Coastal Financial Corporation · NASDAQ:CCB
Coastal Financial — Investor Presentation (July 2024)
33 slides from Coastal Financial's investor presentation, Jul 29, 2024
Slide 1: Investor Presentation
July 29, 2024 INVESTOR PRESENTATION Exhibit 99.1 COASTAL FINANCIAL CORPORATION
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: Second Quarter 2024 Summary
3 SECOND QUARTER 2024 SUMMARY Net Income Quarter ended June 30, 2024 compared to Quarter Ended March 31, 2024 Net income of $11.6 million, or $0.84 per diluted common share, for the three months ended June 30, 2024, compared to $6.8 million, or $0.50 per diluted common share for the three months end
Slide 4: Consolidated Financial Highlights
4 Co re D ep os it s (2 ) CONSOLIDATED FINANCIAL HIGHLIGHTS - As of and for the Quarter ended June 30, 2024 To ta l A ss et s Note: Annual data as of or for the year ended December 31 of each respective year Lo an s Re ce iv ab le N et In co m e (1) Tangible equity to tangible assets is a non-GAAP m
Slide 5: Financial Stability
5 FINANCIAL STABILITY DEPOSITS • Deposits increased $80.5 million, or 2.3%, during the three months ended June 30, 2024 • Includes $352.3 million in fully insured IntraFi network sweep deposits as of June 30, 2024, compared to $336.8 million as of March 31, 2024 Note: Data as of three months ended J
Slide 6: Continuing Profitability and Efficiency
6 CONTINUING PROFITABILITY AND EFFICIENCY Net Income and Return on Average Assets N et In co m e ($ 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: Except as noted, annual data is as of an
Slide 7: Long-Term Strategic Verticals
7 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 8: Coastal Overview
8 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 9: Environmental, Social and Governance Initiatives
9 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 10: Coastal World
10 Coastal World is an immersive 3D web platform that promotes, educates, and informs visitors about digital banking solutions that best fit their lifestyle, values, or specific financial situations through a fun and engaging online experience. Opportunity and Potential www.coastalworld.com Engageme
Slide 11: Banking as a Service Partners
Banking as a Service – “BaaS” Partners SHORT-TERM LENDING SAVINGS ACCOUNTS CREDIT CARDS INVESTING CHECKING ACCOUNTS HSA AND FSA ACCOUNTS 11 (Secured) Evergreen (Secured credit card) (Business Checking)(Secured & Unsecured) (Secured by and classified as 1-4 RE) (Formerly X1) (Owned by Progressive) (A
Slide 12: CCBX Banking as a Service Partners
12 22 21 21 18 19 19 1 1 11 1 11 1 Wind down - active but preparing to exit relationship Signed letters of intent Implementation / onboarding Friends and family / testing Active June 30, 2023 March 31, 2024 June 30, 2024 CCBX provides banking as a service (BaaS) that enables broker dealers and digit
Slide 13: CCBX Revenue Growth
13 CCBX REVENUE GROWTH As of and for the three month period indicated (Dollars in thousands) $3,948 $4,401 $4,369 $4,825 $6,096 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 BaaS Program Fee Income Note: Data as of and for the quarter ended June 30, 2024, unless oth
Slide 14: Growth in CCBX Activity Based Income
14 GROWTH IN CCBX ACTIVITY BASED INCOME CCBX TRANSACTION AND INTERCHANGE INCOME (Dollars in thousands) 44.7% growth over prior year quarter $2,027 $2,252 $2,278 $2,661 $2,933 $1,052 $1,036 $1,006 $1,122 $1,309 $975 $1,216 $1,272 $1,539 $1,624 Transaction income Interchange income 2Q2023 3Q2023 4Q202
Slide 15: CCBX Loans and Deposits
15 CCBX LOANS AND DEPOSITS (Dollars in millions) $1,653.1 $2,028.9 $2,056.5 BaaS-brokered deposits Demand, noninterest bearing Interest bearing June 30, 2023 March 31, 2024 June 30, 2024 (Dollars in millions) $1,295.0 $1,316.7 $1,414.9 Other consumer loans Residential RE secured credit cards Commerc
Slide 16: Risk Management
16 RISK MANAGEMENT Growth and Investment in Risk and Compliance Personnel 4 4 4 4 5 5 9 11 12 14 19 43 64 69 80 92 110 116 150 176 210 228 211 211 258 Risk Management Compliance BSA Internal Audit CCBX Risk Co-sourced BSA Resources Q2 - 2018 Q3 - 2018 Q4 - 2018 Q1 - 2019 Q2 - 2019 Q3 - 2019 Q4 - 201
Slide 17: Loan Composition
17 CRE - Non- Owner Occupied 17.6% CRE - Owner Occupied 12.0% C&I 8.9% Consumer and other 29.7% 1-4 Family 15.5% Construction and Land Development 5.2% Multifamily 11.1% LOAN COMPOSITION Consolidated Loan Composition Community Bank Loan Concentrations by County Consolidated Commercial & Industrial (
Slide 18: Deposit Composition
18 Demand, noninterest bearing 16.8% Interest bearing demand and money market 80.9% Savings 1.9% Time deposits < $100K 0.2% Time deposits > $100K 0.2% DEPOSIT COMPOSITION Deposit Composition Core Deposit Driven Funding Emphasis on core deposits has helped generate an attractive funding mix • Core de
Slide 19: Deposit Costs
19 DEPOSIT COSTS • Cost of total deposits was 3.58% for the quarter ended June 30, 2024 compared to 3.49% for the quarter ended March 31, 2024, and 2.72% for the quarter ended June 30, 2023 ◦ Cost of deposits for the community bank and CCBX were 1.77% and 4.92%, respectively, for the quarter ended J
Slide 20: Segment Overview - Community Bank and CCBX
20 SEGMENT OVERVIEW - Community Bank and CCBX (for the three months ended) 0.98% 1.66% 1.77% 4.42% 4.93% 4.92% 2.72% 3.49% 3.58% Community Bank CCBX Consolidated June 30, 2023 March 31, 2024 June 30, 2024 —% 2.50% 5.00% 7.50% Average Cost of Deposits (annualized) 6.28% 6.46% 6.52% 16.95% 17.34% 17.7
Slide 21: Segment Overview - Credit Quality
21 SEGMENT OVERVIEW - Credit Quality 1.21% 1.14% 1.10% 6.96% 8.96% 8.97% 3.68% 4.35% 4.45% Community Bank CCBX Consolidated June 30, 2023 March 31, 2024 June 30, 2024 —% 1.25% 2.50% 3.75% 5.00% 6.25% 7.50% 8.75% 10.00% Allowance for Loan Losses to Total Loans CCBX partner agreements provide for a cr
Slide 22: CCBX Loan Portfolio Statistics & Lending Approach
22 CCBX LOAN PORTFOLIO STATISTICS & LENDING APPROACH CCBX Loan Portfolio Information June 30, 2024 (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 Cash Reserve/ Pledge Ac
Slide 23: Strong Asset Quality
23 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 1.14% and 1.36% for NPAs/Total Assets and NPLs/Loans Receivable, respectively as
Slide 24: CFC Loan and Deposit Growth
24 CFC LOAN AND DEPOSIT GROWTH $3.20 $1.71 $1.88 $1.91 $1.29 $1.32 $1.41 Community Bank CCBX June 30, 2023 March 31, 2024 June 30, 2024 Loans increased $126.9 million or 4.0% from March 31, 2024 with enhanced credit standards Cost of Deposits 3.58% for the Quarter Ended June 30, 2024 $3.16 $3.46 $1.
Slide 25: CFC Quarterly Results
25 CFC QUARTERLY RESULTS For the Three Months Ended June 30, Earnings (Dollars in millions, except per share amounts) 2024 2023 Net Income $11.6 $12.9 Efficiency Ratio 43.19% 42.92% Basic Earnings Per Share $0.86 $0.97 Return on Average Assets 1.21% 1.52% Return on Average Equity 15.22% 19.53% Balan
Slide 26: Appendix
26 APPENDIX
Slide 27: CFC Selected Year-End Financials
27 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 28: CFC Selected Quarterly Financials
28 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 29: Community Bank Loan Portfolio Statistics
29 COMMUNITY BANK LOAN PORTFOLIO STATISTICS (1) The Bank’s hotel portfolio predominantly consists of travel hotels/motels and as such our occupancy rates are higher than the national average. (2) Based on best available data. If a loan has multiple guarantors, FICO score represented is highest of th
Slide 30: Office Loans - Community Bank
30 OFFICE LOANS - COMMUNITY BANK Most current data as of June 30, 2024 unless noted otherwise $31.6 $55.4 $19.5 $18.0 $— $— Loan to Value 0% - 50% 51% - 60% 61% - 70% 71% - 80% 81% - 90% 90% -100% $— $25.0 $50.0 $75.0 Loan to Value Ranges (in millions) $55.3 44.5% $69.1 55.5% Owner Occupied (OO) Non
Slide 31: Liability-Sensitive Balance Sheet
31 LIABILITY-SENSITIVE BALANCE SHEET Bank is well positioned for rate changes • Liability sensitive balance sheet • 44% of our assets reprice within 3 months as of June 30, 2024 • 73% of our liabilities reprice within 3 months as of June 30, 2024 Community Bank: • 18% of community bank loans reprice
Slide 32: Non-GAAP Reconciliation - Net BaaS Loan Income
32 NON-GAAP RECONCILIATION –Net BaaS Loan Income Interest Margin 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. However,
Slide 33: Non-GAAP Reconciliation - 2017 Adjusted Measures
33 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 t
Coastal Financial — Investor Presentation (July 2024) on 6ix