stal Financial (CCB) - 2024 Q4 - Annual Results

Financial Performance - Coastal Financial Corporation reported a net income of $13.4 million, or$0.94 per diluted common share, for Q4 2024, compared to $13.5 million, or$0.97 per diluted common share, in Q3 2024[1]. - Return on average assets (ROA) was 1.30% for the quarter ended December 31, 2024, a decrease from 1.34% in the previous quarter and an increase from 0.97% in the same quarter last year[10]. - Net interest income was $66.5 million for the quarter ended December 31, 2024, a decrease of$5.7 million, or 7.9%, from the previous quarter, but an increase of $6.9 million, or 11.5$76.8 million, down $3.3 million from Q3 2024 but up$12.1 million from Q4 2023, primarily due to a decrease in BaaS income[36][37]. - The company reported a net interest income after provision for credit losses of $4,649 thousand, compared to a net loss of$22,222 thousand in the same quarter last year[74]. - Basic earnings per common share were $0.97, down from$1.00 in the previous quarter, but up from $0.86 year-over-year[75]. Capital and Growth - The company completed a$98.0 million capital raise during Q4 2024, which will support growth in the Bank and the CCBX segment[2]. - The common equity tier 1 capital ratio increased to 12.04% as of December 31, 2024, benefiting from the capital raise[4]. - The company has three signed letters of intent (LOIs) and an active pipeline for 2025 to support future growth[4]. - Total shareholders' equity increased by $106.8 million since September 30, 2024, primarily due to a$93.4 million increase in common stock outstanding[47]. - The company aims to selectively expand its CCBX partnerships while enhancing technology and risk management infrastructure to support future growth[14]. Loan and Asset Management - The company sold $845.5 million in loans during Q4 2024, primarily consisting of credit card receivables[4]. - Total loans receivable rose by$67.7 million to $3.49 billion at December 31, 2024, compared to$3.42 billion at September 30, 2024[43]. - The community bank saw net loans decrease by $14.6 million, or 0.8$1.88 billion for the quarter ended December 31, 2024[26]. - CCBX loans increased by $82.3 million, or 5.4$1.60 billion despite selling $845.5 million in loans during the quarter[20]. - Total outstanding loan balances amount to$3.49 billion, with unused commitments of $1.96 billion, totaling$5.46 billion[90]. Credit Quality and Losses - Nonperforming assets to total assets ratio improved to 1.52% as of December 31, 2024, down from 1.63% in Q3 2024[8]. - The allowance for credit losses to total loans receivable ratio was 5.08% as of December 31, 2024, compared to 4.98% in Q3 2024[8]. - Net charge-offs for Q4 2024 totaled $55.9 million, an increase from$49.2 million in Q3 2024 and $44.9 million in Q4 2023, with a net charge-off rate of 6.51$177.0 million, representing 5.08% of loans receivable as of December 31, 2024, compared to 4.98% in Q3 2024 and 3.86% in Q4 2023[50][51]. - CCBX nonperforming loans decreased to $62.6 million as of December 31, 2024, down from$65.3 million at September 30, 2024[64]. Expense Management - Total non-interest expense decreased by $1.4 million, or 2.1$64.2 million in Q4 2024 compared to Q3 2024[4]. - Noninterest expenses were lower compared to the previous quarter due to a decrease in BaaS loan expense, but higher than the same quarter last year due to increased salaries and technology investments[10]. - Total noninterest expense decreased to $64.2 million in Q4 2024 from$65.6 million in Q3 2024, but increased by $12.5 million from$51.7 million in Q4 2023[38]. BaaS Program Performance - The company continues to focus on expanding its BaaS program, which generated $8,210 thousand in income for the quarter, up from$4,369 thousand a year ago[74]. - BaaS loan interest income for Q4 2024 was $58.671 million, a decrease from$67.692 million in Q3 2024, but an increase from $52.327 million in Q4 2023, with yields of 15.28$62.1 million in BaaS credit enhancements related to provisions for credit losses during the quarter ended December 31, 2024[103]. - The average BaaS loans receivable decreased, leading to a reduction in interest income, primarily due to loan sales aimed at optimizing the loan portfolio[107].