On July 29, 2024, Coastal Financial Corp (CCB, Financial) released its 8-K filing announcing its second-quarter 2024 financial results. Coastal Financial Corp, a financial service provider, offers banking products and services to consumers and small to medium-sized businesses through its three segments: the community bank, CCBX, and treasury & administration.
Performance Highlights
Coastal Financial Corp reported a net income of $11.6 million, or $0.84 per diluted common share, for the three months ended June 30, 2024. This represents a significant increase from the $6.8 million, or $0.50 per diluted common share, reported for the first quarter of 2024. The company's return on average assets (ROA) improved to 1.21%, and return on average equity (ROE) rose to 15.22% for the second quarter of 2024.
Key Financial Metrics
Net interest margin increased to 7.13% for the quarter, up from 6.78% in the previous quarter. The yield on loans receivable also saw an uptick, reaching 11.23%. Total assets grew by $96.3 million, or 2.5%, to $3.96 billion, while total loans, net of deferred fees, increased by $126.9 million, or 4.0%, to $3.33 billion.
| Metric | Q2 2024 | Q1 2024 |
|---|---|---|
| Net Income | $11.6 million | $6.8 million |
| EPS | $0.84 | $0.50 |
| ROA | 1.21% | 0.73% |
| ROE | 15.22% | 9.21% |
| Net Interest Margin | 7.13% | 6.78% |
Loan and Deposit Growth
Coastal Financial Corp experienced robust loan growth, with community bank loans increasing by $28.8 million and CCBX loans rising by $98.1 million. The company also sold $155.2 million in CCBX loans during the quarter as part of its strategy to reduce risk and optimize its loan portfolio. Deposits grew by $80.5 million, or 2.3%, to $3.54 billion, with community bank deposits increasing by $52.9 million and CCBX deposits by $27.5 million.
Commentary
"We are happy to report that we have experienced robust loan growth of $126.9 million for the quarter ended June 30, 2024. This growth can be attributed to our strong relationships with existing CCBX partners and successful efforts to attract new community bank borrowers. We are pleased to report that we are maintaining our strong credit quality, and our portfolio is performing as expected. This is a testament to our diligent risk management practices and proactive measures to optimize our loan portfolio." - Eric Sprink, CEO
Financial Achievements
Net interest income for the quarter was $66.2 million, an increase of $5.3 million from the previous quarter. The company's cost of deposits rose slightly to 3.58%, reflecting the competitive pressures and higher interest rate environment. Despite these challenges, Coastal Financial Corp managed to maintain a strong net interest margin and achieve significant loan and deposit growth.
Analysis
Coastal Financial Corp's strong performance in the second quarter of 2024 highlights its effective risk management and strategic initiatives to optimize its loan portfolio. The company's ability to grow its loan and deposit base while maintaining strong credit quality is a positive indicator for future performance. However, the rising cost of deposits and competitive pressures in the banking industry remain challenges that the company will need to navigate carefully.
For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Coastal Financial Corp for further details.
