Coastal Financial Corporation · NASDAQ:CCB
Coastal Financial — Q3 2021 Earnings Presentation
33 slides from Coastal Financial's earnings presentation, Oct 27, 2021
Slide 1: Investor Presentation
October 27, 2021 INVESTOR PRESENTATION Exhibit 99.2
Slide 2: Legal Information and Disclaimer
LEGAL INFORMATION AND DISCLAIMER This presentation and oral statements made regarding the subject of this presentation contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Coastal Financial Corporation
Slide 3: Three Prong Long-Term Strategy
THREE PRONG LONG-TERM STRATEGY Driving Long-Term Value for Shareholders 3-Prong Strategy “CFC” The Community Bank “CCB” Provide Banking as a Service (BaaS) “CCBX” Coastal’s Digital Bank “CCDB” Compliance Operational Integrity No matter how we talk to our customers or what type of customer, Complianc
Slide 4: CFC Financial Highlights
Core Deposits (4) CFC FINANCIAL HIGHLIGHTS - As of and for the Quarter ended September 30, 2021 Total Assets Note: Annual data as of or for the year ended December 31 of each respective year Total Loans Net Income Tangible equity to tangible assets is a non-GAAP measure. Since there is no goodwill o
Slide 5: Coastal Community Bank company overview
Coastal Community Bank was established in 1997 with a focus on serving small to medium-sized businesses within the Puget Sound region. Headquarters Everett, Washington – the largest city in and county seat of Snohomish County Branches 14 full-service banking locations 12 in Snohomish County 1 in Isl
Slide 6: COVID-19 Response – PPP Loans
COVID-19 RESPONSE – PPP LOANS PPP loans: We funded a total of $763.9 million in assistance to existing and new small business customers in 2020 and 2021 As of September 30, 2021, we have $267.3 million in PPP loans outstanding Repaid the Paycheck Protection Program Liquidity Facility (“PPPLF”) as of
Slide 7: COVID-19 Response – PPP Loans: PPP Balances Over Time
COVID-19 RESPONSE – PPP LOANS PPP Balances Over Time
Slide 8: COVID-19 Response – Loan Modifications
COVID-19 RESPONSE – LOAN MODIFICATIONS Status of All Deferred or Modified Loans All loans that were deferred of modified have returned to active status or paid off as of September 30, 2021. We have had no charge-offs, repossessions, or moves to TDR as a result of this program. Total of $246.4 millio
Slide 9: CCB Core Markets – Snohomish County
CCB CORE MARKETS – SNOHOMISH COUNTY Largest Locally HQ’d Bank in Snohomish County Notable Employers Source: S&P Global Market Intelligence; FDIC’s Summary of Deposits as of June 30, 2021 (2) Puget Sound Region Snohomish County Branch Statistics (1) (1)
Slide 10: CFC Loan and Deposit Growth
CFC LOAN AND DEPOSIT GROWTH Loan Growth of $158.5 million or 10.2% from December 31, 2020 Deposit Growth of $802.2* million or 56.4% from December 31, 2020 (Dollars in thousands) (Dollars in thousands) CCBX Deposit Growth of $339.8* million or 127.1% from December 31, 2020 Low 0.03% Nonperforming Lo
Slide 11: CFC Loan Composition
CFC LOAN COMPOSITION Loan Composition Loan Concentrations by County Overall Loan Portfolio 2.70 years weighted average reprice 6.46 years weighted average maturity Commercial & Industrial (“C&I”) Portfolio $536.9 million total C&I loans $267.3 million in PPP Small Business Administration (“SBA”) C&I
Slide 12: CFC Deposit Composition
CFC DEPOSIT COMPOSITION Deposit Composition Core Deposit Driven Funding Emphasis on core deposits has helped generate an attractive funding mix Core Deposit Franchise Core deposits are all deposits excluding time deposits and brokered deposits Core deposits were 126.0% of total loans as of September
Slide 13: Strong Asset Quality
STRONG ASSET QUALITY Asset Quality Trends NPAs / Assets (%), NPLs / Loans (%) and NCOs / Avg. Loans (%) Allowance for Loan Losses (“ALLL”) / NPLs (%) Note: Data as of and for the year ended December 31 of each respective year unless noted otherwise
Slide 14: Historic Profitability and Efficiency
HISTORIC PROFITABILITY AND EFFICIENCY Net Income and Return on Average Assets (average assets for QE September 30, 2021 includes $322.6 million in average PPP loans) Net Income ($mm) Efficiency Ratio (%) and Noninterest Expense (“NIE”) to Average Assets (%) (average assets for QE September 30, 2021
Slide 15: CFC Quarterly Results
CFC QUARTERLY RESULTS 3Q 2021 Financial Results: Includes $267.3 million in PPP loans at September 30, 2021 and $365.8 million in PPP loans at December 31, 2020. Pre-Tax, Pre-Provision return on average assets is a non-GAAP measure that excludes the impact of the provision for income taxes and loan
Slide 16: CCBX Partner and Revenue Growth
CCBX PARTNER AND REVENUE GROWTH Baas Fees increased $862,000, or 60.5%, to $2.3 million for the three months ended September 30, 2021, compared to $1.4 million for the three months ended June 30, 2021 BaaS Fees includes $306,000 in fraud loss reimbursement and credit enhancement recovery for the thr
Slide 17: CCBX Loans and Deposits
CCBX Loans and Deposits Deposit growth of $339.8 million, or 127.1%, as of September 30, 2021, compared to June 30, 2021, and $538.5 million, or 784.0%, compared to December 31, 2020 Access to $331.1 million in CCBX deposits that are swept off the balance sheet as of September 30, 2021 As of Septemb
Slide 18: Robust Sourcing Capabilities and Partnering
ROBUST SOURCING CAPABILITIES AND PARTNERING Thesis-Driven Sourcing Focused points of view and research with experts Proactive market mapping and product identification Diversity and inclusion Intensive Filtering Visionary management teams Strong execution teams Compelling unit economics Bankable siz
Slide 19: Fintech Company Stage
FINTECH COMPANY STAGE Seed Early Mid/Expansion Late/Mezzanine Exit Venture Investors Early–Stage: Between Seed and Series A: Partner with companies early and obtain long term loyal relationships Growth Company Stage Fintech’s Time Horizon 3 – 5 years in business Years 5 - 15 Debt Financing Later–Sta
Slide 20: Hiring to build infrastructure for new partners
We continue to hire staff to build our infrastructure for the addition of new partners. The investments we are making today are not for immediate returns but for longer-term returns that we believe will build value for shareholders while benefiting our customers, employees, and communities that we s
Slide 21: Banking as a Service and Financial Inclusion
BANKING AS A SERVICE AND FINANCIAL INCLUSION Flexibility Started with belief that being flexible while holding our partners to strong compliance and regulatory standards would benefit both the fintech and their customers. Changing Environment We also believed that the partnerships would better help
Slide 22: Strong Commitment to Diversity & Inclusion
STRONG COMMITMENT TO DIVERSITY & INCLUSION Diversity and inclusion has been incorporated throughout our partnering process including: Financial literacy for at-risk communities Underserved and under-represented minority communities Small dollar lending programs for underserved communities Environmen
Slide 23: Audiences Served by CCBX Fintech Partners
AUDIENCES SERVED BY CCBX FINTECH PARTNERS Coastal Young Adults ESG Immigrants Underserved Small Business Black Women Latinx Asian Muslim
Slide 24: Looking Forward
Looking Forward CCB Continuing to build and strengthen relationships in the communities we serve Expect PPP forgiveness payments to continue through the second quarter of 2022 CCBX Anticipates new relationships will be added in fourth quarter 2021 Anticipates more existing partners/relationships to
Slide 25: Appendix
APPENDIX [COASTAL
Slide 26: CFC Selected Year-End Financials
CFC SELECTED YEAR-END FINANCIALS Refer to “Non-GAAP Reconciliation” in this Appendix for additional details. Share and per share amounts are based on total common shares outstanding, which includes common stock. Tangible book value per share is a non-GAAP measure. Since there is no goodwill or other
Slide 27: CFC Selected Quarterly Financials
CFC SELECTED QUARTERLY FINANCIALS Core deposits are defined as all deposits excluding time and brokered deposits. Share and per share amounts are based on total common shares outstanding, which includes common stock and nonvoting common stock. Tangible book value per share is a non-GAAP measure. Sin
Slide 28: CFC Diverse Loan Portfolio
CFC DIVERSE LOAN PORTFOLIO CRE Loan and Available Commitment Breakdown as % of Total Outstanding Balances and Available Commitments (Excludes PPP Loans) Represents $858.2 and 40.3% of Total Outstanding Balances and Available Commitments (Excludes PPP Loans) C&I Loan Breakdown and Available Commitmen
Slide 29: CFC Loan Portfolio Statistics
CFC LOAN PORTFOLIO STATISTICS (1) (1) (2) (2) (3) Based on best available data. If a loan has multiple guarantors, FICO score represented is highest of the guarantors. FICO scores are based off origination unless updated through annual term loan review or other credit action. Loan to Value (“LTV”) d
Slide 30: COVID-19 Update – Company and Washington State Re-Opening
COVID-19 UPDATE – COMPANY and WASHINGTON STATE RE-OPENING As of September 30, 2021, Washington state re-opened under the Washington Ready plan. All industry sectors previously covered by the Roadmap to Recovery or the Safe Start plan, with limited exceptions, returned to usual capacity and operation
Slide 31: Non-GAAP Reconciliation – PPP Loan Impact
NON-GAAP RECONCILIATION –PPP LOAN IMPACT The following non-GAAP financial measures are presented to illustrate and identify the impact of PPP loans on Tier 1 Capital, we are providing investors with this information to better compare results with periods that did not have these significant impacts.
Slide 32: Non-GAAP Reconciliation – Pre-Tax, Pre-Provision
NON-GAAP RECONCILIATION – PRE-TAX, PRE-PROVISION Some of the financial measures included in this presentation are not measures of financial performance recognized by GAAP. The following non-GAAP measures are presented to illustrate the impact of provision for loan losses and provision for income tax
Slide 33: Non-GAAP Reconciliation – 2017 Adjusted Measures
NON-GAAP RECONCILIATION – 2017 ADJUSTED MEASURES Some of the financial measures included in this presentation are not measures of financial performance recognized by GAAP. Our management uses the non-GAAP financial measures set forth below in its analysis of our performance for 2017 to exclude the i