EVERETT, Wash., July 29, 2025 (GLOBE NEWSWIRE) -- Coastal Financial Corporation (NASDAQ:CCB) (the "Company", "Coastal", "we", "our", or "us"), the holding company for Coastal Community Bank (the "Bank"), through which it operates a community-focused bank segment ("community bank") with an industry leading banking as a service ("BaaS") segment ("CCBX"), today reported unaudited financial results for the quarter ended June 30, 2025, including net income of $11.0 million, or $0.71 per diluted common share, compared to $9.7 million, or $0.63 per diluted common share, for the three months ended March 31, 2025 and $11.6 million, or $0.84 per diluted common share, for the three months ended June 30, 2024.

Management Discussion of the Second Quarter Results

"Second quarter of 2025 saw a lower provision for credit losses as a result of an improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical loss factors. Noninterest expenses were fairly flat compared to last quarter related to continued onboarding and implementation costs for partnerships and products within CCBX and investments in technology. We believe these investments are important to the long-term success and scalability of the Company," stated CEO Eric Sprink. "We had another quarter of quality deposit growth of $122.3 million during the second quarter, and our CCBX program fee income, excluding nonrecurring revenue, increased 8.2% compared to the prior quarter."

Key Points for Second Quarter and Our Go-Forward Strategy

CCBX Making Progress on Launching New Programs. As of June 30, 2025 we had two partners in testing, two in implementation/onboarding, five signed letters of intent (LOI) and we have an active pipeline of new partners along with new products with existing partners for the balance of 2025 and into 2026. Total BaaS program fee income was $6.8 million, excluding $504,000 in nonrecurring revenue, for the three months ended June 30, 2025, an increase of $512,000, or 8.2%, from the three months ended March 31, 2025. We continue to have contracts with our partners that fully indemnify us against fraud and 98.8% against credit risk as of June 30, 2025.
Continued Investments in Future Growth. Total noninterest expense of $72.8 million was up $843,000, or 1.2%, as compared to $72.0 million in the quarter ended March 31, 2025, mainly driven by higher data processing and software costs partially offset by lower legal and professional expenses. With the increase in new CCBX partners and the launch of products with existing partners in 2025, we expect that expenses will be predominantly incurred at the outset, emphasizing compliance and operational risk management. This will occur before the new programs or products start to produce revenue. As a result, we believe expense growth should moderate considerably in the second half of 2025, with new programs or products starting to produce revenue to offset the initial up-front expenses.
Favorable Trends On, and Off Balance Sheet. Average deposits were $3.93 billion, an increase of $221.6 million, or 6.0%, over the quarter ended March 31, 2025, driven primarily by growth in CCBX partner programs and the addition of a new deposit partner. During the second quarter of 2025, we sold $1.30 billion of loans, the majority of which were credit card receivables. We retain a portion of the fee income on sold credit card loans. As of June 30, 2025 there were 313,827 off balance sheet credit cards with fee earning potential, an increase of 76,803 compared to the quarter ended March 31, 2025 and an increase of 286,146 from June 30, 2024.

Second Quarter 2025 Financial Highlights

The tables below outline some of our key operating metrics.

	Three Months Ended
(Dollars in thousands, except share and per share data; unaudited)	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Income Statement Data:
Interest and dividend income	$	107,797		$	104,907		$	102,448		$	105,165		$	97,422
Interest expense		31,060			28,845			30,071			32,892			31,250
Net interest income		76,737			76,062			72,377			72,273			66,172
Provision for credit losses		32,211			55,781			61,867			70,257			62,325
Net interest income after provision for credit losses		44,526			20,281			10,510			2,016			3,847
Noninterest income		42,693			63,477			74,100			78,790			69,138
Noninterest expense		72,832			71,989			67,411			64,424			57,964
Provision for income tax		3,359			2,039			3,832			2,926			3,425
Net income	$	11,028		$	9,730		$	13,367		$	13,456		$	11,596

	As of and for the Three Month Period
	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Balance Sheet Data:
Cash and cash equivalents	$	719,759		$	624,302		$	452,513		$	484,026		$	487,245
Investment securities		45,577			46,991			47,321			48,620			49,213
Loans held for sale		60,474			42,132			20,600			7,565			—
Loans receivable		3,540,330			3,517,359			3,486,565			3,413,894			3,321,813
Allowance for credit losses		(164,794	)		(183,178	)		(176,994	)		(171,674	)		(148,878	)
Total assets		4,480,559			4,339,282			4,121,208			4,064,472			3,959,549
Interest bearing deposits		3,358,216			3,251,599			3,057,808			3,047,861			2,949,643
Noninterest bearing deposits		555,355			539,630			527,524			579,427			593,789
Core deposits ⁽¹⁾		3,441,624			3,321,772			3,123,434			3,190,869			3,528,339
Total deposits		3,913,571			3,791,229			3,585,332			3,627,288			3,543,432
Total borrowings		47,960			47,923			47,884			47,847			47,810
Total shareholders' equity	$	461,709		$	449,917		$	438,704		$	331,930		$	316,693

Share and Per Share Data ⁽²⁾:
Earnings per share – basic	$	0.73		$	0.65		$	0.97		$	1.00		$	0.86
Earnings per share – diluted	$	0.71		$	0.63		$	0.94		$	0.97		$	0.84
Dividends per share		—			—			—			—			—
Book value per share ⁽³⁾	$	30.59		$	29.98		$	29.37		$	24.51		$	23.54
Tangible book value per share ⁽⁴⁾	$	30.59		$	29.98		$	29.37		$	24.51		$	23.54
Weighted avg outstanding shares – basic		15,033,296			14,962,507			13,828,605			13,447,066			13,412,667
Weighted avg outstanding shares – diluted		15,447,923			15,462,041			14,268,229			13,822,270			13,736,508
Shares outstanding at end of period		15,093,036			15,009,225			14,935,298			13,543,282			13,453,805
Stock options outstanding at end of period		126,654			163,932			186,354			198,370			286,119

See footnotes that follow the tables below

	As of and for the Three Month Period
	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Credit Quality Data:
Nonperforming assets ⁽⁵⁾ to total assets		1.36	%		1.30	%		1.52	%		1.63	%		1.34	%
Nonperforming assets⁽⁵⁾to loans receivable and OREO		1.72	%		1.60	%		1.80	%		1.94	%		1.60	%
Nonperforming loans ⁽⁵⁾ to total loans receivable		1.72	%		1.60	%		1.80	%		1.94	%		1.60	%
Allowance for credit losses to nonperforming loans		270.7	%		325.0	%		282.5	%		258.7	%		279.9	%
Allowance for credit losses to total loans receivable		4.65	%		5.21	%		5.08	%		5.03	%		4.48	%
Gross charge-offs	$	53,780		$	53,686		$	61,585		$	53,305		$	55,207
Gross recoveries	$	4,467		$	5,486		$	5,223		$	4,516		$	2,254
Net charge-offs to average loans ⁽⁶⁾		5.54	%		5.57	%		6.56	%		5.60	%		6.54	%

Capital Ratios:
Company
Tier 1 leverage capital		10.39	%		10.67	%		10.78	%		8.40	%		8.31	%
Common equity Tier 1 risk-based capital		12.32	%		12.13	%		12.04	%		9.24	%		9.03	%
Tier 1 risk-based capital		12.41	%		12.22	%		12.14	%		9.34	%		9.13	%
Total risk-based capital		14.90	%		14.73	%		14.67	%		11.89	%		11.70	%
Bank
Tier 1 leverage capital		10.33	%		10.57	%		10.64	%		9.29	%		9.24	%
Common equity Tier 1 risk-based capital		12.36	%		12.12	%		11.99	%		10.34	%		10.15	%
Tier 1 risk-based capital		12.36	%		12.12	%		11.99	%		10.34	%		10.15	%
Total risk-based capital		13.65	%		13.42	%		13.28	%		11.63	%		11.44	%

⁽¹⁾Core deposits are defined as all deposits excluding brokered and time deposits.
⁽²⁾Share and per share amounts are based on total actual or average common shares outstanding, as applicable.
⁽³⁾We calculate book value per share as total shareholders' equity at the end of the relevant period divided by the outstanding number of our common shares at the end of each period.
⁽⁴⁾Tangible book value per share is a non-GAAP financial measure. We calculate tangible book value per share as total shareholders' equity at the end of the relevant period, less goodwill and other intangible assets, divided by the outstanding number of our common shares at the end of each period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets as of any of the dates indicated. As a result, tangible book value per share is the same as book value per share as of each of the dates indicated.
⁽⁵⁾Nonperforming assets and nonperforming loans include loans 90+ days past due and accruing interest.
⁽⁶⁾Annualized calculations.

Key Performance Ratios

Return on average assets ("ROA") was 0.99% for the quarter ended June 30, 2025 compared to 0.93% and 1.21% for the quarters ended March 31, 2025 and June 30, 2024, respectively. ROA for the quarter ended June 30, 2025, increased 0.06% and decreased 0.22% compared to March 31, 2025 and June 30, 2024, respectively. Noninterest expenses were slightly higher for the quarter ended June 30, 2025 compared to the quarter ended March 31, 2025 due to continued investments in growth, technology and risk management, partially offset by a decrease in legal and professional expenses. Noninterest expenses were higher than the quarter ended June 30, 2024 due primarily to an increase in salaries and employee benefits, data processing and software licenses and legal and professional expenses, all of which are related to the growth of Company and investments in technology and risk management.

Yield on earning assets and yield on loans receivable decreased 0.40% and 0.22%, respectively, for the quarter ended June 30, 2025 compared to the quarter ended March 31, 2025, largely due to a decrease in CCBX loan yield. Lower rate capital call lines increased $66.2 million, or 49.6%, compared to the quarter ended March 31, 2025. These loans bear a lower rate of interest, but have less credit risk due to the way the loans are structured compared to other commercial loans. Average loans receivable as of June 30, 2025 increased $56.1 million compared to March 31, 2025 as net CCBX loans continue to grow, despite selling $1.30 billion in CCBX loans during the quarter ended June 30, 2025.

The quarter over quarter volatility in the efficiency ratio and noninterest income to average asset performance metrics was driven by a higher-quality CCBX loan-mix from a credit quality perspective, which effectively reduced the credit enhancement required within non-interest income due to lower net-charge off activity as a percent of total loans which lowered our provision expense. These items have a neutral impact to net income although impacted the quarter-to-quarter metrics due to lower reported noninterest income. Additionally, results for the three months ended June 30, 2025 also included a net $439,000 loss on equity securities due to the re-valuation of a privately held equity stake, which CCB reviews quarterly. Management doesn't believe the write-down is indicative of longer-term concerns of the portfolio company's health at this time.

The following table shows the Company's key performance ratios for the periods indicated.

	Three Months Ended
(unaudited)	June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		June 30, 2024

Return on average assets ⁽¹⁾	0.99	%	0.93	%	1.30	%	1.34	%	1.21	%
Return on average equity ⁽¹⁾	9.72	%	8.91	%	14.90	%	16.67	%	15.22	%
Yield on earnings assets ⁽¹⁾	9.92	%	10.32	%	10.24	%	10.79	%	10.49	%
Yield on loans receivable⁽¹⁾	11.11	%	11.33	%	11.12	%	11.44	%	11.22	%
Cost of funds⁽¹⁾	3.13	%	3.11	%	3.24	%	3.62	%	3.60	%
Cost of deposits ⁽¹⁾	3.10	%	3.08	%	3.21	%	3.59	%	3.58	%
Net interest margin ⁽¹⁾	7.06	%	7.48	%	7.23	%	7.42	%	7.12	%
Noninterest expense to average assets ⁽¹⁾	6.52	%	6.87	%	6.54	%	6.42	%	6.05	%
Noninterest income to average assets⁽¹⁾	3.82	%	6.06	%	7.19	%	7.85	%	7.22	%
Efficiency ratio	60.98	%	51.59	%	46.02	%	42.65	%	42.84	%
Loans receivable to deposits ⁽²⁾	92.01	%	93.89	%	97.82	%	94.33	%	93.75	%

⁽¹⁾Annualized calculations shown for quarterly periods presented.
⁽²⁾Includes loans held for sale.

Management Outlook; CEO Eric Sprink

"As we look to the latter half of 2025 and beyond, we expect to see additional new partner engagements, given that our CCBX pipeline remains strong with high-quality opportunities. We are committed to continuing to invest in our technology and risk management infrastructure to support our growth in the BaaS sector which is expected to produce future efficiencies, automation and cost reductions as we grow. The improvement in the performance of the CCBX portfolio and lower historical loss factors within the CCBX portfolio are positive indicators that our risk reduction and credit improvement efforts are proving effective, alongside the fraud and credit indemnifications provided by our partners. Additionally, we saw an increase of $512,000, or 8.2%, from the three months ended March 31, 2025 in BaaS program income, excluding nonrecurring revenue, namely in transaction and interchange income. We anticipate this growth to continue in future periods as our partner activities expand and grow." said CEO Eric Sprink.

Coastal Financial Corporation Overview

The Company has one main subsidiary, the Bank, which consists of three segments: CCBX, the community bank and treasury & administration. The CCBX segment includes all of our BaaS activities, the community bank segment includes all community banking activities and the treasury & administration segment includes treasury management, overall administration and all other aspects of the Company.

CCBX Performance Update

Our CCBX segment continues to evolve, and we have 29 relationships, at varying stages, including two partners in testing, two in implementation/onboarding, and five signed LOI as of June 30, 2025. We continue to refine the criteria for CCBX partnerships, exploring relationships with larger and more established partners, with experienced management teams, existing customer bases and strong financial positions. We also will consider promising medium and smaller sized partners that align with our approach and terms including financial wherewithal and will continue to exit relationships where it makes sense for us to do so.

While we explore relationships with new partners we continue to expand our product offerings with existing CCBX partners. As we become more proficient in the BaaS space we aim to cultivate new relationships that align with our long-term goals. We believe that a strategy of adding new partnerships and launching new products with existing partners allows us to expand and grow our customer base with a modest increase in regulatory risk given our operational history with them. Increases in partner activity/transaction counts is positively impacting noninterest income and we expect this trend to continue as current products grow and new products are introduced. We plan to continue selling loans as part of our strategy to balance partner and lending limits, and manage the loan portfolio and credit quality. We retain a portion of the fee income for our role in processing transactions on sold credit card loans, and will continue this strategy to provide an on-going revenue source with no on balance sheet risk or capital requirement.

As we build our deposit base, we will be able to sweep deposits off and on the balance sheet as needed. This deposit sweep capability allows us to better manage liquidity and deposit programs. At June 30, 2025 we swept off $478.7 million in deposits for FDIC insurance and liquidity purposes. Robinhood has entered the production testing phase for its suite of deposit products, signaling continued momentum in our strategic partnership pipeline. Dave finalized production testing in Q2 and is poised to initiate its beta launch, expanding our footprint in digital banking solutions. The introduction of theses products are expected to diversify and grow deposits.

The following table illustrates the activity and evolution in CCBX relationships for the periods presented.

	As of
(unaudited)	June 30, 2025	March 31, 2025	June 30, 2024
Active	20	19	19
Friends and family / testing	2	2	1
Implementation / onboarding	2	3	1
Signed letters of intent	5	1	0
Total CCBX relationships	29	25	21

CCBX loans increased $29.5 million, or 1.8%, to $1.68 billion despite selling $1.30 billion in loans during the three months ended June 30, 2025. In accordance with the program agreement for one partner, we are responsible for losses on 5% of that portfolio. At June 30, 2025 the portion of that portfolio for which we are responsible represented $19.8 million in loans.

The following table details the CCBX loan portfolio:

CCBX	As of
	June 30, 2025					March 31, 2025					June 30, 2024
(dollars in thousands; unaudited)	Balance			% to Total		Balance			% to Total		Balance			% to Total
Commercial and industrial loans:
Capital call lines	$	199,675		11.9	%	$	133,466		8.1	%	$	109,133		7.7	%
All other commercial & industrial loans		26,142		1.6			29,702		1.8			41,757		3.0
Real estate loans:
Residential real estate loans		234,786		14.0			285,355		17.3			287,950		20.4
Consumer and other loans:
Credit cards		533,925		31.8			532,775		32.2			549,241		39.0
Other consumer and other loans		686,321		40.7			670,026		40.6			422,136		29.9
Gross CCBX loans receivable		1,680,849		100.0	%		1,651,324		100.0	%		1,410,217		100.0	%
Net deferred origination (fees) costs		(569	)				(498	)				(438	)
Loans receivable	$	1,680,280				$	1,650,826				$	1,409,779
Loan Yield - CCBX ⁽¹⁾⁽²⁾		16.22	%				16.88	%				17.75	%

⁽¹⁾CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements and originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.
⁽²⁾Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.

The increase in CCBX loans in the quarter ended June 30, 2025, includes an increase of $66.2 million, or 49.6%, in capital call lines as a result of normal balance fluctuations and business activities, a decrease of $50.6 million, or 17.7%, in residential real estate loans and an increase of $17.4 million or 1.5%, in other consumer and other loans. We continue to monitor and manage the CCBX loan portfolio, and sold $1.30 billion in CCBX loans during the quarter ended June 30, 2025 compared to sales of $744.6 million in the quarter ended March 31, 2025. We continue to reposition ourselves by managing CCBX credit and concentration levels in an effort to optimize our loan portfolio earnings and generate off balance sheet fee income. CCBX loan yield decreased 0.67% for the quarter ended June 30, 2025 compared to the quarter ended March 31, 2025 as a result of an increase in lower rate capital call lines and overall mix of loans compared to the quarter ended March 31, 2025, these loans bear a lower rate of interest, but have less credit risk due to the way the loans are structured compared to other commercial loans.

The following chart shows the growth in credit card accounts that generate fee income. This includes accounts with balances, which are included in our loan totals, and accounts that have been sold and have no corresponding balance in our loan totals, and that generate fee income.

Active CCBX Credit Cards

The following chart shows the growth in active CCBX debit cards which are sources of interchange income.

Active CCBX Debit Cards

The following table details the CCBX deposit portfolio:

CCBX	As of
	June 30, 2025					March 31, 2025					June 30, 2024
(dollars in thousands; unaudited)	Balance			% to Total		Balance			% to Total		Balance			% to Total
Demand, noninterest bearing	$	60,448		2.6	%	$	58,416		2.6	%	$	62,234		3.0	%
Interest bearing demand and money market		2,231,159		94.5			2,145,608		94.6			1,989,105		96.7
Savings		51,523		2.2			16,625		0.7			5,150		0.3
Total core deposits		2,343,130		99.3			2,220,649		97.9			2,056,489		100.0
Other deposits		17,013		0.7			46,359		2.1			—		—
Total CCBX deposits	$	2,360,143		100.0	%	$	2,267,008		100.0	%	$	2,056,489		100.0	%
Cost of deposits ⁽¹⁾		3.96	%				4.01	%				4.92	%

⁽¹⁾Cost of deposits is annualized for the three months ended for each period presented.

CCBX deposits increased $93.1 million, or 4.1%, in the three months ended June 30, 2025 to $2.36 billion as a result of growth and normal balance fluctuations. This excludes the $478.7 million in CCBX deposits that were transferred off balance sheet for increased Federal Deposit Insurance Corporation ("FDIC") insurance coverage and sweep purposes, compared to $406.3 million for the quarter ended March 31, 2025. Amounts in excess of FDIC insurance coverage are transferred, using a third-party facilitator/vendor sweep product, to participating financial institutions.

Community Bank Performance Update

In the quarter ended June 30, 2025, the community bank saw net loans decrease $6.5 million, or 0.3%, to $1.86 billion, as a result of normal balance fluctuations.

The following table details the Community Bank loan portfolio:

Community Bank	As of
	June 30, 2025					March 31, 2025					June 30, 2024
(dollars in thousands; unaudited)	Balance			% to Total		Balance			% to Total		Balance			% to Total
Commercial and industrial loans	$	149,926		8.0	%	$	149,104		8.0	%	$	144,436		7.5	%
Real estate loans:
Construction, land and land development loans		194,150		10.4			166,551		8.9			173,064		9.0
Residential real estate loans		198,844		10.7			202,920		10.8			229,639		12.0
Commercial real estate loans		1,310,882		70.2			1,340,647		71.6			1,357,979		70.8
Consumer and other loans:
Other consumer and other loans		12,230		0.7			13,326		0.7			14,220		0.7
Gross Community Bank loans receivable		1,866,032		100.0	%		1,872,548		100.0	%		1,919,338		100.0	%
Net deferred origination fees		(5,982	)				(6,015	)				(7,304	)
Loans receivable	$	1,860,050				$	1,866,533				$	1,912,034
Loan Yield⁽¹⁾		6.53	%				6.53	%				6.52	%

⁽¹⁾Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.

Community bank loan categories decreased $29.8 million in commercial real estate loans and $1.1 million in consumer and other loans, partially offset by an increase of $27.6 million in construction, land and land development loans and $822,000 in commercial and industrial loans, during the quarter ended June 30, 2025.

The following table details the community bank deposit portfolio:

Community Bank	As of
	June 30, 2025					March 31, 2025					June 30, 2024
(dollars in thousands; unaudited)	Balance			% to Total		Balance			% to Total		Balance			% to Total
Demand, noninterest bearing	$	494,907		31.9	%	$	481,214		31.5	%	$	531,555		35.7	%
Interest bearing demand and money market		545,655		35.1			560,416		36.8			876,668		59.0
Savings		57,933		3.7			59,493		3.9			63,627		4.3
Total core deposits		1,098,495		70.7			1,101,123		72.2			1,471,850		99.0
Other deposits		440,975		28.4			407,391		26.7			1		0.0
Time deposits less than $100,000		5,299		0.3			5,585		0.4			6,741		0.5
Time deposits $100,000 and over		8,659		0.6			10,122		0.7			8,351		0.5
Total Community Bank deposits	$	1,553,428		100.0	%	$	1,524,221		100.0	%	$	1,486,943		100.0	%
Cost of deposits⁽¹⁾		1.77	%				1.76	%				1.77	%

⁽¹⁾Cost of deposits is annualized for the three months ended for each period presented.

Community bank deposits increased $29.2 million, or 1.9%, during the three months ended June 30, 2025 to $1.55 billion. The community bank segment includes noninterest bearing deposits of $494.9 million, or 31.9%, of total community bank deposits, resulting in a cost of deposits of 1.77%, which compared to 1.76% for the quarter ended March 31, 2025.

Net Interest Income and Margin Discussion

Net interest income was $76.7 million for the quarter ended June 30, 2025, an increase of $675,000, or 0.9%, from $76.1 million for the quarter ended March 31, 2025, and an increase of $10.6 million, or 16.0%, from $66.2 million for the quarter ended June 30, 2024. Net interest income compared to March 31, 2025, was higher due to an increase in average loans receivable. The increase in net interest income compared to June 30, 2024 was largely related to growth in loans receivable and a reduction in cost of funds as a result of lower interest rates.

Net interest margin was 7.06% for the three months ended June 30, 2025, compared to 7.48% for the three months ended March 31, 2025, due primarily to a decrease in loan yield. Net interest margin, net of BaaS loan expense, (a reconciliation of the non-GAAP measures are set forth in the Non-GAAP Financial Measures section of this earnings release) was 4.07% for the three months ended June 30, 2025, compared to 4.28% for the three months ended March 31, 2025. Net interest margin was 7.12% for the three months ended June 30, 2024. The decrease in net interest margin for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was largely due to a decrease in loan yield, partially offset by lower cost of funds. The $66.2 million of growth in lower rate capital call lines and overall mix of loans contributed to the decrease in net interest margin for the three months ended June 30, 2025. Capital call lines grew 49.6% quarter-over-quarter to $199.7 million, or 11.9% of total CCBX loans versus 8.1% in the prior quarter. These loans carry a lower interest rate, but also lower credit costs.

Interest and fees on loans receivable increased $720,000, or 0.7%, to $98.9 million for the three months ended June 30, 2025, compared to $98.1 million for the three months ended March 31, 2025, as a result of loan growth. Interest and fees on loans receivable increased $8.0 million, or 8.8%, compared to $90.9 million for the three months ended June 30, 2024, due to an increase in outstanding balances. Net interest margin, net of BaaS loan expense (a reconciliation of the non-GAAP measures are set forth in the Non-GAAP Financial Measures section of this earnings release) decreased 0.21% for the three months ended June 30, 2025, compared to the three months ended March 31, 2025 and increased 0.07% compared the three months ended June 30, 2024.

The following tables illustrate how net interest margin and loan yield is affected by BaaS loan expense:

Consolidated	As of and for the Three Months Ended
(dollars in thousands; unaudited)	June 30 2025			March 31 2025			June 30 2024
Net interest margin, net of BaaS loan expense:
Net interest margin ⁽¹⁾		7.06	%		7.48	%		7.12	%
Earning assets		4,356,591			4,124,065			3,736,579
Net interest income (GAAP)		76,737			76,062			66,172
Less: BaaS loan expense		(32,483	)		(32,507	)		(29,011	)
Net interest income, net of BaaS loan expense⁽²⁾	$	44,254		$	43,555		$	37,161
Net interest margin, net of BaaS loan expense ⁽¹⁾⁽²⁾		4.07	%		4.28	%		4.00	%
Loan income net of BaaS loan expense divided by average loans:
Loan yield (GAAP)⁽¹⁾		11.11	%		11.33	%		11.22	%
Total average loans receivable	$	3,567,823		$	3,511,724		$	3,258,042
Interest and earned fee income on loans (GAAP)		98,867			98,147			90,879
BaaS loan expense		(32,483	)		(32,507	)		(29,011	)
Net loan income⁽²⁾	$	66,384		$	65,640		$	61,868
Loan income, net of BaaS loan expense, divided by average loans ⁽¹⁾⁽²⁾		7.46	%		7.58	%		7.64	%

⁽¹⁾Annualized calculations shown for periods presented.
⁽²⁾A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.

Average investment securities decreased $900,000 to $46.3 million compared to the three months ended March 31, 2025 and decreased $3.5 million compared to the three months ended June 30, 2024 as a result of principal paydowns.

Cost of funds was 3.13% for the quarter ended June 30, 2025, an increase of 2 basis points from the quarter ended March 31, 2025 and a decrease of 47 basis points from the quarter ended June 30, 2024. Cost of deposits for the quarter ended June 30, 2025 was 3.10%, compared to 3.08% for the quarter ended March 31, 2025, and 3.58% for the quarter ended June 30, 2024. The decreased cost of funds and deposits compared to June 30, 2024 were largely due to the reductions in the Fed funds rate in 2024.

The following table summarizes the average yield on loans receivable and cost of deposits:

	For the Three Months Ended
	June 30, 2025				March 31, 2025				June 30, 2024
	Yield on Loans ⁽²⁾		Cost of Deposits ⁽²⁾		Yield on Loans ⁽²⁾		Cost of Deposits ⁽²⁾		Yield on Loans ⁽²⁾		Cost of Deposits ⁽²⁾
Community Bank	6.53	%	1.77	%	6.53	%	1.76	%	6.52	%	1.77	%
CCBX ⁽¹⁾	16.22	%	3.96	%	16.88	%	4.01	%	17.75	%	4.92	%
Consolidated	11.11	%	3.10	%	11.33	%	3.08	%	11.22	%	3.58	%
⁽¹⁾CCBX yield on loans does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit and fraud enhancements and originating & servicing CCBX loans. To determine Net BaaS loan income earned from CCBX loan relationships, the Company takes BaaS loan interest income and deducts BaaS loan expense to arrive at Net BaaS loan income which can be compared to interest income on the Company's community bank loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.
⁽²⁾Annualized calculations for periods presented.

The following table illustrates how BaaS loan interest income is affected by BaaS loan expense resulting in net BaaS loan income and the associated yield:

	For the Three Months Ended
	June 30, 2025				March 31, 2025				June 30, 2024
(dollars in thousands, unaudited)	Income / Expense		Income / expense divided by average CCBX loans ⁽²⁾		Income / Expense		Income / expense divided by average CCBX loans⁽²⁾		Income / Expense		Income / expense divided by average CCBX loans ⁽²⁾
BaaS loan interest income	$	68,264	16.22	%	$	67,855	16.88	%	$	60,138	17.75	%
Less: BaaS loan expense		32,483	7.72	%		32,507	8.09	%		29,011	8.56	%
Net BaaS loan income⁽¹⁾	$	35,781	8.50	%	$	35,348	8.79	%	$	31,127	9.19	%
Average BaaS Loans⁽³⁾	$	1,688,492			$	1,630,088			$	1,362,343

⁽¹⁾A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.
⁽²⁾ Annualized calculations shown for the periods presented.
⁽³⁾Includes loans held for sale.

Noninterest Income Discussion

Noninterest income was $42.7 million for the three months ended June 30, 2025, a decrease of $20.8 million from $63.5 million for the three months ended March 31, 2025, and a decrease of $26.4 million from $69.1 million for the three months ended June 30, 2024. The decrease in noninterest income for the quarter ended June 30, 2025 as compared to the quarter ended March 31, 2025 was primarily due to a decrease of $20.6 million in total BaaS income. The $20.6 million decrease in total BaaS income included a $22.4 million decrease in BaaS credit enhancements related to the decrease in provision for credit losses due to an improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical loss factors, which had a favorable impact on the provision for credit losses, partially offset by an increase of $1.0 million in BaaS program income, which includes $504,000 in nonrecurring revenue, and a $811,000 increase in BaaS fraud enhancements. Results for the three months ended June 30, 2025 also included a net $439,000 loss on equity securities due to the re-valuation of a privately held equity stake, which we review quarterly. Management doesn't believe the write-down is indicative of longer-term concerns of the portfolio company's health at this time. The $1.0 million increase in BaaS program income is largely due to an increase in transaction and interchange fees and includes $504,000 in nonrecurring revenue (see "Appendix B" for more information on the accounting for BaaS allowance for credit losses and credit and fraud enhancements).

The $26.4 million decrease in noninterest income over the quarter ended June 30, 2024 was primarily due to a $28.5 million decrease in BaaS credit and fraud enhancements due to improvement in the performance of the CCBX loan portfolio, partially offset by an increase of $2.0 million in BaaS program income, which includes $504,000 in nonrecurring revenue.

Noninterest Expense Discussion

Total noninterest expense increased $843,000 to $72.8 million for the three months ended June 30, 2025, compared to $72.0 million for the three months ended March 31, 2025, and increased $14.9 million from $58.0 million for the three months ended June 30, 2024. The $843,000 increase in noninterest expense for the quarter ended June 30, 2025, as compared to the quarter ended March 31, 2025, was primarily due to a $659,000 increase in data processing and software licenses, an $811,000 increase in BaaS fraud expense and a $74,000 increase in legal and professional fees, partially offset by a $414,000 decrease in other expenses, $119,000 decrease in occupancy expense, $81,000 decrease in salaries and employee benefits and a $24,000 decrease in BaaS loan expense. The increase in data processing and software licenses were part of our continued investments in growth, technology and risk management. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, and originating & servicing CCBX loans. BaaS fraud expense represents non-credit fraud losses on partner's customer loan and deposit accounts. A portion of this expense is realized during the quarter in which the loss occurs, and a portion is estimated based on historical or other information from our partners.

The increase in noninterest expenses for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 was largely due to a $4.4 million increase in salary and employee benefits, a $1.6 million increase in data processing and software licenses due to enhancements and investments in technology, and a $2.7 million increase in legal and professional expenses, all of which are related to the growth of Company and investments in technology and risk management. Also contributing to the the increase was a $3.5 million increase in BaaS loan expense and a $1.0 million increase in BaaS fraud expense.

Certain noninterest expenses are reimbursed by our CCBX partners. In accordance with GAAP we recognize all expenses in noninterest expense and the reimbursement of expenses from our CCBX partner in noninterest income. The following table reflects the portion of noninterest expenses that are reimbursed by partners to assist in the understanding of how the increases in noninterest expense are related to expenses incurred and reimbursed by CCBX partners:

	Three Months Ended
	June 30,		March 31,		June 30,
(dollars in thousands; unaudited)		2025		2025		2024
Total noninterest expense (GAAP)	$	72,832	$	71,989	$	57,964
Less: BaaS loan expense		32,483		32,507		29,011
Less: BaaS fraud expense		2,804		1,993		1,784
Less: Reimbursement of expenses (BaaS)		646		1,026		857
Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses (BaaS)⁽¹⁾	$	36,899	$	36,463	$	26,312

⁽¹⁾A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.

Provision for Income Taxes

The provision for income taxes was $3.4 million for the three months ended June 30, 2025, $2.0 million for the three months ended March 31, 2025 and $3.4 million for the second quarter of 2024. The income tax provision as a percentage was higher for the three months ended June 30, 2025 compared to the quarter ended March 31, 2025 as a result of the higher net income and increase in state income tax rates, partially offset by the deductibility of certain equity awards, and was somewhat flat in dollar amount compared to the quarter ended June 30, 2024, but higher in tax rate.

The Company is subject to various state taxes that are assessed as CCBX activities and employees expand into other states, which has increased the overall tax rate used in calculating the provision for income taxes in the current and future periods. The Company uses a federal statutory tax rate of 21.0% as a basis for calculating provision for federal income taxes and 5.14% for calculating the provision for state income taxes. The state rate increased in the quarter ended June 30, 2025 primarily as a result of a change in California's tax laws.

Financial Condition Overview

Total assets increased $141.3 million, or 3.3%, to $4.48 billion at June 30, 2025 compared to $4.34 billion at March 31, 2025. The increase is primarily comprised of a $95.5 million increase in cash and interest bearing deposits with other banks, a $23.0 million increase in loans receivable, and an $18.3 million increase in loans held for sale. Total loans receivable increased to $3.54 billion at June 30, 2025, from $3.52 billion at March 31, 2025.

As of June 30, 2025, in addition to the $719.8 million in cash on hand the Company had the capacity to borrow up to a total of $642.7 million from the Federal Reserve Bank discount window and Federal Home Loan Bank, plus an additional $50.0 million from a correspondent bank. There were no borrowings outstanding on these lines as of June 30, 2025.

The Company, on a stand alone basis, had a cash balance of $43.9 million as of June 30, 2025, a portion of which is retained for general operating purposes, including debt repayment, for funding $1.6 million in commitments to bank technology investment funds, with the remaining cash available to be contributed to the Bank as capital.

Uninsured deposits were $579.9 million as of June 30, 2025, compared to $558.8 million as of March 31, 2025.

Total shareholders' equity as of June 30, 2025 increased $11.8 million since March 31, 2025. The increase in shareholders' equity was primarily comprised of $11.0 million in net earnings combined with an increase of $764,000 in common stock outstanding as a result of equity awards exercised or vested during the three months ended June 30, 2025.

The Company and the Bank remained well capitalized at June 30, 2025, as summarized in the following table.

(unaudited)	Coastal Community Bank		Coastal Financial Corporation		Minimum Well Capitalized Ratios under Prompt Corrective Action ⁽¹⁾
Tier 1 Leverage Capital (to average assets)	10.33	%	10.39	%	5.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)	12.36	%	12.32	%	6.50	%
Tier 1 Capital (to risk-weighted assets)	12.36	%	12.41	%	8.00	%
Total Capital (to risk-weighted assets)	13.65	%	14.90	%	10.00	%

⁽¹⁾Presents the minimum capital ratios for an insured depository institution, such as the Bank, to be considered well capitalized under the Prompt Corrective Action framework. The minimum requirements for the Company to be considered well capitalized under Regulation Y include to maintain, on a consolidated basis, a total risk-based capital ratio of 10.0 percent or greater and a tier 1 risk-based capital ratio of 6.0 percent or greater.

Asset Quality

The allowance for credit losses was $164.8 million and 4.65% of loans receivable at June 30, 2025 compared to $183.2 million and 5.21% at March 31, 2025 and $148.9 million and 4.48% at June 30, 2024. The allowance for credit loss allocated to the CCBX portfolio was $145.9 million and 8.68% of CCBX loans receivable at June 30, 2025, with $18.9 million of allowance for credit loss allocated to the community bank or 1.02% of total community bank loans receivable.

The following table details the allocation of the allowance for credit loss as of the period indicated:

	As of June 30, 2025									As of March 31, 2025									As of June 30, 2024
(dollars in thousands; unaudited)	Community Bank			CCBX			Total			Community Bank			CCBX			Total			Community Bank			CCBX			Total
Loans receivable	$	1,860,050		$	1,680,280		$	3,540,330		$	1,866,533		$	1,650,826		$	3,517,359		$	1,912,034		$	1,409,779		$	3,321,813
Allowance for credit losses		(18,936	)		(145,858	)		(164,794	)		(18,992	)		(164,186	)		(183,178	)		(21,046	)		(127,832	)		(148,878	)
Allowance for credit losses to total loans receivable		1.02	%		8.68	%		4.65	%		1.02	%		9.95	%		5.21	%		1.10	%		9.07	%		4.48	%

Net charge-offs totaled $49.3 million for the quarter ended June 30, 2025, compared to $48.2 million for the quarter ended March 31, 2025 and $53.0 million for the quarter ended June 30, 2024. Net charge-offs as a percent of average loans decreased to 5.54% for the quarter ended June 30, 2025 compared to 5.57% for the quarter ended March 31, 2025. CCBX partner agreements provide for a credit enhancement that covers the net-charge-offs on CCBX loans and negative deposit accounts by indemnifying or reimbursing incurred losses, except in accordance with the program agreement for one partner where the Company was responsible for credit losses on approximately 5% of a $296.3 million loan portfolio. At June 30, 2025, our portion of this portfolio represented $19.8 million in loans. Net charge-offs for this $19.8 million in loans were $1.3 million for the three months ended June 30, 2025, $1.1 million for the three months ended March 31, 2025 and $1.3 million for the three months ended June 30, 2024.

The following table details net charge-offs for the community bank and CCBX for the period indicated:

	Three Months Ended
	June 30, 2025									March 31, 2025									June 30, 2024
(dollars in thousands; unaudited)	Community Bank			CCBX			Total			Community Bank			CCBX			Total			Community Bank			CCBX			Total
Gross charge-offs	$	11		$	53,769		$	53,780		$	4		$	53,682		$	53,686		$	2		$	55,205		$	55,207
Gross recoveries		(2	)		(4,465	)		(4,467	)		(7	)		(5,479	)		(5,486	)		(4	)		(2,250	)		(2,254	)
Net charge-offs	$	9		$	49,304		$	49,313		$	(3	)	$	48,203		$	48,200		$	(2	)	$	52,955		$	52,953
Net charge-offs to average loans ⁽¹⁾		0.00	%		11.71	%		5.54	%		0.00	%		11.99	%		5.57	%		0.00	%		15.63	%		6.54	%

⁽¹⁾Annualized calculations shown for periods presented.

During the quarter ended June 30, 2025, a $31.0 million provision for credit losses was recorded for CCBX partner loans, compared to the $54.3 million provision for credit losses was recorded for CCBX partner loans for the quarter ended March 31, 2025. The provision was based on management's analysis, bringing the CCBX allowance for credit losses to $145.9 million at June 30, 2025 compared to $164.2 million at March 31, 2025. The decrease in the allowance is due to an improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical loss factors. As we continue to originate higher quality loans, these become a greater proportion of the CCBX portfolio, resulting in an improvement in expected losses and a reduced allowance. In general, CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses. Agreements with our CCBX partners provide for a credit enhancement which protects the Bank by indemnifying or reimbursing incurred losses.

In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassified negative deposit accounts. When the provision for CCBX credit losses and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements). Expected losses are recorded in the allowance for credit losses. The credit enhancement asset is relieved when credit enhancement recoveries are received from the CCBX partner. If our partner is unable to fulfill their contracted obligations then the Bank could be exposed to additional credit losses. Management regularly evaluates and manages this counterparty risk with our CCBX partners.

The factors used in management's analysis for community bank credit losses indicated that a provision recapture of $47,000 was needed for the quarter ended June 30, 2025 compared to a provision of $65,000 and a provision recapture of $341,000 for the quarters ended March 31, 2025 and June 30, 2024, respectively. The provision recapture in the current period was due to the lower outstanding balance in the community bank loan portfolio.

The following table details the provision expense/(recapture) for the community bank and CCBX for the period indicated:

	Three Months Ended
(dollars in thousands; unaudited)	June 30, 2025			March 31, 2025		June 30, 2024
Community bank	$	(47	)	$	65	$	(341	)
CCBX		30,976			54,319		62,231
Total provision expense	$	30,929		$	54,384	$	61,890

A provision for unfunded commitments of $1.5 million was recorded for the quarter ended June 30, 2025 as a result of a change in the loan mix of available balance. A provision for accrued interest receivable of $182,000 was recorded for the quarter ended June 30, 2025 on CCBX loans.

At June 30, 2025, our nonperforming assets were $60.9 million, or 1.36%, of total assets, compared to $56.4 million, or 1.30%, of total assets, at March 31, 2025, and $53.2 million, or 1.34%, of total assets, at June 30, 2024. These ratios are impacted by nonperforming CCBX loans that are covered by CCBX partner credit enhancements. As of June 30, 2025, $55.3 million of the $57.0 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements described above. Additionally, some CCBX partners have a collection practice that places certain loans on nonaccrual status to improve collectability. $20.1 million of these loans are less than 90 days past due as of June 30, 2025.

Nonperforming assets increased $4.5 million during the quarter ended June 30, 2025, compared to the quarter ended March 31, 2025. Community bank nonperforming loans increased $3.7 million from March 31, 2025 to $3.8 million as of June 30, 2025, and CCBX nonperforming loans increased $847,000 to $57.0 million from March 31, 2025. The increase in CCBX nonperforming loans is due to an increase of $4.2 million in nonaccrual loans from March 31, 2025 to $24.4 million, partially offset by a $3.4 million decrease in CCBX loans that are past due 90 days or more and still accruing interest. As of June 30, 2025, $20.1 million in loans are under 90 days past due as a result of CCBX partners placing them on nonaccrual status to improve collectability. As a result of the type of loans (primarily consumer loans) originated through our CCBX partners we would typically anticipate that balances 90 days past due or more and still accruing will generally increase as those loan portfolios grow, therefore we believe the decrease in these past due CCBX loans is a positive performance indicator for the CCBX portfolio. Installment/closed-end and revolving/open-end consumer loans originated through CCBX lending partners will continue to accrue interest until 120 and 180 days past due, respectively and are reported as substandard, 90 days or more days past due and still accruing. There were no repossessed assets or other real estate owned at June 30, 2025. Our nonperforming loans to loans receivable ratio was 1.72% at June 30, 2025, compared to 1.60% at March 31, 2025, and 1.60% at June 30, 2024.

For the quarter ended June 30, 2025, there were $9,000 in community bank net charge-offs and $49.3 million in net charge-offs were recorded on CCBX loans. These CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses.

The following table details the Company's nonperforming assets for the periods indicated.

Consolidated	As of
(dollars in thousands; unaudited)	June 30, 2025			March 31, 2025			June 30, 2024
Nonaccrual loans:
Commercial and industrial loans	$	2,333		$	381		$	—
Real estate loans:
Construction, land and land development		1,697			—			—
Residential real estate		—			—			213
Commercial real estate		—			—			7,731
Consumer and other loans:
Credit cards		20,140			13,602			—
Other consumer and other loans		4,063			6,376			—
Total nonaccrual loans		28,233			20,359			7,944
Accruing loans past due 90 days or more:
Commercial & industrial loans		926			782			1,278
Real estate loans:
Residential real estate loans		1,817			2,407			2,722
Consumer and other loans:
Credit cards		23,116			27,187			36,465
Other consumer and other loans		6,775			5,632			4,779
Total accruing loans past due 90 days or more		32,634			36,008			45,244
Total nonperforming loans		60,867			56,367			53,188
Real estate owned		—			—			—
Repossessed assets		—			—			—
Total nonperforming assets	$	60,867		$	56,367		$	53,188
Total nonaccrual loans to loans receivable		0.80	%		0.58	%		0.24	%
Total nonperforming loans to loans receivable		1.72	%		1.60	%		1.60	%
Total nonperforming assets to total assets		1.36	%		1.30	%		1.34	%

The following tables detail the CCBX and community bank nonperforming assets which are included in the total nonperforming assets table above.

CCBX	As of
(dollars in thousands; unaudited)	June 30, 2025			March 31, 2025			June 30, 2024
Nonaccrual loans:
Commercial and industrial loans:
All other commercial & industrial loans	$	188		$	192		$	—
Consumer and other loans:
Credit cards		20,140			13,602			—
Other consumer and other loans		4,063			6,376			—
Total nonaccrual loans		24,391			20,170			—
Accruing loans past due 90 days or more:
Commercial & industrial loans		926			782			1,278
Real estate loans:
Residential real estate loans		1,817			2,407			2,722
Consumer and other loans:
Credit cards		23,116			27,187			36,465
Other consumer and other loans		6,775			5,632			4,779
Total accruing loans past due 90 days or more		32,634			36,008			45,244
Total nonperforming loans		57,025			56,178			45,244
Other real estate owned		—			—			—
Repossessed assets		—			—			—
Total nonperforming assets	$	57,025		$	56,178		$	45,244
Total CCBX nonperforming assets to total consolidated assets		1.27	%		1.29	%		1.14	%

Community Bank	As of
(dollars in thousands; unaudited)	June 30, 2025			March 31, 2025			June 30, 2024
Nonaccrual loans:
Commercial and industrial loans	$	2,145		$	189		$	—
Real estate:
Construction, land and land development		1,697			—			—
Residential real estate		—			—			213
Commercial real estate		—			—			7,731
Total nonaccrual loans		3,842			189			7,944
Accruing loans past due 90 days or more:
Total accruing loans past due 90 days or more		—			—			—
Total nonperforming loans		3,842			189			7,944
Other real estate owned		—			—			—
Repossessed assets		—			—			—
Total nonperforming assets	$	3,842		$	189		$	7,944
Total community bank nonperforming assets to total consolidated assets		0.09	%		—	%		0.20	%

About Coastal Financial

Coastal Financial Corporation (NASDAQ:CCB) (the "Company"), is an Everett, Washington based bank holding company whose wholly owned subsidiaries are Coastal Community Bank ("Bank") and Arlington Olympic LLC. The $4.48 billion Bank provides service through 14 branches in Snohomish, Island, and King Counties, the Internet and its mobile banking application. The Bank provides banking as a service to digital financial service providers, companies and brands that want to provide financial services to their customers through the Bank's CCBX segment. To learn more about the Company visit www.coastalbank.com.

CCB-ER

Contact

Eric Sprink, Chief Executive Officer, (425) 357-3659

Joel Edwards, Executive Vice President & Chief Financial Officer, (425) 357-3687

Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management's expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believes," "can," "could," "may," "predicts," "potential," "should," "will," "estimate," "plans," "projects," "continuing," "ongoing," "expects," "intends" and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of or reference to forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of risks, uncertainties and assumptions that are difficult to predict. Factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, the risk that changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition, and results of operations and those other risks and uncertainties discussed under "Risk Factors" in our Annual Report on Form 10-K for the most recent period filed and in any of our subsequent filings with the Securities and Exchange Commission.

If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. You are cautioned not to place undue reliance on forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as required by law.

COASTAL FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands; unaudited)

ASSETS
	June 30, 2025			March 31, 2025			December 31, 2024			September 30, 2024			June 30, 2024
Cash and due from banks	$	29,546		$	43,467		$	36,533		$	45,327		$	59,995
Interest earning deposits with other banks		690,213			580,835			415,980			438,699			427,250
Investment securities, available for sale, at fair value		33			34			35			38			39
Investment securities, held to maturity, at amortized cost		45,544			46,957			47,286			48,582			49,174
Other investments		12,521			12,589			10,800			10,757			10,664
Loans held for sale		60,474			42,132			20,600			7,565			—
Loans receivable		3,540,330			3,517,359			3,486,565			3,413,894			3,321,813
Allowance for credit losses		(164,794	)		(183,178	)		(176,994	)		(171,674	)		(148,878	)
Total loans receivable, net		3,375,536			3,334,181			3,309,571			3,242,220			3,172,935
CCBX credit enhancement asset		167,779			183,377			181,890			173,600			149,096
CCBX receivable		13,009			12,685			14,138			16,060			11,520
Premises and equipment, net		29,052			28,639			27,431			25,833			24,526
Lease right-of-use assets		4,891			5,117			5,219			5,427			5,635
Accrued interest receivable		20,849			21,109			21,104			22,315			21,620
Bank-owned life insurance, net		13,648			13,501			13,375			13,255			13,132
Deferred tax asset, net		3,829			3,912			3,600			3,083			2,221
Other assets		13,635			10,747			13,646			11,711			11,742
Total assets	$	4,480,559		$	4,339,282		$	4,121,208		$	4,064,472		$	3,959,549

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits	$	3,913,571		$	3,791,229		$	3,585,332		$	3,627,288		$	3,543,432
Subordinated debt, net		44,368			44,331			44,293			44,256			44,219
Junior subordinated debentures, net		3,592			3,592			3,591			3,591			3,591
Deferred compensation		295			310			332			369			405
Accrued interest payable		954			1,107			962			1,070			999
Lease liabilities		5,063			5,293			5,398			5,609			5,821
CCBX payable		32,939			29,391			29,171			37,839			32,539
Other liabilities		18,068			14,112			13,425			12,520			11,850
Total liabilities		4,018,850			3,889,365			3,682,504			3,732,542			3,642,856
SHAREHOLDERS' EQUITY
Common Stock		230,423			229,659			228,177			134,769			132,989
Retained earnings		231,287			220,259			210,529			197,162			183,706
Accumulated other comprehensive loss, net of tax		(1	)		(1	)		(2	)		(1	)		(2	)
Total shareholders' equity		461,709			449,917			438,704			331,930			316,693
Total liabilities and shareholders' equity	$	4,480,559		$	4,339,282		$	4,121,208		$	4,064,472		$	3,959,549

COASTAL FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts; unaudited)

	Three Months Ended
	June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024		June 30, 2024
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	98,867	$	98,147	$	95,575	$	99,676	$	90,879
Interest on interest earning deposits with other banks		8,085		6,070		6,021		4,781		5,683
Interest on investment securities		626		650		661		675		686
Dividends on other investments		219		40		191		33		174
Total interest income		107,797		104,907		102,448		105,165		97,422
INTEREST EXPENSE
Interest on deposits		30,400		28,185		29,404		32,083		30,578
Interest on borrowed funds		660		660		667		809		672
Total interest expense		31,060		28,845		30,071		32,892		31,250
Net interest income		76,737		76,062		72,377		72,273		66,172
PROVISION FOR CREDIT LOSSES		32,211		55,781		61,867		70,257		62,325
Net interest income/(expense) after provision for credit losses		44,526		20,281		10,510		2,016		3,847
NONINTEREST INCOME
Service charges and fees		913		860		932		952		946
Loan referral fees		—		—

Coastal Financial Corporation Announces Second Quarter 2025 Results