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Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Stock Options and Restricted Stock The 2018 Coastal Financial Corporation Omnibus Plan (the "2018 Plan") authorizes the Company to grant awards, including but not limited to, stock options, restricted stock units, and restricted stock awards, to eligible employees, directors or individuals that provide service to the Company, up to an aggregate of 500,000 shares of common stock. On May 24, 2021, the Company’s shareholders approved the First Amendment to the 2018 Plan, which increased the authorized plan shares by 600,000. The 2018 Plan replaced the 2006 Plan for new awards. Existing awards will vest under the terms granted and no further awards will be granted under these prior plans. Shares available to be granted under the 2018 plan were 249,028 at September 30, 2024. Stock Option Awards The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. Expected volatilities are based on historical volatility of the Company’s stock and other factors. The Company uses the vesting term and contractual life to determine the expected life. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense related to unvested stock option awards is reversed at date of forfeiture. There were no new stock options granted in the nine months ended September 30, 2024 and 2023. A summary of stock option activity under the 2018 Plan and 2006 Plan during the nine months ended September 30, 2024:
Options |  | Number of Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
|  | (dollars in thousands, except per share amounts; unaudited)
Outstanding at December 31, 2023 |  | 354,969 |  | $ | 9.11 |  |  | 3.3 |  | $ | 12,531 |
Granted |  | — |  | — |  |  |  |  |
Exercised |  | (155,439) |  | 8.18 |  |  |  |  | $ | 7,120 |
Expired |  | (20) |  | 14.91 |  |  |  |  |
Forfeited |  | (1,140) |  | 9.67 |  |  |  |  |
Outstanding at September 30, 2024 |  | 198,370 |  | $ | 9.83 |  |  | 3.1 |  | $ | 8,760 |
Vested or expected to vest at September 30, 2024 |  | 198,370 |  | $ | 9.83 |  |  | 3.1 |  | $ | 8,760 |
Exercisable at September 30, 2024 |  | 80,921 |  | $ | 9.74 |  |  | 2.9 |  | $ | 3,580 |
The total intrinsic value (which is the amount by which the stock price at the date of exercise exceeds the exercise price) of options exercised during the three and nine months ended September 30, 2024 was $3.8 million and $5.9 million, respectively. The total intrinsic value of options exercised during the three and nine months ended September 30, 2023 was $59,000 and $2.4 million, respectively. As of September 30, 2024, there was $572,000 of total unrecognized compensation cost related to nonvested stock options granted under the 2018 Plan and 2006 Plan. Total unrecognized compensation costs are adjusted for unvested forfeitures. The Company expects to recognize that cost over a remaining weighted-average period of approximately 3.1 years. Compensation expense recorded related to stock options was $49,000 and $226,000 respectively, for the three and nine months ended September 30, 2024 and $61,000 and $261,000 respectively, for the three and nine months ended September 30, 2023. Restricted Stock Units In the first quarter of 2024, the Company granted 76,473 restricted stock units ("RSUs") under the 2018 Plan to employees, which vest ratably over 4 years and 3,174 RSUs to employees which vest ratably over 5 years. No new RSUs were granted in the second quarter of 2024. In the three months ended September 30, 2024, the Company granted 572 RSUs to employees which vest ratably over 3 years, 3,361 RSUs to employees which vest ratably over 5 years and 25,000 RSUs which vest ratably over 43 months, with 16.28% vesting on April 30, 2025, and 2.3256% vesting each month thereafter. Additionally, the Company granted 60,000 performance-based restricted stock units ("PSUs") under the 2018 Plan to an employee, that are eligible to vest on the first day of each month beginning on October 1, 2024 until April 30, 2028, subject to continuous employment with the Company and the achievement of certain stock price conditions, and 15,000 PSUs that are eligible to vest on April 30, 2028, subject to continuous employment with the Company and the achievement of specified performance goals. RSUs provide for an interest in Company common stock to the recipient, the underlying stock is not issued until certain conditions are met. Vesting requirements include time-based, performance-based, or market-based conditions. Recipients of RSUs do not pay any cash consideration to the Company for the units and the holders of the restricted units do not have voting rights. The fair value of time-based and performance-based units is equal to the fair market value of the Company’s common stock on the grant date. The fair value of market-based units is estimated on the grant date using the Monte Carlo simulation model. Compensation expense is recognized over the vesting period that the awards are based. RSUs are nonparticipating securities. As of September 30, 2024, there was $13.1 million of total unrecognized compensation cost related to nonvested RSUs. The Company expects to recognize that cost over the remaining weighted-average vesting period of approximately 4.1 years. Compensation expense recorded related to RSUs was $846,000 and $2.7 million respectively, for the three and nine months ended September 30, 2024 and $735,000 and $2.2 million respectively, for the three and nine months ended September 30, 2023. A summary of the Company’s nonvested RSUs at September 30, 2024 and changes during the nine month period is presented below:
Nonvested shares - RSUs |  | Number of Shares |  | Weighted- Average Grant Date Fair Value
|  | (dollars in thousands, except per share amounts; unaudited)
Nonvested shares at December 31, 2023 |  | 409,271 |  | $ | 31.22 |
Granted |  | 183,580 |  | $ | 38.08 |
Forfeited or expired |  | (15,242) |  | $ | 36.21 |
Vested |  | (66,806) |  | $ | 33.61 |
Nonvested shares at September 30, 2024 |  | 510,803 |  | $ | 33.22 |
Restricted Stock Awards Employees There were no new restricted stock awards granted in the nine months ended September 30, 2024. The fair value of restricted stock awards is equal to the fair value of the Company’s stock at the date of grant. Compensation expense is recognized over the vesting period that the awards are based. Restricted stock awards are participating securities. As of September 30, 2024, there was $30,000 of total unrecognized compensation cost related to nonvested restricted stock awards. The Company expects to recognize that cost over the remaining weighted-average vesting period of approximately 3.3 years. Compensation expense recorded related to restricted stock awards was $2,000 and $7,000 respectively, for the three and nine months ended September 30, 2024 and $2,000 and $7,000 respectively, for the three and nine months ended September 30, 2023. Director’s Stock Compensation Under the 2018 Plan, eligible directors are granted stock with a total market value of approximately $60,000, and the Board Chair is granted stock with a total market value of approximately $90,000. Committee chairs receive additional stock in an amount that varies depending upon the nature and frequency of the committee meetings. The audit committee chair receives additional stock with a market value of approximately $15,000, non-financial risk and compensation committee chairs receive additional stock with a market value of approximately $12,500, and all other committee chairs receive additional stock with a market value of approximately $10,000. Stock is granted as of each annual meeting date and vest one day prior to the next annual meeting date. During the vesting period, the grants are considered participating securities. As of September 30, 2024, there was $481,000 of total unrecognized compensation expense related to director restricted stock awards which the Company expects to recognize over the remaining average vesting period of approximately 0.7 years. Director compensation expense recorded related to the 2018 Plan totaled $184,000 and $442,000, respectively, for the three and nine months ended September 30, 2024 and $120,000 and $312,000 respectively, for the three and nine months ended September 30, 2023. A summary of the Company’s nonvested shares at September 30, 2024 and changes during the nine-month period is presented below:
Nonvested shares - RSAs |  | Number of Shares |  | Weighted- Average Grant Date Fair Value
|  | (dollars in thousands, except per share amounts; unaudited)
Nonvested shares at December 31, 2023 |  | 16,038 |  | $ | 32.41 |
Granted |  | 16,698 |  | $ | 43.66 |
Forfeited |  | — |  | $ | — |
Vested |  | (14,038) |  | $ | 34.49 |
Nonvested shares at September 30, 2024 |  | 18,698 |  | $ | 40.90 |

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