DEF: Coastal Financial Corporation Sets Date for 2025 Annual Shareholder Meeting, Proposes Bylaw Amendments

Coastal Financial Corporation announces its 2025 Annual Meeting of Shareholders will be held virtually on May 28, 2025, to vote on director elections, executive compensation, an incentive plan amendment, bylaw changes, and auditor ratification.

Summary

• Coastal Financial Corporation will hold its 2025 Annual Meeting of Shareholders virtually on May 28, 2025.
• Shareholders will vote on the election of directors, including Christopher D. Adams, Stephan Klee, and Thomas D. Lane for three-year terms and Steven D. Hovde for a one-year term.
• An advisory vote will be held to approve the compensation paid to the named executive officers.
• Shareholders will vote on the Second Amendment to the Coastal Financial Corporation 2018 Omnibus Incentive Plan, including an increase of 600,000 authorized shares.
• Amendments to the Amended and Restated Bylaws of Coastal Financial Corporation will be voted on, including removing the mandatory retirement age for directors.
• The ratification of Moss Adams LLP as the independent registered public accounting firm for fiscal year 2025 will be voted on.
• The record date for determining shareholders eligible to vote is March 19, 2025.
• Shareholders must register in advance by May 27, 2025, at 5:00 p.m. Pacific Time to attend the virtual annual meeting.

Sentiment

Score: 6

Explanation: The document is primarily factual and procedural, outlining the details of the upcoming shareholder meeting and related proposals. The restatement of financials and clawback is a negative, but the company is taking steps to address it.

Positives

• The virtual meeting format allows for expanded meeting access for shareholders in a climate-friendly format and provides improved communication and cost savings.
• The company is focused on environmental sustainability, including reducing waste and energy consumption, reusing furniture, and recycling old technology equipment.
• The company promotes culture and inclusion by seeking qualified director candidates with backgrounds in fintech and digital banking, regardless of gender, race, or other personal characteristics.
• The company supports the communities it serves through donations, sponsorships, and employee volunteerism.
• The company had 77 internal promotions in 2024.

Negatives

• The company had to restate financial statements for the 2023 fiscal year and quarterly periods due to errors in recognizing interest income and Banking as a Service (BaaS) expense for certain BaaS partner loans.
• An aggregate amount of $2,873 had been overpaid for 2023 due to corrections to the balance sheet impacting certain incentive awards granted in 2023 because such compensation was granted in part based on Gross Loan Growth which was impacted by the restatement.

Risks

• The company faces risks associated with financial matters, cybersecurity, compensation policies, and potential conflicts of interest.
• The company's Non-Financial Risk Committee is responsible for assisting the Board of Directors in discharging its duties related to overseeing risks in conjunction with the Bank providing Banking as a Service (BaaS) to various entities through our CCBX segment.

Future Outlook

The company aims to better align and foster a common interest between shareholders and those charged with carrying out strategic plans for growth and the creation of shareholder value.

Management Comments

• Eric M. Sprink, Chief Executive Officer: 'We look forward to seeing you at the annual meeting.'

Industry Context

The company is operating in a competitive financial services industry, including traditional banking and fintech sectors, and is focused on attracting and retaining talent, managing risk, and delivering shareholder value.

Comparison to Industry Standards

• The document references peer groups for compensation analysis, including bank-only peers and BaaS peers, but does not provide specific details on how Coastal Financial's performance compares to these groups.
• The document mentions that the company benchmarks and sets pay ranges based on banking and/or fintech market data, but does not provide specific details on how Coastal Financial's compensation compares to industry standards.

Related Party Transactions

• The company engages Adams and Duncan, Inc. P.S. for legal services in which Christopher D. Adams, who is one of the Company’s directors, is a partner. For fiscal year ended December 31, 2024, total payments for legal services were $971,000.

Stakeholder Impact

• Shareholders are impacted by the proposals being voted on, including director elections, executive compensation, and changes to the incentive plan and bylaws.
• Employees are impacted by the company's compensation policies and practices, as well as the company's commitment to culture and inclusion.
• Communities are impacted by the company's support through donations, sponsorships, and employee volunteerism.

Next Steps

• Shareholders need to review the proxy materials and vote on the proposals.
• The company will hold the 2025 Annual Meeting of Shareholders on May 28, 2025.
• The Board of Directors will consider the outcome of the advisory vote on executive compensation when determining future executive compensation arrangements.

Key Dates

Keywords

Annual Meeting, Shareholders, Board of Directors, Executive Compensation, Incentive Plan, Bylaws, Auditor Ratification, Director Election, Coastal Financial Corporation, Proxy Statement