Second Quarter 2024
Highlights:
- Net income of
$11.6 million, or $0.84 per diluted common share, for the three
months ended June 30, 2024, compared to $6.8
million, or $0.50
per diluted common share, for the three months
ended March 31,
2024.
- Return on average assets
("ROA") of 1.21% for the three
months ended June 30, 2024,
compared to 0.73% for the three
months ended March 31,
2024.
- Return on average equity ("ROE") of
15.22% for the three months ended
June 30, 2024 compared to
9.21% for the three months ended
March 31, 2024.
- Net interest margin increased to 7.13% for the quarter
ended June 30, 2024, compared to 6.78% for the quarter ended
March 31, 2024.
- Yield on loans receivable increased 0.38% to 11.23% for
the quarter ended June 30, 2024, compared to 10.85% for the
quarter ended March 31, 2024.
- Cost of deposits increased 0.09% to 3.58% for the
quarter ended June 30, 2024, compared to 3.49% for the quarter
ended March 31, 2024.
- Total assets increased
$96.3 million, or
2.5%, to $3.96
billion for the quarter ended
June 30, 2024, compared to
$3.87 billion at
March 31, 2024.
- Total loans, net of deferred fees
increased $126.9 million,
or 4.0%, to
$3.33 billion for the quarter
ended June 30, 2024 compared
to the quarter ended March 31,
2024.
- Community bank loans
increased $28.8 million,
or 1.5%, to
$1.91 billion.
- CCBX loans increased
$98.1 million, or
7.4%, to $1.41
billion.
- Enhanced credit standards on new CCBX loan
originations.
- Effective April 1, 2024,
exposure was reduced from 10% to 5% on the CCBX
portfolio that the Company is responsible for losses on.
- Total of $155.2 million in CCBX loans sold during the
quarter ended June 30, 2024. The Company will
continue to sell loans as part of our strategy to reduce risk,
optimize the CCBX loan portfolio, maintain strong credit quality,
and manage portfolio and partner limits.
- Deposits increased
$80.5 million, or
2.3%, to $3.54
billion for the quarter ended
June 30, 2024.
- CCBX deposit growth of $27.5
million, or
1.4%, to $2.06
billion.
- CCBX deposit growth excludes the
$117.7 million in CCBX deposits that were
transferred off balance sheet for increased Federal Deposit
Insurance Corporation ("FDIC") insurance coverage purposes,
compared to $92.2 million for the quarter ended
March 31, 2024. Amounts in excess of
FDIC insurance coverage are transferred, using a third party
facilitator/vendor sweep product, to participating financial
institutions.
- Community bank deposits
increased $52.9 million,
or 3.7%, to
$1.49 billion, after two quarters of
declining balances.
- Includes noninterest bearing deposits of
$531.6 million or
35.7% of total community bank
deposits.
- Community bank cost of deposits was
1.77% compared to
1.66% for the quarter ended
March 31, 2024.
- Uninsured deposits of $532.9 million,
or 15.0% of total deposits as of
June 30, 2024, compared to
$495.6 million, or 14.3% of total deposits
as of March 31,
2024.
- We have taken steps to ensure our balance sheet is well
positioned to handle upcoming expected interest rate changes and
continue to improve our position in a declining interest rate
environment for the quarters ended March 31, 2024 and June 30, 2024
compared to the quarter ended December 31, 2023.
- Liquidity/Borrowings as of
June 30, 2024:
- Capacity to borrow up to $650.1 million from Federal
Home Loan Bank and the Federal Reserve Bank discount window with no
borrowings on these lines at June 30, 2024
and only minimal borrowings, taken to test
the lines, under these facilities since the first quarter of
2022.
EVERETT, Wash., July 29, 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 ended June 30, 2024.
Quarterly net income for the second quarter of 2024 was $11.6
million, or $0.84 per diluted common share, compared with net
income of $6.8 million, or $0.50 per diluted common share, for the
first quarter of 2024, and $12.9 million, or $0.95 per diluted
common share, for the quarter ended June 30, 2023.
Total assets increased $96.3 million, or 2.5%, during the second
quarter of 2024 to $3.96 billion, from $3.87 billion at
March 31, 2024. Total loans, net of deferred fees increased
$126.9 million, or 4.0%, during the three months ended
June 30, 2024 to $3.33 billion, compared to $3.20 billion at
March 31, 2024. CCBX loans increased $98.1 million, or 7.4%,
primarily as a result of a $107.4 million increase in consumer and
other loans, partially offset by a decrease of $26.5 million in
capital call lines, as a result of normal fluctuations. CCBX loan
growth is net of $155.2 million in CCBX loans sold during the
quarter ended June 30, 2024. We will continue to sell loans
back to our CCBX partners, pursuant to the applicable partner
agreement, as part of our strategy to reduce risk, optimize the
CCBX loan portfolio, maintain strong credit quality, and manage
portfolio and partner limits.
We saw solid deposit growth in the second quarter, with deposits
increasing $80.5 million, or 2.3%, compared to March 31, 2024.
CCBX deposits grew $27.5 million, or 1.4%. Community bank deposits
increased $52.9 million, or 3.7%, after two consecutive quarters of
declining balances primarily as a result of letting some of our
higher rate deposits run-off during those quarters. Fully insured
IntraFi network reciprocal deposits increased $15.5 million to
$352.3 million as of June 30, 2024, compared to $336.8 million
as of March 31, 2024. These fully insured reciprocal deposits
allow our larger deposit customers to fully insure their deposits
through a reciprocal agreement with other banks. We continue to
monitor our liquidity position through diligent management of our
liquid assets and liabilities as well as maintaining access to
alternative sources of funds. As of June 30, 2024, we had
$487.2 million in cash on the balance sheet and the capacity to
borrow up to $650.1 million from Federal Home Loan Bank and the
Federal Reserve Bank discount window, and an additional $50.0
million from a correspondent bank, with no borrowings occurring,
except minimal amounts borrowed to test the lines, under these
facilities since the first quarter of 2022. Cash on the balance
sheet and total borrowing capacity totaled $1.19 billion, which
represented 33.5% of total deposits and exceeded our $532.9 million
in uninsured deposits as of June 30, 2024.
"We are happy to report that we have experienced robust loan
growth of $126.9 million for the quarter ended June 30, 2024.
This growth can be attributed to our strong relationships with
existing CCBX partners and successful efforts to attract new
community bank borrowers. We are pleased to report that we are
maintaining our strong credit quality, and our portfolio is
performing as expected. This is a testament to our diligent risk
management practices and proactive measures to optimize our loan
portfolio.
We have taken steps to manage our balance sheet and we believe
it is well positioned to handle upcoming expected interest rate
changes. This involves carefully managing our interest rate risk
exposure and implementing strategies to mitigate any adverse
impacts on our financial performance from interest rate changes. By
closely monitoring market trends and leveraging our expertise in
financial analysis, we believe we are well positioned to adapt to
changing interest rate environments.
In late 2023 and early 2024, we took proactive measures to
enhance the credit quality of our CCBX loans by selling higher rate
and higher risk loans. This strategic decision, although it
resulted in a short-term reduction in income, is expected to result
in long-term stability and success. By focusing on the quality of
our loan portfolio, we believe that we are well positioned to
achieve our goals and deliver sustainable financial performance in
the future.
We believe our organization's strong credit quality, neutral to
slightly liability sensitive balance sheet, robust loan and deposit
growth, and proactive risk management measures demonstrate our
commitment to maintaining a solid financial position. We remain
confident in our ability to navigate changing market conditions and
achieve long-term success in the BaaS and community bank space,"
stated Eric Sprink, the CEO of the Company and the Bank.
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.
Net interest income was $66.2 million for the quarter ended
June 30, 2024, an increase of $5.3 million, or 8.7%, from
$60.9 million for the quarter ended March 31, 2024, and an
increase of $3.9 million, or 6.2%, from $62.4 million for the
quarter ended June 30, 2023. Yield on loans
receivable was 11.23% for the three months ended June 30,
2024, compared to 10.85% for the three months ended March 31,
2024 and June 30, 2023. Cost of deposits was 3.58%
for the three months ended June 30, 2024, compared to 3.49%
for the three months ended March 31, 2024 and 2.72% for the
three months ended June 30, 2023. The increase in net interest
income compared to March 31, 2024, was a result of increased
interest income due to an increase in average loans receivable
partially offset by an increase in cost of deposits as a result of
deposit portfolio composition and competitive pressures. The
increase in net interest income compared to June 30, 2023 was
largely related to increased yield on loans resulting from higher
interest rates and growth in higher yielding
loans. Total average loans receivable for the three
months ended June 30, 2024 was $3.26 billion, compared to
$3.14 billion for the three months ended March 31, 2024, and
$2.97 billion for the three months ended June 30, 2023.
Interest and fees on loans totaled $90.9 million for the three
months ended June 30, 2024 compared to $84.6 million and $80.2
million for the three months ended March 31, 2024 and
June 30, 2023, respectively. Total loans, net of
deferred fees increased $126.9 million, or 4.0%, during the quarter
ended June 30, 2024, which included a $98.1 million increase
in CCBX loans and an increase of $28.8 million in community bank
loans. The increase in CCBX loans includes an increase of $107.4
million, or 12.4%, in consumer and other loans, $22.8 million
increase in residential real estate loans and a decrease of $26.5
million, or 19.6%, in capital call lines as a result of normal
balance fluctuations and business activities. We
continue to monitor and manage the CCBX loan portfolio, and sold
$155.2 million in CCBX loans during the quarter ended June 30,
2024 to reduce credit exposure in certain loan categories and
manage credit risk, compared to sales of $100.5 million in the
quarter ended March 31, 2024. We continue to reposition
ourselves by managing CCBX credit and concentration levels in an
effort to optimize our loan portfolio. The increase in interest and
fees on loans compared to the quarter ended March 31, 2024 was
largely due to loan growth in higher yielding loans. The increase
compared to the quarter ended June 30, 2023 was also largely
due to growth in higher yielding loans. The FOMC has
increased rates 0.25% since June 30, 2023 and last raised the
target Federal Funds rate 0.25% on July 26, 2023. Loans have
been repricing at these higher rates for almost a year.
Interest income from interest earning deposits with other banks
was $5.7 million for the quarter ended June 30, 2024, an
increase of $903,000 compared to March 31, 2024, due to an
increase in average balance and an increase of $3.0 million
compared to June 30, 2023 due to an increase in average
balance and higher interest rates. The average balance
of interest earning deposits with other banks for the three months
ended June 30, 2024 was $418.2 million, compared to $350.9
million and $211.4 million for the three months ended
March 31, 2024 and June 30, 2023,
respectively. The average yield on these interest
earning deposits with other banks decreased nominally to 5.47% for
the quarter ended June 30, 2024, compared to 5.48% for the
quarter ended March 31, 2024 and increased from 5.08% in the
quarter ended June 30, 2023.
Total interest expense was $31.3 million for the quarter ended
June 30, 2024, a $1.7 million increase from the quarter ended
March 31, 2024 and a $9.9 million increase from the quarter
ended June 30, 2023. Interest expense on deposits was $30.6
million for the quarter ended June 30, 2024, compared to $28.9
million for the quarter ended March 31, 2024 and $20.7 million
for the quarter ended June 30, 2023. Interest expense on
interest bearing deposits increased $1.7 million for the quarter
ended June 30, 2024, compared to the quarter ended
March 31, 2024, and $9.9 million compared to the quarter ended
June 30, 2023 as a result of an increase in CCBX deposits that
are tied to, and reprice when the FOMC raises rates. Similarly,
most of our CCBX loans also reprice when the FOMC raises interest
rates. Interest expense on borrowed funds was $672,000 for the
quarter ended June 30, 2024, compared to $669,000 and $661,000
for the quarters ended March 31, 2024 and June 30, 2023,
respectively. The $11,000 increase in interest expense on borrowed
funds from the quarter ended June 30, 2023 is the result of an
increase in interest rates.
Total cost of deposits was 3.58% for the three months ended
June 30, 2024, compared to 3.49% for the three months ended
March 31, 2024, and 2.72%, for the three months ended
June 30, 2023. Community bank and CCBX cost of deposits were
1.77% and 4.92% respectively, for the three months ended
June 30, 2024, compared to 1.66% and 4.93%, for the three
months ended March 31, 2024, and 0.98% and 4.42% for the three
months ended June 30, 2023. The increase in cost of deposits
for the three months ended June 30, 2024 compared to the prior
periods for both segments is a result of the continued higher
interest rate environment. While we continue working to hold down
deposit costs, the higher interest rate environment has impacted
our cost of deposits and resulted in higher interest expense on
interest bearing deposits as we work to retain and grow our
community bank deposits and CCBX deposits continue to grow as a
percent of total deposits.
Net Interest Margin
Net interest margin was 7.13% for the three months ended
June 30, 2024, compared to 6.78% for the three months ended
March 31, 2024. The increase in net interest margin
compared to the three months ended March 31, 2024 was
primarily due to higher loan yields. Net interest margin was 7.58%
for the three months ended June 30, 2023. The decrease in net
interest margin for the three months ended June 30, 2024
compared to the three months ended June 30, 2023 was largely
due to an increase in cost of deposits, partially offset by an
increase in loan yield. Increases in rates on interest bearing
deposits by our competitors and the growth in higher cost CCBX
deposits contributed to an overall increase in interest expense on
interest bearing deposits. Interest and fees on loans
receivable increased $6.3 million, or 7.5%, to $90.9 million for
the three months ended June 30, 2024, compared to $84.6
million for the three months ended March 31, 2024, and
increased $10.7 million, or 13.4%, compared to $80.2 million for
the three months ended June 30, 2023, due to an increase in
outstanding balances and higher interest rates. Compared
to the three months ended June 30, 2023, there was a $3.0
million increase in interest on interest earning deposits held at
other financial institutions. These interest earning
deposits earned an average rate of 5.47% for the quarter ended
June 30, 2024, compared to 5.48% and 5.08% for the quarters
ended March 31, 2024 and June 30, 2023,
respectively. Average investment securities decreased
$65.6 million to $49.8 million compared to the three months ended
March 31, 2024 and decreased $60.5 million compared to the
three months ended June 30, 2023 as a result of $100.0 million
in AFS U.S. Treasury securities that matured on February 29, 2024.
Interest on investment securities decreased $348,000 for the three
months ended June 30, 2024 compared to the three months ended
March 31, 2024 as a result of the maturing Treasury
securities. Interest on total investment securities increased
$33,000 compared to June 30, 2023, as a result of increased
yield. These increases in interest income were partially
offset by increases in interest expense on interest bearing
deposits, as previously discussed.
Cost of funds was 3.60% for the quarter ended June 30,
2024, an increase of 8 basis points from the quarter ended
March 31, 2024 and an increase of 83 basis points from the
quarter ended June 30, 2023. Cost of deposits for the quarter
ended June 30, 2024 was 3.58%, compared to 3.49% for the
quarter ended March 31, 2024, and 2.72% for the quarter ended
June 30, 2023. The increased cost of funds and deposits
compared to March 31, 2024 and June 30, 2023 was due to
the increase in interest rates compared to the previous periods and
growth in higher rate CCBX deposits.
During the quarter ended June 30, 2024, total loans
receivable increased by $126.9 million, or 4.0%, to $3.33 billion,
compared to $3.20 billion for the quarter ended March 31,
2024. This increase consists of a $98.1 million increase
in CCBX loans and $28.8 million in community bank loan growth.
Total loans receivable as of June 30, 2024 increased $318.9
million compared to June 30, 2023. This increase
includes community bank loan growth of $199.0 million and an
increase in CCBX loans of $119.9 million. During the quarter ended
June 30, 2024, $155.2 million in CCBX loans were sold,
compared to sales of $100.5 million in the quarter ended
March 31, 2024.
Total yield on loans receivable for the quarter ended
June 30, 2024 was 11.23%, compared to 10.85% for the quarters
ended March 31, 2024 and June 30, 2023. During the
quarter ended June 30, 2024, community bank loans increased
1.5%, or $28.8 million, to $1.91 billion compared to $1.88 billion
at March 31, 2024, with an average yield of 6.52%. CCBX loans
outstanding increased 7.4%, or $98.1 million, to $1.41 billion
compared to $1.32 billion at March 31, 2024, with an average
CCBX yield of 17.77%. The yield on CCBX loans 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.
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 Six Months Ended |
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
|
June 30, 2024 |
|
June 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) |
|
Yield on
Loans (2) |
|
Cost of
Deposits (2) |
|
Yield on
Loans (2) |
|
Cost of
Deposits (2) |
|
Community Bank |
|
6.52 |
% |
|
1.77 |
% |
|
6.46 |
% |
|
1.66 |
% |
|
6.28 |
% |
|
0.98 |
% |
|
6.49 |
% |
|
1.71 |
% |
|
6.13 |
% |
|
0.82 |
% |
| CCBX (1) |
|
17.77 |
% |
|
4.92 |
% |
|
17.34 |
% |
|
4.93 |
% |
|
16.95 |
% |
|
4.42 |
% |
|
17.56 |
% |
|
4.92 |
% |
|
16.56 |
% |
|
4.18 |
% |
| Consolidated |
|
11.23 |
% |
|
3.58 |
% |
|
10.85 |
% |
|
3.49 |
% |
|
10.85 |
% |
|
2.72 |
% |
|
11.04 |
% |
|
3.53 |
% |
|
10.42 |
% |
|
2.44 |
% |
(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 |
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 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 |
|
$ |
60,203 |
|
17.77 |
% |
|
$ |
54,569 |
|
17.34 |
% |
|
$ |
53,632 |
|
16.95 |
% |
| Less: BaaS loan expense |
|
|
29,076 |
|
8.58 |
% |
|
|
24,837 |
|
7.89 |
% |
|
|
22,033 |
|
6.96 |
% |
|
Net BaaS loan income (1) |
|
$ |
31,127 |
|
9.19 |
% |
|
$ |
29,732 |
|
9.45 |
% |
|
$ |
31,599 |
|
9.98 |
% |
| Average BaaS
Loans(3) |
|
$ |
1,362,343 |
|
|
|
$ |
1,265,857 |
|
|
|
$ |
1,269,406 |
|
|
| |
|
For the Six Months Ended |
| |
|
June 30, 2024 |
|
June 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) |
|
BaaS loan interest income |
|
$ |
114,772 |
|
17.56 |
% |
|
$ |
95,851 |
|
16.56 |
% |
| Less: BaaS loan expense |
|
|
53,913 |
|
8.25 |
% |
|
|
39,587 |
|
6.84 |
% |
|
Net BaaS loan income (1) |
|
$ |
60,859 |
|
9.31 |
% |
|
$ |
56,264 |
|
9.72 |
% |
| Average BaaS
Loans(3) |
|
$ |
1,314,099 |
|
|
|
$ |
1,167,366 |
|
|
(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 1.21% for the quarter ended June 30, 2024 compared
to 0.73% and 1.52% for the quarters ended March 31, 2024 and
June 30, 2023, respectively. ROA for the quarter
ended June 30, 2024, was up 0.48% and down 0.31% compared to
March 31, 2024 and June 30, 2023, respectively.
Noninterest expenses were higher for the quarter ended
June 30, 2024 compared to the quarters ended March 31,
2024 and June 30, 2023 due to an increase in BaaS loan
expense, which is directly related to interest earned on CCBX
loans. Noninterest expense excluding Baas loan and fraud expense
was lower for the quarter ended June 30, 2024 compared to the
quarters ended March 31, 2024 and June 30, 2023 largely
due to the $1.2 million credit for business and occupation taxes
paid on CCBX income that was sourced/allocated outside the State of
Washington for years 2019 through 2022.
The following table shows the Company’s key performance ratios
for the periods indicated.
| |
|
Three Months Ended |
|
Six Months Ended |
|
(unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
|
June 30,
2023 |
|
June 30,
2024 |
|
June 30,
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets (1) |
|
1.21 |
% |
|
0.73 |
% |
|
0.97 |
% |
|
1.13 |
% |
|
1.52 |
% |
|
0.98 |
% |
|
1.55 |
% |
| Return on average equity
(1) |
|
15.22 |
% |
|
9.21 |
% |
|
12.35 |
% |
|
14.60 |
% |
|
19.53 |
% |
|
12.26 |
% |
|
19.70 |
% |
| Yield on earnings assets
(1) |
|
10.49 |
% |
|
10.07 |
% |
|
9.77 |
% |
|
10.08 |
% |
|
10.18 |
% |
|
10.28 |
% |
|
9.70 |
% |
| Yield on loans receivable
(1) |
|
11.23 |
% |
|
10.85 |
% |
|
10.71 |
% |
|
10.84 |
% |
|
10.85 |
% |
|
11.04 |
% |
|
10.42 |
% |
| Cost of funds
(1) |
|
3.60 |
% |
|
3.52 |
% |
|
3.39 |
% |
|
3.18 |
% |
|
2.77 |
% |
|
3.56 |
% |
|
2.49 |
% |
| Cost of deposits
(1) |
|
3.58 |
% |
|
3.49 |
% |
|
3.36 |
% |
|
3.14 |
% |
|
2.72 |
% |
|
3.53 |
% |
|
2.44 |
% |
| Net interest margin
(1) |
|
7.13 |
% |
|
6.78 |
% |
|
6.61 |
% |
|
7.10 |
% |
|
7.58 |
% |
|
6.96 |
% |
|
7.37 |
% |
| Noninterest expense to average
assets (1) |
|
6.14 |
% |
|
6.04 |
% |
|
5.56 |
% |
|
6.23 |
% |
|
6.11 |
% |
|
6.09 |
% |
|
5.91 |
% |
| Noninterest income to average
assets (1) |
|
7.30 |
% |
|
9.38 |
% |
|
6.95 |
% |
|
3.81 |
% |
|
6.90 |
% |
|
8.32 |
% |
|
6.60 |
% |
| Efficiency ratio |
|
43.19 |
% |
|
37.88 |
% |
|
41.58 |
% |
|
58.36 |
% |
|
42.92 |
% |
|
40.43 |
% |
|
42.97 |
% |
| Loans receivable to deposits
(2) |
|
93.88 |
% |
|
92.42 |
% |
|
90.05 |
% |
|
90.19 |
% |
|
96.23 |
% |
|
93.88 |
% |
|
96.23 |
% |
(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 |
| |
|
June 30, |
|
March 31, |
|
June 30, |
|
(dollars in thousands; unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
Deposit service charges and fees |
|
$ |
946 |
|
$ |
908 |
|
$ |
989 |
|
Loan referral fees |
|
|
— |
|
|
168 |
|
|
682 |
|
Unrealized gain (loss) on equity securities, net |
|
|
9 |
|
|
15 |
|
|
155 |
|
Gain on sales of loans, net |
|
|
— |
|
|
— |
|
|
23 |
|
Other |
|
|
257 |
|
|
308 |
|
|
234 |
|
Noninterest income, excluding BaaS program income and BaaS
indemnification income |
|
|
1,212 |
|
|
1,399 |
|
|
2,083 |
|
Servicing and other BaaS fees |
|
|
1,525 |
|
|
1,131 |
|
|
895 |
|
Transaction fees |
|
|
1,309 |
|
|
1,122 |
|
|
1,052 |
|
Interchange fees |
|
|
1,625 |
|
|
1,539 |
|
|
975 |
|
Reimbursement of expenses |
|
|
1,637 |
|
|
1,033 |
|
|
1,026 |
|
BaaS program income |
|
|
6,096 |
|
|
4,825 |
|
|
3,948 |
|
BaaS credit enhancements |
|
|
60,826 |
|
|
79,808 |
|
|
51,027 |
|
Baas fraud enhancements |
|
|
1,784 |
|
|
923 |
|
|
1,537 |
|
BaaS indemnification income |
|
|
62,610 |
|
|
80,731 |
|
|
52,564 |
|
Total BaaS income |
|
|
68,706 |
|
|
85,556 |
|
|
56,512 |
| Total noninterest income |
|
$ |
69,918 |
|
$ |
86,955 |
|
$ |
58,595 |
| |
Noninterest income was $69.9 million for the three months ended
June 30, 2024, a decrease of $17.1 million from $87.0 million
for the three months ended March 31, 2024, and a increase of
$11.3 million from $58.6 million for the three months ended
June 30, 2023. The decrease in noninterest income
over the quarter ended March 31, 2024 was primarily due to a
decrease of $16.9 million in total BaaS income. The
$16.9 million decrease in total BaaS income included a $19.0
million decrease in BaaS credit enhancements related to the
provision for credit losses, partially offset by a $861,000
increase in BaaS fraud enhancements, and an increase of $1.3
million in BaaS program income. The increase in BaaS program income
is largely due to higher servicing and other BaaS fees, transaction
fees and interchange fees and our primary BaaS source for recurring
fee income (see “Appendix B” for more information on the accounting
for BaaS allowance for credit losses and credit and fraud
enhancements). Additionally, community bank loan referral fees
decreased $168,000 due to the continued high interest rate
environment. Other income decreased $51,000 largely due to a
decrease in SBA servicing fees. The $11.3 million increase in
noninterest income over the quarter ended June 30, 2023 was
primarily due to a $10.0 million increase in BaaS credit and fraud
enhancements, an increase of $2.1 million in BaaS program income,
partially offset by a decrease of $682,000 in loan referral
fees.
Our CCBX segment continues to evolve, and we have 21
relationships, at varying stages, as of June 30, 2024.
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.
We launched two new lending products through our CCBX segment in
the first quarter of 2024 that can reach wide, established customer
bases. One was a point-of-sale installment loan program. These
loans are fully disclosed and offered as standard credit products,
which we believe will minimize the concerns raised with respect to
more typical point of sale "Buy Now Pay Later" offerings. The
second product was a new credit card that will be marketed to CCBX
partner customers who satisfy heightened underwriting
standards.
The following table illustrates the activity and evolution in
CCBX relationships for the periods presented.
| |
|
As of |
|
(unaudited) |
|
June 30, 2024 |
March 31, 2024 |
June 30, 2023 |
|
Active |
|
19 |
19 |
18 |
| Friends and family /
testing |
|
1 |
1 |
1 |
| Implementation /
onboarding |
|
1 |
1 |
1 |
| Signed letters of intent |
|
0 |
0 |
1 |
| Wind down - active but
preparing to exit relationship |
|
0 |
0 |
1 |
|
Total CCBX relationships |
|
21 |
21 |
22 |
The following table details noninterest expense for the periods
indicated:
Noninterest Expense
|
|
|
Three Months Ended |
| |
|
June 30, |
|
March 31, |
|
June 30, |
|
(dollars in thousands; unaudited) |
|
2024 |
|
2024 |
|
2023 |
|
Salaries and employee benefits |
|
$ |
17,005 |
|
|
$ |
17,984 |
|
$ |
16,309 |
|
Legal and professional expenses |
|
|
3,631 |
|
|
|
3,672 |
|
|
4,645 |
|
Data processing and software licenses |
|
|
2,924 |
|
|
|
2,892 |
|
|
1,972 |
|
Occupancy |
|
|
1,686 |
|
|
|
1,518 |
|
|
1,143 |
|
Point of sale expense |
|
|
852 |
|
|
|
869 |
|
|
814 |
|
Director and staff expenses |
|
|
470 |
|
|
|
400 |
|
|
519 |
|
FDIC assessments |
|
|
690 |
|
|
|
683 |
|
|
570 |
|
Excise taxes |
|
|
(706 |
) |
|
|
320 |
|
|
531 |
|
Marketing |
|
|
14 |
|
|
|
53 |
|
|
115 |
|
Other |
|
|
1,383 |
|
|
|
1,867 |
|
|
1,722 |
|
Noninterest expense, excluding BaaS loan and BaaS fraud
expense |
|
|
27,949 |
|
|
|
30,258 |
|
|
28,340 |
|
BaaS loan expense |
|
|
29,076 |
|
|
|
24,837 |
|
|
22,033 |
|
BaaS fraud expense |
|
|
1,784 |
|
|
|
923 |
|
|
1,537 |
|
BaaS loan and fraud expense |
|
|
30,860 |
|
|
|
25,760 |
|
|
23,570 |
| Total noninterest expense |
|
$ |
58,809 |
|
|
$ |
56,018 |
|
$ |
51,910 |
| |
Total noninterest expense increased $2.8 million to $58.8
million for the three months ended June 30, 2024, compared to
$56.0 million for the three months ended March 31, 2024, and
increased $6.9 million from $51.9 million for the three months
ended June 30, 2023. The increase in noninterest expense for
the quarter ended June 30, 2024, as compared to the quarter
ended March 31, 2024, was primarily due to a $5.1 million
increase in BaaS expense (including a $861,000 increase in BaaS
fraud expense and a $4.2 million increase in BaaS loan expense)
(BaaS loan expense represents the amount paid or payable to
partners for credit enhancements, fraud enhancements, and
originating & servicing CCBX loans. BaaS fraud expense
represents non-credit fraud losses on partner’s customer loan and
deposit accounts. A portion of this expense is realized during the
quarter during which the loss occurs, and a portion is estimated
based on historical or other information from our partners),
partially offset by a $1.0 million decrease in excise taxes (due to
the recording of $1.2 million business and occupation tax credit
from the State of Washington as a result of a tax apportionment
study completed to quantify revenue earned outside of the state of
Washington. CCBX income is sourced to the state the partner is
headquartered, and the majority of partners are located outside the
state of Washington, therefore the credit was for taxes we paid on
CCBX income to Washington state that was sourced to other states),
$1.0 million decrease in salaries and employee benefits, a $484,000
decrease in other expenses as a result of unanticipated expenses in
the quarter ended March 31, 2024 that did not recur in the
current quarter and a $41,000 decrease in legal and professional
fees as some of our risk management infrastructure projects are
being completed. We continue to invest in our infrastructure and
the automation of our processes so that they are scalable.
The increase in noninterest expenses for the quarter ended
June 30, 2024 compared to the quarter ended June 30, 2023
were largely due to an increase of $7.3 million in BaaS partner
expense (including a $7.0 million increase in BaaS loan and an
increase of $247,000 in BaaS fraud expense), a $952,000 increase in
data processing and software licenses due to enhancements in
technology, $696,000 increase in salary and employee benefits
related to hiring staff for CCBX and additional staff for our
ongoing growth initiatives, partially offset by a $1.2 million
decrease in business and occupation excise taxes as mentioned
above, and a $1.0 million decrease in legal and professional fees
as a result of risk management projects are being completed.
Provision for Income Taxes
The provision for income taxes was $3.4 million for the three
months ended June 30, 2024, $1.9 million for the three months
ended March 31, 2024 and $3.9 million for the second quarter
of 2023. The income tax provision was higher for the three
months ended June 30, 2024 compared to the quarter ended
March 31, 2024 primarily due to higher net income and lower
than the quarter ended June 30, 2023 primarily due to lower
net income compared to that quarter. Also contributing to the
variances is the tax impact of stock equity award deductions which
fluctuates based on activity. 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 21.0% as a basis for calculating provision for federal income
taxes and 2.62% for calculating the provision for state income
taxes.
Financial Condition Overview
Total assets increased $96.3 million, or 2.5%, to $3.96 billion
at June 30, 2024 compared to $3.87 billion at March 31,
2024. The increase is primarily due to a $126.9 million
increase in loans receivable partially offset by $8.7 million
increase in the allowance for credit losses, a $55.1 million
decrease in interest earning deposits held at other banks, a $6.2
million increase in the credit enhancement asset and a $1.1 million
decrease in accrued interest receivable. During the quarter ended
June 30, 2024, we sold $155.2 million in CCBX loans compared
to $100.5 million sold during the quarter ended March 31,
2024.
Total assets increased $426.3 million, or 12.1%, to $3.96
billion at June 30, 2024, compared to $3.54 billion at
June 30, 2023. The increase is primarily due to
loans receivable increasing $318.9 million, a $182.0 million
increase in interest earning deposits with other banks, and an
increase of $46.6 million in the credit enhancement asset,
partially offset by a decrease of $61.5 million in investment
securities compared to June 30, 2023.
Loans Receivable
Total loans receivable increased $126.9 million to $3.33 billion
at June 30, 2024, from $3.20 billion at March 31, 2024,
and increased $318.9 million from $3.01 billion at June 30,
2023. The increase in loans receivable over the quarter
ended March 31, 2024 was the result of an increase of $98.1
million in CCBX loans as we continue to build back this portfolio
with new loans, subject to enhanced credit standards, following
several periods of shrinking this portfolio to optimize our balance
sheet, and a $28.8 million increase in community bank loans. We
continue to monitor and manage the CCBX loan portfolio, and sold
$155.2 million in CCBX loans during the quarter ended June 30,
2024 as part of our strategy to reduce risk, optimize the CCBX loan
portfolio, maintain strong credit quality, and manage portfolio and
partner limits. The change in loans receivable over the quarter
ended June 30, 2023 includes CCBX loan growth of $119.9
million and community bank loan growth of $199.0 million as of
June 30, 2024.
The following table summarizes the loan portfolio at the period
indicated:
|
Consolidated |
|
As of June 30, 2024 |
|
As of March 31, 2024 |
|
As of June 30, 2023 |
|
(dollars in thousands; unaudited) |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital call lines |
|
$ |
109,133 |
|
|
3.3 |
% |
|
$ |
135,671 |
|
|
4.2 |
% |
|
$ |
138,428 |
|
|
4.6 |
% |
|
All other commercial & industrial loans |
|
|
186,167 |
|
|
5.6 |
|
|
|
201,555 |
|
|
6.3 |
|
|
|
215,401 |
|
|
7.1 |
|
|
Total commercial and industrial loans: |
|
|
295,300 |
|
|
8.9 |
|
|
|
337,226 |
|
|
10.5 |
|
|
|
353,829 |
|
|
11.7 |
|
| Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction, land and land development |
|
|
173,064 |
|
|
5.2 |
|
|
|
160,862 |
|
|
5.0 |
|
|
|
186,706 |
|
|
6.2 |
|
|
Residential real estate |
|
|
517,589 |
|
|
15.5 |
|
|
|
496,305 |
|
|
15.5 |
|
|
|
463,179 |
|
|
15.4 |
|
|
Commercial real estate |
|
|
1,357,979 |
|
|
40.7 |
|
|
|
1,342,489 |
|
|
41.9 |
|
|
|
1,164,088 |
|
|
38.6 |
|
| Consumer and other loans |
|
|
990,270 |
|
|
29.7 |
|
|
|
870,134 |
|
|
27.1 |
|
|
|
846,459 |
|
|
28.1 |
|
|
Gross loans receivable |
|
|
3,334,202 |
|
|
100.0 |
% |
|
|
3,207,016 |
|
|
100.0 |
% |
|
|
3,014,261 |
|
|
100.0 |
% |
| Net deferred origination
fees |
|
|
(7,742 |
) |
|
|
|
|
(7,462 |
) |
|
|
|
|
(6,708 |
) |
|
|
|
Loans receivable |
|
$ |
3,326,460 |
|
|
|
|
$ |
3,199,554 |
|
|
|
|
$ |
3,007,553 |
|
|
|
| Loan Yield (1) |
|
|
11.23 |
% |
|
|
|
|
10.85 |
% |
|
|
|
|
10.85 |
% |
|
|
(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 |
|
|
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
| (dollars in thousands;
unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Commercial and industrial loans |
|
$ |
144,436 |
|
|
7.5 |
% |
|
$ |
154,395 |
|
|
8.2 |
% |
|
$ |
155,078 |
|
|
9.0 |
% |
| Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction, land and land development loans |
|
|
173,064 |
|
|
9.0 |
|
|
|
160,862 |
|
|
8.5 |
|
|
|
186,706 |
|
|
10.9 |
|
|
Residential real estate loans |
|
|
229,639 |
|
|
12.0 |
|
|
|
231,157 |
|
|
12.2 |
|
|
|
211,966 |
|
|
12.3 |
|
|
Commercial real estate loans |
|
|
1,357,979 |
|
|
70.8 |
|
|
|
1,342,489 |
|
|
71.0 |
|
|
|
1,164,088 |
|
|
67.7 |
|
| Consumer and other loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer and other loans |
|
|
14,220 |
|
|
0.7 |
|
|
|
1,447 |
|
|
0.1 |
|
|
|
1,457 |
|
|
0.1 |
|
|
Gross Community Bank loans receivable |
|
|
1,919,338 |
|
|
100.0 |
% |
|
|
1,890,350 |
|
|
100.0 |
% |
|
|
1,719,295 |
|
|
100.0 |
% |
| Net deferred origination
fees |
|
|
(7,304 |
) |
|
|
|
|
(7,068 |
) |
|
|
|
|
(6,261 |
) |
|
|
|
Loans receivable |
|
$ |
1,912,034 |
|
|
|
|
$ |
1,883,282 |
|
|
|
|
$ |
1,713,034 |
|
|
|
| Loan Yield(1) |
|
|
6.52 |
% |
|
|
|
|
6.46 |
% |
|
|
|
|
6.28 |
% |
|
|
(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 |
|
|
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
|
(dollars in thousands; unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital call lines |
|
$ |
109,133 |
|
|
7.7 |
% |
|
$ |
135,671 |
|
|
10.3 |
% |
|
$ |
138,428 |
|
|
10.7 |
% |
|
All other commercial & industrial loans |
|
|
41,731 |
|
|
3.0 |
|
|
|
47,160 |
|
|
3.6 |
|
|
|
60,323 |
|
|
4.7 |
|
| Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate loans |
|
|
287,950 |
|
|
20.4 |
|
|
|
265,148 |
|
|
20.1 |
|
|
|
251,213 |
|
|
19.4 |
|
| Consumer and other loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit cards |
|
|
549,241 |
|
|
38.7 |
|
|
|
505,706 |
|
|
38.4 |
|
|
|
379,642 |
|
|
29.3 |
|
|
Other consumer and other loans |
|
|
426,809 |
|
|
30.2 |
|
|
|
362,981 |
|
|
27.6 |
|
|
|
465,360 |
|
|
35.9 |
|
|
Gross CCBX loans receivable |
|
|
1,414,864 |
|
|
100.0 |
% |
|
|
1,316,666 |
|
|
100.0 |
% |
|
|
1,294,966 |
|
|
100.0 |
% |
| Net deferred origination
(fees) costs |
|
|
(438 |
) |
|
|
|
|
(394 |
) |
|
|
|
|
(447 |
) |
|
|
|
Loans receivable |
|
$ |
1,414,426 |
|
|
|
|
$ |
1,316,272 |
|
|
|
|
$ |
1,294,519 |
|
|
|
| Loan Yield - CCBX
(1)(2) |
|
|
17.77 |
% |
|
|
|
|
17.34 |
% |
|
|
|
|
16.95 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
(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 $80.5 million, or 2.3%, to $3.54
billion at June 30, 2024 from $3.46 billion at March 31,
2024. The increase was due to a $80.5 million increase in core
deposits. Deposits in our community bank segment increased $52.9
million from $1.43 billion at March 31, 2024, to $1.49 billion
at June 30, 2024 and CCBX deposits increased $27.5 million,
from $2.03 billion at March 31, 2024, to $2.06 billion at
June 30, 2024. The deposits from our CCBX segment are
predominately classified as interest bearing demand and money
market accounts. During the quarter ended June 30, 2024,
noninterest bearing deposits increased $19.7 million, or 3.4%, to
$593.8 million from $574.1 million at March 31, 2024.
Community bank noninterest bearing deposits totaled $531.6 million
or 35.7% of total community bank deposits and CCBX noninterest
bearing deposits totaled $62.2 million, or 3.0% of total CCBX
deposits. In the quarter ended June 30, 2024 compared to the
quarter ended March 31, 2024, interest bearing demand and
money market accounts increased $66.1 million, savings deposits
decreased $5.3 million, and time deposits decreased $22,000.
Included in total deposits is $352.3 million in IntraFi network
reciprocal interest bearing demand and money market accounts as of
June 30, 2024, which provides our larger deposit customers
with fully insured deposits through a reciprocal agreement with
other banks. Uninsured deposits decreased to $532.9 million as of
June 30, 2024, compared to $495.6 million as of March 31,
2024.
Total deposits increased $380.9 million, or 12.0%, to $3.54
billion at June 30, 2024 compared to $3.16 billion at
June 30, 2023. The increase is largely the result of growth in
CCBX deposits. Noninterest bearing deposits decreased $131.8
million, or 18.2%, to $593.8 million at June 30, 2024 from
$725.6 million at June 30, 2023 as a result of customer
movement from noninterest to interest bearing accounts. Interest
bearing demand and money market accounts increased $542.6 million,
or 23.4%, to $2.87 billion at June 30, 2024, and savings
deposits decreased $20.2 million, or 22.7%, and time deposits
decreased $9.7 million, or 39.2%, in the second quarter
of 2024 compared to the second quarter of 2023. Deposits in our
CCBX segment increased $403.4 million, from $1.65 billion at
June 30, 2023, to $2.06 billion at June 30, 2024 and
community bank deposits decreased $22.5 million, from $1.51 billion
at June 30, 2023, to $1.49 billion at June 30, 2024. The
deposits from our CCBX segment are predominately classified as
interest bearing demand and money market accounts. Uninsured
deposits decreased to $532.9 million as of June 30, 2024,
compared to $632.1 million as of June 30, 2023 primarily as a
result of increased usage of our cash sweep and exchange services
to other banks for increased FDIC insurance coverage as described
below.
Additionally, as of June 30, 2024, $117.7 million in CCBX
customer deposits were transferred off the Bank’s balance sheet to
other financial institutions on a daily basis for additional FDIC
insurance coverage. Efforts to retain and grow core deposits are
evidenced by the high ratios in these categories when compared to
total deposits.
The following table summarizes the deposit portfolio for the
periods indicated.
|
Consolidated |
|
As of June 30, 2024 |
|
As of March 31, 2024 |
|
As of June 30, 2023 |
|
(dollars in thousands; unaudited) |
|
Amount |
|
Percent of
Total
Deposits |
|
Balance |
|
Percent of
Total
Deposits |
|
Balance |
|
Percent of
Total
Deposits |
|
Demand, noninterest bearing |
|
$ |
593,789 |
|
|
16.8 |
% |
|
$ |
574,112 |
|
|
16.6 |
% |
|
$ |
725,592 |
|
|
22.9 |
% |
Interest bearing demand
and
money market |
|
|
2,865,773 |
|
|
80.9 |
|
|
|
2,799,667 |
|
|
80.9 |
|
|
|
2,323,164 |
|
|
73.5 |
|
| Savings |
|
|
68,777 |
|
|
1.9 |
|
|
|
74,085 |
|
|
2.1 |
|
|
|
88,991 |
|
|
2.8 |
|
|
Total core deposits |
|
|
3,528,339 |
|
|
99.6 |
|
|
|
3,447,864 |
|
|
99.6 |
|
|
|
3,137,747 |
|
|
99.2 |
|
| Brokered deposits |
|
|
1 |
|
|
0.0 |
|
|
|
1 |
|
|
0.0 |
|
|
|
1 |
|
|
— |
|
| Time deposits less than
$100,000 |
|
|
6,741 |
|
|
0.2 |
|
|
|
7,199 |
|
|
0.2 |
|
|
|
9,741 |
|
|
0.3 |
|
| Time deposits $100,000 and
over |
|
|
8,351 |
|
|
0.2 |
|
|
|
7,915 |
|
|
0.2 |
|
|
|
15,083 |
|
|
0.5 |
|
|
Total |
|
$ |
3,543,432 |
|
|
100.0 |
% |
|
$ |
3,462,979 |
|
|
100.0 |
% |
|
$ |
3,162,572 |
|
|
100.0 |
% |
| Cost of deposits
(1) |
|
|
3.58 |
% |
|
|
|
|
3.49 |
% |
|
|
|
|
2.72 |
% |
|
|
(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 |
|
|
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
|
(dollars in thousands; unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Demand, noninterest bearing |
|
$ |
531,555 |
|
|
35.7 |
% |
|
$ |
515,443 |
|
|
35.9 |
% |
|
$ |
621,012 |
|
|
41.1 |
% |
Interest bearing demand
and
money market |
|
|
876,668 |
|
|
59.0 |
|
|
|
834,725 |
|
|
58.2 |
|
|
|
778,475 |
|
|
51.6 |
|
| Savings |
|
|
63,627 |
|
|
4.3 |
|
|
|
68,747 |
|
|
4.8 |
|
|
|
85,146 |
|
|
5.7 |
|
|
Total core deposits |
|
|
1,471,850 |
|
|
99.0 |
|
|
|
1,418,915 |
|
|
98.9 |
|
|
|
1,484,633 |
|
|
98.4 |
|
| Brokered deposits |
|
|
1 |
|
|
0.0 |
|
|
|
1 |
|
|
0.0 |
|
|
|
1 |
|
|
0.0 |
|
| Time deposits less than
$100,000 |
|
|
6,741 |
|
|
0.5 |
|
|
|
7,199 |
|
|
0.5 |
|
|
|
9,741 |
|
|
0.6 |
|
| Time deposits $100,000 and
over |
|
|
8,351 |
|
|
0.5 |
|
|
|
7,915 |
|
|
0.6 |
|
|
|
15,083 |
|
|
1.0 |
|
|
Total Community Bank deposits |
|
$ |
1,486,943 |
|
|
100.0 |
% |
|
$ |
1,434,030 |
|
|
100.0 |
% |
|
$ |
1,509,458 |
|
|
100.0 |
% |
| Cost of
deposits(1) |
|
|
1.77 |
% |
|
|
|
|
1.66 |
% |
|
|
|
|
0.98 |
% |
|
|
(1) Cost of deposits is annualized for the
three months ended for each period presented.
|
CCBX |
|
As of |
|
|
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
|
(dollars in thousands; unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Demand, noninterest bearing |
|
$ |
62,234 |
|
|
3.0 |
% |
|
$ |
58,669 |
|
|
2.9 |
% |
|
$ |
104,580 |
|
|
6.3 |
% |
Interest bearing demand
and
money market |
|
|
1,989,105 |
|
|
96.7 |
|
|
|
1,964,942 |
|
|
96.8 |
|
|
|
1,544,689 |
|
|
93.5 |
|
| Savings |
|
|
5,150 |
|
|
0.3 |
|
|
|
5,338 |
|
|
0.3 |
|
|
|
3,845 |
|
|
0.2 |
|
|
Total core deposits |
|
|
2,056,489 |
|
|
100.0 |
|
|
|
2,028,949 |
|
|
100.0 |
|
|
|
1,653,114 |
|
|
100.0 |
|
| BaaS-brokered deposits |
|
|
— |
|
|
0.0 |
|
|
|
— |
|
|
0.0 |
|
|
|
— |
|
|
— |
|
|
Total CCBX deposits |
|
$ |
2,056,489 |
|
|
100.0 |
% |
|
$ |
2,028,949 |
|
|
100.0 |
% |
|
$ |
1,653,114 |
|
|
100.0 |
% |
| Cost of deposits
(1) |
|
|
4.92 |
% |
|
|
|
|
4.93 |
% |
|
|
|
|
4.42 |
% |
|
|
(1) Cost of deposits is annualized for the
three months ended for each period presented.
Borrowings
As of June 30, 2024, the Company had the capacity to borrow
up to a total of $650.1 million from the Federal Reserve Bank
discount window and Federal Home Loan Bank, and an additional $50.0
million from a correspondent bank, with no borrowings outstanding
on these lines as of June 30, 2024.
Shareholders’ Equity
The Company had a cash balance of $5.3 million as of
June 30, 2024, which is retained for general operating
purposes, including debt repayment, and for funding $593,000 in
commitments to bank technology funds.
Total shareholders’ equity increased $13.0 million since
March 31, 2024. The increase in shareholders’
equity was primarily due to $11.6 million in net earnings, combined
with an increase of $1.4 million in common stock outstanding as a
result of equity awards exercised during the three months ended
June 30, 2024.
Capital Ratios
The Company and the Bank remained well capitalized at
June 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) |
|
9.24 |
% |
|
8.31 |
% |
|
5.00 |
% |
| Common Equity Tier 1 Capital
(to risk-weighted assets) |
|
10.15 |
% |
|
9.03 |
% |
|
6.50 |
% |
| Tier 1 Capital (to
risk-weighted assets) |
|
10.15 |
% |
|
9.13 |
% |
|
8.00 |
% |
| Total Capital (to
risk-weighted assets) |
|
11.44 |
% |
|
11.70 |
% |
|
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 $147.9 million and
4.45% of loans receivable at June 30, 2024 compared to $139.3
million and 4.35% at March 31, 2024 and $110.8 million and
3.68% at June 30, 2023. The allowance for credit loss
allocated to the CCBX portfolio was $126.9 million and 8.97% of
CCBX loans receivable at June 30, 2024, with $21.0 million of
allowance for credit loss allocated to the community bank or 1.10%
of total community bank loans receivable.
The following table details the allocation of the allowance for
credit loss as of the period indicated:
| |
|
As of June 30, 2024 |
|
As of March 31, 2024 |
|
As of June 30, 2023 |
|
(dollars in thousands; unaudited) |
|
Community
Bank |
|
CCBX |
|
Total |
|
Community
Bank |
|
CCBX |
|
Total |
|
Community
Bank |
|
CCBX |
|
Total |
|
Loans receivable |
|
$ |
1,912,034 |
|
|
$ |
1,414,426 |
|
|
$ |
3,326,460 |
|
|
$ |
1,883,282 |
|
|
$ |
1,316,272 |
|
|
$ |
3,199,554 |
|
|
$ |
1,713,034 |
|
|
$ |
1,294,519 |
|
|
$ |
3,007,553 |
|
| Allowance for credit
losses |
|
|
(21,045 |
) |
|
|
(126,869 |
) |
|
|
(147,914 |
) |
|
|
(21,384 |
) |
|
|
(117,874 |
) |
|
|
(139,258 |
) |
|
|
(20,653 |
) |
|
|
(90,109 |
) |
|
|
(110,762 |
) |
| Allowance for credit losses to
total loans receivable |
|
|
1.10 |
% |
|
|
8.97 |
% |
|
|
4.45 |
% |
|
|
1.14 |
% |
|
|
8.96 |
% |
|
|
4.35 |
% |
|
|
1.21 |
% |
|
|
6.96 |
% |
|
|
3.68 |
% |
Provision for credit losses - loans totaled $61.9 million for the
three months ended June 30, 2024, $79.5 million for the three
months ended March 31, 2024, and $52.6 million for the three
months ended June 30, 2023. Net charge-offs totaled $53.2
million for the quarter ended June 30, 2024, compared to $57.2
million for the quarter ended March 31, 2024 and $31.0 million
for the quarter ended June 30, 2023. Net charge-offs as a
percent of average loans decreased to 6.57% for the quarter ended
June 30, 2024 compared to 7.34% for the quarter ended
March 31, 2024 which we believe is a result of the steps we
took to strengthen our credit quality. Provisions for
credit losses – loans decreased largely due to a steadying of
expected loss rates on CCBX loans receivable. CCBX partner
agreements provide for a credit enhancement that covers the
net-charge-offs on CCBX loans and negative deposit accounts by
indemnifying or reimbursing incurred losses, except in accordance
with the program agreement for one partner where the Company was
responsible for credit losses on approximately 5% of a $353.6
million loan portfolio. At June 30, 2024, our portion of this
portfolio represented $17.7 million in loans. The provision on the
Company's portion of the portfolio was $1.6 million for the three
months ended June 30, 2024 compared to $1.3 million for the
three months ended March 31, 2024 and $1.6 million for the
three months ended June 30, 2023.
Net charge-offs for this $17.7 million in loans were $1.3
million for the three months ended June 30, 2024, compared to
$2.1 million for the three months ended March 31, 2024 and
$917,000 for the three months ended June 30, 2023.
The following table details net charge-offs for the community
bank and CCBX for the period indicated:
| |
|
Three Months Ended |
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2023 |
|
(dollars in thousands; unaudited) |
|
Community
Bank |
|
CCBX |
|
Total |
|
Community
Bank |
|
CCBX |
|
Total |
|
Community
Bank |
|
CCBX |
|
Total |
|
Gross charge-offs |
|
$ |
2 |
|
|
$ |
55,205 |
|
|
$ |
55,207 |
|
|
$ |
15 |
|
|
$ |
58,979 |
|
|
$ |
58,994 |
|
|
$ |
9 |
|
|
$ |
32,290 |
|
|
$ |
32,299 |
|
| Gross recoveries |
|
|
(4 |
) |
|
|
(1,969 |
) |
|
|
(1,973 |
) |
|
|
(4 |
) |
|
|
(1,772 |
) |
|
|
(1,776 |
) |
|
|
— |
|
|
|
(1,340 |
) |
|
|
(1,340 |
) |
|
Net charge-offs |
|
$ |
(2 |
) |
|
$ |
53,236 |
|
|
$ |
53,234 |
|
|
$ |
11 |
|
|
$ |
57,207 |
|
|
$ |
57,218 |
|
|
$ |
9 |
|
|
$ |
30,950 |
|
|
$ |
30,959 |
|
| Net charge-offs to average
loans (1) |
|
|
0.00 |
% |
|
|
15.72 |
% |
|
|
6.57 |
% |
|
|
0.00 |
% |
|
|
18.18 |
% |
|
|
7.34 |
% |
|
|
0.00 |
% |
|
|
9.78 |
% |
|
|
4.19 |
% |
| |
|
Six Months Ended |
| |
|
June 30, 2024 |
|
June 30, 2023 |
|
(dollars in thousands; unaudited) |
|
Community
Bank |
|
CCBX |
|
Total |
|
Community
Bank |
|
CCBX |
|
Total |
|
Gross charge-offs |
|
$ |
17 |
|
|
$ |
114,184 |
|
|
$ |
114,201 |
|
|
$ |
59 |
|
|
$ |
66,407 |
|
|
$ |
66,466 |
|
| Gross recoveries |
|
|
(8 |
) |
|
|
(3,741 |
) |
|
|
(3,749 |
) |
|
|
(5 |
) |
|
|
(3,200 |
) |
|
|
(3,205 |
) |
|
Net charge-offs |
|
$ |
9 |
|
|
$ |
110,443 |
|
|
$ |
110,452 |
|
|
$ |
54 |
|
|
$ |
63,207 |
|
|
$ |
63,261 |
|
Net charge-offs to
average loans (1) |
|
|
0.00 |
% |
|
|
16.90 |
% |
|
|
6.95 |
% |
|
|
0.01 |
% |
|
|
10.92 |
% |
|
|
4.50 |
% |
(1) Annualized calculations shown for
periods presented.
The decrease in the Company’s provision for credit losses -
loans during the quarter ended June 30, 2024, is largely the
result of a steadying of expected loss rates in our CCBX portfolio.
During the quarter ended June 30, 2024, a $62.2 million
provision for credit losses - loans was recorded for CCBX partner
loans based on management’s analysis, compared to the $79.7 million
provision for credit losses - loans that was recorded for CCBX for
the quarter ended March 31, 2024, largely as a result of the
mix in CCBX loans receivable. CCBX loans have a higher level of
expected losses than our community bank loans, which is reflected
in the factors for the allowance for credit losses. Agreements with
our CCBX partners provide for a credit enhancement which protects
the Bank by indemnifying or reimbursing incurred losses.
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 $341,000 and
was needed for the quarter ended June 30, 2024 compared to
provision recaptures of $199,000 and $47,000 for the quarters ended
March 31, 2024 and June 30, 2023, respectively.
The following table details the provision expense/(recapture)
for the community bank and CCBX for the period indicated:
| |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
June 30,
2024 |
|
June 30,
2023 |
|
Community bank |
|
$ |
(341 |
) |
|
$ |
(199 |
) |
|
$ |
(47 |
) |
|
$ |
(540 |
) |
|
$ |
381 |
| CCBX |
|
|
62,231 |
|
|
|
79,717 |
|
|
|
52,645 |
|
|
|
141,948 |
|
|
|
95,761 |
|
Total provision expense |
|
$ |
61,890 |
|
|
$ |
79,518 |
|
|
$ |
52,598 |
|
|
$ |
141,408 |
|
|
$ |
96,142 |
At June 30, 2024, our nonperforming assets were $53.2 million,
or 1.34% of total assets, compared to $54.9 million, or 1.42%, of
total assets, at March 31, 2024, and $33.7 million, or 0.95%
of total assets, at June 30, 2023. These ratios are impacted
by CCBX loans over 90 days delinquent that are covered by CCBX
partner credit enhancements. As of June 30, 2024, $43.9
million of the $45.2 million in nonperforming CCBX loans were
covered by CCBX partner credit enhancements described above.
Nonperforming assets decreased $1.7 million during the quarter
ended June 30, 2024, compared to the quarter ended
March 31, 2024, primarily due to a $1.7 million decrease in
CCBX loans that are past due 90 days or more and still accruing. As
a result of the type of loans (primarily consumer loans) originated
through our CCBX partners we anticipate that balances 90 days past
due or more and still accruing will generally increase as those
loan portfolios grow. Installment/closed-end and revolving/open-end
consumer loans originated through CCBX lending partners will
continue to accrue interest until 120 and 180 days past due,
respectively and are reported as substandard, 90 days or more days
past due and still accruing. There were no repossessed assets or
other real estate owned at June 30, 2024. Our nonperforming
loans to loans receivable ratio was 1.60% at June 30, 2024,
compared to 1.71% at March 31, 2024, and 1.12% at
June 30, 2023.
For the quarter ended June 30, 2024, there were $2,000
community bank net recoveries and $7.9 million nonperforming
community bank loans, including a multifamily loan for $6.9 million
with a $1.1 million reserve to align with purchase sale agreement.
For the quarter ended June 30, 2024 $53.2 million in net
charge-offs were recorded on CCBX loans. These CCBX loans have a
higher level of expected losses than our community bank loans,
which is reflected in the factors for the allowance for credit
losses.
The following table details the Company’s nonperforming assets
for the periods indicated.
|
Consolidated |
|
|
|
|
|
|
|
(dollars in thousands; unaudited) |
|
As of June 30,
2024 |
|
As of March 31,
2024 |
|
As of June 30,
2023 |
|
Nonaccrual loans: |
|
|
|
|
|
|
|
Commercial and industrial loans |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5 |
|
| Real estate loans: |
|
|
|
|
|
|
|
Construction, land and land development |
|
|
— |
|
|
|
— |
|
|
|
66 |
|
|
Residential real estate |
|
|
213 |
|
|
|
212 |
|
|
|
186 |
|
|
Commercial real estate |
|
|
7,731 |
|
|
|
7,731 |
|
|
|
7,142 |
|
|
Total nonaccrual loans |
|
|
7,944 |
|
|
|
7,943 |
|
|
|
7,399 |
|
| Accruing loans past
due 90 days or more: |
|
|
|
|
|
|
| Commercial & industrial
loans |
|
|
1,278 |
|
|
|
1,793 |
|
|
|
808 |
|
| Real estate loans: |
|
|
|
|
|
|
|
Residential real estate loans |
|
|
2,722 |
|
|
|
1,796 |
|
|
|
1,722 |
|
| Consumer and other loans: |
|
|
|
|
|
|
|
Credit cards |
|
|
36,465 |
|
|
|
37,603 |
|
|
|
18,306 |
|
|
Other consumer and other loans |
|
|
4,779 |
|
|
|
5,731 |
|
|
|
5,492 |
|
|
Total accruing loans past due 90 days or more |
|
|
45,244 |
|
|
|
46,923 |
|
|
|
26,328 |
|
|
Total nonperforming loans |
|
|
53,188 |
|
|
|
54,866 |
|
|
|
33,727 |
|
| Real estate
owned |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Repossessed
assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total nonperforming
assets |
|
$ |
53,188 |
|
|
$ |
54,866 |
|
|
$ |
33,727 |
|
| Total nonaccrual loans to
loans receivable |
|
|
0.24 |
% |
|
|
0.25 |
% |
|
|
0.25 |
% |
| Total nonperforming loans to
loans receivable |
|
|
1.60 |
% |
|
|
1.71 |
% |
|
|
1.12 |
% |
| Total nonperforming assets to
total assets |
|
|
1.34 |
% |
|
|
1.42 |
% |
|
|
0.95 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
Nonaccrual loans: |
|
|
|
|
|
|
|
Commercial and industrial loans |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5 |
|
| Real estate: |
|
|
|
|
|
|
|
Construction, land and land development |
|
|
— |
|
|
|
— |
|
|
|
66 |
|
|
Residential real estate |
|
|
213 |
|
|
|
212 |
|
|
|
186 |
|
|
Commercial real estate |
|
|
7,731 |
|
|
|
7,731 |
|
|
|
7,142 |
|
|
Total nonaccrual loans |
|
|
7,944 |
|
|
|
7,943 |
|
|
|
7,399 |
|
| Accruing loans past
due 90 days or more: |
|
|
|
|
|
|
|
Total accruing loans past due 90 days or more |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total nonperforming loans |
|
|
7,944 |
|
|
|
7,943 |
|
|
|
7,399 |
|
| Other real estate
owned |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Repossessed
assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total nonperforming
assets |
|
$ |
7,944 |
|
|
$ |
7,943 |
|
|
$ |
7,399 |
|
| Total community bank
nonperforming assets to total consolidated assets |
|
|
0.20 |
% |
|
|
0.21 |
% |
|
|
0.21 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CCBX |
|
As of |
|
(dollars in thousands; unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
Nonaccrual loans |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| Accruing loans past
due 90 days or more: |
|
|
|
|
|
|
| Commercial & industrial
loans |
|
|
1,278 |
|
|
|
1,793 |
|
|
|
808 |
|
| Real estate loans: |
|
|
|
|
|
|
|
Residential real estate loans |
|
|
2,722 |
|
|
|
1,796 |
|
|
|
1,722 |
|
| Consumer and other loans: |
|
|
|
|
|
|
|
Credit cards |
|
|
36,465 |
|
|
|
37,603 |
|
|
|
18,306 |
|
|
Other consumer and other loans |
|
|
4,779 |
|
|
|
5,731 |
|
|
|
5,492 |
|
|
Total accruing loans past due 90 days or more |
|
|
45,244 |
|
|
|
46,923 |
|
|
|
26,328 |
|
|
Total nonperforming loans |
|
|
45,244 |
|
|
|
46,923 |
|
|
|
26,328 |
|
| Other real estate
owned |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Repossessed
assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total nonperforming
assets |
|
$ |
45,244 |
|
|
$ |
46,923 |
|
|
$ |
26,328 |
|
| Total CCBX nonperforming
assets to total consolidated assets |
|
|
1.14 |
% |
|
|
1.21 |
% |
|
|
0.74 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
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 $3.96 billion Bank provides
service through 14 branches in Snohomish, Island, and King
Counties, the Internet and its mobile banking
application. The Bank provides banking as a service to
broker-dealers, digital financial service providers, companies and
brands that want to provide financial services to their customers
through the Bank's CCBX segment. To learn more about the
Company visit www.coastalbank.com.
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 |
| |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
Cash and due from banks |
|
$ |
59,995 |
|
|
$ |
32,790 |
|
|
$ |
29,783 |
|
| Interest earning deposits with
other banks |
|
|
427,250 |
|
|
|
482,338 |
|
|
|
245,277 |
|
| Investment securities, available
for sale, at fair value |
|
|
39 |
|
|
|
41 |
|
|
|
98,167 |
|
| Investment securities, held to
maturity, at amortized cost |
|
|
49,174 |
|
|
|
50,049 |
|
|
|
12,563 |
|
| Other investments |
|
|
10,664 |
|
|
|
10,583 |
|
|
|
12,037 |
|
| Loans held for sale |
|
|
— |
|
|
|
797 |
|
|
|
35,923 |
|
| Loans receivable |
|
|
3,326,460 |
|
|
|
3,199,554 |
|
|
|
3,007,553 |
|
| Allowance for credit losses |
|
|
(147,914 |
) |
|
|
(139,258 |
) |
|
|
(110,762 |
) |
|
Total loans receivable, net |
|
|
3,178,546 |
|
|
|
3,060,296 |
|
|
|
2,896,791 |
|
| CCBX credit enhancement
asset |
|
|
143,485 |
|
|
|
137,276 |
|
|
|
96,928 |
|
| CCBX receivable |
|
|
11,520 |
|
|
|
10,369 |
|
|
|
19,113 |
|
| Premises and equipment, net |
|
|
24,526 |
|
|
|
22,995 |
|
|
|
18,903 |
|
| Lease right-of-use assets |
|
|
5,635 |
|
|
|
5,756 |
|
|
|
6,216 |
|
| Accrued interest receivable |
|
|
23,617 |
|
|
|
24,681 |
|
|
|
21,581 |
|
| Bank-owned life insurance,
net |
|
|
13,132 |
|
|
|
12,991 |
|
|
|
12,873 |
|
| Deferred tax asset, net |
|
|
2,221 |
|
|
|
2,221 |
|
|
|
25,764 |
|
| Other assets |
|
|
11,742 |
|
|
|
12,075 |
|
|
|
3,364 |
|
|
Total assets |
|
$ |
3,961,546 |
|
|
$ |
3,865,258 |
|
|
$ |
3,535,283 |
|
| |
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| LIABILITIES |
|
|
|
|
|
|
|
Deposits |
|
$ |
3,543,432 |
|
|
$ |
3,462,979 |
|
|
$ |
3,162,572 |
|
|
Subordinated debt, net |
|
|
44,219 |
|
|
|
44,181 |
|
|
|
44,069 |
|
|
Junior subordinated debentures, net |
|
|
3,591 |
|
|
|
3,590 |
|
|
|
3,589 |
|
|
Deferred compensation |
|
|
405 |
|
|
|
442 |
|
|
|
547 |
|
|
Accrued interest payable |
|
|
999 |
|
|
|
1,061 |
|
|
|
766 |
|
|
Lease liabilities |
|
|
5,821 |
|
|
|
5,946 |
|
|
|
6,413 |
|
|
CCBX payable |
|
|
34,536 |
|
|
|
33,095 |
|
|
|
27,714 |
|
|
Other liabilities |
|
|
11,850 |
|
|
|
10,255 |
|
|
|
16,951 |
|
|
Total liabilities |
|
|
3,644,853 |
|
|
|
3,561,549 |
|
|
|
3,262,621 |
|
| |
|
|
|
|
|
|
| SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
| Common stock |
|
|
132,989 |
|
|
|
131,601 |
|
|
|
128,315 |
|
|
Retained earnings |
|
|
183,706 |
|
|
|
172,110 |
|
|
|
146,029 |
|
|
Accumulated other comprehensive loss, net of tax |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(1,682 |
) |
|
Total shareholders’ equity |
|
|
316,693 |
|
|
|
303,709 |
|
|
|
272,662 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
3,961,546 |
|
|
$ |
3,865,258 |
|
|
$ |
3,535,283 |
|
| |
COASTAL FINANCIAL
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts; unaudited) |
| |
| |
|
Three Months Ended |
| |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
| INTEREST AND DIVIDEND INCOME |
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
90,944 |
|
|
$ |
84,621 |
|
|
$ |
80,199 |
|
Interest on interest earning deposits with other banks |
|
|
5,683 |
|
|
|
4,780 |
|
|
|
2,678 |
|
Interest on investment securities |
|
|
686 |
|
|
|
1,034 |
|
|
|
653 |
|
Dividends on other investments |
|
|
174 |
|
|
|
37 |
|
|
|
156 |
|
Total interest income |
|
|
97,487 |
|
|
|
90,472 |
|
|
|
83,686 |
| INTEREST EXPENSE |
|
|
|
|
|
|
|
Interest on deposits |
|
|
30,578 |
|
|
|
28,867 |
|
|
|
20,675 |
|
Interest on borrowed funds |
|
|
672 |
|
|
|
669 |
|
|
|
661 |
|
Total interest expense |
|
|
31,250 |
|
|
|
29,536 |
|
|
|
21,336 |
|
Net interest income |
|
|
66,237 |
|
|
|
60,936 |
|
|
|
62,350 |
| PROVISION FOR CREDIT LOSSES |
|
|
62,325 |
|
|
|
83,158 |
|
|
|
52,253 |
|
Net interest income/(expense) after provision for credit
losses |
|
|
3,912 |
|
|
|
(22,222 |
) |
|
|
10,097 |
| NONINTEREST INCOME |
|
|
|
|
|
|
|
Deposit service charges and fees |
|
|
946 |
|
|
|
908 |
|
|
|
989 |
|
Loan referral fees |
|
|
— |
|
|
|
168 |
|
|
|
682 |
|
Gain on sales of loans, net |
|
|
— |
|
|
|
— |
|
|
|
23 |
|
Unrealized gain (loss) on equity securities, net |
|
|
9 |
|
|
|
15 |
|
|
|
155 |
|
Other income |
|
|
257 |
|
|
|
308 |
|
|
|
234 |
|
Noninterest income, excluding BaaS program income and BaaS
indemnification income |
|
|
1,212 |
|
|
|
1,399 |
|
|
|
2,083 |
|
Servicing and other BaaS fees |
|
|
1,525 |
|
|
|
1,131 |
|
|
|
895 |
|
Transaction fees |
|
|
1,309 |
|
|
|
1,122 |
|
|
|
1,052 |
|
Interchange fees |
|
|
1,625 |
|
|
|
1,539 |
|
|
|
975 |
|
Reimbursement of expenses |
|
|
1,637 |
|
|
|
1,033 |
|
|
|
1,026 |
|
BaaS program income |
|
|
6,096 |
|
|
|
4,825 |
|
|
|
3,948 |
|
BaaS credit enhancements |
|
|
60,826 |
|
|
|
79,808 |
|
|
|
51,027 |
|
BaaS fraud enhancements |
|
|
1,784 |
|
|
|
923 |
|
|
|
1,537 |
|
BaaS indemnification income |
|
|
62,610 |
|
|
|
80,731 |
|
|
|
52,564 |
|
Total noninterest income |
|
|
69,918 |
|
|
|
86,955 |
|
|
|
58,595 |
| NONINTEREST EXPENSE |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
17,005 |
|
|
|
17,984 |
|
|
|
16,309 |
|
Occupancy |
|
|
1,686 |
|
|
|
1,518 |
|
|
|
1,143 |
|
Data processing and software licenses |
|
|
2,924 |
|
|
|
2,892 |
|
|
|
1,972 |
|
Legal and professional expenses |
|
|
3,631 |
|
|
|
3,672 |
|
|
|
4,645 |
|
Point of sale expense |
|
|
852 |
|
|
|
869 |
|
|
|
814 |
|
Excise taxes |
|
|
(706 |
) |
|
|
320 |
|
|
|
531 |
|
Federal Deposit Insurance Corporation ("FDIC") assessments |
|
|
690 |
|
|
|
683 |
|
|
|
570 |
|
Director and staff expenses |
|
|
470 |
|
|
|
400 |
|
|
|
519 |
|
Marketing |
|
|
14 |
|
|
|
53 |
|
|
|
115 |
|
Other expense |
|
|
1,383 |
|
|
|
1,867 |
|
|
|
1,722 |
|
Noninterest expense, excluding BaaS loan and BaaS fraud
expense |
|
|
27,949 |
|
|
|
30,258 |
|
|
|
28,340 |
|
BaaS loan expense |
|
|
29,076 |
|
|
|
24,837 |
|
|
|
22,033 |
|
BaaS fraud expense |
|
|
1,784 |
|
|
|
923 |
|
|
|
1,537 |
|
BaaS loan and fraud expense |
|
|
30,860 |
|
|
|
25,760 |
|
|
|
23,570 |
|
Total noninterest expense |
|
|
58,809 |
|
|
|
56,018 |
|
|
|
51,910 |
|
Income before provision for income taxes |
|
|
15,021 |
|
|
|
8,715 |
|
|
|
16,782 |
| PROVISION FOR INCOME TAXES |
|
|
3,425 |
|
|
|
1,915 |
|
|
|
3,876 |
| NET INCOME |
|
$ |
11,596 |
|
|
$ |
6,800 |
|
|
$ |
12,906 |
| Basic earnings per common
share |
|
$ |
0.86 |
|
|
$ |
0.51 |
|
|
$ |
0.97 |
| Diluted earnings per common
share |
|
$ |
0.84 |
|
|
$ |
0.50 |
|
|
$ |
0.95 |
| Weighted average number of common
shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
13,412,667 |
|
|
|
13,340,997 |
|
|
|
13,275,640 |
|
Diluted |
|
|
13,736,508 |
|
|
|
13,676,917 |
|
|
|
13,597,763 |
| |
COASTAL FINANCIAL
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts; unaudited) |
| |
|
Six Months Ended |
| |
|
June 30,
2024 |
|
June 30,
2023 |
| INTEREST AND DIVIDEND INCOME |
|
|
|
|
|
Interest and fees on loans |
|
$ |
175,565 |
|
|
$ |
146,630 |
|
Interest on interest earning deposits with other banks |
|
|
10,463 |
|
|
|
5,775 |
|
Interest on investment securities |
|
|
1,720 |
|
|
|
1,206 |
|
Dividends on other investments |
|
|
211 |
|
|
|
186 |
|
Total interest income |
|
|
187,959 |
|
|
|
153,797 |
| INTEREST EXPENSE |
|
|
|
|
|
Interest on deposits |
|
|
59,445 |
|
|
|
35,633 |
|
Interest on borrowed funds |
|
|
1,341 |
|
|
|
1,323 |
|
Total interest expense |
|
|
60,786 |
|
|
|
36,956 |
|
Net interest income |
|
|
127,173 |
|
|
|
116,841 |
| PROVISION FOR CREDIT LOSSES |
|
|
145,483 |
|
|
|
95,950 |
|
Net interest income/(expense) after provision for credit
losses |
|
|
(18,310 |
) |
|
|
20,891 |
| NONINTEREST INCOME |
|
|
|
|
|
Deposit service charges and fees |
|
|
1,854 |
|
|
|
1,899 |
|
Loan referral fees |
|
|
168 |
|
|
|
682 |
|
Gain on sales of loans, net |
|
|
— |
|
|
|
146 |
|
Unrealized gain (loss) on equity securities, net |
|
|
24 |
|
|
|
194 |
|
Other income |
|
|
565 |
|
|
|
533 |
|
Noninterest income, excluding BaaS program income and BaaS
indemnification income |
|
|
2,611 |
|
|
|
3,454 |
|
Servicing and other BaaS fees |
|
|
2,656 |
|
|
|
1,843 |
|
Transaction fees |
|
|
2,431 |
|
|
|
1,969 |
|
Interchange fees |
|
|
3,164 |
|
|
|
1,764 |
|
Reimbursement of expenses |
|
|
2,670 |
|
|
|
1,947 |
|
BaaS program income |
|
|
10,921 |
|
|
|
7,523 |
|
BaaS credit enhancements |
|
|
140,634 |
|
|
|
93,389 |
|
BaaS fraud enhancements |
|
|
2,707 |
|
|
|
3,536 |
|
BaaS indemnification income |
|
|
143,341 |
|
|
|
96,925 |
|
Total noninterest income |
|
|
156,873 |
|
|
|
107,902 |
| NONINTEREST EXPENSE |
|
|
|
|
|
Salaries and employee benefits |
|
|
34,989 |
|
|
|
31,884 |
|
Occupancy |
|
|
3,204 |
|
|
|
2,362 |
|
Data processing and software licenses |
|
|
5,816 |
|
|
|
3,812 |
|
Legal and professional expenses |
|
|
7,303 |
|
|
|
7,707 |
|
Point of sale expense |
|
|
1,721 |
|
|
|
1,567 |
|
Excise taxes |
|
|
(386 |
) |
|
|
986 |
|
Federal Deposit Insurance Corporation ("FDIC") assessments |
|
|
1,373 |
|
|
|
1,165 |
|
Director and staff expenses |
|
|
870 |
|
|
|
1,145 |
|
Marketing |
|
|
67 |
|
|
|
210 |
|
Other expense |
|
|
3,250 |
|
|
|
2,612 |
|
Noninterest expense, excluding BaaS loan and BaaS fraud
expense |
|
|
58,207 |
|
|
|
53,450 |
|
BaaS loan expense |
|
|
53,913 |
|
|
|
39,587 |
|
BaaS fraud expense |
|
|
2,707 |
|
|
|
3,536 |
|
BaaS loan and fraud expense |
|
|
56,620 |
|
|
|
43,123 |
|
Total noninterest expense |
|
|
114,827 |
|
|
|
96,573 |
|
Income before provision for income taxes |
|
|
23,736 |
|
|
|
32,220 |
| PROVISION FOR INCOME TAXES |
|
|
5,340 |
|
|
|
6,923 |
| NET INCOME |
|
$ |
18,396 |
|
|
$ |
25,297 |
| Basic earnings per common
share |
|
$ |
1.38 |
|
|
$ |
1.91 |
| Diluted earnings per common
share |
|
$ |
1.34 |
|
|
$ |
1.86 |
| Weighted average number of common
shares outstanding: |
|
|
|
|
|
Basic |
|
|
13,376,832 |
|
|
|
13,236,517 |
|
Diluted |
|
|
13,706,713 |
|
|
|
13,603,594 |
| |
COASTAL FINANCIAL
CORPORATION
AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY
(Dollars in thousands; unaudited) |
| |
| |
|
For the Three Months Ended |
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 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 |
|
$ |
418,165 |
|
|
$ |
5,683 |
|
5.47 |
% |
|
$ |
350,868 |
|
|
$ |
4,780 |
|
5.48 |
% |
|
$ |
211,369 |
|
|
$ |
2,678 |
|
5.08 |
% |
|
Investment securities, available for sale (2) |
|
|
43 |
|
|
|
— |
|
3.13 |
|
|
|
64,878 |
|
|
|
349 |
|
2.16 |
|
|
|
100,278 |
|
|
|
534 |
|
2.14 |
|
|
Investment securities, held to maturity (2) |
|
|
49,737 |
|
|
|
686 |
|
5.55 |
|
|
|
50,490 |
|
|
|
685 |
|
5.46 |
|
|
|
10,047 |
|
|
|
119 |
|
4.75 |
|
|
Other investments |
|
|
10,592 |
|
|
|
174 |
|
6.61 |
|
|
|
10,262 |
|
|
|
37 |
|
1.45 |
|
|
|
11,773 |
|
|
|
156 |
|
5.31 |
|
|
Loans receivable (3) |
|
|
3,258,042 |
|
|
|
90,944 |
|
11.23 |
|
|
|
3,137,271 |
|
|
|
84,621 |
|
10.85 |
|
|
|
2,965,287 |
|
|
|
80,199 |
|
10.85 |
|
| Total interest earning
assets |
|
|
3,736,579 |
|
|
|
97,487 |
|
10.49 |
|
|
|
3,613,769 |
|
|
|
90,472 |
|
10.07 |
|
|
|
3,298,754 |
|
|
|
83,686 |
|
10.18 |
|
| Noninterest earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
|
(138,472 |
) |
|
|
|
|
|
|
(114,985 |
) |
|
|
|
|
|
|
(87,713 |
) |
|
|
|
|
|
Other noninterest earning assets |
|
|
255,205 |
|
|
|
|
|
|
|
229,437 |
|
|
|
|
|
|
|
194,747 |
|
|
|
|
|
|
Total assets |
|
$ |
3,853,312 |
|
|
|
|
|
|
$ |
3,728,221 |
|
|
|
|
|
|
$ |
3,405,788 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
$ |
2,854,575 |
|
|
$ |
30,578 |
|
4.31 |
% |
|
$ |
2,728,884 |
|
|
$ |
28,867 |
|
4.25 |
% |
|
$ |
2,326,702 |
|
|
$ |
20,675 |
|
3.56 |
% |
| FHLB advances and other
borrowings |
|
|
1,648 |
|
|
|
3 |
|
0.73 |
|
|
|
5 |
|
|
|
— |
|
5.43 |
|
|
|
— |
|
|
|
— |
|
— |
|
| Subordinated debt |
|
|
44,197 |
|
|
|
598 |
|
5.44 |
|
|
|
44,159 |
|
|
|
598 |
|
5.45 |
|
|
|
44,047 |
|
|
|
596 |
|
5.43 |
|
| Junior subordinated
debentures |
|
|
3,590 |
|
|
|
71 |
|
7.95 |
|
|
|
3,590 |
|
|
|
71 |
|
7.95 |
|
|
|
3,589 |
|
|
|
65 |
|
7.26 |
|
| Total interest bearing
liabilities |
|
|
2,904,010 |
|
|
|
31,250 |
|
4.33 |
|
|
|
2,776,638 |
|
|
|
29,536 |
|
4.28 |
|
|
|
2,374,338 |
|
|
|
21,336 |
|
3.60 |
|
| Noninterest bearing
deposits |
|
|
584,661 |
|
|
|
|
|
|
|
595,693 |
|
|
|
|
|
|
|
717,256 |
|
|
|
|
|
| Other liabilities |
|
|
58,267 |
|
|
|
|
|
|
|
58,829 |
|
|
|
|
|
|
|
49,085 |
|
|
|
|
|
| Total shareholders'
equity |
|
|
306,374 |
|
|
|
|
|
|
|
297,061 |
|
|
|
|
|
|
|
265,109 |
|
|
|
|
|
| Total liabilities and
shareholders' equity |
|
$ |
3,853,312 |
|
|
|
|
|
|
$ |
3,728,221 |
|
|
|
|
|
|
$ |
3,405,788 |
|
|
|
|
|
| Net interest income |
|
|
|
$ |
66,237 |
|
|
|
|
|
$ |
60,936 |
|
|
|
|
|
$ |
62,350 |
|
|
| Interest rate spread |
|
|
|
|
|
6.17 |
% |
|
|
|
|
|
5.79 |
% |
|
|
|
|
|
6.57 |
% |
| Net interest margin
(4) |
|
|
|
|
|
7.13 |
% |
|
|
|
|
|
6.78 |
% |
|
|
|
|
|
7.58 |
% |
(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 |
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 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) |
|
$ |
1,895,699 |
|
$ |
30,741 |
|
6.52 |
% |
|
$ |
1,871,414 |
|
$ |
30,052 |
|
6.46 |
% |
|
$ |
1,695,881 |
|
$ |
26,567 |
|
6.28 |
% |
|
Total interest earning assets |
|
|
1,895,699 |
|
|
30,741 |
|
6.52 |
|
|
|
1,871,414 |
|
|
30,052 |
|
6.46 |
|
|
|
1,695,881 |
|
|
26,567 |
|
6.28 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
|
938,033 |
|
|
6,459 |
|
2.77 |
% |
|
|
922,340 |
|
|
6,013 |
|
2.62 |
% |
|
|
875,760 |
|
|
3,663 |
|
1.68 |
% |
|
Intrabank liability |
|
|
429,452 |
|
|
5,836 |
|
5.47 |
|
|
|
410,993 |
|
|
5,599 |
|
5.48 |
|
|
|
196,552 |
|
|
2,490 |
|
5.08 |
|
| Total interest bearing
liabilities |
|
|
1,367,485 |
|
|
12,295 |
|
3.62 |
|
|
|
1,333,333 |
|
|
11,612 |
|
3.50 |
|
|
|
1,072,312 |
|
|
6,153 |
|
2.30 |
|
| Noninterest bearing
deposits |
|
|
528,214 |
|
|
|
|
|
|
538,081 |
|
|
|
|
|
|
623,570 |
|
|
|
|
| Net interest income |
|
|
|
$ |
18,446 |
|
|
|
|
|
$ |
18,440 |
|
|
|
|
|
$ |
20,414 |
|
|
| Net interest
margin(3) |
|
|
|
|
|
3.91 |
% |
|
|
|
|
|
3.96 |
% |
|
|
|
|
|
4.83 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CCBX |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable (2)(4) |
|
$ |
1,362,343 |
|
$ |
60,203 |
|
17.77 |
% |
|
$ |
1,265,857 |
|
$ |
54,569 |
|
17.34 |
% |
|
$ |
1,269,406 |
|
$ |
53,632 |
|
16.95 |
% |
|
Intrabank asset |
|
|
610,646 |
|
|
8,299 |
|
5.47 |
|
|
|
598,299 |
|
|
8,151 |
|
5.48 |
|
|
|
275,222 |
|
|
3,487 |
|
5.08 |
|
|
Total interest earning assets |
|
|
1,972,989 |
|
|
68,502 |
|
13.96 |
|
|
|
1,864,156 |
|
|
62,720 |
|
13.53 |
|
|
|
1,544,628 |
|
|
57,119 |
|
14.83 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
|
1,916,542 |
|
|
24,119 |
|
5.06 |
% |
|
|
1,806,544 |
|
|
22,854 |
|
5.09 |
% |
|
|
1,450,942 |
|
|
17,012 |
|
4.70 |
% |
| Total interest bearing
liabilities |
|
|
1,916,542 |
|
|
24,119 |
|
5.06 |
|
|
|
1,806,544 |
|
|
22,854 |
|
5.09 |
|
|
|
1,450,942 |
|
|
17,012 |
|
4.70 |
|
| Noninterest bearing
deposits |
|
|
56,447 |
|
|
|
|
|
|
57,612 |
|
|
|
|
|
|
93,686 |
|
|
|
|
| Net interest income |
|
|
|
$ |
44,383 |
|
|
|
|
|
$ |
39,866 |
|
|
|
|
|
$ |
40,107 |
|
|
| Net interest
margin(3) |
|
|
|
|
|
9.05 |
% |
|
|
|
|
|
8.60 |
% |
|
|
|
|
|
10.41 |
% |
| Net interest margin, net of
Baas loan expense (5) |
|
|
|
|
|
3.12 |
% |
|
|
|
|
|
3.24 |
% |
|
|
|
|
|
4.69 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Three Months Ended |
| |
|
June 30, 2024 |
|
March 31, 2024 |
|
June 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 |
|
$ |
418,165 |
|
$ |
5,683 |
|
5.47 |
% |
|
$ |
350,868 |
|
$ |
4,780 |
|
5.48 |
% |
|
$ |
211,369 |
|
$ |
2,678 |
|
5.08 |
% |
|
Investment securities, available for sale (6) |
|
|
43 |
|
|
— |
|
3.13 |
|
|
|
64,878 |
|
|
349 |
|
2.16 |
|
|
|
100,278 |
|
|
534 |
|
2.14 |
|
|
Investment securities, held to maturity (6) |
|
|
49,737 |
|
|
686 |
|
5.55 |
|
|
|
50,490 |
|
|
685 |
|
5.46 |
|
|
|
10,047 |
|
|
119 |
|
4.75 |
|
|
Other investments |
|
|
10,592 |
|
|
174 |
|
6.61 |
|
|
|
10,262 |
|
|
37 |
|
1.45 |
|
|
|
11,773 |
|
|
156 |
|
5.31 |
|
| Total interest earning
assets |
|
|
478,537 |
|
|
6,543 |
|
5.50 |
% |
|
|
476,498 |
— |
|
5,851 |
|
4.94 |
% |
|
|
333,467 |
|
|
3,487 |
|
4.19 |
% |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances and borrowings |
|
$ |
1,648 |
|
$ |
3 |
|
0.73 |
% |
|
|
5 |
|
|
— |
|
5.43 |
% |
|
|
— |
|
|
— |
|
— |
% |
|
Subordinated debt |
|
|
44,197 |
|
|
598 |
|
5.44 |
% |
|
|
44,159 |
|
|
598 |
|
5.45 |
% |
|
|
44,047 |
|
|
596 |
|
5.43 |
% |
|
Junior subordinated debentures |
|
|
3,590 |
|
|
71 |
|
7.95 |
|
|
|
3,590 |
|
|
71 |
|
7.95 |
|
|
|
3,589 |
|
|
65 |
|
7.26 |
|
|
Intrabank liability, net (7) |
|
|
181,194 |
|
|
2,463 |
|
5.47 |
|
|
|
187,306 |
|
|
2,552 |
|
5.48 |
|
|
|
78,670 |
|
|
997 |
|
5.08 |
|
| Total interest bearing
liabilities |
|
|
230,629 |
|
|
3,135 |
|
5.47 |
|
|
|
235,060 |
|
|
3,221 |
|
5.51 |
|
|
|
126,306 |
|
|
1,658 |
|
5.27 |
|
| Net interest income |
|
|
|
$ |
3,408 |
|
|
|
|
|
$ |
2,630 |
|
|
|
|
|
$ |
1,829 |
|
|
| Net interest
margin(3) |
|
|
|
|
|
2.86 |
% |
|
|
|
|
|
2.22 |
% |
|
|
|
|
|
2.20 |
% |
(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 Six Months Ended |
| |
|
June 30, 2024 |
|
June 30, 2023 |
|
(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 |
|
$ |
384,517 |
|
|
$ |
10,463 |
|
5.47 |
% |
|
$ |
241,368 |
|
|
$ |
5,775 |
|
4.82 |
% |
|
Investment securities, available for sale (2) |
|
|
32,460 |
|
|
|
349 |
|
2.16 |
|
|
|
100,276 |
|
|
|
1,069 |
|
2.15 |
|
|
Investment securities, held to maturity (2) |
|
|
50,114 |
|
|
|
1,371 |
|
5.50 |
|
|
|
6,023 |
|
|
|
137 |
|
4.59 |
|
|
Other investments |
|
|
10,427 |
|
|
|
211 |
|
4.07 |
|
|
|
11,206 |
|
|
|
186 |
|
3.35 |
|
|
Loans receivable (3) |
|
|
3,197,656 |
|
|
|
175,565 |
|
11.04 |
|
|
|
2,837,442 |
|
|
|
146,630 |
|
10.42 |
|
| Total interest earning
assets |
|
|
3,675,174 |
|
|
|
187,959 |
|
10.28 |
|
|
|
3,196,315 |
|
|
|
153,797 |
|
9.70 |
|
| Noninterest earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
|
(126,729 |
) |
|
|
|
|
|
|
(84,417 |
) |
|
|
|
|
|
Other noninterest earning assets |
|
|
242,321 |
|
|
|
|
|
|
|
183,516 |
|
|
|
|
|
|
Total assets |
|
$ |
3,790,766 |
|
|
|
|
|
|
$ |
3,295,414 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
$ |
2,791,729 |
|
|
$ |
59,445 |
|
4.28 |
% |
|
$ |
2,199,168 |
|
|
$ |
35,633 |
|
3.27 |
% |
| FHLB advances and other
borrowings |
|
|
827 |
|
|
|
3 |
|
0.73 |
|
|
|
— |
|
|
|
— |
|
— |
|
| Subordinated debt |
|
|
44,178 |
|
|
|
1,196 |
|
5.44 |
|
|
|
44,028 |
|
|
|
1,195 |
|
5.47 |
|
| Junior subordinated
debentures |
|
|
3,590 |
|
|
|
142 |
|
7.95 |
|
|
|
3,588 |
|
|
|
128 |
|
7.19 |
|
| Total interest bearing
liabilities |
|
|
2,840,324 |
|
|
|
60,786 |
|
4.30 |
|
|
|
2,246,784 |
|
|
|
36,956 |
|
3.32 |
|
| Noninterest bearing
deposits |
|
|
590,177 |
|
|
|
|
|
|
|
746,436 |
|
|
|
|
|
| Other liabilities |
|
|
58,548 |
|
|
|
|
|
|
|
43,299 |
|
|
|
|
|
| Total shareholders'
equity |
|
|
301,718 |
|
|
|
|
|
|
|
258,895 |
|
|
|
|
|
| Total liabilities and
shareholders' equity |
|
$ |
3,790,767 |
|
|
|
|
|
|
$ |
3,295,414 |
|
|
|
|
|
| Net interest income |
|
|
|
$ |
127,173 |
|
|
|
|
|
$ |
116,841 |
|
|
| Interest rate spread |
|
|
|
|
|
5.98 |
% |
|
|
|
|
|
6.39 |
% |
| Net interest margin
(4) |
|
|
|
|
|
6.96 |
% |
|
|
|
|
|
7.37 |
% |
(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 Six Months Ended |
| |
|
June 30, 2024 |
|
June 30, 2023 |
|
(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) |
|
$ |
1,883,557 |
|
$ |
60,793 |
|
6.49 |
% |
|
$ |
1,670,076 |
|
$ |
50,779 |
|
6.13 |
% |
| Total interest earning
assets |
|
|
1,883,557 |
|
|
60,793 |
|
6.49 |
|
|
|
1,670,076 |
|
|
50,779 |
|
6.13 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
|
930,186 |
|
|
12,472 |
|
2.70 |
% |
|
|
864,518 |
|
|
6,197 |
|
1.45 |
% |
|
Intrabank liability |
|
|
420,224 |
|
|
11,435 |
|
5.47 |
|
|
|
145,890 |
|
|
3,569 |
|
4.93 |
|
| Total interest bearing
liabilities |
|
|
1,350,410 |
|
|
23,907 |
|
3.56 |
|
|
|
1,010,408 |
|
|
9,766 |
|
1.95 |
|
| Noninterest bearing
deposits |
|
|
533,147 |
|
|
|
|
|
|
659,668 |
|
|
|
|
| Net interest income |
|
|
|
$ |
36,886 |
|
|
|
|
|
$ |
41,013 |
|
|
| Net interest
margin(3) |
|
|
|
|
|
3.94 |
% |
|
|
|
|
|
4.95 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CCBX |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable (2)(4) |
|
$ |
1,314,099 |
|
$ |
114,772 |
|
17.56 |
% |
|
$ |
1,167,366 |
|
$ |
95,851 |
|
16.56 |
% |
|
Intrabank asset |
|
|
604,474 |
|
|
16,450 |
|
5.47 |
|
|
|
254,052 |
|
|
6,139 |
|
4.87 |
|
| Total interest earning
assets |
|
|
1,918,573 |
|
|
131,222 |
|
13.75 |
|
|
|
1,421,418 |
|
|
101,990 |
|
14.47 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
|
1,861,543 |
|
|
46,973 |
|
5.07 |
% |
|
|
1,334,650 |
|
|
29,436 |
|
4.45 |
% |
| Total interest bearing
liabilities |
|
|
1,861,543 |
|
|
46,973 |
|
5.07 |
|
|
|
1,334,650 |
|
|
29,436 |
|
4.45 |
|
| Noninterest bearing
deposits |
|
|
57,030 |
|
|
|
|
|
|
86,768 |
|
|
|
|
| Net interest income |
|
|
|
$ |
84,249 |
|
|
|
|
|
$ |
72,554 |
|
|
| Net interest
margin(3) |
|
|
|
|
|
8.83 |
% |
|
|
|
|
|
10.29 |
% |
| Net interest margin, net of
Baas loan expense (5) |
|
|
|
|
|
3.18 |
% |
|
|
|
|
|
4.68 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Six Months Ended |
| |
|
June 30, 2024 |
|
June 30, 2023 |
|
(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 |
|
$ |
384,517 |
|
$ |
10,463 |
|
5.47 |
% |
|
$ |
241,368 |
|
$ |
5,775 |
|
4.82 |
% |
|
Investment securities, available for sale (6) |
|
|
32,460 |
|
|
349 |
|
2.16 |
|
|
|
100,276 |
|
|
1,069 |
|
2.15 |
|
|
Investment securities, held to maturity (6) |
|
|
50,114 |
|
|
1,371 |
|
5.50 |
|
|
|
6,023 |
|
|
137 |
|
4.59 |
|
|
Other investments |
|
|
10,427 |
|
|
211 |
|
4.07 |
|
|
|
11,206 |
|
|
186 |
|
3.35 |
|
| Total interest earning
assets |
|
|
477,518 |
|
|
12,394 |
|
5.22 |
|
|
|
358,873 |
|
|
7,167 |
|
4.03 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances and borrowings |
|
|
827 |
|
|
3 |
|
0.73 |
% |
|
|
— |
|
|
— |
|
— |
% |
|
Subordinated debt |
|
|
44,178 |
|
|
1,196 |
|
5.44 |
|
|
|
44,028 |
|
|
1,195 |
|
5.47 |
|
|
Junior subordinated debentures |
|
|
3,590 |
|
|
142 |
|
7.95 |
|
|
|
3,588 |
|
|
128 |
|
7.19 |
|
|
Intrabank liability, net (7) |
|
|
184,250 |
|
|
5,015 |
|
5.47 |
|
|
|
108,162 |
|
|
2,570 |
|
4.79 |
|
| Total interest bearing
liabilities |
|
|
232,845 |
|
|
6,356 |
|
5.49 |
|
|
|
155,778 |
|
|
3,893 |
|
5.04 |
|
| Net interest income |
|
|
|
$ |
6,038 |
|
|
|
|
|
$ |
3,274 |
|
|
| Net interest
margin(3) |
|
|
|
|
|
2.54 |
% |
|
|
|
|
|
1.84 |
% |
(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 |
| |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
|
June 30,
2023 |
| Income Statement
Data: |
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income |
|
$ |
97,487 |
|
|
$ |
90,472 |
|
|
$ |
88,243 |
|
|
$ |
88,331 |
|
|
$ |
83,686 |
|
| Interest expense |
|
|
31,250 |
|
|
|
29,536 |
|
|
|
28,586 |
|
|
|
26,102 |
|
|
|
21,336 |
|
| Net interest income |
|
|
66,237 |
|
|
|
60,936 |
|
|
|
59,657 |
|
|
|
62,229 |
|
|
|
62,350 |
|
| Provision for credit
losses |
|
|
62,325 |
|
|
|
83,158 |
|
|
|
60,789 |
|
|
|
27,253 |
|
|
|
52,253 |
|
| Net interest (expense)/ income
after provision for credit losses |
|
|
3,912 |
|
|
|
(22,222 |
) |
|
|
(1,132 |
) |
|
|
34,976 |
|
|
|
10,097 |
|
| Noninterest income |
|
|
69,918 |
|
|
|
86,955 |
|
|
|
64,694 |
|
|
|
34,579 |
|
|
|
58,595 |
|
| Noninterest expense |
|
|
58,809 |
|
|
|
56,018 |
|
|
|
51,703 |
|
|
|
56,501 |
|
|
|
51,910 |
|
| Provision for income tax |
|
|
3,425 |
|
|
|
1,915 |
|
|
|
2,847 |
|
|
|
2,784 |
|
|
|
3,876 |
|
| Net income |
|
|
11,596 |
|
|
|
6,800 |
|
|
|
9,012 |
|
|
|
10,270 |
|
|
|
12,906 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the Three Month Period |
| |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
|
June 30,
2023 |
| Balance Sheet
Data: |
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
487,245 |
|
|
$ |
515,128 |
|
|
$ |
483,128 |
|
|
$ |
474,946 |
|
|
$ |
275,060 |
|
| Investment securities |
|
|
49,213 |
|
|
|
50,090 |
|
|
|
150,364 |
|
|
|
141,489 |
|
|
|
110,730 |
|
| Loans held for sale |
|
|
— |
|
|
|
797 |
|
|
|
— |
|
|
|
— |
|
|
|
35,923 |
|
| Loans receivable |
|
|
3,326,460 |
|
|
|
3,199,554 |
|
|
|
3,026,092 |
|
|
|
2,967,035 |
|
|
|
3,007,553 |
|
| Allowance for credit
losses |
|
|
(147,914 |
) |
|
|
(139,258 |
) |
|
|
(116,958 |
) |
|
|
(101,085 |
) |
|
|
(110,762 |
) |
| Total assets |
|
|
3,961,546 |
|
|
|
3,865,258 |
|
|
|
3,753,366 |
|
|
|
3,678,265 |
|
|
|
3,535,283 |
|
| Interest bearing deposits |
|
|
2,949,643 |
|
|
|
2,888,867 |
|
|
|
2,735,161 |
|
|
|
2,637,914 |
|
|
|
2,436,980 |
|
| Noninterest bearing
deposits |
|
|
593,789 |
|
|
|
574,112 |
|
|
|
625,202 |
|
|
|
651,786 |
|
|
|
725,592 |
|
| Core deposits
(1) |
|
|
3,528,339 |
|
|
|
3,447,864 |
|
|
|
3,342,004 |
|
|
|
3,269,082 |
|
|
|
3,137,747 |
|
| Total deposits |
|
|
3,543,432 |
|
|
|
3,462,979 |
|
|
|
3,360,363 |
|
|
|
3,289,700 |
|
|
|
3,162,572 |
|
| Total borrowings |
|
|
47,810 |
|
|
|
47,771 |
|
|
|
47,734 |
|
|
|
47,695 |
|
|
|
47,658 |
|
| Total shareholders’
equity |
|
|
316,693 |
|
|
|
303,709 |
|
|
|
294,978 |
|
|
|
284,450 |
|
|
|
272,662 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Share and Per Share
Data
(2): |
|
|
|
|
|
|
|
|
|
|
| Earnings per share –
basic |
|
$ |
0.86 |
|
|
$ |
0.51 |
|
|
$ |
0.68 |
|
|
$ |
0.77 |
|
|
$ |
0.97 |
|
| Earnings per share –
diluted |
|
$ |
0.84 |
|
|
$ |
0.50 |
|
|
$ |
0.66 |
|
|
$ |
0.75 |
|
|
$ |
0.95 |
|
| Dividends per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Book value per share
(3) |
|
$ |
23.54 |
|
|
$ |
22.65 |
|
|
$ |
22.17 |
|
|
$ |
21.38 |
|
|
$ |
20.50 |
|
| Tangible book value per share
(4) |
|
$ |
23.54 |
|
|
$ |
22.65 |
|
|
$ |
22.17 |
|
|
$ |
21.38 |
|
|
$ |
20.50 |
|
| Weighted avg outstanding
shares – basic |
|
|
13,412,667 |
|
|
|
13,340,997 |
|
|
|
13,286,828 |
|
|
|
13,285,974 |
|
|
|
13,275,640 |
|
| Weighted avg outstanding
shares – diluted |
|
|
13,736,508 |
|
|
|
13,676,917 |
|
|
|
13,676,513 |
|
|
|
13,675,833 |
|
|
|
13,597,763 |
|
| Shares outstanding at end of
period |
|
|
13,453,805 |
|
|
|
13,407,320 |
|
|
|
13,304,339 |
|
|
|
13,302,449 |
|
|
|
13,300,809 |
|
| Stock options outstanding at
end of period |
|
|
286,119 |
|
|
|
309,069 |
|
|
|
354,969 |
|
|
|
356,359 |
|
|
|
357,999 |
|
See footnotes on following page
| |
|
As of and for the Three Month Period |
| |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
|
June 30,
2023 |
| Credit Quality
Data: |
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets (5) to total assets |
|
|
1.34 |
% |
|
|
1.42 |
% |
|
|
1.43 |
% |
|
|
1.18 |
% |
|
|
0.95 |
% |
| Nonperforming assets
(5) to loans receivable and OREO |
|
|
1.60 |
% |
|
|
1.71 |
% |
|
|
1.78 |
% |
|
|
1.47 |
% |
|
|
1.12 |
% |
| Nonperforming loans
(5) to total loans receivable |
|
|
1.60 |
% |
|
|
1.71 |
% |
|
|
1.78 |
% |
|
|
1.47 |
% |
|
|
1.12 |
% |
| Allowance for credit losses to
nonperforming loans |
|
|
278.1 |
% |
|
|
253.8 |
% |
|
|
217.2 |
% |
|
|
232.2 |
% |
|
|
328.4 |
% |
| Allowance for credit losses to
total loans receivable |
|
|
4.45 |
% |
|
|
4.35 |
% |
|
|
3.86 |
% |
|
|
3.41 |
% |
|
|
3.68 |
% |
| Gross charge-offs |
|
$ |
55,207 |
|
|
$ |
58,994 |
|
|
$ |
47,652 |
|
|
$ |
37,879 |
|
|
$ |
32,299 |
|
| Gross recoveries |
|
$ |
1,973 |
|
|
$ |
1,776 |
|
|
$ |
2,781 |
|
|
$ |
1,045 |
|
|
$ |
1,340 |
|
| Net charge-offs to average
loans (6) |
|
|
6.57 |
% |
|
|
7.34 |
% |
|
|
5.92 |
% |
|
|
4.77 |
% |
|
|
4.19 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| Capital
Ratios: |
|
|
|
|
|
|
|
|
|
|
| Company |
|
|
|
|
|
|
|
|
|
|
| Tier 1 leverage capital |
|
|
8.31 |
% |
|
|
8.24 |
% |
|
|
8.10 |
% |
|
|
8.03 |
% |
|
|
8.16 |
% |
| Common equity Tier 1
risk-based capital |
|
|
9.03 |
% |
|
|
8.98 |
% |
|
|
9.10 |
% |
|
|
9.00 |
% |
|
|
8.36 |
% |
| Tier 1 risk-based capital |
|
|
9.13 |
% |
|
|
9.08 |
% |
|
|
9.20 |
% |
|
|
9.11 |
% |
|
|
8.47 |
% |
| Total risk-based capital |
|
|
11.70 |
% |
|
|
11.70 |
% |
|
|
11.87 |
% |
|
|
11.80 |
% |
|
|
11.12 |
% |
| Bank |
|
|
|
|
|
|
|
|
|
|
| Tier 1 leverage capital |
|
|
9.24 |
% |
|
|
9.19 |
% |
|
|
9.06 |
% |
|
|
8.99 |
% |
|
|
9.16 |
% |
| Common equity Tier 1
risk-based capital |
|
|
10.15 |
% |
|
|
10.14 |
% |
|
|
10.30 |
% |
|
|
10.21 |
% |
|
|
9.52 |
% |
| Tier 1 risk-based capital |
|
|
10.15 |
% |
|
|
10.14 |
% |
|
|
10.30 |
% |
|
|
10.21 |
% |
|
|
9.52 |
% |
| Total risk-based capital |
|
|
11.44 |
% |
|
|
11.43 |
% |
|
|
11.58 |
% |
|
|
11.48 |
% |
|
|
10.80 |
% |
(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.
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 Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
June 30,
2024 |
|
June 30,
2023 |
| Net BaaS
loan income divided by average CCBX loans: |
|
|
|
|
|
CCBX loan yield (GAAP)(1) |
|
|
17.77 |
% |
|
|
17.34 |
% |
|
|
16.95 |
% |
|
|
17.56 |
% |
|
|
16.56 |
% |
|
Total average CCBX loans receivable |
|
$ |
1,362,343 |
|
|
$ |
1,265,857 |
|
|
$ |
1,269,406 |
|
|
$ |
1,314,099 |
|
|
$ |
1,167,366 |
|
|
Interest and earned fee income on CCBX loans (GAAP) |
|
|
60,203 |
|
|
|
54,569 |
|
|
|
53,632 |
|
|
|
114,772 |
|
|
|
95,851 |
|
|
BaaS loan expense |
|
|
(29,076 |
) |
|
|
(24,837 |
) |
|
|
(22,033 |
) |
|
|
(53,913 |
) |
|
|
(39,587 |
) |
|
Net BaaS loan income |
|
$ |
31,127 |
|
|
$ |
29,732 |
|
|
$ |
31,599 |
|
|
$ |
60,859 |
|
|
$ |
56,264 |
|
|
Net BaaS loan income divided by average CCBX loans
(1) |
|
|
9.19 |
% |
|
|
9.45 |
% |
|
|
9.98 |
% |
|
|
9.31 |
% |
|
|
9.72 |
% |
| Net interest margin,
net of BaaS loan expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
CCBX interest margin (1) |
|
|
9.05 |
% |
|
|
8.60 |
% |
|
|
10.41 |
% |
|
|
8.83 |
% |
|
|
10.29 |
% |
|
CCBX earning assets |
|
|
1,972,989 |
|
|
|
1,864,156 |
|
|
|
1,544,628 |
|
|
|
1,918,573 |
|
|
|
1,421,418 |
|
|
Net interest income |
|
|
44,383 |
|
|
|
39,866 |
|
|
|
40,107 |
|
|
|
84,249 |
|
|
|
72,554 |
|
|
Less: BaaS loan expense |
|
|
(29,076 |
) |
|
|
(24,837 |
) |
|
|
(22,033 |
) |
|
|
(53,913 |
) |
|
|
(39,587 |
) |
|
Net interest income, net of BaaS loan expense |
|
$ |
15,307 |
|
|
$ |
15,029 |
|
|
$ |
18,074 |
|
|
$ |
30,336 |
|
|
$ |
32,967 |
|
|
CCBX net interest margin, net of BaaS loan expense
(1) |
|
|
3.12 |
% |
|
|
3.24 |
% |
|
|
4.69 |
% |
|
|
3.18 |
% |
|
|
4.68 |
% |
(1) Annualized calculations for
periods presented.
APPENDIX A -
As of June 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 $3.33 billion in outstanding loan balances. When combined
with $2.81 billion in unused commitments the total of these
categories is $6.15 billion.
Commercial real estate loans
represent the largest segment of our loans, comprising 40.7% of our
total balance of outstanding loans as of June 30, 2024. Unused
commitments to extend credit represents an additional $50.5
million, and the combined total in commercial real estate loans
represents $1.41 billion, or 22.9% of our total outstanding loans
and loan commitments.
The following table summarizes our loan
commitment by industry for our commercial real estate portfolio as
of June 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 |
|
$ |
356,303 |
|
$ |
6,339 |
|
$ |
362,642 |
|
5.9 |
% |
|
$ |
3,426 |
|
104 |
| Hotel/Motel |
|
|
168,659 |
|
|
592 |
|
|
169,251 |
|
2.8 |
|
|
|
6,746 |
|
25 |
| Convenience Store |
|
|
143,007 |
|
|
885 |
|
|
143,892 |
|
2.3 |
|
|
|
2,307 |
|
62 |
| Office |
|
|
124,462 |
|
|
8,177 |
|
|
132,639 |
|
2.2 |
|
|
|
1,383 |
|
90 |
| Warehouse |
|
|
117,498 |
|
|
2,000 |
|
|
119,498 |
|
1.9 |
|
|
|
1,958 |
|
60 |
| Retail |
|
|
104,936 |
|
|
644 |
|
|
105,580 |
|
1.7 |
|
|
|
999 |
|
105 |
| Mixed use |
|
|
92,480 |
|
|
8,236 |
|
|
100,716 |
|
1.6 |
|
|
|
1,075 |
|
86 |
| Mini Storage |
|
|
79,728 |
|
|
18,998 |
|
|
98,726 |
|
1.6 |
|
|
|
3,322 |
|
24 |
| Strip Mall |
|
|
44,260 |
|
|
— |
|
|
44,260 |
|
0.7 |
|
|
|
6,323 |
|
7 |
| Manufacturing |
|
|
34,837 |
|
|
1,200 |
|
|
36,037 |
|
0.6 |
|
|
|
1,201 |
|
29 |
| Groups < 0.70% of total |
|
|
91,809 |
|
|
3,415 |
|
|
95,224 |
|
1.6 |
|
|
|
1,120 |
|
82 |
|
Total |
|
$ |
1,357,979 |
|
$ |
50,486 |
|
$ |
1,408,465 |
|
22.9 |
% |
|
$ |
2,015 |
|
674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans comprise 29.7%
of our total balance of outstanding loans as of June 30, 2024.
Unused commitments to extend credit represents an additional $1.53
billion, and the combined total in consumer and other loans
represents $2.52 billion, or 40.9% of our total outstanding loans
and loan commitments. As illustrated in the table below, our CCBX
partners bring in a large number of mostly smaller dollar loans,
resulting in an average consumer loan balance of just $1,100. CCBX
consumer loans are underwritten to CCBX credit standards and
underwriting of these loans is regularly tested, including
quarterly testing for partners with portfolio balances greater than
$10.0 million.
The following table summarizes our loan commitment by industry
for our consumer and other loan portfolio as of June 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 |
|
$ |
549,241 |
|
$ |
1,517,881 |
|
$ |
2,067,122 |
|
33.6 |
% |
|
$ |
1.6 |
|
352,248 |
|
Installment loans |
|
|
418,358 |
|
|
900 |
|
|
419,258 |
|
6.8 |
|
|
|
1.0 |
|
404,850 |
|
Lines of credit |
|
|
7,568 |
|
|
6,990 |
|
|
14,558 |
|
0.3 |
|
|
|
— |
|
159,987 |
|
Other loans |
|
|
883 |
|
|
— |
|
|
883 |
|
0.0 |
|
|
|
0.1 |
|
8,163 |
| Community bank consumer
loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Installment loans |
|
|
1,256 |
|
|
— |
|
|
1,256 |
|
0.0 |
|
|
|
59.8 |
|
21 |
|
Lines of credit |
|
|
215 |
|
|
343 |
|
|
558 |
|
0.0 |
|
|
|
6.1 |
|
35 |
|
Other loans |
|
|
12,749 |
|
|
— |
|
|
12,749 |
|
0.2 |
|
|
|
39.8 |
|
320 |
|
Total |
|
$ |
990,270 |
|
$ |
1,526,114 |
|
$ |
2,516,384 |
|
40.9 |
% |
|
$ |
1.1 |
|
925,624 |
(1) Total exposure on CCBX loans is
subject to CCBX partner/portfolio maximum limits.
Residential real estate loans comprise 15.5% of
our total balance of outstanding loans as of June 30, 2024.
Unused commitments to extend credit represents an additional $524.5
million, and the combined total in residential real estate loans
represents $1.04 billion, or 17.0% of our total outstanding loans
and loan commitments.
The following table summarizes our loan
commitment by industry for our residential real estate loan
portfolio as of June 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 |
|
$ |
287,950 |
|
$ |
474,603 |
|
$ |
762,553 |
|
12.4 |
% |
|
$ |
25 |
|
11,514 |
Community
bank residential real estate
loans
|
| Closed end, secured by first
liens |
|
|
193,976 |
|
|
2,959 |
|
|
196,935 |
|
3.2 |
|
|
|
606 |
|
320 |
| Home equity line of
credit |
|
|
26,639 |
|
|
46,091 |
|
|
72,730 |
|
1.2 |
|
|
|
113 |
|
236 |
| Closed end, second liens |
|
|
9,024 |
|
|
885 |
|
|
9,909 |
|
0.2 |
|
|
|
291 |
|
31 |
|
Total |
|
$ |
517,589 |
|
$ |
524,538 |
|
$ |
1,042,127 |
|
17.0 |
% |
|
$ |
43 |
|
12,101 |
(1) Total exposure on CCBX loans is
subject to CCBX partner/portfolio maximum limits.
Commercial and industrial loans comprise 8.9%
of our total balance of outstanding loans as of June 30, 2024.
Unused commitments to extend credit represents an additional $620.6
million, and the combined total in commercial and industrial loans
represents $915.9 million, or 14.9% of our total outstanding loans
and loan commitments. Included in commercial and industrial loans
is $109.1 million in outstanding capital call lines, with an
additional $515.0 million in available loan commitments which is
limited to a $350.0 million portfolio maximum. Capital call lines
are provided to venture capital firms through one of our CCBX BaaS
clients. These loans are secured by the capital call rights and are
individually underwritten to the Bank’s credit standards and the
underwriting is reviewed by the Bank on every capital call
line.
The following table summarizes our loan
commitment by industry for our commercial and industrial loan
portfolio as of June 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 |
|
$ |
109,133 |
|
$ |
515,045 |
|
$ |
624,178 |
|
10.2 |
% |
|
$ |
774 |
|
141 |
| Construction/Contractor
Services |
|
|
26,467 |
|
|
36,818 |
|
|
63,285 |
|
1.0 |
|
|
|
136 |
|
195 |
| Financial Institutions |
|
|
48,648 |
|
|
— |
|
|
48,648 |
|
0.8 |
|
|
|
4,054 |
|
12 |
| Retail |
|
|
38,720 |
|
|
6,015 |
|
|
44,735 |
|
0.7 |
|
|
|
16 |
|
2,448 |
| Manufacturing |
|
|
6,844 |
|
|
5,332 |
|
|
12,176 |
|
0.2 |
|
|
|
159 |
|
43 |
| Medical / Dental / Other Care |
|
|
9,053 |
|
|
1,126 |
|
|
10,179 |
|
0.2 |
|
|
|
604 |
|
15 |
| Groups < 0.20% of total |
|
|
56,435 |
|
|
56,261 |
|
|
112,696 |
|
1.8 |
|
|
|
55 |
|
1,026 |
|
Total |
|
$ |
295,300 |
|
$ |
620,597 |
|
$ |
915,897 |
|
14.9 |
% |
|
$ |
76 |
|
3,880 |
(1) Total exposure on CCBX loans is
subject to CCBX partner/portfolio maximum limits.
Construction, land and land development loans
comprise 5.2% of our total balance of outstanding loans as of
June 30, 2024. Unused commitments to extend credit represents
an additional $90.1 million, and the combined total in
construction, land and land development loans represents $263.2
million, or 4.3% of our total outstanding loans and loan
commitments.
The following table details our loan commitment for our
construction, land and land development portfolio as of
June 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 |
|
$ |
110,372 |
|
$ |
60,912 |
|
$ |
171,284 |
|
2.8 |
% |
|
$ |
7,358 |
|
15 |
| Residential construction |
|
|
34,652 |
|
|
23,805 |
|
|
58,457 |
|
1.0 |
|
|
|
1,824 |
|
19 |
| Developed land loans |
|
|
13,954 |
|
|
1,269 |
|
|
15,223 |
|
0.2 |
|
|
|
734 |
|
19 |
| Undeveloped land loans |
|
|
8,372 |
|
|
3,760 |
|
|
12,132 |
|
0.2 |
|
|
|
558 |
|
15 |
| Land development |
|
|
5,714 |
|
|
345 |
|
|
6,059 |
|
0.1 |
|
|
|
571 |
|
10 |
|
Total |
|
$ |
173,064 |
|
$ |
90,091 |
|
$ |
263,155 |
|
4.3 |
% |
|
$ |
2,219 |
|
78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exposure and risk in our construction, land and
land development portfolio is somewhat higher in the current period
compared to previous periods as indicated in the following
table:
| |
|
Outstanding Balance as of |
| (dollars in thousands;
unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
|
June 30,
2023 |
|
Commercial construction |
|
$ |
110,372 |
|
$ |
102,099 |
|
$ |
81,489 |
|
$ |
91,396 |
|
$ |
78,079 |
| Residential construction |
|
|
34,652 |
|
|
28,751 |
|
|
34,213 |
|
|
33,971 |
|
|
35,032 |
| Undeveloped land loans |
|
|
8,372 |
|
|
8,190 |
|
|
7,890 |
|
|
8,310 |
|
|
42,530 |
| Developed land loans |
|
|
13,954 |
|
|
14,307 |
|
|
20,515 |
|
|
21,369 |
|
|
18,735 |
| Land development |
|
|
5,714 |
|
|
7,515 |
|
|
12,993 |
|
|
12,640 |
|
|
12,330 |
|
Total |
|
$ |
173,064 |
|
$ |
160,862 |
|
$ |
157,100 |
|
$ |
167,686 |
|
$ |
186,706 |
Commitments to extend credit total $2.81 billion at
June 30, 2024, however we do not anticipate our customers
using the $2.81 billion that is showing as available.
The following table presents outstanding commitments to extend
credit as of June 30, 2024:
|
Consolidated |
|
|
|
(dollars in thousands; unaudited) |
|
As of June 30,
2024 |
|
Commitments to extend credit: |
|
|
|
Commercial and industrial loans |
|
$ |
105,552 |
|
Commercial and industrial loans - capital call lines |
|
|
515,045 |
|
Construction – commercial real estate loans |
|
|
65,941 |
|
Construction – residential real estate loans |
|
|
24,150 |
|
Residential real estate loans |
|
|
524,538 |
|
Commercial real estate loans |
|
|
50,486 |
|
Credit cards |
|
|
1,517,881 |
|
Consumer and other loans |
|
|
8,233 |
| Total commitments to extend
credit |
|
$ |
2,811,826 |
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 June 30, 2024,
capital call lines outstanding balance totaled $109.1 million, and
while commitments totaled $515.0 million the commitments are
limited to a maximum of $350.0 million by agreement with the
partner. If a CCBX partner goes over their individual limit, it
would be a breach of their contract and the Bank may impose
penalties and would not be required to fund the loan.
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 |
|
$ |
109,133 |
|
|
7.7 |
% |
$ |
515,045 |
|
$ |
350,000 |
$ |
— |
|
All other commercial & industrial loans |
|
|
41,731 |
|
|
3.0 |
|
|
14,404 |
|
|
293,901 |
|
524 |
| Real estate loans: |
|
|
|
|
|
|
|
|
|
Home equity lines of credit (3) |
|
|
287,950 |
|
|
20.4 |
|
|
474,603 |
|
|
375,000 |
|
34,155 |
| Consumer and other
loans: |
|
|
|
|
|
|
|
Credit cards - cash secured |
|
|
151 |
|
|
|
|
— |
|
|
|
— |
|
Credit cards - unsecured |
|
|
549,090 |
|
|
|
|
1,517,881 |
|
|
|
29,219 |
|
Credit cards - total |
|
|
549,241 |
|
|
38.7 |
|
|
1,517,881 |
|
|
782,024 |
|
29,219 |
|
Installment loans - cash secured |
|
|
100,698 |
|
|
|
|
900 |
|
|
|
— |
|
Installment loans - unsecured |
|
|
317,660 |
|
|
|
|
— |
|
|
|
1,400 |
|
Installment loans - total |
|
|
418,358 |
|
|
29.6 |
|
|
900 |
|
|
1,501,381 |
|
1,400 |
|
Other consumer and other loans |
|
|
8,451 |
|
|
0.6 |
|
|
6,990 |
|
|
127,694 |
|
420 |
|
Gross CCBX loans receivable |
|
|
1,414,864 |
|
|
100.0 |
% |
|
2,529,823 |
|
|
3,430,000 |
$ |
65,718 |
| Net deferred origination
fees |
|
|
(438 |
) |
|
|
|
|
|
|
|
Loans receivable |
|
$ |
1,414,426 |
|
|
|
|
|
|
|
(1) Remaining commitment available, net of outstanding
balance.
(2) Balances are as of July 5, 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 June 30, 2024
CCBX – BaaS Reporting Information
During the quarter ended June 30, 2024, $60.8 million was
recorded in BaaS credit enhancements related to the provision for
credit losses - loans and reserve for unfunded commitments for CCBX
partner loans and negative deposit accounts. Agreements with our
CCBX partners provide for a credit enhancement provided by the
partner which protects the Bank by indemnifying or reimbursing
incurred losses. In accordance with accounting guidance, we
estimate and record a provision for expected losses for these CCBX
loans, unfunded commitments and negative deposit accounts. When the
provision for credit losses - loans and provision for unfunded
commitments is recorded, a credit enhancement asset is also
recorded on the balance sheet through noninterest income (BaaS
credit enhancements) in recognition of the CCBX partner legal
commitment to indemnify or reimburse losses. The credit enhancement
asset is relieved as credit enhancement payments and recoveries are
received from the CCBX partner or taken from the partner's cash
reserve account. Agreements with our CCBX partners also provide
protection to the Bank from fraud by indemnifying or reimbursing
incurred fraud losses. BaaS fraud includes noncredit fraud losses
on loans and deposits originated through partners. Fraud losses are
recorded when incurred as losses in noninterest expense, and the
enhancement received from the CCBX partner is recorded in
noninterest income, resulting in a net impact of zero to the income
statement. Many CCBX partners also pledge a cash reserve account at
the Bank which the Bank can collect from when losses occur that is
then replenished by the partner on a regular interval. Although
agreements with our 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 obligation then
the bank would be exposed to additional loan and deposit losses if
the cash flows on the loans were not sufficient to fund the
reimbursement of loan losses, as a result of this counterparty
risk. If a CCBX partner does not replenish their cash reserve
account the Bank may consider an alternative plan for funding the
cash reserve. This may involve the possibility of adjusting the
funding amounts or timelines to better align with the partner's
specific situation. If a mutually agreeable funding plan is not
agreed to, the Bank could declare the agreement in default, take
over servicing and cease paying the partner for servicing the loan
and providing credit enhancements. The Bank would evaluate any
remaining credit enhancement asset from the CCBX partner in the
event the partner failed to determine if a write-off is
appropriate. If a write-off occurs, the Bank would retain the full
yield and any fee income on the loan portfolio going forward, and
our BaaS loan expense would decrease once default occurred and
payments to the CCBX partner were stopped.
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 |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
June 30,
2024 |
|
June 30,
2023 |
|
Yield on loans (1) |
|
|
17.77 |
% |
|
|
17.34 |
% |
|
|
16.95 |
% |
|
|
17.56 |
% |
|
|
16.56 |
% |
| BaaS loan interest income |
|
$ |
60,203 |
|
|
$ |
54,569 |
|
|
$ |
53,632 |
|
|
$ |
114,772 |
|
|
$ |
95,851 |
|
| Less: BaaS loan expense |
|
|
29,076 |
|
|
|
24,837 |
|
|
|
22,033 |
|
|
|
53,913 |
|
|
|
39,587 |
|
|
Net BaaS loan income (2) |
|
|
31,127 |
|
|
|
29,732 |
|
|
|
31,599 |
|
|
|
60,859 |
|
|
|
56,264 |
|
| Net BaaS loan income divided
by average BaaS loans (1)(2) |
|
|
9.19 |
% |
|
|
9.45 |
% |
|
|
9.98 |
% |
|
|
9.31 |
% |
|
|
9.72 |
% |
(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 CCBX loans receivable resulted in increased
interest income on CCBX loans during the quarter ended
June 30, 2024 compared to the quarter ended March 31,
2024. The increase in 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 June 30, 2024 compared to the quarter
ended June 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 |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
June 30,
2024 |
|
June 30,
2023 |
|
Loan interest income |
|
$ |
60,203 |
|
$ |
54,569 |
|
$ |
53,632 |
|
$ |
114,772 |
|
$ |
95,851 |
|
Total BaaS interest income |
|
$ |
60,203 |
|
$ |
54,569 |
|
$ |
53,632 |
|
$ |
114,772 |
|
$ |
95,851 |
|
Interest expense |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
June 30,
2024 |
|
June 30,
2023 |
|
BaaS interest expense |
|
$ |
24,119 |
|
$ |
22,854 |
|
$ |
17,012 |
|
$ |
46,973 |
|
$ |
29,436 |
|
Total BaaS interest expense |
|
$ |
24,119 |
|
$ |
22,854 |
|
$ |
17,012 |
|
$ |
46,973 |
|
$ |
29,436 |
|
BaaS income |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
June 30,
2024 |
|
June 30,
2023 |
|
BaaS program income: |
|
|
|
|
|
|
|
|
|
|
|
Servicing and other BaaS fees |
|
$ |
1,525 |
|
$ |
1,131 |
|
$ |
895 |
|
$ |
2,656 |
|
$ |
1,843 |
| Transaction fees |
|
|
1,309 |
|
|
1,122 |
|
|
1,052 |
|
|
2,431 |
|
|
1,969 |
| Interchange fees |
|
|
1,625 |
|
|
1,539 |
|
|
975 |
|
|
3,164 |
|
|
1,764 |
| Reimbursement of expenses |
|
|
1,637 |
|
|
1,033 |
|
|
1,026 |
|
|
2,670 |
|
|
1,947 |
|
BaaS program income |
|
|
6,096 |
|
|
4,825 |
|
|
3,948 |
|
|
10,921 |
|
|
7,523 |
| BaaS indemnification
income: |
|
|
|
|
|
|
|
|
|
|
| BaaS credit enhancements |
|
|
60,826 |
|
|
79,808 |
|
|
51,027 |
|
|
140,634 |
|
|
93,389 |
| BaaS fraud enhancements |
|
|
1,784 |
|
|
923 |
|
|
1,537 |
|
|
2,707 |
|
|
3,536 |
|
BaaS indemnification income |
|
|
62,610 |
|
|
80,731 |
|
|
52,564 |
|
|
143,341 |
|
|
96,925 |
| Total noninterest BaaS
income |
|
$ |
68,706 |
|
$ |
85,556 |
|
$ |
56,512 |
|
$ |
154,262 |
|
$ |
104,448 |
|
BaaS loan and fraud expense: |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2024 |
|
March 31,
2024 |
|
June 30,
2023 |
|
June 30,
2024 |
|
June 30,
2023 |
|
BaaS loan expense |
|
$ |
29,076 |
|
$ |
24,837 |
|
$ |
22,033 |
|
$ |
53,913 |
|
$ |
39,587 |
| BaaS fraud expense |
|
|
1,784 |
|
|
923 |
|
|
1,537 |
|
|
2,707 |
|
|
3,536 |
|
Total BaaS loan and fraud expense |
|
$ |
30,860 |
|
$ |
25,760 |
|
$ |
23,570 |
|
$ |
56,620 |
|
$ |
43,123 |
Coastal Financial (NASDAQ:CCB)
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