Coastal Financial Corporation · NASDAQ:CCB
Coastal Financial — IPO Roadshow (December 2021)
43 slides from Coastal Financial's IPO roadshow presentation, Dec 13, 2021
Slide 1: Follow-On Offering Investor Presentation
Issuer Free Writing Prospectus Dated December 13, 2021 Filed Pursuant to Rule 433 Registration Statement No. 333-255210 Follow-On Offering Investor Presentation December 2021
Slide 2: Legal Information and Disclaimer
Legal Information and Disclaimer Forward-Looking Statements and Other Information 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
Slide 3: Offering Summary
Offering Summary Company Coastal Financial Corporation Exchange / Ticker Nasdaq / CCB Security Common Stock Base Deal Size $30 million (100% Primary) Overallotment Option 15% (100% Primary) Lock-up Period 90 days for the Company directors & executive officers General corporate purposes, including, w
Slide 4: Today's Presenters
Today’s Presenters Eric M. Sprink | President and Chief Executive Officer Eric M. Sprink joined the Company in late 2006 as President and Chief Operating Officer and became Chief Executive Officer in 2010. Mr. Sprink began his banking career working for Security Pacific Bank while enrolled at Arizon
Slide 5: Long-Term Strategic Verticals
Long-Term Strategic Verticals “CCB” “CCBX” “CCDB” The Community Bank Banking as a Service (BaaS) Coastal’s Digital Bank • Best-in-class community bank that offers • Provides Banking as a Service (BaaS) to • Shifting from Google banking collaboration lending and deposit products to commercial broker
Slide 6: Consolidated Financial Highlights
Consolidated Financial Highlights For the Quarter Ended September 30, 2021 (Dollars in millions) Balance Sheet ($ in millions) $2,452 Total Assets Total Assets $2,452 $1,766 $952 $1,129 Loans Receivable 1,706 $741 $806 Total Deposits 2,224 Total Shareholder Equity 161 2016 2017 2018 2019 2020 2021Q3
Slide 7: Strong Financial Performance Has Led to Impressive Returns
Strong Financial Performance Has Led to Impressive Returns Revenue CAGR Since CCB’s IPO (%) EPS(1) CAGR Since CCB’s IPO (%) TBVPS CAGR Since CCB’s IPO (%) 29.6% 28.3% 27.5% (2) 19.7% 17.3% 16.4% 8.5% 7.8% 2.5% CCB Specialty Peers KRX Index CCB Specialty Peers KRX Index CCB Specialty Peers KRX Index
Slide 8: Environmental, Social and Governance (ESG) Initiatives
Environmental, Social and Governance (ESG) Initiatives ESG Across Coastal For Coastal, ESG is a complex initiative across the whole organization. Addressing the issue of the 14.1 million unbanked people(1) in the United states cannot be tackled with merely adding products or doing diversity, equity
Slide 9: Coastal Community Bank (CCB) Overview
Coastal Community Bank (CCB) Overview Dedication to Community Banking CCB’s Core Markets CCB was established in 1997 with a focus on serving small to medium- Largest community bank by deposit market share in Snohomish County sized businesses within the Puget Sound region • Headquartered in Everett,
Slide 10: CCBX – Overview
CCBX – Overview Business Overview Partner Growth 26 CCBX provides banking as a service (BaaS) that enables broker dealers 24 and digital financial services partners to offer their customers banking 3 2 services 7 7 16 active partners with 10 more currently in the implementation / 11 3 onboarding or
Slide 11: CCBX – Partner Overview
CCBX – Partner Overview Denotes signed LOI with partners Challenger Banks Financial Wellness Neobank Neobank Consumer Neobank Business Focused Neobanks Lending Marketplace Niche Consumer Family Law Lending Lending Solution 11 Note: Data as of December 10, 2021.
Slide 12: CCBX – Partner Timeline
CCBX – Partner Timeline Denotes signed LOI with partners Financial Wellness Consumer Neobank Family Law Lending Solution Neobank Neobank Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 12 Note: Data as of December 10, 2021.
Slide 13: CCBX – Robust Sourcing Capabilities and Partnering
CCBX – Robust Sourcing Capabilities and Partnering Thesis-Driven Sourcing Intensive Filtering • Focused points of view and research with experts • Visionary management teams • Proactive market mapping and product identification • Strong execution teams • Diversity and inclusion • Compelling unit eco
Slide 14: CCBX – Fintech Company Stage
CCBX – Fintech Company Stage Fintech’s Time Horizon 3 – 5 years in business 5 – 15 years in business Early–Stage: Later–Stage: Between Seed and Series A: Between Series B and D: Partner with companies early and obtain • Leverage strong customer position and apply long term loyal relationships operat
Slide 15: CCBX – Loans and Deposits
CCBX – Loans and Deposits CCBX Loans Receivable CCBX Deposits (Dollars in thousands) (Dollars in thousands) Commercial and Industrial Residential Interest Bearing Credit Card Other Consumer Noninterest Bearing Baas-Brokered $190,144 $607,217 $103,476 $65,626 $267,382 $68,687 December 31, 2020 June 3
Slide 16: Profitability and Efficiency
Profitability and Efficiency Net Income ($ in millions) and Return on Average Assets (%) 1.28% 1.28% 1.14% 0.90% 0.98% 0.96% 0.76% $19.7 0.49% 0.52% $13.2 $15.1 $9.7 $10.5 $5.0 $6.7 $2.3 $3.0 (1) 2014 2015 2016 2017 2018 2019 2020 Q3 2020 Q3 2021 YTD YTD Net Income ROAA Efficiency Ratio (%) and Noni
Slide 17: Diversified Fee Income Streams
Diversified Fee Income Streams Historical Fee Income Trends(1)(3) Q3 2021 Fee Income Breakdown(1)(2)(3) (Dollars in millions) (Dollars in thousands) Mortgage $14.9 Gain on Sale of Loans, net Broker Fees 16.9% $206 $187 16.1% 16.1% 4% 4% 14.9% Other $302 13.6% 6% 13.6% $11.2 10.9% 12.4% 12.5% Loan Re
Slide 18: Loan Composition by Type and County
Loan Composition by Type and County Overall Loan Portfolio Loan Composition by Type • 2.70 years weighted average reprice • 6.46 years weighted average maturity Owner Operated Businesses Commercial & Industrial (“C&I”) Portfolio CRE - Owner Occupied 52.9% Construction, 21.7% • $536.9 million total C
Slide 19: Deposit Composition
Deposit Composition Emphasis on core deposits has helped generate an attractive Deposit Composition funding mix BaaS-brokered • Core deposits are all deposits excluding time deposits and brokered 1.3% Core Deposits: deposits Time Deposits > 96.6% $100K 1.4% Noninterest- • Core deposits were 126.0% o
Slide 20: Strong Asset Quality
Strong Asset Quality NPAs / Assets NPLs / Loans 1.90% 0.72% 1.52% 0.54% 1.24% 1.11% 0.35% 0.32% 0.27% 0.24% 0.26% 0.19% 0.11% 0.09% 0.04% 0.05% 0.04% 0.03% 2013 2014 2015 2016 2017 2018 2019 2020 2021Q3 2013 2014 2015 2016 2017 2018 2019 2020 2021Q3 NCOs / Average Loans ALLL / NPLs 2,705% 2,733% 0.3
Slide 21: Consolidated Capital Ratios
Consolidated Capital Ratios 16.58% 15.40% 14.13% 13.61% 13.24% 13.14% 13.15% 13.12% 12.95% 13.70% 12.78% 12.46% 11.55% 11.64% 11.15% 11.16% 10.50% 11.46% 11.27% 10.15% 11.00% 10.89% 10.92% 9.98% 9.05% 9.94% 8.62% 8.95% 8.00% 7.48% 8.16% 7.94% 7.68% 6.57% 7.23% 2017 2018 2019 2020 2021Q1 2021Q2 2021Q
Slide 22: Investor Highlights
Investor Highlights • Experienced management team with heavy digital vision • Differentiated business model creates competitive advantage in the rapidly changing banking landscape • CCBX’s substantial growth in recent quarters reinforces positive growth and earnings outlook in the medium and long-te
Slide 23: Appendix
Appendix COASTAL FINANCIAL CORPORATION
Slide 24: Significant Growth in Shareholder Value Since IPO
Significant Growth in Shareholder Value Since IPO(1) Total Revenue(2) ($ in thousands) $20,147 $21,342 $23,090 $24,268 $15,088 $15,791 $16,946 $18,336 $10,444 $11,440 $12,612 $13,378 $13,936 $14,272 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 Dil
Slide 25: Loan Portfolio Statistics
Loan Portfolio Statistics Weighted Average Weighted Average FICO Significant CRE Loan Sub-Categories Total Commitments Seasoning (Months) Score(1) Weighted Average LTV(2) Weighted Average DSCR(3) Multifamily $168,202,496 29.2 767.57 60.45% 3.15x Hotels $118,152,315 35.6 762.39 57.07% 2.15x Retail $9
Slide 26: Commercial Real Estate Composition
Commercial Real Estate Composition (Dollars in millions) $837.3 million(1) Outstanding Balance Manufacturing $37.1 Other $20.9 million 5% $95.4 11% Apartments $140.6 Available Loan Commitment Mini Storage 17% $39.9 5% 40.3% Hotel / Motel Mixed Use % of Loans Receivable (Outstanding $74.5 $117.9 14%
Slide 27: Commercial and Industrial Composition
Commercial and Industrial Composition (Dollars in millions) $269.6 million(1) Outstanding Balance Retail $9.6 $415.9 million 4% Other $38.8 Available Loan Commitment Manufacturing 14% $12.2 4% 32.2% Medical / Dental / % of Loans Receivable (Outstanding Other Care Capital Call $12.4 Balance & Availab
Slide 28: Construction, Land and Land Development Composition
Construction, Land and Land Development Composition (Dollars in millions) Land $158.7 million Development $13.9 Outstanding Balance 9% Developed Land Loans $17.9 $152.6 million 11% Available Loan Commitment Commercial 14.6% Construction $63.8 % of Loans Receivable (Outstanding Residential 40% Balanc
Slide 29: COVID-19 Response – PPP Loans
COVID-19 Response – PPP Loans Status of PPP Loans Net Deferred SBA Fees on PPP Loans (Dollars in millions) (Dollars in millions) Round 1 and 2 Outstanding Round 3 $16.2 Unearned $9.4 Outstanding 2.1% $251.1 32.9% Earned 2020 $7.1 Forgiven Earned 1Q2021 $3.2 $496.6 65.0% Earned 2Q2021 $3.6 Earned 3Q2
Slide 30: COVID-19 Response – Company and Washington State Re-Opening
COVID-19 Response – Company and Washington State Re-Opening Status of 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 limite
Slide 31: COVID-19 Response – Loan Modifications
COVID-19 Response – Loan Modifications Status of All Deferred or Modified Loans • All loans that were deferred or modified due to the COVID-19 pandemic 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 the
Slide 32: Interest Rate Sensitivity
Interest Rate Sensitivity Change in Net Interest Income Change in 12 Month Projection as of Market Interest Rate 12/31/2020 9/30/2021 +400 bps 18% 52% +300 bps 14% 39% +200 bps 9% 26% +100 bps 5% 13% -100 bps (4%) (8%) -200 bps (7%) (12%) -300 bps (10%) (16%) 32 Source: Company 10-Q for the quarter
Slide 33: Diversity, Equity, and Inclusion (DEI) and ESG Initiatives
Diversity, Equity, and Inclusion (DEI) and ESG Initiatives Women Black Young Adults Immigrants ESG Muslim Asian Underserved Latinx Small Business 33 Source: Company documents.
Slide 34: Corporate ESG Initiatives
Corporate ESG Initiatives Inclusive Affiliate offerings Governance - BaaS for ESG Board challenger diversity Banks Coastal Financial Corporation Local Sustainability community Strategy initiatives Customer- facing solutions 34
Slide 35: Financial Inclusion Initiatives
Financial Inclusion Initiatives CCBX CCB Fintech ESG New Coastal bank focused providers products, services supported by and education CCBX on Coastal balance sheet (BankOn) Best in breed Focusing on other offering to CCB opportunities in clients through the digital banking affiliation sector includi
Slide 36: Board of Directors
Board of Directors Christopher D. Adams, Chairman of the Board Christopher D. Adams is a partner in the law firm of Adams & Duncan, Inc., P.S. in Everett, Washington. Mr. Adams practices in the areas of corporate law, commercial real estate and tax matters. He graduated from the University of Washin
Slide 37: Board of Directors (cont.)
Board of Directors (cont.) Rilla Delorier, Board Director Rilla Delorier is an experienced C-suite leader with more than 30 years of executive experience and has served in a range of capacities including managing the P&L of a $2.7 billion retail banking business, Chief Strategy and Digital Transform
Slide 38: Board of Directors (cont.)
Board of Directors (cont.) Thomas D. Lane, Board Director Thomas D. Lane is the owner and president and chief executive officer of Dwayne Lane’s Auto Family, which operates six automobile dealerships. He is active in community organizations and currently serves on the Economic Alliance Snohomish Cou
Slide 39: Selected Year-end Financials
Selected Year-end Financials As of and for the Year Ended December 31, (Dollars in thousands, except per share data) 2020 2019 2018 2017 2016 Statement of Income Data: Total interest income $ 63,038 $ 48,587 $ 38,743 $ 32,113 $ 28,460 Total interest expense 5,652 6,576 3,926 2,875 2,523 Provision fo
Slide 40: Selected Quarterly Financials
Selected Quarterly Financials As of and for the Quarter Ended (Dollars in thousands, except per share data) 3Q 2021 2Q 2021 1Q 2021 4Q 2020 3Q 2020 2Q 2020 Statement of Income Data: Total interest income $ 19,608 $ 19,573 $ 18,328 $ 18,098 $ 16,394 $ 15,426 Total interest expense 801 959 1,043 1,165
Slide 41: Non-GAAP Reconciliation – PPP Loan Impact
Non-GAAP Reconciliation – PPP Loan Impact Some of the financial measures included in this presentation are not measures of financial performance recognized by GAAP. The following non-GAAP financial measures are presented to illustrate and identify the impact of PPP loans on Tier 1 Capital, we are pr
Slide 42: 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 43: 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