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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 March 31, 2004
   
 [    ]  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 by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). [ X ]

Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date.

Common Stock Outstanding: 5,297,692 as of April 23, 2004

 
     
 
Coastal Bancorp, Inc. and Subsidiaries
Form 10-Q
Table of Contents


Part I.   Financial Information
 
Item 1
Financial Statements (unaudited)
 
 
Consolidated Statements of Financial Condition at March 31, 2004 and December 31, 2003
1
 
 
 
 
Consolidated Statements of Income for the Three-Month Periods Ended March 31, 2004 and 2003
2
 
 
 
 
Consolidated Statements of Comprehensive Income for the Three-Month Periods Ended
March 31, 2004 and 2003
 
3
 
 
 
 
Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2004 and 2003
4
 
 
 
 
Notes to Consolidated Financial Statements
6
 
 
 
Item 2
Management's Discussion and Analysis of Financial Condition and Results of Operations
16
 
 
 
Item 3
Quantitative and Qualitative Disclosures About Market Risk
20
 
 
 
Item 4
Controls and Procedures
20





Part II.   Other Information



 
 
 
Item 1
Legal Proceedings
21
 
 
 
Item 2
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
21
 
 
 
Item 3
Defaults upon Senior Securities
21
 
 
 
Item 4
Submission of Matters to a Vote of Security Holders
21
 
 
 
Item 5
Other Information
21
 
 
 
Item 6
Exhibits and Reports on Form 8-K
21



Signatures



i


     

Item 1. FINANCIAL STATEMENTS
  
 
 
      
 
  
 
 
COASTAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, except share data)
 
  
 
 
   
March 31,
    
December 31,
  
 
    
2004
    
2003
  
   
 
 
   
(Unaudited)
    
 
  
ASSETS
    
 
    
 
  
              
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, net (note 4)
    
1,967,328
   
1,981,924
 
Mortgage-backed securities available-for-sale, at fair value (note 3)
    
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 (note 5)
  
$
1,680,116
  
$
1,676,131
  
Advances from the FHLB (note 6)
    
801,512
   
799,875
 
Subordinated debentures (note 7)
    
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 (note 4)
    
-
    
-
 
 
    
 
    
 
  
Stockholders' equity (notes 1, 3, 8, 9 and 10):
    
 
    
 
  
Common stock, $.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) - net 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
  
   
 
 
 
    
 
    
 
  
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
       
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 (note 4)
    
 
    
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, net
    
 
    
114
   
(130
)
Gain (loss) on sale of repossessed assets, net
    
 
    
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 common share (note 8)
        
$
0.78
  
$
0.59
  
         
 
 
Diluted earnings per common share (note 8)
        
$
0.75
  
$
0.57
  
         
 
 
 
    
 
    
 
    
 
  
See accompanying Notes to Consolidated Financial Statements
    
 
    
 
    
 
  
 
    
 
    
 
    
 
  
 
    
 
    
 
    
 
  
 
    
 
    
&