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Press Release

Long Island’s Gold Coast Bancorp Reports 7% Deposit and 5% Loan Growth in 2018

Company Release - 7/18/2018 9:00 AM ET

ISLANDIA, N.Y.--(BUSINESS WIRE)-- Gold Coast Bancorp, Inc. (OTC:GLDT) (“Gold Coast”), the holding company of Gold Coast Bank, known as “Long Island’s Community Bank”sm, (the”Bank”) today reported net income for the quarter ended June 30, 2018 of $504,000, or $0.13 per share compared with net income of $645,000, or $0.16 per share for the quarter ended June 30, 2017. Return on average assets and return on average equity was 0.40 percent and 4.76 percent, respectively, in the second quarter of 2018, compared to 0.57 percent and 6.24 percent in the 2017 second quarter. The decrease in net income was largely due to increases in staff to support the Bank’s growth, which was facilitated by the Company’s Subordinated Debt offering in September 2017.

For the six months ended June 30, 2018, Gold Coast earned $1,035,000, or $0.26 per share compared with net income of $1,160,000, or $0.29 per share for the same period in 2017. Return on average assets and return on average equity was 0.42 percent and 4.69 percent, respectively, for the six months ended June 30, 2018, compared to 0.53 percent and 5.70 percent, respectively, for the six months ended June 30, 2017. The decrease in net income in 2018, resulting from the Bank’s expansion, was partially offset by an increase in net interest income during the period.

Total assets at June 30, 2018 were $498 million, an increase of $28 million, or 6 percent from total assets of $470 million at December 31, 2017. Total assets increased $36 million, or 8 percent from $462 million at June 30, 2017.

Deposits at June 30, 2018 totaled $420 million, an increase of $28 million, or 7 percent from $392 million at December 31, 2017. Deposits totaled $417 million at June 30, 2017. Non-interest bearing demand deposits were 23 percent of the total deposit portfolio at June 30, 2018, compared to 25 percent at both December 31, 2017 and June 30, 2017, respectively. FHLB borrowings were $20 million at both June 30, 2018 and December 31, 2017, respectively. There were no FHLB borrowings outstanding at June 30, 2017.

Total loans outstanding at June 30, 2018 were $402 million, an increase of $21 million, or 6 percent from $381 million at December 31, 2017 and an increase of $37 million, or 10 percent from $365 million at June 30, 2017. Loan originations and draws were $19 million in the second quarter of 2018, compared to $41 million in the second quarter of 2017. The Bank experienced loan repayments and pay downs of $8 million in the second quarter of 2018 compared to $20 million in the second quarter of 2017. Loan originations and draws were $50 million in the six months ended June 30, 2018 compared to $72 million in the same period in 2017. The Bank experienced loan repayments and pay downs of $29 million in the six months ended June 30, 2018, compared to $48 million in the same period in 2017. The decrease in loan originations and repayments in 2018 was largely due to the decrease in refinancing activity due to the recent increase in market interest rates.

Asset quality continues to remain strong: The Bank’s nonperforming loans were 0.02 percent of gross loans at June 30, 2018. Allowance for loan losses was 0.98 percent of total loans at June 30, 2018.

The Bank remained well capitalized at June 30, 2018, with the following regulatory capital ratios:
- Tier 1 Leverage Capital Ratio of 11.1 percent
- Common Equity Tier 1 Risk-Based Capital and Tier 1 Risk-Based Capital Ratios of 15.1 percent
- Total Risk-Based Capital Ratio of 16.2 percent

At June 30, 2018 book value per share was $10.80, increasing from $10.69 per share at December 31, 2017 and $10.61 per share at June 30, 2017.

Net interest income was $3.5 million in both the second quarter of 2018 and 2017, respectively, largely due to an 11 percent increase in average interest earning assets, offset by a decrease in the net interest margin to 2.78 percent in the second quarter of 2018 compared to 3.08 percent in the second quarter of 2017. The decrease in the net interest margin is largely due to an increase in the cost of funds, primarily due to the issuance of $13.5 million of 6.50% subordinated notes on September 29, 2017. Net interest income grew $256,000, or 4 percent for the six months ended June 30, 2018, compared to the same six month period in 2017, largely due to a 13 percent increase in average interest earning assets, partially offset by a decrease in the net interest margin to 2.86 percent in the most recent six month period compared to 3.12 percent in the 2017 six month period. The decrease in the net interest margin in the 2018 six month period was also largely due to the interest expense associated with the Company’s subordinated notes.

There was no provision for loan losses required in the second quarter of 2018 compared to $114,000 in the second quarter of 2017. The provision for loan losses for the six months ended June 30, 2018 was $80,000 compared to $114,000 for the six months ended June 30, 2017.

Non-interest income was $110,000 in the second quarter of 2018 compared to $141,000 in the second quarter of 2017. Non-interest income was $217,000 for the six months ended June 30, 2018, compared to $240,000 for the six months ended June 30, 2017. Non-interest expense increased $306,000, or 12 percent in the second quarter of 2018 compared to the second quarter of 2017, largely due to the opening of the Bank’s newest branch in Brooklyn and the addition of staff to support the bank’s expanded lending activities in the NYC metropolitan area. Non-interest expense for the six months ended June 30, 2018 increased $611,000, or 12 percent also due to expansion of staff.

John C. Tsunis, Chairman and CEO stated, “Gold Coast is digesting the planned expansion of our personnel infrastructure as we recruit and engage quality and experienced bankers from money center banks that have been attracted to our community/private banking model. We have installed credit trained personnel at our Brooklyn and Setauket branches to bring relationship bankers closer to our markets, encouraging our borrowing customers to include us as a team member adding value while strengthening our relationship. These opportunities are critical as all community banks in our markets have encountered compressed loan margins due to higher deposit costs as well as intense pressure on lending rates for quality loans. We believe the Gold Coast experience will bear dividends as our lending and underwriting process fast track our loan pipeline to the closing table, accelerating interest income to our bottom line. Notwithstanding the intensity of competition for loans and deposits, we believe in participating in the communities we serve, Gold Coast’s current pipeline of quality loans and mortgages will translate to additional income to our bottom line in the third and fourth quarters of 2018. “

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)
June 30, December 31, June 30,
2018 2017 2017
ASSETS
Total cash and cash equivalents $ 27,571 $ 21,343 $ 38,765
Securities available for sale, at fair value 57,209 56,960 48,158
Securities held to maturity 8,406 8,437 7,468
Loans 402,336 381,452 364,828
Allowance for loan losses   (3,956 )   (3,919 )   (3,547 )
Loans, net 398,380 377,533 361,281
Premises and equipment, net 1,633 1,778 1,984
Other assets   4,703     4,384     4,417  
Total assets $ 497,902   $ 470,435   $ 462,073  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing $ 97,698 $ 99,153 $ 105,827
Interest bearing   321,863     293,120     311,589  
Total deposits 419,561 392,273 417,416
Borrowings 20,000 20,000 -
Subordinated debt, net 13,309 13,299 -
Other liabilities   2,571     2,815     2,954  
Total Liabilities   455,441     428,387     420,370  
Total Shareholders' Equity   42,461     42,048     41,703  
Total Liabilities and Shareholders' Equity $ 497,902   $ 470,435   $ 462,073  
 
 
Selected Financial Data (unaudited)
Allowance for loan losses to total loans 0.98 % 1.03 % 0.97 %
Non-performing loans to total loans 0.02 % 0.13 % 0.22 %
Book value per share $ 10.80 $ 10.69 $ 10.61
 
Capital Ratios (unaudited) (1)
Tier 1 leverage ratio 11.10 % 11.39 % 9.19 %
Common equity Tier 1 risk-based capital ratio 15.14 % 15.31 % 11.99 %
Tier 1 risk-based capital ratio 15.14 % 15.31 % 11.99 %
Total risk-based capital ratio 16.21 % 16.40 % 13.00 %
 
(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 six months ended
June 30, June 30, June 30, June 30,
  2018     2017     2018     2017  
Interest income $ 4,831 $ 4,099 $ 9,628 $ 8,004
Interest expense   1,361     627     2,565     1,197  
Net interest income 3,470 3,472 7,063 6,807
Provision for loan losses   -     114     80     114  
Net interest income after provision for loan losses 3,470 3,358 6,983 6,693
Non interest income 110 141 217 240
Non interest expense   2,918     2,612     5,839     5,228  
Income before income taxes 662 887 1,361 1,705
Income tax expense   158     242     326     545  
Net income (loss) $ 504   $ 645   $ 1,035   $ 1,160  
 
Basic earnings (loss) per share $ 0.13 $ 0.16 $ 0.26 $ 0.29
Diluted earnings (loss) per share $ 0.13 $ 0.16 $ 0.26 $ 0.29
Weighted average common and equivalent
shares outstanding 3,931,634 3,931,634 3,931,634 3,931,634
 
Selected Financial Data (unaudited)
Return on average assets 0.40 % 0.57 % 0.42 % 0.53 %
Return on average equity 4.76 % 6.24 % 4.69 % 5.70 %
Net interest margin 2.78 % 3.08 % 2.86 % 3.12 %
Efficiency ratio 81.51 % 72.29 % 80.21 % 74.19 %
 

Gold Coast Bancorp, Inc.
Catherine Califano, 631-233-8640
EVP-CFO
ccalifano@gcbny.com

Source: Gold Coast Bancorp, Inc.

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