Market Overview

Coastal Financial Corporation Announces Second Quarter 2018 Results

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2018 Second Quarter Highlights:

  • Net income totaled $2.2 million for the second quarter of 2018, or $0.24 per diluted common share, up 22.2% from $1.8 million for the first quarter of 2018.
  • Total assets were $850.9 million at June 30, 2018, up 2.4% from $831.0 million at March 31, 2018.
  • Total loans receivable, net increased 3.3% from March 31, 2018 and 6.7% from December 31, 2017.
  • Total deposits increased 2.4% from March 31, 2018 and increased 5.9% from December 31, 2017.
  • Noninterest bearing deposits at June 30, 2018 were 34.9% of total deposits.
  • Cost of deposits were 0.40% for the second quarter of 2018, up only 0.03% from the first quarter of 2018.
  • Initial public offering of 2,577,500 shares of common stock completed, subsequent to quarter end, on July 18, 2018, for net proceeds of $33.2 million.

EVERETT, Wash., Aug. 21, 2018 (GLOBE NEWSWIRE) -- Coastal Financial Corporation (NASDAQ:CCB) (the "Company") today reported unaudited financial results for the second quarter 2018.  Net income for the second quarter of 2018 was $2.2 million, or $0.24 per diluted common share, compared with net income of $1.8 million, or $0.20 per diluted share, for the first quarter of 2018.

On July 18, 2018, the Company closed its initial public offering of 2,577,500 shares of common stock, including the exercise of the over-allotment of 427,500 shares, for net proceeds of $33.2 million after deducting underwriting discounts, commissions, and estimated offering expenses.

Eric Sprink, President and CEO, commented, "We are pleased with our second quarter financial performance, especially our deposit and loan growth.  Historically, the second quarter has been a tougher quarter to grow deposits due to customers withdrawing funds to pay taxes.  However, for the three months ended June 30, 2018 deposit growth on an annualized basis was 9.5% and loan growth was 13.1%.  We believe that the loan and deposit growth, combined with the increase in net interest margin, positions us well for continued growth in earnings."

In addition, our initial public offering, which was completed on July 20, 2018, was priced at $14.50 a share (which was near the top of the offering range), and net proceeds were $33.2 million after expenses.  We intend to use the net proceeds from this offering to support our growth, organically or through mergers and acquisitions, and for general corporate purposes."

The Company had net income of $4.0 million for the six months ended June 30, 2018, or $0.44 per diluted common share, compared to $3.2 million, or $0.35 per diluted common share for the six months ended June 30, 2017.

Results of Operations

Net interest income was $8.3 million for the three months ended June 30, 2018, an increase of 6.4% from $7.8 million for the first quarter of 2018, and an increase of 15.3% from $7.2 million for the second quarter of 2017. Increases over the prior quarter and prior year were the result of growth in interest earning assets, primarily loans, and improvements in net interest margin.

Net interest income for the six months ended June 30, 2018 totaled $16.1 million, an increase of 14.2% compared to the same period last year. The $2.0 million increase in net interest income over the same period last year was primarily related to growth in loan balances. During the six months ended June 30, 2018, the average balance of total loans receivable increased by $69.2 million, compared to the same period last year. This increase was partially offset by increased deposit costs from the growth in the balance of our deposits of $40.7 million and an increase in the cost of deposit funds of 12 basis points, compared to the same period last year.

Net interest margin for the quarter ended June 30, 2018 increased 14 basis points to 4.26% from 4.12% for the first quarter of 2018 and from 4.12% for the second quarter of 2017. The increase in net interest over the comparable period in the prior year was primarily due to increases in loan volume as a percent of earning assets and higher prepayment penalties and deferred fees recognized on loans paid off, and to a lesser extent, increases in average loan yields. The average loan receivable balance for the three months ended June 30, 2018 was $689.0 million, an increase of 5.3% compared to the prior quarter of 2018 and an increase of 13.5% from the same quarter one year ago.

Net interest margin for the six months ended June 30, 2018 increased 12 basis points to 4.19% from 4.07% for the comparable period last year. The increase in net interest over the comparable period in the prior year was primarily due to increases in loan volume as a percent of earning assets and higher prepayment penalties and deferred fees recognized on loans paid off in the first two quarters of 2018, and to a lesser extent, increases in average loan yields.

Loan yields for the quarter ended June 30, 2018 were 5.11%, an increase of four basis points from 5.07% for the quarter ended March 31, 2018, and a 12 basis point increase from 4.99% for the quarter ended June 30, 2017. Loan yields for the six months ended June 30, 2018 were 5.09%, an increase of 13 basis points from 4.96% for the six months ended June 30, 2017. Prepayment penalties and deferred fees recognized on loans paid off in both the current quarter and previous quarter were each 0.09% higher than the quarter ended June 30, 2017. Contractual loan yields approximated 4.92% for the three months ended June 30, 2018, 4.88% for the three months ended March 31, 2018, and 4.89% for the three months ended June 30, 2017.

The following table shows the Company's key performance ratios for the periods indicated.

    Three months ended   Six months ended
    June 30, 2018 March 31, 2018 June 30, 2017   June 30, 2018 June 30, 2017
               
Return on average assets (1)   1.09% 0.93% 1.03%   1.02% 0.88%
Return on average shareholders' equity (1)   12.90% 11.09% 12.00%   12.07% 9.81%
Yield on earnings assets (1)   4.73% 4.56% 4.51%   4.65% 4.45%
Yield on loans receivable (1)   5.11% 5.07% 4.99%   5.09% 4.96%
Cost of funds (1)   0.50% 0.46% 0.41%   0.48% 0.41%
Cost of deposits (1)   0.40% 0.37% 0.30%   0.38% 0.31%
Net interest margin (1)   4.26% 4.12% 4.12%   4.19% 4.07%
Noninterest expense to average assets (1)   3.15% 3.07% 3.32%   3.12% 2.98%
Efficiency ratio   66.77% 68.28% 66.27%   67.50% 67.96%
Loans receivable to deposits   94.12% 93.30% 97.25%   94.12% 97.25%
               
(1) annualized calculations              



Noninterest income was $1.2 million for the second quarter of 2018, an increase of $106,000 from $1.1 million for the first quarter of 2018 and an increase of $193,000 from $1.0 million for the comparable period one year ago. The increase compared to the prior quarter was primarily due to newly assessed point of sale/ATM fees and increased activity in merchant services, which resulted in an additional $84,000 of income during the quarter. The increase in noninterest income compared to the same quarter one year ago was primarily related to increases in existing deposit fees and the introduction of new deposit fees to bring those fees in line with the industry. Sublease and lease income decreased in the second quarter 2018, as compared to both first quarter 2018 and second quarter 2017, as a result of a long-term tenant electing to not renew their lease.

Noninterest income was $2.3 million for the six months ended June 30, 2018, compared to $1.9 million for the six months ended June 30, 2017. The increase is primarily related to newly assessed deposit fees, as discussed above. Loan referral fee income, which is earned when a borrower enters into an interest rate swap agreement with a third party, totaled $244,000 for the six months ended June 30, 2018, an increase of $202,000 from the same period last year.

Total noninterest expense for the current quarter increased 4.9% to $6.4 million from $6.1 million for the preceding quarter and increased 16.4% from $5.5 million from the comparable period one year ago. The increased expenses for the current quarter compared to the prior quarter and previous quarter one year ago were primarily due to increases in salary expenses. Full time equivalent employees increased 7% during the current quarter and increased 14% from the same quarter one year ago. Staffing increases are due to the continued organic growth initiatives, and includes increases in sales staff, including hiring new banking teams, and additional back office staffing to support the incremental increases in banking teams and for operation as a public company.

Total noninterest expense for the six months ended June 30, 2018 totaled $12.4 million, an increase of 14.8% compared to the same period last year. The increase is primarily attributable to increased salary expense, as discussed above and the addition of our Woodinville branch in October 2017.

The provision for income taxes decreased 33.3% for the current quarter and the six months ended June 30, 2018, compared to the same periods last year, primarily due to the Tax Cuts and Jobs Act legislation which was signed into law on December 22, 2017. The Company began using the lower tax rate of 21.0% for the current fiscal year.

Balance Sheet

The Company's total assets increased $45.1 million, or 5.6%, to $850.9 million at June 30, 2018 from $805.8 million at December 31, 2017 due to the Company's organic growth initiatives.

Total loans receivable, net of allowance for loan losses, increased $43.4 million, or 6.7%, to $692.2 million at June 30, 2018 from $648.8 million at December 31, 2017.  The growth in loans receivable was due primarily to increases in commercial real estate loans of $36.6 million.

The following table summarizes the loan portfolio at the periods indicated.

       
    As of   
    June 30, 2018   December 31, 2017   June 30, 2017  
(Dollars in thousands)   Balance % to
Total
  Balance % to
Total
  Balance % to
Total
 
                     
Commercial and industrial loans   $   89,284 12.7%   $   88,688 13.5%   $   84,792 13.6%  
Real estate:                    
  Construction, land and                    
  land development     46,356 6.6     41,641 6.3     45,626 7.3  
  Residential      88,422 12.6     87,031 13.3     69,478 11.1  
  Commercial real estate     474,330 67.7     437,717 66.6     422,156 67.7  
Consumer and other      2,670 0.4     2,058 0.3     1,795 0.3  
  Gross loans receivable     701,062 100.0%     657,135 100.0%     623,847 100.0%  
Net deferred origination fees     (370)       (347)       (597)    
  Loans receivable   $   700,692     $   656,788     $   623,250    
                     


Total deposits increased $41.2 million, or 5.9%, to $744.5 million at June 30, 2018 from $703.3 million at December 31, 2017.  The increase in deposits included increases in non-interest bearing deposit accounts of $17.1 million, or 7.1%, and total time deposits of $9.2 million, or 10.1%.

The following table shows the Company's deposit composition for the periods indicated.

            As of
    June 30, 2018     December 31, 2017     June 30, 2017  
(Dollars in thousands)   Balance % to Total     Balance % to Total     Balance % to Total  
                         
Demand, non-interest bearing   $   259,449 34.9 %   $   242,358 34.5 %   $   219,872 34.3 %
Now and money market     336,666 45.2       326,412 46.4       305,984 47.8  
Savings     48,509 6.5       43,876 6.2       43,152 6.7  
Time deposits less than $250,000     65,393 8.8       60,445 8.6       51,899 8.1  
Time deposits $250,000 and over     34,451 4.6       30,204 4.3       19,996 3.1  
  Total   $   744,468 100.0 %   $   703,295 100.0 %   $   640,903 100.0 %


Total shareholders' equity increased $3.8 million, or 5.8%, to $69.5 million at June 30, 2018 from $65.7 million at December 31, 2017.  The increase in shareholders' equity was primarily due to net income earned during the year.

Capital Ratios

The Company and the Bank remain well capitalized at June 30, 2018, as summarized in the following table.

             
Capital Ratios:   Coastal
Community
Bank
  Coastal
Financial
Corporation
  Financial
Institution 
Basel III
Regulatory
Guidelines
             
Tier 1 leverage capital 10.18%   9.21%   5.00%
Tier 1 risk-based capital  11.30%   10.24%   8.00%
Common Equity Tier 1 risk-based capital 11.30%   9.76%   6.50%
Total risk-based capital 12.50%   12.82%   10.00%
             
             


Asset Quality

The allowance for loan losses was 1.22% of loans receivable at June 30, 2018, compared to 1.22% at December 31, 2017. Provision for loan losses totaled $392,000 for the current quarter, $501,000 for the preceding quarter, and there was no provision for the same quarter in the prior year. Net charge-offs totaled $370,000 for the six months ended June 30, 2018 compared to net charge-offs of $94,000 for six months ended June 30, 2017.

Non-performing assets were $2.1 million, or 0.24% of total assets, at June 30, 2018, compared to $2.1 million, or 0.26% of total assets at December 31, 2017.  There were no repossessed assets or other real estate owned at June 30, 2018.

Non-performing loans to loans receivable ratio was 0.30% at June 30, 2018, compared to 0.32% at December 31, 2017.  Classified loans were $8.6 million at June 30, 2018, an increase of $700,000, as compared to $7.9 million at December 31, 2017.

The following table details the Company's non-performing assets for the periods indicated.

    As of 
    June 30,   December 31,   June 30, 
(Dollars in thousands)   2018   2017   2017
             
Non-accrual loans:            
Commercial and industrial loans   $   703   $   372   $   284
Real estate:            
  Construction, land and land development     -     -     -
  Residential      75     88     151
  Commercial real estate     -     345     579
  Commercial real estate - troubled debt restructure     1,290     1,315     1,340
Consumer and other loans     -     -     -
  Total non-accrual loans      2,068     2,120     2,354
  Total accruing loans past due 90 days or more     -     -     -
  Total non-performing loans      2,068     2,120     2,354
             
Other real estate owned      -     -     -
Repossessed assets     -     -     -
             
Total non-performing assets   $   2,068   $   2,120   $   2,354
             
Troubled debt restructurings, accruing     -     -     3,999
             
Total non-performing loans to loans receivable   0.30%   0.32%   0.38%
             
Total non-performing assets to total assets   0.24%   0.26%   0.32%
             


About Coastal Financial

Coastal Financial Corporation is an Everett-based Washington State bank holding company with Coastal Community Bank (the "Bank"), a full-service commercial bank, as its sole wholly-owned banking subsidiary.  The Bank operates through its 13 branches in Snohomish, Island, and King Counties, the Internet and its mobile banking application.  More information about the Bank can be found on its website at www.coastalbank.com and its investor relations page.

Contact

Eric Sprink, President & 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. 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 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.

Accordingly, we caution you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. Such factors include, without limitation, those listed from time to time in reports that the Company files with the Securities and Exchange Commission.  These forward-looking statements are made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update 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 or circumstances, except as required by law.


 
COASTAL FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands; unaudited)
 
ASSETS
      June 30,   March 31,   December 31,
      2018   2018   2017
Cash and due from banks   $   14,217   $   13,589   $   13,787
Interest-bearing deposits with other banks     77,232     80,980     75,964
Investment securities, available for sale, at fair value     36,013     36,015     36,927
Investment securities, held to maturity, at amortized cost     1,304     1,323     1,409
Other investments     3,766     3,766     3,680
Loans receivable     700,692     678,515     656,788
Allowance for loan losses     (8,540)     (8,423)     (8,017)
Total loans receivable, net     692,152     670,092     648,771
Premises and equipment, net     12,963     13,000     13,121
Accrued interest receivable     2,290     1,968     2,274
Bank-owned life insurance, net     6,592     6,546     6,500
Deferred tax asset, net     2,253     2,277     2,092
Other assets     2,140     1,406     1,228
  Total assets   $   850,922   $   830,962   $   805,753
               
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES            
Deposits   $   744,468   $   727,268   $   703,295
Federal Home Loan Bank (FHLB) advances     20,000     20,000     20,000
Subordinated debt     9,957     9,954     9,950
Junior subordinated debentures     3,580     3,580     3,579
Deferred compensation     1,127     1,151     1,175
Accrued interest payable     241     229     228
Other liabilities     2,059     1,853     1,815
  Total liabilities     781,432     764,035     740,042
               
SHAREHOLDERS' EQUITY            
Common stock     52,946     52,592     52,521
Retained earnings     18,364     16,163     14,134
Accumulated other comprehensive loss, net of tax     (1,820)     (1,828)     (944)
  Total shareholders' equity     69,490     66,927     65,711
  Total liabilities and shareholders' equity   $   850,922   $   830,962   $   805,753
               


COASTAL FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts; unaudited)
       
  Three months ended  
  June 30, 2018 March 31, 2018 June 30, 2017  
INTEREST AND DIVIDEND INCOME        
Interest and fees on loans $   8,778 $   8,189 $   7,557  
Interest on interest-bearing deposits with other banks   236   255   149  
Interest on investment securities   155   152   132  
Dividends on other investments   62   11   63  
Total interest and dividend income   9,231   8,607   7,901  
INTEREST EXPENSE        
Interest on deposits   712   646   492  
Interest on borrowed funds   216   183   185  
Total interest expense   928   829   677  
Net interest income   8,303   7,778   7,224  
PROVISION FOR LOAN LOSSES   392   501   -  
Net interest income after provision for loan losses   7,911   7,277   7,224  
NONINTEREST INCOME        
Deposit service charges and fees   771   687   651  
Loan referral fees   114   130   42  
Mortgage broker fees   69   37   74  
Sublease and lease income   4   57   55  
Gain on sale of loans   78   64   58  
Other   177   132   140  
Total noninterest income   1,213   1,107   1,020  
NONINTEREST EXPENSE        
Salaries and employee benefits   3,910   3,735   3,174  
Occupancy   804   823   740  
Data processing   492   479   447  
Director and staff expenses   136   144   137  
Excise taxes   134   124   112  
Marketing   86   57   83  
Legal and professional fees   130   80   104  
Federal Deposit Insurance Corporation (FDIC) assessments   79   85   78  
Business development   72   88   60  
Other   511   452   528  
Total noninterest expense   6,354   6,067   5,463  
Income before provision for income taxes   2,770   2,317   2,781  
PROVISION FOR INCOME TAXES   569   474   905  
NET INCOME $   2,201 $   1,843 $   1,876  
         
Basic and diluted earnings per share $   0.24 $   0.20 $   0.20  
Weighted average number of common shares outstanding:        
Basic   9,263,302   9,242,839   9,233,738  
Diluted   9,282,816   9,248,428   9,236,815  
         


   
COASTAL FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts; unaudited)
 
  Six months ended
  June 30, 2018 June 30, 2017
INTEREST AND DIVIDEND INCOME    
Interest and fees on loans $   16,967 $   14,833
 Interest on interest-bearing deposits with other banks    491   287
 Interest on investment securities    307   250
 Dividends on other investments    73   74
Total interest and dividend income   17,838   15,444
 INTEREST EXPENSE     
 Interest on deposits    1,358   986
 Interest on borrowed funds    399   359
 Total interest expense    1,757   1,345
 Net interest income    16,081   14,099
 PROVISION FOR LOAN LOSSES    893   439
 Net interest income after provision for loan losses    15,188   13,660
 NONINTEREST INCOME     
 Deposit service charges and fees    1,458   1,199
 Loan referral fees    244   42
 Mortgage broker fees    106   115
 Sublease and lease income    61   111
Gain on sale of loans   142   84
 Other    309   300
 Total noninterest income    2,320   1,851
 NONINTEREST EXPENSE     
 Salaries and employee benefits    7,645   6,456
 Occupancy    1,627   1,469
 Data processing    971   848
 Director and staff expenses    280   278
 Excise taxes    258   225
 Marketing    143   150
 Legal and professional fees    210   194
 Federal Deposit Insurance Corporation (FDIC) assessments    164   181
 Business development    160   127
 Other    963   911
 Total noninterest expense    12,421   10,839
 Income before provision for income taxes    5,087   4,672
PROVISION FOR INCOME TAXES   1,043   1,483
NET INCOME $   4,044 $   3,189
     
Basic and diluted earnings per share $   0.44 $   0.35
Weighted average number of common shares outstanding:    
Basic   9,253,095   9,232,444
Diluted   9,265,647   9,235,521
     


COASTAL FINANCIAL CORPORATION
AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY
(Dollars in thousands; unaudited)
 
  For the Three Months Ended
  June 30, 2018   March 31, 2018   June 30, 2017
  Average Interest & Yield /   Average Interest & Yield /   Average Interest & Yield /
  Balance Dividends Cost (4)   Balance Dividends Cost (4)   Balance Dividends Cost (4)
Assets                      
Interest earning assets:                      
Interest-bearing deposits $   50,750 $   236 1.87%   $   68,160 $   255 1.52%   $   56,240 $   149 1.06%
Investment securities (1)   39,642   155 1.57     39,717   152 1.55     36,288   132 1.46
Other Investments   3,200   62 7.77     2,912   11 1.53     2,975   63 8.49
Loans receivable (2)   688,975   8,778 5.11     654,570   8,189 5.07     607,197   7,557 4.99
Total interest earning assets $   782,567 $   9,231 4.73   $   765,359 $   8,607 4.56   $   702,700 $   7,901 4.51
Noninterest earning assets:                      
Allowance for loan losses   (8,522)         (8,121)         (7,861)    
Other noninterest earning assets   36,277         36,077         38,094    
Total assets $   810,322       $   793,315       $   732,933    
                       
Liabilities and Shareholders' Equity                      
Interest bearing liabilities:                      
Interest-bearing deposits $   464,133 $   712 0.62%   $   464,219 $   646 0.56%   $   422,166 $   492 0.47%
Subordinated debt   9,955   147 5.92     9,952   144 5.87     9,941   148 5.97
Junior subordinated debentures   3,580   39 4.37     3,579   35 3.97     3,578   30 3.36
FHLB advances and other borrowings   5,972   30 2.01     793   4 2.05     2,544   7 1.10
Total interest-bearing liabilities $   483,640 $   928 0.77   $   478,543 $   829 0.70   $   438,229 $   677 0.62
Non-interest bearing deposits    255,615         245,273         229,084    
Other liabilities   2,610         2,845         2,889    
Total shareholders' equity   68,457         66,654         62,731    
Total liabilities and                       
  shareholders' equity $   810,322       $   793,315       $   732,933    
Net interest income   $   8,303       $   7,778       $   7,224  
Interest rate spread     3.96%       3.86%       3.89%
Net interest margin (3)     4.26%       4.12%       4.12%
                       
(1) 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.
(2) Includes nonaccrual loans
(3) Net interest margin represents net interest income divided by the average total interest-earning assets 
(4) Yields and rates are annualized 
                       


               
COASTAL FINANCIAL CORPORATION
AVERAGE BALANCES, YIELDS, AND RATES – YEAR-TO-DATE
(Dollars in thousands; unaudited)
         
               
  For the Six Months Ended
  June 30, 2018   June 30, 2017
  Average Interest & Yield /   Average Interest & Yield /
  Balance Dividends Cost (4)   Balance Dividends Cost(4)
Assets              
Interest earning assets:              
Interest-bearing deposits $   59,407 $   491 1.67%   $   57,466     $   287 1.01%
Investment securities (1)   39,679   307 1.56     36,336   250 1.39
Other Investments   3,057   73 4.82     2,790   74 5.35
Loans receivable (2)   671,867   16,967 5.09     602,619   14,833 4.96
Total interest earning assets $   774,010 $   17,838 4.65   $   699,211     $   15,444 4.45
Noninterest earning assets:              
Allowance for loan losses   (8,323)         (7,771)    
Other noninterest earning assets   36,178         41,361    
Total assets $   801,865       $   732,801    
               
Liabilities and Shareholders' Equity              
Interest bearing liabilities:              
Interest-bearing deposits $   464,176 $   1,358 0.59%   $   423,501     $   986 0.47%
Subordinated debt   9,954   291 5.90     9,940   291 5.90
Junior subordinated debentures   3,580   74 4.17     3,578   58 3.27
FHLB advances and other borrowings   3,397   34 2.02     1,611   10 1.25
Total interest-bearing liabilities $   481,107 $   1,757 0.74   $   438,630     $   1,345 0.62
Non-interest bearing deposits    250,473         225,769    
Other liabilities   2,724         2,820    
Total shareholders' equity   67,561         65,582    
Total liabilities and               
  shareholders' equity $   801,865       $   732,801    
Net interest income   $   16,081           $   14,099  
Interest rate spread     3.91%       3.84%
Net interest margin (3)     4.19%       4.07%
               
(1) 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.    
(2) Includes nonaccrual loans    
(3) Net interest margin represents net interest income divided by the average total interest-earning assets    
(4) Yields and rates are annualized              


           
COASTAL FINANCIAL CORPORATION
QUARTERLY STATISTICS
(Dollars in thousands, except per share amounts; unaudited) 
         
           
  Three Months Ended
  June 30,  March 31,  December 31,  September 30,  June 30, 
  2018 2018 2017 2017 2017
Income Statement Data:          
Interest and dividend income $   9,231 $   8,607 $   8,452 $   8,217 $   7,901
Interest expense   928   829   798   732   677
Provision for loan losses   392   501   366   65   -
Net interest income after           
provision for loan losses   7,911   7,277   7,288   7,420   7,224
Noninterest income   1,213   1,107   1,053   1,250   1,020
Noninterest expense   6,354   6,067   5,785   5,809   5,463
Provision for income tax   569   474   2,213   957   905
Net income   2,201   1,843   343   1,904   1,876
Adjusted net income (1)   2,201   1,843   1,638   1,904   1,876
           
  As of Period End or for the three month period
  June 30,  March 31,  December 31,  September 30,  June 30, 
  2018 2018 2017 2017 2017
Balance Sheet Data:          
Cash and cash-equivalents $   91,449 $   94,569 $   89,751 $   86,531 $   58,198
Investment securities   37,317   37,338   38,336   40,201   35,280
Loans receivable   700,692   678,515   656,788   630,442   623,250
Allowance for loan losses   (8,540)   (8,423)   (8,017)   (7,947)   (7,889)
Total assets   850,922   830,962   805,753   778,609   738,049
Interest-bearing deposits   485,019   473,268   460,937   438,592   421,031
Noninterest-bearing deposits   259,449   254,000   242,358   242,607   219,872
Total deposits   744,468   727,268   703,295   681,199   640,903
Total borrowings   33,537   33,534   33,529   28,526   30,521
Total shareholders' equity   69,490   66,927   65,711   65,558   63,600
           
Share and Per Share Data (2)(3):          
Earnings per share – basic $   0.24 $   0.20 $   0.04 $   0.21 $   0.20
Earnings per share – diluted $   0.24 $   0.20 $   0.04 $   0.21 $   0.20
Adjusted earnings per share - diluted (4)     $   0.18    
Dividends per share   -   -   -   -   -
Book value per share (5) $   7.47 $   7.23 $   7.10 $   7.09 $   6.88
Tangible book value per share (6) $   7.47 $   7.23 $   7.10 $   7.09 $   6.88
Weighted avg outstanding shares – basic    9,263,302   9,242,766   9,237,660   9,235,344   9,233,738
Weighted avg outstanding shares – diluted    9,282,816   9,248,365   9,240,737   9,238,421   9,236,815
Shares outstanding at end of period   9,298,553   9,253,303   9,248,901   9,249,006   9,245,546
           
Credit Quality Ratios:          
Nonperforming assets to total assets 0.24% 0.20% 0.26% 0.32% 0.32%
Nonperforming assets to loans receivable           
and OREO 0.30% 0.25% 0.32% 0.40% 0.38%
Nonperforming loans to total loans receivable 0.30% 0.25% 0.32% 0.40% 0.38%
Allowance for loan losses to nonperforming loans 412.96% 495.76% 378.16% 316.49% 335.13%
Allowance for loan losses to total loans receivable 1.22% 1.24% 1.22% 1.26% 1.27%
Net charge-offs (recoveries) to average loans (7) 0.16% 0.06% 0.18% 0.01% -0.06%
           
Capital Ratios:          
Tier 1 leverage capital  9.21% 9.07% 8.95% 9.31% 9.22%
Tier 1 risk-based capital  10.24% 10.25% 10.50% 10.75% 10.43%
Common equity Tier 1 risk-based capital  9.76% 9.75% 9.98% 10.21% 9.89%
Total risk-based capital 12.82% 12.90% 13.24% 13.54% 13.21%
           
           
           
(1) Adjusted net income is a non-GAAP financial measure that excludes the impact of the revaluation of our deferred tax assets as a result of the reduction in the corporate income tax rate under the Tax Cuts and Jobs Act. The most directly comparable GAAP measure is net income. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Financial Measures."
(2) Share and per share amounts are based on total common shares outstanding, which includes common stock and nonvoting common stock.
(3) Share and per share information has been adjusted to give effect to a one-for-five reverse stock split of our common shares completed effective May 4, 2018.
(4) Adjusted earnings per share is a non-GAAP financial measure that excludes the impact of the revaluation of our deferred tax assets as a result of the reduction in the corporate income tax rate under the Tax Cuts and Jobs Act. The most directly comparable GAAP measure is earnings per share. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Financial Measures."
(5) 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, which includes common stock and nonvoting common stock, at the end of each period.
(6) 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, which includes common stock and nonvoting common stock, 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.
(7) Annualized calculations          


Non-GAAP Financial Measures

This earnings release contains certain non-GAAP ("Generally Accepted Accounting Principles") financial measures in addition to results presented in accordance with GAAP. These measures include the following:

"Adjusted net income" is a non-GAAP measure defined as net income increased by the additional income tax expense that resulted from the revaluation of deferred tax assets as a result of the reduction in the corporate income tax rate under the recently enacted Tax Cuts and Jobs Act. The most directly comparable GAAP measure is net income.

"Adjusted earnings per share" is a non-GAAP measure defined as net income, plus additional income tax expense, divided by weighted average outstanding shares (diluted). The most directly comparable GAAP measure is earnings per share.

The Company also presented comparable earnings information using GAAP financial measures. Reconciliations of the GAAP and non-GAAP measures are presented below.  

     
(Dollars in thousands, except share and per share data)   As of and for three
Months ended
December 31, 2017
Adjusted net income:    
Net income   $   343
Plus: additional income tax expense     1,295
Adjusted net income   $   1,638
Adjusted earnings per share – diluted:    
Net income   $   343
Plus: additional income tax expense     1,295
Adjusted net income   $   1,638
Weighted average common shares outstanding– diluted (1)     9,240,737
Adjusted earnings per share – diluted (1)   $   0.18
     
       
(1) Share and per share information has been adjusted to give effect to a one-for-five reverse stock split of our common shares completed effective May 4, 2018. 
     

 

 

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