Coastal Financial Corporation · NASDAQ:CCB
Coastal Financial — IPO Roadshow (December 2024)
40 slides from Coastal Financial's IPO roadshow presentation, Dec 10, 2024
Slide 1: Follow-On Investor Presentation
Decem ber 2024 FOLLOW - ON INVESTOR PRESENTATION COASTAL FINANCIAL CORPORATION
Slide 2: Legal Information and Disclaimer
2 LEGAL INFORMATION AND DISCLAIMER Important note regarding forward - looking statements : Statements made in this presentation (or conveyed orally) which are not purely historical are forward - looking statements, as defined in the Private Securities Litigation Reform Act of 1995 . This includes an
Slide 3: Offering Summary
3 OFFERING SUMMARY Company Exchange / Ticker Security Base Deal Size Option to Purchase Additional Shares Lock - up Period Use of Proceeds Lead Bookrunner Joint Bookrunner Expected Pricing Date Coastal Financial Corporation Nasdaq / CCB Common Stock 15% (100% Primary) 90 days for the Company, Direct
Slide 4: Joel G. Edwards, Executive Vice President and Chief Financial Officer
4 Joel G. Edwards | Executive Vice President and Chief Financial Officer Joel G. Edwards has served as Executive Vice President and Chief Financial Officer of the Company since 2012. Mr. Edwards is als o the Executive Vice President and Chief Financial Officer of the Bank. Prior to joining the Compa
Slide 5: Investor Highlights
5 INVESTOR HIGHLIGHTS Strong Management Team with Aligned Focus on Driving Shareholder Value • Experienced management team with heavy digital vision • Large insider ownership (18% (2) ) aligns shareholder interests with day - to - day management and decision - making Continued Regulatory and Complia
Slide 6: Strategic Verticals
6 STRATEGIC VERTICALS The Community Bank “CCB” Banking as a Service (BaaS) “CCBX” • Leading community bank that offers lending and deposit products primarily to commercial customers • Community bank loan portfolio consists primarily of CRE loans, Construction loans, Land and Land Development loans,
Slide 7: Consolidated Financial Highlights
7 CONSOLIDATED FINANCIAL HIGHLIGHTS $968 $1,421 $2,364 $2,818 $3,360 $3,627 2019 2020 2021 2022 2023 2024Q3 $939 $1,547 $1,743 $2,627 $3,026 $3,419 2019 2020 2021 2022 2023 2024Q3 $1,129 $1,766 $2,636 $3,144 $3,753 $4,066 2019 2020 2021 2022 2023 2024Q3 $124 $140 $201 $243 $295 $332 2019 2020 2021 2
Slide 8: Strong Post-IPO Execution
8 STRONG POST - IPO EXECUTION Source: S&P Global. Market data as of December 6, 2024. Note: CCB priced IPO on July 17, 2018. CAGR’s calculated using Q2 2018 and Q3 2024 quarterly financial metrics for select pee r b anks, if available. (1) Revenue calculated as net interest income plus noninterest i
Slide 9: CCBX Overview
© CCBX OVERVIEW © >
Slide 10: CCBX provides banking as a service (BaaS)
10 CCBX provides banking as a service (BaaS) that enables broker dealers and digital financial services partners to offer their customers banking services 19 active CCBX partners with 5 more currently in the testing or signed LOI stage as of November 30, 2024: • Robust sourcing capabilities and inte
Slide 11: Banking as a Service (BaaS) Partners
11 BANKING AS A SERVICE – “BaaS” PARTNERS 11 Partners Short Term Lending Credit Cards Checking Savings Investing HSA / FSA LOI Partner 1 LOI Partner 2 LOI Partner 3
Slide 12: Growing platform for deposit generation
12 Growing platform for deposit generation • CCBX deposit growth of $48.3 million, or 2.3%, as of September 30, 2024, compared to June 30, 2024, and growth of $352.5 million, or 20.1%, compared to September 30, 2023 • CCBX deposits are net of an additional $214.5 million in CCBX deposits that were t
Slide 13: CCBX Fee Income Growth
13 $1,036 $1,006 $1,122 $1,309 $1,696 $1,216 $1,272 $1,539 $1,625 $1,853 $2,252 $2,278 $2,661 $2,934 $3,549 2023Q3 2023Q4 2024Q1 2024Q2 2024Q3 As of and for the three month period indicated (Dollars in thousands) CCBX FEE INCOME GROWTH $4,401 $4,369 $4,825 $6,096 $6,436 2023Q3 2023Q4 2024Q1 2024Q2 2
Slide 14: Compliance and Risk Investments
14 COMPLIANCE AND RISK INVESTMENTS • 29% of our staff are risk personnel: Risk Management, Compliance, BSA, Internal Audit, CCBX Risk & Compliance • Significantly increased our risk personnel since our IPO as we have grown CCBX • In August 2023, Brian Ferrell joined as EVP, Head of Financial Crimes
Slide 15: Community Bank Overview
15 COMMUNITY BANK OVERVIEW
Slide 16: Coastal Community Bank Overview
16 • E stablished 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 as well as treasury management, remote deposit capture and credit processing • Largest bank by depos
Slide 17: Community Bank Loans and Deposits
17 • Community b ank loans increased $112.7 million, or 6.3%, compared to the quarter ended September 30, 2023 • Conservative credit culture with strong community bank n et c harge - off to average loans performance: 0.03% YTD • Community bank loan portfolio consists primarily of CRE loans, Construc
Slide 18: Consolidated Company Detail
18 CONSOLIDATED COMPANY DETAIL
Slide 19: Profitability and Efficiency
19 Net Income ($mm), ROAA (%) and ROAE (%) $13.2 $15.1 $27.0 $40.6 $44.6 $10.3 $13.5 11.29% 11.44% 17.24% 18.24% 16.41% 14.60% 16.67% 2019 2020 2021 2022 2023 Q3 2023 Q3 2024 Net Income Return on Average Equity Efficiency Ratio (%) 61.79% 58.14% 58.82% 56.26% 45.92% 58.36% 43.10% 2019 2020 2021 2022
Slide 20: Diversified Fee Income Streams
20 BaaS Program Income $17,357 81% Deposit Service Charges / Fees $2,806 13% Loan Referral Fees $168 1% Other $1,051 5% $8.3 $8.6 $16.1 $18.9 $22.0 $21.4 $28.5 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 2024 YTD DIVERSIFIED FEE INCOME STREAMS Historical Core Noninterest Income Trends (1) YTD 2024 Fee I
Slide 21: Loan Composition
21 LOAN COMPOSITION Consolidated Commercial & Industrial (“C&I”) Portfolio • $292.6 million total C&I loans ◦ $103.9 million in capital call lines (CCBX) ◦ $184.2 million in other C&I loans ◦ $2.5 million in Small Business Administration (“SBA”) Paycheck Protection Program C&I loans ◦ $2.0 million i
Slide 22: Stable Asset Quality Metrics
22 STABLE ASSET QUALITY METRICS Allowance for Credit Losses / Total Loans Receivable Nonperforming Loans / Total Loans Receivable Allowance for Credit Losse s / Nonperforming Loans 232% 217% 254% 278% 257% 2023Q3 2023Q4 2024Q1 2024Q2 2024Q3 1.47% 1.78% 1.71% 1.60% 1.94% 2023Q3 2023Q4 2024Q1 2024Q2 2
Slide 23: Charge-offs Primarily Recovered Through Partner Credit Enhancements
23 CHARGE - OFFS PRIMARILY RECOVERED THROUGH PARTNER CREDIT ENHANCEMENTS CCBX partner agreements provide for a credit enhancement (1) that covers the net - charge - offs on CCBX loans and negative deposit accounts Most recently, CCBX partners were responsible for and reimbursed the Company for 97.8%
Slide 24: Deposit Composition
24 DEPOSIT COMPOSITION Emphasis on core deposits has helped generate an attractive funding mix • Core deposits are all deposits excluding time deposits and brokered deposits • Core deposits were 93.3% of total loans as of September 30, 2024 • Core deposits were 88.0% of total deposits as of Septembe
Slide 25: Interest Rate Sensitivity
25 INTEREST RATE SENSITIVITY Change in Net Interest Income Static Balance Sheet 12 Month Projection as of and Rate Shifts 9/30/2024 9/30/2023 +400 bps (5.4%) 10.7% +300 bps (4.0%) 8.0% +200 bps (2.6%) 5.4% +100 bps (1.3%) 2.7% -100 bps 1.1% (4.0%) -200 bps 2.2% (8.9%) -300 bps 3.3% (14.0%) -400 bps
Slide 26: Balance Sheet Positioned to Benefit from Lower Rates
26 BALANCE SHEET POSITIONED TO BENEFIT FROM LOWER RATES CCB is well positioned for rate changes • Liability sensitive balance sheet • 45% of our assets reprice within 3 months as of September 30, 2024 • 71% of our liabilities reprice within 3 months as of September 30, 2024 Community Bank: • 23% of
Slide 27: Yields and Costs
27 YIELDS AND COSTS Deposit Costs Loan Yields 1.31% 1.57% 1.66% 1.77% 1.92% 4.80% 4.90% 4.93% 4.92% 4.82% 3.14% 3.36% 3.49% 3.58% 3.59% 2023Q3 2023Q4 2024Q1 2024Q2 2024Q3 Community Bank CCBX Consolidated 6.20% 6.32% 6.46% 6.52% 6.64% 17.05% 17.36% 17.34% 17.77% 17.35% 10.08% 9.30% 9.45% 9.19% 8.99%
Slide 28: Net Interest Income and Margin
28 NET INTEREST INCOME AND MARGIN Net Interest Income Net Interest Margin 4.36% 4.15% 3.96% 3.91% 3.97% 9.66% 8.62% 8.60% 9.05% 9.64% 4.24% 3.15% 3.24% 3.12% 3.31% 7.10% 6.61% 6.78% 7.13% 7.41% 2023Q3 2023Q4 2024Q1 2024Q2 2024Q3 Community Bank CCBX - Gross (GAAP) CCBX - Net (1) Consolidated (GAAP) (
Slide 29: Strong Balance Sheet and Liquidity
29 STRONG BALANCE SHEET AND LIQUIDITY (in millions) • Combined $1.19 billion cash and immediate borrowing capacity • Represents 32.8 % of total deposits at September 30, 2024 • Exceeds $542.2 million in uninsured deposits as of September 30, 2024 • Uninsured deposits include $75.9 million in CCBX ca
Slide 30: Common Raise Substantially Improves Capital Ratios
30 COMMON RAISE SUBSTANTIALLY IMPROVES CAPITAL RATIOS Note: Capital ratios shown are for consolidated company. (1) Tangible common equity to tangible assets is a non - GAAP measure. Since there is no goodwill, other intangible assets or preferre d equity as of September 30, 2024, tangible common equ
Slide 31: Appendix
31 APPENDIX
Slide 32: Significant Growth Since IPO
32 SIGNIFICANT GROWTH SINCE IPO Total Revenue (1) ($mm) Diluted Earnings Per Share ($) Tangible Book Value Per Share (2) ($) $10 $10 $11 $12 $12 $13 $13 $14 $16 $17 $19 $20 $23 $23 $39 $51 $65 $84 $96 $104 $121 $97 $124 $148 $136 $152 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
Slide 33: Office Loans - Community Bank
33 OFFICE LOANS - COMMUNITY BANK ( $ in millions) • All Office loans are suburban properties • Office loans are 2.3% of total loans outstanding and available loan commitments • Average office loan size of $1.4 million • Total of 90 office loans • Total of $123.4 million in office loans outstanding a
Slide 34: Environmental, Social and Governance (ESG) Initiatives
34 ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") INITIATIVES For Coastal, ESG is a complex initiative across the whole organization. Addressing the issue of the approximately 5.9 million un banked households (1) in the United States cannot be tackled with merely adding products or providing diversity
Slide 35: 1. Share and per share amounts are based on total actual or average common
35 1. Share and per share amounts are based on total actual or average common shares outstanding, as applicable. 2. Tangible book value per share is a non - GAAP measure. Since there is no goodwill or other intangible assets as of the dates indic ated, tangible book value per share is the same as bo
Slide 36: 1. Core deposits are defined as all deposits excluding time and brokered deposits. 2.
36 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 is no goodwill or other intangible
Slide 37: Non-GAAP Reconciliation
37 NON - GAAP RECONCILIATION As of and for the Three Months Ended September 30, 2023 December 31, 2024 March 31, 2024 June 30, 2024 September 30, 2024 (dollars in thousands; unaudited) Net BaaS loan income divided by average CCBX loans: 17.05 % 17.36 % 17.34 % 17.77 % 17.35 % CCBX loan yield (GAAP)
Slide 38: Non-GAAP Reconciliation (cont.)
38 NON - GAAP RECONCILIATION (cont.) (1) Annualized for periods presented. The Company uses certain non - GAAP financial measures to provide meaningful supplemental information regarding the Company’s oper ational performance and to enhance investors’ overall understanding of such financial performa
Slide 39: Board of Directors
39 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 i n t he areas of corporate law, commercial real estate and tax matters. He graduated from the University of W
Slide 40: Board of Directors
40 BOARD OF DIRECTORS 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 automo bil e dealerships. He is active in community organizations and currently serves on the Economic Alliance Snohomish County