Long Island’s Gold Coast Bancorp Reports 37% Earnings Growth in 2019

ISLANDIA, N.Y.–(BUSINESS WIRE)–Gold Coast Bancorp, Inc. (OTC:GLDT) (“Gold Coast”), the holding company for Gold Coast Bank, known as “Long Island’s Community Bank”sm, (the “Bank”) today reported net income for the quarter ended September 30, 2019 of $587,000, or $0.15 per diluted share compared with net income of $391,000, or $0.10 per diluted share for the quarter ended September 30, 2018. Return on average assets and return on average equity was 0.41 percent and 5.00 percent, respectively, in the third quarter of 2019, compared to 0.29 percent and 3.64 percent in the 2018 third quarter. The increase in net income was primarily due to a decrease in the provision for loan losses.

For the nine months ended September 30, 2019, Gold Coast earned $1,949,000, or $0.49 per diluted share compared with net income of $1,426,000, or $0.36 per diluted share for the same period in 2018. Return on average assets and return on average equity was 0.46 percent and 5.73 percent, respectively, for the nine months ended September 30, 2019, compared to 0.37 percent and 4.51 percent, respectively, for the nine months ended September 30, 2018. The increase in net income was primarily due to a decrease in salaries and employee benefits.

Total assets at September 30, 2019 were $562 million, an increase of $6 million, or 1 percent from total assets of $556 million at December 31, 2018. Total assets increased $20 million, or 4 percent from $542 million at September 30, 2018.

Deposits at September 30, 2019 totaled $463 million, a decrease of $15 million, or 3 percent from $478 million at December 31, 2018. The Bank repaid $20 million of higher cost broker deposits in September 2019 and replaced a portion with $10 million of lower cost FHLB borrowings. Deposits totaled $482 million at September 30, 2018. Non-interest bearing demand deposits were 19 percent of the total deposit portfolio at September 30, 2019, compared to 21 percent at December 31, 2018 and 23 percent at September 30, 2018, respectively. FHLB borrowings were $30 million at September 30, 2019 and $20 million at December 31, 2018. There were no FHLB borrowings at September 30, 2018.

Total loans outstanding at September 30, 2019 were $461 million, an increase of $15 million, or 3 percent from $446 million at December 31, 2018 and an increase of $29 million, or 7 percent from $432 million at September 30, 2018. Loan originations and draws were $14 million in the third quarter of 2019 and $37 million in the third quarter of 2018. The Bank experienced loan repayments and pay downs of $20 million in the third quarter of 2019 compared to $8 million in the third quarter of 2018. Loan originations and draws were $59 million in the nine months ended September 30, 2019 compared to $87 million in the nine months ended September 30, 2018. The Bank experienced loan repayments and pay downs of $44 million in the nine months ended September 30, 2019 compared to $37 million in the same period in 2018.

Asset quality continues to remain strong: The Bank had two non-performing residential 1-4 family loans totaling $2.8 million, or 0.61 percent of total loans at September 30, 2019. The allowance for loan losses was 0.99 percent of total loans at September 30, 2019.

The Bank remained well capitalized at September 30, 2019, with the following regulatory capital ratios:

– Tier 1 Leverage Capital Ratio of 10.4 percent

– Common Equity Tier 1 Risk-Based Capital and Tier 1 Risk-Based Capital Ratios of 14.2 percent

– Total Risk-Based Capital Ratio of 15.3 percent

At September 30, 2019 book value per share was $11.94, increasing from $11.16 per share at December 31, 2018 and $10.83 per share at September 30, 2018. Total shares outstanding increased to 3,934,387 due to the exercise of stock options.

Net interest income was $3.4 million in the third quarter of 2019 compared to $3.5 million in the third quarter of 2018, largely due to an 8 percent increase in average interest earning assets, offset by a decrease in the net interest margin to 2.41 percent in the third quarter of 2019 compared to 2.66 percent in the third quarter of 2018. Net interest income grew $19,000, or 0.2 percent for the nine months ended September 30, 2019, compared to the same nine month period in 2018, largely due to an 11 percent increase in average interest earning assets, partially offset by a decrease in the net interest margin to 2.52 percent in the most recent nine month period compared to 2.79 percent in the 2018 nine month period. The decrease in the bank’s net interest margin is largely due to an increase in the Bank’s cost of funds, primarily due to the increase in market interest rates.

There was no provision for loan losses in the third quarter of 2019 compared to $276,000 in the third quarter of 2018. The provision for loan losses for the nine months ended September 30, 2019 was $225,000 compared to $356,000 for the nine months ended September 30, 2018.

Non-interest income was $136,000 in the third quarter of 2019 compared to $84,000 in the third quarter of 2018. Non-interest income was $359,000 for the nine months ended September 30, 2019 compared to $301,000 for the nine months ended September 30, 2018. Non-interest expense increased $9,000, or 0.3 percent in the third quarter of 2019 compared to the third quarter of 2018, largely due to incurred expenses of $311,000 due to merger related costs, offset by a reduction in compensation and benefits of $177,000 and a reduction in FDIC expense of $79,000. Non-interest expense for the nine months ended September 30, 2019 decreased $466,000, or 5 percent, comprised primarily of a reduction in salaries and employee benefits of $580,000 due to the reduction of staff and a reduction in FDIC expense of $75,000.

On July 24, 2019, Gold Coast announced that it signed a definitive merger agreement with Investors Bancorp, Inc. (“Investors”) (NASDAQ:ISBC) under which Investors will acquire Gold Coast. Merger consideration will be paid to Gold Coast stockholders in a combination of stock and cash valued at $63.6 million, inclusive of outstanding dilutive securities and based on Investors’ closing price of $11.20 on July 23, 2019. The completion of the transaction is subject to Gold Coast’s stockholder approval and regulatory approvals. Subject to approvals, the transaction is expected to close in the early part of the first quarter of 2020.

John C. Tsunis, Chairman and CEO stated, “Gold Coast enjoyed a substantial increase in net income this past quarter! As closing of our pending merger approaches, there has been a substantial savings in the reduction of salaries and employee benefits and a lower provision for loan losses and FDIC insurance expenses for the quarter which all positively impacted our bottom line. Acknowledging the merger is fast approaching, we nonetheless continue to focus on our business, as our dedicated Gold Coast team continues to meet and service our customers. The fruits of these efforts will continue to be harvested in the future. Our management team appreciate and thank all who have made this possible. We look forward to the fourth quarter and consummation of the merger in early 2020.”

About Gold Coast Bancorp, Inc.

Gold Coast Bancorp, Inc. is the holding company for Gold Coast Bank. Headquartered in Islandia with additional branches located in Huntington, Setauket, Farmingdale, Mineola, Southampton and Brooklyn, Gold Coast Bank is a New York State chartered bank whose popularity and reputation stems from the strong, long-term relationships cultivated among its large and diverse customer base. The bank’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Gold Coast Bank prides itself on providing businesses and individuals with quality lending and banking services. Fulfilling a unique niche within our metropolitan New York trade area, Gold Coast Bank delivers specialty lending capabilities in a variety of areas that include real estate, equipment finance, and lines of credit for privately owned businesses.

For more information about Gold Coast Bancorp, Inc. and Gold Coast Bank, please visit www.gcbny.com. Our press releases, and other material information published by the Company and the Bank, may be found on our website under the tab “Investor Relations”.

Forward-Looking Statements

This news release contains certain forward-looking statements which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Consolidated Balance Sheets
(dollars in thousands, except per share data)
 

(unaudited)

(unaudited)

September 30,

December 31,

September 30,

2019

2018

2018

ASSETS
Total cash and cash equivalents

$

26,444

$

38,377

$

41,568

Securities available for sale, at fair value

 

60,243

 

61,171

 

58,191

Securities held to maturity

 

8,572

 

8,624

 

8,390

Loans

 

461,487

 

446,116

 

431,954

Allowance for loan losses

 

(4,575)

 

(4,293)

 

(4,201)

Loans, net

 

456,912

 

441,823

 

427,753

Premises and equipment, net

 

4,623

 

1,494

 

1,548

Other assets

 

5,444

 

4,976

 

4,375

Total assets

$

562,238

$

556,465

$

541,825

 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Non-interest bearing

$

89,375

$

99,284

$

109,293

Interest bearing

 

374,076

 

378,261

 

372,528

Total deposits

 

463,451

 

477,545

 

481,821

Borrowings

 

30,000

 

20,000

 

Subordinated debt, net

 

13,335

 

13,319

 

13,314

Other liabilities

 

8,494

 

1,713

 

4,101

Total Liabilities

 

515,280

 

512,577

 

499,236

Total Shareholders’ Equity

 

46,958

 

43,888

 

42,589

Total Liabilities and Shareholders’ Equity

$

562,238

$

556,465

$

541,825

 
 
Selected Financial Data (unaudited)
Allowance for loan losses to total loans

 

0.99%

 

0.96%

 

0.97%

Non-performing loans to total loans

 

0.61%

 

0.00%

 

0.02%

Book value per share

$

11.94

$

11.16

$

10.83

 
Capital Ratios (unaudited) (1)
Tier 1 leverage ratio

 

10.43%

 

10.58%

 

10.74%

Common equity Tier 1 risk-based capital ratio

 

14.21%

 

14.05%

 

14.22%

Tier 1 risk-based capital ratio

 

14.21%

 

14.05%

 

14.22%

Total risk-based capital ratio

 

15.29%

 

15.09%

 

15.27%

 
(1) Regulatory capital ratios presented on bank-only basis
 
 
Consolidated Statements of Income (unaudited)
(dollars in thousands, except share and per share data)
 
For the three months ended For the nine months ended
September 30, September 30, September 30, September 30,

2019

2018

2019

2018

Interest income

$

5,859

$

5,193

$

17,441

$

14,821

Interest expense

 

2,420

 

1,688

 

6,854

 

4,253

Net interest income

 

3,439

 

3,505

 

10,587

 

10,568

Provision for loan losses

 

 

276

 

225

 

356

Net interest income after provision for loan losses

 

3,439

 

3,229

 

10,362

 

10,212

Non interest income

 

136

 

84

 

359

 

301

Non interest expense

 

2,808

 

2,799

 

8,172

 

8,638

Income before income taxes

 

767

 

514

 

2,549

 

1,875

Income tax expense

 

180

 

123

 

600

 

449

Net income

$

587

$

391

$

1,949

$

1,426

 
Basic earnings per share

$

0.15

$

0.10

$

0.49

$

0.36

Diluted earnings per share

$

0.15

$

0.10

$

0.49

$

0.36

 
Selected Financial Data (unaudited)
Return on average assets

 

0.41%

 

0.29%

 

0.46%

 

0.37%

Return on average equity

 

5.00%

 

3.64%

 

5.73%

 

4.51%

Net interest margin

 

2.41%

 

2.66%

 

2.52%

 

2.79%

Efficiency ratio

 

78.55%

 

77.99%

 

74.66%

 

79.47%

 

 

Contacts

BANK CONTACT:
Catherine Califano, EVP-CFO

631-233-8640

ccalifano@gcbny.com

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