Coastal Financial Corporation Announces Fourth Quarter and Fiscal Year 2023 Results
- Net income increased from Q3 2023 to Q4 2023
- Total assets and loans increased in Q4 2023
- Deposits saw significant growth, especially CCBX deposits
- Focus on reducing risk and optimizing the CCBX loan portfolio
- Decrease in net interest income compared to Q3 2023
- Increase in cost of deposits and interest expense
Insights
The reported net income of $9.0 million for Q4 2023, a decline from the previous quarter's $10.3 million, indicates a contraction in profitability that market participants should consider when assessing the company's performance trajectory. The decrease in net income, despite a growth in total assets and loans, suggests that the company's margins may be under pressure. The Return on Average Assets (ROA) and Return on Average Equity (ROE) figures, at 0.97% and 12.35% respectively, are critical indicators of the bank's efficiency in utilizing its assets and equity to generate profits.
The decision to not increase deposit rates and allow higher rate deposits to run off led to a decrease in community bank deposits, which could be seen as a strategic move to manage interest expense in a rising rate environment. However, this strategy might also affect the bank's ability to attract and retain depositors in the long term, especially if competitors offer more attractive rates. The increase in CCBX deposits and the sale of $125.1 million in CCBX loans are reflective of the bank's risk management strategy, which could be viewed positively by investors concerned with credit risk exposure.
The banking sector is highly sensitive to interest rate fluctuations and the Federal Open Market Committee's (FOMC) rate hikes have a direct impact on banks' net interest margins (NIM). Coastal Financial Corporation's report shows a net interest margin of 6.61% for Q4 2023, which is a decrease from the previous quarter. This compression in NIM could be attributed to the increased cost of deposits and the strategic sale of higher-yielding loans. The banking industry has been facing margin pressures due to the competitive environment for deposits and loan yields, which is evident in Coastal's financial results.
It's also noteworthy that the bank has maintained a strong liquidity position, with significant cash on hand and borrowing capacity. This could be a strategic advantage in uncertain economic times, providing the bank with the flexibility to respond to unforeseen demands or investment opportunities. The bank's focus on reducing uninsured deposits and increasing FDIC-insured deposits through reciprocal deposits could be a strategic move to enhance depositor confidence and stability.
The bank's performance must be contextualized within the broader economic landscape, characterized by heightened interest rates and economic challenges in 2023. The bank's strategic response, including the sale of riskier loans and a focus on reducing costs, is indicative of a cautious approach in a potentially volatile market. The overall increase in assets and loans year-over-year, despite a short-term decline in net income, suggests the bank is still in a growth phase, albeit with a conservative risk profile.
Furthermore, the bank's strategy to pivot towards larger partners and companies, while optimizing its loan portfolio, suggests a long-term vision aimed at sustainable growth. However, this may result in short-term earnings pressure due to lower loan yields and compressed margins. Investors should weigh the potential for long-term stability against the immediate impact on profitability.
Fourth Quarter 2023 Highlights:
- Net income of
$9.0 million , or$0.66 per diluted common share, for the three months ended December 31, 2023, compared to$10.3 million , or$0.75 per diluted common share for the three months ended September 30, 2023.- Return on average assets ("ROA") of
0.97% for the three months ended December 31, 2023. - Return on average equity ("ROE") of
12.35% for the three months ended December 31, 2023.
- Return on average assets ("ROA") of
- Total assets increased
$75.1 million , or2.0% , to$3.75 billion for the quarter ended December 31, 2023, compared to$3.68 billion at September 30, 2023. - Total loans, net of deferred fees increased
$59.1 million , or2.0% , to$3.03 billion for the quarter ended December 31, 2023.- Community bank loans increased
$45.5 million , or2.5% , to$1.83 billion . - CCBX loans increased
$13.6 million , or1.1% , to$1.20 billion .$125.1 million in CCBX loans were sold as management continued to sell loans as part of our strategy to reduce risk, optimize the CCBX loan portfolio and strengthen our balance sheet through enhanced credit standards.
- Community bank loans increased
- Deposits increased
$70.7 million , or2.1% , to$3.36 billion for the quarter ended December 31, 2023.- CCBX deposit growth of
$110.5 million , or6.3% , to$1.86 billion .- CCBX deposit growth is net of an additional
$69.4 million in CCBX deposits that were transferred off balance sheet for increased FDIC insurance coverage purposes.
- CCBX deposit growth is net of an additional
- Community bank deposits decreased
$39.9 million , or2.6% , to$1.50 billion as a result of our decision to not increase our deposit rates during the quarter and let higher rate deposits run-off.- Includes noninterest bearing deposits of
$561.6 million or37.5% of total community bank deposits. - Community bank cost of deposits was
1.57% compared to1.31% for the quarter ended September 30, 2023. - Average deposits increased by
$5.5 million compared to the quarter ended September 30, 2023.
- Includes noninterest bearing deposits of
- Uninsured deposits of
$558.6 million , or16.6% of total deposits as of December 31, 2023, compared to$599.0 million , or18.2% of total deposits as of September 30, 2023.
- CCBX deposit growth of
- Liquidity/Borrowings as of December 31, 2023:
- Capacity to borrow up to
$640.1 million from Federal Home Loan Bank and the Federal Reserve Bank discount window with only minimal borrowings, taken once to test the lines, under these facilities since the first quarter of 2022.
- Capacity to borrow up to
- Investment Portfolio as of December 31, 2023:
- Available for sale ("AFS") investments of
$99.5 million , compared to$98.9 million as of September 30, 2023, of which99.9% are U.S. Treasuries, with a weighted average remaining life of 2 months as of December 31, 2023. - Held to maturity ("HTM") investments of
$50.9 million , of which100% are U.S. Agency mortgage backed securities held for CRA purposes. The market value of the HTM investments is$180,000 m ore than the carrying value, the weighted average remaining life is 17.7 years as of December 31, 2023 and the weighted average yield is5.45% for the quarter ended December 31, 2023.
- Available for sale ("AFS") investments of
2023 Highlights:
- Net income of
$44.6 million , or$3.27 per diluted common share, for the year ended December 31, 2023, compared to$40.6 million , or$3.01 per diluted common share for the year ended December 31, 2022. - Total assets increased
$608.9 million , or19.4% , to$3.75 billion for the year ended December 31, 2023, compared to$3.14 billion at December 31, 2022. - Total loans, net of deferred fees increased
$398.8 million , or15.2% , to$3.03 billion for the year ended December 31, 2023, compared to$2.63 billion as of December 31, 2022.- Community bank loans increased
$215.4 million , or13.3% , during the year ended December 31, 2023. - CCBX loans increased
$183.4 million , or18.1% , during the year ended December 31, 2023.
- Community bank loans increased
- Deposits:
- Deposits increased
$542.8 million , or19.3% , to$3.36 billion during the year ended December 31, 2023, compared to$2.82 billion at December 31, 2022.- Includes
$340.1 million in fully insured IntraFi network negotiable orders of withdrawal ("NOW") and money market reciprocal deposits as of December 31, 2023 to provide FDIC deposit insurance coverage and peace of mind to larger deposit customers. - Community bank deposits decreased
$40.6 million , or2.6% , during the year ended December 31, 2023 as a result of not increasing our deposit rates this quarter and letting higher rate deposits run-off. - CCBX deposits increased
$583.5 million , or45.6% , during the year ended December 31, 2023.
- Includes
- Deposits increased
EVERETT, Wash., Jan. 30, 2024 (GLOBE NEWSWIRE) -- Coastal Financial Corporation (Nasdaq: CCB) (the “Company”, "Coastal", "we", "our", or "us"), the holding company for Coastal Community Bank (the “Bank”), today reported unaudited financial results for the quarter and fiscal year ended December 31, 2023.
Quarterly net income for the fourth quarter of 2023 was
Total assets increased
We saw solid deposit growth in the fourth quarter, with deposits increasing
"We saw a lot of changes is 2023, with increases in interest rates, bank failures, and other economic challenges. We were able to meet those challenges by being flexible and adjusting our strategy to meet the changing environment. During this turbulent time we were able to reduce uninsured deposits by providing additional FDIC deposit insurance coverage through reciprocal deposits, bringing peace of mind to customers, maintain adequate liquidity and borrowing capacity and still grow both loans and deposits.
"Credit quality was a top priority, and during the quarter ended September 30, 2023 we started the process of optimizing our CCBX loan portfolio by selling higher yielding loans that have a higher potential for credit deterioration or letting such loans mature. As a result of this strategy we are seeing pressure on our margin, but we are on track with repositioning our portfolio and results are in line with our expectations.
"As we look forward to 2024, our focus will be on reducing costs through automation and by leveraging the gains in efficiencies afforded to us in the systems and technology that we continue investing in. We have made progress on reducing expenses in the three months ended December 31, 2023 and will keep working to manage expenses going forward. We will continue our strategy of focusing on larger partners and companies, selecting partnerships that align with our long term profitability and growth objectives. Additionally, we will continue working to optimize our CCBX loan portfolio and manage credit risk. We will work to achieve this by continuing to sell higher yielding loans that have a higher potential for credit deterioration or letting such loans mature, while simultaneously working to strengthen the CCBX portfolio with new loans that meet enhanced credit standards.
"We expect that this strategy will result in lower earnings in the short term with lower loan yields and compressed margins, but will provide for long term stability and profitability," stated Eric Sprink, the CEO of the Company and the Bank.
Results of Operations Overview
The Company has one main subsidiary, the Bank which consists of three segments: CCBX, the community bank and treasury & administration. The CCBX segment includes our BaaS activities, the community bank segment includes all community banking activities, and the treasury & administration segment includes treasury management, overall administration and all other aspects of the Company. Net interest income was
Interest and fees on loans totaled
Interest income from interest earning deposits with other banks was
Total interest expense was
Total cost of deposits was
Net Interest Margin
Net interest margin was
Cost of funds was
During the quarter ended December 31, 2023, total loans receivable increased by
Total yield on loans receivable for the quarter ended December 31, 2023 was
The following table summarizes the average yield on loans receivable and cost of deposits for our community bank and CCBX segments for the periods indicated:
For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||
Yield on Loans (2) | Cost of Deposits (2) | Yield on Loans (2) | Cost of Deposits (2) | Yield on Loans (2) | Cost of Deposits (2) | Yield on Loans (2) | Cost of Deposits (2) | Yield on Loans (2) | Cost of Deposits (2) | ||||||||||
Community Bank | |||||||||||||||||||
CCBX (1) | |||||||||||||||||||
Consolidated |
(1) CCBX yield on loans does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit and fraud enhancements and originating & servicing CCBX loans. To determine Net BaaS loan income earned from CCBX loan relationships, the Company takes BaaS loan interest income and deducts BaaS loan expense to arrive at Net BaaS loan income which can be compared to interest income on the Company’s community bank loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.
(2) Annualized calculations for periods shown.
The following tables illustrates how BaaS loan interest income is affected by BaaS loan expense resulting in net BaaS loan income and the associated yield:
For the Three Months Ended | ||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||
(dollars in thousands, unaudited) | Income / Expense | Income / expense divided by average CCBX loans (2) | Income / Expense | Income / expense divided by average CCBX loans(2) | Income / Expense | Income / expense divided by average CCBX loans (2) | ||||||||||||
BaaS loan interest income | $ | 52,327 | 17.36 | % | $ | 56,279 | 17.05 | % | $ | 38,086 | 15.20 | % | ||||||
Less: BaaS loan expense | 24,310 | 8.06 | % | 23,003 | 6.97 | % | 17,215 | 6.87 | % | |||||||||
Net BaaS loan income (1) | $ | 28,017 | 9.30 | % | $ | 33,276 | 10.08 | % | $ | 20,871 | 8.33 | % | ||||||
Average BaaS Loans(3) | $ | 1,196,137 | $ | 1,309,380 | $ | 994,080 |
For the Twelve Months Ended | ||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||
(dollars in thousands; unaudited) | Income / Expense | Income / expense divided by average CCBX loans (2) | Income / Expense | Income / expense divided by average CCBX loans (2) | ||||||||
BaaS loan interest income | $ | 204,458 | 16.89 | % | $ | 102,808 | 13.85 | % | ||||
Less: BaaS loan expense | 86,900 | 7.18 | % | 53,294 | 7.18 | % | ||||||
Net BaaS loan income (1) | $ | 117,558 | 9.71 | % | $ | 49,514 | 6.67 | % | ||||
Average BaaS Loans(3) | $ | 1,210,413 | $ | 742,392 |
(1) A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.
(2) Annualized calculations shown for quarterly periods presented.
(3) Includes loans held for sale.
Key Performance Ratios
ROA was
The following table shows the Company’s key performance ratios for the periods indicated.
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
(unaudited) | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||
Return on average assets (1) | 0.97 | % | 1.13 | % | 1.52 | % | 1.58 | % | 1.66 | % | 1.28 | % | 1.38 | % | |||||||
Return on average equity (1) | 12.35 | % | 14.60 | % | 19.53 | % | 19.89 | % | 21.86 | % | 16.41 | % | 18.24 | % | |||||||
Yield on earnings assets (1) | 9.77 | % | 10.08 | % | 10.18 | % | 9.19 | % | 8.47 | % | 9.82 | % | 6.68 | % | |||||||
Yield on loans receivable (1) | 10.71 | % | 10.84 | % | 10.85 | % | 9.95 | % | 9.33 | % | 10.60 | % | 8.12 | % | |||||||
Cost of funds (1) | 3.39 | % | 3.18 | % | 2.77 | % | 2.19 | % | 1.61 | % | 2.91 | % | 0.75 | % | |||||||
Cost of deposits (1) | 3.36 | % | 3.14 | % | 2.72 | % | 2.13 | % | 1.56 | % | 2.87 | % | 0.71 | % | |||||||
Net interest margin (1) | 6.61 | % | 7.10 | % | 7.58 | % | 7.15 | % | 6.96 | % | 7.10 | % | 5.97 | % | |||||||
Noninterest expense to average assets (1) | 5.56 | % | 6.23 | % | 6.11 | % | 5.69 | % | 5.97 | % | 5.90 | % | 5.65 | % | |||||||
Noninterest income to average assets (1) | 6.95 | % | 3.81 | % | 6.90 | % | 6.28 | % | 5.43 | % | 5.97 | % | 4.23 | % | |||||||
Efficiency ratio | 41.58 | % | 58.36 | % | 42.92 | % | 43.03 | % | 48.94 | % | 45.92 | % | 56.26 | % | |||||||
Loans receivable to deposits (2) | 90.05 | % | 90.19 | % | 96.23 | % | 92.55 | % | 93.25 | % | 90.05 | % | 93.25 | % |
(1) Annualized calculations shown for quarterly periods presented.
(2) Includes loans held for sale.
Noninterest Income
The following table details noninterest income for the periods indicated:
Three Months Ended | |||||||||||
December 31, | September 30, | December 31, | |||||||||
(dollars in thousands; unaudited) | 2023 | 2023 | 2022 | ||||||||
Deposit service charges and fees | $ | 957 | $ | 998 | $ | 946 | |||||
Loan referral fees | — | 1 | — | ||||||||
Unrealized gain (loss) on equity securities, net | 80 | 5 | (18 | ) | |||||||
Gain on sales of loans, net | — | 107 | — | ||||||||
Other | 60 | 291 | 298 | ||||||||
Noninterest income, excluding BaaS program income and BaaS indemnification income | 1,097 | 1,402 | 1,226 | ||||||||
Servicing and other BaaS fees | 1,015 | 997 | 1,001 | ||||||||
Transaction fees | 1,006 | 1,036 | 964 | ||||||||
Interchange fees | 1,272 | 1,216 | 785 | ||||||||
Reimbursement of expenses | 1,076 | 1,152 | 857 | ||||||||
BaaS program income | 4,369 | 4,401 | 3,607 | ||||||||
BaaS credit enhancements | 58,449 | 25,926 | 31,164 | ||||||||
Baas fraud enhancements | 779 | 2,850 | 6,818 | ||||||||
BaaS indemnification income | 59,228 | 28,776 | 37,982 | ||||||||
Total BaaS income | 63,597 | 33,177 | 41,589 | ||||||||
Total noninterest income | $ | 64,694 | $ | 34,579 | $ | 42,815 |
Noninterest income was
Our CCBX segment continues to evolve, and we now have 21 relationships, at varying stages, as of December 31, 2023. We continue to refine the criteria for CCBX partnerships and are exiting relationships where it makes sense and are focusing on larger more established partners, with experienced management teams, existing customer bases and strong financial positions. The sale of
The following table illustrates the activity and evolution in CCBX relationships for the periods presented.
As of | |||||
(unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | ||
Active | 19 | 18 | 19 | ||
Friends and family / testing | 1 | 1 | 1 | ||
Implementation / onboarding | 1 | 1 | 0 | ||
Signed letters of intent | 0 | 1 | 5 | ||
Wind down - preparing to exit relationship | 0 | 1 | 2 | ||
Total CCBX relationships | 21 | 22 | 27 |
The following table details noninterest expense for the periods indicated:
Noninterest Expense
Three Months Ended | ||||||||||||
December 31, | September 30, | December 31, | ||||||||||
(dollars in thousands; unaudited) | 2023 | 2023 | 2022 | |||||||||
Salaries and employee benefits | $ | 16,490 | $ | 18,087 | $ | 14,399 | ||||||
Legal and professional expenses | 2,649 | 4,447 | 2,799 | |||||||||
Data processing and software licenses | 2,417 | 2,366 | 1,768 | |||||||||
Occupancy | 1,340 | 1,224 | 1,182 | |||||||||
Point of sale expense | 899 | 1,068 | 710 | |||||||||
Director and staff expenses | 478 | 529 | 515 | |||||||||
FDIC assessments | 665 | 694 | 550 | |||||||||
Excise taxes | 449 | 541 | 702 | |||||||||
Marketing | 138 | 169 | 109 | |||||||||
Other | 1,089 | 1,523 | 335 | |||||||||
Noninterest expense, excluding BaaS loan and BaaS fraud expense | 26,614 | 30,648 | 23,069 | |||||||||
BaaS loan expense | 24,310 | 23,003 | 17,215 | |||||||||
BaaS fraud expense | 779 | 2,850 | 6,819 | |||||||||
BaaS loan and fraud expense | 25,089 | 25,853 | 24,034 | |||||||||
Total noninterest expense | $ | 51,703 | $ | 56,501 | $ | 47,103 |
Total noninterest expense decreased
The increase in noninterest expenses for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022 were largely due to an increase of
Provision for Income Taxes
The provision for income taxes was
Financial Condition Overview
Total assets increased
Total assets increased
Loans Receivable
Total loans receivable increased
The following table summarizes the loan portfolio at the period indicated:
As of December 31, 2023 | As of September 30, 2023 | As of December 31, 2022 | ||||||||||||||||||
(dollars in thousands; unaudited) | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||
Commercial and industrial loans: | ||||||||||||||||||||
PPP loans | $ | 3,033 | 0.1 | % | $ | 3,310 | 0.1 | % | $ | 4,699 | 0.2 | % | ||||||||
Capital call lines | 87,494 | 2.9 | 114,174 | 3.8 | 146,029 | 5.5 | ||||||||||||||
All other commercial & industrial loans | 200,767 | 6.6 | 213,791 | 7.2 | 161,900 | 6.1 | ||||||||||||||
Total commercial and industrial loans: | 291,294 | 9.6 | 331,275 | 11.1 | 312,628 | 11.8 | ||||||||||||||
Real estate loans: | ||||||||||||||||||||
Construction, land and land development | 157,100 | 5.2 | 167,686 | 5.6 | 214,055 | 8.1 | ||||||||||||||
Residential real estate | 463,426 | 15.3 | 477,147 | 16.1 | 449,157 | 17.1 | ||||||||||||||
Commercial real estate | 1,303,533 | 43.0 | 1,237,849 | 41.6 | 1,048,752 | 39.8 | ||||||||||||||
Consumer and other loans | 818,039 | 26.9 | 760,463 | 25.6 | 608,771 | 23.2 | ||||||||||||||
Gross loans receivable | 3,033,392 | 100.0 | % | 2,974,420 | 100.0 | % | 2,633,363 | 100.0 | % | |||||||||||
Net deferred origination fees - PPP loans | (47 | ) | (52 | ) | (82 | ) | ||||||||||||||
Net deferred origination fees - all other loans | (7,253 | ) | (7,333 | ) | (6,025 | ) | ||||||||||||||
Loans receivable | $ | 3,026,092 | $ | 2,967,035 | $ | 2,627,256 | ||||||||||||||
Loan Yield (1) | 10.71 | % | 10.84 | % | 9.33 | % |
(1) Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.
Please see Appendix A for additional loan portfolio detail regarding industry concentrations.
The following tables detail the community bank and CCBX loans which are included in the total loan portfolio table above.
Community Bank | As of | ||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||
(dollars in thousands; unaudited) | Balance | % to Total | Balance | % to Total | Balance | % to Total | |||||||||||||||
Commercial and industrial loans: | |||||||||||||||||||||
PPP loans | $ | 3,033 | 0.2 | % | $ | 3,310 | 0.2 | % | $ | 4,699 | 0.3 | % | |||||||||
All other commercial & industrial loans | 146,469 | 8.0 | 154,922 | 8.6 | 146,982 | 9.1 | |||||||||||||||
Real estate loans: | |||||||||||||||||||||
Construction, land and land development loans | 157,100 | 8.5 | 167,686 | 9.4 | 214,055 | 13.2 | |||||||||||||||
Residential real estate loans | 225,391 | 12.3 | 225,372 | 12.6 | 204,581 | 12.6 | |||||||||||||||
Commercial real estate loans | 1,303,533 | 70.9 | 1,237,849 | 69.1 | 1,048,752 | 64.7 | |||||||||||||||
Consumer and other loans: | |||||||||||||||||||||
Other consumer and other loans | 1,628 | 0.1 | 2,483 | 0.1 | 1,725 | 0.1 | |||||||||||||||
Gross Community Bank loans receivable | 1,837,154 | 100.0 | % | 1,791,622 | 100.0 | % | 1,620,794 | 100.0 | % | ||||||||||||
Net deferred origination fees | (7,000 | ) | (6,961 | ) | (6,042 | ) | |||||||||||||||
Loans receivable | $ | 1,830,154 | $ | 1,784,661 | $ | 1,614,752 | |||||||||||||||
Loan Yield(1) | 6.32 | % | 6.20 | % | 5.70 | % |
(1) Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.
CCBX | As of | ||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||
(dollars in thousands; unaudited) | Balance | % to Total | Balance | % to Total | Balance | % to Total | |||||||||||||||
Commercial and industrial loans: | |||||||||||||||||||||
Capital call lines | $ | 87,494 | 7.3 | % | $ | 114,174 | 9.6 | % | $ | 146,029 | 14.4 | % | |||||||||
All other commercial & industrial loans | 54,298 | 4.5 | 58,869 | 5.0 | 14,918 | 1.5 | |||||||||||||||
Real estate loans: | |||||||||||||||||||||
Residential real estate loans | 238,035 | 19.9 | 251,775 | 21.3 | 244,576 | 24.2 | |||||||||||||||
Consumer and other loans: | |||||||||||||||||||||
Credit cards | 505,837 | 42.3 | 440,993 | 37.3 | 279,644 | 27.6 | |||||||||||||||
Other consumer and other loans | 310,574 | 26.0 | 316,987 | 26.8 | 327,402 | 32.3 | |||||||||||||||
Gross CCBX loans receivable | 1,196,238 | 100.0 | % | 1,182,798 | 100.0 | % | 1,012,569 | 100.0 | % | ||||||||||||
Net deferred origination (fees) costs | (300 | ) | (424 | ) | (65 | ) | |||||||||||||||
Loans receivable | $ | 1,195,938 | $ | 1,182,374 | $ | 1,012,504 | |||||||||||||||
Loan Yield - CCBX (1)(2) | 17.36 | % | 17.05 | % | 15.20 | % |
(1) CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements and originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.
(2) Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.
Deposits
Total deposits increased
Total deposits increased
Additionally, as of December 31, 2023,
The following table summarizes the deposit portfolio for the periods indicated.
As of December 31, 2023 | As of September 30, 2023 | As of December 31, 2022 | ||||||||||||||||||
(dollars in thousands; unaudited) | Amount | Percent of Total Deposits | Balance | Percent of Total Deposits | Balance | Percent of Total Deposits | ||||||||||||||
Demand, noninterest bearing | $ | 625,202 | 18.6 | % | $ | 651,786 | 19.8 | % | $ | 775,012 | 27.5 | % | ||||||||
NOW and money market | 2,640,240 | 78.6 | 2,532,668 | 77.0 | 1,804,399 | 64.0 | ||||||||||||||
Savings | 76,562 | 2.3 | 84,628 | 2.6 | 107,117 | 3.8 | ||||||||||||||
Total core deposits | 3,342,004 | 99.5 | 3,269,082 | 99.4 | 2,686,528 | 95.3 | ||||||||||||||
Brokered deposits | 1 | 0.0 | 1 | 0.0 | 101,546 | 3.6 | ||||||||||||||
Time deposits less than | 8,109 | 0.2 | 8,635 | 0.2 | 12,596 | 0.5 | ||||||||||||||
Time deposits | 10,249 | 0.3 | 11,982 | 0.4 | 16,851 | 0.6 | ||||||||||||||
Total | $ | 3,360,363 | 100.0 | % | $ | 3,289,700 | 100.0 | % | $ | 2,817,521 | 100.0 | % | ||||||||
Cost of deposits (1) | 3.36 | % | 3.14 | % | 1.56 | % |
(1) Cost of deposits is annualized for the three months ended for each period presented.
The following tables detail the community bank and CCBX deposits which are included in the total deposit portfolio table above.
Community Bank | As of | ||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||
(dollars in thousands; unaudited) | Balance | % to Total | Balance | % to Total | Balance | % to Total | |||||||||||||||
Demand, noninterest bearing | $ | 561,572 | 37.5 | % | $ | 584,004 | 38.0 | % | $ | 694,179 | 45.2 | % | |||||||||
NOW and money market | 846,072 | 56.5 | 852,747 | 55.5 | 709,490 | 46.1 | |||||||||||||||
Savings | 71,598 | 4.8 | 80,099 | 5.2 | 105,101 | 6.8 | |||||||||||||||
Total core deposits | 1,479,242 | 98.8 | 1,516,850 | 98.7 | 1,508,770 | 98.1 | |||||||||||||||
Brokered deposits | 1 | 0.0 | 1 | 0.0 | 1 | 0.0 | |||||||||||||||
Time deposits less than | 8,109 | 0.5 | 8,635 | 0.5 | 12,596 | 0.8 | |||||||||||||||
Time deposits | 10,249 | 0.7 | 11,982 | 0.8 | 16,851 | 1.1 | |||||||||||||||
Total Community Bank deposits | $ | 1,497,601 | 100.0 | % | $ | 1,537,468 | 100.0 | % | $ | 1,538,218 | 100.0 | % | |||||||||
Cost of deposits(1) | 1.57 | % | 1.31 | % | 0.37 | % |
(1) Cost of deposits is annualized for the three months ended for each period presented.
CCBX | As of | ||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||
(dollars in thousands; unaudited) | Balance | % to Total | Balance | % to Total | Balance | % to Total | |||||||||||||||
Demand, noninterest bearing | $ | 63,630 | 3.4 | % | $ | 67,782 | 3.9 | % | $ | 80,833 | 6.3 | % | |||||||||
NOW and money market | 1,794,168 | 96.3 | 1,679,921 | 95.9 | 1,094,909 | 85.6 | |||||||||||||||
Savings | 4,964 | 0.3 | 4,529 | 0.2 | 2,016 | 0.2 | |||||||||||||||
Total core deposits | 1,862,762 | 100.0 | 1,752,232 | 100.0 | 1,177,758 | 92.1 | |||||||||||||||
BaaS-brokered deposits | — | 0.0 | — | 0.0 | 101,545 | 7.9 | |||||||||||||||
Total CCBX deposits | $ | 1,862,762 | 100.0 | % | $ | 1,752,232 | 100.0 | % | $ | 1,279,303 | 100.0 | % | |||||||||
Cost of deposits (1) | 4.90 | % | 4.80 | % | 3.13 | % |
(1) Cost of deposits is annualized for the three months ended for each period presented.
Borrowings
As of December 31, 2023, the Company had the capacity to borrow up to a total of
Shareholders’ Equity
During the twelve months ended December 31, 2023, the Company contributed
Total shareholders’ equity increased
Capital Ratios
The Company and the Bank remained well capitalized at December 31, 2023, as summarized in the following table.
(unaudited) | Coastal Community Bank | Coastal Financial Corporation | Minimum Well Capitalized Ratios under Prompt Corrective Action (1) | ||||||
Tier 1 Leverage Capital (to average assets) | 9.06 | % | 8.10 | % | 5.00 | % | |||
Common Equity Tier 1 Capital (to risk-weighted assets) | 10.30 | % | 9.10 | % | 6.50 | % | |||
Tier 1 Capital (to risk-weighted assets) | 10.30 | % | 9.20 | % | 8.00 | % | |||
Total Capital (to risk-weighted assets) | 11.58 | % | 11.87 | % | 10.00 | % |
(1) Presents the minimum capital ratios for an insured depository institution, such as the Bank, to be considered well capitalized under the Prompt Corrective Action framework. The minimum requirements for the Company to be considered well capitalized under Regulation Y include to maintain, on a consolidated basis, a total risk-based capital ratio of 10.0 percent or greater and a tier 1 risk-based capital ratio of 6.0 percent or greater.
Asset Quality
Effective January 1, 2023 the Company implemented the CECL allowance model which calculates reserves over the life of the loan and is largely driven by portfolio characteristics, economic outlook, and other key methodology assumptions versus the incurred loss model, which is what we were previously using. As a result of implementing CECL, there was a one-time adjustment to the 2023 opening allowance balance of
The total allowance for credit losses was
The following table details the allocation of the allowance for credit loss as of the period indicated:
As of December 31, 2023 | As of September 30, 2023 | As of December 31, 2022 | ||||||||||||||||||||||||||||||||||
(dollars in thousands; unaudited) | Community Bank | CCBX | Total | Community Bank | CCBX | Total | Community Bank | CCBX | Total | |||||||||||||||||||||||||||
Loans receivable | $ | 1,830,154 | $ | 1,195,938 | $ | 3,026,092 | $ | 1,784,661 | $ | 1,182,374 | $ | 2,967,035 | $ | 1,614,752 | $ | 1,012,504 | $ | 2,627,256 | ||||||||||||||||||
Allowance for credit losses | (21,595 | ) | (95,363 | ) | (116,958 | ) | (21,316 | ) | (79,769 | ) | (101,085 | ) | (20,636 | ) | (53,393 | ) | (74,029 | ) | ||||||||||||||||||
Allowance for credit losses to total loans receivable | 1.18 | % | 7.97 | % | 3.86 | % | 1.19 | % | 6.75 | % | 3.41 | % | 1.28 | % | 5.27 | % | 2.82 | % |
Provision for credit losses - loans totaled
Net charge-offs for this
The following table details net charge-offs for the community bank and CCBX for the period indicated:
Three Months Ended | ||||||||||||||||||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
(dollars in thousands; unaudited) | Community Bank | CCBX | Total | Community Bank | CCBX | Total | Community Bank | CCBX | Total | |||||||||||||||||||||||||||
Gross charge-offs | $ | 2 | $ | 47,650 | $ | 47,652 | $ | 3 | $ | 37,876 | $ | 37,879 | $ | 10 | $ | 18,876 | $ | 18,886 | ||||||||||||||||||
Gross recoveries | (4 | ) | (2,777 | ) | (2,781 | ) | (3 | ) | (1,042 | ) | (1,045 | ) | (3 | ) | (30 | ) | (33 | ) | ||||||||||||||||||
Net charge-offs | $ | (2 | ) | $ | 44,873 | $ | 44,871 | $ | — | $ | 36,834 | $ | 36,834 | $ | 7 | $ | 18,846 | $ | 18,853 | |||||||||||||||||
Net charge-offs to average loans (1) | 0.00 | % | 14.88 | % | 5.92 | % | 0.00 | % | 11.16 | % | 4.77 | % | 0.00 | % | 7.52 | % | 2.87 | % |
(1) Annualized calculations shown for periods presented.
The increase in the Company’s provision for credit losses - loans during the quarter ended December 31, 2023, is a result of an increase in loans receivable. During the quarter ended December 31, 2023, a
In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassified negative deposit accounts. When the provision for CCBX credit losses and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements). Expected losses are recorded in the allowance for credit losses. The credit enhancement asset is relieved when credit enhancement recoveries are received from the CCBX partner. CCBX partners provide for credit enhancements that provide protection to the Bank from credit and fraud losses by indemnifying or reimbursing incurred credit and fraud losses. If our partner is unable to fulfill their contracted obligations then the Bank could be exposed to additional credit losses. Management regularly evaluates and manages this counterparty risk. The Company is responsible for credit losses on approximately
The factors used in management’s analysis for community bank credit losses indicated that a provision of
The following table details the provision expense for the community bank and CCBX for the period indicated:
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||
Community bank | $ | 277 | $ | 664 | $ | 504 | $ | 1,322 | $ | 719 | ||||||||||
CCBX | 60,467 | 26,493 | 33,096 | 182,721 | 78,345 | |||||||||||||||
Total provision expense | $ | 60,744 | $ | 27,157 | $ | 33,600 | $ | 184,043 | $ | 79,064 |
At December 31, 2023, our nonperforming assets were
For the quarter ended December 31, 2023, there were
The following table details the Company’s nonperforming assets for the periods indicated.
(dollars in thousands; unaudited) | As of December 31, 2023 | As of September 30, 2023 | As of December 31, 2022 | ||||||||
Nonaccrual loans: | |||||||||||
Commercial and industrial loans | $ | — | $ | 2 | $ | 113 | |||||
Real estate loans: | |||||||||||
Construction, land and land development | — | — | 66 | ||||||||
Residential real estate | 170 | 176 | — | ||||||||
Commercial real estate | 7,145 | 7,145 | 6,901 | ||||||||
Total nonaccrual loans | 7,315 | 7,323 | 7,080 | ||||||||
Accruing loans past due 90 days or more: | |||||||||||
Commercial & industrial loans | 2,086 | 1,387 | 404 | ||||||||
Real estate loans: | |||||||||||
Residential real estate loans | 1,115 | 1,462 | 876 | ||||||||
Consumer and other loans: | |||||||||||
Credit cards | 34,835 | 24,807 | 10,570 | ||||||||
Other consumer and other loans | 8,488 | 8,561 | 14,245 | ||||||||
Total accruing loans past due 90 days or more | 46,524 | 36,217 | 26,095 | ||||||||
Total nonperforming loans | 53,839 | 43,540 | 33,175 | ||||||||
Real estate owned | — | — | — | ||||||||
Repossessed assets | — | — | — | ||||||||
Modified loans for borrowers experiencing financial difficulty | — | — | — | ||||||||
Total nonperforming assets | $ | 53,839 | $ | 43,540 | $ | 33,175 | |||||
Total nonaccrual loans to loans receivable | 0.24 | % | 0.25 | % | 0.27 | % | |||||
Total nonperforming loans to loans receivable | 1.78 | % | 1.47 | % | 1.26 | % | |||||
Total nonperforming assets to total assets | 1.43 | % | 1.18 | % | 1.06 | % |
The following tables detail the community bank and CCBX nonperforming assets which are included in the total nonperforming assets table above.
Community Bank | As of | ||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||
Nonaccrual loans: | |||||||||||
Commercial and industrial loans | $ | — | $ | 2 | $ | 113 | |||||
Real estate: | |||||||||||
Construction, land and land development | — | — | 66 | ||||||||
Residential real estate | 170 | 176 | — | ||||||||
Commercial real estate | 7,145 | 7,145 | 6,901 | ||||||||
Total nonaccrual loans | 7,315 | 7,323 | 7,080 | ||||||||
Accruing loans past due 90 days or more: | |||||||||||
Total accruing loans past due 90 days or more | — | — | — | ||||||||
Total nonperforming loans | 7,315 | 7,323 | 7,080 | ||||||||
Other real estate owned | — | — | — | ||||||||
Repossessed assets | — | — | — | ||||||||
Total nonperforming assets | $ | 7,315 | $ | 7,323 | $ | 7,080 |
CCBX | As of | ||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||
Nonaccrual loans | $ | — | $ | — | $ | — | |||||
Accruing loans past due 90 days or more: | |||||||||||
Commercial & industrial loans | 2,086 | 1,387 | 404 | ||||||||
Real estate loans: | |||||||||||
Residential real estate loans | 1,115 | 1,462 | 876 | ||||||||
Consumer and other loans: | |||||||||||
Credit cards | 34,835 | 24,807 | 10,570 | ||||||||
Other consumer and other loans | 8,488 | 8,561 | 14,245 | ||||||||
Total accruing loans past due 90 days or more | 46,524 | 36,217 | 26,095 | ||||||||
Total nonperforming loans | 46,524 | 36,217 | 26,095 | ||||||||
Other real estate owned | — | — | — | ||||||||
Repossessed assets | — | — | — | ||||||||
Total nonperforming assets | $ | 46,524 | $ | 36,217 | $ | 26,095 |
About Coastal Financial
Coastal Financial Corporation (Nasdaq: CCB) (the “Company”), is an Everett, Washington based bank holding company whose wholly owned subsidiaries are Coastal Community Bank (“Bank”) and Arlington Olympic LLC. The
CCB-ER
Contact
Eric Sprink, Chief Executive Officer, (425) 357-3659
Joel Edwards, Executive Vice President & Chief Financial Officer, (425) 357-3687
Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of or reference to forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of risks, uncertainties and assumptions that are difficult to predict. Factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, the risks and uncertainties discussed under “Risk Factors” in our Annual Report on Form 10-K for the most recent period filed, our Quarterly Report on Form 10-Q for the most recent quarter, and in any of our subsequent filings with the Securities and Exchange Commission.
If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. You are cautioned not to place undue reliance on forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as required by law.
COASTAL FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands; unaudited)
ASSETS | |||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||
Cash and due from banks | $ | 31,345 | $ | 29,984 | $ | 32,722 | |||||
Interest earning deposits with other banks | 451,783 | 444,962 | 309,417 | ||||||||
Investment securities, available for sale, at fair value | 99,504 | 98,939 | 97,317 | ||||||||
Investment securities, held to maturity, at amortized cost | 50,860 | 42,550 | 1,036 | ||||||||
Other investments | 10,227 | 11,898 | 10,555 | ||||||||
Loans receivable | 3,026,092 | 2,967,035 | 2,627,256 | ||||||||
Allowance for credit losses | (116,958 | ) | (101,085 | ) | (74,029 | ) | |||||
Total loans receivable, net | 2,909,134 | 2,865,950 | 2,553,227 | ||||||||
CCBX credit enhancement asset | 107,921 | 91,867 | 53,377 | ||||||||
CCBX receivable | 9,088 | 10,623 | 10,416 | ||||||||
Premises and equipment, net | 22,090 | 20,543 | 18,213 | ||||||||
Operating lease right-of-use assets | 5,932 | 6,126 | 5,018 | ||||||||
Accrued interest receivable | 26,819 | 23,428 | 17,815 | ||||||||
Bank-owned life insurance, net | 12,870 | 12,970 | 12,667 | ||||||||
Deferred tax asset, net | 3,806 | 4,404 | 18,458 | ||||||||
Other assets | 11,987 | 14,021 | 4,229 | ||||||||
Total assets | $ | 3,753,366 | $ | 3,678,265 | $ | 3,144,467 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
LIABILITIES | |||||||||||
Deposits | $ | 3,360,363 | $ | 3,289,700 | $ | 2,817,521 | |||||
Subordinated debt, net | 44,144 | 44,106 | 43,999 | ||||||||
Junior subordinated debentures, net | 3,590 | 3,589 | 3,588 | ||||||||
Deferred compensation | 479 | 513 | 616 | ||||||||
Accrued interest payable | 892 | 1,056 | 684 | ||||||||
Operating lease liabilities | 6,124 | 6,321 | 5,234 | ||||||||
CCBX payable | 33,651 | 38,229 | 20,419 | ||||||||
Other liabilities | 9,145 | 10,301 | 8,912 | ||||||||
Total liabilities | 3,458,388 | 3,393,815 | 2,900,973 | ||||||||
SHAREHOLDERS’ EQUITY | |||||||||||
Common stock | 130,137 | 129,244 | 125,830 | ||||||||
Retained earnings | 165,310 | 156,299 | 119,998 | ||||||||
Accumulated other comprehensive loss, net of tax | (469 | ) | (1,093 | ) | (2,334 | ) | |||||
Total shareholders’ equity | 294,978 | 284,450 | 243,494 | ||||||||
Total liabilities and shareholders’ equity | $ | 3,753,366 | $ | 3,678,265 | $ | 3,144,467 |
COASTAL FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts; unaudited)
Three Months Ended | |||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||
INTEREST AND DIVIDEND INCOME | |||||||||||
Interest and fees on loans | $ | 81,159 | $ | 83,652 | $ | 61,226 | |||||
Interest on interest earning deposits with other banks | 5,687 | 3,884 | 3,097 | ||||||||
Interest on investment securities | 1,225 | 766 | 557 | ||||||||
Dividends on other investments | 172 | 29 | 150 | ||||||||
Total interest income | 88,243 | 88,331 | 65,030 | ||||||||
INTEREST EXPENSE | |||||||||||
Interest on deposits | 27,916 | 25,451 | 11,061 | ||||||||
Interest on borrowed funds | 670 | 651 | 537 | ||||||||
Total interest expense | 28,586 | 26,102 | 11,598 | ||||||||
Net interest income | 59,657 | 62,229 | 53,432 | ||||||||
PROVISION FOR CREDIT LOSSES - LOANS | 60,744 | 27,157 | 33,600 | ||||||||
PROVISION (RECAPTURE) FOR UNFUNDED COMMITMENTS | 45 | 96 | — | ||||||||
Net interest income after provision for credit losses - loans and unfunded commitments | (1,132 | ) | 34,976 | 19,832 | |||||||
NONINTEREST INCOME | |||||||||||
Deposit service charges and fees | 957 | 998 | 946 | ||||||||
Loan referral fees | — | 1 | — | ||||||||
Gain on sales of loans, net | — | 107 | — | ||||||||
Unrealized (loss) gain on equity securities, net | 80 | 5 | (18 | ) | |||||||
Other income | 60 | 291 | 298 | ||||||||
Noninterest income, excluding BaaS program income and BaaS indemnification income | 1,097 | 1,402 | 1,226 | ||||||||
Servicing and other BaaS fees | 1,015 | 997 | 1,001 | ||||||||
Transaction fees | 1,006 | 1,036 | 964 | ||||||||
Interchange fees | 1,272 | 1,216 | 785 | ||||||||
Reimbursement of expenses | 1,076 | 1,152 | 857 | ||||||||
BaaS program income | 4,369 | 4,401 | 3,607 | ||||||||
BaaS credit enhancements | 58,449 | 25,926 | 31,164 | ||||||||
BaaS fraud enhancements | 779 | 2,850 | 6,818 | ||||||||
BaaS indemnification income | 59,228 | 28,776 | 37,982 | ||||||||
Total noninterest income | 64,694 | 34,579 | 42,815 | ||||||||
NONINTEREST EXPENSE | |||||||||||
Salaries and employee benefits | 16,490 | 18,087 | 14,399 | ||||||||
Occupancy | 1,340 | 1,224 | 1,182 | ||||||||
Data processing and software licenses | 2,417 | 2,366 | 1,768 | ||||||||
Legal and professional expenses | 2,649 | 4,447 | 2,799 | ||||||||
Point of sale expense | 899 | 1,068 | 710 | ||||||||
Excise taxes | 449 | 541 | 702 | ||||||||
Federal Deposit Insurance Corporation ("FDIC") assessments | 665 | 694 | 550 | ||||||||
Director and staff expenses | 478 | 529 | 515 | ||||||||
Marketing | 138 | 169 | 109 | ||||||||
Other expense | 1,089 | 1,523 | 335 | ||||||||
Noninterest expense, excluding BaaS loan and BaaS fraud expense | 26,614 | 30,648 | 23,069 | ||||||||
BaaS loan expense | 24,310 | 23,003 | 17,215 | ||||||||
BaaS fraud expense | 779 | 2,850 | 6,819 | ||||||||
BaaS loan and fraud expense | 25,089 | 25,853 | 24,034 | ||||||||
Total noninterest expense | 51,703 | 56,501 | 47,103 | ||||||||
Income before provision for income taxes | 11,859 | 13,054 | 15,544 | ||||||||
PROVISION FOR INCOME TAXES | 2,847 | 2,784 | 2,426 | ||||||||
NET INCOME | $ | 9,012 | $ | 10,270 | $ | 13,118 | |||||
Basic earnings per common share | $ | 0.68 | $ | 0.77 | $ | 1.01 | |||||
Diluted earnings per common share | $ | 0.66 | $ | 0.75 | $ | 0.96 | |||||
Weighted average number of common shares outstanding: | |||||||||||
Basic | 13,286,828 | 13,285,974 | 13,030,726 | ||||||||
Diluted | 13,676,513 | 13,675,833 | 13,603,978 |
COASTAL FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts; unaudited)
Twelve Months Ended | |||||||
December 31, 2023 | December 31, 2022 | ||||||
INTEREST AND DIVIDEND INCOME | |||||||
Interest and fees on loans | $ | 311,441 | $ | 183,352 | |||
Interest on interest earning deposits with other banks | 15,346 | 6,728 | |||||
Interest on investment securities | 3,197 | 1,745 | |||||
Dividends on other investments | 387 | 345 | |||||
Total interest income | 330,371 | 192,170 | |||||
INTEREST EXPENSE | |||||||
Interest on deposits | 89,000 | 19,004 | |||||
Interest on borrowed funds | 2,644 | 1,391 | |||||
Total interest expense | 91,644 | 20,395 | |||||
Net interest income | 238,727 | 171,775 | |||||
PROVISION FOR CREDIT LOSSES - LOANS | 184,043 | 79,064 | |||||
PROVISION (RECAPTURE) FOR UNFUNDED COMMITMENTS | (51 | ) | — | ||||
Net interest income after provision for credit losses - loans and unfunded commitments | 54,735 | 92,711 | |||||
NONINTEREST INCOME | |||||||
Deposit service charges and fees | 3,854 | 3,804 | |||||
Loan referral fees | 683 | 810 | |||||
Gain on sales of loans, net | 253 | — | |||||
Unrealized (loss) gain on equity securities, net | 279 | (153 | ) | ||||
Other income | 884 | 1,344 | |||||
Noninterest income, excluding BaaS program income and BaaS indemnification income | 5,953 | 5,805 | |||||
Servicing and other BaaS fees | 3,855 | 4,408 | |||||
Transaction fees | 4,011 | 3,211 | |||||
Interchange fees | 4,252 | 2,583 | |||||
Reimbursement of expenses | 4,175 | 2,732 | |||||
BaaS program income | 16,293 | 12,934 | |||||
BaaS credit enhancements | 177,764 | 76,374 | |||||
BaaS fraud enhancements | 7,165 | 29,571 | |||||
BaaS indemnification income | 184,929 | 105,945 | |||||
Total noninterest income | 207,175 | 124,684 | |||||
NONINTEREST EXPENSE | |||||||
Salaries and employee benefits | 66,461 | 52,228 | |||||
Occupancy | 4,926 | 4,548 | |||||
Data processing and software licenses | 8,595 | 6,487 | |||||
Legal and professional expenses | 14,803 | 6,760 | |||||
Point of sale expense | 3,534 | 2,109 | |||||
Excise taxes | 1,976 | 2,204 | |||||
Federal Deposit Insurance Corporation ("FDIC") assessments | 2,524 | 2,859 | |||||
Director and staff expenses | 2,152 | 1,711 | |||||
Marketing | 517 | 351 | |||||
Other expense | 5,224 | 4,652 | |||||
Noninterest expense, excluding BaaS loan and BaaS fraud expense | 110,712 | 83,909 | |||||
BaaS loan expense | 86,900 | 53,294 | |||||
BaaS fraud expense | 7,165 | 29,571 | |||||
BaaS loan and fraud expense | 94,065 | 82,865 | |||||
Total noninterest expense | 204,777 | 166,774 | |||||
Income before provision for income taxes | 57,133 | 50,621 | |||||
PROVISION FOR INCOME TAXES | 12,554 | 9,996 | |||||
NET INCOME | $ | 44,579 | $ | 40,625 | |||
Basic earnings per common share | $ | 3.36 | $ | 3.14 | |||
Diluted earnings per common share | $ | 3.27 | $ | 3.01 | |||
Weighted average number of common shares outstanding: | |||||||
Basic | 13,261,664 | 12,949,266 | |||||
Diluted | 13,640,182 | 13,514,952 |
COASTAL FINANCIAL CORPORATION
AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY
(Dollars in thousands; unaudited)
For the Three Months Ended | |||||||||||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||
Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | |||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Interest earning assets: | |||||||||||||||||||||||||||||
Interest earning deposits with other banks | $ | 413,127 | $ | 5,687 | 5.46 | % | $ | 285,596 | $ | 3,884 | 5.40 | % | $ | 329,354 | $ | 3,097 | 3.73 | % | |||||||||||
Investment securities, available for sale (2) | 100,204 | 546 | 2.16 | 100,283 | 543 | 2.15 | 100,269 | 550 | 2.18 | ||||||||||||||||||||
Investment securities, held to maturity (2) | 49,469 | 679 | 5.45 | 17,703 | 223 | 5.00 | 1,235 | 7 | 2.25 | ||||||||||||||||||||
Other investments | 11,683 | 172 | 5.84 | 11,943 | 29 | 0.96 | 10,592 | 150 | 5.62 | ||||||||||||||||||||
Loans receivable (3) | 3,007,289 | 81,159 | 10.71 | 3,062,214 | 83,652 | 10.84 | 2,603,962 | 61,226 | 9.33 | ||||||||||||||||||||
Total interest earning assets | 3,581,772 | 88,243 | 9.77 | 3,477,739 | 88,331 | 10.08 | 3,045,412 | 65,030 | 8.47 | ||||||||||||||||||||
Noninterest earning assets: | |||||||||||||||||||||||||||||
Allowance for credit losses | (95,391 | ) | (100,329 | ) | (58,440 | ) | |||||||||||||||||||||||
Other noninterest earning assets | 204,052 | 220,750 | 141,624 | ||||||||||||||||||||||||||
Total assets | $ | 3,690,433 | $ | 3,598,160 | $ | 3,128,596 | |||||||||||||||||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||||||||||
Interest bearing deposits | $ | 2,660,235 | $ | 27,916 | 4.16 | % | $ | 2,515,093 | $ | 25,451 | 4.01 | % | $ | 2,006,679 | $ | 11,061 | 2.19 | % | |||||||||||
FHLB advances and borrowings | 1 | — | — | — | — | — | 5 | — | — | ||||||||||||||||||||
Subordinated debt | 44,121 | 598 | 5.38 | 44,084 | 580 | 5.22 | 37,455 | 484 | 5.13 | ||||||||||||||||||||
Junior subordinated debentures | 3,590 | 72 | 7.96 | 3,589 | 71 | 7.85 | 3,588 | 53 | 5.86 | ||||||||||||||||||||
Total interest bearing liabilities | 2,707,947 | 28,586 | 4.19 | 2,562,766 | 26,102 | 4.04 | 2,047,727 | 11,598 | 2.25 | ||||||||||||||||||||
Noninterest bearing deposits | 640,424 | 698,532 | 807,794 | ||||||||||||||||||||||||||
Other liabilities | 52,450 | 57,865 | 34,944 | ||||||||||||||||||||||||||
Total shareholders' equity | 289,612 | 278,997 | 238,131 | ||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 3,690,433 | $ | 3,598,160 | $ | 3,128,596 | |||||||||||||||||||||||
Net interest income | $ | 59,657 | $ | 62,229 | $ | 53,432 | |||||||||||||||||||||||
Interest rate spread | 5.59 | % | 6.04 | % | 6.22 | % | |||||||||||||||||||||||
Net interest margin (4) | 6.61 | % | 7.10 | % | 6.96 | % |
(1) Yields and costs are annualized.
(2) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(3) Includes loans held for sale and nonaccrual loans.
(4) Net interest margin represents net interest income divided by the average total interest earning assets.
COASTAL FINANCIAL CORPORATION
SELECTED AVERAGE BALANCES, YIELDS, AND RATES – BY SEGMENT - QUARTERLY
(Dollars in thousands; unaudited)
For the Three Months Ended | ||||||||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||
(dollars in thousands, unaudited) | Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | |||||||||||||||||
Community Bank | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||||
Loans receivable (2) | $ | 1,811,152 | $ | 28,832 | 6.32 | % | $ | 1,752,834 | $ | 27,373 | 6.20 | % | $ | 1,609,882 | $ | 23,140 | 5.70 | % | ||||||||
Total interest earning assets | 1,811,152 | 28,832 | 6.32 | 1,752,834 | 27,373 | 6.20 | 1,609,882 | 23,140 | 5.70 | |||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||||
Interest bearing deposits | 951,148 | 6,090 | 2.54 | % | 920,707 | 5,067 | 2.18 | % | 864,001 | 1,502 | 0.69 | % | ||||||||||||||
Intrabank liability | 275,995 | 3,799 | 5.46 | 223,221 | 3,036 | 5.40 | 8,069 | 76 | 3.74 | |||||||||||||||||
Total interest bearing liabilities | 1,227,143 | 9,889 | 3.20 | 1,143,928 | 8,103 | 2.81 | 872,070 | 1,578 | 0.72 | |||||||||||||||||
Noninterest bearing deposits | 584,009 | 608,906 | 737,812 | |||||||||||||||||||||||
Net interest income | $ | 18,943 | $ | 19,270 | $ | 21,562 | ||||||||||||||||||||
Net interest margin(3) | 4.15 | % | 4.36 | % | 5.31 | % | ||||||||||||||||||||
CCBX | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||||
Loans receivable (2)(4) | $ | 1,196,137 | $ | 52,327 | 17.36 | % | $ | 1,309,380 | $ | 56,279 | 17.05 | % | $ | 994,080 | $ | 38,086 | 15.20 | % | ||||||||
Intrabank asset | 569,365 | 7,837 | 5.46 | 374,632 | 5,095 | 5.40 | 218,581 | 2,055 | 3.73 | |||||||||||||||||
Total interest earning assets | 1,765,502 | 60,164 | 13.52 | 1,684,012 | 61,374 | 14.46 | 1,212,661 | 40,141 | 13.13 | |||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||||
Interest bearing deposits | 1,709,087 | 21,826 | 5.07 | % | 1,594,386 | 20,384 | 5.07 | % | 1,142,678 | 9,559 | 3.32 | % | ||||||||||||||
Total interest bearing liabilities | 1,709,087 | 21,826 | 5.07 | 1,594,386 | 20,384 | 5.07 | 1,142,678 | 9,559 | 3.32 | |||||||||||||||||
Noninterest bearing deposits | 56,415 | 89,626 | 69,982 | |||||||||||||||||||||||
Net interest income | $ | 38,338 | $ | 40,990 | $ | 30,582 | ||||||||||||||||||||
Net interest margin(3) | 8.62 | % | 9.66 | % | 10.01 | % | ||||||||||||||||||||
Net interest margin, net of Baas loan expense (5) | 3.15 | % | 4.24 | % | 4.37 | % |
For the Three Months Ended | ||||||||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||
(dollars in thousands, unaudited) | Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | |||||||||||||||||
Treasury & Administration | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||||
Interest earning deposits with other banks | $ | 413,127 | $ | 5,687 | 5.46 | % | $ | 285,596 | $ | 3,884 | 5.40 | % | $ | 329,354 | $ | 3,097 | 3.73 | % | ||||||||
Investment securities, available for sale (6) | 100,204 | 546 | 2.16 | 100,283 | 543 | 2.15 | 100,269 | 550 | 2.18 | |||||||||||||||||
Investment securities, held to maturity (6) | 49,469 | 679 | 5.45 | 17,703 | 223 | 5.00 | 1,235 | 7 | 2.25 | |||||||||||||||||
Other investments | 11,683 | 172 | 5.84 | 11,943 | 29 | 0.96 | 10,592 | 150 | 5.62 | |||||||||||||||||
Total interest earning assets | 574,483 | 7,084 | 4.89 | % | 415,525 | 4,679 | 4.47 | % | 441,450 | 3,804 | 3.42 | % | ||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||||
FHLB advances and borrowings | $ | 3 | $ | — | — | % | — | — | — | % | 5 | — | — | % | ||||||||||||
Subordinated debt | 44,121 | 598 | 5.38 | % | 44,084 | 580 | 5.22 | % | 37,455 | 484 | 5.13 | % | ||||||||||||||
Junior subordinated debentures | 3,590 | 72 | 7.96 | 3,589 | 71 | 7.85 | 3,588 | 53 | 5.86 | |||||||||||||||||
Intrabank liability, net (7) | 293,370 | 4,038 | 5.46 | 151,411 | 2,059 | 5.40 | 210,511 | 1,979 | 3.73 | |||||||||||||||||
Total interest bearing liabilities | 341,084 | 4,708 | 5.48 | 199,084 | 2,710 | 5.40 | 251,559 | 2,516 | 3.97 | |||||||||||||||||
Net interest income | $ | 2,376 | $ | 1,969 | $ | 1,288 | ||||||||||||||||||||
Net interest margin(3) | 1.64 | % | 1.88 | % | 1.16 | % |
(1) Yields and costs are annualized.
(2) Includes loans held for sale and nonaccrual loans.
(3) Net interest margin represents net interest income divided by the average total interest earning assets.
(4) CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.
(5) Net interest margin, net of BaaS loan expense includes the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release.
(6) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(7) Intrabank assets and liabilities are consolidated for period calculations and presented as intrabank asset, net or intrabank liability, net in the table above.
COASTAL FINANCIAL CORPORATION
AVERAGE BALANCES, YIELDS, AND RATES – YEAR-TO-DATE
(Dollars in thousands; unaudited)
For the Twelve Months Ended | |||||||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||
(dollars in thousands; unaudited) | Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | |||||||||||||
Assets | |||||||||||||||||||
Interest earning assets: | |||||||||||||||||||
Interest earning deposits with other banks | $ | 295,808 | $ | 15,346 | 5.19 | % | $ | 515,967 | $ | 6,728 | 1.30 | % | |||||||
Investment securities, available for sale (2) | 100,260 | 2,158 | 2.15 | 91,970 | 1,710 | 1.86 | |||||||||||||
Investment securities, held to maturity (2) | 19,918 | 1,039 | 5.22 | 1,266 | 35 | 2.76 | |||||||||||||
Other investments | 11,512 | 387 | 3.36 | 10,146 | 345 | 3.40 | |||||||||||||
Loans receivable (3) | 2,936,908 | 311,441 | 10.60 | 2,257,787 | 183,352 | 8.12 | |||||||||||||
Total interest earning assets | 3,364,406 | 330,371 | 9.82 | 2,877,136 | 192,170 | 6.68 | |||||||||||||
Noninterest earning assets: | |||||||||||||||||||
Allowance for credit losses | (91,194 | ) | (46,769 | ) | |||||||||||||||
Other noninterest earning assets | 198,071 | 119,817 | |||||||||||||||||
Total assets | $ | 3,471,283 | $ | 2,950,184 | |||||||||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||
Interest bearing deposits | $ | 2,395,012 | $ | 89,000 | 3.72 | % | $ | 1,724,020 | $ | 19,004 | 1.10 | % | |||||||
FHLB advances and borrowings | — | — | — | 6,029 | 69 | 1.14 | |||||||||||||
Subordinated debt | 44,066 | 2,373 | 5.39 | 27,626 | 1,179 | 4.27 | |||||||||||||
Junior subordinated debentures | 3,589 | 271 | 7.55 | 3,587 | 143 | 3.99 | |||||||||||||
Total interest bearing liabilities | 2,442,667 | 91,644 | 3.75 | 1,761,262 | 20,395 | 1.16 | |||||||||||||
Noninterest bearing deposits | 707,641 | 942,087 | |||||||||||||||||
Other liabilities | 49,271 | 24,097 | |||||||||||||||||
Total shareholders' equity | 271,704 | 222,738 | |||||||||||||||||
Total liabilities and shareholders' equity | $ | 3,471,283 | $ | 2,950,184 | |||||||||||||||
Net interest income | $ | 238,727 | $ | 171,775 | |||||||||||||||
Interest rate spread | 6.07 | % | 5.52 | % | |||||||||||||||
Net interest margin (4) | 7.10 | % | 5.97 | % |
(1) Yields and costs are annualized.
(2) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(3) Includes loans held for sale and nonaccrual loans.
(4) Net interest margin represents net interest income divided by the average total interest earning assets.
COASTAL FINANCIAL CORPORATION
SELECTED AVERAGE BALANCES, YIELDS, AND RATES – BY SEGMENT – YEAR-TO-DATE
(Dollars in thousands; unaudited)
For the Twelve Months Ended | ||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||
(dollars in thousands; unaudited) | Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | ||||||||||||
Community Bank | ||||||||||||||||||
Assets | ||||||||||||||||||
Interest earning assets: | ||||||||||||||||||
Loans receivable (2) | $ | 1,726,495 | $ | 106,983 | 6.20 | % | $ | 1,515,395 | $ | 80,544 | 5.32 | % | ||||||
Intrabank asset | — | — | — | 123,156 | 796 | 0.65 | ||||||||||||
Total interest earning assets | 1,726,495 | 106,983 | 6.20 | 1,638,551 | 81,340 | 4.96 | ||||||||||||
Liabilities | ||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||
Interest bearing deposits | 900,516 | 17,354 | 1.93 | % | 905,447 | 2,896 | 0.32 | % | ||||||||||
Intrabank liability | 198,176 | 10,404 | 5.25 | — | — | — | ||||||||||||
Total interest bearing liabilities | 1,098,692 | 27,758 | 2.53 | 905,447 | 2,896 | 0.32 | ||||||||||||
Noninterest bearing deposits | 627,803 | 733,104 | ||||||||||||||||
Net interest income | $ | 79,225 | $ | 78,444 | ||||||||||||||
Net interest margin(3) | 4.59 | % | 4.79 | % | ||||||||||||||
CCBX | ||||||||||||||||||
Assets | ||||||||||||||||||
Interest earning assets: | ||||||||||||||||||
Loans receivable (2)(4) | $ | 1,210,413 | $ | 204,458 | 16.89 | % | $ | 742,392 | $ | 102,808 | 13.85 | % | ||||||
Intrabank asset | 363,921 | 19,071 | 5.24 | 285,164 | 4,106 | 1.44 | ||||||||||||
Total interest earning assets | 1,574,334 | 223,529 | 14.20 | 1,027,556 | 106,914 | 10.40 | ||||||||||||
Liabilities | ||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||
Interest bearing deposits | 1,494,496 | 71,646 | 4.79 | % | 818,573 | 16,108 | 1.97 | % | ||||||||||
Total interest bearing liabilities | 1,494,496 | 71,646 | 4.79 | 818,573 | 16,108 | 1.97 | ||||||||||||
Noninterest bearing deposits | 79,838 | 208,983 | ||||||||||||||||
Net interest income | $ | 151,883 | $ | 90,806 | ||||||||||||||
Net interest margin(3) | 9.65 | % | 8.84 | % | ||||||||||||||
Net interest margin, net of Baas loan expense (5) | 4.13 | % | 3.65 | % |
For the Twelve Months Ended | ||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||
(dollars in thousands; unaudited) | Average Balance | Interest & Dividends | Yield / Cost (1) | Average Balance | Interest & Dividends | Yield / Cost (1) | ||||||||||||
Treasury & Administration | ||||||||||||||||||
Assets | ||||||||||||||||||
Interest earning assets: | ||||||||||||||||||
Interest earning deposits with other banks | $ | 295,808 | $ | 15,346 | 5.19 | % | $ | 515,967 | $ | 6,728 | 1.30 | % | ||||||
Investment securities, available for sale (6) | 100,260 | 2,158 | 2.15 | 91,970 | 1,710 | 1.86 | ||||||||||||
Investment securities, held to maturity (6) | 19,918 | 1,039 | 5.22 | 1,266 | 35 | 2.76 | ||||||||||||
Other investments | 11,512 | 387 | 3.36 | 10,146 | 345 | 3.40 | ||||||||||||
Total interest earning assets | 427,498 | 18,930 | 4.43 | 619,349 | 8,818 | 1.42 | ||||||||||||
Liabilities | ||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||
FHLB advances and borrowings | — | — | — | % | 6,029 | 69 | 1.14 | % | ||||||||||
Subordinated debt | 44,066 | 2,373 | 5.39 | 27,626 | 1,179 | 4.27 | ||||||||||||
Junior subordinated debentures | 3,589 | 271 | 7.55 | 3,587 | 143 | 3.99 | ||||||||||||
Intrabank liability, net (7) | 165,745 | 8,667 | 5.23 | 408,320 | 4,902 | 1.20 | ||||||||||||
Total interest bearing liabilities | 213,400 | 11,311 | 5.30 | 445,562 | 6,293 | 1.41 | ||||||||||||
Net interest income | $ | 7,619 | $ | 2,525 | ||||||||||||||
Net interest margin(3) | 1.78 | % | 0.41 | % |
(1) Yields and costs are annualized.
(2) Includes loans held for sale and nonaccrual loans.
(3) Net interest margin represents net interest income divided by the average total interest earning assets.
(4) CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.
(5) Net interest margin, net of BaaS loan expense includes the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release.
(6) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(7) Intrabank assets and liabilities are consolidated for period calculations and presented as intrabank asset, net or intrabank liability, net in the table above.
COASTAL FINANCIAL CORPORATION
QUARTERLY STATISTICS
(Dollars in thousands, except share and per share data; unaudited)
Three Months Ended | |||||||||||||||||||
December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||||||
Income Statement Data: | |||||||||||||||||||
Interest and dividend income | $ | 88,243 | $ | 88,331 | $ | 83,686 | $ | 70,111 | $ | 65,030 | |||||||||
Interest expense | 28,586 | 26,102 | 21,336 | 15,620 | 11,598 | ||||||||||||||
Net interest income | 59,657 | 62,229 | 62,350 | 54,491 | 53,432 | ||||||||||||||
Provision for credit losses - loans | 60,744 | 27,157 | 52,598 | 43,544 | 33,600 | ||||||||||||||
Provision (recovery) for unfunded commitments | 45 | 96 | (345 | ) | 153 | — | |||||||||||||
Net interest income after provision for credit losses - loans and unfunded commitments | (1,132 | ) | 34,976 | 10,097 | 10,794 | 19,832 | |||||||||||||
Noninterest income | 64,694 | 34,579 | 58,595 | 49,307 | 42,815 | ||||||||||||||
Noninterest expense | 51,703 | 56,501 | 51,910 | 44,663 | 47,103 | ||||||||||||||
Provision for income tax | 2,847 | 2,784 | 3,876 | 3,047 | 2,426 | ||||||||||||||
Net income | 9,012 | 10,270 | 12,906 | 12,391 | 13,118 | ||||||||||||||
As of and for the Three Month Period | |||||||||||||||||||
December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||||||
Balance Sheet Data: | |||||||||||||||||||
Cash and cash equivalents | $ | 483,128 | $ | 474,946 | $ | 275,060 | $ | 393,916 | $ | 342,139 | |||||||||
Investment securities | 150,364 | 141,489 | 110,730 | 101,704 | 98,353 | ||||||||||||||
Loans held for sale | — | — | 35,923 | 27,292 | — | ||||||||||||||
Loans receivable | 3,026,092 | 2,967,035 | 3,007,553 | 2,837,204 | 2,627,256 | ||||||||||||||
Allowance for credit losses | (116,958 | ) | (101,085 | ) | (110,762 | ) | (89,123 | ) | (74,029 | ) | |||||||||
Total assets | 3,753,366 | 3,678,265 | 3,535,283 | 3,451,033 | 3,144,467 | ||||||||||||||
Interest bearing deposits | 2,735,161 | 2,637,914 | 2,436,980 | 2,333,423 | 2,042,509 | ||||||||||||||
Noninterest bearing deposits | 625,202 | 651,786 | 725,592 | 761,800 | 775,012 | ||||||||||||||
Core deposits (1) | 3,342,004 | 3,269,082 | 3,137,747 | 3,068,162 | 2,686,528 | ||||||||||||||
Total deposits | 3,360,363 | 3,289,700 | 3,162,572 | 3,095,223 | 2,817,521 | ||||||||||||||
Total borrowings | 47,734 | 47,695 | 47,658 | 47,619 | 47,587 | ||||||||||||||
Total shareholders’ equity | 294,978 | 284,450 | 272,662 | 258,763 | 243,494 | ||||||||||||||
Share and Per Share Data (2): | |||||||||||||||||||
Earnings per share – basic | $ | 0.68 | $ | 0.77 | $ | 0.97 | $ | 0.94 | $ | 1.01 | |||||||||
Earnings per share – diluted | $ | 0.66 | $ | 0.75 | $ | 0.95 | $ | 0.91 | $ | 0.96 | |||||||||
Dividends per share | — | — | — | — | — | ||||||||||||||
Book value per share (3) | $ | 22.17 | $ | 21.38 | $ | 20.50 | $ | 19.48 | $ | 18.50 | |||||||||
Tangible book value per share (4) | $ | 22.17 | $ | 21.38 | $ | 20.50 | $ | 19.48 | $ | 18.50 | |||||||||
Weighted avg outstanding shares – basic | 13,286,828 | 13,285,974 | 13,275,640 | 13,196,960 | 13,030,726 | ||||||||||||||
Weighted avg outstanding shares – diluted | 13,676,513 | 13,675,833 | 13,597,763 | 13,609,491 | 13,603,978 | ||||||||||||||
Shares outstanding at end of period | 13,304,339 | 13,302,449 | 13,300,809 | 13,281,533 | 13,161,147 | ||||||||||||||
Stock options outstanding at end of period | 354,969 | 356,359 | 357,999 | 360,119 | 438,103 |
See footnotes on following page
As of and for the Three Month Period | |||||||||||||||||||
December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||||||
Credit Quality Data: | |||||||||||||||||||
Nonperforming assets (5) to total assets | 1.43 | % | 1.18 | % | 0.95 | % | 0.91 | % | 1.06 | % | |||||||||
Nonperforming assets (5) to loans receivable and OREO | 1.78 | % | 1.47 | % | 1.12 | % | 1.11 | % | 1.26 | % | |||||||||
Nonperforming loans (5) to total loans receivable | 1.78 | % | 1.47 | % | 1.12 | % | 1.11 | % | 1.26 | % | |||||||||
Allowance for credit losses to nonperforming loans | 217.2 | % | 232.2 | % | 328.4 | % | 282.5 | % | 224.4 | % | |||||||||
Allowance for credit losses to total loans receivable | 3.86 | % | 3.41 | % | 3.68 | % | 3.14 | % | 2.82 | % | |||||||||
Gross charge-offs | $ | 47,652 | $ | 37,879 | $ | 32,299 | $ | 34,167 | $ | 18,886 | |||||||||
Gross recoveries | $ | 2,781 | $ | 1,045 | $ | 1,340 | $ | 1,865 | $ | 33 | |||||||||
Net charge-offs to average loans (6) | 5.92 | % | 4.77 | % | 4.19 | % | 4.84 | % | 2.87 | % | |||||||||
Capital Ratios (7): | |||||||||||||||||||
Tier 1 leverage capital | 8.10 | % | 8.03 | % | 8.16 | % | 8.29 | % | 7.97 | % | |||||||||
Common equity Tier 1 risk-based capital | 9.10 | % | 9.00 | % | 8.36 | % | 8.61 | % | 8.92 | % | |||||||||
Tier 1 risk-based capital | 9.20 | % | 9.11 | % | 8.47 | % | 8.73 | % | 9.04 | % | |||||||||
Total risk-based capital | 11.87 | % | 11.80 | % | 11.12 | % | 11.49 | % | 11.94 | % |
(1) Core deposits are defined as all deposits excluding brokered and all time deposits.
(2) Share and per share amounts are based on total actual or average common shares outstanding, as applicable.
(3) We calculate book value per share as total shareholders’ equity at the end of the relevant period divided by the outstanding number of our common shares at the end of each period.
(4) Tangible book value per share is a non-GAAP financial measure. We calculate tangible book value per share as total shareholders’ equity at the end of the relevant period, less goodwill and other intangible assets, divided by the outstanding number of our common shares at the end of each period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets as of any of the dates indicated. As a result, tangible book value per share is the same as book value per share as of each of the dates indicated.
(5) Nonperforming assets and nonperforming loans include loans 90+ days past due and accruing interest.
(6) Annualized calculations.
(7) Capital ratios are for the Company, Coastal Financial Corporation.
Non-GAAP Financial Measures
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, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.
The following non-GAAP measures are presented to illustrate the impact of BaaS loan expense on net loan income and yield on CCBX loans and the impact of BaaS loan expense on net interest income and net interest margin.
Net BaaS loan income divided by average CCBX loans is a non-GAAP measure that includes the impact BaaS loan expense on net BaaS loan income and the yield on CCBX loans. The most directly comparable GAAP measure is yield on CCBX loans.
Net interest income net of BaaS loan expense is a non-GAAP measure that includes the impact BaaS loan expense on net interest income. The most directly comparable GAAP measure is net interest income.
Net interest margin, net of BaaS loan expense is a non-GAAP measure that includes the impact of BaaS loan expense on net interest rate margin. The most directly comparable GAAP measure is net interest margin.
Reconciliations of the GAAP and non-GAAP measures are presented below.
As of and for the Three Months Ended | As of and for the Twelve Months Ended | |||||||||||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||
Net BaaS loan income divided by average CCBX loans: | ||||||||||||||||||||
CCBX loan yield (GAAP)(1) | 17.36 | % | 17.05 | % | 15.20 | % | 16.89 | % | 13.85 | % | ||||||||||
Total average CCBX loans receivable | $ | 1,196,137 | $ | 1,309,380 | $ | 994,080 | $ | 1,210,413 | $ | 742,392 | ||||||||||
Interest and earned fee income on CCBX loans (GAAP) | 52,327 | 56,279 | 38,086 | 204,458 | 102,808 | |||||||||||||||
BaaS loan expense | (24,310 | ) | (23,003 | ) | (17,215 | ) | (86,900 | ) | (53,294 | ) | ||||||||||
Net BaaS loan income | $ | 28,017 | $ | 33,276 | $ | 20,871 | $ | 117,558 | $ | 49,514 | ||||||||||
Net BaaS loan income divided by average CCBX loans (1) | 9.30 | % | 10.08 | % | 8.33 | % | 9.71 | % | 6.67 | % | ||||||||||
Net interest margin, net of BaaS loan expense: | ||||||||||||||||||||
CCBX interest margin (1) | 8.62 | % | 9.66 | % | 10.01 | % | 9.65 | % | 8.84 | % | ||||||||||
CCBX earning assets | 1,765,502 | 1,684,012 | 1,212,661 | 1,574,334 | 1,027,556 | |||||||||||||||
Net interest income | 38,338 | 40,990 | 30,582 | 151,883 | 90,806 | |||||||||||||||
Less: BaaS loan expense | (24,310 | ) | (23,003 | ) | (17,215 | ) | (86,900 | ) | (53,294 | ) | ||||||||||
Net interest income, net of BaaS loan expense | $ | 14,028 | $ | 17,987 | $ | 13,367 | $ | 64,983 | $ | 37,512 | ||||||||||
Net interest margin, net of BaaS loan expense (1) | 3.15 | % | 4.24 | % | 4.37 | % | 4.13 | % | 3.65 | % |
(1) Annualized calculations for periods presented.
APPENDIX A -
As of December 31, 2023
Industry Concentration
We have a diversified loan portfolio, representing a wide variety of industries. Our major categories of loans are commercial real estate, consumer and other loans, residential real estate, commercial and industrial, and construction, land and land development loans. Together they represent
Commercial real estate loans represent the largest segment of our loans, comprising
The following table summarizes our loan commitment by industry for our commercial real estate portfolio as of December 31, 2023:
(dollars in thousands; unaudited) | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment | % of Total Loans (Outstanding Balance & Available Commitment) | Average Loan Balance | Number of Loans | |||||||||||
Apartments | $ | 356,046 | $ | 10,783 | $ | 366,829 | 6.8 | % | $ | 3,359 | 106 | ||||||
Hotel/Motel | 172,437 | 2,345 | 174,782 | 3.2 | 6,387 | 27 | |||||||||||
Convenience Store | 132,007 | 1,086 | 133,093 | 2.5 | 2,164 | 61 | |||||||||||
Mixed use | 93,850 | 3,475 | 97,325 | 1.8 | 1,079 | 87 | |||||||||||
Warehouse | 114,572 | 2,166 | 116,738 | 2.2 | 1,975 | 58 | |||||||||||
Office | 89,007 | 3,447 | 92,454 | 1.7 | 989 | 90 | |||||||||||
Retail | 101,688 | 719 | 102,407 | 1.9 | 987 | 103 | |||||||||||
Mini Storage | 65,731 | 23,979 | 89,710 | 1.7 | 3,130 | 21 | |||||||||||
Strip Mall | 44,590 | — | 44,590 | 0.8 | 6,370 | 7 | |||||||||||
Manufacturing | 37,946 | 1,514 | 39,460 | 0.7 | 1,186 | 32 | |||||||||||
Groups < | 95,659 | 4,775 | 100,434 | 1.9 | 1,139 | 84 | |||||||||||
Total | $ | 1,303,533 | $ | 54,289 | $ | 1,357,822 | 25.2 | % | $ | 1,928 | 676 |
Consumer loans comprise
The following table summarizes our loan commitment by industry for our consumer and other loan portfolio as of December 31, 2023:
(dollars in thousands; unaudited) | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment (1) | % of Total Loans (Outstanding Balance & Available Commitment) | Average Loan Balance | Number of Loans | |||||||||||
CCBX consumer loans | |||||||||||||||||
Credit cards | $ | 505,837 | $ | 1,014,959 | $ | 1,520,796 | 28.3 | % | $ | 1.6 | 308,955 | ||||||
Installment loans | 302,241 | 134 | 302,375 | 5.6 | 1.1 | 266,203 | |||||||||||
Lines of credit | 5,788 | 63 | 5,851 | 0.1 | 0.1 | 102,805 | |||||||||||
Other loans | 2,545 | — | 2,545 | 0.1 | 0.2 | 10,993 | |||||||||||
Community bank consumer loans | |||||||||||||||||
Installment loans | 1,151 | — | 1,151 | 0.0 | 57.6 | 20 | |||||||||||
Lines of credit | 147 | 582 | 729 | 0.0 | 3.5 | 42 | |||||||||||
Other loans | 330 | — | 330 | 0.0 | 1.1 | 314 | |||||||||||
Total | $ | 818,039 | $ | 1,015,738 | $ | 1,833,777 | 34.1 | % | $ | 1.2 | 689,332 |
(1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.
Residential real estate loans comprise
The following table summarizes our loan commitment by industry for our residential real estate loan portfolio as of December 31, 2023:
(dollars in thousands; unaudited) | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment (1) | % of Total Loans (Outstanding Balance & Available Commitment) | Average Loan Balance | Number of Loans | |||||||||||
CCBX residential real estate loans | |||||||||||||||||
Home equity line of credit | $ | 238,035 | $ | 418,761 | $ | 656,796 | 12.2 | % | $ | 24 | 9,792 | ||||||
Community bank residential real estate loans | |||||||||||||||||
Closed end, secured by first liens | 192,805 | 3,268 | 196,073 | 3.7 | 610 | 316 | |||||||||||
Home equity line of credit | 23,049 | 42,048 | 65,097 | 1.2 | 106 | 217 | |||||||||||
Closed end, second liens | 9,537 | 1,810 | 11,347 | 0.2 | 281 | 34 | |||||||||||
Total | $ | 463,426 | $ | 465,887 | $ | 929,313 | 17.3 | % | $ | 45 | 10,359 |
(1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.
Commercial and industrial loans comprise
The following table summarizes our loan commitment by industry for our commercial and industrial loan portfolio as of December 31, 2023:
(dollars in thousands; unaudited) | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment (1) | % of Total Loans (Outstanding Balance & Available Commitment) | Average Loan Balance | Number of Loans | |||||||||||
Capital Call Lines | $ | 87,494 | $ | 608,837 | $ | 696,331 | 12.9 | % | $ | 537 | 163 | ||||||
Retail | 52,208 | 1,842 | 54,050 | 1.0 | 18 | 2,887 | |||||||||||
Construction/Contractor Services | 24,360 | 31,020 | 55,380 | 1.0 | 129 | 189 | |||||||||||
Financial Institutions | 48,648 | — | 48,648 | 0.9 | 4,054 | 12 | |||||||||||
Medical / Dental / Other Care | 20,732 | 3,852 | 24,584 | 0.5 | 942 | 22 | |||||||||||
Manufacturing | 8,022 | 3,967 | 11,989 | 0.2 | 187 | 43 | |||||||||||
Groups < | 49,830 | 45,453 | 95,283 | 1.8 | 67 | 744 | |||||||||||
Total | $ | 291,294 | $ | 694,971 | $ | 986,265 | 18.3 | % | $ | 72 | 4,060 |
(1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.
We have individual CCBX partner portfolio limits with our each of our partners to manage loan concentration risk, liquidity risk, and counter-party partner risk. For example, as of December 31, 2023, capital call lines outstanding balance totaled
(dollars in thousands; unaudited) | Balance | Percent of CCBX loans receivable | Available Commitments (1) | Maximum Portfolio Size | Cash Reserve/Pledge Account Amount (2) | |||||||||
Commercial and industrial loans: | ||||||||||||||
Capital call lines | $ | 87,494 | 7.3 | % | $ | 608,837 | $ | 350,000 | $ | — | ||||
All other commercial & industrial loans | 54,298 | 4.5 | 9,144 | 305,905 | 2,426 | |||||||||
Real estate loans: | ||||||||||||||
Home equity lines of credit (3) | 238,035 | 19.9 | 418,761 | 375,000 | 28,043 | |||||||||
Consumer and other loans: | ||||||||||||||
Credit cards - cash secured | 43 | — | — | |||||||||||
Credit cards - unsecured | 505,794 | 1,014,959 | 27,704 | |||||||||||
Credit cards - total | 505,837 | 42.3 | 1,014,959 | 756,614 | 27,704 | |||||||||
Installment loans - cash secured | 68,856 | — | — | |||||||||||
Installment loans - unsecured | 233,385 | 134 | 8,960 | |||||||||||
Installment loans - total | 302,241 | 25.3 | 134 | 933,374 | 8,960 | |||||||||
Other consumer and other loans | 8,333 | 0.7 | 63 | 709,108 | 820 | |||||||||
Gross CCBX loans receivable | 1,196,238 | 100.0 | % | 2,051,898 | 3,430,001 | $ | 67,953 | |||||||
Net deferred origination fees | (300 | ) | ||||||||||||
Loans receivable | $ | 1,195,938 |
(1) Remaining commitment available, net of outstanding balance.
(2) Balances are as of January 9, 2024.
(3) These home equity lines of credit are secured by residential real estate and are accessed by using a credit card, but are classified as 1-4 family residential properties per regulatory guidelines.
Construction, land and land development loans comprise
The following table details our loan commitment for our construction, land and land development portfolio as of December 31, 2023:
(dollars in thousands; unaudited) | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment | % of Total Loans (Outstanding Balance & Available Commitment) | Average Loan Balance | Number of Loans | |||||||||||
Commercial construction | $ | 81,489 | $ | 85,584 | $ | 167,073 | 3.1 | % | $ | 5,433 | 15 | ||||||
Undeveloped land loans | 7,890 | 4,391 | 12,281 | 0.2 | 564 | 14 | |||||||||||
Residential construction | 34,213 | 16,687 | 50,900 | 1.0 | 1,711 | 20 | |||||||||||
Developed land loans | 20,515 | 2,734 | 23,249 | 0.4 | 789 | 26 | |||||||||||
Land development | 12,993 | 4,138 | 17,131 | 0.3 | 866 | 15 | |||||||||||
Total | $ | 157,100 | $ | 113,534 | $ | 270,634 | 5.0 | % | $ | 1,746 | 90 |
Exposure and risk in our construction, land and land development portfolio is lower in the current period compared to previous periods as demonstrated by the declining outstanding balance for the periods indicated in the following table:
Outstanding Balance as of | |||||||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||||||
Commercial construction | $ | 81,489 | $ | 91,396 | $ | 78,079 | $ | 97,987 | $ | 100,714 | |||||
Residential construction | 34,213 | 33,971 | 35,032 | 32,268 | 32,879 | ||||||||||
Undeveloped land loans | 7,890 | 8,310 | 42,530 | 41,951 | 44,578 | ||||||||||
Developed land loans | 20,515 | 21,369 | 18,735 | 19,130 | 20,167 | ||||||||||
Land development | 12,993 | 12,640 | 12,330 | 15,299 | 15,717 | ||||||||||
Total | $ | 157,100 | $ | 167,686 | $ | 186,706 | $ | 206,635 | $ | 214,055 |
APPENDIX B -
As of December 31, 2023
CCBX – BaaS Reporting Information
During the quarter ended December 31, 2023,
For CCBX partner loans the Bank records contractual interest earned from the borrower on loans in interest income, adjusted for origination costs which are paid or payable to the CCBX partner. BaaS loan expense represents the amount paid or payable to partners for credit and fraud enhancements and originating & servicing CCBX loans. To determine net revenue (Net BaaS loan income) earned from CCBX loan relationships, the Bank takes BaaS loan interest income and deducts BaaS loan expense to arrive at Net BaaS loan income (A reconciliation of the non-GAAP measures are set forth in the preceding section of this earnings release.) which can be compared to interest income on the Company’s community bank loans.
The following table illustrates how CCBX partner loan income and expenses are recorded in the financial statements:
Loan income and related loan expense | Three Months Ended | Twelve Months Ended | ||||||||||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||
Yield on loans (1) | 17.36 | % | 17.05 | % | 15.20 | % | 16.89 | % | 13.85 | % | ||||||||||
BaaS loan interest income | $ | 52,327 | $ | 56,279 | $ | 38,086 | $ | 204,458 | $ | 102,808 | ||||||||||
Less: BaaS loan expense | 24,310 | 23,003 | 17,215 | 86,900 | 53,294 | |||||||||||||||
Net BaaS loan income (2) | 28,017 | 33,276 | 20,871 | 117,558 | 49,514 | |||||||||||||||
Net BaaS loan income divided by average BaaS loans (1)(2) | 9.30 | % | 10.08 | % | 8.33 | % | 9.71 | % | 6.67 | % |
(1) Annualized calculation for quarterly periods shown.
(2) A reconciliation of the non-GAAP measures are set forth in the preceding section of this earnings release.
A decrease in CCBX loans receivable resulted in decreased interest income on CCBX loans during the quarter ended December 31, 2023 compared to the quarter ended September 30, 2023. The decrease in CCBX loans receivable was primarily due to the sale of CCBX loans as part of our strategy to reduce risk, optimize the CCBX loan portfolio and strengthen our balance sheet through enhanced credit standards. Increased interest rates and growth in CCBX loans and deposits has resulted in increases in interest income and expense for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022.
The following tables are a summary of the interest components, direct fees, and expenses of BaaS for the periods indicated and are not inclusive of all income and expense related to BaaS.
Interest income | Three Months Ended | Twelve Months Ended | |||||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||
Loan interest income | $ | 52,327 | $ | 56,279 | $ | 38,086 | $ | 204,458 | $ | 102,808 | |||||
Total BaaS interest income | $ | 52,327 | $ | 56,279 | $ | 38,086 | $ | 204,458 | $ | 102,808 |
Interest expense | Three Months Ended | Twelve Months Ended | |||||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||
BaaS interest expense | $ | 21,826 | $ | 20,384 | $ | 9,559 | $ | 71,646 | $ | 16,108 | |||||
Total BaaS interest expense | $ | 21,826 | $ | 20,384 | $ | 9,559 | $ | 71,646 | $ | 16,108 |
BaaS income | Three Months Ended | Twelve Months Ended | |||||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||
BaaS program income: | |||||||||||||||
Servicing and other BaaS fees | $ | 1,015 | $ | 997 | $ | 1,001 | $ | 3,855 | $ | 4,408 | |||||
Transaction fees | 1,006 | 1,036 | 964 | 4,011 | 3,211 | ||||||||||
Interchange fees | 1,272 | 1,216 | 785 | 4,252 | 2,583 | ||||||||||
Reimbursement of expenses | 1,076 | 1,152 | 857 | 4,175 | 2,732 | ||||||||||
BaaS program income | 4,369 | 4,401 | 3,607 | 16,293 | 12,934 | ||||||||||
BaaS indemnification income: | |||||||||||||||
BaaS credit enhancements | 58,449 | 25,926 | 31,164 | 177,764 | 76,374 | ||||||||||
BaaS fraud enhancements | 779 | 2,850 | 6,818 | 7,165 | 29,571 | ||||||||||
BaaS indemnification income | 59,228 | 28,776 | 37,982 | 184,929 | 105,945 | ||||||||||
Total BaaS income | $ | 63,597 | $ | 33,177 | $ | 41,589 | $ | 201,222 | $ | 118,879 |
BaaS loan and fraud expense: | Three Months Ended | Twelve Months Ended | |||||||||||||
(dollars in thousands; unaudited) | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||
BaaS loan expense | $ | 24,310 | $ | 23,003 | $ | 17,215 | $ | 86,900 | $ | 53,294 | |||||
BaaS fraud expense | 779 | 2,850 | 6,819 | 7,165 | 29,571 | ||||||||||
Total BaaS loan and fraud expense | $ | 25,089 | $ | 25,853 | $ | 24,034 | $ | 94,065 | $ | 82,865 |
FAQ
What was the net income for Coastal Financial Corporation in Q4 2023?
How much did total assets increase by in Q4 2023?
What was the growth in CCBX deposits for Coastal Financial Corporation in Q4 2023?