Coastal Financial Corporation · NASDAQ:CCB
Coastal Financial — Q3 2022 Earnings Presentation
29 slides from Coastal Financial's earnings presentation, Oct 27, 2022
Slide 1: Investor Presentation
October 27, 2022 INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Legal Information and Disclaimer
2 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 Corporati
Slide 3: Long-Term Strategic Verticals
3 LONG-TERM STRATEGIC VERTICALS The Community Bank “CCB” Provide Banking as a Service (BaaS) “CCBX” • Best-in-class community bank that offers lending and deposit products to commercial customers • Community bank loan portfolio consists primarily of CRE loans, Construction, Land and Land Development
Slide 4: Consolidated Financial Highlights
4 C or e D ep os it s (2 ) CONSOLIDATED FINANCIAL HIGHLIGHTS - As of and for the Quarter ended September 30, 2022 To ta l A ss et s Note: Annual data as of or for the year ended December 31 of each respective year To ta l L oa ns N et I nc om e (1) Tangible equity to tangible assets is a non-GAAP me
Slide 5: Environmental, Social and Governance (ESG) Initiatives
5 ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") INITIATIVES (1) Source: National Survey of Unbanked and Underbanked Households by the Federal Deposit Insurance Corporation (FDIC) in June 2021. For Coastal, ESG is a complex initiative across the whole organization. Addressing the issue of the 14.1 mil
Slide 6: CCB Overview
6 Coastal Community Bank was established in 1997 with a focus on serving small to medium-sized businesses within the Puget Sound region. Offers traditional lending and deposit products to commercial and retail customers • Lending products: Commercial real estate, Small Business Administration (“SBA”
Slide 7: CCBX Partner Activity
7 CCBX PARTNER ACTIVITY 26 29 29 16 23 19 0 2 27 — — 3 4 5 0 0 3 Active Friends and family / testing Implementation / onboarding Signed letters of intent Wind down - preparing to exit relationship September 30, 2021 June 30, 2022 September 30, 2022 CCBX provides banking as a service (BaaS) that enab
Slide 8: CCBX Revenue Growth
8 CCBX REVENUE GROWTH As of and for the three month period indicated (Dollars in thousands) $1,980 $3,219 $3,642 September 30, 2021 June 30, 2022 September 30, 2022 BaaS Program Fee Income (1) Note: Data as of and for the quarter ended September 30, 2022, unless otherwise indicated (1) BaaS program
Slide 9: Growth in CCBX Activity Based Income
9 GROWTH IN CCBX ACTIVITY BASED INCOME $163 $217 $185 $246 $277 $256 $392 $456 $486 $499 $545 $526 $607 $64 $99 $65 $116 $138 $142 $213 $262 $269 $282 $306 $277 $357 $99 $118 $120 $130 $139 $114 $179 $194 $217 $217 $239 $249 $250 Transaction income Interchange income 09/2021 10/2021 11/2021 12/2021
Slide 10: CCBX Loans and Deposits
10 CCBX Loans and Deposits (Dollars in thousands) $607,217 $1,066,115 $1,202,270 BaaS-brokered deposits Demand, noninterest bearing Interest bearing September 30, 2021 June 30, 2022 September 30, 2022 (Dollars in thousands) $190,144 $667,738 $915,552 Other consumer loans Residential RE secured credi
Slide 11: Robust Sourcing Capabilities and Partnering
11 ROBUST SOURCING CAPABILITIES AND PARTNERING • Involve board members • Fintech experts and partners • Integrate Coastal LPs Thesis-Driven Sourcing Due Diligence Onboarding to Date Intensive Filtering • Focused points of view and research with experts • Proactive market mapping and product identifi
Slide 12: Historic Profitability and Efficiency
12 HISTORIC PROFITABILITY AND EFFICIENCY Net Income and Return on Average Assets N et In co m e ($ m m ) Efficiency Ratio (%) and Noninterest Expense (“NIE”) to Average Assets (%) RO A A (% ) Ef fic ie nc y Ra ti o (% ) N IE / A ve ra ge A ss et s (% ) Note: Annual data is as of and for the year end
Slide 13: Loan Composition
13 CRE - Owner Occupied 13.4% C&I 13.5% Consumer and other 20.8% 1-4 Family 16.0% CRE - Non- Owner Occupied 17.5% Multifamily 9.8% Construction and Land Development 8.9% LOAN COMPOSITION Consolidated Loan Composition Community Bank Loan Concentrations by County Consolidated Commercial & Industrial (
Slide 14: Deposit Composition
14 Demand, noninterest bearing 28.7% NOW and money market 63.7% Savings 3.8% Time deposits < $100K 0.5% Time deposits > $100K 0.7% BaaS-brokered 2.6% DEPOSIT COMPOSITION Deposit Composition Core Deposit Driven Funding Emphasis on core deposits has helped generate an attractive funding mix • Core dep
Slide 15: Segment Overview - Community Bank and CCBX (Cost of Deposits)
15 SEGMENT OVERVIEW - Community Bank and CCBX 0.13% 0.08% 0.16% 0.02% 0.56% 1.79% 0.25% 0.10% 0.82% Community Bank CCBX Consolidated September 30, 2021 June 30, 2022 September 30, 2022 —% 0.50% 1.00% 1.50% 2.00% Average Cost of Deposits (annualized)
Slide 16: Segment Overview - Community Bank and CCBX (Loan Yields)
16 SEGMENT OVERVIEW - Community Bank and CCBX (1) CCBX - gross yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancement and servicing CCBX loans. To determine net revenue (Net BaaS loan income) earned from CCBX
Slide 17: Strong Asset Quality
17 STRONG ASSET QUALITY (1) These ratios are impacted by the increase in CCBX loans over 90 days delinquent that are covered by CCBX partner credit enhancements, see note below for more information. (2) Agreements with our CCBX partners provide for a credit enhancement which protects the Bank by abs
Slide 18: CFC Loan and Deposit Growth
18 CFC LOAN AND DEPOSIT GROWTH $1,705,682 $2,334,354 $2,507,889 Community Bank CCBX September 30, 2021 June 30, 2022 September 30, 2022 Loan Growth of $173.5 million or 7.4% from June 30, 2022 Cost of funds 0.82% for the Quarter Ended September 30, 2022 $2,223,540 $2,697,305 $2,837,066 Community Ban
Slide 19: CFC Quarterly Results
19 CFC QUARTERLY RESULTS 3Q2022 Financial Results: Balance Sheet As of the quarter ended (Dollars in millions, except per share amounts) September 30, 2022 June 30, 2022 September 30, 2021 Total Assets $3,133.7 $2,969.7 $2,451.6 Total Loans $2,507.9 $2,334.4 $1,705.7 Total Deposits $2,837.1 $2,697.3
Slide 20: Diversity, Equity, and Inclusion (DEI) and ESG Initiatives
20 DIVERSITY, EQUITY, AND INCLUSION (DEI) AND ESG INITIATIVES Young Adults ESG Immigrants Underserved Small Business Black Women Latinx Asian Muslim
Slide 21: Appendix
21 APPENDIX
Slide 22: CFC Selected Year-End Financials
22 CFC SELECTED YEAR-END FINANCIALS (1) Refer to “Non-GAAP Reconciliation” in this Appendix for additional details. (2) Share and per share amounts are based on total actual or average common shares outstanding, as applicable. (3) Tangible book value per share is a non-GAAP measure. Since there is n
Slide 23: CFC Selected Quarterly Financials
23 CFC SELECTED QUARTERLY FINANCIALS (1) Core deposits are defined as all deposits excluding time and brokered deposits. (2) Share and per share amounts are based on total actual or average common shares outstanding, as applicable. (3) Tangible book value per share is a non-GAAP measure. Since there
Slide 24: Community Bank Loan Portfolio Statistics
24 COMMUNITY BANK LOAN PORTFOLIO STATISTICS (1) (1) (2) (2) (3) (1) 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. (2) L
Slide 25: CCBX Loan Portfolio Statistics & Lending Approach
25 CCBX LOAN PORTFOLIO STATISTICS & LENDING APPROACH CCBX Loan Portfolio Information September 30, 2022 (dollars in thousands; unaudited) Type of Lending Balance Percent of CCBX loans receivable Available Commitments (1) Maximum Portfolio Size Number of Accounts Average Loans Size Reserve/ Pledge Ac
Slide 26: CCBX Loan Portfolio Statistics & Lending Approach
26 CCBX LOAN PORTFOLIO STATISTICS & LENDING APPROACH 2. Cash Reserve Pledge Account Partner pledges/places cash in a Bank controlled deposit account at an agreed percentage of the loan balance: • We call this account the cash reserve pledge account; • The Bank has the right to access the cash reserv
Slide 27: Asset-Sensitive Balance Sheet
27 ASSET-SENSITIVE BALANCE SHEET Loan Repricing 27% 8% 14% 25% 24% 2% 32% 5% 22% 18% 22% 1% 28% 6% 24% 19% 22% 1% 9/30/2021 6/30/2022 9/30/2022 Three months or less Over three months - 12 months Over one year - three years Over three years - five years Over five years - 15 years Over 15 years Bank w
Slide 28: Non-GAAP Reconciliation - Net BaaS Loan Income/Average CCBX Loans
28 NON-GAAP RECONCILIATION –Net BaaS Loan Income/Average CCBX Loans The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. Howev
Slide 29: Non-GAAP Reconciliation - 2017 Adjusted Measures
29 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 th