Long Island’s Gold Coast Bancorp Reports 18 Percent Asset Growth in 2018

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 year ended December 31, 2018 of $2,158,000, or $0.55 per share compared with net income of $1,710,000,or $0.43 per share for the year ended December 31, 2017. Net income for the 2017 year reflected a one –time charge of $650,000 related to the downward revaluation of the company’s deferred tax assets resulting from the reduction of the U.S. corporate tax rate to 21%. This adjustment was recorded in the fourth quarter of 2017 upon enactment of the Tax Cuts and Jobs Act in December 2017. Adjusted for the impact of the deferred tax asset revaluation, net income totaled $2,360,000 for the year ended December 31, 2017, or $0.60 per share. Return on average assets and return on average equity was 0.42 percent and 5.08 percent, respectively, in 2018, compared to 0.37 percent and 4.10 percent in 2017, on an unadjusted basis.

Gold Coast reported net income of $732,000 for the quarter ended December 31, 2018, compared to a net loss of $266,000 for the same period in 2017. Net income in the 2017 fourth quarter was reduced by the aforementioned $650,000 charge. Adjusted to exclude the impact of the deferred tax asset revaluation, net income for the 2017 fourth quarter totaled $384,000. On a per share basis, Gold Coast reported net income of $0.19 per share compared to a net loss of ($0.07) per share in the prior year period. Excluding the reevaluation of the deferred tax asset, earnings per share in the fourth quarter of 2017 was $0.10 per share. Return on average assets and return on average equity was 0.52 percent and 6.51 percent, respectively, for the three months ended December 31, 2018, compared to (0.22) percent and (2.47) percent, respectively, for the three months ended December 31, 2017, on an unadjusted basis.

Total assets at December 31, 2018 were $556 million, an increase of $86 million, or 18 percent from total assets of $470 million at December 31, 2017. Total assets increased $14 million, or 3 percent from $542 million at September 30, 2018.

Deposits at December 31, 2018 totaled $478 million, an increase of $86 million, or 22 percent, compared with $ 392 million at December 31, 2017. Total deposits decreased modestly by $4 million from $482 million at September 30, 2018. Non-interest bearing demand deposits were 21 percent of the total deposit portfolio at December 31, 2018 compared to 25 percent of the total deposit portfolio at December 31, 2017 and 23 percent at September 30, 2018, respectively. FHLB borrowings were $20 million at both December 31, 2018 and 2017, respectively. There were no FHLB borrowings at September 30, 2018.

Total loans outstanding at December 31, 2018 were $446 million, an increase of $65 million, or 17 percent from $381 million at December 31, 2017 and an increase of $14 million, or 3 percent from $432 million at September 30, 2018. Loan originations and draws were $122 million in 2018 compared to $117 million in 2017, a 4 percent increase year over year. The bank experienced a 26 percent decrease in loan repayments and pay downs year over year at $57 million in 2018 compared to $77 million in 2017. Loan originations and draws were $34 million for the three months ended December 31, 2018, compared to $27 million for the same three month period in 2017. Loan repayments and pay downs were $20 million in the 2018 fourth quarter compared to $12 million in the same previous year quarter.

Asset quality continues to remain strong: The Bank had no nonperforming loans at December 31, 2018. Allowance for loan losses was 0.96 percent of total loans at December 31, 2018.

The Bank remained well –capitalized at December 31, 2018, with the following regulatory capital ratios:

- Tier 1 Leverage Capital Ratio of 10.61 percent

- Common Equity Tier 1 Risk-Based Capital and Tier 1 Risk-Based Capital Ratios of 14.09 percent

- Total Risk-Based Capital Ratio of 15.13 percent

At December 31, 2018 book value was $11.16 per share, increasing from $10.69 per share at December 31, 2017.

Net interest income grew $226,000, or 2 percent in 2018 compared to 2017, largely due to a 13 percent increase in average interest earning assets, partially offset by a decrease in the net interest margin to 2.77 percent in 2018 compared to 3.05 percent in 2017. Net interest income grew $146,000, or 4 percent for the three months ended December 31, 2018, compared to the same three month period in 2017, due to a 13 percent increase in average interest earning assets, partially offset by a decrease in the net interest margin to 2.72 percent in the most recent three month period compared to 2.93 percent in the 2017 three 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.

Non-interest income decreased $68,000, or 14 percent in 2018 compared to 2017 and decreased $23,000, or 22% in the fourth quarter of 2018 compared to the same period in 2017, largely due to a decrease in loan prepayment fees. Non-interest expense increased $657,000, or 6 percent in 2018 compared to 2017, largely due to an increase in compensation and benefits expense. Non-interest expense decreased $135,000, or 5 percent in the fourth quarter of 2018 compared with the same period of 2017.

John C. Tsunis, Chairman and CEO stated, “As reflected in our financial results for the past year, our team has been vigilant in our marketplace and prudently grew our loan portfolio with our best customers, increasing loan amounts where appropriate, while attracting new customers. We have grown through creditworthy loans and accompanied deposits. As with the entire financial sector, Gold Coast experienced an extraordinary 2018 due to severe rate competition for deposits, resulting in margin compression and an adverse impact on net interest income. Notwithstanding the decrease of the banking sector’s net interest margins, Gold Coast expanded its earning assets while maintaining its pristine loan quality, as reflected in NO NON PERFORMING LOANS as of December 31, 2018. We continue to attract a larger, more diversified and sophisticated customer base, with worthy and attractive properties in our footprint, sponsored by well known, experienced owners, developers and investors. We intend to stay the course in our market, continue to generate a growing portfolio of excellent loans, and reap the benefits as margins once again expand in the business cycle.”

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) up to applicable limits. 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 Statements of Condition (unaudited)
(dollars in thousands, except per share data)
		December 31,				September 30,				December 31,
		2018				2018				2017
ASSETS
Total cash and cash equivalents		$	38,377			$	41,568			$	21,343
Securities available for sale, at fair value			61,171				58,191				56,960
Securities held to maturity			8,624				8,390				8,437
Loans			446,116				431,954				381,452
Allowance for loan losses			(4,293	)			(4,201	)			(3,919	)
Loans, net			441,823				427,753				377,533
Premises and equipment, net			1,494				1,548				1,778
Other assets and accrued interest receivable			4,976				4,375				4,384
Total Assets		$	556,465			$	541,825			$	470,435
LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits		$	99,284			$	109,293			$	99,153
Savings, N.O.W. and money market deposits			231,632				237,330				221,383
Certificates of deposit and other time deposits			146,629				135,198				71,737
Total deposits			477,545				481,821				392,273
Borrowings			20,000				-				20,000
Subordinated notes, net			13,319				13,314				13,299
Other liabilities and accrued expenses			1,713				4,101				2,815
Total Liabilities			512,577				499,236				428,387
Total Stockholders' Equity			43,888				42,589				42,048
Total Liabilities and Stockholders' Equity		$	556,465			$	541,825			$	470,435
Selected Financial Data (unaudited)
Allowance for Loan Losses to Total Loans			0.96	%			0.97	%			1.03	%
Non-performing Loans to Total Loans			0.00	%			0.02	%			0.13	%
Non-performing Assets to Total Assets			0.00	%			0.02	%			0.11	%
Book Value per Share		$	11.16			$	10.83			$	10.69
Capital Ratios (unaudited) (1)
Tier 1 Leverage Ratio			10.61	%			10.74	%			11.39	%
Common Equity Tier 1 Risk-Based Capital Ratio			14.09	%			14.22	%			15.31	%
Tier 1 Risk-Based Capital Ratio			14.09	%			14.22	%			15.31	%
Total Risk-Based Capital Ratio			15.13	%			15.27	%			16.40	%
(1) Regulatory capital ratios presented on bank-only basis

Consolidated Statements of Operations (unaudited)
(dollars in thousands, except share and per share data)
		For the three months ended												For the year ended
		December 31,				September 30,				December 31,				December 31,				December 31,
		2018				2018				2017				2018				2017
Interest income			5,579				5,193				4,488			$	20,400			$	16,849
Interest expense			1,880				1,688				935				6,133				2,808
Net interest income			3,699				3,505				3,553				14,267				14,041
Provision for loan losses			88				276				119				444				233
Net interest income after provision for loan losses			3,611				3,229				3,434				13,823				13,808
Other income			128				84				105				429				497
Other expense			2,781				2,799				2,916				11,419				10,762
Income before income taxes			958				514				623				2,833				3,543
Income tax expense			226				123				889				675				1,833
Net income (loss)		$	732			$	391			$	(266	)		$	2,158			$	1,710
Basic earnings (loss) per share		$	0.19			$	0.10			$	(0.07	)		$	0.55			$	0.43
Diluted earnings (loss) per share		$	0.19			$	0.10			$	(0.07	)		$	0.55			$	0.43
Weighted average common and equivalent shares outstanding			3,931,634				3,931,634				3,931,634				3,931,634				3,931,634
Selected Financial Data (unaudited)
Return on Average Assets			0.52	%			0.29	%			(0.22	)%			0.42	%			0.37	%
Return on Average Equity			6.51	%			3.64	%			(2.47	)%			5.08	%			4.10	%
Net Interest Margin			2.72	%			2.66	%			2.93	%			2.77	%			3.05	%
Efficiency Ratio			72.67	%			77.99	%			79.72	%			77.70	%			74.03	%

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