SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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) MARCH 31, 1999
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COASTAL BANCORP, INC.
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(Exact name of registrant as specified in charter)
TEXAS 0-24526 76-0428727
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
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5718 WESTHEIMER, SUITE 600, HOUSTON, TEXAS . . . . 77057
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(Address of Principal executive offices) . . . . . (Zip Code)
Registrant's telephone number including area code. (713) 435-5000
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(Former name or former address, if changed since last report) -- Not applicable
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ITEM 5. OTHER EVENTS.
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On August 11, 1998, Coastal Bancorp, Inc. ("Coastal") purchased a $10.0 million
participation in a warehouse loan aggregating $25.0 million to MCA Financial
Corp., and certain of its affiliates, of Southfield, Michigan (collectively the
"Mortgage Banker"). The lead lender ("Lead Lender") in this facility is a major
commercial bank and the loan is secured by subprime residential loans. In late
January 1999, due to a lack of liquidity, the Mortgage Banker ceased operations
and shortly thereafter was seized by the Michigan Bureau of Financial
Institutions. A conservator was appointed to take control of the Mortgage
Banker's books and records, marshal that company's assets and continue its loan
servicing operations. A voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code was filed in the U.S. Bankruptcy Court for the Eastern District
of Michigan for the Mortgage Banker on or about February 11, 1999, by the
conservator, who has been appointed the "debtor-in-possession," to allow the
conservator time to develop a plan of reorganization while protecting the assets
of the Mortgage Banker.
Coastal has hired special bankruptcy counsel to represent it in this situation
and has been involved in discussions with the Lead Lender regarding the status
of the loan. Although Coastal has been informed by the Lead Lender that
Coastal's loan is collateralized by residential loans, the Bank, as of the date
hereof, has been unable to verify the extent to which the collateral, if any, is
sufficient to prevent Coastal from incurring a loss. Coastal has put this loan
on nonaccrual and has allocated $1.5 million of the loan loss reserve to this
loan. At this time, Coastal is unable to determine the timing, probability, or
the amount of any loss which might result from the default by the Mortgage
Banker.
However, on March 31, 1999 Coastal stated that it had taken loan loss reserves
for the three months ended March 31, 1999, on this transaction. Coastal accrued
loan loss reserves for such period in the amount of approximately $800,000,
which represents approximately 8 cents per fully diluted common share.
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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.
COASTAL BANCORP, INC.
/s/ Catherine N. Wylie Date: March 31, 1999
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by: Catherine N. Wylie
Executive Vice President/
Chief Financial Officer
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