Coastal Bancorp, Inc. Announces First Quarter Results of 76 Cents Per Share

Apr 16, 2001, 01:00 ET from Coastal Bancorp, Inc.

    HOUSTON, April 16 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA)
 today reported net income available to common stockholders of $4.6 million for
 the quarter ended March 31, 2001, compared to $3.9 million for the same period
 in 2000, which is a $692,000, or 17.9%, increase.  The increase was primarily
 due to a $2.2 million increase in net interest income, a $1.5 million decrease
 in the provision for loan losses and a $212,000 decrease in noninterest
 expense.  These increases were somewhat offset by a $2.7 million decrease in
 noninterest income (which includes a $564,000 fair value loss on derivative
 instruments due to the change in accounting principle adopted effective
 January 1, 2001 (see below)), a $405,000 increase in the provision for Federal
 income taxes and a $104,000 (net of tax) cumulative transition adjustment loss
 due to the change in accounting for derivative instruments (see below).
 Diluted earnings per share for the quarter ended March 31, 2001 were $0.76
 compared to $0.60 for the same period last year.  The weighted average common
 shares outstanding used in the diluted earnings per share calculations for the
 periods were 6,001,821 and 6,475,801, respectively.
 
     Change in Accounting Principle
     Effective January 1, 2001, Coastal adopted Statement of Financial
 Accounting Standards No. 133 ("Statement 133.")  The adoption of Statement
 133 had two effects on Coastal's earnings for the first quarter of 2001.  The
 implementation of Statement 133 caused Coastal to record a $104,000 loss (net
 of tax), (or $0.02 per diluted share), as the cumulative effect of the change
 in accounting for derivative instruments.  The transition adjustment loss
 represents the impact of Coastal's derivative contracts that did not qualify
 for hedge accounting as of January 1, 2001.  The derivative instruments held
 by Coastal include interest rate swap agreements where Coastal makes fixed
 interest payments and receives payments based on a floating index and interest
 rate cap agreements.  In addition, pursuant to Statement 133, any subsequent
 changes in the fair value of these derivative contracts are to be recorded in
 current period earnings. For the quarter ended March 31, 2001, Coastal
 recorded a fair value loss of $564,000 (or $0.06 per diluted share net of the
 tax effect), which is included as part of the decrease in noninterest income
 when comparing the 2001 and 2000 periods.  In total for the first quarter of
 2001, the adoption of Statement 133 had a negative impact on Coastal's
 earnings of $0.08 per diluted share.
 
     Net Interest Income
     As noted previously, the most significant contributor to increased net
 income available to common stockholders was increased net interest income.
 This increase in net interest income continues to show the progress of
 Coastal's strategic focus on commercial banking business.  The $2.2 million,
 or 10.9%, increase in net interest income from 2000 to 2001 was primarily due
 to the increase in net interest margin to 2.98% for the quarter ended
 March 31, 2001 from 2.78% for the same period in 2000.  The increase in net
 interest margin was primarily due to the 0.46% increase in the average yield
 on interest-earning assets, primarily on loans receivable, offset by a 0.36%
 increase in the average rate paid on interest-bearing liabilities, due
 primarily to higher wholesale funding costs.  In addition, net interest margin
 was positively impacted by a $17.7 million increase in average net interest-
 earning assets.  Comparing the quarter ended March 31, 2001 to the same period
 in 2000, average interest-earning assets increased $94.4 million.  This
 increase consisted primarily of a $129.3 million increase in the average
 balance of loans receivable (which are higher yielding than the other
 interest-earning assets held by Coastal), somewhat offset by the $36.6 million
 decrease in the average balance of mortgage-backed securities.  Comparing the
 same periods, average interest-bearing liabilities increased $76.6 million.
 This increase was primarily comprised of a $55.5 million increase in interest-
 bearing deposits and a $21.2 million increase in the average balance of
 advances from the Federal Home Loan Bank of Dallas.
 
     Provision for Loan Losses
     During the first quarter of 2001, Coastal recorded a provision for loan
 losses of $900,000 compared to $2.4 million during the same period in 2000.
 Overall during 2000 and continuing in 2001, Coastal continues to focus on
 increasing the size of Coastal's commercial loan portfolio.  As such, Coastal
 continues to execute on its plan to eventually build the allowance for loan
 losses to a benchmark of approximately 100% of nonperforming loans.
 Nonperforming loans are those loans on nonaccrual status as well as those
 loans greater than ninety (90) days delinquent and still accruing interest.
 At March 31, 2001, Coastal had nonperforming loans totaling $22.0 million.  Of
 these nonperforming loans, $17.1 million, or 78%, were first lien residential
 (single family) mortgage loans, $2.7 million were commercial real estate
 loans, $1.3 million were commercial financial and industrial loans with the
 balance in the residential construction and consumer and other categories.  At
 March 31, 2001, the allowance for loan losses as a percentage of nonperforming
 loans was 64.4% compared to 68.3% at December 31, 2000.
 
     Noninterest Expense, Noninterest Income and Provision for Federal Income
 Taxes
     The $212,000 decrease in noninterest expense was primarily due to
 decreases of $160,000 and $130,000 in other noninterest expense and office
 occupancy, respectively, partially offset by a $129,000 increase in
 compensation, payroll taxes and other benefits, in addition to small changes
 in other categories.  The decrease in noninterest income was primarily due to
 the $2.2 million non-recurring gain recorded on the sale of Coastal's mortgage
 servicing rights during the quarter ended March 31, 2000 and the related loss
 of the servicing income and loan fees, during the periods subsequent to the
 sale.  In addition to the servicing sale, the effect of the fair value loss of
 $564,000 recorded pursuant to Statement 133 as mentioned previously was a
 factor in the decrease in total noninterest income.  The provision for Federal
 income taxes increased $405,000 primarily due to the increased income before
 Federal income taxes, minority interest and cumulative effect of accounting
 change.
 
     Common Stock Repurchase
     On August 27, 1998, December 21, 1998, February 25, 1999, April 27, 2000
 and July 27, 2000, the Board of Directors authorized five separate repurchase
 plans for up to 500,000 shares each of the outstanding shares of common stock
 through an open-market repurchase program and privately negotiated
 repurchases, if any.  As of March 31, 2001, 2,000,000 shares had been
 repurchased at an average repurchase price of $15.67 per share for a total
 cost of $31.3 million, with no shares from the July 27, 2000 authorization
 having been repurchased to date.  Book value per common share at
 March 31, 2001 was $19.60.
 
     The Company
     At March 31, 2001, Coastal had total assets of approximately $3.2 billion,
 deposits of approximately $1.7 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
 $116.3 million.
     Coastal Bancorp, Inc. owns, through its wholly-owned subsidiary, Coastal
 Banc Holding Company, Inc., 100 percent of the voting stock of Coastal Banc
 ssb, a Texas-chartered FDIC insured, state savings bank headquartered in
 Houston.  Coastal Banc ssb operates 50 branch offices in metropolitan Houston,
 Austin, Corpus Christi, the Rio Grande Valley and small cities in the
 southeast quadrant of Texas.  You can visit our website at
 www.coastalbanc.com.
     "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 Ended
                                                      March 31,
                                                  2001         2000
 
     Basic earnings per share
      without the adoption of Statement 133     $  0.88      $  0.61
     Basic earnings per share before the
      cumulative effect of accounting change    $  0.81      $  0.61
     Basic earnings per share                   $  0.80      $  0.61
 
     Diluted earnings per share without the
      adoption of Statement 133                 $  0.84      $  0.60
     Diluted earnings per share before the
      cumulative effect of accounting change    $  0.78      $  0.60
     Diluted earnings per share                 $  0.76      $  0.60
 
     Net change in diluted earnings per share
      due to the adoption of Statement 133      $  0.08      $  0.00
 
     Diluted cash earnings per share (A)        $  1.00      $  0.71
 
     Return (before minority interest) on
      average assets                               0.76%        0.68%
 
     Return on average common equity              16.31%       14.54%
 
     Net interest margin                           2.98%        2.78%
 
     Noninterest expense to average total
      assets                                       1.93%        1.99%
 
     Charge-offs of loans receivable            $ 1,260      $   283
 
     Net charge-offs (recoveries) of loans
      receivable                                $ 1,225      $    (1)
 
     Ratio of net charge-offs to average
      loans receivable                             0.06%        0.00%
 
     (A) Cash earnings is calculated by adding back goodwill amortization and
         the fair value losses recorded pursuant to the adoption of Statement
         133 in 2001.
 
 
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                       SELECTED FINANCIAL DATA, continued
                 (Dollars In Thousands, except per share data)
                                  (unaudited)
 
                                              For the Three Months Ended
                                                       March 31,
                                                 2001            2000
 
     Average balance sheet information
     Assets:
     Interest-earning assets:
     Loans receivable                       $ 1,946,887     $ 1,817,596
     Mortgage-backed securities                 978,991       1,015,624
     Other                                       65,770          64,075
         Total interest-earning assets        2,991,648       2,897,295
     Noninterest-earning assets                  98,688         110,912
         Total assets                       $ 3,090,336     $ 3,008,207
 
     Liabilities and stockholders' equity:
     Interest-bearing deposits              $ 1,531,216     $ 1,475,721
     Borrowings                               1,176,980       1,155,861
     Senior Notes payable                        46,900          46,900
         Total interest-bearing liabilities   2,755,096       2,678,482
     Noninterest-bearing liabilities            165,742         166,967
     Preferred Stock of Coastal Banc ssb         28,750          28,750
     Preferred stockholders' equity              27,500          27,500
     Common stockholders' equity                113,248         106,508
         Total liabilities and stockholders'
          equity                            $ 3,090,336     $ 3,008,207
 
 
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                              OTHER FINANCIAL DATA
                 (Dollars in Thousands, except per share data)
                                  (unaudited)
 
                                                March 31,      December 31,
                                                  2001            2000
     Nonaccrual loans receivable:
         First lien residential               $  16,958       $  16,062
         Residential construction                   312             390
         Commercial real estate                   2,691           1,134
         Commercial, financial and industrial       691           1,152
         Consumer and other                         539             496
                                                 21,191          19,234
 
     Loans greater than 90 days delinquent
      and still accruing:
         First lien residential                     118             475
         Commercial real estate                     ---             736
         Commercial, financial and industrial       647             634
         Consumer and other                          52             153
                                                    817           1,998
 
     Total nonperforming loans                   22,008          21,232
     Real estate owned and repossessed assets     3,628           4,095
 
     Total nonperforming assets               $  25,636       $  25,327
 
     Allowance for loan losses                $  14,182       $  14,507
 
     Ratio of nonperforming loans to loans
      receivable                                   1.10%           1.12%
 
     Ratio of nonperforming assets to
      total assets                                 0.81%           0.82%
 
     Ratio of allowance for loan losses
      to nonperforming loans receivable           64.44%          68.32%
 
     Ratio of allowance for loan losses to
      loans receivable                             0.71%           0.77%
 
     Book value per common share              $   19.60       $   18.89
 
     Tangible book value per common share     $   15.90       $   15.08
 
     Regulatory capital ratios:
         Tier 1 (Core)                             6.23%           6.22%
         Tier 1 risk-based                         9.85%           9.94%
         Total risk-based                         10.59%          10.72%
 
 
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                       (In Thousands, except share data)
 
 
                       ASSETS                   March 31,      December 31,
                                                  2001             2000
                                               (unaudited)
 
     Cash and cash equivalents               $    40,861      $    69,730
     Federal funds sold                            8,150              869
     Loans receivable                          1,997,286        1,896,228
     Mortgage-backed securities
      held-to-maturity                           878,096          885,565
     Mortgage-backed securities
      available-for-sale, at market value         93,300           94,673
     U.S. Treasury security held-to-maturity       1,398            1,497
     Accrued interest receivable                  18,283           18,772
     Property and equipment                       27,196           28,086
     Stock in the Federal Home Loan Bank
      of Dallas (FHLB)                            61,729           58,005
     Goodwill                                     23,909           24,611
     Prepaid expenses and other assets            11,906           13,575
                                             $ 3,162,114      $ 3,091,611
 
           LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Liabilities:
         Deposits                            $ 1,697,162      $ 1,674,981
         Advances from the FHLB                1,218,145        1,150,305
         Senior notes payable                     46,900           46,900
         Advances from borrowers for taxes
          and insurance                            6,806            5,050
         Other liabilities and accrued
          expenses                                20,542           47,154
             Total liabilities                 2,989,555        2,924,390
 
     9.0% noncumulative preferred stock of
      Coastal Banc ssb (Series A)                 28,750           28,750
 
     Commitments and contingencies
 
     Stockholders' equity
         Preferred stock, no par value;
          authorized shares 5,000,000;
          9.12% Cumulative, Series A
          1,100,000 shares issued and
          outstanding                             27,500           27,500
         Common stock, $0.01 par value;
          authorized shares 30,000,000;
          7,737,526 shares issued and
          5,737,526 shares outstanding at
          March 31, 2001;  7,677,622 shares
          issued and 5,677,622 shares
          outstanding at December 31, 2000            83               77
         Additional paid-in capital               34,058           33,312
         Retained earnings                       114,773          110,794
         Accumulated other comprehensive loss
          - unrealized loss on securities
          available-for-sale                      (1,260)          (1,867)
         Treasury stock, at cost (2,000,000
          shares in 2001 and 2000)               (31,345)         (31,345)
             Total stockholders' equity          143,809          138,471
                                             $ 3,162,114      $ 3,091,611
 
 
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                     (In Thousands, except per share data)
 
                                                   Three Months Ended
                                                        March 31,
                                                  2001            2000
                                                       (Unaudited)
     Interest income:
         Loans receivable                     $  43,001       $  38,506
         Mortgage-backed securities              16,258          15,433
         FHLB stock, federal funds sold
          and other interest-earning assets         906             975
                                                 60,165          54,914
 
     Interest expense:
         Deposits                                19,921          16,533
         Other borrowed money                         3               1
         Senior notes payable                     1,173           1,173
         Advances from the FHLB                  16,763          17,095
                                                 37,860          34,802
 
             Net interest income                 22,305          20,112
     Provision for loan losses                      900           2,400
             Net interest income after
              provision for loan losses          21,405          17,712
 
     Noninterest income:
         Service charges on deposit accounts      1,761           1,709
         Loan fees                                  240             348
         Loan servicing income, net                 ---             201
         Gain (loss) on derivative instruments     (564)            ---
         Other                                      385              96
         Gain on sale of mortgage servicing
          rights                                    ---           2,172
                                                  1,822           4,526
 
     Noninterest expense:
         Compensation, payroll taxes and
          other benefits                          7,598           7,469
         Office occupancy                         2,676           2,806
         Data processing                            854             859
         Amortization of goodwill                   702             753
         Insurance premiums                         154             149
         Other                                    2,698           2,858
                                                 14,682          14,894
             Income before provision for
              Federal income taxes, minority
              interest and cumulative effect
              of accounting change                8,545           7,344
     Provision for Federal income taxes           2,614           2,209
             Income before minority interest and
              cumulative effect of accounting
              change                              5,931           5,135
     Minority interest - preferred stock
      dividends of Coastal Banc ssb                 647             647
             Income before cumulative effect of
              accounting change                   5,284           4,488
     Cumulative effect of change in accounting
      for derivative instruments, net of tax       (104)            ---
             Net income                      $    5,180      $    4,488
             Net income available to common
              stockholders                   $    4,553      $    3,861
 
     Basis earnings per share before
      cumulative effect of accounting change $     0.81      $     0.61
     Basic earnings per share                $     0.80      $     0.61
     Diluted earnings per share before
      cumulative effect of accounting change $     0.78      $     0.60
     Diluted earnings per share              $     0.76      $     0.60
 
 

SOURCE Coastal Bancorp, Inc.
    HOUSTON, April 16 /PRNewswire/ -- Coastal Bancorp, Inc. (Nasdaq: CBSA)
 today reported net income available to common stockholders of $4.6 million for
 the quarter ended March 31, 2001, compared to $3.9 million for the same period
 in 2000, which is a $692,000, or 17.9%, increase.  The increase was primarily
 due to a $2.2 million increase in net interest income, a $1.5 million decrease
 in the provision for loan losses and a $212,000 decrease in noninterest
 expense.  These increases were somewhat offset by a $2.7 million decrease in
 noninterest income (which includes a $564,000 fair value loss on derivative
 instruments due to the change in accounting principle adopted effective
 January 1, 2001 (see below)), a $405,000 increase in the provision for Federal
 income taxes and a $104,000 (net of tax) cumulative transition adjustment loss
 due to the change in accounting for derivative instruments (see below).
 Diluted earnings per share for the quarter ended March 31, 2001 were $0.76
 compared to $0.60 for the same period last year.  The weighted average common
 shares outstanding used in the diluted earnings per share calculations for the
 periods were 6,001,821 and 6,475,801, respectively.
 
     Change in Accounting Principle
     Effective January 1, 2001, Coastal adopted Statement of Financial
 Accounting Standards No. 133 ("Statement 133.")  The adoption of Statement
 133 had two effects on Coastal's earnings for the first quarter of 2001.  The
 implementation of Statement 133 caused Coastal to record a $104,000 loss (net
 of tax), (or $0.02 per diluted share), as the cumulative effect of the change
 in accounting for derivative instruments.  The transition adjustment loss
 represents the impact of Coastal's derivative contracts that did not qualify
 for hedge accounting as of January 1, 2001.  The derivative instruments held
 by Coastal include interest rate swap agreements where Coastal makes fixed
 interest payments and receives payments based on a floating index and interest
 rate cap agreements.  In addition, pursuant to Statement 133, any subsequent
 changes in the fair value of these derivative contracts are to be recorded in
 current period earnings. For the quarter ended March 31, 2001, Coastal
 recorded a fair value loss of $564,000 (or $0.06 per diluted share net of the
 tax effect), which is included as part of the decrease in noninterest income
 when comparing the 2001 and 2000 periods.  In total for the first quarter of
 2001, the adoption of Statement 133 had a negative impact on Coastal's
 earnings of $0.08 per diluted share.
 
     Net Interest Income
     As noted previously, the most significant contributor to increased net
 income available to common stockholders was increased net interest income.
 This increase in net interest income continues to show the progress of
 Coastal's strategic focus on commercial banking business.  The $2.2 million,
 or 10.9%, increase in net interest income from 2000 to 2001 was primarily due
 to the increase in net interest margin to 2.98% for the quarter ended
 March 31, 2001 from 2.78% for the same period in 2000.  The increase in net
 interest margin was primarily due to the 0.46% increase in the average yield
 on interest-earning assets, primarily on loans receivable, offset by a 0.36%
 increase in the average rate paid on interest-bearing liabilities, due
 primarily to higher wholesale funding costs.  In addition, net interest margin
 was positively impacted by a $17.7 million increase in average net interest-
 earning assets.  Comparing the quarter ended March 31, 2001 to the same period
 in 2000, average interest-earning assets increased $94.4 million.  This
 increase consisted primarily of a $129.3 million increase in the average
 balance of loans receivable (which are higher yielding than the other
 interest-earning assets held by Coastal), somewhat offset by the $36.6 million
 decrease in the average balance of mortgage-backed securities.  Comparing the
 same periods, average interest-bearing liabilities increased $76.6 million.
 This increase was primarily comprised of a $55.5 million increase in interest-
 bearing deposits and a $21.2 million increase in the average balance of
 advances from the Federal Home Loan Bank of Dallas.
 
     Provision for Loan Losses
     During the first quarter of 2001, Coastal recorded a provision for loan
 losses of $900,000 compared to $2.4 million during the same period in 2000.
 Overall during 2000 and continuing in 2001, Coastal continues to focus on
 increasing the size of Coastal's commercial loan portfolio.  As such, Coastal
 continues to execute on its plan to eventually build the allowance for loan
 losses to a benchmark of approximately 100% of nonperforming loans.
 Nonperforming loans are those loans on nonaccrual status as well as those
 loans greater than ninety (90) days delinquent and still accruing interest.
 At March 31, 2001, Coastal had nonperforming loans totaling $22.0 million.  Of
 these nonperforming loans, $17.1 million, or 78%, were first lien residential
 (single family) mortgage loans, $2.7 million were commercial real estate
 loans, $1.3 million were commercial financial and industrial loans with the
 balance in the residential construction and consumer and other categories.  At
 March 31, 2001, the allowance for loan losses as a percentage of nonperforming
 loans was 64.4% compared to 68.3% at December 31, 2000.
 
     Noninterest Expense, Noninterest Income and Provision for Federal Income
 Taxes
     The $212,000 decrease in noninterest expense was primarily due to
 decreases of $160,000 and $130,000 in other noninterest expense and office
 occupancy, respectively, partially offset by a $129,000 increase in
 compensation, payroll taxes and other benefits, in addition to small changes
 in other categories.  The decrease in noninterest income was primarily due to
 the $2.2 million non-recurring gain recorded on the sale of Coastal's mortgage
 servicing rights during the quarter ended March 31, 2000 and the related loss
 of the servicing income and loan fees, during the periods subsequent to the
 sale.  In addition to the servicing sale, the effect of the fair value loss of
 $564,000 recorded pursuant to Statement 133 as mentioned previously was a
 factor in the decrease in total noninterest income.  The provision for Federal
 income taxes increased $405,000 primarily due to the increased income before
 Federal income taxes, minority interest and cumulative effect of accounting
 change.
 
     Common Stock Repurchase
     On August 27, 1998, December 21, 1998, February 25, 1999, April 27, 2000
 and July 27, 2000, the Board of Directors authorized five separate repurchase
 plans for up to 500,000 shares each of the outstanding shares of common stock
 through an open-market repurchase program and privately negotiated
 repurchases, if any.  As of March 31, 2001, 2,000,000 shares had been
 repurchased at an average repurchase price of $15.67 per share for a total
 cost of $31.3 million, with no shares from the July 27, 2000 authorization
 having been repurchased to date.  Book value per common share at
 March 31, 2001 was $19.60.
 
     The Company
     At March 31, 2001, Coastal had total assets of approximately $3.2 billion,
 deposits of approximately $1.7 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
 $116.3 million.
     Coastal Bancorp, Inc. owns, through its wholly-owned subsidiary, Coastal
 Banc Holding Company, Inc., 100 percent of the voting stock of Coastal Banc
 ssb, a Texas-chartered FDIC insured, state savings bank headquartered in
 Houston.  Coastal Banc ssb operates 50 branch offices in metropolitan Houston,
 Austin, Corpus Christi, the Rio Grande Valley and small cities in the
 southeast quadrant of Texas.  You can visit our website at
 www.coastalbanc.com.
     "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 Ended
                                                      March 31,
                                                  2001         2000
 
     Basic earnings per share
      without the adoption of Statement 133     $  0.88      $  0.61
     Basic earnings per share before the
      cumulative effect of accounting change    $  0.81      $  0.61
     Basic earnings per share                   $  0.80      $  0.61
 
     Diluted earnings per share without the
      adoption of Statement 133                 $  0.84      $  0.60
     Diluted earnings per share before the
      cumulative effect of accounting change    $  0.78      $  0.60
     Diluted earnings per share                 $  0.76      $  0.60
 
     Net change in diluted earnings per share
      due to the adoption of Statement 133      $  0.08      $  0.00
 
     Diluted cash earnings per share (A)        $  1.00      $  0.71
 
     Return (before minority interest) on
      average assets                               0.76%        0.68%
 
     Return on average common equity              16.31%       14.54%
 
     Net interest margin                           2.98%        2.78%
 
     Noninterest expense to average total
      assets                                       1.93%        1.99%
 
     Charge-offs of loans receivable            $ 1,260      $   283
 
     Net charge-offs (recoveries) of loans
      receivable                                $ 1,225      $    (1)
 
     Ratio of net charge-offs to average
      loans receivable                             0.06%        0.00%
 
     (A) Cash earnings is calculated by adding back goodwill amortization and
         the fair value losses recorded pursuant to the adoption of Statement
         133 in 2001.
 
 
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                       SELECTED FINANCIAL DATA, continued
                 (Dollars In Thousands, except per share data)
                                  (unaudited)
 
                                              For the Three Months Ended
                                                       March 31,
                                                 2001            2000
 
     Average balance sheet information
     Assets:
     Interest-earning assets:
     Loans receivable                       $ 1,946,887     $ 1,817,596
     Mortgage-backed securities                 978,991       1,015,624
     Other                                       65,770          64,075
         Total interest-earning assets        2,991,648       2,897,295
     Noninterest-earning assets                  98,688         110,912
         Total assets                       $ 3,090,336     $ 3,008,207
 
     Liabilities and stockholders' equity:
     Interest-bearing deposits              $ 1,531,216     $ 1,475,721
     Borrowings                               1,176,980       1,155,861
     Senior Notes payable                        46,900          46,900
         Total interest-bearing liabilities   2,755,096       2,678,482
     Noninterest-bearing liabilities            165,742         166,967
     Preferred Stock of Coastal Banc ssb         28,750          28,750
     Preferred stockholders' equity              27,500          27,500
     Common stockholders' equity                113,248         106,508
         Total liabilities and stockholders'
          equity                            $ 3,090,336     $ 3,008,207
 
 
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                              OTHER FINANCIAL DATA
                 (Dollars in Thousands, except per share data)
                                  (unaudited)
 
                                                March 31,      December 31,
                                                  2001            2000
     Nonaccrual loans receivable:
         First lien residential               $  16,958       $  16,062
         Residential construction                   312             390
         Commercial real estate                   2,691           1,134
         Commercial, financial and industrial       691           1,152
         Consumer and other                         539             496
                                                 21,191          19,234
 
     Loans greater than 90 days delinquent
      and still accruing:
         First lien residential                     118             475
         Commercial real estate                     ---             736
         Commercial, financial and industrial       647             634
         Consumer and other                          52             153
                                                    817           1,998
 
     Total nonperforming loans                   22,008          21,232
     Real estate owned and repossessed assets     3,628           4,095
 
     Total nonperforming assets               $  25,636       $  25,327
 
     Allowance for loan losses                $  14,182       $  14,507
 
     Ratio of nonperforming loans to loans
      receivable                                   1.10%           1.12%
 
     Ratio of nonperforming assets to
      total assets                                 0.81%           0.82%
 
     Ratio of allowance for loan losses
      to nonperforming loans receivable           64.44%          68.32%
 
     Ratio of allowance for loan losses to
      loans receivable                             0.71%           0.77%
 
     Book value per common share              $   19.60       $   18.89
 
     Tangible book value per common share     $   15.90       $   15.08
 
     Regulatory capital ratios:
         Tier 1 (Core)                             6.23%           6.22%
         Tier 1 risk-based                         9.85%           9.94%
         Total risk-based                         10.59%          10.72%
 
 
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                       (In Thousands, except share data)
 
 
                       ASSETS                   March 31,      December 31,
                                                  2001             2000
                                               (unaudited)
 
     Cash and cash equivalents               $    40,861      $    69,730
     Federal funds sold                            8,150              869
     Loans receivable                          1,997,286        1,896,228
     Mortgage-backed securities
      held-to-maturity                           878,096          885,565
     Mortgage-backed securities
      available-for-sale, at market value         93,300           94,673
     U.S. Treasury security held-to-maturity       1,398            1,497
     Accrued interest receivable                  18,283           18,772
     Property and equipment                       27,196           28,086
     Stock in the Federal Home Loan Bank
      of Dallas (FHLB)                            61,729           58,005
     Goodwill                                     23,909           24,611
     Prepaid expenses and other assets            11,906           13,575
                                             $ 3,162,114      $ 3,091,611
 
           LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Liabilities:
         Deposits                            $ 1,697,162      $ 1,674,981
         Advances from the FHLB                1,218,145        1,150,305
         Senior notes payable                     46,900           46,900
         Advances from borrowers for taxes
          and insurance                            6,806            5,050
         Other liabilities and accrued
          expenses                                20,542           47,154
             Total liabilities                 2,989,555        2,924,390
 
     9.0% noncumulative preferred stock of
      Coastal Banc ssb (Series A)                 28,750           28,750
 
     Commitments and contingencies
 
     Stockholders' equity
         Preferred stock, no par value;
          authorized shares 5,000,000;
          9.12% Cumulative, Series A
          1,100,000 shares issued and
          outstanding                             27,500           27,500
         Common stock, $0.01 par value;
          authorized shares 30,000,000;
          7,737,526 shares issued and
          5,737,526 shares outstanding at
          March 31, 2001;  7,677,622 shares
          issued and 5,677,622 shares
          outstanding at December 31, 2000            83               77
         Additional paid-in capital               34,058           33,312
         Retained earnings                       114,773          110,794
         Accumulated other comprehensive loss
          - unrealized loss on securities
          available-for-sale                      (1,260)          (1,867)
         Treasury stock, at cost (2,000,000
          shares in 2001 and 2000)               (31,345)         (31,345)
             Total stockholders' equity          143,809          138,471
                                             $ 3,162,114      $ 3,091,611
 
 
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                     (In Thousands, except per share data)
 
                                                   Three Months Ended
                                                        March 31,
                                                  2001            2000
                                                       (Unaudited)
     Interest income:
         Loans receivable                     $  43,001       $  38,506
         Mortgage-backed securities              16,258          15,433
         FHLB stock, federal funds sold
          and other interest-earning assets         906             975
                                                 60,165          54,914
 
     Interest expense:
         Deposits                                19,921          16,533
         Other borrowed money                         3               1
         Senior notes payable                     1,173           1,173
         Advances from the FHLB                  16,763          17,095
                                                 37,860          34,802
 
             Net interest income                 22,305          20,112
     Provision for loan losses                      900           2,400
             Net interest income after
              provision for loan losses          21,405          17,712
 
     Noninterest income:
         Service charges on deposit accounts      1,761           1,709
         Loan fees                                  240             348
         Loan servicing income, net                 ---             201
         Gain (loss) on derivative instruments     (564)            ---
         Other                                      385              96
         Gain on sale of mortgage servicing
          rights                                    ---           2,172
                                                  1,822           4,526
 
     Noninterest expense:
         Compensation, payroll taxes and
          other benefits                          7,598           7,469
         Office occupancy                         2,676           2,806
         Data processing                            854             859
         Amortization of goodwill                   702             753
         Insurance premiums                         154             149
         Other                                    2,698           2,858
                                                 14,682          14,894
             Income before provision for
              Federal income taxes, minority
              interest and cumulative effect
              of accounting change                8,545           7,344
     Provision for Federal income taxes           2,614           2,209
             Income before minority interest and
              cumulative effect of accounting
              change                              5,931           5,135
     Minority interest - preferred stock
      dividends of Coastal Banc ssb                 647             647
             Income before cumulative effect of
              accounting change                   5,284           4,488
     Cumulative effect of change in accounting
      for derivative instruments, net of tax       (104)            ---
             Net income                      $    5,180      $    4,488
             Net income available to common
              stockholders                   $    4,553      $    3,861
 
     Basis earnings per share before
      cumulative effect of accounting change $     0.81      $     0.61
     Basic earnings per share                $     0.80      $     0.61
     Diluted earnings per share before
      cumulative effect of accounting change $     0.78      $     0.60
     Diluted earnings per share              $     0.76      $     0.60
 
 SOURCE  Coastal Bancorp, Inc.