SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 1998
(January 21, 1998)
COAST SAVINGS FINANCIAL, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-10264 95-4196764
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(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
1000 Wilshire Boulevard
Los Angeles, California 90017-2457
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 362-2000
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Not Applicable
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(former name or former address, if changed since last report)
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Item 5. Other Events.
On January 21, 1998, Coast Savings Financial, Inc. ("Coast")
issued a press release announcing its earnings results for the
period October 1, 1997 to December 31, 1997 and the year ended
December 31, 1997. The press release issued by Coast on January
21, 1998 is included as Exhibit 99.1 hereto and is incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
99.1 Press Release issued by Coast Savings Financial, Inc.
on January 21, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: January 21, 1998
COAST SAVINGS FINANCIAL, INC.
(Registrant)
By: /s/ Ray Martin
----------------------
Name: Ray Martin
Title: Chairman of the Board
and Chief Executive Officer
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EXHIBIT INDEX
99.1 Press Release issued by Coast Savings Financial, Inc.
on January 21, 1998.
[Coast Savings Logo] NEWS RELEASE
Contact: Mark Neal FOR RELEASE ON WEDNESDAY,
(213) 362-2242 JANUARY 21, 1998 AT 8:45 AM EDT
COAST ANNOUNCES RECORD CORE AND NET EARNINGS
Los Angeles, January 21, 1998 -- Coast Savings Financial,
Inc. (NYSE & PSE: CSA), the holding company of Coast Federal
Bank, FSB, reported today that net earnings were $12.1 million
for the quarter ended December 31, 1997, compared to $9.6 million
for the fourth quarter of 1996. Diluted net earnings per share
were $.62 for the latest quarter, compared to $.51 per share for
the year-earlier period. The latest quarter's results include an
after-tax charge of $4.5 million or $.23 per diluted share
associated with stock performance-based incentive plans.
The Company's net earnings for the year ended December 31,
1997 were a record $57.2 million or $2.97 per diluted share,
compared to $10.8 million or $.57 for the year ended December 31,
1996. Net earnings for 1997 include a one-time tax benefit of
$9.0 million or $.47 per diluted share and an after-tax charge of
$7.8 million or $.41 per diluted share resulting from the
significant stock price increase associated with the previously
announced proposed merger with H.F. Ahmanson & Company. Net
earnings for 1996 included an after-tax charge of $23.5 million
or $1.24 per diluted share related to the one-time special
assessment to recapitalize the industry's Savings Association
Insurance Fund.
"The past year was marked by several significant
developments," stated Ray Martin, chairman and chief executive
officer. "The Company reported record core and net earnings for
the year. In addition, the Company's improved asset quality and
the strengthening California economy led to the lowest level of
non-performing assets and credit costs in nearly a decade."
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<PAGE>
As of December 31, 1997, Coast's core and risk-based
capital ratios were 6.0 and 12.3 percent, respectively, each of
which exceeded the regulatory thresholds necessary to be
designated a "well capitalized" institution.
Nonperforming assets (defined as the sum of nonaccrual
loans and foreclosed real estate owned) were $99.3 million or
1.12 percent of assets at December 31, 1997, compared to $124.1
million or 1.43 percent of assets at December 31, 1996.
Loan originations for the fourth quarter of 1997 totaled
$397 million, essentially all of which were single family
adjustable rate mortgages. At December 31, 1997, Coast had 98
percent of its portfolio in adjustable rate loans, and its
one-year gap ratio - a measure of interest rate exposure - was a
positive 3 percent.
Coast's net interest rate spread - the difference between
the yield on interest-earning assets and the cost of
interest-bearing liabilities - was 2.41 percent at December 31,
1997, compared to 2.35 percent as of December 31, 1996. Net
interest income reached an all time high of $56.2 million for the
latest quarter compared to the $53.8 million recorded during the
quarter ended December 31, 1996.
As a result of the substantial increase in Coast's stock
price associated with the proposed merger and other market
developments, the fourth quarter's results include a $7.7 million
charge to reflect the increased liability associated with the
Company's stock performance-based incentive plans. Excluding this
charge, operating expenses were $36.7 million for the three
months ended December 31, 1997, compared to $38.1 million for the
three-month period ended December 31, 1996.
The total of loan servicing fees and charges and retail
banking fees was $13.4 million for the latest three months,
compared to $12.2 million for the year-earlier quarter.
As a result of the items summarized above, Coast's pretax
core profitability (defined as net interest income before
provision for loan losses less operating expenses plus loan
servicing fees and charges and the recurring portion of other
income) reached a record high of $32.9 million for the latest
quarter compared to
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$27.8 million recorded during the three-month period ended
December 31, 1996. Core earnings for the year were a record
$126.0 million compared to $108.7 million for the year earlier.
Stockholders' equity increased to $510.2 million or $26.27
per share at December 31, 1997, compared to $424.5 million or
$22.84 per share at December 31, 1996. Tangible stockholders'
equity was $505.1 million or $26.01 per share at the end of the
latest quarter, compared to $418.3 million or $22.51 per share
at September 30, 1996.
Coast Savings Financial, Inc., is the holding company of
Coast Federal Bank, FSB. With assets of $8.8 billion, Coast is
one of the nation's largest thrift institutions and provides
consumer banking services and residential real estate loans
through 91 retail banking offices located throughout California.
###
(Tables follow)
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COAST SAVINGS FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Financial Highlights (Unaudited)
(dollars in thousands)
December 31, December 31,
1997 1996
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Assets
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Cash and due from banks $ 142,811 $ 138,861
Investment securities 183,855 234,628
Loans receivable 5,946,644 5,856,107
Mortgage-backed securities 2,180,334 2,043,270
Real estate held for sale 43,174 41,259
Federal Home Loan Bank stock 101,120 90,882
Land and depreciable assets 83,940 95,010
Interest receivable and other assets 156,346 198,697
Goodwill 5,182 6,238
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$ 8,843,406 $ 8,704,952
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Liabilities and Stockholders' Equity
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Liabilities:
Deposits $ 6,418,194 $ 6,356,448
Federal Home Loan Bank advances 1,321,500 1,104,200
Other borrowings 469,803 699,518
Income taxes 7,830 4,747
Other liabilities 115,836 115,508
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8,333,163 8,280,421
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Stockholders' equity:
Common stock 194 186
Additional paid-in capital 293,423 265,055
Unrealized gain on securities
available for sale 2,887 2,778
Retained earnings 213,739 156,512
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510,243 424,531
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$ 8,843,406 $ 8,704,952
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Regulatory Capital Ratios
Risk-based 12.29% 10.90%
Core 5.96 5.33
Tangible 5.96 5.33
============== ==============
Weighted Average Interest Rates
Loans receivable and mortgage-
backed securities 7.33% 7.30%
Investment securities 6.07 6.25
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Interest-earning assets 7.29 7.25
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Deposits 4.50 4.59
Borrowings 6.25 6.03
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Interest-bearing liabilities 4.88 4.90
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Net spread 2.41% 2.35%
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One Year Gap (the cumulative
difference between repricing
assets and liabilities) to
total assets 3% 6%
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COAST SAVINGS FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Financial Highlights (Unaudited)
(dollars in thousands except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
1997 1996 1997 1996
---- ---- ---- ----
Interest income:
Loans and mortgage-backed
securities $ 153,217 $ 147,973 $ 608,744 $ 582,240
Investment securities 5,945 5,586 23,837 21,210
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159,162 153,559 632,581 603,450
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Interest expense:
Deposits 73,933 73,027 294,095 285,764
Borrowings 29,034 26,768 116,045 102,886
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102,967 99,795 410,140 388,650
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Net interest income 56,195 53,764 222,441 214,800
Provision for loan losses 4,000 40,000 25,000 70,000
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Net interest income
after provision for
loan losses 52,195 13,764 197,441 144,800
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Noninterest Income:
Loan servicing fees and
charges 2,858 3,000 11,787 12,671
Other 10,591 9,247 39,099 37,434
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13,449 12,247 50,886 50,105
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Noninterest expense:
General and administrative
expenses 44,463 38,099 160,861 158,601
SAIF special assessment - - - 41,978
Real estate operations, net 68 508 3,260 3,881
Amortization of goodwill 259 270 1,056 1,094
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44,790 38,877 165,177 205,554
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Earnings (loss) before
income tax expense
(benefit) 20,854 (12,866) 83,150 (10,649)
Income tax expense (benefit) 8,759 (22,505) 25,923 (21,485)
--------- ---------- ---------- ---------
Net earnings $ 12,095 $ 9,639 $ 57,227 $ 10,836
========= ========== ========== =========
Diluted earnings per share of
common stock $ 0.62 $ 0.51 $ 2.97 $ 0.57
========= ========== ========== =========
Shares of common stock outstanding at end of period 19,420,931 18,584,717
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
COAST SAVINGS FINANCIAL, INC. AND SUBSIDIARIES
NONPERFORMING ASSETS
(dollars in thousands)
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
1997 1997 1997 1997 1996 1996 1996 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Nonaccrual loans $ 56,079 $ 64,727 $ 78,738 $ 81,799 $ 82,804 $ 80,742 $ 74,620 $ 93,288 $ 81,351
Foreclosed real
estate owned 43,174 46,886 49,112 36,371 41,259 50,286 57,762 39,999 31,696
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Nonperforming
assets $ 99,253 $ 111,613 $ 127,850 $ 118,170 $ 124,063 $ 131,028 $ 132,382 $ 133,287 $ 113,047
========== ========== ========== ========== ========== ========== ========== ========== ==========
General valuation
allowance (GVA) $ 93,000 $ 93,000 $ 93,000 $ 93,000 $ 93,000 $ 73,000 $ 73,000 $ 82,000 $ 82,000
========== ========== ========== ========== ========== ========== ========== ========== ==========
Total assets $8,843,406 $9,040,413 $9,102,743 $8,797,075 $8,704,952 $8,549,032 $8,350,710 $8,239,880 $8,251,680
========== ========== ========== ========== ========== ========== ========== ========== ==========
Ratio of
nonperforming
assets to
total assets 1.12% 1.23% 1.40% 1.34% 1.43% 1.53% 1.59% 1.62% 1.37%
========== ========== ========== ========== ========== ========== ========== ========== ==========
Ratio of GVA to
nonperforming
assets 94% 83% 73% 79% 75% 56% 55% 62% 73%
========== ========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>
