ck1437958-def14a_20220524.htm

DEF 14A 1 ck1437958-def14a_20220524.htm DEF 14A ck1437958-def14a_20220524.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. ___)

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐ Preliminary Proxy Statement

☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒ Definitive Proxy Statement

☐ Definitive Additional Materials

☐ Soliciting Material pursuant to §240.14a-12

Coastal Financial Corporation

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☒	No fee required.

☐	Fee paid previously with preliminary materials.

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

April 8, 2022

Dear Shareholder:

You are cordially invited to attend the 2022 Annual Meeting of Shareholders (the “annual meeting”) of Coastal Financial Corporation (the “Company”). The annual meeting will be held on Tuesday, May 24, 2022 at 6:00 p.m. Pacific Time and will be held in a completely virtual format. There will not be a physical location for the annual meeting. The virtual meeting format allows for expanded meeting access for our shareholders in a climate friendly format, since traveling to a physical meeting location is no longer a factor. Additionally, the virtual meeting format provides improved communication and cost savings for our shareholders and our Company. To attend the virtual annual meeting you must register in advance at https://register.proxypush.com/CCB prior to the registration deadline of May 23, 2022 at 5:00 p.m. Pacific Time.

The notice of annual meeting and proxy statement appearing on the following pages describe the formal business to be transacted at the annual meeting. Directors and officers of the Company, as well as a representative of Moss Adams LLP, the Company’s independent registered public accounting firm, will be present to respond to appropriate questions of shareholders.

It is important that your shares are represented at this meeting, whether or not you attend the annual meeting virtually and regardless of the number of shares you own. To make sure your shares are represented, we urge you to vote online or to mail your completed proxy card. You may attend and participate in the annual meeting virtually by registering in advance at https://register.proxypush.com/CCB prior to the registration deadline of May 23, 2022 at 5:00 p.m. Pacific Time. You will be able to vote electronically and submit questions during the annual meeting only if you register to attend the annual meeting.

If you attend the virtual annual meeting, you may vote virtually even if you have previously voted online or if you have mailed a proxy card.

We look forward to seeing you at the annual meeting.

Sincerely,

Eric M. Sprink

President and Chief Executive Officer

This proxy statement is first being sent to the shareholders of the Company on or about April 8, 2022.

NOTICE OF THE 2022 ANNUAL MEETING OF SHAREHOLDERS OF

COASTAL FINANCIAL CORPORATION


TIME AND DATE:	6:00 p.m. Pacific Time, on Tuesday, May 24, 2022.
PLACE:	Virtual meeting only. To attend the virtual annual meeting you must register in advance at https://register.proxypush.com/CCB prior to the registration deadline of May 23, 2022 at 5:00 p.m. Pacific Time. There will not be a physical location for the annual meeting.
ITEMS OF BUSINESS:	(1)	To elect Christopher D. Adams, Steven D. Hovde, Stephan Klee and Thomas D. Lane to serve for a term of three years until the 2025 annual meeting of shareholders;
	(2)	To ratify the selection of Moss Adams LLP by the Audit Committee of the Board of Directors as our independent registered public accounting firm for fiscal year 2022; and
	(3)	To transact such other business as may properly come before the annual meeting and any adjournment or postponement of the meeting.
RECORD DATE:	To vote, you must have been a shareholder at the close of business on March 22, 2022. A complete list of such shareholders will be available for inspection at the Company’s offices in Everett, Washington during normal business hours for a period of 10 days prior to the 2022 annual meeting, and also during the annual meeting until the close of such meeting.
ATTENDANCE AND VOTING:	You may attend the annual meeting virtually by registering in advance at https://register.proxypush.com/CCB prior to the registration deadline of May 23, 2022 at 5:00 p.m. Pacific Time. Shareholders may vote and submit questions while attending the annual meeting virtually. You will need the control number located on either your notice of internet availability or your proxy card to register for the annual meeting.

Your vote is important. It is important that your shares be represented and voted at the annual meeting. You can vote your shares online or by completing and returning the proxy card or voting instruction card sent to you. Voting instructions are printed on your proxy card or voting instruction card and are included in the accompanying proxy statement. You can revoke a proxy at any time before its exercise at the annual meeting by following the instructions in the proxy statement. Whether or not you plan to attend the annual meeting, please vote online or by marking, signing, dating and promptly returning the proxy card or voting instruction card.


	By Order of the Board of Directors

	Joel G. Edwards
	Corporate Secretary
Everett, Washington
April 8, 2022
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 24, 2022
This proxy statement, proxy card and the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 are available at www.pstvote.com/coastal2022

INFORMATION ABOUT THE ANNUAL MEETING1

Internet Availability of Proxy Materials1

Time and Location1

Who Can Vote at the Annual Meeting1

Attending the Meeting2

Items Voted on; Vote Required2

Abstentions and Broker Non-Votes2

Effect of Not Casting Your Vote For Shares Held in Street Name3

Voting by Proxy3

Revoking Your Proxy3

Annual Meeting Advance Notice Requirements3

Requirements for Shareholder Proposals to Be Included in the Company’s Proxy Materials4

Proxy Solicitation Costs5

Sharing An Address With Other Shareholders5

CORPORATE GOVERNANCE6

General6

Code of Ethics and Business Conduct6

Hedging and Pledging6

Meetings and Committees of the Board of Directors6

Board Diversity Matrix6

Director Independence7

Board Leadership Structure12

Board Oversight of Risk Management12

Attendance at the Annual Meeting of Shareholders13

Diversity, Equity and Inclusion (“DEI”)13

Environment and Sustainability14

Human Capital14

ITEMS TO BE VOTED ON BY SHAREHOLDERS16

ITEM 1. ELECTION OF DIRECTORS16

Nominees for Election of Directors:17

Directors Continuing in Office:18

ITEM 2. RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM21

Audit and Non-Audit Fees21

Pre-Approval of Services by Moss Adams LLP21

Audit Committee Report22

DIRECTOR COMPENSATION24

EXECUTIVE COMPENSATION26

Summary Compensation Table26

Outstanding Equity Awards at 2021 Fiscal Year End28

Employment and Change in Control Agreements with Named Executive Officers30

2018 Omnibus Incentive Plan31

Risk Considerations in our Compensation Program31

STOCK INFORMATION32

Delinquent Section 16(a) Reports35

OTHER INFORMATION RELATED TO DIRECTORS AND EXECUTIVE OFFICERS36

Policies and Procedures for Approval of Related Persons Transactions36

Transactions with Related Persons37

Shareholder Communications39

INFORMATION ABOUT THE ANNUAL MEETING

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Coastal Financial Corporation (which we refer to in this proxy statement as “Coastal Financial,” “we,” “us,” “our,” or the “Company”) to be used at the 2022 Annual Meeting of Shareholders of the Company (the “annual meeting”). The Company is the holding company for Coastal Community Bank (the “Bank”).

Internet Availability of Proxy Materials

This proxy statement, proxy card and the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”) are available at our corporate website at www.coastalbank.com. You also can obtain copies without charge at the SEC’s website at www.sec.gov and may access these materials at www.pstvote.com/coastal2022. A Notice of Internet Availability of Proxy Materials regarding this proxy statement is being first mailed to shareholders on or about April 8, 2022, containing instructions on how to access and review this proxy statement and the Annual Report. The Notice of Internet Availability of Proxy Materials also instructs you how you may submit your proxy online or via mail. If you would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting those materials included in the Notice of Internet Availability of Proxy Materials.

Website addresses referenced herein are intended to provide inactive, textual references only, and the information on these websites is not part of this proxy statement.

Time and Location

Virtually

The annual meeting will be held in a completely virtual format. There will be no physical location for the annual meeting. You may attend, vote and submit questions during the virtual annual meeting by registering in advance at https://register.proxypush.com/CCB prior to the registration deadline of May 23, 2022 at 5:00 p.m. Pacific Time. You may submit written questions or statements during the meeting by following the instructions on the meeting website. You may also submit written questions or statements through the registration website until the registration deadline for the meeting. Questions or statements received from shareholders that are relevant to the business to be conducted at the annual meeting will be read aloud and, if appropriate, answered during the meeting. You will need the control number located on either your Notice of Internet Availability or on your proxy card to register for the annual meeting.

In order to be climate friendly, provide expanded access, improved communication and cost savings for our shareholders and our Company, this year’s annual meeting will be held in a virtual only format. We have designed our virtual format to enhance, rather than constrain, shareholder access, participation and communication. For example, the virtual format allows shareholders to communicate with us during the annual meeting so they can ask questions. During the live Q&A session of the annual meeting, we may answer questions as they come in, to the extent relevant to the business of the annual meeting, as time permits.

Who Can Vote at the Annual Meeting

Shareholders of Record

You are entitled to vote your shares of Coastal Financial common stock if the records of the Company show that you held your shares as of the close of business on March 22, 2022 (the “Record Date”).

Beneficial Owners

If your shares are held in a stock brokerage account or by a bank or other nominees, you are considered the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by your broker, bank or other nominee. As the beneficial owner, you have the right to direct your broker, bank or other

INFORMATION ABOUT THE ANNUAL MEETING

nominee on how to vote your shares. Your broker, bank or other nominee has enclosed a voting instruction form for you to use in directing it on how to vote your shares.

As of the close of business on the Record Date, 12,926,863 shares of Coastal Financial common stock were outstanding and entitled to vote. Each share of common stock has one vote.

Attending the Meeting

If you are a shareholder of record as of the Record Date, you may attend the virtual annual meeting by registering in advance at https://register.proxypush.com/CCB prior to the registration deadline of May 23, 2022 at 5:00 p.m. Pacific Time. If you hold your shares in street name, you will also need to register to attend the virtual annual meeting. Instructions are required to be provided on the voting instruction card provided by the beneficial owner’s broker, bank, or other nominee.

The annual meeting will begin promptly at 6:00 p.m. Pacific Time, on Tuesday, May 24, 2022. We encourage you to access the annual meeting prior to start time. Please allow time for online check-in, which will begin at 5:45 p.m. Pacific Time.

Items Voted on; Vote Required

Quorum

The annual meeting will be held only if there is a quorum. A majority of the outstanding shares of Coastal Financial common stock entitled to vote, represented virtually or by proxy, on a matter constitutes a quorum for that matter. If you return valid proxy instructions or attend the annual meeting virtually, your shares will be counted for purposes of determining whether there is a quorum, even if you abstain from voting. Abstentions, broker non-votes and votes withheld will be treated as present for purposes of determining the presence or absence of quorum.

Vote Required

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Item 1 – In voting on the election of directors, you may vote in favor of the nominees or withhold votes as to the nominees. There is no cumulative voting for the election of directors. Directors are elected by a plurality of the votes cast at the annual meeting. “Plurality” means that the nominees receiving the largest number of votes cast will be elected up to the maximum number of directors to be elected at the annual meeting. The maximum number of directors to be elected at the annual meeting is four. In the election of directors, abstentions, broker non-votes and votes withheld are treated as present for quorum purposes only and will have no effect on the outcome of the election.

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Item 2 – In voting on the approval to ratify the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for fiscal year 2022, you may vote in favor of the proposal, vote against the proposal or abstain from voting. To be approved, the proposal requires the affirmative vote of a majority of the votes cast at the annual meeting. In the ratification of our independent registered public accounting firm, abstentions are treated as present for quorum purposes only and will have no effect. We do not expect to receive broker non-votes on this item as brokers, banks or other nominees will have discretionary authority to vote shares for which street name shareholders do not provide voting instructions.

Abstentions and Broker Non-Votes

Abstentions and “broker non-votes” are not considered “votes cast” and will therefore have no effect on the outcome of any vote taken at the annual meeting. An abstention occurs when a shareholder attends the annual meeting, either virtually or by proxy, but abstains from voting where permitted. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker, bank or other nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.

INFORMATION ABOUT THE ANNUAL MEETING

Effect of Not Casting Your Vote For Shares Held in Street Name

Item 1: If you hold your shares in street name, it is critical that you cast your vote if you want it to count in the election of directors. Current regulations restrict the ability of your broker, bank or other nominee to vote your uninstructed shares in the election of directors and certain other matters on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your broker, bank or other nominee how to vote in the election of directors, no votes will be cast on your behalf. These are referred to as broker non-votes.

Item 2: Your broker, bank or other nominee will, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of the Company’s independent registered public accounting firm.

Voting by Proxy

This proxy statement is being sent to you by the Board of Directors to request that you allow your shares of Company common stock to be represented at the annual meeting by the persons named in the proxy card. All shares of Company common stock represented at the annual meeting by properly executed and dated proxies will be voted according to the instructions indicated on the proxy card. If you vote online or if you sign, date and return a proxy card without giving voting instructions, your shares will be voted as recommended by the Board of Directors.

The Board of Directors recommends that you vote:

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“FOR” each of the nominees for director; and

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“FOR” the ratification of the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for fiscal year 2022.

If any matter not described in this proxy statement is properly presented at the annual meeting, the persons named in the proxy card will use their judgment to determine how to vote your shares. This includes a motion to adjourn or postpone the meeting to solicit additional proxies. If the annual meeting is adjourned or postponed, your shares of Coastal Financial common stock may also be voted by the persons named in the proxy card on the new meeting date, unless you have revoked your proxy. The Company does not know of any other matters to be presented at the annual meeting.

If your Coastal Financial common stock is held in street name, you will receive instructions from your broker, bank or other nominee that you must follow to have your shares voted. Your broker, bank or other nominee may allow you to deliver your voting instructions online. Please see the instruction form provided by your broker, bank or other nominee that accompanies this proxy statement. If you wish to change your voting instructions after you have returned your voting instruction form to your broker, bank or other nominees, you must contact your broker, bank or other nominee.

Revoking Your Proxy

You may revoke your proxy at any time before the vote is taken at the annual meeting. To revoke your proxy, you must either advise the Corporate Secretary of the Company in writing, addressed to Corporate Secretary, Coastal Financial Corporation, 5415 Evergreen Way, Everett, Washington 98203 before your Company common stock has been voted at the annual meeting, deliver a later-dated and executed valid proxy or attend the virtual annual meeting and vote your shares virtually. Attendance at the annual meeting will not in itself constitute revocation of your proxy.

Annual Meeting Advance Notice Requirements

Consideration of Director Recommendations by Shareholders. It is the policy of the Governance & Nominating Committee to consider director candidates recommended by shareholders who appear to be qualified to serve on the Board of Directors. The Governance & Nominating Committee may choose not to consider an

INFORMATION ABOUT THE ANNUAL MEETING

unsolicited recommendation if no vacancy exists on the Board of Directors. In order to avoid the unnecessary use of the Governance & Nominating Committee’s resources, the Governance & Nominating Committee will consider only those director candidates recommended in accordance with the procedures set forth below.

Procedures to be Followed by Shareholders for Consideration of Director Nominees and Other Matters. To submit a recommendation for a director candidate to the Governance & Nominating Committee, a shareholder should submit the following information in writing, addressed to the Chair of the Governance & Nominating Committee, care of the Corporate Secretary, Coastal Financial Corporation, 5415 Evergreen Way, Everett, Washington 98203:

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the name of the person recommended as a director candidate;

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all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

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the written consent of the person being recommended as a director candidate to being named in the Company’s proxy statement as a nominee and to serving as a director if elected;

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as to the shareholder making the recommendation, the name and address, as they appear on the Company’s books, of such shareholder; provided, that if the shareholder is not a registered holder of the Company’s common stock, the shareholder should submit his or her name and address along with a current written statement from the record holder of the shares that reflects ownership of the Company’s common stock;

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the class and number of shares of the Company's common stock that are beneficially owned by such shareholder; and

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a statement disclosing whether such shareholder is acting with or on behalf of any other person or persons and, if applicable, the identity of such person or persons.

In order for a director candidate to be considered for nomination by the Board of Directors at the Company’s annual meeting of shareholders the recommendation must be received at the principal executive office of the Company at least 90 days prior to the date of the meeting, or, if less than 100 days’ notice is given of the annual meeting of shareholders, the recommendation must be received within 10 business days of such notice. The Company’s Amended and Restated Bylaws (“Bylaws”) provide that a person may not be nominated for election as a director of the Company unless that person is nominated by or at the direction of the Board of Directors or by a shareholder who has given appropriate notice to the Company before the meeting.

Similarly, a shareholder may not bring business before an annual meeting unless the shareholder has given the Company appropriate notice of their intention to bring that business before the meeting. The Company's Corporate Secretary must receive notice of shareholder nomination or proposal not less than 90 days before the annual meeting; provided, that if less than 100 days' of (i) notice or (ii) prior public disclosure of the meeting date is given or made to the shareholders, shareholder notice must be received not later than the close of business on the 10th day following the day the annual meeting notice was (A) mailed or (B) such public disclosure was made. A shareholder who desires to raise new business must provide certain information as provided by our Bylaws to the Company concerning the nature of the new business, the shareholder, the shareholder’s ownership in the Company and the shareholder’s interest in the business matter. Similarly, a shareholder wishing to nominate any person for election as a director must provide the Company with certain information as provided by our Bylaws concerning the nominee and the proposing shareholder as described above. A copy of our Bylaws may be obtained from the Company.

Requirements for Shareholder Proposals to Be Included in the Company’s Proxy Materials

Shareholders interested in submitting a proposal (other than for the nomination of directors) for inclusion in the proxy materials to be distributed by us for our 2023 Annual Meeting of Shareholders may do so by following the

INFORMATION ABOUT THE ANNUAL MEETING

procedures prescribed in Rule 14a-8 promulgated under the Exchange Act. The Company must receive proposals that shareholders seek to include in the proxy statement for the Company’s next annual meeting no later than December 9, 2022. If next year’s annual meeting is held on a date more than 30 calendar days from May 23, 2023, a shareholder proposal must be received by a reasonable time before the Company begins to print and mail its proxy solicitation for such annual meeting. Any shareholder proposals will be subject to the requirements of our Bylaws and Rule 14a-8 promulgated under the Exchange Act regarding the inclusion of shareholder proposals in company-sponsored proxy materials. Such proposals should be sent in writing to Coastal Financial Corporation, Corporate Secretary, 5415 Evergreen Way, Everett, Washington 98203.

Proxy Solicitation Costs

The accompanying proxy is being solicited by the Board of Directors. The Company will pay the cost of this proxy solicitation. The Company will also reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of the Company. In addition to soliciting proxies by mail, directors, officers and regular employees of the Company may solicit proxies personally or by telephone. None of these persons will receive additional compensation for these activities.

Sharing An Address With Other Shareholders

In some cases, shareholders holding their shares in “street name,” who share the same surname and address receive only one copy of the Notice of Internet Availability of Proxy Materials or other annual meeting materials, if any. This practice, known as “householding,” is designed to reduce our printing and postage costs as well as natural resources. However, if a shareholder residing at such an address wishes to receive a separate annual report or Notice of Internet Availability of Proxy Materials in the future, he or she should contact their broker, bank or other nominee. If you are a shareholder of record and are receiving multiple copies of our annual report and proxy statement, you can request householding by contacting the Company’s stock transfer agent (Philadelphia Stock Transfer) by calling their toll-free number at 1-866-223-0448 or by emailing our transfer agent at info@philadelphiastocktransfer.com.

CORPORATE GOVERNANCE

General

The Company periodically reviews its corporate governance policies and procedures to ensure that the Company meets the highest standards of ethical conduct, reports results with accuracy and transparency and maintains full compliance with the laws, rules and regulations that govern the Company’s operations. As part of this periodic corporate governance review, the Board of Directors reviews and strives to adopt best corporate governance policies and practices for the Company.

Code of Ethics and Business Conduct

The Company has adopted a Code of Ethics and Business Conduct that applies to all of its directors, officers and employees, including its principal executive officer, principal financial officer and principal accounting officer and persons performing similar functions. The Code of Ethics and Business Conduct is available upon written request to Corporate Secretary, Coastal Financial Corporation, 5415 Evergreen Way, Everett, Washington 98203 and on the Company’s website at www.coastalbank.com. If the Company amends or grants any waiver from a provision of the Code of Ethics and Business Conduct that applies to its executive officers, it will publicly disclose such amendment or waiver on its website and as required by applicable law, including by filing a Current Report on Form 8-K with the U.S. Securities and Exchange Commission (the “SEC”).

Hedging and Pledging

Our directors, executive officers and certain employees are prohibited from hedging and speculative trading in and out of the Company’s securities, including short sales and leverage transactions, such as puts, calls, and listed and unlisted options.

We also prohibit our directors and certain employees from pledging Company securities as collateral for a loan.

Meetings and Committees of the Board of Directors

The Company conducts business through meetings of its Board of Directors and its committees. The Board of Directors held 11 regular meetings during the fiscal year ended December 31, 2021. No director during 2021 attended fewer than 75% of the total meetings of the Board of Directors and committees on which such director served.

Board Diversity Matrix

CORPORATE GOVERNANCE

Coastal Financial Corporation - Board Diversity Matrix As of March 22, 2022
Total Number of Directors:	11
		Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors		3	8	0	0
Part II: Demographic Background
African American or Black		1	0	0	0
Native American or Alaskan Native		0	0	0	0
Asian		1	0	0	0
Hispanic or Latinx		0	0	0	0
Native Hawaiian or Pacific Islander		0	0	0	0
White		2	8	0	0
Two or More Races/Ethnicities *		1	0	0	0
LGBTQ+		0
Did Not Disclose Demographic Background		0

* Directors identifying in this category are also identified in each individual category as required.

Director Independence

As required under Nasdaq Stock Market, LLC (“Nasdaq”) listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Consistent with these regulations, after review of all relevant transactions or relationships between each director, or any of such director’s family members, and the Company, its senior management and its independent registered public accounting firm, the Board of Directors has determined that all of our directors are independent directors within the meaning of applicable Nasdaq listing standards, except for Eric M. Sprink, who is the President and Chief Executive Officer of the Company and the Bank, Andrew P. Skotdal, who has a 50% interest in an entity from which the Bank leases its Downtown Everett Branch, and Chris Adams, who is a partner of Adams & Duncan Inc., PS, which is a law firm that provides legal services to the Company.

CORPORATE GOVERNANCE

The following table identifies our standing committees and their members as of March 22, 2022. All members of each committee are independent in accordance with the listing standards of the Nasdaq. The Board of Directors has adopted a written charter for each committee that, among other things, specifies the scope of each committee’s rights and responsibilities. A copy of each committee charter is available on the Company’s website at www.coastalbank.com.

Director	Audit Committee		Compensation Committee		Governance & Nominating Committee
Andrew P. Skotdal
Christopher D. Adams
Sadhana Akella-Mishra (5)	Member				Member
Andrew R. Dale (1)(2)(5)	Member
Rilla R. Delorier (5)	Member		Member
Steven D. Hovde (5)			Member		Member
Stephan Klee (5)	Chair		Chair
Thomas D. Lane (5)	Member		Member		Chair
Michael R. Patterson (3)(5)	Member
Eric M. Sprink
Gregory A. Tisdel (5)	Member		Member
Pamela R. Unger (4)(5)	Member				Member
Number of Meetings in 2021		8		9	5

(1) Mr. Dale served on the Audit Committee from January 1, 2021 to May 24, 2021.
(2) Mr. Dale retired from the Board of Directors on May 24, 2021.
(3) Mr. Patterson joined the Audit Committee on December 7, 2021.
(4) Ms. Unger joined the Audit Committee and Governance and Nominating Committee on December 7, 2021.
(5) Independent Director.

Audit Committee. The Audit Committee assists the Board of Directors in discharging its duties related to the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent auditor qualifications, independence and performance, the performance of our internal audit function, our accounting and financial reporting process and financial statement audits. Among other things, the functions and responsibilities of the Audit Committee include:

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being responsible for the appointment, compensation, retention and oversight of the independent auditor;

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reviewing and discussing the Company’s annual and quarterly financial statements with management and the independent auditor;

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overseeing internal audit activities;

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pre-approving all audit and permissible non-audit services to be performed by the Company’s independent auditor;

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authorizing, reviewing, and approving the Audit Committee Report to be included in the Company’s annual proxy statement;

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overseeing the Company's risk assessment and risk management policies;

CORPORATE GOVERNANCE

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establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and for the confidential, anonymous submission by its employees of concerns regarding questionable accounting or auditing matters; and

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reviewing the Audit Committee’s performance and the adequacy of the Audit Committee’s charter on an annual basis.

The Company also provides for appropriate funding, as determined by the Audit Committee, for payment of compensation to the Company’s independent auditor, any independent counsel or other advisors engaged by the Audit Committee and for administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.

The Board of Directors has determined that Stephan Klee is an “audit committee financial expert,” as such term is defined by the rules and regulations of the SEC.

The report of the Audit Committee appears in this proxy statement under the heading “Item 2 — Ratification of Selection of Independent Registered Public Accounting Firm—Audit Committee Report.”

Compensation Committee. The Compensation Committee establishes, administers and reviews the Company’s policies, programs and procedures for compensating its executive officers and directors. Among other things, the functions and responsibilities of the Compensation Committee include:

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overseeing the Company’s overall compensation structure, policies and programs, and assessing whether the Company’s compensation structure establishes appropriate incentives for management and employees;

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reviewing and approving annually the corporate goals and objectives applicable to the compensation of the President and Chief Executive Officer, evaluating at least annually the President and Chief Executive Officer’s performance in light of these goals and objectives, and recommending to the Board of Directors the President and Chief Executive Officer’s compensation level based on this evaluation;

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in collaboration with the President and Chief Executive Officer, reviewing and evaluating the performance of the Company’s executive officers and approving such other executive officers’ compensation and benefits;

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reviewing, administering and making recommendations to the Board of Directors with respect to the Company’s incentive compensation and equity-based plans;

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reviewing, approving and recommending to the Board of Directors, employment agreements and severance arrangements for executive officers, including change-in-control provisions, plans or agreements;

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reviewing the Company’s incentive compensation arrangements to determine whether they encourage any excessive risk-taking, reviewing at least annually the relationship between risk management policies and practices and compensation and evaluating compensation policies and practices that could mitigate any such risk;

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retaining such compensation consultants, legal counsel or other advisors as the Compensation Committee deems necessary or appropriate for it to carry out its duties, with direct responsibility for the appointment, compensation and oversight of work of such consultants, counsels and advisors;

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preparing a report on executive compensation for inclusion in the Company’s annual meeting proxy statement, when required by applicable law;

CORPORATE GOVERNANCE

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reviewing and making recommendations to the Board of Directors with respect to the compensation of the Company’s directors;

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developing a succession plan for our executive officer positions, reviewing it annually and making recommendations to the Board regarding the selection of individuals to fill these positions; and

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reviewing the Compensation Committee’s performance and the adequacy of its charter on an annual basis.

Independent Compensation Consultant – Pearl Meyer & Partners LLC (“Pearl Meyer”)

During the past fiscal year, the Compensation Committee engaged Pearl Meyer, an independent compensation consulting firm. Specifically, the Compensation Committee engaged Pearl Meyer to:

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review the Company’s compensation philosophy and strategy;

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advise and aid in the design of the CEO compensation package;

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advise and aid in the design of executive officer compensation;

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evaluate and make recommendations on incentive compensation plans;

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review and advise on Board of Directors compensation; and

•

perform peer analysis.

Under its charter, the Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other advisor to the Compensation Committee, only after assessing the independence of such person in accordance with SEC and Nasdaq requirements that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent.

The Compensation Committee has assessed Pearl Meyer’s independence and determined that there was no conflict of interest resulting from retaining Pearl Meyer for this engagement.

Governance & Nominating Committee. The Governance & Nominating Committee is responsible for assisting the Board of Directors in discharging its duties related to corporate governance and nominating functions. Among other things, the functions and responsibilities of the Governance & Nominating Committee include:

•

developing policies on the size and composition of the Board of Directors;

•

developing and recommending to the Board of Directors criteria to be used in identifying and selecting nominees for director;

•

reviewing possible candidates for election to the Board of Directors;

•

recommending to the Board of Directors candidates for election or re-election to the Board of Directors;

•

recommending structure, composition and assignments of the Board of Directors and its committees;

•

conducting an annual performance evaluation of the Board of Directors and its committees; and

•

reviewing the Governance & Nominating Committee’s performance and the adequacy of its charter on an annual basis.

Minimum Qualifications. The Governance & Nominating Committee has adopted a set of criteria that it considers when it selects individuals to be nominated for election to the Board of Directors. First, a candidate must

CORPORATE GOVERNANCE

meet the eligibility requirements set forth in the Company’s Bylaws, which include an age limitation. A candidate also must meet any qualification requirements set forth in any Board of Directors or committee governing guidelines.

The Governance & Nominating Committee will consider the following criteria in selecting nominees:

•

contributions to the range of talent, skill and expertise appropriate for the Board of Directors;

•

financial, regulatory and business experience;

•

knowledge of the banking and financial services industries;

•

familiarity with the operations of public companies and ability to read and understand financial statements;

•

familiarity with the Company’s market area and participation in and ties to local businesses and local civic, charitable and religious organizations;

•

personal and professional integrity, honesty and reputation;

•

ability to represent the best interests of the shareholders of the Company and the best interests of the Bank;

•

ability to devote sufficient time and energy to the performance of his or her duties;

•

independence;

•

current equity holdings in the Company; and

•

any other factors the Governance & Nominating Committee deems relevant, including age, diversity, size of the Board of Directors and regulatory disclosure obligations.

In its consideration of diversity, the Governance & Nominating Committee seeks to create a Board of Directors that is strong in its collective knowledge and that has a diverse set of skills and experience with respect to management and leadership, vision and strategy, accounting and finance, business operations and judgment, industry knowledge and corporate governance. The Governance & Nominating Committee strives to seek out diverse and qualified director candidates who bring a background and expertise in the fintech and digital banking sectors regardless of their gender, race, or other personal characteristics.

In addition, prior to nominating an existing director for re-election to the Board of Directors, the Governance & Nominating Committee will consider and review an existing director’s Board of Directors and committee attendance and performance; length of Board of Directors service; experience, skills and contributions that the existing director brings to the Board of Directors; and independence.

Director Nomination Process. The process that the Governance & Nominating Committee follows when it identifies and evaluates individuals to be nominated for election to the Board of Directors is as follows:

For purposes of identifying nominees for the Board of Directors, the Governance & Nominating Committee relies on personal contacts of the committee members and other members of the Board of Directors, as well as their knowledge of members of the communities served by the Bank. The Governance & Nominating Committee also will consider director candidates recommended by shareholders in accordance with the policy and procedures set forth below. The Governance & Nominating Committee has not previously used and does not currently use an independent search firm to identify nominees.

CORPORATE GOVERNANCE

In evaluating potential nominees for the Board of Directors, Governance & Nominating Committee determines whether the candidate is eligible and qualified for service on the Board of Directors by evaluating the candidate under the selection criteria set forth above. In addition, the Governance & Nominating Committee will conduct a check of the individual’s background and interview the candidate to further assess the qualities of the prospective nominees and the contributions he or she would make to the Board of Directors.

Board Leadership Structure

Our Board of Directors does not have a formal policy requiring the separation of the roles of Chief Executive Officer and Board Chair. It is the Board of Directors’ view that rather than having a rigid policy, the Board of Directors, with the advice and assistance of the Governance & Nominating Committee, and upon consideration of all relevant factors and circumstances, will determine, as and when appropriate, whether the two offices should be separate. Currently, our leadership structure separates the offices of Chief Executive Officer and Board Chair, with Eric M. Sprink serving as our President and Chief Executive Officer, Christopher D. Adams serving as Board Chair, and Andrew P. Skotdal serving as Vice Chair of the Board. In keeping with good corporate governance practices, the Board believes that the separation of the duties of Board Chair and Chief Executive Officer eliminates any inherent conflict of interest that may arise when the roles are combined, and that an independent director can best provide the leadership and objectivity required as Chair. This reinforces the leadership role of our Board of Directors in its oversight of our business and affairs.

Board Oversight of Risk Management

Our Board of Directors believes that effective risk management and control processes are critical to our safety and soundness, our ability to predict and manage the challenges that we face and, ultimately, our long-term corporate success. The Chair of the Board of Directors meets regularly with management to discuss strategy and risks facing the Company. Senior management members attend the Board’s meetings and are available to address any questions or concerns raised by the Board of Directors on risk management and any other matters. The Chair of the Board of Directors and non-executive members of the Board of Directors work together to provide strong, independent oversight of the Company’s management and affairs through its standing committees and, when necessary, special meetings of Independent Directors.

Our Board of Directors, both directly and through its committees, is responsible for overseeing and evaluating our risk management processes, with each of the committees of our Board of Directors assuming a different and important role in overseeing and evaluating the management of the risks the Company faces.

The Board of Directors discusses and evaluates a broad range of topics, including environmental, social and governance (ESG) matters, cybersecurity and human capital management topics including culture, succession planning and development, compensation, benefits, employee recruiting and retention, health, safety and wellness, and diversity, equity and inclusion.

The Audit Committee of the Board of Directors is responsible for overseeing and evaluating risks associated with financial matters (particularly financial reporting, accounting practices and policies, disclosure controls and procedures and internal control over financial reporting).

The Compensation Committee of the Board of Directors has primary responsibility for risks and exposures associated with our compensation policies, plans and practices, regarding both executive compensation and the Company’s compensation structure generally. In particular, our Compensation Committee, in conjunction with our President and Chief Executive Officer and other members of our management, as appropriate, reviews our incentive compensation arrangements to ensure these programs are consistent with applicable laws and regulations, including safety and soundness requirements, and do not encourage imprudent or excessive risk-taking by our employees.

The Governance & Nominating Committee of the Board of Directors oversees risks associated with the independence of our Board of Directors and potential conflicts of interest.

CORPORATE GOVERNANCE

The Non-Financial Risk Committee of the Board of Directors 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.

While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors oversees overall strategic and reputational risks, and is regularly informed through committee reports and reports directly from officers responsible for oversight of various risks within the Company. In addition, the Board of Directors has oversight with respect to risks related to the COVID-19 pandemic. While its committees addressed COVID-19 risks specific to their delegated duties, the Board of Directors has reviewed, overseen and continues to monitor the identification of COVID-19 risks and mitigation strategies related to the Company's workplace procedures, cybersecurity, liquidity, business strategy, and funding and capital stress forecasts.

Our executive management is responsible for implementing our risk management processes, including by assessing and managing the risks we face, including strategic, operational, regulatory, investment and execution risks, on a day-to-day basis, and reporting to our Board of Directors regarding our risk management processes. Our executive management is also responsible for creating and recommending to our Board of Directors for approval appropriate risk appetite metrics reflecting the aggregate levels and types of risk we are willing to accept in connection with the operation of our business and pursuit of our business objectives.

The role of our Board of Directors in our risk oversight is consistent with our leadership structure, with our President and Chief Executive Officer and the other members of executive management having responsibility for assessing and managing our risk exposure, and our Board of Directors and its committees providing oversight in connection with those efforts. We believe this division of risk management responsibilities presents a consistent, systemic and effective approach for identifying, managing and mitigating risks throughout our operations.

Attendance at the Annual Meeting of Shareholders

The Board of Directors encourages directors to attend the annual meeting of shareholders. Eight directors serving on the Board of Directors at the time of the 2021 Annual Meeting of Shareholders and one director nominee attended the Company’s 2021 Annual Meeting of Shareholders.

Diversity, Equity and Inclusion (“DEI”)

We believe that DEI needs to start at the top of an organization, and the Company began this process at the Board level in 2017 when our board of directors began discussing strategic planning and board recruitment. As the Company has entered more complex arenas including BaaS, we seek out diverse and qualified director candidates who bring a background and expertise in the fintech and digital banking sectors regardless of their gender, race, or other personal characteristics. Additionally, those board members would need to be representative of the diversity found in our fintech partners. Since beginning this effort the board has added three women directors, two of which are from minority backgrounds. We strive to maintain a diverse and inclusive work culture in which individual differences and experiences are valued and all employees have the opportunity to contribute and thrive. We believe that leveraging our employees’ diverse perspectives and capabilities will enhance innovation, foster a collaborative work culture and enable us to better serve our customers and communities.

Our commitment to diversity starts with our Board of Directors, which oversees the culture and holds management accountable to build and maintain a diverse and inclusive environment. We believe a diverse workforce is critical to sustainable success. As of December 31, 2021, we employed 387 full and part-time employees. The following table is a breakdown of our workforce as of December 31, 2021.

Gender		Race and Ethnicity		Disability
64% Female		20% non-white		3%

CORPORATE GOVERNANCE

We are proud of our workforce and the opportunity to further diversify our team going forward.

Our DEI efforts are enhanced by our CCBX business partnerships and the customers our partners serve. Our reach extends to a diverse and often underserved market through our BaaS relationships. These partners are uniquely qualified to offer access to credit, promote financial well-being, provide financial education, and other services to a variety of customers, including but not limited to, women, people of color, young adults, immigrants, small businesses and other underserved populations.

DEI extends to all our customers as well. We are focused on supporting small businesses throughout our communities including but not limited to minority, women, and veteran owned businesses. The COVID-19 pandemic exposed the challenges of small business. We are proud to have participated in the Paycheck Protection Program, originating over 5,800 loans totaling more than $763 million to a variety of businesses. During the COVID-19 pandemic, our company also financially supported locally-owned restaurants by providing meals and gift cards for our employees from these locally owned and community based restaurants.

Environment and Sustainability

Services like mobile and online banking, remote deposit capture, electronic loan payments, eStatements and combined statements enable us to support all customers in their efforts to consume less fuel and paper. We continue to digitize loan origination and deposit account opening processes, reducing trips to the bank and paper documents for our customers.

Additionally, we work hard to ensure that our lending activities do not encourage business activities that could cause irreparable damage to our reputation or the environment. As a result, we try to conduct business responsibly, with awareness to environmental, social, and human rights issues while also monitoring credit risks. This process involves management and Board oversight. In general, we evaluate each credit or transaction on its individual merits, with larger deals receiving more attention and deeper analysis.

We are focused on the environment and committed to business practices and activities that encourage sustainability and minimize our environmental impact.

We demonstrate environmental responsibility in various ways, including:

•

replacing standard light bulbs with LED bulbs that have a longer life and use less energy – most notably many of our parking lot lights have been converted to LED; and

•

repurposing existing furniture, whenever possible, instead of buying new.

We are focused on sustainability throughout our everyday business practices by:

•

using technology that provides for a paperless environment and transactional efficiencies,

•

eCycling old technology equipment, whenever possible, to avoid sending it to landfills,

•

installation of occupancy sensors that automatically shut off lights in densely populated buildings; and

•

having exterior lights on timers.

Human Capital

As of December 31, 2021, we had 377 full-time equivalent employees, all were located in the United States, however technology has allowed us to expand our reach to include a larger demographic with more remote employees working outside of our physical locations and throughout the country. We seek to attract, retain and develop the most talented employees possible by promoting a strong, positive culture, maintaining a safe and

CORPORATE GOVERNANCE

healthy workplace, emphasizing open communication with management and investing in training and education. None of our employees are parties to a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.

Culture. We have always led with people, building our Bank on the diverse perspectives, knowledge, and experiences of our employees. Our employees utilize their strengths to set the course and are empowered to do the right things for our clients. We strive to create an inclusive workplace so we can build and maintain a high-performing culture where engaged, satisfied employees embody our core values: stay flexible, take care of each other, embrace gray thinking, be relentless, be the best and be un-bankey.

We seek out talent that will be a cultural fit to our core values and have backgrounds that are as diverse as the clients we serve in each of our business units.

Pay Equity. We believe our staff should be paid for the roles they fulfill, their experience, and how they do their jobs, and our goal is to attract, retain and develop quality talent. To deliver on that commitment, we benchmark and set pay ranges based on banking market data and consider factors such as an employee’s role and experience, the location of their job, and their performance. We also regularly review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our pay is fair and equitable.

Health, Safety and Wellness. Since the onset of the COVID-19 pandemic, we have taken a people-first approach to help our employees manage their work and personal responsibilities, with a strong focus on employee wellbeing, health and safety. Our human resource team engages the staff in an evolving wellness program designed to enhance physical, financial, and mental wellbeing for all our employees. We encourage healthy lifestyle behaviors through regular communications, educational sessions, voluntary progress tracking of beneficial health changes, and wellness challenges.

We value the contributions of our employees, particularly in the face of the challenges posed by the COVID-19 pandemic. Where possible, many employees have been working from home to help maintain their health and safety as well as business continuity. The Bank has accommodated staff who are unable to work on site due to health or family issues, and our human resources department works one-on-one to find solutions that are workable for both staff and the Company.

Community Engagement. We are committed to supporting the communities we serve through donations, sponsorships, employee volunteerism and the Employee Giving Fund. In 2021, the Bank supported 110 organizations through donations and event sponsorships.

The Employee Giving Fund is supported entirely by donations contributed by employees, enabling staff to pool their donations for the greatest impact in each community we serve. Employees direct the grants from the fund by serving on Bank’s grant advisory committee. Since its inception in 2001, the Employee Giving Fund has awarded 436 grants totaling more than $669,000 through the end of 2021.

While volunteering and supporting our communities continued to look different in 2021 due to the COVID-19 pandemic, employees continued to volunteer in a variety of capacities, and still found many ways to get involved. In 2021, employees volunteered 6,748 hours supporting 148 organizations.

ITEMS TO BE VOTED ON BY SHAREHOLDERS

ITEM 1. ELECTION OF DIRECTORS

The Board of Directors consists of eleven members. Under our second amended and restated articles of incorporation, as amended, the Board is divided into three classes with three-year staggered terms, with approximately one-third of the directors elected each year. Four directors have terms that expire at the annual meeting.

At the annual meeting, shareholders will vote to elect Christopher D. Adams, Steven D. Hovde, Stephan Klee and Thomas D. Lane, whose terms expire at this annual meeting, to each serve for a three-year term. All nominees currently serve on the Board of Directors. The Board has nominated Mr. Adams, Mr. Hovde, Mr. Klee and Mr. Lane to serve until the 2025 annual meeting of shareholders or until their successors are elected, or until their earlier resignation or death. Each of the nominees was recommended for election by the Governance & Nominating Committee, and each such recommendation was approved unanimously by the Board of Directors. Mr. Hovde, Mr. Klee and Mr. Lane are independent directors within the meaning of the applicable Nasdaq listing rules.

Unless you indicate on the proxy card that your shares should not be voted for the nominees, the Board of Directors intends that the proxies solicited by it and returned will be voted for the election of each of the Board of Directors’ nominees. If any nominee is unable to serve, the persons named in the proxy card will vote your shares to approve the election of any substitute proposed by the Board of Directors. Alternatively, the Board of Directors may adopt a resolution to reduce the size of the Board of Directors. At this time, the Board of Directors knows of no reason why any nominees might be unable to serve.

The Board of Directors unanimously recommends a vote “FOR” the election of Christopher D. Adams, Steven D. Hovde, Stephan Klee and Thomas D. Lane.

The election of each nominee requires a plurality of the votes cast for each nominee. Abstentions and broker non-votes are treated as present for quorum purposes only and will have no effect on the outcome of the proposal.

Certain information about each of the nominees is furnished below, including their experience, qualifications, attributes or skills that caused the Governance & Nominating Committee and the Board of Directors to determine that the nominees should continue to serve as directors. The age indicated for each individual is as of December 31, 2021. There are no family relationships among the directors or executive officers. The indicated period of service as a director includes service as a director of the Bank.

ITEM 1. ELECTION OF DIRECTORS

Nominees for Election of Directors:

CHRISTOPHER D. ADAMS

Age: 42

Director since: 2016

Current term expires: 2022

Biographical Information:

Christopher D. Adams is a partner in the law firm of Adams & Duncan, Inc., P.S. in Everett, Washington since 2006. Mr. Adams practices in the areas of corporate law, commercial real estate and tax matters.

Qualifications:

The Company believes that Mr. Adams brings to the Board of Directors legal expertise and familiarity with our market area, and is well qualified to continue serving on the Board of Directors.

STEVEN D. HOVDE

Age: 67

Director since: 2011

Current term expires: 2022

Biographical Information:

Steven D. Hovde is the Chair and Chief Executive Officer at Hovde Group, LLC, an investment banking and advisory firm that serves bank and thrift clients across the United States, since January 1988, where he is responsible for managing its investment banking activities, the strategic development of mergers and acquisitions of bank and thrift institutions, and its private equity activities. He serves as a director of Republic Bank of Chicago and as a trustee of several charitable foundations.

Qualifications:

The Company believes that Mr. Hovde provides the Board of Directors with important experience and insight into the financial services industry, and is well qualified to continue serving on the Board of Directors.

STEPHAN KLEE

Age: 48

Director since: 2018

Current term expires: 2022

Biographical Information:

Stephan Klee has served as the Chief Financial Officer at Sagard Holdings Inc., which makes investments in innovative financial services companies, since September 2017. Prior to joining Sagard Holdings Inc., Mr. Klee served as Chief Financial Officer of Zenbanx Holding, Inc. from February 2015 to September 2017 and remained in an executive capacity after its merger with SoFi, Inc., one of the largest U.S. fintech companies. Previously, Mr. Klee served as a Senior Vice President at Bank of Nova Scotia, at ING Direct Canada, where he was CFO and Treasurer from 2011 to 2014, and at ING Direct USA, where he served as Chief of Staff from 2002 to 2011.

Qualifications:

The Company believes that Mr. Klee brings to the Board of Directors experience in private equity and finance, and is well qualified to continue serving on the Board of Directors.

THOMAS D. LANE

Age: 52

Director since: 1997

Current term expires: 2022

Biographical Information:

Thomas D. Lane is the owner and president and chief executive officer of Dwayne Lane’s Auto Family, which operates five automobile dealerships, since March 1992. He is active in community organizations and currently serves on the Economic Alliance Snohomish County board of trustees. Mr. Lane is a founding director of the Company.

Qualifications:

The Company believes that Mr. Lane brings to the Board of Directors leadership experience, familiarity with our market area, and is well qualified to continue serving on the Board of Directors.

ITEM 1. ELECTION OF DIRECTORS

Directors Continuing in Office:

RILLA R. DELORIER

Age: 54

Director since: 2020

Current term expires: 2023

Biographical Information:

Rilla R. Delorier is a retired banking professional with over 30 years executive experience. Most recently, Ms. Delorier was the Chief Strategy and Digital Transformation Officer at Umpqua Bank from April 2017 to August 2020 where she was responsible for shifting from physical to digital service and sales models, developing new products, and automating operations. Ms. Delorier was at SunTrust Bank from February 2006 to February 2016, where she held multiple positions. As the leader of SunTrust’s Retail Bank, she was responsible for managing the profit and loss of a $2.7 billion retail banking business. Throughout her career she has lead innovation initiatives and been instrumental in business transformation.

Qualifications:

The Company believes that Ms. Delorier brings to the Board of Directors experience in developing new products, automating operations, implementing enhanced cyber-security practices, establishing strategic partnerships, using modernized analytics, and is well qualified to continue serving on the Board of Directors.

MICHAEL R. PATTERSON

Age: 61

Director since: 2021

Current term expires: 2023

Biographical Information:

Michael R. Patterson is a Certified Public Accountant, registered in the State of New York with over 38 years of cross-sector experience. He led EY LLP’s Compliance Risk Management business in the firm’s Financial Services Office. Mr. Patterson is currently an independent consultant and was with EY, LLP from January 2009 until June 2021. Michael Patterson is experienced in risk management, compliance, risk governance, financial accounting, and control matters based upon his experience at EY, LLP, Merrill Lynch & Co., BearingPoint and Arthur Andersen, LLP. He is most experienced in the banking and capital markets industries.

Qualifications:

The Company believes that Mr. Patterson brings to the Board of Directors experience in risk management, compliance, risk governance, financial accounting, control matters, and is well qualified to continue serving on the Board of Directors.

ANDREW P. SKOTDAL

Age: 51

Director since: 1997

Current term expires: 2023

Biographical Information:

Andrew P. Skotdal serves as President of the office and industrial portfolios of Skotdal Real Estate, a private commercial real estate development company that develops projects as long-term investments in the northern Puget Sound region and that also operates retail and multi-family portfolios, since May 2017. He is also the President and co-owner of S-R Broadcasting Co., Inc., which operates radio stations serving the northern Puget Sound region. He is a member of Young Presidents Organization, a global network of young chief executives. Mr. Skotdal also serves as an advisor to a technology start-up company headquartered on Mercer Island. Mr. Skotdal is a founding director of the Company.

Qualifications:

The Company believes that Mr. Skotdal brings to the Board of Directors leadership experience, expertise in finance and real estate, technology start-up experience, strategy, familiarity with our market area, and is well qualified to continue serving on the Board of Directors.

ITEM 1. ELECTION OF DIRECTORS

GREGORY A. TISDEL

Age: 67

Director since: 2002

Current term expires: 2023

Biographical Information:

Gregory A. Tisdel is the former owner of Tiz’s Door Sales, Inc., from July 1996 to July 2011, and a member of the City of Everett Planning Commission since January 2014. He serves on the Advisory Board of the Puget Sound Clean Air Agency since February 1985 and previously served as Special Advisor to the Economic Alliance Snohomish County from November 2011 to 2015. Mr. Tisdel has been active in community organizations, including the YMCA, American Red Cross Snohomish County Chapter and Volunteers of America.

Qualifications:

The Company believes that Mr. Tisdel brings to the Board of Directors leadership experience, familiarity with our market area and is well qualified to continue serving on the Board of Directors.

ERIC M. SPRINK

Age: 49

Director since: 2006

Current term expires: 2024

Biographical Information:

Eric M. Sprink serves as our President and Chief Executive Officer. Mr. Sprink joined the Company in late 2006 as President and Chief Operating Officer and became Chief Executive Officer in 2010. Mr. Sprink began his banking career working for Security Pacific Bank while enrolled at Arizona State University. He assumed increasing levels of responsibility in the areas of retail operations, consumer and commercial lending and wealth management with Security Pacific Bank and its successor, Bank of America. He then moved to Centura Bank, where he held management positions in retail operations and corporate finance. After Centura Bank was acquired, he held senior management positions at Washington Trust Bank and Global Credit Union. Mr. Sprink is active in industry trade groups and is a director and past Chair of the Community Bankers of Washington.

Qualifications:

The Company believes that Mr. Sprink brings to our Board of Directors leadership experience, significant experience in many facets of the financial services business, familiarity with our market area, and is well qualified to continue serving on the Board of Directors.

SADHANA AKELLA-MISHRA

Age: 45

Director since: 2019

Current term expires: 2024

Biographical Information:

Sadhana Akella-Mishra is currently the Chief Risk Officer and Corporate Secretary for Finxact, Inc., a core banking software company. Ms. Akella-Mishra joined Finxact, Inc. in July 2018 and is responsible for the company’s compliance, information security, testing/examinations and legal and human resources. Prior to that time, Ms. Akella-Mishra served as the Chief Compliance Officer (Global) of Geoswift Ltd. from June 2017 to April 2018 and as the U.S. Head of Compliance for Geoswift US Inc. from November 2016 to June 2017. From April 2016 to November 2016, Ms. Akella-Mishra served as the Senior Manager, General Compliance of Ripple, Inc. Prior to that time, she served as the Chief Compliance Officer of Zenbanx Holding Ltd. from March 2014 to April 2016 and as a Senior Compliance Manager for Zenbanx Holding Ltd. from August 2013 to February 2014. From July 2007 to July 2013, Ms. Akella-Mishra served in various positions with Deutsche Bank, including as Americas Regional Head, Anti Financial Crime-Fraud from September 2012 to July 2013.

Qualifications:

The Company believes that Ms. Akella-Mishra brings to the Board of Directors compliance and information security expertise, familiarity with the financial services industry, and is well qualified to continue serving on the Board of Directors.

ITEM 1. ELECTION OF DIRECTORS

PAMELA R. UNGER

Age: 37

Director since: 2021

Current term expires: 2024

Biographical Information:

Pamela Unger is a Certified Public Accountant. She is currently a Managing Director, and was previously the Tax Director at Belltower Fund Group, a financial services company based in Seattle, Washington, where she has been employed since January 2019. From September 2007 to January 2019, Ms. Unger held various positions, most recently she was a Tax Manager, at PwC, a network of accounting firms. She serves on the City of Bellevue’s Parks and Community Services Board.

Qualifications:

The Company believes that Ms. Unger provides the Board of Directors significant experience in the accounting industry, and is well qualified to serve on the Board of Directors.

ITEM 2. RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors has selected Moss Adams LLP to be the Company’s independent registered public accounting firm for the 2022 fiscal year, subject to ratification by shareholders. Moss Adams LLP has served as our independent registered public accounting firm since 2016. A representative of Moss Adams LLP will be present at the annual meeting to respond to appropriate questions from shareholders and will have the opportunity to make a statement should he or she desire to do so.

In determining whether to reappoint Moss Adams LLP as the Company’s independent registered public accounting firm, the Audit Committee took into consideration a number of factors, including the length of time the firm has been engaged, the quality of the Audit Committee’s ongoing discussions with Moss Adams LLP, an assessment of the professional qualifications and past performance of Moss Adams LLP and the potential impact of changing independent registered public accounting firms. Through its experience with the Company, Moss Adams LLP has gained institutional knowledge and expertise regarding the Company’s operations, accounting policies and practices and internal control over financial reporting.

If the ratification of the appointment of Moss Adams LLP is not approved by a majority of the votes cast at the annual meeting, the Audit Committee will consider other independent registered public accounting firms. In addition, if the ratification of Moss Adams LLP is approved by shareholders at the annual meeting, the Audit Committee may also consider other independent registered public accounting firms in the future if it determines that such consideration is in the best interests of the Company and its shareholders.

The Board of Directors unanimously recommends a vote “FOR” the ratification of the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm.

To be approved, the appointment of Moss Adams LLP as our independent registered public accounting firm must receive an affirmative vote of a majority of the votes cast. Abstentions are treated as present for quorum. purposes only and will have no effect on the outcome of the proposal. We do not expect to receive broker non-votes in this Item.

Audit and Non-Audit Fees

The following table sets forth the fees billed to the Company for the fiscal years ending December 31, 2021 and December 31, 2020 for services provided by Moss Adams LLP.

		2021		2020
Audit Fees (1)		$	328,000	$	349,690
Audit-Related Fees (2)			123,200		19,050
Tax Fees			-		-
All Other Fees (3)			16,800		11,100

(1)	Fees for both years include Federal Deposit Insurance Corporation Improvement Act of 1991 internal control audit and fees for performance of the audit and review of financial statements.
(2)	For 2021 includes $92,400 for comfort procedures related to a public equity offering completed in the fourth quarter, $6,000 for S-3 review, $6,000 for S-8 review, and $5,300 for oral due diligence. For both years, includes 401(k) Plan audit.
(3)	Fees in both years include a flat 5% of total billing as a charge to cover expenses such as copying costs, postage, administrative billable time, report processing time, filing fees, and technology expenses.

Pre-Approval of Services by Moss Adams LLP

The Audit Committee is responsible for appointing, setting compensation and overseeing the work of Moss

ITEM 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTING FIRM

Adams LLP. In accordance with its charter, the Audit Committee approves, in advance, all audit and permissible non-audit services to be performed by Moss Adams LLP. Such approval process ensures that Moss Adams LLP does not provide any non-audit services to the Company that are prohibited by law or regulation.

In addition, the Audit Committee has established a policy regarding pre-approval of all audit and permissible non-audit services provided by Moss Adams LLP. Requests for services by Moss Adams LLP for compliance with the auditor services policy must be specific as to the particular services to be provided. The request may be made with respect to either specific services or a type of service for predictable or recurring services.

Any proposed specific engagement may be presented to the Audit Committee for consideration at its next regular meeting or, if earlier consideration is required, to the Audit Committee or one or more of its members. The member or members to whom such authority is delegated shall report any specific approval of services at the next regular meeting of the Audit Committee. The Audit Committee will regularly review summary reports detailing all services being provided to the Company by its independent registered public accounting firm.

During the year ended December 31, 2021, all services were approved, in advance, by the Audit Committee in compliance with these procedures.

Audit Committee Report

The Company’s management is responsible for the Company’s internal control over financial reporting. Moss Adams LLP is responsible for performing an independent audit of the Company’s consolidated financial statements and issuing an opinion on the conformity of those financial statements with generally accepted accounting principles. The Audit Committee oversees the Company’s internal control over financial reporting on behalf of the Board of Directors.

In this context, the Audit Committee has met and held discussions with management and Moss Adams LLP. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and Moss Adams LLP.

The Audit Committee has also reviewed and discussed with the Company’s management the audited financial statements in the Annual Report. In addition, the Audit Committee discussed with Moss Adams LLP those matters required to be discussed under applicable Public Company Accounting Oversight Board (“PCAOB”) rules or standards and the SEC. Additionally, Moss Adams LLP provided to the Audit Committee the written disclosures and the letter required under applicable PCAOB rules or standards. The Audit Committee also discussed with Moss Adams LLP its independence from the Company. In concluding that the accounting firm is independent, the Audit Committee considered, among other factors, whether the non-audit services provided by Moss Adams LLP were compatible with their independence.

The Audit Committee discussed with Moss Adams LLP the overall scope and plans for their audit. The Audit Committee meets with Moss Adams LLP, with and without management present, to discuss the results of their audit, their evaluation of the Company’s internal control over financial reporting, and the overall quality of the Company’s financial reporting process.

In performing all of these functions, the Audit Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for financial statements and reports, and of Moss Adams LLP who, in its report, expresses an opinion on the conformity of the Company’s financial statements to generally accepted accounting principles. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations.

Furthermore, the Audit Committee’s considerations and discussions with management and Moss Adams LLP do not assure that the Company’s financial statements are presented in accordance with generally accepted

ITEM 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTING FIRM

accounting principles, that the audit of the Company’s consolidated financial statements has been carried out in accordance with the standards of the PCAOB or that the Company’s independent registered public accounting firm is in fact “independent.”

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited consolidated financial statements be included in the Annual Report for filing with the SEC. The Audit Committee has appointed, subject to shareholder ratification, the selection of Moss Adams LLP for the fiscal year ended December 31, 2022.

Audit Committee of the Board of Directors of Coastal Financial Corporation

Stephan Klee (Chair)

Sadhana Akella-Mishra

Rilla R. Delorier

Thomas D. Lane

Michael R. Patterson

Gregory A. Tisdel

Pamela R. Unger

DIRECTOR COMPENSATION

Our Board determines the compensation of our non-employee directors in conjunction with recommendations made by the Compensation Committee. We use a combination of cash and share-based compensation to attract and retain qualified candidates to serve on the Board of Directors. Eric M. Sprink did not receive fees or other compensation for his service as a director of the Company or the Bank during the fiscal year ended December 31, 2021 and is not included in the 2021 Director Compensation Table below.

Our non-employee directors received compensation for service and attendance as follows during the year ended December 31, 2021:

•

The Board Chair and Audit Committee and Compensation Committee chairs combined (the same director chairs both committees) received annual cash compensation of $50,000;

•

Other committee chairs received annual cash compensation of $45,000; and

•

Other directors received annual cash compensation of $40,000.

In addition to the cash compensation outlined above, non-employee directors, excluding the Board Chair, receive approximately $15,000 in restricted stock, and the Board Chair receives approximately $25,000 in restricted stock. Partial shares are not issued, therefore shares are rounded up to the nearest whole number.

DIRECTOR COMPENSATION

The following table sets forth information regarding compensation paid for the year ended December 31, 2021 to our directors who were not Named Executive Officers:

	Fees Earned or Paid in Cash		Stock Awards		Total
Name	($)		($) (1)		($)
Christopher D. Adams	$	50,000	$	25,027	$	75,027
Andrew P. Skotdal		45,000		15,028		60,028
Sadhana Akella-Mishra		45,000		15,028		60,028
Andrew R. Dale (2)(3)		26,667		-		26,667
Rilla R. Delorier		40,000		15,028		55,028
Steven D. Hovde		45,000		15,028		60,028
Stephan Klee		50,000		15,028		65,028
Thomas D. Lane

SEC Form DEF 14A filed by Coastal Financial Corporation