Coastal Financial Corporation · NASDAQ:CCB
Coastal Financial — Q4 2022 Earnings Presentation
31 slides from Coastal Financial's earnings presentation, Jan 27, 2023
Slide 1: Investor Presentation
January 27, 2023 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 December 31, 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 mea
Slide 5: Environmental, Social and Governance ("ESG") Initiatives
5 ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") INITIATIVES (1) Source: 2021 National Survey of Unbanked and Underbanked Households by the Federal Deposit Insurance Corporation (FDIC) in November 2022. For Coastal, ESG is a complex initiative across the whole organization. Addressing the issue of the
Slide 6: Coastal World
6 COASTAL WORLD In late 2022, the bank soft launched www.coastalworld.com an immersive 3D web platform that promotes, educates and informs visitors about digital banking solutions through our fintech partners. Through activities and games, users are able to learn which providers best fit their lifes
Slide 7: CCB Overview
7 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 8: CCBX Partner Activity
8 CCBX PARTNER ACTIVITY 28 29 27 19 19 19 1 2 1 5 3 5 5 3 2 Wind down - preparing to exit relationship Signed letters of intent Implementation / onboarding Friends and family / testing Active December 31, 2021 September 30, 2022 December 31, 2022 CCBX provides banking as a service (BaaS) that enable
Slide 9: CCBX Revenue Growth
9 CCBX REVENUE GROWTH As of and for the three month period indicated (Dollars in thousands) $2,364 $3,642 $3,607 December 31, 2021 September 30, 2022 December 31, 2022 BaaS Program Fee Income (1) Note: Data as of and for the quarter ended December 31, 2022, unless otherwise indicated (1) BaaS progra
Slide 10: Growth in CCBX Activity Based Income
10 GROWTH IN CCBX ACTIVITY BASED INCOME $648 $925 $1,442 $1,678 $1,749 $280 $493 $814 $940 $964 $368 $432 $628 $738 $785 Transaction income Interchange income 4Q2021 1Q2022 2Q2022 3Q2022 4Q2022 $— $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 CCBX TRANSACTION AND INTERCHANGE INCOME (Dollars in t
Slide 11: CCBX Loans and Deposits
11 CCBX Loans and Deposits (Dollars in thousands) $716,258 $1,202,270 $1,279,303 BaaS-brokered deposits Demand, noninterest bearing Interest bearing December 31, 2021 September 30, 2022 December 31, 2022 (Dollars in thousands) $346,606 $915,552 $1,012,569 Other consumer loans Residential RE secured
Slide 12: Robust Sourcing Capabilities and Partnering
12 ROBUST SOURCING CAPABILITIES AND PARTNERING • Involve board members • Fintech experts and partners • Integrate Coastal LPs Thesis-Driven Sourcing Due Diligence Onboarding to Date Intensive Filtering • Focused points of view and research with experts • Proactive market mapping and product identifi
Slide 13: Risk Management
13 RISK MANAGEMENT Growth and Investment in Risk and Compliance Personnel 4 4 4 4 4 5 5 9 11 12 14 19 43 61 61 74 85 108 107 115 Risk Management Compliance BSA Internal Audit CCBX Risk & Compliance Q1 - 2018 Q2 - 2018 Q3 - 2018 Q4 - 2018 Q1 - 2019 Q2 - 2019 Q3 - 2019 Q4 - 2019 Q1 - 2020 Q2 - 2020 Q3
Slide 14: Historic Profitability and Efficiency
14 HISTORIC PROFITABILITY AND EFFICIENCY Net Income and Return on Average Assets N et In co m e ($ 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 15: Historic Profitability and Efficiency
15 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 16: Loan Composition
16 CRE - Owner Occupied 13.2% C&I 11.9% Consumer and other 23.1% 1-4 Family 17.1% CRE - Non- Owner Occupied 17.4% Multifamily 9.2% Construction and Land Development 8.1% LOAN COMPOSITION Consolidated Loan Composition Community Bank Loan Concentrations by County Consolidated Commercial & Industrial (
Slide 17: Deposit Composition
17 Demand, noninterest bearing 27.5% NOW and money market 64.0% Savings 3.8% Time deposits < $100K 0.5% Time deposits > $100K 0.6% BaaS-brokered 3.6% DEPOSIT COMPOSITION Deposit Composition Core Deposit Driven Funding Emphasis on core deposits has helped generate an attractive funding mix • Core dep
Slide 18: Segment Overview - Community Bank and CCBX
18 SEGMENT OVERVIEW - Community Bank and CCBX (for the three months ended) 0.12% 0.16% 0.37% 0.02% 1.79% 3.13% 0.09% 0.82% 1.56% Community Bank CCBX Consolidated December 31, 2021 September 30, 2022 December 31, 2022 —% 1.00% 2.00% 3.00% Average Cost of Deposits (annualized) 5.89% 5.31% 5.70% 6.13%
Slide 19: Segment Overview - Credit Quality
19 SEGMENT OVERVIEW - Credit Quality 0.00 % 0.10% 0.00 % 0.59% 3.59% 7.52% 0.00 % 1.38% 2.87% Community Bank CCBX Consolidated December 31, 2021 September 30, 2022 December 31, 2022 0.00% 2.00% 4.00% 6.00% 8.00% 1.45% 1.26% 1.28% 2.40% 4.28% 5.27% 1.64% 2.36% 2.82% Community Bank CCBX Consolidated D
Slide 20: Strong Asset Quality
20 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. CCBX loans represent 0.83% and 0.99% for NPAs/Assets and NPLs/Loans, respectively. (2) Agreements wit
Slide 21: CFC Loan and Deposit Growth
21 CFC LOAN AND DEPOSIT GROWTH $1,742,735 $2,507,889 $2,627,256 $1,396,060 $1,592,320 $1,614,752 $346,675 $915,569 $1,012,504 Community Bank CCBX December 31, 2021 September 30, 2022 December 31, 2022 Loan Growth of $119.4 million or 4.8% from September 30, 2022 Cost of deposits 1.56% for the Quarte
Slide 22: CFC Quarterly Results
22 CFC QUARTERLY RESULTS 4Q2022 Financial Results: Balance Sheet As of the quarter ended (Dollars in millions, except per share amounts) December 31, 2022 September 30, 2022 December 31, 2021 Total Assets $3,144.5 $3,133.7 $2,635.5 Total Loans $2,627.3 $2,507.9 $1,742.7 Total Deposits $2,817.5 $2,83
Slide 23: Appendix
23 APPENDIX
Slide 24: CFC Selected Year-End Financials
24 CFC SELECTED YEAR-END FINANCIALS (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 indicated, tangible book v
Slide 25: CFC Selected Quarterly Financials
25 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 26: Community Bank Loan Portfolio Statistics
26 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 27: CCBX Loan Portfolio Statistics & Lending Approach
27 CCBX LOAN PORTFOLIO STATISTICS & LENDING APPROACH CCBX Loan Portfolio Information December 31, 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 Acc
Slide 28: CCBX Loan Portfolio Statistics & Lending Approach
28 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 29: Asset-Sensitive Balance Sheet
29 ASSET-SENSITIVE BALANCE SHEET Loan Repricing 36% 9% 13% 17% 23% 2% 56% 6% 5% 11% 21% 1% 56% 6% 5% 12% 20% 1% December 31, 2021 September 30, 2022 December 31, 2022 Three months or less Over three months - 12 months Over one year - three years Over three years - five years Over five years - 15 yea
Slide 30: Non-GAAP Reconciliation – Net BaaS Loan Income/Average CCBX Loans
30 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 31: Non-GAAP Reconciliation – 2017 Adjusted Measures
31 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