Coastal Financial Corporation Announces Third Quarter 2024 Results
Coastal Financial (CCB) reported strong Q3 2024 results with net income of $13.5 million, or $0.97 per diluted share, up from $11.6 million in Q2 2024. The company saw net loan growth of $92.4 million despite selling $423.7 million in loans. Key highlights include a balance sheet positioned for lower rates with $1.95 billion of CCBX deposits that reprice immediately upon Federal Funds Rate reduction, and $1.09 billion of CCBX loans repricing in 90 days or less. ROA improved to 1.34%, while total assets reached $4.07 billion. The company maintains 22 CCBX relationships and continues to expand product offerings with existing partners.
Coastal Financial (CCB) ha riportato risultati solidi per il terzo trimestre del 2024, con un utile netto di 13,5 milioni di dollari, ovvero 0,97 dollari per azione diluita, in aumento rispetto agli 11,6 milioni di dollari del secondo trimestre del 2024. L'azienda ha visto una crescita netta dei prestiti di 92,4 milioni di dollari nonostante la vendita di prestiti per 423,7 milioni di dollari. I principali punti salienti includono un bilancio posizionato per tassi inferiori, con 1,95 miliardi di dollari di depositi CCBX che si riprezzeranno immediatamente dopo una riduzione del tasso dei fondi federali, e 1,09 miliardi di dollari di prestiti CCBX che si riprezzeranno entro 90 giorni o meno. Il ROA è migliorato all'1,34%, mentre il totale degli attivi ha raggiunto i 4,07 miliardi di dollari. L'azienda mantiene 22 relazioni CCBX e continua a espandere l'offerta di prodotti con i partner esistenti.
Coastal Financial (CCB) reportó resultados sólidos en el tercer trimestre de 2024, con un ingreso neto de 13,5 millones de dólares, o 0,97 dólares por acción diluida, un aumento desde los 11,6 millones de dólares en el segundo trimestre de 2024. La compañía vio un crecimiento neto de préstamos de 92,4 millones de dólares a pesar de haber vendido 423,7 millones de dólares en préstamos. Los aspectos destacados incluyen un balance posicionado para tasas más bajas con 1,95 mil millones de dólares en depósitos CCBX que se reajustarán inmediatamente tras la reducción de la tasa de fondos federales, y 1,09 mil millones de dólares en préstamos CCBX que se reajustarán en 90 días o menos. El ROA mejoró al 1,34%, mientras que los activos totales alcanzaron los 4,07 mil millones de dólares. La compañía mantiene 22 relaciones CCBX y continúa ampliando su oferta de productos con socios existentes.
코스탈 파이낸셜 (CCB)은 2024년 3분기 강력한 실적을 보고했으며 순이익 1,350만 달러, 즉 희석 주당 0.97달러로, 2024년 2분기의 1,160만 달러에서 증가했습니다. 회사는 4억 2,370만 달러의 대출을 판매했음에도 불구하고 9,240만 달러의 순 대출 성장을 보았습니다. 주요 하이라이트는 연방 자금 금리 인하 시 즉시 재가격 조정되는 19억 5천만 달러의 CCBX 예금과 90일 이내에 재가격 조정되는 10억 9천만 달러의 CCBX 대출로, 낮은 금리를 반영하기 위해 포지셔닝된 대차대조표입니다. ROA는 1.34%로 개선되었고, 총 자산은 40억 7천만 달러에 도달했습니다. 회사는 22개의 CCBX 관계를 유지하고 있으며 기존 파트너와 함께 제품 제공을 계속 확장하고 있습니다.
Coastal Financial (CCB) a annoncé des résultats solides pour le troisième trimestre de 2024, avec un revenu net de 13,5 millions de dollars, soit 0,97 dollar par action diluée, en hausse par rapport à 11,6 millions de dollars au deuxième trimestre de 2024. La société a constaté une croissance nette des prêts de 92,4 millions de dollars malgré la vente de prêts pour 423,7 millions de dollars. Les points saillants incluent un bilan positionné pour des taux plus bas, avec 1,95 milliard de dollars de dépôts CCBX qui se réajustent immédiatement après une baisse du taux des fonds fédéraux, et 1,09 milliard de dollars de prêts CCBX qui se réajustent dans les 90 jours ou moins. Le ROA s'est amélioré à 1,34%, tandis que le total des actifs a atteint 4,07 milliards de dollars. L'entreprise maintient 22 relations CCBX et continue d'élargir son offre de produits avec des partenaires existants.
Coastal Financial (CCB) hat starke Ergebnisse für das dritte Quartal 2024 berichtet, mit einem Nettoeinkommen von 13,5 Millionen Dollar, bzw. 0,97 Dollar pro verwässerter Aktie, ein Anstieg von 11,6 Millionen Dollar im zweiten Quartal 2024. Das Unternehmen verzeichnete ein Nettowachstum der Kredite von 92,4 Millionen Dollar, trotz des Verkaufs von Krediten in Höhe von 423,7 Millionen Dollar. Zu den wichtigsten Höhepunkten gehören eine Bilanz, die für niedrigere Zinsen positioniert ist, mit 1,95 Milliarden Dollar an CCBX-Einlagen, die sofort nach einer Senkung des Federal Funds Rate umschichtet werden, und 1,09 Milliarden Dollar an CCBX-Krediten, die in 90 Tagen oder weniger umgeschichtet werden. ROA verbesserte sich auf 1,34%, während die Gesamtsumme der Vermögenswerte 4,07 Milliarden Dollar erreichte. Das Unternehmen hält 22 CCBX-Beziehungen und erweitert weiterhin das Produktangebot mit bestehenden Partnern.
- Net income increased to $13.5 million from $11.6 million QoQ
- ROA improved to 1.34% from 1.21% QoQ
- Net interest income grew 16% YoY to $72.2 million
- Net loan growth of $92.4 million in Q3
- CCBX loans increased by $106.9 million (7.6%)
- Net charge-offs to average loans at 5.65%
- Nonperforming assets to total assets at 1.34%
- Higher noninterest expenses QoQ due to increased BaaS loan expense
- Community bank loans decreased by $14.5 million (0.8%)
Insights
The Q3 2024 results show strong financial performance with several positive indicators. Net income increased to
Notable metrics:
- Net interest income grew
9.0% quarter-over-quarter to$72.2 million - ROA improved to
1.34% from1.21% in Q2 - Loan portfolio expanded by
$92.4 million despite significant loan sales - Strategic loan sales of
$423.7 million demonstrate effective balance sheet management
The company's positioning for lower rates with
The operational metrics reveal solid execution of Coastal's BaaS strategy. The CCBX segment shows impressive growth with 22 active relationships and expanding product offerings with existing partners. Key operational developments include:
- Credit card program expansion with active growth in both dollars and card numbers
- Improved credit standards and risk management through strategic loan sales
- Efficient capital management with core deposits at
97.8% of total CCBX deposits - Strong asset quality with allowance for credit losses at
4.98%
The bifurcation of the President role into separate CCBX and community bank positions indicates strategic focus on specialized growth areas while maintaining traditional banking strength.
EVERETT, Wash., Oct. 28, 2024 (GLOBE NEWSWIRE) -- Coastal Financial Corporation (Nasdaq: CCB) (the “Company”, "Coastal", "we", "our", or "us"), the holding company for Coastal Community Bank (the “Bank”), through which it operates a community-focused bank with an industry leading banking as a service ("BaaS") segment, today reported unaudited financial results for the quarter ended September 30, 2024, including net income of
Management Discussion of the Quarter
“The third quarter demonstrated strong momentum across both our community bank and CCBX operating segments, despite a still challenging operating environment,” said CEO Eric Sprink. “We saw high quality net loan growth of
Key Points for Third Quarter and Our Go-Forward Strategy
- Balance Sheet Well Positioned for Lower Rates. Our balance sheet stands in a modestly liability sensitive position as of September 30, 2024, with
$1.95 billion of CCBX deposits that contractually reprice lower immediately upon any reduction in the Federal Funds Rate, with$1.09 billion of CCBX loans repricing in 90 days or less following such reduction. The Federal Open Market Committee recently lowered the targeted Federal Funds rate0.50% on September 19, 2024; a reduction of0.50% compared to June 30, 2024 and September 30, 2023. The rate decrease came late in the quarter, so the full impact of this and any subsequent rate changes will be reflected in future periods. - Expanding Relationships with CCBX Partners. We continue to focus on expanding product offerings with existing CCBX partners. We believe that launching new products with existing partners positions us to reach a wide and established customer base with modest increase in enterprise risk. Products launched in 2024 with existing partners have gained traction and are growing the balance sheet and increasing income. The pipeline for CCBX is active, although we expect to remain selective in adding new partners to manage risk and capital.
- On-going Loan Sales. We sold
$423.7 million loans in the quarter ended September 30, 2024 as part of our strategy to balance credit risk, manage partner and lending limits, protect capital levels and move credit card balances to an off balance sheet fee generating model. We are retaining a portion of the fee income for our role in processing transactions on sold credit card balances. This provides an on-going and passive revenue stream with no on balance sheet risk. - Continued Regulatory and Compliance Infrastructure Investments Position Us Well for Next Phase of Growth. We continue to utilize co-sourced personnel as a component of our risk and compliance efforts. This flexible co-sourcing approach allows us to manage the growth of our internal team while also ensuring CCBX has the resources it needs. While we remain
100% indemnified against partner fraud losses, we were encouraged to see fraudulent activity amongst our partners remains low during the current quarter, compared to the same period last year, a positive indicator of our continued investments in our risk infrastructure. - Reorganization and Strengthening of Talent to Accommodate Growth and Plans for the Future. We recently announced the bifurcation of the President of the Bank into two roles, appointing Brian Hamilton as President of CCBX, the Fintech and BaaS segment of the Bank, with Curt Queyrouze serving as President of the community bank and corporate credit.
Third Quarter 2024 Financial Highlights
The tables below outline some of our key operating metrics.
Three Months Ended | ||||||||||||||||||||
(Dollars in thousands, except share and per share data; unaudited) | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | |||||||||||||||
Income Statement Data: | ||||||||||||||||||||
Interest and dividend income | $ | 105,079 | $ | 97,487 | $ | 90,472 | $ | 88,243 | $ | 88,331 | ||||||||||
Interest expense | 32,892 | 31,250 | 29,536 | 28,586 | 26,102 | |||||||||||||||
Net interest income | 72,187 | 66,237 | 60,936 | 59,657 | 62,229 | |||||||||||||||
Provision for credit losses | 70,257 | 62,325 | 83,158 | 60,789 | 27,253 | |||||||||||||||
Net interest (expense)/ income after provision for credit losses | 1,930 | 3,912 | (22,222 | ) | (1,132 | ) | 34,976 | |||||||||||||
Noninterest income | 80,068 | 69,918 | 86,955 | 64,694 | 34,579 | |||||||||||||||
Noninterest expense | 65,616 | 58,809 | 56,018 | 51,703 | 56,501 | |||||||||||||||
Provision for income tax | 2,926 | 3,425 | 1,915 | 2,847 | 2,784 | |||||||||||||||
Net income | 13,456 | 11,596 | 6,800 | 9,012 | 10,270 | |||||||||||||||
As of and for the Three Month Period | ||||||||||||||||||||
September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 484,026 | $ | 487,245 | $ | 515,128 | $ | 483,128 | $ | 474,946 | ||||||||||
Investment securities | 48,620 | 49,213 | 50,090 | 150,364 | 141,489 | |||||||||||||||
Loans held for sale | 7,565 | — | 797 | — | — | |||||||||||||||
Loans receivable | 3,418,832 | 3,326,460 | 3,199,554 | 3,026,092 | 2,967,035 | |||||||||||||||
Allowance for credit losses | (170,263 | ) | (147,914 | ) | (139,258 | ) | (116,958 | ) | (101,085 | ) | ||||||||||
Total assets | 4,065,821 | 3,961,546 | 3,865,258 | 3,753,366 | 3,678,265 | |||||||||||||||
Interest bearing deposits | 3,047,861 | 2,949,643 | 2,888,867 | 2,735,161 | 2,637,914 | |||||||||||||||
Noninterest bearing deposits | 579,427 | 593,789 | 574,112 | 625,202 | 651,786 | |||||||||||||||
Core deposits (1) | 3,190,869 | 3,528,339 | 3,447,864 | 3,342,004 | 3,269,082 | |||||||||||||||
Total deposits | 3,627,288 | 3,543,432 | 3,462,979 | 3,360,363 | 3,289,700 | |||||||||||||||
Total borrowings | 47,847 | 47,810 | 47,771 | 47,734 | 47,695 | |||||||||||||||
Total shareholders’ equity | 331,930 | 316,693 | 303,709 | 294,978 | 284,450 | |||||||||||||||
Share and Per Share Data (2): | ||||||||||||||||||||
Earnings per share – basic | $ | 1.00 | $ | 0.86 | $ | 0.51 | $ | 0.68 | $ | 0.77 | ||||||||||
Earnings per share – diluted | $ | 0.97 | $ | 0.84 | $ | 0.50 | $ | 0.66 | $ | 0.75 | ||||||||||
Dividends per share | — | — | — | — | — | |||||||||||||||
Book value per share (3) | $ | 24.51 | $ | 23.54 | $ | 22.65 | $ | 22.17 | $ | 21.38 | ||||||||||
Tangible book value per share (4) | $ | 24.51 | $ | 23.54 | $ | 22.65 | $ | 22.17 | $ | 21.38 | ||||||||||
Weighted avg outstanding shares – basic | 13,447,066 | 13,412,667 | 13,340,997 | 13,286,828 | 13,285,974 | |||||||||||||||
Weighted avg outstanding shares – diluted | 13,822,270 | 13,736,508 | 13,676,917 | 13,676,513 | 13,675,833 | |||||||||||||||
Shares outstanding at end of period | 13,543,282 | 13,453,805 | 13,407,320 | 13,304,339 | 13,302,449 | |||||||||||||||
Stock options outstanding at end of period | 198,370 | 286,119 | 309,069 | 354,969 | 356,359 | |||||||||||||||
See footnotes that follow the tables below | ||||||||||||||||||||
As of and for the Three Month Period | ||||||||||||||||||||
September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||||||||
Credit Quality Data: | ||||||||||||||||||||
Nonperforming assets (5) to total assets | 1.34 | % | 1.34 | % | 1.42 | % | 1.43 | % | 1.18 | % | ||||||||||
Nonperforming assets (5) to loans receivable and OREO | 1.60 | % | 1.60 | % | 1.71 | % | 1.78 | % | 1.47 | % | ||||||||||
Nonperforming loans (5) to total loans receivable | 1.60 | % | 1.60 | % | 1.71 | % | 1.78 | % | 1.47 | % | ||||||||||
Allowance for credit losses to nonperforming loans | 311.5 | % | 278.1 | % | 253.8 | % | 217.2 | % | 232.2 | % | ||||||||||
Allowance for credit losses to total loans receivable | 4.98 | % | 4.45 | % | 4.35 | % | 3.86 | % | 3.41 | % | ||||||||||
Gross charge-offs | $ | 53,305 | $ | 55,207 | $ | 58,994 | $ | 47,652 | $ | 37,879 | ||||||||||
Gross recoveries | $ | 4,069 | $ | 1,973 | $ | 1,776 | $ | 2,781 | $ | 1,045 | ||||||||||
Net charge-offs to average loans (6) | 5.65 | % | 6.57 | % | 7.34 | % | 5.92 | % | 4.77 | % | ||||||||||
Capital Ratios: | ||||||||||||||||||||
Company | ||||||||||||||||||||
Tier 1 leverage capital | 8.40 | % | 8.31 | % | 8.24 | % | 8.10 | % | 8.03 | % | ||||||||||
Common equity Tier 1 risk-based capital | 9.26 | % | 9.03 | % | 8.98 | % | 9.10 | % | 9.00 | % | ||||||||||
Tier 1 risk-based capital | 9.35 | % | 9.13 | % | 9.08 | % | 9.20 | % | 9.11 | % | ||||||||||
Total risk-based capital | 11.90 | % | 11.70 | % | 11.70 | % | 11.87 | % | 11.80 | % | ||||||||||
Bank | ||||||||||||||||||||
Tier 1 leverage capital | 9.29 | % | 9.24 | % | 9.19 | % | 9.06 | % | 8.99 | % | ||||||||||
Common equity Tier 1 risk-based capital | 10.36 | % | 10.15 | % | 10.14 | % | 10.30 | % | 10.21 | % | ||||||||||
Tier 1 risk-based capital | 10.36 | % | 10.15 | % | 10.14 | % | 10.30 | % | 10.21 | % | ||||||||||
Total risk-based capital | 11.65 | % | 11.44 | % | 11.43 | % | 11.58 | % | 11.48 | % | ||||||||||
(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.
Key Performance Ratios
Return on average assets ("ROA") was
The following table shows the Company’s key performance ratios for the periods indicated.
Three Months Ended | |||||||||||||||
(unaudited) | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||
Return on average assets (1) | 1.34 | % | 1.21 | % | 0.73 | % | 0.97 | % | 1.13 | % | |||||
Return on average equity (1) | 16.67 | % | 15.22 | % | 9.21 | % | 12.35 | % | 14.60 | % | |||||
Yield on earnings assets (1) | 10.79 | % | 10.49 | % | 10.07 | % | 9.77 | % | 10.08 | % | |||||
Yield on loans receivable (1) | 11.43 | % | 11.23 | % | 10.85 | % | 10.71 | % | 10.84 | % | |||||
Cost of funds (1) | 3.62 | % | 3.60 | % | 3.52 | % | 3.39 | % | 3.18 | % | |||||
Cost of deposits (1) | 3.59 | % | 3.58 | % | 3.49 | % | 3.36 | % | 3.14 | % | |||||
Net interest margin (1) | 7.41 | % | 7.13 | % | 6.78 | % | 6.61 | % | 7.10 | % | |||||
Noninterest expense to average assets (1) | 6.54 | % | 6.14 | % | 6.04 | % | 5.56 | % | 6.23 | % | |||||
Noninterest income to average assets (1) | 7.98 | % | 7.30 | % | 9.38 | % | 6.95 | % | 3.81 | % | |||||
Efficiency ratio | 43.10 | % | 43.19 | % | 37.88 | % | 41.58 | % | 58.36 | % | |||||
Loans receivable to deposits (2) | 94.46 | % | 93.88 | % | 92.42 | % | 90.05 | % | 90.19 | % | |||||
(1) Annualized calculations shown for quarterly periods presented.
(2) Includes loans held for sale.
Management Outlook; CEO Eric Sprink
“As we look ahead to the fourth quarter and 2025, we remain laser focused on building out our technology and risk management infrastructure to more efficiently support our next phase of growth within CCBX. While the balance sheet re-mix earlier this year resulted in a short-term reduction to income, we continue to make strategic decisions which are enhancing credit quality, generating passive fee income, strengthening our talent and growing relationships with established and prospective CCBX partners all of which are expected to position Coastal to be more profitable in 2025.”
Coastal Financial Corporation 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 all of 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.
CCBX Performance Update
Our CCBX segment continues to evolve, and we have 22 relationships, at varying stages, as of September 30, 2024. We continue to refine the criteria for CCBX partnerships, are exiting relationships where it makes sense for us to do so and are focusing on larger more established partners, with experienced management teams, existing customer bases and strong financial positions.
We are expanding product offerings with our existing CCBX partners. We believe that launching new products with existing partners positions us to reach a wide and established customer base with a modest increase in regulatory risk given we have already vetted these partners and have operational history. Products launched earlier in the year with existing partners have gained traction and are growing the balance sheet and increasing income. We continue to sell loans as part of our strategy to balance partner and lending limits, and manage the loan portfolio and credit quality. We retain a portion of the fee income for our role in processing transactions on sold credit card balances. This is expected to provide an on-going and passive revenue stream with no on balance sheet risk.
The following table illustrates the activity and evolution in CCBX relationships for the periods presented.
As of | ||||
(unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | |
Active | 19 | 19 | 18 | |
Friends and family / testing | 1 | 1 | 1 | |
Implementation / onboarding | 1 | 1 | 1 | |
Signed letters of intent | 1 | 0 | 1 | |
Wind down - active but preparing to exit relationship | 0 | 0 | 1 | |
Total CCBX relationships | 22 | 21 | 22 | |
CCBX loans increased
The following table details the CCBX loan portfolio:
CCBX | As of | ||||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||||||||||||
(dollars in thousands; unaudited) | Balance | % to Total | Balance | % to Total | Balance | % to Total | |||||||||||||||
Commercial and industrial loans: | |||||||||||||||||||||
Capital call lines | $ | 103,924 | 6.8 | % | $ | 109,133 | 7.7 | % | $ | 114,174 | 9.6 | % | |||||||||
All other commercial & industrial loans | 36,494 | 2.4 | 41,731 | 3.0 | 58,869 | 5.0 | |||||||||||||||
Real estate loans: | |||||||||||||||||||||
Residential real estate loans | 265,402 | 17.5 | 287,950 | 20.4 | 251,775 | 21.3 | |||||||||||||||
Consumer and other loans: | |||||||||||||||||||||
Credit cards | 633,691 | 41.6 | 549,241 | 38.7 | 440,993 | 37.3 | |||||||||||||||
Other consumer and other loans | 482,228 | 31.7 | 426,809 | 30.2 | 316,987 | 26.8 | |||||||||||||||
Gross CCBX loans receivable | 1,521,739 | 100.0 | % | 1,414,864 | 100.0 | % | 1,182,798 | 100.0 | % | ||||||||||||
Net deferred origination (fees) costs | (447 | ) | (438 | ) | (424 | ) | |||||||||||||||
Loans receivable | $ | 1,521,292 | $ | 1,414,426 | $ | 1,182,374 | |||||||||||||||
Loan Yield - CCBX (1)(2) | 17.35 | % | 17.77 | % | 17.05 | % | |||||||||||||||
(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.
The increase in CCBX loans in the quarter ended September 30, 2024, includes an increase of
Our credit card program through CCBX continues to grow in dollars and number of active cards as shown in the graph below:
The following table details the CCBX deposit portfolio:
CCBX | As of | ||||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||||||||||||
(dollars in thousands; unaudited) | Balance | % to Total | Balance | % to Total | Balance | % to Total | |||||||||||||||
Demand, noninterest bearing | $ | 60,655 | 2.9 | % | $ | 62,234 | 3.0 | % | $ | 67,782 | 3.9 | % | |||||||||
Interest bearing demand and money market | 1,991,858 | 94.6 | 1,989,105 | 96.7 | 1,679,921 | 95.9 | |||||||||||||||
Savings | 5,204 | 0.3 | 5,150 | 0.3 | 4,529 | 0.2 | |||||||||||||||
Total core deposits | 2,057,717 | 97.8 | 2,056,489 | 100.0 | 1,752,232 | 100.0 | |||||||||||||||
Other deposits | 47,046 | 2.2 | — | 0.0 | — | — | |||||||||||||||
Total CCBX deposits | $ | 2,104,763 | 100.0 | % | $ | 2,056,489 | 100.0 | % | $ | 1,752,232 | 100.0 | % | |||||||||
Cost of deposits (1) | 4.82 | % | 4.92 | % | 4.80 | % |
(1) Cost of deposits is annualized for the three months ended for each period presented.
CCBX deposits increased
Community Bank Performance Update
In the quarter ended September 30, 2024, the community bank saw net loans decrease
The following table details the Community Bank loan portfolio:
Community Bank | As of | ||||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||||||||||||
(dollars in thousands; unaudited) | Balance | % to Total | Balance | % to Total | Balance | % to Total | |||||||||||||||
Commercial and industrial loans | $ | 152,161 | 8.0 | % | $ | 144,436 | 7.5 | % | $ | 158,232 | 8.8 | % | |||||||||
Real estate loans: | |||||||||||||||||||||
Construction, land and land development loans | 163,051 | 8.6 | 173,064 | 9.0 | 167,686 | 9.4 | |||||||||||||||
Residential real estate loans | 212,467 | 11.2 | 229,639 | 12.0 | 225,372 | 12.6 | |||||||||||||||
Commercial real estate loans | 1,362,452 | 71.5 | 1,357,979 | 70.8 | 1,237,849 | 69.1 | |||||||||||||||
Consumer and other loans: | |||||||||||||||||||||
Other consumer and other loans | 14,173 | 0.7 | 14,220 | 0.7 | 2,483 | 0.1 | |||||||||||||||
Gross Community Bank loans receivable | 1,904,304 | 100.0 | % | 1,919,338 | 100.0 | % | 1,791,622 | 100.0 | % | ||||||||||||
Net deferred origination fees | (6,764 | ) | (7,304 | ) | (6,961 | ) | |||||||||||||||
Loans receivable | $ | 1,897,540 | $ | 1,912,034 | $ | 1,784,661 | |||||||||||||||
Loan Yield(1) | 6.64 | % | 6.52 | % | 6.20 | % |
(1) Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.
Community bank loans had a
The following table details the community bank deposit portfolio:
Community Bank | As of | ||||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||||||||||||
(dollars in thousands; unaudited) | Balance | % to Total | Balance | % to Total | Balance | % to Total | |||||||||||||||
Demand, noninterest bearing | $ | 518,772 | 34.1 | % | $ | 531,555 | 35.6 | % | $ | 584,004 | 37.9 | % | |||||||||
Interest bearing demand and money market | 552,108 | 36.3 | 876,668 | 59.0 | 852,747 | 55.5 | |||||||||||||||
Savings | 62,272 | 4.1 | 63,627 | 4.3 | 80,099 | 5.2 | |||||||||||||||
Total core deposits | 1,133,152 | 74.5 | 1,471,850 | 98.9 | 1,516,850 | 98.6 | |||||||||||||||
Other deposits | 373,681 | 24.5 | 1 | 0.0 | 1 | 0.0 | |||||||||||||||
Time deposits less than | 6,305 | 0.4 | 6,741 | 0.5 | 8,635 | 0.6 | |||||||||||||||
Time deposits | 9,387 | 0.6 | 8,351 | 0.6 | 11,982 | 0.8 | |||||||||||||||
Total Community Bank deposits | $ | 1,522,525 | 100.0 | % | $ | 1,486,943 | 100.0 | % | $ | 1,537,468 | 100.0 | % | |||||||||
Cost of deposits(1) | 1.92 | % | 1.77 | % | 1.31 | % |
(1) Cost of deposits is annualized for the three months ended for each period presented.
Community bank deposits increased
Net Interest Income and Margin Discussion
Net interest income was
Net interest margin was
Average investment securities decreased
Cost of funds was
The following table summarizes the average yield on loans receivable and cost of deposits:
For the Three Months Ended | ||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||||||||
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 | 6.64 | % | 1.92 | % | 6.52 | % | 1.77 | % | 6.20 | % | 1.31 | % | ||||||
CCBX (1) | 17.35 | % | 4.82 | % | 17.77 | % | 4.92 | % | 17.05 | % | 4.80 | % | ||||||
Consolidated | 11.43 | % | 3.59 | % | 11.23 | % | 3.58 | % | 10.84 | % | 3.14 | % |
(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 | ||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||||||||
(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 | $ | 67,692 | 17.35 | % | $ | 60,203 | 17.77 | % | $ | 56,279 | 17.05 | % | ||||||
Less: BaaS loan expense | 32,612 | 8.36 | % | 29,076 | 8.58 | % | 23,003 | 6.97 | % | |||||||||
Net BaaS loan income (1) | $ | 35,080 | 8.99 | % | $ | 31,127 | 9.19 | % | $ | 33,276 | 10.08 | % | ||||||
Average BaaS Loans(3) | $ | 1,552,443 | $ | 1,362,343 | $ | 1,309,380 |
(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.
Noninterest Income Discussion
Noninterest income was
The
Noninterest Expense Discussion
Total noninterest expense increased
The increase in noninterest expenses for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023 was largely due to an increase of
Provision for Income Taxes
The provision for income taxes was
The Company is subject to various state taxes that are assessed as CCBX activities and employees expand into other states, which has increased the overall tax rate used in calculating the provision for income taxes in the current and future periods. The Company uses a federal statutory tax rate of
Financial Condition Overview
Total assets increased
As of September 30, 2024, the Company had the capacity to borrow up to a total of
The Company had a cash balance of
Uninsured deposits were
Total shareholders’ equity increased
The Company and the Bank remained well capitalized at September 30, 2024, 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) | 9.29 | % | 8.40 | % | 5.00 | % | |||
Common Equity Tier 1 Capital (to risk-weighted assets) | 10.36 | % | 9.26 | % | 6.50 | % | |||
Tier 1 Capital (to risk-weighted assets) | 10.36 | % | 9.35 | % | 8.00 | % | |||
Total Capital (to risk-weighted assets) | 11.65 | % | 11.90 | % | 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
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 September 30, 2024 | As of June 30, 2024 | As of September 30, 2023 | ||||||||||||||||||||||||||||||||||
(dollars in thousands; unaudited) | Community Bank | CCBX | Total | Community Bank | CCBX | Total | Community Bank | CCBX | Total | |||||||||||||||||||||||||||
Loans receivable | $ | 1,897,540 | $ | 1,521,292 | $ | 3,418,832 | $ | 1,912,034 | $ | 1,414,426 | $ | 3,326,460 | $ | 1,784,661 | $ | 1,182,374 | $ | 2,967,035 | ||||||||||||||||||
Allowance for credit losses | (20,132 | ) | (150,131 | ) | (170,263 | ) | (21,045 | ) | (126,869 | ) | (147,914 | ) | (21,316 | ) | (79,769 | ) | (101,085 | ) | ||||||||||||||||||
Allowance for credit losses to total loans receivable | 1.06 | % | 9.87 | % | 4.98 | % | 1.10 | % | 8.97 | % | 4.45 | % | 1.19 | % | 6.75 | % | 3.41 | % | ||||||||||||||||||
Net charge-offs totaled
The following table details net charge-offs for the community bank and CCBX for the period indicated:
Three Months Ended | ||||||||||||||||||||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||||||||||||||||||||||||||
(dollars in thousands; unaudited) | Community Bank | CCBX | Total | Community Bank | CCBX | Total | Community Bank | CCBX | Total | |||||||||||||||||||||||||||
Gross charge-offs | $ | 398 | $ | 52,907 | $ | 53,305 | $ | 2 | $ | 55,205 | $ | 55,207 | $ | 3 | $ | 37,876 | $ | 37,879 | ||||||||||||||||||
Gross recoveries | (3 | ) | (4,066 | ) | (4,069 | ) | (4 | ) | (1,969 | ) | (1,973 | ) | (3 | ) | (1,042 | ) | (1,045 | ) | ||||||||||||||||||
Net charge-offs | $ | 395 | $ | 48,841 | $ | 49,236 | $ | (2 | ) | $ | 53,236 | $ | 53,234 | $ | — | $ | 36,834 | $ | 36,834 | |||||||||||||||||
Net charge-offs to average loans (1) | 0.08 | % | 12.52 | % | 5.65 | % | 0.00 | % | 15.72 | % | 6.57 | % | 0.00 | % | 11.16 | % | 4.77 | % |
(1) Annualized calculations shown for periods presented.
During the quarter ended September 30, 2024, 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. 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 factors used in management’s analysis for community bank credit losses indicated that a provision recapture of
The following table details the provision expense/(recapture) for the community bank and CCBX for the period indicated:
Three Months Ended | |||||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||
Community bank | $ | (519 | ) | $ | (341 | ) | $ | 664 | |||
CCBX | 72,104 | 62,231 | 26,493 | ||||||||
Total provision expense | $ | 71,585 | $ | 61,890 | $ | 27,157 |
At September 30, 2024, our nonperforming assets were
Nonperforming assets increased
For the quarter ended September 30, 2024, there were
The following table details the Company’s nonperforming assets for the periods indicated.
Consolidated | As of | |||||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
Nonaccrual loans: | ||||||||||||
Commercial and industrial loans | $ | 198 | $ | — | $ | 2 | ||||||
Real estate loans: | ||||||||||||
Construction, land and land development | — | — | — | |||||||||
Residential real estate | 44 | 213 | 176 | |||||||||
Commercial real estate | 831 | 7,731 | 7,145 | |||||||||
Consumer and other loans: | ||||||||||||
Credit cards | 7,987 | — | — | |||||||||
Total nonaccrual loans | 9,060 | 7,944 | 7,323 | |||||||||
Accruing loans past due 90 days or more: | ||||||||||||
Commercial & industrial loans | 1,593 | 1,278 | 1,387 | |||||||||
Real estate loans: | ||||||||||||
Residential real estate loans | 3,025 | 2,722 | 1,462 | |||||||||
Consumer and other loans: | ||||||||||||
Credit cards | 34,562 | 36,465 | 24,807 | |||||||||
Other consumer and other loans | 6,412 | 4,779 | 8,561 | |||||||||
Total accruing loans past due 90 days or more | 45,592 | 45,244 | 36,217 | |||||||||
Total nonperforming loans | 54,652 | 53,188 | 43,540 | |||||||||
Real estate owned | — | — | — | |||||||||
Repossessed assets | — | — | — | |||||||||
Total nonperforming assets | $ | 54,652 | $ | 53,188 | $ | 43,540 | ||||||
Total nonaccrual loans to loans receivable | 0.27 | % | 0.24 | % | 0.25 | % | ||||||
Total nonperforming loans to loans receivable | 1.60 | % | 1.60 | % | 1.47 | % | ||||||
Total nonperforming assets to total assets | 1.34 | % | 1.34 | % | 1.18 | % | ||||||
The following tables detail the CCBX and community bank nonperforming assets which are included in the total nonperforming assets table above.
CCBX | As of | |||||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
Nonaccrual loans: | ||||||||||||
Consumer and other loans: | ||||||||||||
Credit cards | $ | 7,987 | $ | — | $ | — | ||||||
Total nonaccrual loans | 7,987 | — | — | |||||||||
Accruing loans past due 90 days or more: | ||||||||||||
Commercial & industrial loans | 1,593 | 1,278 | 1,387 | |||||||||
Real estate loans: | ||||||||||||
Residential real estate loans | 3,025 | 2,722 | 1,462 | |||||||||
Consumer and other loans: | ||||||||||||
Credit cards | 34,562 | 36,465 | 24,807 | |||||||||
Other consumer and other loans | 6,412 | 4,779 | 8,561 | |||||||||
Total accruing loans past due 90 days or more | 45,592 | 45,244 | 36,217 | |||||||||
Total nonperforming loans | 53,579 | 45,244 | 36,217 | |||||||||
Other real estate owned | — | — | — | |||||||||
Repossessed assets | — | — | — | |||||||||
Total nonperforming assets | $ | 53,579 | $ | 45,244 | $ | 36,217 | ||||||
Total CCBX nonperforming assets to total consolidated assets | 1.32 | % | 1.14 | % | 0.98 | % |
Community Bank | As of | |||||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
Nonaccrual loans: | ||||||||||||
Commercial and industrial loans | $ | 198 | $ | — | $ | 2 | ||||||
Real estate: | ||||||||||||
Construction, land and land development | — | — | — | |||||||||
Residential real estate | 44 | 213 | 176 | |||||||||
Commercial real estate | 831 | 7,731 | 7,145 | |||||||||
Total nonaccrual loans | 1,073 | 7,944 | 7,323 | |||||||||
Accruing loans past due 90 days or more: | ||||||||||||
Total accruing loans past due 90 days or more | — | — | — | |||||||||
Total nonperforming loans | 1,073 | 7,944 | 7,323 | |||||||||
Other real estate owned | — | — | — | |||||||||
Repossessed assets | — | — | — | |||||||||
Total nonperforming assets | $ | 1,073 | $ | 7,944 | $ | 7,323 | ||||||
Total community bank nonperforming assets to total consolidated assets | 0.03 | % | 0.20 | % | 0.20 | % | ||||||
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 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 | ||||||||||||||||||||
September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||||||||
Cash and due from banks | $ | 45,327 | $ | 59,995 | $ | 32,790 | $ | 31,345 | $ | 29,984 | ||||||||||
Interest earning deposits with other banks | 438,699 | 427,250 | 482,338 | 451,783 | 444,962 | |||||||||||||||
Investment securities, available for sale, at fair value | 38 | 39 | 41 | 99,504 | 98,939 | |||||||||||||||
Investment securities, held to maturity, at amortized cost | 48,582 | 49,174 | 50,049 | 50,860 | 42,550 | |||||||||||||||
Other investments | 10,757 | 10,664 | 10,583 | 10,227 | 11,898 | |||||||||||||||
Loans held for sale | 7,565 | — | 797 | — | — | |||||||||||||||
Loans receivable | 3,418,832 | 3,326,460 | 3,199,554 | 3,026,092 | 2,967,035 | |||||||||||||||
Allowance for credit losses | (170,263 | ) | (147,914 | ) | (139,258 | ) | (116,958 | ) | (101,085 | ) | ||||||||||
Total loans receivable, net | 3,248,569 | 3,178,546 | 3,060,296 | 2,909,134 | 2,865,950 | |||||||||||||||
CCBX credit enhancement asset | 167,251 | 143,485 | 137,276 | 107,921 | 91,867 | |||||||||||||||
CCBX receivable | 16,060 | 11,520 | 10,369 | 9,088 | 10,623 | |||||||||||||||
Premises and equipment, net | 25,833 | 24,526 | 22,995 | 22,090 | 20,543 | |||||||||||||||
Lease right-of-use assets | 5,427 | 5,635 | 5,756 | 5,932 | 6,126 | |||||||||||||||
Accrued interest receivable | 23,664 | 23,617 | 24,681 | 26,819 | 23,428 | |||||||||||||||
Bank-owned life insurance, net | 13,255 | 13,132 | 12,991 | 12,870 | 12,970 | |||||||||||||||
Deferred tax asset, net | 3,083 | 2,221 | 2,221 | 3,806 | 4,404 | |||||||||||||||
Other assets | 11,711 | 11,742 | 12,075 | 11,987 | 14,021 | |||||||||||||||
Total assets | $ | 4,065,821 | $ | 3,961,546 | $ | 3,865,258 | $ | 3,753,366 | $ | 3,678,265 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Deposits | $ | 3,627,288 | $ | 3,543,432 | $ | 3,462,979 | $ | 3,360,363 | $ | 3,289,700 | ||||||||||
Subordinated debt, net | 44,256 | 44,219 | 44,181 | 44,144 | 44,106 | |||||||||||||||
Junior subordinated debentures, net | 3,591 | 3,591 | 3,590 | 3,590 | 3,589 | |||||||||||||||
Deferred compensation | 369 | 405 | 442 | 479 | 513 | |||||||||||||||
Accrued interest payable | 1,070 | 999 | 1,061 | 892 | 1,056 | |||||||||||||||
Lease liabilities | 5,609 | 5,821 | 5,946 | 6,124 | 6,321 | |||||||||||||||
CCBX payable | 39,188 | 34,536 | 33,095 | 33,651 | 38,229 | |||||||||||||||
Other liabilities | 12,520 | 11,850 | 10,255 | 9,145 | 10,301 | |||||||||||||||
Total liabilities | 3,733,891 | 3,644,853 | 3,561,549 | 3,458,388 | 3,393,815 | |||||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Common Stock | 134,769 | 132,989 | 131,601 | 130,136 | 129,244 | |||||||||||||||
Retained earnings | 197,162 | 183,706 | 172,110 | 165,311 | 156,299 | |||||||||||||||
Accumulated other comprehensive loss, net of tax | (1 | ) | (2 | ) | (2 | ) | (469 | ) | (1,093 | ) | ||||||||||
Total shareholders’ equity | 331,930 | 316,693 | 303,709 | 294,978 | 284,450 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,065,821 | $ | 3,961,546 | $ | 3,865,258 | $ | 3,753,366 | $ | 3,678,265 |
COASTAL FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts; unaudited) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||||||
INTEREST AND DIVIDEND INCOME | ||||||||||||||||||
Interest and fees on loans | $ | 99,590 | $ | 90,944 | $ | 84,621 | $ | 81,159 | $ | 83,652 | ||||||||
Interest on interest earning deposits with other banks | 4,781 | 5,683 | 4,780 | 5,687 | 3,884 | |||||||||||||
Interest on investment securities | 675 | 686 | 1,034 | 1,225 | 766 | |||||||||||||
Dividends on other investments | 33 | 174 | 37 | 172 | 29 | |||||||||||||
Total interest income | 105,079 | 97,487 | 90,472 | 88,243 | 88,331 | |||||||||||||
INTEREST EXPENSE | ||||||||||||||||||
Interest on deposits | 32,083 | 30,578 | 28,867 | 27,916 | 25,451 | |||||||||||||
Interest on borrowed funds | 809 | 672 | 669 | 670 | 651 | |||||||||||||
Total interest expense | 32,892 | 31,250 | 29,536 | 28,586 | 26,102 | |||||||||||||
Net interest income | 72,187 | 66,237 | 60,936 | 59,657 | 62,229 | |||||||||||||
PROVISION FOR CREDIT LOSSES | 70,257 | 62,325 | 83,158 | 60,789 | 27,253 | |||||||||||||
Net interest income/(expense) after provision for credit losses | 1,930 | 3,912 | (22,222 | ) | (1,132 | ) | 34,976 | |||||||||||
NONINTEREST INCOME | ||||||||||||||||||
Deposit service charges and fees | 952 | 946 | 908 | 957 | 998 | |||||||||||||
Loan referral fees | — | — | 168 | — | 1 | |||||||||||||
Gain on sales of loans, net | — | — | — | — | 107 | |||||||||||||
Unrealized gain (loss) on equity securities, net | 2 | 9 | 15 | 80 | 5 | |||||||||||||
Other income | 486 | 257 | 308 | 60 | 291 | |||||||||||||
Noninterest income, excluding BaaS program income and BaaS indemnification income | 1,440 | 1,212 | 1,399 | 1,097 | 1,402 | |||||||||||||
Servicing and other BaaS fees | 1,044 | 1,525 | 1,131 | 1,015 | 997 | |||||||||||||
Transaction fees | 1,696 | 1,309 | 1,122 | 1,006 | 1,036 | |||||||||||||
Interchange fees | 1,853 | 1,625 | 1,539 | 1,272 | 1,216 | |||||||||||||
Reimbursement of expenses | 1,843 | 1,637 | 1,033 | 1,076 | 1,152 | |||||||||||||
BaaS program income | 6,436 | 6,096 | 4,825 | 4,369 | 4,401 | |||||||||||||
BaaS credit enhancements | 70,108 | 60,826 | 79,808 | 58,449 | 25,926 | |||||||||||||
BaaS fraud enhancements | 2,084 | 1,784 | 923 | 779 | 2,850 | |||||||||||||
BaaS indemnification income | 72,192 | 62,610 | 80,731 | 59,228 | 28,776 | |||||||||||||
Total noninterest income | 80,068 | 69,918 | 86,955 | 64,694 | 34,579 | |||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||
Salaries and employee benefits | 17,101 | 17,005 | 17,984 | 16,490 | 18,087 | |||||||||||||
Occupancy | 1,750 | 1,686 | 1,518 | 1,340 | 1,224 | |||||||||||||
Data processing and software licenses | 3,511 | 2,924 | 2,892 | 2,417 | 2,366 | |||||||||||||
Legal and professional expenses | 3,597 | 3,631 | 3,672 | 2,649 | 4,447 | |||||||||||||
Point of sale expense | 1,351 | 852 | 869 | 899 | 1,068 | |||||||||||||
Excise taxes | 762 | (706 | ) | 320 | 449 | 541 | ||||||||||||
Federal Deposit Insurance Corporation ("FDIC") assessments | 740 | 690 | 683 | 665 | 694 | |||||||||||||
Director and staff expenses | 559 | 470 | 400 | 478 | 529 | |||||||||||||
Marketing | 67 | 14 | 53 | 138 | 169 | |||||||||||||
Other expense | 1,482 | 1,383 | 1,867 | 1,089 | 1,523 | |||||||||||||
Noninterest expense, excluding BaaS loan and BaaS fraud expense | 30,920 | 27,949 | 30,258 | 26,614 | 30,648 | |||||||||||||
BaaS loan expense | 32,612 | 29,076 | 24,837 | 24,310 | 23,003 | |||||||||||||
BaaS fraud expense | 2,084 | 1,784 | 923 | 779 | 2,850 | |||||||||||||
BaaS loan and fraud expense | 34,696 | 30,860 | 25,760 | 25,089 | 25,853 | |||||||||||||
Total noninterest expense | 65,616 | 58,809 | 56,018 | 51,703 | 56,501 | |||||||||||||
Income before provision for income taxes | 16,382 | 15,021 | 8,715 | 11,859 | 13,054 | |||||||||||||
PROVISION FOR INCOME TAXES | 2,926 | 3,425 | 1,915 | 2,847 | 2,784 | |||||||||||||
NET INCOME | $ | 13,456 | $ | 11,596 | $ | 6,800 | $ | 9,012 | $ | 10,270 | ||||||||
Basic earnings per common share | $ | 1.00 | $ | 0.86 | $ | 0.51 | $ | 0.68 | $ | 0.77 | ||||||||
Diluted earnings per common share | $ | 0.97 | $ | 0.84 | $ | 0.50 | $ | 0.66 | $ | 0.75 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||||
Basic | 13,447,066 | 13,412,667 | 13,340,997 | 13,286,828 | 13,285,974 | |||||||||||||
Diluted | 13,822,270 | 13,736,508 | 13,676,917 | 13,676,513 | 13,675,833 |
COASTAL FINANCIAL CORPORATION AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY (Dollars in thousands; unaudited) | ||||||||||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||||||||||||||||||||
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 | $ | 350,915 | $ | 4,781 | 5.42 | % | $ | 418,165 | $ | 5,683 | 5.47 | % | $ | 285,596 | $ | 3,884 | 5.40 | % | ||||||||||||
Investment securities, available for sale (2) | 40 | — | — | 43 | — | 3.13 | 100,283 | 543 | 2.15 | |||||||||||||||||||||
Investment securities, held to maturity (2) | 48,945 | 675 | 5.49 | 49,737 | 686 | 5.55 | 17,703 | 223 | 5.00 | |||||||||||||||||||||
Other investments | 11,140 | 33 | 1.18 | 10,592 | 174 | 6.61 | 11,943 | 29 | 0.96 | |||||||||||||||||||||
Loans receivable (3) | 3,464,871 | 99,590 | 11.43 | 3,258,042 | 90,944 | 11.23 | 3,062,214 | 83,652 | 10.84 | |||||||||||||||||||||
Total interest earning assets | 3,875,911 | 105,079 | 10.79 | 3,736,579 | 97,487 | 10.49 | 3,477,739 | 88,331 | 10.08 | |||||||||||||||||||||
Noninterest earning assets: | ||||||||||||||||||||||||||||||
Allowance for credit losses | (151,292 | ) | (138,472 | ) | (100,329 | ) | ||||||||||||||||||||||||
Other noninterest earning assets | 268,903 | 255,205 | 220,750 | |||||||||||||||||||||||||||
Total assets | $ | 3,993,522 | $ | 3,853,312 | $ | 3,598,160 | ||||||||||||||||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||||||||
Interest bearing deposits | $ | 2,966,527 | $ | 32,083 | 4.30 | % | $ | 2,854,575 | $ | 30,578 | 4.31 | % | $ | 2,515,093 | $ | 25,451 | 4.01 | % | ||||||||||||
FHLB advances and other borrowings | 9,717 | 140 | 5.73 | 1,648 | 3 | 0.73 | — | — | — | |||||||||||||||||||||
Subordinated debt | 44,234 | 598 | 5.38 | 44,197 | 598 | 5.44 | 44,084 | 580 | 5.22 | |||||||||||||||||||||
Junior subordinated debentures | 3,591 | 71 | 7.87 | 3,590 | 71 | 7.95 | 3,589 | 71 | 7.85 | |||||||||||||||||||||
Total interest bearing liabilities | 3,024,069 | 32,892 | 4.33 | 2,904,010 | 31,250 | 4.33 | 2,562,766 | 26,102 | 4.04 | |||||||||||||||||||||
Noninterest bearing deposits | 588,178 | 584,661 | 698,532 | |||||||||||||||||||||||||||
Other liabilities | 60,101 | 58,267 | 57,865 | |||||||||||||||||||||||||||
Total shareholders' equity | 321,174 | 306,374 | 278,997 | |||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 3,993,522 | $ | 3,853,312 | $ | 3,598,160 | ||||||||||||||||||||||||
Net interest income | $ | 72,187 | $ | 66,237 | $ | 62,229 | ||||||||||||||||||||||||
Interest rate spread | 6.46 | % | 6.17 | % | 6.04 | % | ||||||||||||||||||||||||
Net interest margin (4) | 7.41 | % | 7.13 | % | 7.10 | % |
(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 | |||||||||||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||||||||||||||||||
(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) | $ | 1,912,428 | $ | 31,898 | 6.64 | % | $ | 1,895,699 | $ | 30,741 | 6.52 | % | $ | 1,752,834 | $ | 27,373 | 6.20 | % | |||||||||
Total interest earning assets | 1,912,428 | 31,898 | 6.64 | 1,895,699 | 30,741 | 6.52 | 1,752,834 | 27,373 | 6.20 | ||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||||||||
Interest bearing deposits | 982,280 | 7,264 | 2.94 | % | 938,033 | 6,459 | 2.77 | % | 920,707 | 5,067 | 2.18 | % | |||||||||||||||
Intrabank liability | 406,641 | 5,540 | 5.42 | 429,452 | 5,836 | 5.47 | 223,221 | 3,036 | 5.40 | ||||||||||||||||||
Total interest bearing liabilities | 1,388,921 | 12,804 | 3.67 | 1,367,485 | 12,295 | 3.62 | 1,143,928 | 8,103 | 2.81 | ||||||||||||||||||
Noninterest bearing deposits | 523,507 | 528,214 | 608,906 | ||||||||||||||||||||||||
Net interest income | $ | 19,094 | $ | 18,446 | $ | 19,270 | |||||||||||||||||||||
Net interest margin(3) | 3.97 | % | 3.91 | % | 4.36 | % | |||||||||||||||||||||
CCBX | |||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||
Interest earning assets: | |||||||||||||||||||||||||||
Loans receivable (2)(4) | $ | 1,552,443 | $ | 67,692 | 17.35 | % | $ | 1,362,343 | $ | 60,203 | 17.77 | % | $ | 1,309,380 | $ | 56,279 | 17.05 | % | |||||||||
Intrabank asset | 496,475 | 6,764 | 5.42 | 610,646 | 8,299 | 5.47 | 374,632 | 5,095 | 5.40 | ||||||||||||||||||
Total interest earning assets | 2,048,918 | 74,456 | 14.46 | 1,972,989 | 68,502 | 13.96 | 1,684,012 | 61,374 | 14.46 | ||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||||||||
Interest bearing deposits | 1,984,247 | 24,819 | 4.98 | % | 1,916,542 | 24,119 | 5.06 | % | 1,594,386 | 20,384 | 5.07 | % | |||||||||||||||
Total interest bearing liabilities | 1,984,247 | 24,819 | 4.98 | 1,916,542 | 24,119 | 5.06 | 1,594,386 | 20,384 | 5.07 | ||||||||||||||||||
Noninterest bearing deposits | 64,671 | 56,447 | 89,626 | ||||||||||||||||||||||||
Net interest income | $ | 49,637 | $ | 44,383 | $ | 40,990 | |||||||||||||||||||||
Net interest margin(3) | 9.64 | % | 9.05 | % | 9.66 | % | |||||||||||||||||||||
Net interest margin, net of Baas loan expense (5) | 3.31 | % | 3.12 | % | 4.24 | % | |||||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||||||||||||||||||
(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 | $ | 350,915 | $ | 4,781 | 5.42 | % | $ | 418,165 | $ | 5,683 | 5.47 | % | $ | 285,596 | $ | 3,884 | 5.40 | % | |||||||||
Investment securities, available for sale (6) | 40 | — | — | 43 | — | 3.13 | 100,283 | 543 | 2.15 | ||||||||||||||||||
Investment securities, held to maturity (6) | 48,945 | 675 | 5.49 | 49,737 | 686 | 5.55 | 17,703 | 223 | 5.00 | ||||||||||||||||||
Other investments | 11,140 | 33 | 1.18 | 10,592 | 174 | 6.61 | 11,943 | 29 | 0.96 | ||||||||||||||||||
Total interest earning assets | 411,040 | 5,489 | 5.31 | % | 478,537 | 6,543 | 5.50 | % | 415,525 | 4,679 | 4.47 | % | |||||||||||||||
Liabilities | |||||||||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||||||||
FHLB advances and borrowings | $ | 9,717 | $ | 140 | 5.73 | % | 1,648 | 3 | 0.73 | % | — | — | — | % | |||||||||||||
Subordinated debt | 44,234 | 598 | 5.38 | % | 44,197 | 598 | 5.44 | % | 44,084 | 580 | 5.22 | % | |||||||||||||||
Junior subordinated debentures | 3,591 | 71 | 7.87 | 3,590 | 71 | 7.95 | 3,589 | 71 | 7.85 | ||||||||||||||||||
Intrabank liability, net (7) | 89,834 | 1,224 | 5.42 | 181,194 | 2,463 | 5.47 | 151,411 | 2,059 | 5.40 | ||||||||||||||||||
Total interest bearing liabilities | 147,376 | 2,033 | 5.49 | 230,629 | 3,135 | 5.47 | 199,084 | 2,710 | 5.40 | ||||||||||||||||||
Net interest income | $ | 3,456 | $ | 3,408 | $ | 1,969 | |||||||||||||||||||||
Net interest margin(3) | 3.34 | % | 2.86 | % | 1.88 | % |
(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.
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 | ||||||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
Net BaaS loan income divided by average CCBX loans: | ||||||||||||
CCBX loan yield (GAAP)(1) | 17.35 | % | 17.77 | % | 17.05 | % | ||||||
Total average CCBX loans receivable | $ | 1,552,443 | $ | 1,362,343 | $ | 1,309,380 | ||||||
Interest and earned fee income on CCBX loans (GAAP) | 67,692 | 60,203 | 56,279 | |||||||||
BaaS loan expense | (32,612 | ) | (29,076 | ) | (23,003 | ) | ||||||
Net BaaS loan income | $ | 35,080 | $ | 31,127 | $ | 33,276 | ||||||
Net BaaS loan income divided by average CCBX loans (1) | 8.99 | % | 9.19 | % | 10.08 | % | ||||||
Net interest margin, net of BaaS loan expense: | ||||||||||||
CCBX interest margin (1) | 9.64 | % | 9.05 | % | 9.66 | % | ||||||
CCBX earning assets | 2,048,918 | 1,972,989 | 1,684,012 | |||||||||
Net interest income | 49,637 | 44,383 | 40,990 | |||||||||
Less: BaaS loan expense | (32,612 | ) | (29,076 | ) | (23,003 | ) | ||||||
Net interest income, net of BaaS loan expense | $ | 17,025 | $ | 15,307 | $ | 17,987 | ||||||
CCBX net interest margin, net of BaaS loan expense (1) | 3.31 | % | 3.12 | % | 4.24 | % |
(1) Annualized calculations for periods presented.
APPENDIX A -
As of September 30, 2024
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 September 30, 2024:
(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 | $ | 382,498 | $ | 5,685 | $ | 388,183 | 6.8 | % | $ | 3,714 | 103 | ||||||
Hotel/Motel | 155,441 | 189 | 155,630 | 2.7 | 6,758 | 23 | |||||||||||
Convenience Store | 142,366 | 614 | 142,980 | 2.5 | 2,296 | 62 | |||||||||||
Office | 123,423 | 8,204 | 131,627 | 2.3 | 1,371 | 90 | |||||||||||
Warehouse | 102,818 | 2,000 | 104,818 | 1.8 | 1,743 | 59 | |||||||||||
Retail | 107,934 | 620 | 108,554 | 1.9 | 1,018 | 106 | |||||||||||
Mixed use | 93,490 | 5,273 | 98,763 | 1.7 | 1,154 | 81 | |||||||||||
Mini Storage | 79,395 | 14,330 | 93,725 | 1.7 | 3,452 | 23 | |||||||||||
Strip Mall | 44,089 | — | 44,089 | 0.8 | 6,298 | 7 | |||||||||||
Manufacturing | 34,599 | 1,200 | 35,799 | 0.6 | 1,193 | 29 | |||||||||||
Groups < | 96,393 | 3,392 | 99,785 | 1.8 | 1,205 | 80 | |||||||||||
Total | $ | 1,362,446 | $ | 41,507 | $ | 1,403,953 | 24.6 | % | $ | 2,055 | 663 | ||||||
Consumer loans comprise
The following table summarizes our loan commitment by industry for our consumer and other loan portfolio as of September 30, 2024:
(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 | $ | 633,691 | $ | 1,055,684 | $ | 1,689,375 | 29.5 | % | $ | 1.7 | 369,404 | ||||||
Installment loans | 471,813 | 7,112 | 478,925 | 8.4 | 0.9 | 513,897 | |||||||||||
Lines of credit | 1,362 | — | 1,362 | 0.0 | 2.4 | 558 | |||||||||||
Other loans | 9,053 | — | 9,053 | 0.2 | — | 365,834 | |||||||||||
Community bank consumer loans | |||||||||||||||||
Installment loans | 1,291 | 1 | 1,292 | 0.0 | 51.6 | 25 | |||||||||||
Lines of credit | 194 | 365 | 559 | 0.0 | 6.1 | 32 | |||||||||||
Other loans | 12,688 | 3,000 | 15,688 | 0.3 | 32.5 | 390 | |||||||||||
Total | $ | 1,130,092 | $ | 1,066,162 | $ | 2,196,254 | 38.4 | % | $ | 0.9 | 1,250,140 |
(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 September 30, 2024:
(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 | $ | 265,402 | $ | 472,385 | $ | 737,787 | 12.9 | % | $ | 25 | 10,742 | ||||||
Community bank residential real estate loans | |||||||||||||||||
Closed end, secured by first liens | 176,066 | 2,961 | 179,027 | 3.1 | 555 | 317 | |||||||||||
Home equity line of credit | 25,427 | 46,515 | 71,942 | 1.3 | 106 | 239 | |||||||||||
Closed end, second liens | 10,974 | 925 | 11,899 | 0.2 | 366 | 30 | |||||||||||
Total | $ | 477,869 | $ | 522,786 | $ | 1,000,655 | 17.5 | % | $ | 42 | 11,328 |
(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 September 30, 2024:
(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 | |||||||||||
Consolidated C&I loans | |||||||||||||||||
Capital Call Lines | $ | 103,924 | $ | 504,561 | $ | 608,485 | 10.6 | % | $ | 764 | 136 | ||||||
Construction/Contractor Services | 27,463 | 34,658 | 62,121 | 1.1 | 136 | 202 | |||||||||||
Financial Institutions | 48,648 | — | 48,648 | 0.9 | 4,054 | 12 | |||||||||||
Retail | 33,003 | 5,725 | 38,728 | 0.7 | 15 | 2,247 | |||||||||||
Manufacturing | 6,124 | 5,460 | 11,584 | 0.2 | 149 | 41 | |||||||||||
Medical / Dental / Other Care | 6,864 | 2,731 | 9,595 | 0.2 | 528 | 13 | |||||||||||
Groups < | 66,553 | 45,299 | 111,852 | 2.0 | 58 | 1,143 | |||||||||||
Total | $ | 292,579 | $ | 598,434 | $ | 891,013 | 15.6 | % | $ | 77 | 3,794 |
(1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.
Construction, land and land development loans comprise
The following table details our loan commitment for our construction, land and land development portfolio as of September 30, 2024:
(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 | $ | 97,798 | $ | 41,521 | $ | 139,319 | 2.5 | % | $ | 7,523 | 13 | ||||||
Residential construction | 35,822 | 16,846 | 52,668 | 0.9 | 1,990 | 18 | |||||||||||
Developed land loans | 14,863 | 723 | 15,586 | 0.3 | 743 | 20 | |||||||||||
Undeveloped land loans | 8,606 | 4,086 | 12,692 | 0.2 | 574 | 15 | |||||||||||
Land development | 5,968 | 345 | 6,313 | 0.1 | 597 | 10 | |||||||||||
Total | $ | 163,057 | $ | 63,521 | $ | 226,578 | 4.0 | % | $ | 2,145 | 76 | ||||||
Exposure and risk in our construction, land and land development portfolio is in line with our average historically, compared to June 30, 2024 when the balance was elevated as indicated in the following table:
Outstanding Balance as of | |||||||||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||
Commercial construction | $ | 97,798 | $ | 110,372 | $ | 102,099 | $ | 81,489 | $ | 91,396 | |||||
Residential construction | 35,822 | 34,652 | 28,751 | 34,213 | 33,971 | ||||||||||
Undeveloped land loans | 8,606 | 8,372 | 8,190 | 7,890 | 8,310 | ||||||||||
Developed land loans | 14,863 | 13,954 | 14,307 | 20,515 | 21,369 | ||||||||||
Land development | 5,968 | 5,714 | 7,515 | 12,993 | 12,640 | ||||||||||
Total | $ | 163,057 | $ | 173,064 | $ | 160,862 | $ | 157,100 | $ | 167,686 | |||||
Commitments to extend credit total
The following table presents outstanding commitments to extend credit as of September 30, 2024:
Consolidated | |||
(dollars in thousands; unaudited) | As of September 30, 2024 | ||
Commitments to extend credit: | |||
Commercial and industrial loans | $ | 93,873 | |
Commercial and industrial loans - capital call lines | 504,561 | ||
Construction – commercial real estate loans | 46,007 | ||
Construction – residential real estate loans | 17,514 | ||
Residential real estate loans | 522,786 | ||
Commercial real estate loans | 41,507 | ||
Credit cards | 1,055,684 | ||
Consumer and other loans | 10,478 | ||
Total commitments to extend credit | $ | 2,292,410 | |
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 September 30, 2024, capital call lines outstanding balance totaled
See the table below for CCBX portfolio maximums and related available commitments:
CCBX | ||||||||||||||
(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 | $ | 103,924 | 6.8 | % | $ | 504,561 | $ | 350,000 | $ | — | ||||
All other commercial & industrial loans | 36,494 | 2.4 | 16,922 | 285,153 | 675 | |||||||||
Real estate loans: | ||||||||||||||
Home equity lines of credit (3) | 265,402 | 17.5 | 472,385 | 375,000 | 35,597 | |||||||||
Consumer and other loans: | ||||||||||||||
Credit cards - cash secured | 180 | — | — | |||||||||||
Credit cards - unsecured | 633,511 | 1,055,684 | 37,065 | |||||||||||
Credit cards - total | 633,691 | 41.6 | 1,055,684 | 807,263 | 37,065 | |||||||||
Installment loans - cash secured | 129,138 | 7,112 | — | |||||||||||
Installment loans - unsecured | 342,675 | — | 2,222 | |||||||||||
Installment loans - total | 471,813 | 31.0 | 7,112 | 1,630,027 | 2,222 | |||||||||
Other consumer and other loans | 10,415 | 0.7 | — | 7,557 | 383 | |||||||||
Gross CCBX loans receivable | 1,521,739 | 100.0 | % | 2,056,664 | 3,455,000 | $ | 75,942 | |||||||
Net deferred origination fees | (447 | ) | ||||||||||||
Loans receivable | $ | 1,521,292 |
(1) Remaining commitment available, net of outstanding balance.
(2) Balances are as of October 4, 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.
APPENDIX B -
As of September 30, 2024
CCBX – BaaS Reporting Information
During the quarter ended September 30, 2024,
The Bank records contractual interest earned from the borrower on CCBX partner 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 | |||||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
Yield on loans (1) | 17.35 | % | 17.77 | % | 17.05 | % | ||||||
BaaS loan interest income | $ | 67,692 | $ | 60,203 | $ | 56,279 | ||||||
Less: BaaS loan expense | 32,612 | 29,076 | 23,003 | |||||||||
Net BaaS loan income (2) | $ | 35,080 | $ | 31,127 | $ | 33,276 | ||||||
Net BaaS loan income divided by average BaaS loans (1)(2) | 8.99 | % | 9.19 | % | 10.08 | % |
(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.
An increase in average CCBX loans receivable resulted in increased interest income on CCBX loans during the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024. The increase in average CCBX loans receivable was primarily due to growth in the CCBX loan portfolio as part of our strategy to optimize the CCBX loan portfolio and strengthen our balance sheet through originating higher quality new loans and 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 September 30, 2024 compared to the quarter ended September 30, 2023.
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 | ||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||
Loan interest income | $ | 67,692 | $ | 60,203 | $ | 56,279 | |||
Total BaaS interest income | $ | 67,692 | $ | 60,203 | $ | 56,279 |
Interest expense | Three Months Ended | ||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||
BaaS interest expense | $ | 24,819 | $ | 24,119 | $ | 20,384 | |||
Total BaaS interest expense | $ | 24,819 | $ | 24,119 | $ | 20,384 |
BaaS income | Three Months Ended | ||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||
BaaS program income: | |||||||||
Servicing and other BaaS fees | $ | 1,044 | $ | 1,525 | $ | 997 | |||
Transaction fees | 1,696 | 1,309 | 1,036 | ||||||
Interchange fees | 1,853 | 1,625 | 1,216 | ||||||
Reimbursement of expenses | 1,843 | 1,637 | 1,152 | ||||||
BaaS program income | 6,436 | 6,096 | 4,401 | ||||||
BaaS indemnification income: | |||||||||
BaaS credit enhancements | 70,108 | 60,826 | 25,926 | ||||||
BaaS fraud enhancements | 2,084 | 1,784 | 2,850 | ||||||
BaaS indemnification income | 72,192 | 62,610 | 28,776 | ||||||
Total noninterest BaaS income | $ | 78,628 | $ | 68,706 | $ | 33,177 | |||
Servicing and other BaaS fees decreased
BaaS loan and fraud expense: | Three Months Ended | ||||||||
(dollars in thousands; unaudited) | September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||
BaaS loan expense | $ | 32,612 | $ | 29,076 | $ | 23,003 | |||
BaaS fraud expense | 2,084 | 1,784 | 2,850 | ||||||
Total BaaS loan and fraud expense | $ | 34,696 | $ | 30,860 | $ | 25,853 | |||
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/2d50cba0-18d9-4c78-8e96-0418250a8658
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