
     
Three Months Ended
March 31,
   
  
 
 
2004
2003
   
 
 
(unaudited)
Interest income:
 
 
 
Loans receivable
    
$
24,670
  
$
25,612
  
Mortgage-backed securities
      
3,646
    
3,667
  
FHLB stock, federal funds sold and other interest-earning assets
    

 269

  
325
   
 
 
 
      
28,585
    
29,604
  
     
 
 
 
      
 
    
 
  
Interest expense:
      
 
    
 
  
Deposits
      
6,806
    
8,048
  
Advances from the FHLB
      
4,061
    
4,225
  
Subordinated debentures
      
1,270
    
1,160
  
     
 
 
 
      
12,137
    
13,433
  
     
 
 
 
      
 
    
 
  
   Net interest income
      
16,448
    
16,171
  
Provision for loan losses
      
450
    
900
  
     
 
 
   Net interest income after provision for loan losses
      
15,998
    
15,271
  
     
 
 
 
      
 
    
 
  
Noninterest income:
      
 
    
 
  
Service charges on deposit accounts
      
2,893
    
2,902
  
Loan fees
      
244
    
219
  
Gain on sale of loans receivable held for sale
      
18
    
734
  
Gain on sale of mortgage-backed securities available-for-sale
      
200
    
--
  
Gain (loss) on sale of real estate owned
      
114
    
(130
)
Gain (loss) on sale of repossessed assets
      
180
    
(8
)
Other
    

 389

    
276
  
   
 
 
 
      
4,038
    
3,993
  
     
 
 
 
      
 
    
 
  
Noninterest expense:
      
 
    
 
  
Compensation, payroll taxes and other benefits
      
7,834
    
8,008
  
Office occupancy
      
2,389
    
2,317
  
Data processing
      
479
    
433
  
Advertising
      
314
    
275
  
Postage and delivery
      
375
    
379
  
Other
      
2,307
    
2,508
  
     
 
 
 
      
13,698
    
13,920
  
     
 
 
     Income before provision for Federal income taxes
      
6,338
    
5,344
  
Provision for Federal income taxes
      
2,226
    
1,659
  
     
 
 
     Net income
    
$
4,112
  
$
3,685
  
     
 
 
     Net income available to common stockholders
    
$
4,112
  
$
3,058
  
     
 
 
 
      
 
    
 
  
Basic earnings per share
    
$
0.78
  
$
0.59
  
     
 
 
Diluted earnings per share
    
$
0.75
  
$
0.57