The $2.8 billion-asset company said total loans in its BaaS division increased by
49% in the first quarter from a quarter earlier, to roughly $515 million.
Deposits rose by 26% to $900 million.
Coastal gained
seven new relationships over the 12-month period that ended on March 31.
The
business “continues to grow, providing additional fee and interest income,”
Eric Sprink, Coastal’s president and CEO, said in a Wednesday press release. “We
are pleased with how this segment of the company compliments the community bank
services that our bank was built upon.”
The BaaS
platform is helping expand Coastal’s net interest margin, which widened by 50
basis points during the first quarter, to 4.55%.
The gross yield on BaaS loans –
which excludes the impact of BaaS loan expense – was 12.73%, compared to 3.6%
for other loans made by the bank.
Coastal said about $690 million on BaaS-related noninterest deposits were
reclassed to interest-bearing after the Federal Reserve raised rates in
mid-March.
Coastal
said 20 of its relationships are active, one is in friends-and-family
testing and five are in the onboarding and implementation phase. Two have
signed letters of intent.
"We are more selective in our new ... relationships
and are focused on only selecting the relationships which are well-capitalized,
are already established, and have experienced management teams,” the company said.
Coastal
recorded a $12.6 million loan-loss provision in the first quarter for its BaaS
operations, increasing the allowance to $18.1 million on March 31. Agreements provide
various protections for Coastal in the event of loan losses.
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