Coastal Financial Corporation has reported its first quarter 2024 financial results, with net income of $6.8 million, or $0.50 per diluted common share. This represents a decrease from the $9.0 million, or $0.66 per diluted common share, reported for the fourth quarter of 2023, and a further decline from the $12.4 million, or $0.91 per diluted common share, reported for the quarter ended March 31, 2023.
Return on average assets (ROA) for the first quarter of 2024 was 0.73%, down from 0.97% for the fourth quarter of 2023. Similarly, return on average equity (ROE) decreased to 9.21% for the first quarter of 2024 from 12.35% for the fourth quarter of 2023.
The net interest margin for the quarter ended March 31, 2024, was 6.78%, compared to 6.61% for the quarter ended December 31, 2023.
Total assets increased by $111.9 million, or 3.0%, to $3.87 billion for the quarter ended March 31, 2024, compared to $3.75 billion at December 31, 2023. Total loans, net of deferred fees, also saw an increase of $173.5 million, or 5.7%, reaching $3.20 billion for the quarter ended March 31, 2024, compared to the quarter ended December 31, 2023.
Deposits grew by $102.6 million, or 3.1%, to $3.46 billion for the quarter ended March 31, 2024. Notably, Coastal Community Bank (CCBX) deposits saw significant growth of $166.2 million, or 8.9%, reaching $2.03 billion.
However, community bank deposits decreased by $63.6 million, or 4.2%, to $1.43 billion. This decrease was attributed to the bank's strategy of focusing on growing and retaining less costly core deposits.
The company experienced unanticipated expenses amounting to $2.3 million, which impacted the decrease in net income. These expenses included audit and accounting services, contract termination fees, operational losses, and employment realignment costs.
Coastal Financial Corporation emphasized its continued investment in technology to enhance operational efficiency and productivity, despite the significant upfront expenses. The company highlighted the importance of this investment for long-term success, even though it may impact earnings in the short term.
Furthermore, the company reported an increase in net interest income, with total average loans receivable reaching $3.14 billion for the quarter ended March 31, 2024. Yield on loans receivable was reported at 10.85% for the same period.
The increase in interest expense was primarily driven by an increase in CCBX deposits tied to the Federal Open Market Committee (FOMC) rate increases. Interest expense on borrowed funds remained relatively stable.
As a result of these announcements, the company's shares have moved -2.9% on the market, and are now trading at a price of $39.41. Check out the company's full 8-K submission here.
