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Press Release

Long Island’s Gold Coast Bancorp Reports 23 Percent Deposit Growth and 13 Percent Loan Growth in 2018

Company Release - 10/22/2018 1:16 PM 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 September 30, 2018 of $391,000, or $0.10 per share compared with net income of $816,000, or $0.21 per share for the quarter ended September 30, 2017. Return on average assets and return on average equity was 0.29 percent and 3.64 percent, respectively, in the third quarter of 2018, compared to 0.69 percent and 7.68 percent in the 2017 quarter. The decrease in net income was largely due to increases in interest income being offset by interest expense on the Company’s Subordinated Debt and an increased cost of deposits, reflecting raising market rates, as well as an increase in the provision for loan losses associated with the growth of the portfolio.

For the nine months ended September 30, 2018, Gold Coast earned $1,426,000, or $0.36 per share compared with net income of $1,976,000, or $0.50 per share for the same period in 2017. Return on average assets and return on average equity was 0.37 percent and 4.51 percent, respectively, for the nine months ended September 30, 2018, compared to 0.58 percent and 6.38 percent, respectively, for the nine months ended September 30, 2017. The decrease in net income for the 2018 year to date period was the result of the same factors discussed for the quarterly results.

Total assets at September 30, 2018 were $542 million, an increase of $72 million, or 15 percent from total assets of $470 million at December 31, 2017. Total assets increased $65 million, or 14 percent from $477 million at September 30, 2017.

Deposits at September 30, 2018 totaled $482 million, an increase of $90 million, or 23 percent from $392 million at December 31, 2017. Deposits totaled $417 million at September 30, 2017. Non-interest bearing demand deposits were 23 percent of the total deposit portfolio at September 30, 2018, compared to 25 percent at December 31, 2017 and 24 percent at September 30, 2017, respectively. There were no FHLB borrowings outstanding at September 30, 2018 and 2017, respectively. The Bank repaid $20 million of FHLB borrowings in the third quarter of 2018 as a result of deposit growth. FHLB borrowings were $20 million at December 31, 2017.

Total loans outstanding at September 30, 2018 were $432 million, an increase of $51 million, or 13 percent from $381 million at December 31, 2017 and an increase of $67 million, or 18 percent from $365 million at September 30, 2017. Loan originations and draws were $37 million in the third quarter of 2018, an increase of $19 million, or 106 percent compared to $18 million in the third quarter of 2017. The Bank experienced loan repayments and pay downs of $8 million in the third quarter of 2018 compared to $17 million in the third quarter of 2017. Loan originations and draws were $87 million in the nine months ended September 30, 2018 compared to $90 million in the same period in 2017. The Bank experienced loan repayments and pay downs of $37 million in the nine months ended September 30, 2018, compared to $65 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 September 30, 2018. Allowance for loan losses was 0.97 percent of total loans at September 30, 2018.

The Bank remained well capitalized at September 30, 2018, with the following regulatory capital ratios:
- Tier 1 Leverage Capital Ratio of 10.7 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, 2018 book value per share was $10.83, increasing from $10.69 per share at December 31, 2017.

Net interest income was $3.5 million in the third quarter of 2018 compared to $3.7 million in the third quarter of 2017. The decrease was largely due to a decrease in the net interest margin to 2.66 percent in the third quarter of 2018 compared to 3.10 percent in the third quarter of 2017, partially offset by a 13 percent increase in average interest earning assets. 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, coupled with the recent increase in market interest rates which increased the Bank’s cost of deposits in the third quarter of 2018 compared to the same period in 2017. Net interest income grew $80,000 for the nine months ended September 30, 2018, compared to the same nine 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 2.79 percent in the most recent nine month period compared to 3.09 percent in the 2017 nine month period.

The provision for loan losses was $276,000 in the third quarter of 2018. There was no provision for loan losses required in the third quarter of 2017. The provision for loan losses for the nine months ended September 30, 2018 was $356,000 compared to $114,000 for the nine months ended September 30, 2017.

Non-interest income was $84,000 in the third quarter of 2018 compared to $152,000 in the third quarter of 2017. Non-interest income was $301,000 for the nine months ended September 30, 2018, compared to $392,000 for the nine months ended September 30, 2017. Non-interest expense increased $181,000, or 7 percent in the third quarter of 2018 compared to the third quarter of 2017, largely due to the addition of staff to support the bank’s expanded lending activities in the NYC metropolitan area. Non-interest expense for the nine months ended September 30, 2018 increased $792,000, or 10 percent also due to expansion of staff.

John C. Tsunis, Chairman and CEO stated, “Gold Coast has been digesting the planned expansion of our infrastructure as we recruit and engage quality and experienced bankers that have been attracted to our community/private banking model. We have deployed experienced credit trained personnel at our Brooklyn and Mineola branches to bring decision making relationship bankers closer to our markets, adding value and strengthening our customer relationships. The recent turmoil community banks have encountered as market interest rates rise and competition remains strong is an opportunity for Gold Coast to expand its market share. We believe the Gold Coast experience will bear dividends as our lending and underwriting process fast tracks our robust loan pipeline from application to the closing table, while accelerating interest income to our bottom line. Notwithstanding the intensity of competition for loans and deposits, we continue to believe in participating in the communities we serve, investing our local deposits into the local communities, which we believe will translate into incremental deposits and additional income to our bottom line in the fourth quarter 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)
September 30, December 31, September 30,
2018 2017 2017
ASSETS
Total cash and cash equivalents $ 41,568 $ 21,343 $ 54,244
Securities available for sale, at fair value 58,191 56,960 47,893
Securities held to maturity 8,390 8,437 7,456
Loans 431,954 381,452 365,031
Allowance for loan losses   (4,201 )   (3,919 )   (3,783 )
Loans, net 427,753 377,533 361,248
Premises and equipment, net 1,548 1,778 1,892
Other assets   4,375     4,384     4,093  
Total assets $ 541,825   $ 470,435   $ 476,826  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing $ 109,293 $ 99,153 $ 100,564
Interest bearing   372,528     293,120     316,531  
Total deposits 481,821 392,273 417,095
Borrowings - 20,000 -
Subordinated debt, net 13,314 13,299 13,298
Other liabilities   4,101     2,815     3,866  
Total Liabilities   499,236     428,387     434,259  
Total Shareholders' Equity   42,589     42,048     42,567  
Total Liabilities and Shareholders' Equity $ 541,825   $ 470,435   $ 476,826  
 
 
Selected Financial Data (unaudited)
Allowance for loan losses to total loans 0.97 % 1.03 % 1.04 %
Non-performing loans to total loans 0.02 % 0.13 % 0.41 %
Book value per share $ 10.83 $ 10.69 $ 10.83
 
Capital Ratios (unaudited) (1)
Tier 1 leverage ratio 10.74 % 11.39 % 11.68 %
Common equity Tier 1 risk-based capital ratio 14.22 % 15.31 % 15.83 %
Tier 1 risk-based capital ratio 14.22 % 15.31 % 15.83 %
Total risk-based capital ratio 15.27 % 16.40 % 16.92 %
 
(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,
2018 2017 2018 2017
Interest income $ 5,193 $ 4,357 $ 14,821 $ 12,361
Interest expense   1,688     676     4,253     1,873  
Net interest income 3,505 3,681 10,568 10,488
Provision for loan losses   276     -     356     114  
Net interest income after provision for loan losses 3,229 3,681 10,212 10,374
Non interest income 84 152 301 392
Non interest expense   2,799     2,618     8,638     7,846  
Income before income taxes 514 1,215 1,875 2,920
Income tax expense   123     399     449     944  
Net income $ 391   $ 816   $ 1,426   $ 1,976  
 
Basic earnings per share $ 0.10 $ 0.21 $ 0.36 $ 0.50
Diluted earnings per share $ 0.10 $ 0.21 $ 0.36 $ 0.50

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 0.29 % 0.69 % 0.37 % 0.58 %
Return on average equity 3.64 % 7.68 % 4.51 % 6.38 %
Net interest margin 2.66 % 3.10 % 2.79 % 3.09 %
Efficiency ratio 77.99 % 68.30 % 79.47 % 72.11 %
 

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

Source: Gold Coast Bancorp, Inc.

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