Second Quarter
2023 Highlights:
- Net income of
$12.9 million, or
$0.95 per diluted common share, for the
three months ended June 30,
2023, compared to $12.4
million, or $0.91
per diluted common share for the three months
ended March 31,
2023.
- Return on average assets ("ROA") of
1.52% for the three months ended
June 30, 2023.
- Return on average equity ("ROE") of
19.53% for the three months ended
June 30, 2023.
- Total assets increased
$84.3 million, or
2.4%, to $3.54
billion for the quarter ended
June 30, 2023, compared to
$3.45 billion at
March 31, 2023.
- Loan growth, net of deferred fees of
$170.3 million, or
6.0%, to $3.01
billion for the quarter ended
June 30, 2023.
- CCBX loans increased
$128.3 million, or
11.0%, to $1.29
billion.
- Community bank loans increased $42.0
million, or
2.5%, to $1.71
billion.
- Deposits increased
$67.3 million, or
2.2%, to $3.16
billion for the quarter ended
June 30, 2023.
- CCBX deposit growth of $89.3
million, or
5.7%, to $1.65
billion.
- Additional $9.9 million
in CCBX deposits transferred off
balance sheet.
- Community bank deposits
decreased $21.9 million,
or 1.4%, to
$1.51 billion.
- Includes noninterest bearing deposits of
$621.0 million or
41.1% of total community bank
deposits
- Community bank cost of deposits was
0.98%.
- Uninsured deposits of $632.1
million, or 20.0%
of total deposits as of June 30,
2023, compared to $768.3
million, or 24.8%
of total deposits as of March 31,
2023.
- Total revenue increased
$17.1 million, or
16.5%, for the three months ended
June 30, 2023, compared to the three
months ended March 31, 2023
- Total revenue excluding Banking as a Service ("BaaS")
credit enhancements and BaaS fraud enhancements
increased $8.9 million,
or 15.0%, to
$68.4 million for the three months
ended June 30, 2023,
compared to the three months ended March 31,
2023. (A reconciliation of the
non-GAAP measures are set forth at the end of this earnings
release.)
- Liquidity/Borrowings as of
June 30, 2023:
- Capacity to borrow up to $559.8
million from Federal Home Loan Bank and the
Federal Reserve Bank discount window with no
borrowings taken under these facilities
since the first quarter of 2022.
- Investment Portfolio as of
June 30, 2023 :
- Available for sale ("AFS") investments of
$98.2 million, compared to
$98.0 million as of
March 31, 2023, of which
99.7% are U.S. Treasuries, with a weighted
average remaining duration of 8 months
as of June 30,
2023.
- Held to maturity ("HTM") investments of
$12.6 million, of which
100% are U.S. Agency mortgage backed
securities held for CRA purposes, with a fair value of
$404,000 less than the carrying value and
a weighted average remaining duration of 6.7
years as of June 30,
2023.
EVERETT, Wash., July 27, 2023 (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, 2023.
Quarterly net income for the second quarter of 2023 was $12.9
million, or $0.95 per diluted common share, compared with net
income of $12.4 million, or $0.91 per diluted common share, for the
first quarter of 2023, and $10.2 million, or $0.76 per diluted
common share, for the quarter ended June 30, 2022.
Total assets increased $84.3 million, or 2.4%, during the second
quarter of 2023 to $3.54 billion, from $3.45 billion at
March 31, 2023. Loan growth of $170.3 million, or 6.0%, during
the three months ended June 30, 2023 to $3.01 billion,
compared to $2.84 billion at March 31, 2023. Loan growth
included CCBX loan growth of $128.3 million, or 11.0%, and an
increase of $42.0 million, or 2.5% in community bank loans, which
is net of $196,000 in PPP loan forgiveness/repayments. Deposits
increased $67.3 million, or 2.2%, during the three months ended
June 30, 2023 and included CCBX deposit growth of $89.3
million, or 5.7%, and a decrease in community bank deposits of
$21.9 million, or 1.4%. The slight decrease in community bank
deposits was a result of pricing disciplines as some customers
sought higher rate products. Our cost of deposits for the community
bank was 0.98% for the three months ended June 30, 2023,
compared to 0.66% for the three months ended March 31,
2023.
“We saw solid deposit growth in the second quarter, with
deposits increasing $67.3 million, or 2.2%, compared to
March 31, 2023. Fully insured IntraFi network sweep deposits
increased $146.0 million to $240.3 million as of June 30,
2023, compared to $94.3 million as of March 31,
2023. These fully insured sweep deposits allow our
larger deposit customers to fully insure their deposits through a
sweep to other banks. Loans receivable increased $170.3 million, or
6.0%, during the three months ended June 30, 2023.
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, 2023 we had $275.1 million in cash on the balance
sheet and the capacity to borrow up to $559.8 million from Federal
Home Loan Bank and the Federal Reserve Bank discount window, which
we did not draw down at any point in the second quarter of 2023.
Cash on the balance sheet and borrowing capacity totaled $834.8
million, which represented 26.4% of total deposits and exceeded our
$632.1 million in uninsured deposits as of June 30, 2023.
We understand that there continues to be uncertainty and concern
surrounding the current economic environment; and as such we work
hard to ensure that we are serving our customers and shareholders
in the best way possible. Building a company that we believe can
withstand the challenges of our time, growing in strength and size,
through thoughtful and strategic management of growth, resources
and opportunities. Net income for the quarter ended June 30,
2023 was adversely impacted by elevated legal & professional
fees which increased $1.6 million compared to the quarter ended
March 31, 2023. Nearly all of the increase in professional
fees is related to enhancing or expanding our CCBX business, which
we view as a strategic priority, by further developing our risk
management system to support growth of the CCBX business as well as
evaluating new Fintech partnerships and acquisitions of technology
platforms and related assets. We anticipate that our legal and
professional fees will remain elevated through the third quarter of
2023 then start to decline as projects are completed and
initiatives are achieved, with legal and professional fees leveling
off to approximate first quarter 2023 levels by first quarter 2024.
We continue to remain true to our "un-Bankey" roots by looking for
and finding new opportunities to survive and thrive in the changing
banking world, while still maintaining the community bank mentality
and feel," stated Eric Sprink, the CEO of the Company and the
Bank.
Results of Operations Overview
The Company has one main subsidiary, the Bank which consists of
three segments: CCBX, the community bank and treasury &
administration. The CCBX segment includes our BaaS
activities, the community bank segment includes all community
banking activities, and the treasury & administration segment
includes treasury management, overall administration and all other
aspects of the Company. Net interest income was $62.4
million for the quarter ended June 30, 2023, an increase of
$7.9 million, or 14.4%, from $54.5 million for the quarter ended
March 31, 2023, and an increase of $22.5 million, or 56.3%,
from $39.9 million for the quarter ended June 30,
2022. Yield on loans receivable was 10.85% for the three
months ended June 30, 2023, compared to 9.95% for the three
months ended March 31, 2023 and 7.34% for the three months
ended June 30, 2022. The increase in net interest
income compared to March 31, 2023 and June 30, 2022, was
largely related to increased yield on loans resulting from higher
interest rates and growth in higher yielding loans, primarily from
CCBX. Total average loans receivable for the three
months ended June 30, 2023 was $2.97 billion, compared to
$2.71 billion for the three months ended March 31, 2023, and
$2.19 billion for the three months ended June 30, 2022.
Interest and fees on loans totaled $80.2 million for the three
months ended June 30, 2023 compared to $66.4 million and $40.2
million for the three months ended March 31, 2023 and
June 30, 2022, respectively. Loan growth of $170.3
million, or 6.0%, during the quarter ended June 30, 2023
included a $128.3 million increase in CCBX loans. The increase in
CCBX loans includes an increase of $95.3 million, or 12.7%, in
consumer and other loans and an increase of $19.6 million, or
16.5%, in capital call lines as a result of normal balance
fluctuations and business activities. Capital call lines
bear a lower rate of interest, but have less credit risk due to the
way the loans are structured compared to other commercial
loans. The increase in interest and fees on loans for
the quarter ended June 30, 2023, compared to March 31,
2023 and June 30, 2022, was largely due to growth in higher
yielding loans and increased interest rates. As a result
of the Federal Open Market Committee (“FOMC”) raising the target
Federal Funds rate 0.25% during the quarter, interest rates on our
existing variable rate loans were affected, as are the rates on new
loans. The FOMC last raised the target Federal Funds rate 0.25% on
May 3, 2023. We continue to monitor the impact of these
increases in interest rates.
Interest income from interest earning deposits with other banks
was $2.7 million for the quarter ended June 30, 2023 a
decrease of $419,000 compared to March 31, 2023 as a result of
lower average balances, and an increase of $1.7 million compared to
June 30, 2022 due to an increase in interest
rates. The average balance of interest earning deposits
with other banks for the three months ended June 30, 2023 was
$211.4 million, compared to $271.7 million and $499.9 million for
the three months ended March 31, 2023 and June 30, 2022,
respectively. Interest earning deposits with other banks
decreased as a result of increased loan demand compared to the
three months ended March 31, 2023 and June 30, 2022.
Additionally, the average yield on these interest earning
deposits with other banks increased to 5.08% for the quarter ended
June 30, 2023, compared to 4.62% and 0.77% for the quarters
ended March 31, 2023 and June 30, 2022, respectively.
Total interest expense was $21.3 million for the quarter ended
June 30, 2023, a $5.7 million increase from the quarter ended
March 31, 2023 and a $19.4 million increase from the quarter
ended June 30, 2022. Interest expense on deposits was $20.7
million for the quarter ended June 30, 2023, compared to $1.7
million for the quarter ended June 30, 2022. Interest expense
on interest bearing deposits increased $5.7 million for the quarter
ended June 30, 2023, compared to the quarter ended
March 31, 2023, and $19.0 million compared to the quarter
ended June 30, 2022 as a result an increase in CCBX deposits
that are tied to, and reprice when the FOMC raises rates just like
our most of our CCBX loans which also reprice when the FOMC raises
interest rates. Interest expense on borrowed funds was
$661,000 for the quarter ended June 30, 2023, compared to
$662,000 and $260,000 for the quarters ended March 31, 2023
and June 30, 2022, respectively. The $401,000 increase in
interest expense on borrowed funds from the quarter ended
June 30, 2022 is the result of an increase of $19.7 million in
subordinated debt and an increase in interest rates.
Total cost of deposits was 2.72% for the three months ended
June 30, 2023, compared to 2.13% for the three months ended
March 31, 2023, and 0.25%, for the three months ended
June 30, 2022. Community bank and CCBX cost of deposits were
0.98% and 4.42% respectively, for the three months ended
June 30, 2023, compared to 0.66% and 3.89%, for the three
months ended March 31, 2023, and 0.08% and 0.56% for the three
months ended June 30, 2022. The increase in cost of deposits
for the three months ended June 30, 2023 compared to the prior
periods for both segments is a result of increased interest rates
and increased interest bearing deposits at higher rates. Any
additional FOMC interest rate increases will increase our cost of
deposits and result in higher interest expense on interest bearing
deposits.
Net Interest Margin
Net interest margin was 7.58% for the three months ended
June 30, 2023, compared to 7.15% and 5.66% for the three
months ended March 31, 2023 and June 30, 2022,
respectively. The increase in net interest margin
compared to the three months ended March 31, 2023 and
June 30, 2022, was largely a result of increased volume and an
increase in higher interest rates on new loans and on existing
variable rate loans as they reprice. Loans receivable
increased $170.3 million and $673.2 million, compared to
March 31, 2023 and June 30, 2022,
respectively. Additionally, the Fed Funds interest rate
increases has resulted in existing, variable rate loans repricing
to higher interest rates. Interest and fees on loans
receivable increased $13.8 million, or 20.7%, to $80.2 million for
the three months ended June 30, 2023, compared to $66.4
million for the three months ended March 31, 2023, and $40.2
million for the three months ended June 30,
2022. Also contributing to the increase in net interest
margin compared to the three months ended June 30, 2022, was a
$1.7 million increase in interest on interest earning
deposits. These interest earning deposits earned an
average rate of 5.08% for the quarter ended June 30, 2023,
compared to 4.62% and 0.77% for the quarters ended March 31,
2023 and June 30, 2022, respectively. Average
investment securities increased $8.1 million to $110.3 million due
to the purchase of $8.9 million in securities during the three
months ended June 30, 2023 compared to the three months ended
March 31, 2023, and decreased $10.9 million compared to the
three months ended June 30, 2022. Interest on investment
securities increased $100,000 for the three months ended
June 30, 2023 compared to the three months ended
March 31, 2023 as a result of the increase in average
outstanding balance coupled with increased yield, which also
positively impacted net interest margin. Interest on investment
securities increased $90,000 compared to June 30, 2022, 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 2.77% for the quarter ended June 30,
2023, an increase of 58 basis points from the quarter ended
March 31, 2023 and an increase of 248 basis points from the
quarter ended June 30, 2022. Cost of deposits for the quarter
ended June 30, 2023 was 2.72%, compared to 2.13% for the
quarter ended March 31, 2023, and 0.25% for the quarter ended
June 30, 2022. The increased cost of funds and deposits
compared to March 31, 2023 and June 30, 2022 was largely
due to the increase in interest rates compared to the previous
periods and growth in higher cost CCBX deposits compared to
June 30, 2022.
During the quarter ended June 30, 2023, total loans
receivable increased by $170.3 million, or 6.0%, to $3.01 billion,
compared to $2.84 billion for the quarter ended March 31,
2023. This increase consists of $128.3 million in CCBX
loan growth and $42.0 million in community bank loan growth.
Community bank loan growth is net of $196,000 in PPP loan
forgiveness/repayments since March 31, 2023. Total loans
receivable as of June 30, 2023 increased $673.2 million
compared to June 30, 2022. This increase includes
CCBX loan growth of $490.6 million and community bank loan growth
of $182.6 million. Community bank loan growth is net of $12.8
million in PPP loan forgiveness/repayments since June 30,
2022. During the quarter ended June 30, 2023, $88.6
million in CCBX loans were transferred into loans held for sale,
with $80.0 million in loans sold during the quarter and $35.9
million remaining in loans held for sale as of June 30, 2023;
compared to $27.3 million in loans held for sale as of
March 31, 2023.
Total yield on loans receivable for the quarter ended
June 30, 2023 was 10.85%, compared to 9.95% for the quarter
ended March 31, 2023, and 7.34% for the quarter ended
June 30, 2022. This increase in yield on loans receivable is a
combination of an overall increase in interest rates, repricing of
variable rate loans as well as additional volume in higher rate
consumer loans from CCBX partners. During the quarter
ended June 30, 2023, CCBX loans outstanding increased 11.0%,
or $128.3 million, compared to March 31, 2023, with an average
CCBX yield of 16.95% and community bank loans increased 2.5%, or
$42.0 million, compared to the quarter ended March 31, 2023,
with an average yield of 6.28%. 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, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
|
|
Yield on
Loans(2) |
|
Cost of
Deposits(2) |
|
Yield on
Loans(2) |
|
Cost of
Deposits(2) |
|
Yield on
Loans(2) |
|
Cost of
Deposits(2) |
|
Yield on
Loans(2) |
|
Cost of
Deposits(2) |
|
Yield on
Loans(2) |
|
Cost of
Deposits(2) |
|
Community Bank |
6.28% |
|
0.98% |
|
5.97% |
|
0.66% |
|
5.04% |
|
0.08% |
|
6.13% |
|
0.82% |
|
5.10% |
|
0.09% |
| CCBX(1) |
16.95% |
|
4.42% |
|
16.09% |
|
3.89% |
|
12.35% |
|
0.56% |
|
16.56% |
|
4.18% |
|
12.48% |
|
0.34% |
| Consolidated |
10.85% |
|
2.72% |
|
9.95% |
|
2.13% |
|
7.34% |
|
0.25% |
|
10.42% |
|
2.44% |
|
7.10% |
|
0.18% |
|
(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 interest expense resulting in net BaaS
loan income and the associated yield:
| |
|
For the Three Months Ended |
| |
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(dollars in thousands, unaudited) |
|
Income /
Expense |
|
Income / expense divided by average CCBX
loans(2) |
|
Income /
Expense |
|
Income / expense divided by
average CCBX
loans(2) |
|
Income /
Expense |
|
Income / expense divided by average CCBX
loans(2) |
|
BaaS loan interest income |
|
$ |
53,632 |
|
16.95 |
% |
|
$ |
42,220 |
|
16.09 |
% |
|
$ |
21,281 |
|
12.35 |
% |
| Less: BaaS loan expense |
|
|
22,033 |
|
6.96 |
% |
|
|
17,554 |
|
6.69 |
% |
|
|
12,229 |
|
7.10 |
% |
|
Net BaaS loan income(1) |
|
$ |
31,599 |
|
9.98 |
% |
|
$ |
24,666 |
|
9.40 |
% |
|
$ |
9,052 |
|
5.25 |
% |
| Average BaaS
Loans(3) |
|
$ |
1,269,406 |
|
|
|
$ |
1,064,192 |
|
|
|
$ |
691,294 |
|
|
| |
|
For the Six Months Ended |
| |
|
June 30, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Income /
Expense |
|
Income / expense divided by average CCBX
loans(2) |
|
Income /
Expense |
|
Income / expense divided by average CCBX
loans(2) |
|
BaaS loan interest income |
|
$ |
95,851 |
|
16.56 |
% |
|
$ |
33,273 |
|
12.48 |
% |
| Less: BaaS loan expense |
|
|
39,587 |
|
6.84 |
% |
|
|
20,519 |
|
7.70 |
% |
|
Net BaaS loan income(1) |
|
$ |
56,264 |
|
9.72 |
% |
|
$ |
12,754 |
|
4.78 |
% |
| Average BaaS
Loans(3) |
|
$ |
1,167,366 |
|
|
|
$ |
537,577 |
|
|
|
(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 1.52% for the quarter ended June 30, 2023 compared
to 1.58% and 1.41% for the quarters ended March 31, 2023 and
June 30, 2022, respectively. ROA for the quarter
ended June 30, 2023, was down 0.06% as a result of higher
expenses compared to March 31, 2023 and was up 0.11% due to
increases in deposits, loans and overall higher interest rates on
interest earning assets, compared to the quarter ended
June 30, 2022.
The following table shows the Company’s key performance ratios
for the periods indicated.
| |
|
Three Months Ended |
|
Six Months Ended |
|
(unaudited) |
|
June 30,
2023 |
|
March 31,
2023 |
|
December 31,
2022 |
|
September 30,
2022 |
|
June 30,
2022 |
|
June 30,
2023 |
|
June 30,
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets(1) |
|
1.52 |
% |
|
1.58 |
% |
|
1.66 |
% |
|
1.45 |
% |
|
1.41 |
% |
|
1.55 |
% |
|
1.18 |
% |
| Return on average
equity(1) |
|
19.53 |
% |
|
19.89 |
% |
|
21.86 |
% |
|
19.36 |
% |
|
18.86 |
% |
|
19.70 |
% |
|
15.57 |
% |
| Yield on earnings
assets(1) |
|
10.18 |
% |
|
9.19 |
% |
|
8.47 |
% |
|
7.38 |
% |
|
5.94 |
% |
|
9.70 |
% |
|
5.28 |
% |
| Yield on loans
receivable(1) |
|
10.85 |
% |
|
9.95 |
% |
|
9.33 |
% |
|
8.46 |
% |
|
7.34 |
% |
|
10.42 |
% |
|
7.10 |
% |
| Cost of
funds(1) |
|
2.77 |
% |
|
2.19 |
% |
|
1.61 |
% |
|
0.85 |
% |
|
0.29 |
% |
|
2.49 |
% |
|
0.22 |
% |
| Cost of
deposits(1) |
|
2.72 |
% |
|
2.13 |
% |
|
1.56 |
% |
|
0.82 |
% |
|
0.25 |
% |
|
2.44 |
% |
|
0.18 |
% |
| Net interest
margin(1) |
|
7.58 |
% |
|
7.15 |
% |
|
6.96 |
% |
|
6.58 |
% |
|
5.66 |
% |
|
7.37 |
% |
|
5.08 |
% |
| Noninterest expense to average
assets(1) |
|
6.11 |
% |
|
5.69 |
% |
|
5.97 |
% |
|
6.66 |
% |
|
5.29 |
% |
|
5.91 |
% |
|
4.92 |
% |
| Noninterest income to average
assets(1) |
|
6.90 |
% |
|
6.28 |
% |
|
5.43 |
% |
|
4.48 |
% |
|
3.53 |
% |
|
6.60 |
% |
|
3.40 |
% |
| Efficiency ratio |
|
42.92 |
% |
|
43.03 |
% |
|
48.94 |
% |
|
61.12 |
% |
|
58.38 |
% |
|
42.97 |
% |
|
58.80 |
% |
| Loans receivable to
deposits(2) |
|
96.23 |
% |
|
92.55 |
% |
|
93.25 |
% |
|
89.92 |
% |
|
88.77 |
% |
|
96.23 |
% |
|
88.77 |
% |
|
(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) |
2023 |
|
2023 |
|
2022 |
|
Deposit service charges and fees |
$ |
989 |
|
$ |
910 |
|
$ |
988 |
|
Loan referral fees |
|
682 |
|
|
— |
|
|
208 |
|
Unrealized gain on equity securities, net |
|
155 |
|
|
39 |
|
|
— |
|
Gain on sales of loans, net |
|
23 |
|
|
123 |
|
|
— |
|
Other |
|
234 |
|
|
299 |
|
|
396 |
|
Noninterest income, excluding BaaS program income and BaaS
indemnification income |
|
2,083 |
|
|
1,371 |
|
|
1,592 |
|
Servicing and other BaaS fees |
|
895 |
|
|
948 |
|
|
1,159 |
|
Transaction fees |
|
1,052 |
|
|
917 |
|
|
814 |
|
Interchange fees |
|
975 |
|
|
789 |
|
|
628 |
|
Reimbursement of expenses |
|
1,026 |
|
|
921 |
|
|
618 |
|
BaaS program income |
|
3,948 |
|
|
3,575 |
|
|
3,219 |
|
BaaS credit enhancements |
|
51,027 |
|
|
42,362 |
|
|
14,207 |
|
Baas fraud enhancements |
|
1,537 |
|
|
1,999 |
|
|
6,474 |
|
BaaS indemnification income |
|
52,564 |
|
|
44,361 |
|
|
20,681 |
|
Total BaaS income |
|
56,512 |
|
|
47,936 |
|
|
23,900 |
| Total noninterest income |
$ |
58,595 |
|
$ |
49,307 |
|
$ |
25,492 |
| |
|
|
|
|
|
|
|
|
Noninterest income was $58.6 million for the three months ended
June 30, 2023, an increase of $9.3 million from $49.3 million
for the three months ended March 31, 2023, and an increase of
$33.1 million from $25.5 million for the three months ended
June 30, 2022. The increase in noninterest income
over the quarter ended March 31, 2023 was primarily due to an
increase of $8.6 million in total BaaS income. The $8.6
million increase in total BaaS income included a $8.7 million
increase in BaaS credit enhancements related to the allowance for
credit losses, a $462,000 decrease in BaaS fraud enhancements, and
an increase of $373,000 in BaaS program income. The increase in
BaaS program income is largely the result of higher transaction and
interchange fees (see “Appendix B” for more information on the
accounting for BaaS allowance for credit losses and credit and
fraud enhancements). The $33.1 million increase in noninterest
income over the quarter ended June 30, 2022 was primarily due
to a $32.6 million increase in BaaS income. The $32.6 million
increase in BaaS income included a $36.8 million increase in BaaS
credit enhancements, a $4.9 million decrease in BaaS fraud
enhancements and a $729,000 increase in BaaS program income.
Our CCBX segment continues to evolve, and we now have 22
relationships, at varying stages, as of June 30, 2023.
We continue to refine the criteria for CCBX partnerships and are
exiting relationships where it makes sense and are focusing more on
selecting larger and more established partners, with experienced
management teams, existing customer bases and strong financial
positions.
The following table illustrates the activity and evolution in
CCBX relationships for the periods presented.
| |
As of |
|
(unaudited) |
June 30, 2023 |
March 31, 2023 |
June 30, 2022 |
|
Active |
18 |
18 |
23 |
| Friends and family /
testing |
1 |
1 |
2 |
| Implementation /
onboarding |
1 |
1 |
0 |
| Signed letters of intent |
1 |
4 |
4 |
| Wind down - preparing to exit
relationship |
1 |
1 |
0 |
|
Total CCBX relationships |
22 |
25 |
29 |
|
|
|
|
|
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) |
|
2023 |
|
2023 |
|
2022 |
|
Salaries and employee benefits |
|
$ |
16,309 |
|
$ |
15,575 |
|
$ |
12,238 |
|
Legal and professional expenses |
|
|
4,645 |
|
|
3,062 |
|
|
1,002 |
|
Data processing and software licenses |
|
|
1,972 |
|
|
1,840 |
|
|
1,546 |
|
Occupancy |
|
|
1,143 |
|
|
1,219 |
|
|
1,083 |
|
Point of sale expense |
|
|
814 |
|
|
753 |
|
|
409 |
|
Director and staff expenses |
|
|
519 |
|
|
626 |
|
|
377 |
|
FDIC assessments |
|
|
570 |
|
|
595 |
|
|
855 |
|
Excise taxes |
|
|
531 |
|
|
455 |
|
|
564 |
|
Marketing |
|
|
115 |
|
|
95 |
|
|
74 |
|
Other |
|
|
1,722 |
|
|
890 |
|
|
1,318 |
|
Noninterest expense, excluding BaaS loan and BaaS fraud
expense |
|
|
28,340 |
|
|
25,110 |
|
|
19,466 |
|
BaaS loan expense |
|
|
22,033 |
|
|
17,554 |
|
|
12,229 |
|
BaaS fraud expense |
|
|
1,537 |
|
|
1,999 |
|
|
6,474 |
|
BaaS loan and fraud expense |
|
|
23,570 |
|
|
19,553 |
|
|
18,703 |
| Total noninterest expense |
|
$ |
51,910 |
|
$ |
44,663 |
|
$ |
38,169 |
| |
|
|
|
|
|
|
|
|
|
Total noninterest expense increased $7.2 million to $51.9
million for the three months ended June 30, 2023, compared to
$44.7 million for the three months ended March 31, 2023 and
increased $13.7 million from $38.2 million for the three months
ended June 30, 2022. The increase in noninterest expense for
the quarter ended June 30, 2023, as compared to the quarter
ended March 31, 2023, was primarily due to a $4.0 million
increase in BaaS expense (of which $4.5 million is related to an
increase in partner loan expense partially offset by a decrease of
$462,000 in partner fraud expense). Partner loan expense
represents the amount paid or payable to partners for credit
enhancements, fraud enhancements, and originating & servicing
CCBX loans. Partner 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. Legal and
professional fees increased $1.6 million for the quarter ended
June 30, 2023, as compared to the quarter ended March 31,
2023 due to increased fees related to data and risk management,
building out our infrastructure and increased consulting expenses
for projects and enhanced monitoring. Additionally, there was a
$734,000 increase in salaries and employee benefits related to
hiring staff for CCBX and additional staff for our ongoing growth
initiatives. We anticipate that our legal and professional fees
will remain elevated through the third quarter of 2023 then start
to decline as projects are completed and initiatives are achieved,
with legal and professional fees leveling off to approximate first
quarter 2023 levels by first quarter 2024.
The increase in noninterest expenses for the quarter ended
June 30, 2023 compared to the quarter ended June 30, 2022
were largely due to an increase of $4.9 million in BaaS partner
expense (of which $9.8 million is related to an increase in partner
loan expense partially offset by a decrease of $4.9 million in
partner fraud expense), $4.1 million increase in salary and
employee benefits related to hiring staff for CCBX and additional
staff for our ongoing growth initiatives and $3.6 million increase
in legal and professional fees due to increased fees related to
data and risk management, building out our infrastructure and
increased consulting expenses for projects and enhanced monitoring.
Additionally, there was a $405,000 increase in point of sale
expenses which is attributed to increased CCBX activity, and
$404,000 increase in other operational losses.
Provision for Income Taxes
The provision for income taxes was $3.9 million for the three
months ended June 30, 2023, $3.0 million for the three months
ended March 31, 2023 and $2.9 million for the second quarter
of 2022. The provision for income taxes was higher for
the three months ended June 30, 2023 compared to
March 31, 2023 as a result of higher stock equity award
deductions in the quarter ended March 31, 2023, which lowered
the effective tax rate as well. 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 taxes.
Financial Condition Overview
Total assets increased $84.3 million, or 2.4%, to $3.54 billion
at June 30, 2023 compared to $3.45 billion at March 31,
2023. The increase is primarily due to loans receivable
increasing $170.3 million during the quarter ended June 30,
2023 partially offset by a $111.0 million decrease in interest
earning deposits with other banks during the quarter ended
June 30, 2023. Additionally, there were $35.9
million in loans held for sale at June 30, 2023, compared to
$27.3 million at March 31, 2023.
Total assets increased $565.6 million, or 19.0%, at
June 30, 2023, compared to $2.97 billion at June 30,
2022. The increase is primarily due to loans receivable
increasing $673.2 million, and an increase of $909,000 in
investment securities and a $119.7 million decrease in interest
earning deposits with other banks, resulting from increased loan
demand and funds being shifted from interest earning deposits with
other banks to loans, compared to June 30, 2022.
Loans Receivable
Total loans receivable increased $170.3 million to $3.01 billion
at June 30, 2023, from $2.84 billion at March 31, 2023,
and increased $673.2 million from $2.33 billion at June 30,
2022. The increase in loans receivable over the quarter
ended March 31, 2023 was the result of $128.3 million in CCBX
loan growth and $42.0 million in community bank loan growth.
Community bank loan growth is net of $196,000 in PPP loan
forgiveness/repayments since March 31, 2023. The
change in loans receivable over the quarter ended June 30,
2022 includes CCBX loan growth of $490.6 million and $182.6 million
in community bank loan growth as of June 30,
2023. Community bank loan growth is net of $12.8 million
in PPP loan forgiveness/repayments since June 30, 2022.
The following table summarizes the loan portfolio at the period
indicated:
|
|
As of June 30, 2023 |
|
As of March 31, 2023 |
|
As of June 30, 2022 |
|
(dollars in thousands; unaudited) |
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
PPP loans |
$ |
3,595 |
|
|
0.1 |
% |
|
$ |
3,791 |
|
|
0.1 |
% |
|
$ |
16,398 |
|
|
0.7 |
% |
|
Capital call lines |
|
138,428 |
|
|
4.6 |
|
|
|
118,796 |
|
|
4.2 |
|
|
|
224,930 |
|
|
9.6 |
|
|
All other commercial & industrial loans |
|
211,806 |
|
|
7.0 |
|
|
|
203,751 |
|
|
7.2 |
|
|
|
160,636 |
|
|
6.9 |
|
|
Total commercial and industrial loans: |
|
353,829 |
|
|
11.7 |
|
|
|
326,338 |
|
|
11.5 |
|
|
|
401,964 |
|
|
17.2 |
|
| Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
Construction, land and land development |
|
186,706 |
|
|
6.2 |
|
|
|
206,635 |
|
|
7.3 |
|
|
|
225,512 |
|
|
9.6 |
|
|
Residential real estate |
|
463,179 |
|
|
15.4 |
|
|
|
455,507 |
|
|
16.0 |
|
|
|
326,661 |
|
|
14.0 |
|
|
Commercial real estate |
|
1,164,088 |
|
|
38.6 |
|
|
|
1,102,771 |
|
|
38.8 |
|
|
|
956,320 |
|
|
40.8 |
|
| Consumer and other loans |
|
846,459 |
|
|
28.1 |
|
|
|
752,528 |
|
|
26.4 |
|
|
|
430,083 |
|
|
18.4 |
|
|
Gross loans receivable |
|
3,014,261 |
|
|
100.0 |
% |
|
|
2,843,779 |
|
|
100.0 |
% |
|
|
2,340,540 |
|
|
100.0 |
% |
| Net deferred origination fees
- PPP loans |
|
(60 |
) |
|
|
|
|
(63 |
) |
|
|
|
|
(396 |
) |
|
|
| Net deferred origination fees
- all other loans |
|
(6,648 |
) |
|
|
|
|
(6,512 |
) |
|
|
|
|
(5,790 |
) |
|
|
|
Loans receivable |
$ |
3,007,553 |
|
|
|
|
$ |
2,837,204 |
|
|
|
|
$ |
2,334,354 |
|
|
|
| Loan Yield(1) |
|
10.85 |
% |
|
|
|
|
9.95 |
% |
|
|
|
|
7.34 |
% |
|
|
|
(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, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
PPP loans |
|
$ |
3,595 |
|
|
0.2 |
% |
|
$ |
3,791 |
|
|
0.2 |
% |
|
$ |
16,398 |
|
|
1.1 |
% |
|
All other commercial & industrial loans |
|
|
151,483 |
|
|
8.8 |
|
|
|
155,082 |
|
|
9.3 |
|
|
|
142,569 |
|
|
9.3 |
|
| Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction, land and land development loans |
|
|
186,706 |
|
|
10.9 |
|
|
|
206,635 |
|
|
12.3 |
|
|
|
225,512 |
|
|
14.7 |
|
|
Residential real estate loans |
|
|
211,966 |
|
|
12.3 |
|
|
|
206,140 |
|
|
12.3 |
|
|
|
193,518 |
|
|
12.6 |
|
|
Commercial real estate loans |
|
|
1,164,088 |
|
|
67.7 |
|
|
|
1,102,771 |
|
|
65.7 |
|
|
|
956,320 |
|
|
62.1 |
|
| Consumer and other loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer and other loans |
|
|
1,457 |
|
|
0.1 |
|
|
|
2,860 |
|
|
0.2 |
|
|
|
2,325 |
|
|
0.2 |
|
|
Gross Community Bank loans receivable |
|
|
1,719,295 |
|
|
100.0 |
% |
|
|
1,677,279 |
|
|
100.0 |
% |
|
|
1,536,642 |
|
|
100.0 |
% |
| Net deferred origination
fees |
|
|
(6,261 |
) |
|
|
|
|
(6,265 |
) |
|
|
|
|
(6,240 |
) |
|
|
|
Loans receivable |
|
$ |
1,713,034 |
|
|
|
|
$ |
1,671,014 |
|
|
|
|
$ |
1,530,402 |
|
|
|
| Loan Yield(1) |
|
|
6.28 |
% |
|
|
|
|
5.97 |
% |
|
|
|
|
5.04 |
% |
|
|
|
(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, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Commercial and industrial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital call lines |
|
$ |
138,428 |
|
|
10.7 |
% |
|
$ |
118,796 |
|
|
10.2 |
% |
|
$ |
224,930 |
|
|
28.0 |
% |
|
All other commercial & industrial loans |
|
|
60,323 |
|
|
4.7 |
|
|
|
48,669 |
|
|
4.1 |
|
|
|
18,067 |
|
|
2.2 |
|
| Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate loans |
|
|
251,213 |
|
|
19.4 |
|
|
|
249,367 |
|
|
21.4 |
|
|
|
133,143 |
|
|
16.5 |
|
| Consumer and other loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit cards |
|
|
379,642 |
|
|
29.3 |
|
|
|
318,187 |
|
|
27.3 |
|
|
|
139,501 |
|
|
17.4 |
|
|
Other consumer and other loans |
|
|
465,360 |
|
|
35.9 |
|
|
|
431,481 |
|
|
37.0 |
|
|
|
288,257 |
|
|
35.9 |
|
|
Gross CCBX loans receivable |
|
|
1,294,966 |
|
|
100.0 |
% |
|
|
1,166,500 |
|
|
100.0 |
% |
|
|
803,898 |
|
|
100.0 |
% |
| Net deferred origination
(fees) costs |
|
|
(447 |
) |
|
|
|
|
(310 |
) |
|
|
|
|
54 |
|
|
|
|
Loans receivable |
|
$ |
1,294,519 |
|
|
|
|
$ |
1,166,190 |
|
|
|
|
$ |
803,952 |
|
|
|
| Loan Yield -
CCBX(1)(2) |
|
|
16.95 |
% |
|
|
|
|
16.09 |
% |
|
|
|
|
12.35 |
% |
|
|
|
(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 $67.3 million, or 2.2%, to $3.16
billion at June 30, 2023 from $3.10 billion at March 31,
2023. The increase was due to a $69.6 million increase in core
deposits, partially offset by a $2.2 million decrease in time
deposits. BaaS-brokered deposits are now classified as NOW accounts
due to a change in the relationship agreement with one of our
partners. Deposits in our CCBX segment increased $89.3 million,
from $1.56 billion at March 31, 2023, to $1.65 billion at
June 30, 2023 and community bank deposits decreased $21.9
million from $1.53 billion at March 31, 2023, to $1.51 billion
at June 30, 2023. The deposits from our CCBX segment are
predominately classified as interest bearing, or NOW and money
market accounts. During the quarter ended June 30, 2023,
noninterest bearing deposits decreased $36.2 million, or 4.8%, to
$725.6 million from $761.8 million at March 31, 2023.
Community bank noninterest bearing deposits totaled $621.0 million
or 41.1% of total community bank deposits and CCBX noninterest
bearing deposits totaled $104.6 million, or 6.3% of total CCBX
deposits. In the quarter ended June 30, 2023 compared to the
quarter ended March 31, 2023, NOW and money market accounts
increased $116.0 million, savings deposits decreased $10.3 million,
and time deposits decreased $2.2 million. Included in total
deposits is $240.3 million in IntraFi network NOW and money market
sweep accounts as of June 30, 2023, which provides our larger
deposit customers with fully insured deposits through a sweep to
other banks. Uninsured deposits decreased to $632.1 million as of
June 30, 2023, compared to $768.3 million as of March 31,
2023.
Total deposits increased $465.3 million, or 17.2%, to $3.16
billion at June 30, 2023 compared to $2.70 billion at
June 30, 2022. The increase is largely the result of growth in
CCBX deposits. Noninterest bearing deposits decreased $92.5
million, or 11.3%, to $725.6 million at June 30, 2023 from
$818.1 million at June 30, 2022. NOW and money market accounts
increased $662.8 million, or 39.9%, to $2.32 billion at
June 30, 2023, and savings deposits decreased $17.5 million,
or 16.4%, and time deposits decreased $11.6 million, or
31.9%, in the second quarter of 2023 compared to the second quarter
of 2022 and includes BaaS-brokered deposits that are now classified
as NOW accounts included in core deposits due to a change in the
relationship agreement with one of our partners and these deposits
increased to $275.2 million as of June 30, 2023, compared to
$76.0 million as of June 30, 2022. These deposits increased as
a result of sweeping them back on the balance sheet. Deposits in
our CCBX segment increased $587.0 million, from $1.07 billion at
June 30, 2022, to $1.65 billion at June 30, 2023 and
community bank deposits decreased $121.7 million, from $1.63
billion at June 30, 2022, to $1.51 billion at June 30,
2023. The deposits from our CCBX segment are predominately
classified as interest bearing, or NOW and money market accounts.
Uninsured deposits decreased to $632.1 million as of June 30,
2023, compared to $812.1 million as of June 30, 2022.
Additionally, as of June 30, 2023 we have access to $9.9
million in CCBX customer deposits that are currently being
transferred off the Bank’s balance sheet to other financial
institutions on a daily basis. The Bank could retain these deposits
for liquidity and funding purposes if needed. If a portion of these
deposits are retained, they would be classified as NOW accounts.
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.
| |
As of June 30, 2023 |
|
As of March 31, 2023 |
|
As of June 30, 2022 |
|
(dollars in thousands; unaudited) |
Amount |
|
Percent of
Total
Deposits |
|
Balance |
|
Percent of
Total
Deposits |
|
Balance |
|
Percent of
Total
Deposits |
|
Demand, noninterest bearing |
$ |
725,592 |
|
|
22.9 |
% |
|
$ |
761,800 |
|
|
24.6 |
% |
|
$ |
818,052 |
|
|
30.3 |
% |
| NOW and money market |
|
2,323,164 |
|
|
73.5 |
|
|
|
2,207,121 |
|
|
71.3 |
|
|
|
1,660,315 |
|
|
61.6 |
|
| Savings |
|
88,991 |
|
|
2.8 |
|
|
|
99,241 |
|
|
3.2 |
|
|
|
106,464 |
|
|
3.9 |
|
|
Total core deposits |
|
3,137,747 |
|
|
99.2 |
|
|
|
3,068,162 |
|
|
99.1 |
|
|
|
2,584,831 |
|
|
95.8 |
|
| Brokered deposits |
|
1 |
|
|
0.0 |
|
|
|
1 |
|
|
0.0 |
|
|
|
76,001 |
|
|
2.8 |
|
| Time deposits less than
$100,000 |
|
9,741 |
|
|
0.3 |
|
|
|
11,343 |
|
|
0.4 |
|
|
|
14,009 |
|
|
0.5 |
|
| Time deposits $100,000 and
over |
|
15,083 |
|
|
0.5 |
|
|
|
15,717 |
|
|
0.5 |
|
|
|
22,464 |
|
|
0.8 |
|
|
Total |
$ |
3,162,572 |
|
|
100.0 |
% |
|
$ |
3,095,223 |
|
|
100.0 |
% |
|
$ |
2,697,305 |
|
|
100.0 |
% |
| Cost of
deposits(1) |
|
2.72 |
% |
|
|
|
|
2.13 |
% |
|
|
|
|
0.25 |
% |
|
|
|
(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, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Demand, noninterest bearing |
|
$ |
621,012 |
|
|
41.1 |
% |
|
$ |
664,452 |
|
|
43.4 |
% |
|
$ |
729,436 |
|
|
44.7 |
% |
| NOW and money market |
|
|
778,475 |
|
|
51.6 |
|
|
|
743,548 |
|
|
48.6 |
|
|
|
759,704 |
|
|
46.6 |
|
| Savings |
|
|
85,146 |
|
|
5.7 |
|
|
|
96,330 |
|
|
6.3 |
|
|
|
105,576 |
|
|
6.5 |
|
|
Total core deposits |
|
|
1,484,633 |
|
|
98.4 |
|
|
|
1,504,330 |
|
|
98.3 |
|
|
|
1,594,716 |
|
|
97.8 |
|
| Brokered deposits |
|
|
1 |
|
|
0.0 |
|
|
|
1 |
|
|
0.0 |
|
|
|
1 |
|
|
0.0 |
|
| Time deposits less than
$100,000 |
|
|
9,741 |
|
|
0.6 |
|
|
|
11,343 |
|
|
0.7 |
|
|
|
14,009 |
|
|
0.9 |
|
| Time deposits $100,000 and
over |
|
|
15,083 |
|
|
1.0 |
|
|
|
15,717 |
|
|
1.0 |
|
|
|
22,464 |
|
|
1.4 |
|
|
Total Community Bank deposits |
|
$ |
1,509,458 |
|
|
100.0 |
% |
|
$ |
1,531,391 |
|
|
100.0 |
% |
|
$ |
1,631,190 |
|
|
100.0 |
% |
| Cost of
deposits(1) |
|
|
0.98 |
% |
|
|
|
|
0.66 |
% |
|
|
|
|
0.08 |
% |
|
|
|
(1) |
|
Cost of
deposits is annualized for the three months ended for each period
presented. |
|
CCBX |
|
As of |
|
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Balance |
|
% to Total |
|
Demand, noninterest bearing |
|
$ |
104,580 |
|
|
6.3 |
% |
|
$ |
97,348 |
|
|
6.2 |
% |
|
$ |
88,616 |
|
|
8.3 |
% |
| NOW and money market |
|
|
1,544,689 |
|
|
93.5 |
|
|
|
1,463,573 |
|
|
93.6 |
|
|
|
900,611 |
|
|
84.5 |
|
| Savings |
|
|
3,845 |
|
|
0.2 |
|
|
|
2,911 |
|
|
0.2 |
|
|
|
888 |
|
|
0.1 |
|
|
Total core deposits |
|
|
1,653,114 |
|
|
100.0 |
|
|
|
1,563,832 |
|
|
100.0 |
|
|
|
990,115 |
|
|
92.9 |
|
| BaaS-brokered deposits |
|
|
— |
|
|
0.0 |
|
|
|
— |
|
|
0.0 |
|
|
|
76,000 |
|
|
7.1 |
|
|
Total CCBX deposits |
|
$ |
1,653,114 |
|
|
100.0 |
% |
|
$ |
1,563,832 |
|
|
100.0 |
% |
|
$ |
1,066,115 |
|
|
100.0 |
% |
| Cost of
deposits(1) |
|
|
4.42 |
% |
|
|
|
|
3.89 |
% |
|
|
|
|
0.56 |
% |
|
|
|
(1) |
|
Cost of
deposits is annualized for the three months ended for each period
presented. |
| |
|
|
Borrowings
As of June 30, 2023 the Company has the capacity to borrow
up to a total of $559.8 million from the Federal Reserve Bank
discount window and Federal Home Loan Bank, with no borrowings
outstanding on these lines as of June 30, 2023.
Shareholders’ Equity
During the six months ended June 30, 2023, the Company
contributed $15.0 million in capital to the Bank. The
Company had a cash balance of $6.8 million as of June 30,
2023, which is retained for general operating purposes, including
debt repayment, and for funding $763,000 in commitments to bank
technology funds.
Total shareholders’ equity increased $13.9 million since
March 31, 2023. The increase in shareholders’
equity was primarily due to $12.9 million in net earnings, a
$846,000 increase from the amortization of equity awards, combined
with a decrease in the unrealized loss on available-for-sale
securities of $125,000 and $22,000 increase from stock options
being exercised during the three months ended June 30,
2023.
Capital Ratios
The Company and the Bank remained well capitalized at
June 30, 2023, as summarized in the following table.
|
(unaudited) |
|
Coastal Community Bank |
|
Coastal Financial Corporation |
|
Minimum Well Capitalized Ratios under Prompt Corrective
Action(1) |
|
Tier 1 Leverage Capital (to average assets) |
|
9.16 |
% |
|
8.16 |
% |
|
5.00 |
% |
| Common Equity Tier 1 Capital
(to risk-weighted assets) |
|
9.52 |
% |
|
8.36 |
% |
|
6.50 |
% |
| Tier 1 Capital (to
risk-weighted assets) |
|
9.52 |
% |
|
8.47 |
% |
|
8.00 |
% |
| Total Capital (to
risk-weighted assets) |
|
10.80 |
% |
|
11.12 |
% |
|
10.00 |
% |
|
(1) |
|
Presents the minimum capital ratios for an insured depository
institution, such as the Bank, to be considered well capitalized
under the Prompt Corrective Action framework. The minimum
requirements for the Company to be considered well capitalized
under Regulation Y include to maintain, on a consolidated basis, a
total risk-based capital ratio of 10.0 percent or greater and a
tier 1 risk-based capital ratio of 6.0 percent or greater. |
| |
|
|
Asset Quality
Effective January 1, 2023 the Company implemented the CECL
allowance model which calculates reserves over the life of the loan
and is largely driven by portfolio characteristics, economic
outlook, and other key methodology assumptions versus the incurred
loss model, which is what we were previously using. As a result of
implementing CECL, there was a one-time adjustment to the 2023
opening allowance balance of $3.9 million. The day 1 CECL
adjustment for community bank loans included a reduction of
$310,000 to the community bank allowance driven by the reversal of
the unallocated balance and a reduction of $340,000 related to the
community bank unfunded commitment reserve also driven by the
reversal of the unallocated balance. This was offset by an increase
to the CCBX allowance for $4.2 million. With the mirror image
approach accounting related to the contingent receivable for CCBX
partner loans, there was a CECL day 1 increase to the
indemnification asset in the amount of $4.5 million. Net, the day 1
impact to retained earnings for the Bank’s transition to CECL was
an increase of $954,000, excluding the impact of income taxes.
The total allowance for credit losses was $110.8 million and
3.68% of loans receivable at June 30, 2023 compared to $89.1
million and 3.14% at March 31, 2023 and $49.4 million and
2.11% at June 30, 2022. The allowance for credit loss
allocated to the CCBX portfolio was $90.1 million and 6.96% of CCBX
loans receivable at June 30, 2023, with $20.7 million of
allowance for credit loss allocated to the community bank or 1.21%
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, 2023 |
|
As of March 31, 2023 |
|
As of June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Community Bank |
|
CCBX |
|
Total |
|
Community Bank |
|
CCBX |
|
Total |
|
Community Bank |
|
CCBX |
|
Total |
|
Loans receivable |
|
$ |
1,713,034 |
|
|
$ |
1,294,519 |
|
|
$ |
3,007,553 |
|
|
$ |
1,671,014 |
|
|
$ |
1,166,190 |
|
|
$ |
2,837,204 |
|
|
$ |
1,530,402 |
|
|
$ |
803,952 |
|
|
$ |
2,334,354 |
|
| Allowance for credit
losses |
|
|
(20,653 |
) |
|
|
(90,109 |
) |
|
|
(110,762 |
) |
|
|
(20,708 |
) |
|
|
(68,415 |
) |
|
|
(89,123 |
) |
|
|
(20,785 |
) |
|
|
(28,573 |
) |
|
|
(49,358 |
) |
| Allowance for credit
losses to total loans receivable |
|
|
1.21 |
% |
|
|
6.96 |
% |
|
|
3.68 |
% |
|
|
1.24 |
% |
|
|
5.87 |
% |
|
|
3.14 |
% |
|
|
1.36 |
% |
|
|
3.55 |
% |
|
|
2.11 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit losses - loans totaled $52.6 million for
the three months ended June 30, 2023, $43.5 million for the
three months ended March 31, 2023, and $14.1 million for the
three months ended June 30, 2022. Net charge-offs totaled
$31.0 million for the quarter ended June 30, 2023, compared to
$32.3 million for the quarter ended March 31, 2023 and $3.5
million for the quarter ended June 30, 2022. Net charge-offs
increased primarily due to CCBX partner loans. CCBX partner
agreements provide for a credit enhancement that covers the
net-charge-offs on CCBX loans and negative deposit accounts, except
in accordance with the program agreement for one partner where the
Company is responsible for credit losses on approximately 10% of a
$180.5 million loan portfolio. At June 30, 2023, our portion
of this portfolio represented $18.0 million in loans.
The following table details net charge-offs for the core bank
and CCBX for the period indicated:
| |
|
Three Months Ended |
| |
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Community
Bank |
|
CCBX |
|
Total |
|
Community
Bank |
|
CCBX |
|
Total |
|
Community Bank |
|
CCBX |
|
Total |
|
Gross charge-offs |
|
$ |
9 |
|
|
$ |
32,290 |
|
|
$ |
32,299 |
|
|
$ |
50 |
|
|
$ |
34,117 |
|
|
$ |
34,167 |
|
|
$ |
3 |
|
|
$ |
3,539 |
|
|
$ |
3,542 |
|
| Gross recoveries |
|
|
— |
|
|
|
(1,340 |
) |
|
|
(1,340 |
) |
|
|
(5 |
) |
|
|
(1,860 |
) |
|
|
(1,865 |
) |
|
|
(36 |
) |
|
|
— |
|
|
|
(36 |
) |
|
Net charge-offs |
|
$ |
9 |
|
|
$ |
30,950 |
|
|
$ |
30,959 |
|
|
$ |
45 |
|
|
$ |
32,257 |
|
|
$ |
32,302 |
|
|
$ |
(33 |
) |
|
$ |
3,539 |
|
|
$ |
3,506 |
|
| Net charge-offs
to average loans(1) |
|
|
— |
% |
|
|
9.78 |
% |
|
|
4.19 |
% |
|
|
0.01 |
% |
|
|
12.29 |
% |
|
|
4.84 |
% |
|
|
(0.01 |
)% |
|
|
2.05 |
% |
|
|
0.64 |
% |
|
(1) |
|
Annualized calculations shown for periods presented. |
| |
|
|
The increase in the Company’s provision for credit losses -
loans during the quarter ended June 30, 2023, is a result of
loan growth in CCBX partner loans and to replenish reserves as a
result of loan charge-off activity, which has resulted in increased
charge-off rates impacting the allowance calculation. During the
quarter ended June 30, 2023, a $52.6 million provision for
credit losses - loans was recorded for CCBX partner loans based on
management’s analysis, compared to the $43.1 million provision for
credit losses - loans that was recorded for CCBX for the quarter
ended March 31, 2023. 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. CCBX partners provide for credit
enhancements that provide protection to the Bank from credit and
fraud losses by indemnifying or reimbursing incurred credit and
fraud losses. If our partner is unable to fulfill their contracted
obligations then the bank could be exposed to additional credit
losses. Management regularly evaluates and manages this
counterparty risk. The Company is responsible for credit losses on
approximately 10% of a $180.5 million CCBX loan portfolio. At
June 30, 2023, 10% of this portfolio represented $18.0 million
in loans. The factors used in management’s analysis for community
bank credit losses indicated that a small adjustment (recapture) of
$47,000 and provision of $428,000 was needed for the quarters ended
June 30, 2023 and March 31, 2023, respectively.
The following table details the provision expense for the
community bank and CCBX for the period indicated:
| |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
|
Community bank |
|
$ |
(47 |
) |
|
$ |
428 |
|
$ |
109 |
|
$ |
381 |
|
$ |
452 |
| CCBX |
|
|
52,645 |
|
|
|
43,116 |
|
|
13,985 |
|
|
95,761 |
|
|
26,584 |
|
Total provision expense |
|
$ |
52,598 |
|
|
$ |
43,544 |
|
$ |
14,094 |
|
$ |
96,142 |
|
$ |
27,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2023, our nonperforming assets were $33.7
million, or 0.95% of total assets, compared to $31.5 million, or
0.91%, of total assets, at March 31, 2023, and $5.8 million,
or 0.20% of total assets, at June 30, 2022. These ratios are
impacted by CCBX loans over 90 days delinquent that are covered by
CCBX partner credit enhancements. As of June 30, 2023, $25.2
million of the $26.3 million in nonperforming CCBX loans were
covered by CCBX partner credit enhancements. Agreements with our
CCBX partners provide for a credit enhancement which protects the
Bank by indemnifying or reimbursing incurred losses. Under the
agreement, CCBX partners will indemnify or reimburse the Bank for
its loss/charge-off on these loans. Nonperforming assets increased
$2.2 million during the quarter ended June 30, 2023, compared
to the quarter ended March 31, 2023, due to a $1.8 million
increase in CCBX loans that are past due 90 days or more and still
accruing combined with a $417,000 increase in community bank
nonaccrual loans. 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
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. Community bank nonaccrual
loans increased due to the addition of three loans partially offset
by principal reductions. There were no repossessed assets or other
real estate owned at June 30, 2023. Our nonperforming loans to
loans receivable ratio was 1.12% at June 30, 2023, compared to
1.11% at March 31, 2023, and 0.25% at June 30, 2022.
For the quarter ended June 30, 2023, there were $9,000 of
community bank net charge-offs and $7.4 million of nonperforming
community bank loans. For the quarter ended June 30, 2023,
$31.0 million in net charge-offs were recorded on CCBX loans. These
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 Company is responsible for credit losses on
approximately 10% of a $180.5 million loan portfolio. At
June 30, 2023, our portion of this portfolio represented $18.0
million in loans.
The following table details the Company’s nonperforming assets
for the periods indicated.
|
(dollars in thousands; unaudited) |
As of June 30,
2023 |
|
As of March 31,
2023 |
|
As of June 30,
2022 |
|
Nonaccrual loans: |
|
|
|
|
|
|
Commercial and industrial loans |
$ |
5 |
|
|
$ |
15 |
|
|
$ |
111 |
|
| Real estate loans: |
|
|
|
|
|
|
Construction, land and land development |
|
66 |
|
|
|
66 |
|
|
|
67 |
|
|
Residential real estate |
|
186 |
|
|
|
— |
|
|
|
53 |
|
|
Commercial real estate |
|
7,142 |
|
|
|
6,901 |
|
|
|
— |
|
|
Total nonaccrual loans |
|
7,399 |
|
|
|
6,982 |
|
|
|
231 |
|
| Accruing loans past
due 90 days or more: |
|
|
|
|
|
| Commercial & industrial
loans |
|
808 |
|
|
|
187 |
|
|
|
10 |
|
| Real estate loans: |
|
|
|
|
|
|
Residential real estate loans |
|
1,722 |
|
|
|
946 |
|
|
|
123 |
|
| Consumer and other loans: |
|
|
|
|
|
|
Credit cards |
|
18,306 |
|
|
|
17,772 |
|
|
|
1,283 |
|
|
Other consumer and other loans |
|
5,492 |
|
|
|
5,657 |
|
|
|
4,164 |
|
|
Total accruing loans past due 90 days or more |
|
26,328 |
|
|
|
24,562 |
|
|
|
5,580 |
|
|
Total nonperforming loans |
|
33,727 |
|
|
|
31,544 |
|
|
|
5,811 |
|
|
Real estate owned |
|
— |
|
|
|
— |
|
|
|
— |
|
| Repossessed
assets |
|
— |
|
|
|
— |
|
|
|
— |
|
| Modified loans for
borrowers experiencing financial difficulty |
|
— |
|
|
|
— |
|
|
|
— |
|
| Total nonperforming
assets |
$ |
33,727 |
|
|
$ |
31,544 |
|
|
$ |
5,811 |
|
| Total nonaccrual loans to
loans receivable |
|
0.25 |
% |
|
|
0.25 |
% |
|
|
0.01 |
% |
| Total nonperforming loans to
loans receivable |
|
1.12 |
% |
|
|
1.11 |
% |
|
|
0.25 |
% |
| Total nonperforming assets to
total assets |
|
0.95 |
% |
|
|
0.91 |
% |
|
|
0.20 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
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,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
Nonaccrual loans: |
|
|
|
|
|
|
Commercial and industrial loans |
$ |
5 |
|
$ |
15 |
|
$ |
111 |
| Real estate: |
|
|
|
|
|
|
Construction, land and land development |
|
66 |
|
|
66 |
|
|
67 |
|
Residential real estate |
|
186 |
|
|
— |
|
|
53 |
|
Commercial real estate |
|
7,142 |
|
|
6,901 |
|
|
— |
|
Total nonaccrual loans |
|
7,399 |
|
|
6,982 |
|
|
231 |
| Accruing loans past
due 90 days or more: |
|
|
|
|
|
|
Total accruing loans past due 90 days or more |
|
— |
|
|
— |
|
|
— |
|
Total nonperforming loans |
|
7,399 |
|
|
6,982 |
|
|
231 |
| Other real estate
owned |
|
— |
|
|
— |
|
|
— |
| Repossessed
assets |
|
— |
|
|
— |
|
|
— |
| Total nonperforming
assets |
$ |
7,399 |
|
$ |
6,982 |
|
$ |
231 |
|
CCBX |
As of |
|
(dollars in thousands; unaudited) |
June 30,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
Nonaccrual loans |
$ |
— |
|
$ |
— |
|
$ |
— |
| Accruing loans past
due 90 days or more: |
|
|
|
|
|
| Commercial & industrial
loans |
|
808 |
|
|
187 |
|
|
10 |
| Real estate loans: |
|
|
|
|
|
|
Residential real estate loans |
|
1,722 |
|
|
946 |
|
|
123 |
| Consumer and other loans: |
|
|
|
|
|
|
Credit cards |
|
18,306 |
|
|
17,772 |
|
|
1,283 |
|
Other consumer and other loans |
|
5,492 |
|
|
5,657 |
|
|
4,164 |
|
Total accruing loans past due 90 days or more |
|
26,328 |
|
|
24,562 |
|
|
5,580 |
|
Total nonperforming loans |
|
26,328 |
|
|
24,562 |
|
|
5,580 |
| Other real estate
owned |
|
— |
|
|
— |
|
|
— |
| Repossessed
assets |
|
— |
|
|
— |
|
|
— |
| Total nonperforming
assets |
$ |
26,328 |
|
$ |
24,562 |
|
$ |
5,580 |
| |
|
|
|
|
|
|
|
|
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 $3.54 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, our Quarterly Report on Form 10-Q for the most
recent quarter, and in any of our subsequent filings with the
Securities and Exchange Commission.
If one or more events related to these or other risks or
uncertainties materialize, or if our underlying assumptions prove
to be incorrect, actual results may differ materially from what we
anticipate. You are cautioned not to place undue reliance on
forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which it is made, and we undertake no
obligation to update or revise any forward-looking statement to
reflect events or circumstances after the date on which the
statement is made or to reflect the occurrence of unanticipated
events, except as required by law.
|
COASTAL FINANCIAL CORPORATION |
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION |
|
(Dollars in thousands; unaudited) |
|
|
|
ASSETS |
| |
June 30,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
Cash and due from banks |
$ |
29,783 |
|
|
$ |
37,676 |
|
|
$ |
40,750 |
|
| Interest earning deposits with
other banks |
|
245,277 |
|
|
|
356,240 |
|
|
|
364,939 |
|
| Investment securities, available
for sale, at fair value |
|
98,167 |
|
|
|
97,999 |
|
|
|
108,560 |
|
| Investment securities, held to
maturity, at amortized cost |
|
12,563 |
|
|
|
3,705 |
|
|
|
1,261 |
|
| Other investments |
|
12,037 |
|
|
|
11,346 |
|
|
|
10,379 |
|
| Loans held for sale |
|
35,923 |
|
|
|
27,292 |
|
|
|
60,000 |
|
| Loans receivable |
|
3,007,553 |
|
|
|
2,837,204 |
|
|
|
2,334,354 |
|
| Allowance for credit losses |
|
(110,762 |
) |
|
|
(89,123 |
) |
|
|
(49,358 |
) |
|
Total loans receivable, net |
|
2,896,791 |
|
|
|
2,748,081 |
|
|
|
2,284,996 |
|
| CCBX credit enhancement
asset |
|
96,928 |
|
|
|
76,395 |
|
|
|
30,715 |
|
| CCBX receivable |
|
19,113 |
|
|
|
13,681 |
|
|
|
4,114 |
|
| Premises and equipment, net |
|
18,903 |
|
|
|
18,030 |
|
|
|
18,670 |
|
| Operating lease right-of-use
assets |
|
6,216 |
|
|
|
4,812 |
|
|
|
5,565 |
|
| Accrued interest receivable |
|
21,581 |
|
|
|
19,321 |
|
|
|
12,430 |
|
| Bank-owned life insurance,
net |
|
12,873 |
|
|
|
12,761 |
|
|
|
12,485 |
|
| Deferred tax asset, net |
|
25,764 |
|
|
|
20,527 |
|
|
|
11,709 |
|
| Other assets |
|
3,364 |
|
|
|
3,167 |
|
|
|
3,149 |
|
|
Total assets |
$ |
3,535,283 |
|
|
$ |
3,451,033 |
|
|
$ |
2,969,722 |
|
| |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| LIABILITIES |
|
|
|
|
|
|
Deposits |
$ |
3,162,572 |
|
|
$ |
3,095,223 |
|
|
$ |
2,697,305 |
|
|
Subordinated debt, net |
|
44,069 |
|
|
|
44,031 |
|
|
|
24,324 |
|
|
Junior subordinated debentures, net |
|
3,589 |
|
|
|
3,588 |
|
|
|
3,587 |
|
|
Deferred compensation |
|
547 |
|
|
|
582 |
|
|
|
680 |
|
|
Accrued interest payable |
|
766 |
|
|
|
874 |
|
|
|
330 |
|
|
Operating lease liabilities |
|
6,413 |
|
|
|
5,022 |
|
|
|
5,786 |
|
|
CCBX payable |
|
27,714 |
|
|
|
30,794 |
|
|
|
12,058 |
|
|
Other liabilities |
|
16,951 |
|
|
|
12,156 |
|
|
|
7,991 |
|
|
Total liabilities |
|
3,262,621 |
|
|
|
3,192,270 |
|
|
|
2,752,061 |
|
| |
|
|
|
|
|
| SHAREHOLDERS’ EQUITY |
|
|
|
|
|
| Common stock |
|
128,315 |
|
|
|
127,447 |
|
|
|
123,226 |
|
|
Retained earnings |
|
146,029 |
|
|
|
133,123 |
|
|
|
95,779 |
|
|
Accumulated other comprehensive loss, net of tax |
|
(1,682 |
) |
|
|
(1,807 |
) |
|
|
(1,344 |
) |
|
Total shareholders’ equity |
|
272,662 |
|
|
|
258,763 |
|
|
|
217,661 |
|
|
Total liabilities and shareholders’ equity |
$ |
3,535,283 |
|
|
$ |
3,451,033 |
|
|
$ |
2,969,722 |
|
| COASTAL FINANCIAL
CORPORATION |
| CONDENSED
CONSOLIDATED STATEMENTS OF INCOME |
| (Dollars in
thousands, except per share amounts; unaudited) |
| |
| |
Three Months Ended |
| |
June 30,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
| INTEREST AND DIVIDEND INCOME |
|
|
|
|
|
|
Interest and fees on loans |
$ |
80,199 |
|
|
$ |
66,431 |
|
$ |
40,166 |
|
Interest on interest earning deposits with other banks |
|
2,678 |
|
|
|
3,097 |
|
|
956 |
|
Interest on investment securities |
|
653 |
|
|
|
553 |
|
|
563 |
|
Dividends on other investments |
|
156 |
|
|
|
30 |
|
|
134 |
|
Total interest income |
|
83,686 |
|
|
|
70,111 |
|
|
41,819 |
| INTEREST EXPENSE |
|
|
|
|
|
|
Interest on deposits |
|
20,675 |
|
|
|
14,958 |
|
|
1,673 |
|
Interest on borrowed funds |
|
661 |
|
|
|
662 |
|
|
260 |
|
Total interest expense |
|
21,336 |
|
|
|
15,620 |
|
|
1,933 |
|
Net interest income |
|
62,350 |
|
|
|
54,491 |
|
|
39,886 |
| PROVISION FOR CREDIT LOSSES -
LOANS |
|
52,598 |
|
|
|
43,544 |
|
|
14,094 |
| (RECAPTURE) PROVISION FOR
UNFUNDED COMMITMENTS |
|
(345 |
) |
|
|
153 |
|
|
— |
|
Net interest income after provision for credit losses -
loans and unfunded commitments |
|
10,097 |
|
|
|
10,794 |
|
|
25,792 |
| NONINTEREST INCOME |
|
|
|
|
|
|
Deposit service charges and fees |
|
989 |
|
|
|
910 |
|
|
988 |
|
Loan referral fees |
|
682 |
|
|
|
— |
|
|
208 |
|
Gain on sales of loans, net |
|
23 |
|
|
|
123 |
|
|
— |
|
Unrealized (loss) gain on equity securities, net |
|
155 |
|
|
|
39 |
|
|
— |
|
Other income |
|
234 |
|
|
|
299 |
|
|
396 |
|
Noninterest income, excluding BaaS program income and BaaS
indemnification income |
|
2,083 |
|
|
|
1,371 |
|
|
1,592 |
|
Servicing and other BaaS fees |
|
895 |
|
|
|
948 |
|
|
1,159 |
|
Transaction fees |
|
1,052 |
|
|
|
917 |
|
|
814 |
|
Interchange fees |
|
975 |
|
|
|
789 |
|
|
628 |
|
Reimbursement of expenses |
|
1,026 |
|
|
|
921 |
|
|
618 |
|
BaaS program income |
|
3,948 |
|
|
|
3,575 |
|
|
3,219 |
|
BaaS credit enhancements |
|
51,027 |
|
|
|
42,362 |
|
|
14,207 |
|
BaaS fraud enhancements |
|
1,537 |
|
|
|
1,999 |
|
|
6,474 |
|
BaaS indemnification income |
|
52,564 |
|
|
|
44,361 |
|
|
20,681 |
|
Total noninterest income |
|
58,595 |
|
|
|
49,307 |
|
|
25,492 |
| NONINTEREST EXPENSE |
|
|
|
|
|
|
Salaries and employee benefits |
|
16,309 |
|
|
|
15,575 |
|
|
12,238 |
|
Occupancy |
|
1,143 |
|
|
|
1,219 |
|
|
1,083 |
|
Data processing and software licenses |
|
1,972 |
|
|
|
1,840 |
|
|
1,546 |
|
Legal and professional expenses |
|
4,645 |
|
|
|
3,062 |
|
|
1,002 |
|
Point of sale expense |
|
814 |
|
|
|
753 |
|
|
409 |
|
Excise taxes |
|
531 |
|
|
|
455 |
|
|
564 |
|
Federal Deposit Insurance Corporation ("FDIC") assessments |
|
570 |
|
|
|
595 |
|
|
855 |
|
Director and staff expenses |
|
519 |
|
|
|
626 |
|
|
377 |
|
Marketing |
|
115 |
|
|
|
95 |
|
|
74 |
|
Other expense |
|
1,722 |
|
|
|
890 |
|
|
1,318 |
|
Noninterest expense, excluding BaaS loan and BaaS fraud
expense |
|
28,340 |
|
|
|
25,110 |
|
|
19,466 |
|
BaaS loan expense |
|
22,033 |
|
|
|
17,554 |
|
|
12,229 |
|
BaaS fraud expense |
|
1,537 |
|
|
|
1,999 |
|
|
6,474 |
|
BaaS loan and fraud expense |
|
23,570 |
|
|
|
19,553 |
|
|
18,703 |
|
Total noninterest expense |
|
51,910 |
|
|
|
44,663 |
|
|
38,169 |
|
Income before provision for income taxes |
|
16,782 |
|
|
|
15,438 |
|
|
13,115 |
| PROVISION FOR INCOME TAXES |
|
3,876 |
|
|
|
3,047 |
|
|
2,939 |
| NET INCOME |
$ |
12,906 |
|
|
$ |
12,391 |
|
$ |
10,176 |
| Basic earnings per common
share |
$ |
0.97 |
|
|
$ |
0.94 |
|
$ |
0.79 |
| Diluted earnings per common
share |
$ |
0.95 |
|
|
$ |
0.91 |
|
$ |
0.76 |
| Weighted average number of common
shares outstanding: |
|
|
|
|
|
|
Basic |
|
13,275,640 |
|
|
|
13,196,960 |
|
|
12,928,061 |
|
Diluted |
|
13,597,763 |
|
|
|
13,609,491 |
|
|
13,442,013 |
| COASTAL FINANCIAL
CORPORATION |
| CONDENSED
CONSOLIDATED STATEMENTS OF INCOME |
| (Dollars in
thousands, except per share amounts; unaudited) |
| |
| |
Six Months Ended |
| |
June 30,
2023 |
|
June 30,
2022 |
| INTEREST AND DIVIDEND INCOME |
|
|
|
|
Interest and fees on loans |
$ |
146,630 |
|
|
$ |
69,798 |
|
Interest on interest earning deposits with other banks |
|
5,775 |
|
|
|
1,358 |
|
Interest on investment securities |
|
1,206 |
|
|
|
634 |
|
Dividends on other investments |
|
186 |
|
|
|
171 |
|
Total interest income |
|
153,797 |
|
|
|
71,961 |
| INTEREST EXPENSE |
|
|
|
|
Interest on deposits |
|
35,633 |
|
|
|
2,226 |
|
Interest on borrowed funds |
|
1,323 |
|
|
|
581 |
|
Total interest expense |
|
36,956 |
|
|
|
2,807 |
|
Net interest income |
|
116,841 |
|
|
|
69,154 |
| PROVISION FOR CREDIT LOSSES -
LOANS |
|
96,142 |
|
|
|
27,036 |
| RECAPTURE FOR UNFUNDED
COMMITMENTS |
|
(192 |
) |
|
|
— |
|
Net interest income after provision for credit losses -
loans and unfunded commitments |
|
20,891 |
|
|
|
42,118 |
| NONINTEREST INCOME |
|
|
|
|
Deposit service charges and fees |
|
1,899 |
|
|
|
1,872 |
|
Loan referral fees |
|
682 |
|
|
|
810 |
|
Gain on sales of loans, net |
|
146 |
|
|
|
— |
|
Unrealized (loss) gain on equity securities, net |
|
194 |
|
|
|
— |
|
Other income |
|
533 |
|
|
|
784 |
|
Noninterest income, excluding BaaS program income and BaaS
indemnification income |
|
3,454 |
|
|
|
3,466 |
|
Servicing and other BaaS fees |
|
1,843 |
|
|
|
2,328 |
|
Transaction fees |
|
1,969 |
|
|
|
1,307 |
|
Interchange fees |
|
1,764 |
|
|
|
1,060 |
|
Reimbursement of expenses |
|
1,947 |
|
|
|
990 |
|
BaaS program income |
|
7,523 |
|
|
|
5,685 |
|
BaaS credit enhancements |
|
93,389 |
|
|
|
27,282 |
|
BaaS fraud enhancements |
|
3,536 |
|
|
|
11,045 |
|
BaaS indemnification income |
|
96,925 |
|
|
|
38,327 |
|
Total noninterest income |
|
107,902 |
|
|
|
47,478 |
| NONINTEREST EXPENSE |
|
|
|
|
Salaries and employee benefits |
|
31,884 |
|
|
|
23,323 |
|
Occupancy |
|
2,362 |
|
|
|
2,219 |
|
Data processing and software licenses |
|
3,812 |
|
|
|
3,050 |
|
Legal and professional expenses |
|
7,707 |
|
|
|
1,710 |
|
Point of sale expense |
|
1,567 |
|
|
|
657 |
|
Excise taxes |
|
986 |
|
|
|
913 |
|
Federal Deposit Insurance Corporation ("FDIC") assessments |
|
1,165 |
|
|
|
1,459 |
|
Director and staff expenses |
|
1,145 |
|
|
|
721 |
|
Marketing |
|
210 |
|
|
|
173 |
|
Other expense |
|
2,612 |
|
|
|
2,795 |
|
Noninterest expense, excluding BaaS loan and BaaS fraud
expense |
|
53,450 |
|
|
|
37,020 |
|
BaaS loan expense |
|
39,587 |
|
|
|
20,519 |
|
BaaS fraud expense |
|
3,536 |
|
|
|
11,045 |
|
BaaS loan and fraud expense |
|
43,123 |
|
|
|
31,564 |
|
Total noninterest expense |
|
96,573 |
|
|
|
68,584 |
|
Income before provision for income taxes |
|
32,220 |
|
|
|
21,012 |
| PROVISION FOR INCOME TAXES |
|
6,923 |
|
|
|
4,606 |
| NET INCOME |
$ |
25,297 |
|
|
$ |
16,406 |
| Basic earnings per common
share |
$ |
1.91 |
|
|
$ |
1.27 |
| Diluted earnings per common
share |
$ |
1.86 |
|
|
$ |
1.22 |
| Weighted average number of common
shares outstanding: |
|
|
|
|
Basic |
|
13,236,517 |
|
|
|
12,913,485 |
|
Diluted |
|
13,603,594 |
|
|
|
13,458,706 |
| COASTAL FINANCIAL
CORPORATION |
| AVERAGE BALANCES,
YIELDS, AND RATES – QUARTERLY |
| (Dollars in
thousands; unaudited) |
| |
| |
For the Three Months Ended |
| |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest earning deposits with other banks |
$ |
211,369 |
|
|
$ |
2,678 |
|
5.08 |
% |
|
$ |
271,700 |
|
|
$ |
3,097 |
|
4.62 |
% |
|
$ |
499,918 |
|
|
$ |
956 |
|
0.77 |
% |
|
Investment securities, available for sale(2) |
|
100,278 |
|
|
|
534 |
|
2.14 |
|
|
|
100,273 |
|
|
|
535 |
|
2.16 |
|
|
|
119,975 |
|
|
|
554 |
|
1.85 |
|
|
Investment securities, held to maturity(2) |
|
10,047 |
|
|
|
119 |
|
4.75 |
|
|
|
1,955 |
|
|
|
18 |
|
3.73 |
|
|
|
1,280 |
|
|
|
9 |
|
2.82 |
|
|
Other investments |
|
11,773 |
|
|
|
156 |
|
5.31 |
|
|
|
10,633 |
|
|
|
30 |
|
1.14 |
|
|
|
10,225 |
|
|
|
134 |
|
5.26 |
|
|
Loans receivable(3) |
|
2,965,287 |
|
|
|
80,199 |
|
10.85 |
|
|
|
2,708,177 |
|
|
|
66,431 |
|
9.95 |
|
|
|
2,194,761 |
|
|
|
40,166 |
|
7.34 |
|
| Total interest earning
assets |
|
3,298,754 |
|
|
|
83,686 |
|
10.18 |
|
|
|
3,092,738 |
|
|
|
70,111 |
|
9.19 |
|
|
|
2,826,159 |
|
|
|
41,819 |
|
5.94 |
|
| Noninterest earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
(87,713 |
) |
|
|
|
|
|
|
(81,086 |
) |
|
|
|
|
|
|
(46,354 |
) |
|
|
|
|
|
Other noninterest earning assets |
|
194,747 |
|
|
|
|
|
|
|
172,161 |
|
|
|
|
|
|
|
115,788 |
|
|
|
|
|
|
Total assets |
$ |
3,405,788 |
|
|
|
|
|
|
$ |
3,183,813 |
|
|
|
|
|
|
$ |
2,895,593 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
$ |
2,326,702 |
|
|
$ |
20,675 |
|
3.56 |
% |
|
$ |
2,070,217 |
|
|
$ |
14,958 |
|
2.93 |
% |
|
$ |
1,792,119 |
|
|
$ |
1,673 |
|
0.37 |
% |
| Subordinated debt |
|
44,047 |
|
|
|
596 |
|
5.43 |
|
|
|
44,010 |
|
|
|
599 |
|
5.52 |
|
|
|
24,313 |
|
|
|
231 |
|
3.81 |
|
| Junior subordinated
debentures |
|
3,589 |
|
|
|
65 |
|
7.26 |
|
|
|
3,588 |
|
|
|
63 |
|
7.12 |
|
|
|
3,587 |
|
|
|
29 |
|
3.24 |
|
| Total interest bearing
liabilities |
|
2,374,338 |
|
|
|
21,336 |
|
3.60 |
|
|
|
2,117,815 |
|
|
|
15,620 |
|
2.99 |
|
|
|
1,820,019 |
|
|
|
1,933 |
|
0.43 |
|
| Noninterest bearing
deposits |
|
717,256 |
|
|
|
|
|
|
|
775,940 |
|
|
|
|
|
|
|
839,562 |
|
|
|
|
|
| Other liabilities |
|
49,085 |
|
|
|
|
|
|
|
37,448 |
|
|
|
|
|
|
|
19,550 |
|
|
|
|
|
| Total shareholders'
equity |
|
265,109 |
|
|
|
|
|
|
|
252,610 |
|
|
|
|
|
|
|
216,462 |
|
|
|
|
|
| Total liabilities and
shareholders' equity |
$ |
3,405,788 |
|
|
|
|
|
|
$ |
3,183,813 |
|
|
|
|
|
|
$ |
2,895,593 |
|
|
|
|
|
| Net interest income |
|
|
$ |
62,350 |
|
|
|
|
|
$ |
54,491 |
|
|
|
|
|
$ |
39,886 |
|
|
| Interest rate spread |
|
|
|
|
6.57 |
% |
|
|
|
|
|
6.20 |
% |
|
|
|
|
|
5.51 |
% |
| Net interest
margin(4) |
|
|
|
|
7.58 |
% |
|
|
|
|
|
7.15 |
% |
|
|
|
|
|
5.66 |
% |
|
(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, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(dollars in thousands, unaudited) |
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Community Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable(2) |
$ |
1,695,881 |
|
$ |
26,567 |
|
6.28 |
% |
|
$ |
1,643,985 |
|
$ |
24,211 |
|
5.97 |
% |
|
$ |
1,503,467 |
|
$ |
18,885 |
|
5.04 |
% |
|
Intrabank asset |
|
— |
|
|
— |
|
— |
|
|
|
— |
|
|
— |
|
— |
|
|
|
158,607 |
|
|
303 |
|
0.77 |
|
|
Total interest earning assets |
|
1,695,881 |
|
|
26,567 |
|
6.28 |
|
|
|
1,643,985 |
|
|
24,211 |
|
5.97 |
|
|
|
1,662,074 |
|
|
19,188 |
|
4.63 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
875,760 |
|
|
3,663 |
|
1.68 |
% |
|
|
853,152 |
|
|
2,534 |
|
1.20 |
% |
|
|
921,499 |
|
|
317 |
|
0.14 |
% |
|
Intrabank liability |
|
196,552 |
|
|
2,490 |
|
5.08 |
|
|
|
94,668 |
|
|
1,079 |
|
4.62 |
|
|
|
— |
|
|
— |
|
— |
|
| Total interest
bearing liabilities |
|
1,072,312 |
|
|
6,153 |
|
2.30 |
|
|
|
947,820 |
|
|
3,613 |
|
1.55 |
|
|
|
921,499 |
|
|
317 |
|
0.14 |
|
| Noninterest
bearing deposits |
|
623,570 |
|
|
|
|
|
|
696,166 |
|
|
|
|
|
|
740,575 |
|
|
|
|
| Net interest income |
|
|
$ |
20,414 |
|
|
|
|
|
$ |
20,598 |
|
|
|
|
|
$ |
18,871 |
|
|
| Net interest
margin(4) |
|
|
|
|
4.83 |
% |
% |
|
|
|
|
5.08 |
% |
|
|
|
|
|
4.55 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CCBX |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable(2)(4) |
$ |
1,269,406 |
|
$ |
53,632 |
|
16.95 |
% |
|
$ |
1,064,192 |
|
$ |
42,220 |
|
16.09 |
% |
|
$ |
691,294 |
|
$ |
21,281 |
|
12.35 |
% |
|
Intrabank asset |
|
275,222 |
|
|
3,487 |
|
5.08 |
|
|
|
232,647 |
|
|
2,652 |
|
4.62 |
|
|
|
278,312 |
|
|
532 |
|
0.77 |
|
|
Total interest earning assets |
|
1,544,628 |
|
|
57,119 |
|
14.83 |
|
|
|
1,296,839 |
|
|
44,872 |
|
14.03 |
|
|
|
969,606 |
|
|
21,813 |
|
9.02 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
1,450,942 |
|
|
17,012 |
|
4.70 |
% |
|
|
1,217,065 |
|
|
12,424 |
|
4.14 |
% |
|
|
870,620 |
|
|
1,356 |
|
0.62 |
% |
| Total interest
bearing liabilities |
|
1,450,942 |
|
|
17,012 |
|
4.70 |
|
|
|
1,217,065 |
|
|
12,424 |
|
4.14 |
|
|
|
870,620 |
|
|
1,356 |
|
0.62 |
|
| Noninterest
bearing deposits |
|
93,686 |
|
|
|
|
|
|
79,774 |
|
|
|
|
|
|
98,987 |
|
|
|
|
| Net interest income |
|
|
$ |
40,107 |
|
|
|
|
|
$ |
32,448 |
|
|
|
|
|
$ |
20,457 |
|
|
| Net interest
margin(3) |
|
|
|
|
10.41 |
% |
|
|
|
|
|
10.15 |
% |
|
|
|
|
|
8.46 |
% |
| Net interest margin,
net of BaaS loan expense(5) |
|
|
|
|
4.69 |
% |
|
|
|
|
|
4.66 |
% |
|
|
|
|
|
3.40 |
% |
| |
For the Three Months Ended |
| |
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
|
(dollars in thousands, unaudited) |
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
| Treasury &
Administration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest earning deposits with other banks |
$ |
211,369 |
|
$ |
2,678 |
|
5.08 |
% |
|
$ |
271,700 |
|
$ |
3,097 |
|
4.62 |
% |
|
$ |
499,918 |
|
$ |
956 |
|
0.77 |
% |
|
Investment securities, available for sale(6) |
|
100,278 |
|
|
534 |
|
2.14 |
|
|
|
100,273 |
|
|
535 |
|
2.16 |
|
|
|
119,975 |
|
|
554 |
|
1.85 |
|
|
Investment securities, held to maturity(6) |
|
10,047 |
|
|
119 |
|
4.75 |
|
|
|
1,955 |
|
|
18 |
|
3.73 |
|
|
|
1,280 |
|
|
9 |
|
2.82 |
|
|
Other investments |
|
11,773 |
|
|
156 |
|
5.31 |
|
|
|
10,633 |
|
|
30 |
|
1.14 |
|
|
|
10,225 |
|
|
134 |
|
5.26 |
|
| Total interest earning
assets |
|
333,467 |
|
|
3,487 |
|
4.19 |
% |
|
|
384,561 |
|
|
3,680 |
|
3.88 |
% |
|
|
631,398 |
|
|
1,653 |
|
1.05 |
% |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest
bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt |
|
44,047 |
|
|
596 |
|
5.43 |
% |
|
|
44,010 |
|
|
599 |
|
5.52 |
% |
|
|
24,313 |
|
|
231 |
|
3.81 |
% |
|
Junior subordinated debentures |
|
3,589 |
|
|
65 |
|
7.26 |
|
|
|
3,588 |
|
|
63 |
|
7.12 |
|
|
|
3,587 |
|
|
29 |
|
3.24 |
|
|
Intrabank liability, net(7) |
|
78,670 |
|
|
997 |
|
5.08 |
|
|
|
137,979 |
|
|
1,573 |
|
4.62 |
|
|
|
436,919 |
|
|
835 |
|
0.77 |
|
| Total interest bearing
liabilities |
|
126,306 |
|
|
1,658 |
|
5.27 |
|
|
|
185,576 |
|
|
2,235 |
|
4.89 |
|
|
|
464,819 |
|
|
1,095 |
|
0.94 |
|
| Net interest income |
|
|
$ |
1,829 |
|
|
|
|
|
$ |
1,445 |
|
|
|
|
|
$ |
558 |
|
|
| Net interest
margin(3) |
|
|
|
|
2.20 |
% |
|
|
|
|
|
1.52 |
% |
|
|
|
|
|
0.35 |
% |
|
(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, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest earning deposits with other banks |
$ |
241,368 |
|
|
$ |
5,775 |
|
4.82 |
% |
|
$ |
670,974 |
|
|
$ |
1,358 |
|
0.41 |
% |
|
Investment securities, available for sale(2) |
|
100,276 |
|
|
|
1,069 |
|
2.15 |
|
|
|
82,431 |
|
|
|
615 |
|
1.50 |
|
|
Investment securities, held to maturity(2) |
|
6,023 |
|
|
|
137 |
|
4.59 |
|
|
|
1,286 |
|
|
|
19 |
|
2.98 |
|
|
Other investments |
|
11,206 |
|
|
|
186 |
|
3.35 |
|
|
|
9,729 |
|
|
|
171 |
|
3.54 |
|
|
Loans receivable(3) |
|
2,837,442 |
|
|
|
146,630 |
|
10.42 |
|
|
|
1,982,700 |
|
|
|
69,798 |
|
7.10 |
|
| Total interest earning
assets |
|
3,196,315 |
|
|
|
153,797 |
|
9.70 |
|
|
|
2,747,120 |
|
|
|
71,961 |
|
5.28 |
|
| Noninterest earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
(84,417 |
) |
|
|
|
|
|
|
(38,554 |
) |
|
|
|
|
|
Other noninterest earning assets |
|
183,516 |
|
|
|
|
|
|
|
104,159 |
|
|
|
|
|
|
Total assets |
$ |
3,295,414 |
|
|
|
|
|
|
$ |
2,812,725 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
$ |
2,199,168 |
|
|
$ |
35,633 |
|
3.27 |
% |
|
$ |
1,463,875 |
|
|
$ |
2,226 |
|
0.31 |
% |
| FHLB advances and
borrowings |
|
— |
|
|
|
— |
|
— |
|
|
|
12,154 |
|
|
|
69 |
|
1.14 |
|
| Subordinated debt |
|
44,028 |
|
|
|
1,195 |
|
5.47 |
|
|
|
24,304 |
|
|
|
461 |
|
3.83 |
|
| Junior subordinated
debentures |
|
3,588 |
|
|
|
128 |
|
7.19 |
|
|
|
3,587 |
|
|
|
51 |
|
2.87 |
|
| Total interest bearing
liabilities |
|
2,246,784 |
|
|
|
36,956 |
|
3.32 |
|
|
|
1,503,920 |
|
|
|
2,807 |
|
0.38 |
|
| Noninterest bearing
deposits |
|
746,436 |
|
|
|
|
|
|
|
1,078,525 |
|
|
|
|
|
| Other liabilities |
|
43,299 |
|
|
|
|
|
|
|
17,790 |
|
|
|
|
|
| Total shareholders'
equity |
|
258,895 |
|
|
|
|
|
|
|
212,490 |
|
|
|
|
|
| Total liabilities and
shareholders' equity |
$ |
3,295,414 |
|
|
|
|
|
|
$ |
2,812,725 |
|
|
|
|
|
| Net interest income |
|
|
$ |
116,841 |
|
|
|
|
|
$ |
69,154 |
|
|
| Interest rate spread |
|
|
|
|
6.39 |
% |
|
|
|
|
|
4.90 |
% |
| Net interest
margin(4) |
|
|
|
|
7.37 |
% |
|
|
|
|
|
5.08 |
% |
|
(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, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Community Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable(2) |
|
$ |
1,670,076 |
|
$ |
50,779 |
|
6.13 |
% |
|
$ |
1,445,123 |
|
$ |
36,525 |
|
5.10 |
% |
|
Intrabank asset |
|
|
— |
|
|
— |
|
— |
|
|
|
213,207 |
|
|
431 |
|
0.41 |
|
| Total interest earning
assets |
|
|
1,670,076 |
|
|
50,779 |
|
6.13 |
|
|
|
1,658,330 |
|
|
36,956 |
|
4.49 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
|
864,518 |
|
|
6,197 |
|
1.45 |
% |
|
|
928,602 |
|
|
752 |
|
0.16 |
% |
|
Intrabank liability |
|
|
145,890 |
|
|
3,569 |
|
4.93 |
|
|
|
— |
|
|
— |
|
— |
|
| Total interest bearing
liabilities |
|
|
1,010,408 |
|
|
9,766 |
|
1.95 |
|
|
|
928,602 |
|
|
752 |
|
0.16 |
|
| Noninterest bearing
deposits |
|
|
659,668 |
|
|
|
|
|
|
729,728 |
|
|
|
|
| Net interest income |
|
|
|
$ |
41,013 |
|
|
|
|
|
$ |
36,204 |
|
|
| Interest rate spread |
|
|
|
|
|
4.18 |
% |
|
|
|
|
|
4.33 |
% |
| Net interest
margin(3) |
|
|
|
|
|
4.95 |
% |
|
|
|
|
|
4.40 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CCBX |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable(2)(4) |
|
$ |
1,167,366 |
|
$ |
95,851 |
|
16.56 |
% |
|
$ |
537,577 |
|
$ |
33,273 |
|
12.48 |
% |
|
Intrabank asset |
|
|
254,052 |
|
|
6,139 |
|
4.87 |
|
|
|
346,493 |
|
|
730 |
|
0.42 |
|
| Total interest earning
assets |
|
|
1,421,418 |
|
|
101,990 |
|
14.47 |
|
|
|
884,070 |
|
|
34,003 |
|
7.76 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
|
|
1,334,650 |
|
|
29,436 |
|
4.45 |
% |
|
|
535,273 |
|
|
1,474 |
|
0.56 |
% |
| Total interest bearing
liabilities |
|
|
1,334,650 |
|
|
29,436 |
|
4.45 |
|
|
|
535,273 |
|
|
1,474 |
|
0.56 |
|
| Noninterest bearing
deposits |
|
|
86,768 |
|
|
|
|
|
|
348,797 |
|
|
|
|
| Net interest income |
|
|
|
$ |
72,554 |
|
|
|
|
|
$ |
32,529 |
|
|
| Interest rate spread |
|
|
|
|
|
10.02 |
% |
|
|
|
|
|
7.20 |
% |
| Interest rate spread, net
of BaaS loan expense |
|
|
|
|
|
3.18 |
% |
|
|
|
|
|
(0.50 |
)% |
| Net interest
margin(3) |
|
|
|
|
|
10.29 |
% |
|
|
|
|
|
7.42 |
% |
| Net interest margin, net
of Baas loan expense(5) |
|
|
|
|
|
4.68 |
% |
|
|
|
|
|
2.74 |
% |
| |
|
For the Six Months Ended |
| |
|
June 30, 2023 |
|
June 30, 2022 |
|
(dollars in thousands; unaudited) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Average
Balance |
|
Interest &
Dividends |
|
Yield /
Cost(1) |
|
Treasury & Administration |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest earning deposits with other banks |
|
$ |
241,368 |
|
$ |
5,775 |
|
4.82 |
% |
|
$ |
670,974 |
|
$ |
1,358 |
|
0.41 |
% |
|
Investment securities, available for sale(6) |
|
|
100,276 |
|
|
1,069 |
|
2.15 |
|
|
|
82,431 |
|
|
615 |
|
1.50 |
|
|
Investment securities, held to maturity(6) |
|
|
6,023 |
|
|
137 |
|
4.59 |
|
|
|
1,286 |
|
|
19 |
|
2.98 |
|
|
Other investments |
|
|
11,206 |
|
|
186 |
|
3.35 |
|
|
|
9,729 |
|
|
171 |
|
3.54 |
|
| Total interest earning
assets |
|
|
358,873 |
|
|
7,167 |
|
4.03 |
|
|
|
764,420 |
|
|
2,163 |
|
0.57 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances and borrowings |
|
|
— |
|
|
— |
|
— |
% |
|
|
12,154 |
|
|
69 |
|
1.14 |
% |
|
Subordinated debt |
|
|
44,028 |
|
|
1,195 |
|
5.47 |
|
|
|
24,304 |
|
|
461 |
|
3.83 |
|
|
Junior subordinated debentures |
|
|
3,588 |
|
|
128 |
|
7.19 |
|
|
|
3,587 |
|
|
51 |
|
2.87 |
|
|
Intrabank liability, net(7) |
|
|
108,162 |
|
|
2,570 |
|
4.79 |
|
|
|
559,700 |
|
|
1,161 |
|
0.42 |
|
| Total interest bearing
liabilities |
|
|
155,778 |
|
|
3,893 |
|
5.04 |
|
|
|
599,745 |
|
|
1,742 |
|
0.59 |
|
| Net interest income |
|
|
|
$ |
3,274 |
|
|
|
|
|
$ |
421 |
|
|
| Interest rate spread |
|
|
|
|
|
(1.01) |
% |
|
|
|
|
|
(0.02 |
)% |
| Net interest
margin(3) |
|
|
|
|
|
1.84 |
% |
|
|
|
|
|
0.11 |
% |
|
(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,
2023 |
|
March 31,
2023 |
|
December 31,
2022 |
|
September 30,
2022 |
|
June 30,
2022 |
| Income Statement
Data: |
|
|
|
|
|
|
|
|
|
|
Interest and dividend income |
$ |
83,686 |
|
|
$ |
70,111 |
|
|
$ |
65,030 |
|
|
$ |
55,179 |
|
|
$ |
41,819 |
|
| Interest expense |
|
21,336 |
|
|
|
15,620 |
|
|
|
11,598 |
|
|
|
5,990 |
|
|
|
1,933 |
|
| Net interest income |
|
62,350 |
|
|
|
54,491 |
|
|
|
53,432 |
|
|
|
49,189 |
|
|
|
39,886 |
|
| Provision for credit losses -
loans |
|
52,598 |
|
|
|
43,544 |
|
|
|
33,600 |
|
|
|
18,428 |
|
|
|
14,094 |
|
| (Recovery)Provision for
unfunded commitments |
|
(345 |
) |
|
|
153 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Net interest income
after provision for credit losses - loans and unfunded
commitments |
|
10,097 |
|
|
|
10,794 |
|
|
|
19,832 |
|
|
|
30,761 |
|
|
|
25,792 |
|
| Noninterest income |
|
58,595 |
|
|
|
49,307 |
|
|
|
42,815 |
|
|
|
34,391 |
|
|
|
25,492 |
|
| Noninterest expense |
|
51,910 |
|
|
|
44,663 |
|
|
|
47,103 |
|
|
|
51,087 |
|
|
|
38,169 |
|
| Provision for income tax |
|
3,876 |
|
|
|
3,047 |
|
|
|
2,426 |
|
|
|
2,964 |
|
|
|
2,939 |
|
| Net income |
|
12,906 |
|
|
|
12,391 |
|
|
|
13,118 |
|
|
|
11,101 |
|
|
|
10,176 |
|
| |
|
|
|
|
|
|
|
|
|
| |
As of and for the Three Month Period |
| |
June 30,
2023 |
|
March 31,
2023 |
|
December 31,
2022 |
|
September 30,
2022 |
|
June 30,
2022 |
| Balance Sheet
Data: |
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
$ |
275,060 |
|
|
$ |
393,916 |
|
|
$ |
342,139 |
|
|
$ |
410,728 |
|
|
$ |
405,689 |
|
| Investment securities |
|
110,730 |
|
|
|
101,704 |
|
|
|
98,353 |
|
|
|
98,871 |
|
|
|
109,821 |
|
| Loans held for sale |
|
35,923 |
|
|
|
27,292 |
|
|
|
— |
|
|
|
43,314 |
|
|
|
60,000 |
|
| Loans receivable |
|
3,007,553 |
|
|
|
2,837,204 |
|
|
|
2,627,256 |
|
|
|
2,507,889 |
|
|
|
2,334,354 |
|
| Allowance for credit
losses |
|
(110,762 |
) |
|
|
(89,123 |
) |
|
|
(74,029 |
) |
|
|
(59,282 |
) |
|
|
(49,358 |
) |
| Total assets |
|
3,535,283 |
|
|
|
3,451,033 |
|
|
|
3,144,467 |
|
|
|
3,133,741 |
|
|
|
2,969,722 |
|
| Interest bearing deposits |
|
2,436,980 |
|
|
|
2,333,423 |
|
|
|
2,042,509 |
|
|
|
2,023,849 |
|
|
|
1,879,253 |
|
| Noninterest bearing
deposits |
|
725,592 |
|
|
|
761,800 |
|
|
|
775,012 |
|
|
|
813,217 |
|
|
|
818,052 |
|
| Core
deposits(1) |
|
3,137,747 |
|
|
|
3,068,162 |
|
|
|
2,686,528 |
|
|
|
2,727,830 |
|
|
|
2,584,831 |
|
| Total deposits |
|
3,162,572 |
|
|
|
3,095,223 |
|
|
|
2,817,521 |
|
|
|
2,837,066 |
|
|
|
2,697,305 |
|
| Total borrowings |
|
47,658 |
|
|
|
47,619 |
|
|
|
47,587 |
|
|
|
27,931 |
|
|
|
27,911 |
|
| Total shareholders’
equity |
|
272,662 |
|
|
|
258,763 |
|
|
|
243,494 |
|
|
|
228,733 |
|
|
|
217,661 |
|
| |
|
|
|
|
|
|
|
|
|
| Share and Per Share
Data(2): |
|
|
|
|
|
|
|
|
|
| Earnings per share –
basic |
$ |
0.97 |
|
|
$ |
0.94 |
|
|
$ |
1.01 |
|
|
$ |
0.86 |
|
|
$ |
0.79 |
|
| Earnings per share –
diluted |
$ |
0.95 |
|
|
$ |
0.91 |
|
|
$ |
0.96 |
|
|
$ |
0.82 |
|
|
$ |
0.76 |
|
| Dividends per share |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Book value per
share(3) |
$ |
20.50 |
|
|
$ |
19.48 |
|
|
$ |
18.50 |
|
|
$ |
17.66 |
|
|
$ |
16.81 |
|
| Tangible book value per
share(4) |
$ |
20.50 |
|
|
$ |
19.48 |
|
|
$ |
18.50 |
|
|
$ |
17.66 |
|
|
$ |
16.81 |
|
| Weighted avg outstanding
shares – basic |
|
13,275,640 |
|
|
|
13,196,960 |
|
|
|
13,030,726 |
|
|
|
12,938,200 |
|
|
|
12,928,061 |
|
| Weighted avg outstanding
shares – diluted |
|
13,597,763 |
|
|
|
13,609,491 |
|
|
|
13,603,978 |
|
|
|
13,536,823 |
|
|
|
13,442,013 |
|
| Shares outstanding at end of
period |
|
13,300,809 |
|
|
|
13,281,533 |
|
|
|
13,161,147 |
|
|
|
12,954,573 |
|
|
|
12,948,623 |
|
| Stock options outstanding at
end of period |
|
357,999 |
|
|
|
360,119 |
|
|
|
438,103 |
|
|
|
644,334 |
|
|
|
655,844 |
|
See footnotes on following page
| |
As of and for the Three Month Period |
| |
June 30,
2023 |
|
March 31,
2023 |
|
December 31,
2022 |
|
September 30,
2022 |
|
June 30,
2022 |
| Credit Quality
Data: |
|
|
|
|
|
|
|
|
|
|
Nonperforming assets(5)to total assets |
|
0.95 |
% |
|
|
0.91 |
% |
|
|
1.06 |
% |
|
|
0.73 |
% |
|
|
0.09 |
% |
| Nonperforming
assets(5)to loans receivable and OREO |
|
1.12 |
% |
|
|
1.11 |
% |
|
|
1.26 |
% |
|
|
0.91 |
% |
|
|
0.11 |
% |
| Nonperforming
loans(5)to total loans receivable |
|
1.12 |
% |
|
|
1.11 |
% |
|
|
1.26 |
% |
|
|
0.91 |
% |
|
|
0.11 |
% |
| Allowance for credit losses to
nonperforming loans |
|
328.4 |
% |
|
|
282.5 |
% |
|
|
224.4 |
% |
|
|
259.1 |
% |
|
|
849.4 |
% |
| Allowance for credit losses to
total loans receivable |
|
3.68 |
% |
|
|
3.14 |
% |
|
|
2.82 |
% |
|
|
2.36 |
% |
|
|
2.11 |
% |
| Gross charge-offs |
$ |
32,299 |
|
|
$ |
34,167 |
|
|
$ |
18,886 |
|
|
$ |
8,513 |
|
|
$ |
3,542 |
|
| Gross recoveries |
$ |
1,340 |
|
|
$ |
1,865 |
|
|
$ |
33 |
|
|
$ |
9 |
|
|
$ |
36 |
|
| Net charge-offs to average
loans(6) |
|
4.19 |
% |
|
|
4.84 |
% |
|
|
2.87 |
% |
|
|
1.38 |
% |
|
|
0.64 |
% |
| |
|
|
|
|
|
|
|
|
|
| Capital
Ratios(7): |
|
|
|
|
|
|
|
|
|
| Tier 1 leverage capital |
|
8.16 |
% |
|
|
8.29 |
% |
|
|
7.97 |
% |
|
|
7.70 |
% |
|
|
7.68 |
% |
| Common equity Tier 1
risk-based capital |
|
8.36 |
% |
|
|
8.61 |
% |
|
|
8.92 |
% |
|
|
8.49 |
% |
|
|
8.51 |
% |
| Tier 1 risk-based capital |
|
8.47 |
% |
|
|
8.73 |
% |
|
|
9.04 |
% |
|
|
8.62 |
% |
|
|
8.65 |
% |
| Total risk-based capital |
|
11.12 |
% |
|
|
11.49 |
% |
|
|
11.94 |
% |
|
|
10.80 |
% |
|
|
10.88 |
% |
|
(1) |
|
Core deposits are defined as all deposits excluding brokered and
all time deposits. |
| (2) |
|
Share and per share amounts are
based on total actual or average common shares outstanding, as
applicable. |
| (3) |
|
We calculate book value per share
as total shareholders’ equity at the end of the relevant period
divided by the outstanding number of our common shares at the end
of each period. |
| (4) |
|
Tangible book value per share is
a non-GAAP financial measure. We calculate tangible book value per
share as total shareholders’ equity at the end of the relevant
period, less goodwill and other intangible assets, divided by the
outstanding number of our common shares at the end of each period.
The most directly comparable GAAP financial measure is book value
per share. We had no goodwill or other intangible assets as of any
of the dates indicated. As a result, tangible book value per share
is the same as book value per share as of each of the dates
indicated. |
| (5) |
|
Nonperforming assets and
nonperforming loans include loans 90+ days past due and accruing
interest. |
| (6) |
|
Annualized calculations. |
| (7) |
|
Capital ratios are for the
Company, Coastal Financial Corporation. |
| |
|
|
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures to provide
meaningful supplemental information regarding the Company’s
operational performance and to enhance investors’ overall
understanding of such financial performance.
However, these non-GAAP financial measures are supplemental and
are not a substitute for an analysis based on GAAP measures. As
other companies may use different calculations for these adjusted
measures, this presentation may not be comparable to other
similarly titled adjusted measures reported by other companies.
The following non-GAAP measure is presented to illustrate the
impact of BaaS credit enhancements and BaaS fraud enhancements on
total revenue.
Revenue excluding BaaS credit enhancements and BaaS fraud
enhancements is a non-GAAP measure that excludes the impact of BaaS
credit enhancements and BaaS fraud enhancements on revenue. The
most directly comparable GAAP measure is revenue.
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,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
June 30,
2023 |
|
June 30,
2022 |
| Revenue
excluding BaaS credit enhancements and BaaS fraud
enhancements: |
|
|
|
|
|
Total net interest income |
|
$ |
62,350 |
|
|
$ |
54,491 |
|
|
$ |
39,886 |
|
|
$ |
116,841 |
|
|
$ |
69,154 |
|
|
Total noninterest income |
|
|
58,595 |
|
|
|
49,307 |
|
|
|
25,492 |
|
|
|
107,902 |
|
|
|
47,478 |
|
|
Total Revenue |
|
$ |
120,945 |
|
|
$ |
103,798 |
|
|
$ |
65,378 |
|
|
$ |
224,743 |
|
|
$ |
116,632 |
|
| Less: BaaS credit
enhancements |
|
|
(51,027 |
) |
|
|
(42,362 |
) |
|
|
(14,207 |
) |
|
|
(93,389 |
) |
|
|
(27,282 |
) |
|
Less: BaaS fraud enhancements |
|
|
(1,537 |
) |
|
|
(1,999 |
) |
|
|
(6,474 |
) |
|
|
(3,536 |
) |
|
|
(11,045 |
) |
|
Total revenue excluding BaaS credit enhancements and BaaS fraud
enhancements |
|
$ |
68,381 |
|
|
$ |
59,437 |
|
|
$ |
44,697 |
|
|
$ |
127,818 |
|
|
$ |
78,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following non-GAAP measure is presented to illustrate the
impact of BaaS loan expense on net loan income and yield on CCBX
loans.
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.
The following non-GAAP measure is presented to illustrate the
impact of BaaS loan expense on net interest income and net interest
margin.
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,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
June 30,
2023 |
|
June 30,
2022 |
| Net BaaS
loan income divided by average CCBX loans: |
|
|
|
|
|
CCBX loan yield (GAAP)(1) |
|
|
16.95 |
% |
|
|
16.09 |
% |
|
|
12.35 |
% |
|
|
16.56 |
% |
|
|
12.48 |
% |
|
Total average CCBX loans receivable |
|
$ |
1,269,406 |
|
|
$ |
1,064,192 |
|
|
$ |
691,294 |
|
|
$ |
1,167,366 |
|
|
$ |
537,577 |
|
|
Interest and earned fee income on CCBX loans (GAAP) |
|
|
53,632 |
|
|
|
42,220 |
|
|
|
21,281 |
|
|
|
95,851 |
|
|
|
33,273 |
|
|
BaaS loan expense |
|
|
(22,033 |
) |
|
|
(17,554 |
) |
|
|
(12,229 |
) |
|
|
(39,587 |
) |
|
|
(20,519 |
) |
|
Net BaaS loan income |
|
$ |
31,599 |
|
|
$ |
24,666 |
|
|
$ |
9,052 |
|
|
$ |
56,264 |
|
|
$ |
12,754 |
|
|
Net BaaS loan income divided by average CCBX
loans(1) |
|
|
9.98 |
% |
|
|
9.40 |
% |
|
|
5.25 |
% |
|
|
9.72 |
% |
|
|
4.78 |
% |
| Net
interest margin, net of BaaS loan expense: |
|
|
|
|
|
|
|
|
|
CCBX interest margin(1) |
|
|
10.41 |
% |
|
|
10.15 |
% |
|
|
8.46 |
% |
|
|
10.29 |
% |
|
|
7.42 |
% |
|
CCBX earning assets |
|
|
1,544,628 |
|
|
|
1,296,839 |
|
|
|
969,606 |
|
|
|
1,421,418 |
|
|
|
884,070 |
|
|
Net interest income |
|
|
40,107 |
|
|
|
32,448 |
|
|
|
20,457 |
|
|
|
72,554 |
|
|
|
32,529 |
|
|
Less: BaaS loan expense |
|
|
(22,033 |
) |
|
|
(17,554 |
) |
|
|
(12,229 |
) |
|
|
(39,587 |
) |
|
|
(20,519 |
) |
|
Net interest income, net of BaaS loan expense |
|
$ |
18,074 |
|
|
$ |
14,894 |
|
|
$ |
8,228 |
|
|
$ |
32,967 |
|
|
$ |
12,010 |
|
|
Net interest margin, net of BaaS loan
expense(1) |
|
|
4.69 |
% |
|
|
4.66 |
% |
|
|
3.40 |
% |
|
|
4.68 |
% |
|
|
2.74 |
% |
|
(1) |
|
Annualized calculations for periods presented. |
APPENDIX A -
As of June 30, 2023
Industry Concentration
We have a diversified loan portfolio,
representing a wide variety of industries. Our major categories of
loans are commercial real estate, consumer and other loans,
residential real estate, commercial and industrial, and
construction, land and land development loans. Together they
represent $3.01 billion in outstanding loan balances. When combined
with $2.34 billion in unused commitments the total of these
categories is $5.36 billion.
Commercial real estate loans
represent the largest segment of our loans, comprising 38.6% of our
total balance of outstanding loans as of June 30, 2023. Unused
commitments to extend credit represents an additional $34.2
million, and the combined total in commercial real estate loans
represents $1.20 billion, or 22.4% 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, 2023:
|
(dollars in thousands; unaudited) |
|
Outstanding Balance |
|
Available Loan Commitments |
|
Total Outstanding Balance & Available
Commitment |
|
% of Total Loans
(Outstanding Balance &
Available Commitment) |
|
Average Loan Balance |
|
Number of Loans |
|
Apartments |
|
$ |
305,459 |
|
$ |
11,819 |
|
$ |
317,278 |
|
5.9 |
% |
|
$ |
3,117 |
|
98 |
| Hotel/Motel |
|
|
164,098 |
|
|
2,577 |
|
|
166,675 |
|
3.1 |
|
|
|
6,311 |
|
26 |
| Convenience Store |
|
|
107,568 |
|
|
2,585 |
|
|
110,153 |
|
2.1 |
|
|
|
1,992 |
|
54 |
| Mixed use |
|
|
89,926 |
|
|
2,752 |
|
|
92,678 |
|
1.7 |
|
|
|
1,046 |
|
86 |
| Warehouse |
|
|
89,222 |
|
|
2,122 |
|
|
91,344 |
|
1.7 |
|
|
|
1,652 |
|
54 |
| Office |
|
|
87,322 |
|
|
3,194 |
|
|
90,516 |
|
1.7 |
|
|
|
939 |
|
93 |
| Retail |
|
|
88,307 |
|
|
675 |
|
|
88,982 |
|
1.7 |
|
|
|
920 |
|
96 |
| Mini Storage |
|
|
55,774 |
|
|
1,792 |
|
|
57,566 |
|
1.1 |
|
|
|
2,935 |
|
19 |
| Strip Mall |
|
|
45,729 |
|
|
— |
|
|
45,729 |
|
0.9 |
|
|
|
5,716 |
|
8 |
| Manufacturing |
|
|
37,297 |
|
|
1,800 |
|
|
39,097 |
|
0.7 |
|
|
|
1,130 |
|
33 |
| Groups < 0.70% of total |
|
|
93,386 |
|
|
4,923 |
|
|
98,309 |
|
1.8 |
|
|
|
1,139 |
|
82 |
|
Total |
|
$ |
1,164,088 |
|
$ |
34,239 |
|
$ |
1,198,327 |
|
22.4 |
% |
|
$ |
1,794 |
|
649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans comprise 28.1% of our total
balance of outstanding loans as of June 30, 2023. Unused
commitments to extend credit represents an additional $991.3
million, and the combined total in consumer and other loans
represents $1.84 billion, or 34.3% 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 $1,500. CCBX
consumer loans are underwritten to CCBX credit standards and
underwriting of these loans is regularly tested.
The following table summarizes our loan commitment by industry
for our consumer and other loan portfolio as of June 30,
2023:
|
(dollars in thousands; unaudited) |
|
Outstanding Balance |
|
Available Loan Commitments |
|
Total Outstanding Balance & Available
Commitment(1) |
|
% of Total Loans
(Outstanding Balance &
Available Commitment) |
|
Average Loan Balance |
|
Number of Loans |
| CCBX
consumer loans |
|
Credit cards |
|
$ |
379,642 |
|
$ |
990,447 |
|
$ |
1,370,089 |
|
25.6 |
% |
|
$ |
1.5 |
|
248,853 |
|
Installment loans |
|
|
459,391 |
|
|
— |
|
|
459,391 |
|
8.6 |
|
|
|
1.7 |
|
269,592 |
|
Lines of credit |
|
|
3,704 |
|
|
296 |
|
|
4,000 |
|
0.1 |
|
|
|
0.1 |
|
25,826 |
|
Other loans |
|
|
2,265 |
|
|
— |
|
|
2,265 |
|
0.0 |
|
|
|
0.1 |
|
17,261 |
| Community
bank consumer loans |
|
Installment loans |
|
|
1,254 |
|
|
— |
|
|
1,254 |
|
0.0 |
|
|
|
52.3 |
|
24 |
|
Lines of credit |
|
|
149 |
|
|
585 |
|
|
734 |
|
0.0 |
|
|
|
3.5 |
|
43 |
|
Other loans |
|
|
54 |
|
|
— |
|
|
54 |
|
0.0 |
|
|
|
0.2 |
|
315 |
|
Total |
|
$ |
846,459 |
|
$ |
991,328 |
|
$ |
1,837,787 |
|
34.3 |
% |
|
$ |
1.5 |
|
561,914 |
|
(1) |
|
Total exposure on CCBX loans is subject to portfolio maximum limits
- see table below. |
| |
|
|
Residential real estate loans comprise 15.4% of
our total balance of outstanding loans as of June 30, 2023.
Unused commitments to extend credit represents an additional $460.0
million, and the combined total in residential real estate loans
represents $923.2 million, or 17.2% 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, 2023:
|
(dollars in thousands; unaudited) |
|
Outstanding Balance |
|
Available Loan Commitments |
|
Total Outstanding Balance & Available
Commitment(1) |
|
% of Total Loans
(Outstanding Balance &
Available Commitment) |
|
Average Loan Balance |
|
Number of Loans |
| CCBX
residential real estate loans |
|
Home equity line of credit |
|
$ |
251,213 |
|
$ |
413,473 |
|
$ |
664,686 |
|
12.4 |
% |
|
$ |
23 |
|
10,976 |
| Community
bank residential real estate loans |
| Closed end, secured by first
liens |
|
|
181,507 |
|
|
3,597 |
|
|
185,104 |
|
3.4 |
|
|
|
603 |
|
301 |
| Home equity line of
credit |
|
|
21,803 |
|
|
41,764 |
|
|
63,567 |
|
1.2 |
|
|
|
98 |
|
222 |
| Closed end, second liens |
|
|
8,656 |
|
|
1,170 |
|
|
9,826 |
|
0.2 |
|
|
|
321 |
|
27 |
|
Total |
|
$ |
463,179 |
|
$ |
460,004 |
|
$ |
923,183 |
|
17.2 |
% |
|
$ |
40 |
|
11,526 |
|
(1) |
|
Total exposure on CCBX loans is subject to portfolio maximum limits
- see table below. |
| |
|
|
Commercial and industrial loans comprise 11.7%
of our total balance of outstanding loans as of June 30, 2023.
Unused commitments to extend credit represents an additional $699.5
million, and the combined total in commercial and industrial loans
represents $1.05 billion, or 19.7% of our total outstanding loans
and loan commitments. Included in commercial and industrial loans
is $138.4 million in outstanding capital call lines, with an
additional $622.3 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 line.
The following table summarizes our loan
commitment by industry for our commercial and industrial loan
portfolio as of June 30, 2023:
|
(dollars in thousands; unaudited) |
|
Outstanding Balance |
|
Available Loan Commitments |
|
Total Outstanding Balance & Available
Commitment(1) |
|
% of Total Loans
(Outstanding Balance &
Available Commitment) |
|
Average Loan Balance |
|
Number of Loans |
|
Capital Call Lines |
|
$ |
138,428 |
|
$ |
622,319 |
|
$ |
760,747 |
|
14.2 |
% |
|
$ |
876 |
|
158 |
| Retail |
|
|
60,344 |
|
|
6,362 |
|
|
66,706 |
|
1.2 |
|
|
|
22 |
|
2,718 |
| Construction/Contractor
Services |
|
|
24,067 |
|
|
27,329 |
|
|
51,396 |
|
1.0 |
|
|
|
131 |
|
184 |
| Financial Institutions |
|
|
48,648 |
|
|
— |
|
|
48,648 |
|
0.9 |
|
|
|
4,054 |
|
12 |
| Medical / Dental / Other
Care |
|
|
19,046 |
|
|
8,610 |
|
|
27,656 |
|
0.5 |
|
|
|
705 |
|
27 |
| Manufacturing |
|
|
9,286 |
|
|
3,905 |
|
|
13,191 |
|
0.3 |
|
|
|
202 |
|
46 |
| Groups < 0.30% of total |
|
|
54,010 |
|
|
31,017 |
|
|
85,027 |
|
1.6 |
|
|
|
150 |
|
359 |
|
Total |
|
$ |
353,829 |
|
$ |
699,542 |
|
$ |
1,053,371 |
|
19.7 |
% |
|
$ |
101 |
|
3,504 |
|
(1) |
|
Total exposure on CCBX loans is subject to portfolio maximum limits
-see table below. |
| |
|
|
Construction, land and land development loans
comprise 6.2% of our total balance of outstanding loans as of
June 30, 2023. Unused commitments to extend credit represents
an additional $159.1 million, and the combined total in
construction, land and land development loans represents $345.8
million, or 6.5% 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, 2023:
|
(dollars in thousands; unaudited) |
|
Outstanding Balance |
|
Available Loan Commitments |
|
Total Outstanding Balance & Available
Commitment |
|
% of Total Loans
(Outstanding Balance &
Available Commitment) |
|
Average Loan Balance |
|
Number of Loans |
|
Commercial construction |
|
$ |
78,079 |
|
$ |
127,352 |
|
$ |
205,431 |
|
3.8 |
% |
|
$ |
4,109 |
|
19 |
| Undeveloped land loans |
|
|
42,530 |
|
|
9,718 |
|
|
52,248 |
|
1.0 |
|
|
|
2,835 |
|
15 |
| Residential construction |
|
|
35,032 |
|
|
16,833 |
|
|
51,865 |
|
1.0 |
|
|
|
1,208 |
|
29 |
| Developed land loans |
|
|
18,735 |
|
|
400 |
|
|
19,135 |
|
0.4 |
|
|
|
669 |
|
28 |
| Land development |
|
|
12,330 |
|
|
4,774 |
|
|
17,104 |
|
0.3 |
|
|
|
822 |
|
15 |
|
Total |
|
$ |
186,706 |
|
$ |
159,077 |
|
$ |
345,783 |
|
6.5 |
% |
|
$ |
1,761 |
|
106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We have 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, 2023,
capital call lines outstanding balance totaled $138.4 million, and
while commitments totaled $622.3 million the commitments are
limited to a maximum of $350.0 million by agreement with the
partner.
APPENDIX B -
As of June 30, 2023
CCBX – BaaS Reporting Information
During the quarter ended June 30, 2023, $51.0 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 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. Partner 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. 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 obligations to replenish their
cash reserve account then the bank would be exposed to additional
loan and deposit losses, as a result of this counterparty risk. If
a CCBX partner does not replenish their cash reserve account then
the Bank can declare the agreement in default, take over servicing
and cease paying the partner for servicing the loan and providing
credit enhancements. The Bank would write-off any remaining credit
enhancement asset from the CCBX partner but would retain the full
yield and any fee income on the loan going forward, and BaaS loan
expense would decrease once default occurred and payments to the
CCBX partner were stopped.
For CCBX partner loans the Bank records contractual interest
earned from the borrower on loans in interest income, adjusted for
origination costs which are paid or payable to the CCBX partner.
BaaS loan expense represents the amount paid or payable to partners
for credit 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,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
June 30,
2023 |
|
June 30,
2022 |
|
Yield on loans(2) |
|
|
16.95 |
% |
|
|
16.09 |
% |
|
|
12.35 |
% |
|
|
16.56 |
% |
|
|
12.48 |
% |
| BaaS loan interest income |
|
$ |
53,632 |
|
|
$ |
42,220 |
|
|
$ |
21,281 |
|
|
$ |
95,851 |
|
|
$ |
33,273 |
|
| Less: BaaS loan expense |
|
|
22,033 |
|
|
|
17,554 |
|
|
|
12,229 |
|
|
|
39,587 |
|
|
|
20,519 |
|
|
Net BaaS loan income(1) |
|
|
31,599 |
|
|
|
24,666 |
|
|
|
9,052 |
|
|
|
56,264 |
|
|
|
12,754 |
|
| Net BaaS loan income divided
by average BaaS loans(1) |
|
|
9.98 |
% |
|
|
9.40 |
% |
|
|
5.25 |
% |
|
|
9.72 |
% |
|
|
4.78 |
% |
|
(1) |
|
A
reconciliation of the non-GAAP measures are set forth in the
preceding section of this earnings release. |
| (2) |
|
Annualized calculation for
quarterly periods shown. |
| |
|
|
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, 2023 compared to the quarters ended
March 31, 2023 and June 30, 2022. The following tables
are a summary of the interest components, direct fees, and expenses
of BaaS for the periods indicated and are not inclusive of all
income and expense related to BaaS.
|
Interest income |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
June 30,
2023 |
|
June 30,
2022 |
|
Loan interest income |
|
$ |
53,632 |
|
$ |
42,220 |
|
$ |
21,281 |
|
$ |
95,851 |
|
$ |
33,273 |
|
Total BaaS interest income |
|
$ |
53,632 |
|
$ |
42,220 |
|
$ |
21,281 |
|
$ |
95,851 |
|
$ |
33,273 |
|
Interest expense |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
June 30,
2023 |
|
June 30,
2022 |
|
BaaS interest expense |
|
$ |
17,012 |
|
$ |
12,424 |
|
$ |
1,356 |
|
$ |
29,436 |
|
$ |
1,474 |
|
Total BaaS interest expense |
|
$ |
17,012 |
|
$ |
12,424 |
|
$ |
1,356 |
|
$ |
29,436 |
|
$ |
1,474 |
|
BaaS income |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
June 30,
2023 |
|
June 30,
2022 |
|
BaaS program income: |
|
|
|
|
|
|
|
|
|
|
|
Servicing and other BaaS fees |
|
$ |
895 |
|
$ |
948 |
|
$ |
1,159 |
|
$ |
1,843 |
|
$ |
2,328 |
| Transaction fees |
|
|
1,052 |
|
|
917 |
|
|
814 |
|
|
1,969 |
|
|
1,307 |
| Interchange fees |
|
|
975 |
|
|
789 |
|
|
628 |
|
|
1,764 |
|
|
1,060 |
| Reimbursement of expenses |
|
|
1,026 |
|
|
921 |
|
|
618 |
|
|
1,947 |
|
|
990 |
|
BaaS program income |
|
|
3,948 |
|
|
3,575 |
|
|
3,219 |
|
|
7,523 |
|
|
5,685 |
| BaaS indemnification
income: |
|
|
|
|
|
|
|
|
|
|
| BaaS credit enhancements |
|
|
51,027 |
|
|
42,362 |
|
|
14,207 |
|
|
93,389 |
|
|
27,282 |
| BaaS fraud enhancements |
|
|
1,537 |
|
|
1,999 |
|
|
6,474 |
|
|
3,536 |
|
|
11,045 |
|
BaaS indemnification income |
|
|
52,564 |
|
|
44,361 |
|
|
20,681 |
|
|
96,925 |
|
|
38,327 |
| Total BaaS income |
|
$ |
56,512 |
|
$ |
47,936 |
|
$ |
23,900 |
|
$ |
104,448 |
|
$ |
44,012 |
|
BaaS loan and fraud expense: |
|
Three Months Ended |
|
Six Months Ended |
|
(dollars in thousands; unaudited) |
|
June 30,
2023 |
|
March 31,
2023 |
|
June 30,
2022 |
|
June 30,
2023 |
|
June 30,
2022 |
|
BaaS loan expense |
|
$ |
22,033 |
|
$ |
17,554 |
|
$ |
12,229 |
|
$ |
39,587 |
|
$ |
20,519 |
| BaaS fraud expense |
|
|
1,537 |
|
|
1,999 |
|
|
6,474 |
|
|
3,536 |
|
|
11,045 |
|
Total BaaS loan and fraud expense |
|
$ |
23,570 |
|
$ |
19,553 |
|
$ |
18,703 |
|
$ |
43,123 |
|
$ |
31,564 |
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