EVERETT, Wash., July 30, 2026 (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, 2026, including net loss of $42.1 million, or $(2.76) per diluted common share, compared to net income of $12.0 million, or $0.78 per diluted common share, for the three months ended March 31, 2026 and $11.0 million, or $0.71 per diluted common share, for the three months ended June 30, 2025. The net loss is primarily attributable to a $68.8 million credit expense related to a single, isolated CCBX partner relationship.

Management Discussion of the Second Quarter Results

"Our second quarter results reflect continued performance of our core franchise, which was offset by decisive action we took on a single non-public company partner relationship. Based on our assessment, we recorded the potential impact fully and in accordance with our credit protection framework. We believe this is an isolated issue pertaining to one partner and does not reflect a change in our view of our broader partner portfolio or BaaS model. We remain focused on disciplined and sustainable growth by partnering with organizations that align with our long-term strategy, thoughtfully expanding our product offerings, and continuing to build a resilient BaaS platform designed to deliver value for all stakeholders," stated CEO Eric Sprink.

"Despite these credit expenses, we delivered solid loan growth of 9.0%, increased BaaS program income, and continued to deepen relationships with our established partners while advancing new products that support our strategy," added Sprink. "Our CCBX segment expanded product offerings with existing partners during the quarter while advancing new partners through onboarding toward launch and active status in alignment with our long-term strategy. We also experienced solid quarter-over-quarter growth in BaaS program income, reflecting continued momentum across our diversified revenue streams."

"Looking ahead, we remain focused on disciplined, sustainable growth by strengthening relationships with larger, well-established partners, thoughtfully expanding our product offerings, and continuing to invest in the infrastructure, technology and risk management capabilities that support our platform. Our operating momentum, our disciplined approach to partner selection, and our strong capital and liquidity position leave us confident in our ability to execute and to create long-term value for shareholders," concluded Sprink.

Key Points for Second Quarter

CCBX Partner and Product Expansion. As of June 30, 2026 we had one partner in testing, one in implementation/onboarding, and three signed letters of intent (LOIs). Our active pipeline positions us for continued growth, with new partnership opportunities and product launches expected for the remainder of 2026. Total BaaS program fee income was $12.0 million for the three months ended June 30, 2026, an increase of $1.1 million, or 10.3%, from the three months ended March 31, 2026.

"Our technology modernization initiatives continue to strengthen the CCBX platform, improving operational efficiency, enhancing the partner experience and supporting long-term scalability," stated CCBX President Brian Hamilton.
Items Affecting Second Quarter Results. Significant items impacting June 30, 2026 results included a $22.8 million provision for credit losses and a $46.0 million valuation adjustment to the credit enhancement asset, both related to one partner, not expected to be fully collected under its indemnification arrangement. These items followed an individual assessment of collectability. We also recorded $4.4 million of capitalized software amortization due to shortened useful lives associated with technology modernization.
Positive On- and Off-Balance Sheet Trends Continue. At June 30, 2026 we swept off $4.26 billion in deposits for Federal Deposit Insurance Corporation ("FDIC") insurance and liquidity purposes, and generated $1.2 million in noninterest income during the quarter ended June 30, 2026, an increase of $467,000, or 65.8%, from $710,000 for the quarter ended March 31, 2026 and an increase of $820,000, or 229.7% from $357,000 for the quarter ended June 30, 2025.

During the second quarter of 2026, we sold $4.56 billion of loans, including $3.68 billion of additional credit card receivables originated through ongoing cardholder spend and revolving activity and sold under existing forward flow arrangements, compared to $3.28 billion of sold loans in the quarter ended March 31, 2026, including $2.63 billion sold under the same forward flow arrangements. As of June 30, 2026 there were 881,659 off-balance sheet credit cards with fee earning potential, an increase of 214,636, or 32.18%, compared to the quarter ended March 31, 2026 and an increase of 567,832, or 180.94%, from June 30, 2025.

Capital and Liquidity

The Company and the Bank remained well capitalized at June 30, 2026, with a Company common equity Tier 1 ratio of 10.86%, a Tier 1 leverage ratio of 9.11%, and a total risk-based capital ratio of 13.30%, each above the levels required to be considered well capitalized. The quarter’s charges reduced capital ratios by approximately one percentage point, and the Company retained $1.01 billion of cash and cash equivalents and $1.12 billion of additional contingent borrowing capacity, with no borrowings outstanding as of June 30, 2026. The Company’s capital efficient model, including ongoing loan sales and off-balance sheet deposit and card programs, continues to support internal capital generation.

Executive Chairman Appointment

The Company also announced that Christopher D. Adams, Chairman since 2019 and a member of the Board since 2016, has been appointed Executive Chairman of Coastal Financial Corporation, effective immediately. In this expanded capacity, Mr. Adams will devote additional time to long-term strategy, leadership development, and external engagement, and partner closely with Mr. Sprink and the rest of the management team.

Second Quarter 2026 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, 2026			March 31, 2026			December 31, 2025			September 30, 2025			June 30, 2025
Income Statement Data:
Interest and dividend income	$	118,554		$	111,681		$	107,886		$	109,027		$	107,797
Interest expense		29,187			28,324			28,521			31,126			31,060
Net interest income		89,367			83,357			79,365			77,901			76,737
Provision for credit losses		92,157			51,398			48,041			56,598			32,211
Net interest (loss) income after provision for credit losses		(2,790	)		31,959			31,324			21,303			44,526
Noninterest income		88,707			66,077			58,661			66,777			42,693
Noninterest expense		141,111			83,452			72,804			70,172			72,832
(Benefit) provision for income tax		(13,089	)		2,565			4,538			4,316			3,359
Net (loss) income	$	(42,105	)	$	12,019		$	12,643		$	13,592		$	11,028

	As of and for the Three Month Period
	June 30, 2026			March 31, 2026			December 31, 2025			September 30, 2025			June 30, 2025
Balance Sheet Data:
Cash and cash equivalents	$	1,008,448		$	1,495,467		$	736,970		$	642,258		$	719,759
Investment securities		45,246			46,169			48,247			43,942			45,577
Loans held for sale		107,838			124,039			71,216			42,894			60,474
Loans receivable		4,208,270			3,859,379			3,749,531			3,703,848			3,540,330
Allowance for credit losses		(213,724	)		(172,427	)		(169,530	)		(173,813	)		(164,794	)
Total assets		5,456,152			5,663,829			4,741,437			4,553,076			4,480,559
Interest bearing deposits		4,249,420			4,462,003			3,564,583			3,408,160			3,358,216
Noninterest bearing deposits		612,478			579,161			579,616			564,403			555,355
Core deposits⁽¹⁾		4,850,783			5,028,967			4,131,911			3,959,360			3,441,624
Total deposits		4,861,898			5,041,164			4,144,199			3,972,563			3,913,571
Total borrowings		48,112			48,074			48,036			47,999			47,960
Total shareholders’ equity	$	463,447		$	503,762		$	490,959		$	475,277		$	461,709

Share and Per Share Data⁽²⁾:
(Loss) earnings per share – basic	$	(2.76	)	$	0.79		$	0.84		$	0.90		$	0.73
(Loss) earnings per share – diluted	$	(2.76	)	$	0.78		$	0.82		$	0.88		$	0.71
Dividends per share		—			—			—			—			—
Book value per share⁽³⁾	$	30.33		$	33.05		$	32.43		$	31.45		$	30.59
Tangible book value per share⁽⁴⁾	$	30.05		$	32.76		$	32.13		$	31.45		$	30.59
Weighted avg outstanding shares – basic		15,243,357			15,179,447			15,116,005			15,093,274			15,033,296
Weighted avg outstanding shares – diluted		15,243,357			15,422,822			15,455,856			15,443,987			15,447,923
Shares outstanding at end of period		15,280,689			15,241,491			15,140,192			15,112,000			15,093,036
Stock options outstanding at end of period		65,835			68,585			118,881			122,206			126,654

	As of and for the Three Month Period
	June 30, 2026			March 31, 2026			December 31, 2025			September 30, 2025			June 30, 2025
Credit Quality Data:
Nonperforming assets⁽⁵⁾to total assets		1.38	%		1.19	%		1.35	%		1.31	%		1.36	%
Nonperforming assets⁽⁵⁾to loans receivable and OREO		1.79	%		1.75	%		1.71	%		1.61	%		1.72	%
Nonperforming loans⁽⁵⁾to total loans receivable		1.79	%		1.75	%		1.71	%		1.61	%		1.72	%
Allowance for credit losses to nonperforming loans		284.2	%		259.3	%		264.4	%		290.8	%		270.7	%
Allowance for credit losses to total loans receivable		5.08	%		4.47	%		4.52	%		4.69	%		4.65	%
Gross charge-offs	$	58,218		$	54,523		$	55,189		$	54,534		$	53,780
Gross recoveries	$	7,583		$	4,936		$	5,114		$	5,289		$	4,467
Net charge-offs to average loans⁽⁶⁾		4.90	%		5.13	%		5.31	%		5.37	%		5.54	%

Capital Ratios:
Company
Tier 1 leverage capital		9.11	%		10.09	%		10.62	%		10.54	%		10.39	%
Common equity Tier 1 risk-based capital		10.86	%		12.08	%		12.43	%		12.33	%		12.32	%
Tier 1 risk-based capital		10.94	%		12.17	%		12.52	%		12.42	%		12.41	%
Total risk-based capital		13.30	%		14.54	%		14.95	%		14.88	%		14.90	%
Bank
Tier 1 leverage capital		9.12	%		10.10	%		10.60	%		10.49	%		10.33	%
Common equity Tier 1 risk-based capital		10.97	%		12.19	%		12.50	%		12.37	%		12.36	%
Tier 1 risk-based capital		10.97	%		12.19	%		12.50	%		12.37	%		12.36	%
Total risk-based capital		12.27	%		13.48	%		13.79	%		13.66	%		13.65	%

⁽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. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of intangible assets on book value.

⁽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 (3.32)% for the quarter ended June 30, 2026 compared to 0.98% and 0.99% for the quarters ended March 31, 2026 and June 30, 2025, respectively. The decline in ROA compared to the prior quarters was primarily attributable to charges related to one partner relationship, including a valuation adjustment to the related credit enhancement asset and an increase in the provision for credit losses. ROA was also impacted by higher noninterest expense, including a loss on disposal of internally developed software and increased data processing and software license costs. See the "Provision for Credit Losses" and "Noninterest Expense" discussions below for additional information.

Compared to the quarter ended March 31, 2026, yield on earning assets increased 0.27% while yield on loans receivable decreased by 0.02%. Average loans receivable as of June 30, 2026 increased $269.8 million compared to March 31, 2026 as net CCBX loans continue to grow, despite selling $4.56 billion in CCBX loans during the quarter ended June 30, 2026. Compared to the quarter ended June 30, 2025, yield on earning assets declined 0.28% and yield on loans receivable declined by 0.36%. Average loans receivable as of June 30, 2026 increased $580.6 million compared to June 30, 2025.

The quarter over quarter volatility in the efficiency ratio and noninterest income to average asset performance metrics were driven by changes in the credit enhancement on CCBX loans, which is included within noninterest income, due to changes in CCBX provision expense. Although these items have historically been largely offsetting, a portion of the second quarter 2026 provision was not expected to be fully recovered under a partner indemnification arrangement, resulting in a net adverse impact on earnings. The quarter over quarter change in ROA and return on average equity are related to the expenses previously mentioned.

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

	Three Months Ended
(unaudited)	June 30, 2026		March 31, 2026		December 31, 2025		September 30, 2025		June 30, 2025

Return on average assets⁽¹⁾	(3.32	)%	0.98	%	1.09	%	1.19	%	0.99	%
Return on average equity⁽¹⁾	(33.10	)%	9.80	%	10.41	%	11.52	%	9.72	%
Yield on earnings assets⁽¹⁾	9.65	%	9.38	%	9.55	%	9.80	%	9.92	%
Yield on loans receivable⁽¹⁾	10.74	%	10.76	%	10.63	%	10.95	%	11.11	%
Cost of funds⁽¹⁾	2.62	%	2.59	%	2.77	%	3.07	%	3.13	%
Cost of deposits⁽¹⁾	2.57	%	2.56	%	2.74	%	3.04	%	3.10	%
Net interest margin⁽¹⁾	7.27	%	7.00	%	7.03	%	7.00	%	7.06	%
Noninterest expense to average assets⁽¹⁾	11.13	%	6.78	%	6.25	%	6.13	%	6.52	%
Noninterest income to average assets⁽¹⁾	7.00	%	5.37	%	5.04	%	5.83	%	3.82	%
Efficiency ratio	79.24	%	55.85	%	52.75	%	48.50	%	60.98	%
Loans receivable to deposits⁽²⁾	88.77	%	79.02	%	92.20	%	94.32	%	92.01	%

⁽¹⁾Annualized calculations shown for quarterly periods presented.

⁽²⁾Includes loans held for sale.

Second Quarter Conference Call

The Company will host its second quarter conference call on July 30, 2026 at 8 a.m. ET (5 a.m. PT). A live webcast of the conference call, as well as a replay, will be available online on the Investor Relations section of the Company’s investor website at https://ir.coastalbank.com/

Q2 Earnings Call Webcast Link: Link to Earnings Call

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 30 relationships, at varying stages, including one partner in testing, one in implementation/onboarding, three signed LOIs and three winding down as of June 30, 2026. We continue to focus on the composition of our partner portfolio by emphasizing relationships with well-established organizations that align with our long-term strategy, while continually evaluating our portfolio to ensure it reflects our risk and return objectives. As part of this disciplined approach, we remain focused on strengthening existing partnerships, thoughtfully expanding product offerings, and selectively adding new relationships that complement our platform and support sustainable growth.

Our strategy is centered on building long-term partnerships and leveraging the scale of our existing relationships to drive continued growth while maintaining a strong focus on prudent risk management and operational excellence.

Increased partner activity and transaction volumes are driving growth in noninterest income, a trend we expect to continue as existing products scale and new offerings are introduced. As part of our strategy to manage partner and lending limits, as well as overall portfolio composition and credit quality, we plan to continue selling loans. We also retain a portion of the fee income associated with processing transactions on sold credit card loans. This revenue stream continues to grow and is expected to provide ongoing income without adding balance sheet risk or capital requirements.

As our deposit base grows, we expect to continue moving deposits on and off the balance sheet, subject to applicable agreements, to manage liquidity, FDIC insurance coverage, and deposit program operations. This deposit sweep capability allows us to better manage liquidity and deposit programs. At June 30, 2026 we swept off $4.26 billion in deposits for FDIC insurance and liquidity purposes, and generated $1.2 million in noninterest income during the quarter ended June 30, 2026, compared to $710,000 for the quarter ended March 31, 2026. During the quarter ended June 30, 2026, eight partner programs were in various stages of expansion to include additional products, such as lines of credit, deposit programs, asset backed credit cards, credit cards, and other lending products. The expansion of these and other partner initiatives is expected to drive higher partner revenue in upcoming periods.

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

	As of
(unaudited)	June 30, 2026	March 31, 2026	June 30, 2025
Active	22	20	20
Friends and family / testing	1	2	2
Implementation / onboarding	1	3	2
Signed letters of intent	3	2	5
Wind down - active but preparing to exit relationship	3	3	0
Total CCBX relationships	30	30	29

Total exited relationships life to date	10	9	8

CCBX loans increased $341.6 million, or 18.1%, to $2.23 billion despite selling $4.56 billion in loans during the three months ended June 30, 2026, $3.68 billion of which was new activity on previously sold credit card loans.

The following table details the CCBX loan portfolio:

CCBX	As of
	June 30, 2026					March 31, 2026					June 30, 2025
(dollars in thousands; unaudited)	Balance			% to Total		Balance			% to Total		Balance			% to Total
Commercial and industrial loans:
Capital call lines	$	204,835		9.2	%	$	176,384		9.4	%	$	199,675		11.9	%
All other commercial & industrial loans		24,638		1.1			21,792		1.2			26,142		1.6
Real estate loans:
Residential real estate loans		324,873		14.6			266,037		14.1			234,786		14.0
Consumer and other loans:
Credit cards		753,171		33.8			693,485		36.8			533,925		31.8
Other consumer and other loans		918,779		41.3			726,943		38.5			686,321		40.7
Gross CCBX loans receivable		2,226,296		100.0	%		1,884,641		100.0	%		1,680,849		100.0	%
Net deferred origination fees		(544	)				(517	)				(569	)
Loans receivable	$	2,225,752				$	1,884,124				$	1,680,280
Loan Yield - CCBX⁽¹⁾⁽²⁾		14.56	%				15.01	%				16.22	%

⁽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, 2026, includes an increase of $251.5 million, or 17.7%, in consumer and other loans, an increase of $58.8 million, or 22.1%, in residential real estate and an increase of $28.5 million, or 16.1%, in capital call lines as a result of normal balance fluctuations and business activities. We sold $4.56 billion in CCBX loans during the quarter ended June 30, 2026 compared to sales of $3.28 billion in the quarter ended March 31, 2026. We continue to manage 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 0.45% for the quarter ended June 30, 2026 compared to the quarter ended March 31, 2026 due to a change in overall mix of loans compared to the quarter ended March 31, 2026.

The following charts show the growth and quarter over quarter changes 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, both of which generate fee income.

Quarter over Quarter Change in CCBX Credit Cards

The following table details the CCBX deposit portfolio:

CCBX	As of
	June 30, 2026					March 31, 2026					June 30, 2025
(dollars in thousands; unaudited)	Balance			% to Total		Balance			% to Total		Balance			% to Total
Demand, noninterest bearing	$	109,634		3.3	%	$	77,890		2.2	%	$	60,448		2.6	%
Interest bearing demand and money market		2,723,084		82.8			3,121,888		90.0			2,231,159		94.5
Savings		455,014		13.9			268,444		7.7			51,523		2.2
Total core deposits		3,287,732		100.0			3,468,222		100.0			2,343,130		99.3
Other deposits		—		0.0			—		0.0			17,013		0.7
Total CCBX deposits	$	3,287,732		100.0	%	$	3,468,222		100.0	%	$	2,360,143		100.0	%
Cost of deposits⁽¹⁾		3.19	%				3.17	%				3.96	%

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

CCBX deposits reported on the balance sheet decreased $180.5 million, or 5.2%, in the three months ended June 30, 2026 to $3.29 billion. The decline was primarily attributable to increased use of off-balance sheet sweep arrangements and does not reflect a decline in underlying partner deposit activity. Deposits swept off-balance sheet for increased FDIC insurance coverage and liquidity purposes increased to $4.26 billion at June 30, 2026, compared to $2.81 billion for the quarter ended March 31, 2026, demonstrating continued growth in partner balances despite lower reported on-balance-sheet balances. Using third-party facilitator/vendor sweep products, amounts in excess of FDIC insurance coverage are swept off-balance sheet to participating financial institutions.

Community Bank Performance Update

In the quarter ended June 30, 2026, the community bank saw net loans increase $7.3 million, or 0.4%, to $1.98 billion, as a result of loan originations and normal balance fluctuations.

The following table details the community bank loan portfolio:

Community Bank	As of
	June 30, 2026					March 31, 2026					June 30, 2025
(dollars in thousands; unaudited)	Balance			% to Total		Balance			% to Total		Balance			% to Total
Commercial and industrial loans	$	237,176		11.9	%	$	235,603		11.9	%	$	149,926		8.0	%
Real estate loans:
Construction, land and land development loans		221,562		11.2			234,911		11.8			194,150		10.4
Residential real estate loans		199,530		10.0			199,185		10.1			198,844		10.7
Commercial real estate loans		1,319,798		66.4			1,300,547		65.6			1,310,882		70.2
Consumer and other loans:
Other consumer and other loans		10,760		0.5			11,587		0.6			12,230		0.7
Gross community bank loans receivable		1,988,826		100.0	%		1,981,833		100.0	%		1,866,032		100.0	%
Net deferred origination fees		(6,308	)				(6,578	)				(5,944	)
Loans receivable	$	1,982,518				$	1,975,255				$	1,860,088
Loan Yield⁽¹⁾		6.57	%				6.58	%				6.53	%

⁽¹⁾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 community bank loans consisted of an increase of $19.3 million in commercial real estate loans, an increase of $1.6 million in commercial and industrial loans and an increase of $345,000 in residential real estate loans, partially offset by a decrease of $13.3 million in construction, land and land development loans, and $827,000 in consumer and other loans during the quarter ended June 30, 2026.

The following table details the community bank deposit portfolio:

Community Bank	As of
	June 30, 2026					March 31, 2026					June 30, 2025
(dollars in thousands; unaudited)	Balance			% to Total		Balance			% to Total		Balance			% to Total
Demand, noninterest bearing	$	502,844		31.9	%	$	501,271		31.9	%	$	494,907		31.9	%
Interest bearing demand and money market		1,005,748		63.9			1,006,623		64.0			545,655		35.1
Savings		54,459		3.5			52,851		3.4			57,933		3.7
Total core deposits		1,563,051		99.3			1,560,745		99.2			1,098,495		70.7
Other deposits		1		0.0			1		0.0			440,975		28.4
Time deposits less than $250,000		7,283		0.5			8,121		0.5			5,299		0.3
Time deposits $250,000 and over		3,831		0.2			4,075		0.3			8,659		0.6
Total community bank deposits	$	1,574,166		100.0	%	$	1,572,942		100.0	%	$	1,553,428		100.0	%
Cost of deposits⁽¹⁾		1.46	%				1.46	%				1.77	%

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

Community bank deposits increased $1.2 million, or 0.1%, during the three months ended June 30, 2026 to $1.57 billion as a result of normal growth and balance fluctuations. The community bank segment includes noninterest bearing deposits of $502.8 million, or 31.9%, of total community bank deposits, resulting in a cost of deposits of 1.46%, which is unchanged from the quarter ended March 31, 2026.

Net Interest Income and Margin Discussion

Net interest income was $89.4 million for the quarter ended June 30, 2026, an increase of $6.0 million, or 7.2%, from $83.4 million for the quarter ended March 31, 2026, and an increase of $12.6 million, or 16.4%, from $76.7 million for the quarter ended June 30, 2025. Net interest income compared to March 31, 2026 and June 30, 2025 was higher due to interest on loans due to an increase in average loans receivable partially offset by a decrease in interest on interest earning deposits with other banks due to lower average balances.

Net interest margin was 7.27% for the three months ended June 30, 2026, compared to 7.00% for the three months ended March 31, 2026 and 7.06% for the three months ended June 30, 2025. The increase in net interest margin for the three months ended June 30, 2026 compared to the three months ended March 31, 2026 was primarily driven by a higher proportion of interest-earning assets invested in loans rather than interest-bearing deposits with other banks. 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 3.98% for the three months ended June 30, 2026, compared to 3.90% for the three months ended March 31, 2026 and 4.07% for the three months ended June 30, 2025. The quarter-over-quarter increase in net interest margin, net of BaaS loan expense, was also primarily driven by a higher proportion of interest-earning assets invested in loans rather than interest-bearing deposits with other banks.

Interest and fees on loans receivable increased $8.2 million, or 8.0%, to $111.1 million for the three months ended June 30, 2026, compared to $102.9 million for the three months ended March 31, 2026, as a result of an increase in loans receivable. Interest and fees on loans receivable increased $12.2 million, or 12.4%, compared to $98.9 million for the three months ended June 30, 2025, due to loan growth, partially offset by a decrease in loan yield.

The following table illustrates 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 2026			March 31 2026			June 30 2025
Net interest margin, net of BaaS loan expense:
Net interest margin⁽¹⁾		7.27	%		7.00	%		7.06	%
Earning assets		4,928,350			4,830,601			4,356,591
Net interest income (GAAP)		89,367			83,357			76,737
Less: BaaS loan expense		(40,409	)		(36,940	)		(32,483	)
Net interest income, net of BaaS loan expense⁽²⁾	$	48,958		$	46,417		$	44,254
Net interest margin, net of BaaS loan expense⁽¹⁾⁽²⁾		3.98	%		3.90	%		4.07	%
Loan income net of BaaS loan expense divided by average loans:
Loan yield (GAAP)⁽¹⁾		10.74	%		10.76	%		11.11	%
Total average loans receivable	$	4,148,380		$	3,878,626		$	3,567,823
Interest and earned fee income on loans (GAAP)		111,097			102,887			98,867
BaaS loan expense		(40,409	)		(36,940	)		(32,483	)
Net loan income⁽²⁾	$	70,688		$	65,947		$	66,384
Loan income, net of BaaS loan expense, divided by average loans⁽¹⁾⁽²⁾		6.83	%		6.90	%		7.46	%

⁽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 $1.6 million to $45.8 million compared to the three months ended March 31, 2026 as a result of maturities and principal paydowns, and decreased $482,000 compared to the three months ended June 30, 2025.

Cost of funds was 2.62% for the quarter ended June 30, 2026, an increase of three basis points from the quarter ended March 31, 2026 and a decrease of 51 basis points from the quarter ended June 30, 2025. Cost of deposits for the quarter ended June 30, 2026 was 2.57%, compared to 2.56% for the quarter ended March 31, 2026, and 3.10% for the quarter ended June 30, 2025. The decreased cost of funds and deposits compared to June 30, 2025 was largely due to the reductions in the Fed funds rate in 2025.

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

	For the Three Months Ended
	June 30, 2026		March 31, 2026		June 30, 2025
	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	6.57%	1.46%	6.58%	1.46%	6.53%	1.77%
CCBX⁽¹⁾	14.56%	3.19%	15.01%	3.17%	16.22%	3.96%
Consolidated	10.74%	2.57%	10.76%	2.56%	11.11%	3.10%

⁽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, 2026				March 31, 2026				June 30, 2025
(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	$	78,580	14.56	%	$	71,153	15.01	%	$	68,264	16.22	%
Less: BaaS loan expense		40,409	7.49	%		36,940	7.79	%		32,483	7.72	%
Net BaaS loan income⁽¹⁾	$	38,171	7.07	%	$	34,213	7.22	%	$	35,781	8.50	%
Average BaaS Loans⁽³⁾	$	2,164,634			$	1,922,586			$	1,688,492

⁽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 $88.7 million for the three months ended June 30, 2026, an increase of $22.6 million from $66.1 million for the three months ended March 31, 2026, and an increase of $46.0 million from $42.7 million for the three months ended June 30, 2025. The increase in noninterest income for the quarter ended June 30, 2026 as compared to the quarter ended March 31, 2026 was primarily due to a $20.0 million increase in BaaS credit enhancements related to the increase in provision for credit losses based upon an analysis of the CCBX loan portfolio, a $1.3 million increase in BaaS fraud enhancements, and an increase of $1.1 million in BaaS program income (see "Appendix B" for more information on the accounting for BaaS allowance for credit losses and credit and fraud enhancements).

The $46.0 million increase in noninterest income over the quarter ended June 30, 2025 was primarily due to a $41.0 million increase in BaaS credit and fraud enhancements due primarily to loan growth in the CCBX loan portfolio and an increase of $4.4 million in BaaS program income.

Noninterest Expense Discussion

Total noninterest expense increased $57.7 million to $141.1 million for the three months ended June 30, 2026, compared to $83.5 million for the three months ended March 31, 2026, and increased $68.3 million from $72.8 million for the three months ended June 30, 2025. The $57.7 million increase in noninterest expense for the quarter ended June 30, 2026, as compared to the quarter ended March 31, 2026, was primarily due to a $46.0 million credit enhancement receivable valuation adjustment related to the assessment of collectability for one CCBX partner, a $6.7 million increase in data processing and software licenses and a $451,000 increase in salaries and employee benefits, partially offset by an $805,000 decrease in legal and professional fees. Also contributing to the variance is a $3.5 million increase in BaaS loan expense, and a $1.3 million increase in BaaS fraud expense. BaaS loan expense represents the amount paid or payable to partners for credit 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. Data processing and software license costs increased due to continued investments in growth, technology and risk management and included a $4.4 million impact from revising the estimated useful life of certain software assets to reflect their abandonment as they are replaced with the technology modernization initiatives.

The $68.3 million increase in noninterest expenses for the quarter ended June 30, 2026 compared to the quarter ended June 30, 2025 was largely due to a $46.0 million credit enhancement receivable valuation adjustment, $8.8 million increase in data processing and software licenses due to enhancements and investments in technology and a $2.2 million increase in salaries and employee benefits. Also contributing to the variance is a $7.9 million increase in BaaS loan expense and a $1.5 million increase in BaaS fraud expense.

Certain operating expenses associated with CCBX programs 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 partners in noninterest income. The following table reflects the portion of noninterest expenses that are reimbursed by partners to assist in understanding 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)	2026		2026		2025
Total noninterest expense (GAAP)	$	141,111	$	83,452	$	72,832
Less: BaaS loan expense		40,409		36,940		32,483
Less: BaaS fraud expense		4,312		3,059		2,804
Less: Reimbursement of expenses (BaaS)		2,259		2,392		646
Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses (BaaS)⁽¹⁾	$	94,131	$	41,061	$	36,899

⁽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 reflected a benefit of $13.1 million for the three months ended June 30, 2026, compared to tax expense of $2.6 million for the three months ended March 31, 2026 and $3.4 million for the three months ended June 30, 2025. The tax benefit recognized during the three months ended June 30, 2026 was primarily attributable to the pre-tax loss incurred during the period, while differences between periods also reflect changes in the taxability of certain equity awards.

As CCBX activities and employee presence expand into additional states, the Company becomes subject to additional state tax jurisdictions, which has increased the overall tax rate used in calculating the provision for income taxes. 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.

Financial Condition Overview

Total assets decreased $207.7 million, or 3.7%, to $5.46 billion at June 30, 2026 compared to $5.66 billion at March 31, 2026. The decrease is primarily comprised of a $482.4 million decrease in interest earning deposits with other banks and a $16.2 million decrease in loans held for sale, partially offset by a $348.9 million increase in loans receivable.

As of June 30, 2026, in addition to the $1.01 billion in cash on hand, the Company had borrowing capacity of up to a total of $865.6 million from the Federal Reserve Bank discount window and Federal Home Loan Bank, plus an additional $250.0 million available under credit facilities with banker's banks. There were no borrowings outstanding on these lines as of June 30, 2026.

The Company, on a stand alone basis, had a cash balance of $40.2 million as of June 30, 2026, a portion of which is retained for general operating purposes, including debt repayment, and for funding $917,000 in commitments to bank technology investment funds, with the remaining cash available to be contributed to the Bank as capital.

Uninsured deposits were estimated at $1.35 billion as of June 30, 2026, compared to $1.77 billion as of March 31, 2026. While uninsured deposits decreased from the prior quarter, they are expected to remain above historical levels due to the composition and timing of certain partner deposit balances, including the periodic use of sweep arrangements.

Total shareholders’ equity as of June 30, 2026 decreased $40.3 million since March 31, 2026. The decrease in shareholders’ equity was primarily comprised of $42.1 million in net losses partially offset by an increase of $1.8 million in common stock outstanding as a result of equity awards vested and exercised during the three months ended June 30, 2026.

The Company and the Bank remained well capitalized at June 30, 2026, 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)	9.12	%	9.11	%	5.00	%
Common Equity Tier 1 Capital (to risk-weighted assets)	10.97	%	10.86	%	6.50	%
Tier 1 Capital (to risk-weighted assets)	10.97	%	10.94	%	8.00	%
Total Capital (to risk-weighted assets)	12.27	%	13.30	%	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 $213.7 million and 5.08% of loans receivable at June 30, 2026 compared to $172.4 million and 4.47% at March 31, 2026 and $164.8 million and 4.65% at June 30, 2025. The allowance for credit loss allocated to the CCBX portfolio was $198.0 million and 8.90% of CCBX loans receivable at June 30, 2026, with $15.7 million of allowance for credit loss allocated to the community bank, or 0.79% 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, 2026									As of March 31, 2026									As of June 30, 2025
(dollars in thousands; unaudited)	Community Bank			CCBX			Total			Community Bank			CCBX			Total			Community Bank			CCBX			Total
Loans receivable	$	1,982,518		$	2,225,752		$	4,208,270		$	1,975,255		$	1,884,124		$	3,859,379		$	1,860,088		$	1,680,280		$	3,540,368
Allowance for credit losses		(15,723	)		(198,001	)		(213,724	)		(18,153	)		(154,274	)		(172,427	)		(18,936	)		(145,858	)		(164,794	)
Allowance for credit losses to total loans receivable		0.79	%		8.90	%		5.08	%		0.92	%		8.19	%		4.47	%		1.02	%		8.68	%		4.65	%

Net charge-offs totaled $50.6 million for the quarter ended June 30, 2026, compared to $49.6 million for the quarter ended March 31, 2026 and $49.3 million for the quarter ended June 30, 2025. Net charge-offs as a percent of average loans decreased to 4.90% for the quarter ended June 30, 2026 compared to 5.18% for the quarter ended March 31, 2026, and 5.54% for the quarter ended June 30, 2025. Under one partner program, the Company retains ownership of approximately 5% of a $350.8 million loan portfolio and retains the provision for credit losses for that portfolio. At June 30, 2026, our retained exposure totaled $23.4 million in loans. Net charge-offs for this $23.4 million in loans were $1.0 million for the three months ended June 30, 2026, $1.0 million for the three months ended March 31, 2026 and $1.3 million for the three months ended June 30, 2025.

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

	Three Months Ended
	June 30, 2026									March 31, 2026									June 30, 2025
(dollars in thousands; unaudited)	Community Bank			CCBX			Total			Community Bank			CCBX			Total			Community Bank			CCBX			Total
Gross charge-offs	$	56		$	58,162		$	58,218		$	2		$	54,521		$	54,523		$	11		$	53,769		$	53,780
Gross recoveries		(2	)		(7,581	)		(7,583	)		(3	)		(4,933	)		(4,936	)		(2	)		(4,465	)		(4,467	)
Net charge-offs (recoveries)	$	54		$	50,581		$	50,635		$	(1	)	$	49,588		$	49,587		$	9		$	49,304		$	49,313
Net charge-offs to average loans⁽¹⁾		0.01	%		9.37	%		4.90	%		0.00	%		10.46	%		5.18	%		0.00	%		11.71	%		5.54	%

⁽¹⁾Annualized calculations shown for periods presented.

During the quarter ended June 30, 2026, a $94.3 million provision for credit losses was recorded for CCBX partner loans, compared to $52.6 million for the quarter ended March 31, 2026. The increase in the provision for credit losses compared to the prior quarter was primarily driven by loan growth, changes in the composition of the loan portfolio and the establishment of a $22.8 million specific provision related to one partner relationship for credit losses not expected to be fully recovered under the partner's indemnification arrangement following an individual assessment of collectability, bringing the CCBX allowance for credit losses to $198.0 million at June 30, 2026 compared to $154.3 million at March 31, 2026. 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.

In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassified negative deposit accounts, with expected losses reflected in the allowance for credit losses. When provision expense is recognized for CCBX credit losses and unfunded commitments that are subject to partner indemnification, we also record a credit enhancement asset through noninterest income (BaaS credit enhancements) representing amounts contractually due under the applicable partner agreements. We evaluate the collectability of the credit enhancement asset each reporting period and record a valuation adjustment when collection of all or a portion of the asset is no longer considered probable. The credit enhancement asset is reduced as indemnification payments are received from CCBX partners. Management regularly evaluates and manages counterparty risk associated with its CCBX partners, as the Bank could incur additional credit losses to the extent a partner is unable to fulfill its contractual obligations.

The factors used in management’s analysis for community bank credit losses indicated that a provision recapture of $2.2 million was needed for the quarter ended June 30, 2026 compared to a provision recapture of $1.4 million and $47,000 for the quarters ended March 31, 2026 and June 30, 2025, respectively. The provision recapture in the current period was due to a decrease in weighted average life of the construction, land and land development portfolio and an improvement in the overall mix of the 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, 2026			March 31, 2026			June 30, 2025
Community bank	$	(2,164	)	$	(1,428	)	$	(47	)
CCBX		94,309			52,563			30,976
Total provision expense	$	92,145		$	51,135		$	30,929

Included in provision expense was a $213,000 provision for unfunded commitments, recorded primarily due to higher loss rates on certain CCBX loans.

At June 30, 2026, our nonperforming assets were $75.2 million, or 1.38%, of total assets, compared to $67.6 million, or 1.19%, of total assets, at March 31, 2026, and $60.9 million, or 1.36%, of total assets, at June 30, 2025. These ratios are impacted by nonperforming CCBX loans that are covered by CCBX partner credit enhancements. As of June 30, 2026, $67.0 million of the $69.0 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements described above. Additionally, certain CCBX partners employ collection practices that place specific loans on nonaccrual status to enhance collectability. As of June 30, 2026, $24.6 million of these loans are less than 90 days past due.

Nonperforming assets increased $7.5 million during the quarter ended June 30, 2026, compared to the quarter ended March 31, 2026. Community bank nonperforming loans increased $1.4 million from March 31, 2026 to $6.2 million as of June 30, 2026. CCBX nonperforming loans increased $6.2 million to $69.0 million from March 31, 2026. The increase in CCBX nonperforming loans is due to an increase of $2.9 million in nonaccrual loans from March 31, 2026 to $30.5 million, combined with a $3.3 million increase in CCBX loans that are past due 90 days or more and still accruing interest. 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. Consumer loans originated through CCBX lending partners may continue to accrue interest beyond 90 days past due. Installment (closed-end) loans generally continue to accrue until 120 past due while revolving (open-end) loans generally continue to accrue until 180 days past due. There were no repossessed assets or other real estate owned at June 30, 2026. Our nonperforming loans to loans receivable ratio was 1.79% at June 30, 2026, compared to 1.75% at March 31, 2026 and 1.72% at June 30, 2025.

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

Consolidated	As of
(dollars in thousands; unaudited)	June 30, 2026			March 31, 2026			June 30, 2025
Nonaccrual loans:
Commercial and industrial loans	$	243		$	251		$	2,333
Real estate loans:
Construction, land and land development		—			—			1,697
Residential real estate		1,705			314			—
Commercial real estate		4,344			4,344			—
Consumer and other loans:
Credit cards		26,670			24,497			20,140
Other consumer and other loans		3,729			3,015			4,063
Total nonaccrual loans		36,691			32,421			28,233
Accruing loans past due 90 days or more:
Commercial & industrial loans		504			604			926
Real estate loans:
Residential real estate loans		1,446			2,241			1,817
Consumer and other loans:
Credit cards		27,077			24,149			23,116
Other consumer and other loans		9,472			8,205			6,775
Total accruing loans past due 90 days or more		38,499			35,199			32,634
Total nonperforming loans		75,190			67,620			60,867
Real estate owned		—			—			—
Repossessed assets		—			—			—
Total nonperforming assets	$	75,190		$	67,620		$	60,867
Total nonaccrual loans to loans receivable		0.87	%		0.84	%		0.80	%
Total nonperforming loans to loans receivable		1.79	%		1.75	%		1.72	%
Total nonperforming assets to total assets		1.38	%		1.19	%		1.36	%

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, 2026			March 31, 2026			June 30, 2025
Nonaccrual loans:
Commercial and industrial loans:
All other commercial & industrial loans	$	68		$	81		$	188
Consumer and other loans:
Credit cards		26,670			24,497			20,140
Other consumer and other loans		3,729			3,015			4,063
Total nonaccrual loans		30,467			27,593			24,391
Accruing loans past due 90 days or more:
Commercial & industrial loans		504			604			926
Real estate loans:
Residential real estate loans		1,446			2,241			1,817
Consumer and other loans:
Credit cards		27,077			24,149			23,116
Other consumer and other loans		9,472			8,205			6,775
Total accruing loans past due 90 days or more		38,499			35,199			32,634
Total nonperforming loans		68,966			62,792			57,025
Other real estate owned		—			—			—
Repossessed assets		—			—			—
Total nonperforming assets	$	68,966		$	62,792		$	57,025
Total CCBX nonperforming assets to total consolidated assets		1.26	%		1.11	%		1.27	%

Community Bank	As of
(dollars in thousands; unaudited)	June 30, 2026			March 31, 2026			June 30, 2025
Nonaccrual loans:
Commercial and industrial loans	$	175		$	170		$	2,145
Real estate:
Construction, land and land development		—			—			1,697
Residential real estate		1,705			314			—
Commercial real estate		4,344			4,344			—
Total nonaccrual loans		6,224			4,828			3,842
Accruing loans past due 90 days or more:
Total accruing loans past due 90 days or more		—			—			—
Total nonperforming loans		6,224			4,828			3,842
Other real estate owned		—			—			—
Repossessed assets		—			—			—
Total nonperforming assets	$	6,224		$	4,828		$	3,842
Total community bank nonperforming assets to total consolidated assets		0.11	%		0.09	%		0.09	%

Negative deposit account balances are reclassified as loans for financial reporting purposes and are included in the Company's allowance for credit losses under its CECL methodology. Because these balances do not accrue interest, they are not included in nonaccrual loans. Management monitors the aging, collectability and expected credit losses associated with these balances as part of its ongoing credit risk management process. At June 30, 2026, reclassified negative deposit accounts outstanding for more than 90 days totaled $22.8 million.

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 $5.46 billion Bank provides service through 14 full-service branches in Snohomish, Island and King Counties, one loan production office in King County, 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, esprink@coastalbank.com

Brandon J. Soto, Executive Vice President & Chief Financial Officer, bsoto@coastalbank.com

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, our ability to effectively evaluate and manage counterparty risk associated with CCBX partners and the risk that the conflicts in the Middle East and/or 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, 2026			March 31, 2026			December 31, 2025			September 30, 2025			June 30, 2025
Cash and due from banks	$	48,088		$	52,695		$	34,241		$	34,928		$	29,546
Interest earning deposits with other banks		960,360			1,442,772			702,729			607,330			690,213
Investment securities, available-for-sale, at fair value		27			28			29			31			33
Investment securities, held-to-maturity, at amortized cost		45,219			46,141			48,218			43,911			45,544
Other investments		14,177			14,023			12,837			12,778			12,521
Loans held for sale		107,838			124,039			71,216			42,894			60,474
Loans receivable		4,208,270			3,859,379			3,749,531			3,703,848			3,540,330
Allowance for credit losses		(213,724	)		(172,427	)		(169,530	)		(173,813	)		(164,794	)
Total loans receivable, net		3,994,546			3,686,952			3,580,001			3,530,035			3,375,536
CCBX credit enhancement asset, net		154,346			180,587			177,657			177,741			167,779
CCBX receivable		28,134			24,926			23,047			16,260			13,009
Premises and equipment, net		25,736			29,710			29,325			29,114			29,052
Lease right-of-use assets		4,368			4,641			4,821			4,788			4,891
Accrued interest receivable		20,937			20,139			18,613			20,493			20,849
Bank-owned life insurance, net		14,199			14,044			13,910			13,777			13,648
Deferred tax asset, net		16,196			—			—			—			3,829
Intangible assets, net		4,207			4,434			4,536			—			—
Other assets		17,774			18,698			20,257			18,996			13,635
Total assets	$	5,456,152		$	5,663,829		$	4,741,437		$	4,553,076		$	4,480,559

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits	$	4,861,898		$	5,041,164		$	4,144,199		$	3,972,563		$	3,913,571
Subordinated debt, net		44,518			44,480			44,443			44,406			44,368
Junior subordinated debentures, net		3,594			3,594			3,593			3,593			3,592
Deferred compensation		236			251			267			281			295
Accrued interest payable		2,178			2,665			1,435			1,106			954
Lease liabilities		4,522			4,799			4,984			4,956			5,063
CCBX payable		32,980			28,410			27,492			31,221			32,939
Deferred tax liability, net		—			1,656			853			799			—
Other liabilities		42,779			33,048			23,212			18,874			18,068
Total liabilities		4,992,705			5,160,067			4,250,478			4,077,799			4,018,850
SHAREHOLDERS’ EQUITY
Common Stock		236,012			234,222			233,438			230,399			230,423
Retained earnings		227,436			269,541			257,522			244,879			231,287
Accumulated other comprehensive loss, net of tax		(1	)		(1	)		(1	)		(1	)		(1	)
Total shareholders’ equity		463,447			503,762			490,959			475,277			461,709
Total liabilities and shareholders’ equity	$	5,456,152		$	5,663,829		$	4,741,437		$	4,553,076		$	4,480,559

COASTAL FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

	Three Months Ended
	June 30, 2026			March 31, 2026		December 31, 2025		September 30, 2025		June 30, 2025
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	111,097		$	102,887	$	100,206	$	100,367	$	98,867
Interest on interest earning deposits with other banks		6,607			8,128		6,810		8,007		8,085
Interest on investment securities		612			622		635		616		626
Dividends on other investments		238			44		235		37		219
Total interest income		118,554			111,681		107,886		109,027		107,797
INTEREST EXPENSE
Interest on deposits		28,043			27,670		27,863		30,466		30,400
Interest on borrowed funds		1,144			654		658		660		660
Total interest expense		29,187			28,324		28,521		31,126		31,060
Net interest income		89,367			83,357		79,365		77,901		76,737
PROVISION FOR CREDIT LOSSES		92,157			51,398		48,041		56,598		32,211
Net interest income after provision for credit losses		(2,790	)		31,959		31,324		21,303		44,526
NONINTEREST INCOME
Service charges and fees		1,016			850		882		903		913
Unrealized gain (loss) on equity securities, net		(25	)		126		—		9		(439	)
Other income		667			410		459		461		496
Noninterest income, excluding BaaS program income and BaaS indemnification income		1,658			1,386		1,341		1,373		970
Servicing and other BaaS fees		2,917			2,623		2,113		1,575		1,896
Transaction and interchange fees		6,836			5,873		4,924		4,878		5,109
Reimbursement of expenses		2,259			2,392		1,868		1,412		646
BaaS program income		12,012			10,888		8,905		7,865		7,651
BaaS credit enhancements		70,725			50,744		47,325		55,412		31,268
BaaS fraud enhancements		4,312			3,059		1,090		2,127		2,804
BaaS indemnification income		75,037			53,803		48,415		57,539		34,072
Total noninterest income		88,707			66,077		58,661		66,777		42,693
NONINTEREST EXPENSE
Salaries and employee benefits		23,615			23,164		22,787		20,189		21,450
Occupancy		890			859		1,091		952		915
Data processing and software licenses		14,348			7,643		6,978		6,114		5,541
Legal and professional expenses		6,197			7,002		4,447		3,957		5,962
Point of sale expense		464			445		105		69		69
Excise taxes		988			1,169		756		696		681
Federal Deposit Insurance Corporation ("FDIC") assessments		829			573		817		815		790
Director and staff expenses		718			668		870		544		612
Marketing		6			38		259		272		50
Credit enhancement receivable valuation adjustment		46,009			—		—		—		—
Other expense		2,326			1,892		2,348		1,597		1,475
Noninterest expense, excluding BaaS loan and BaaS fraud expense		96,390			43,453		40,458		35,205		37,545
BaaS loan expense		40,409			36,940		31,256		32,840		32,483
BaaS fraud expense		4,312			3,059		1,090		2,127		2,804
BaaS loan and fraud expense		44,721			39,999		32,346		34,967		35,287
Total noninterest expense		141,111			83,452		72,804		70,172		72,832
(Loss) income before provision for income taxes		(55,194	)		14,584		17,181		17,908		14,387
(BENEFIT) PROVISION FOR INCOME TAXES		(13,089	)		2,565		4,538		4,316		3,359
NET INCOME	$	(42,105	)	$	12,019	$	12,643	$	13,592	$	11,028
Basic (loss) earnings per common share	$	(2.76	)	$	0.79	$	0.84	$	0.90	$	0.73
Diluted (loss) earnings per common share	$	(2.76	)	$	0.78	$	0.82	$	0.88	$	0.71
Weighted average number of common shares outstanding:
Basic		15,243,357			15,179,447		15,116,005		15,093,274		15,033,296
Diluted		15,243,357			15,422,822		15,455,856		15,443,987		15,447,923

COASTAL FINANCIAL CORPORATION

AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY

(Dollars in thousands; unaudited)

	For the Three Months Ended
	June 30, 2026						March 31, 2026						June 30, 2025
	Average Balance		Interest & Dividends		Yield / Cost⁽¹⁾		Average Balance		Interest & Dividends		Yield / Cost⁽¹⁾		Average Balance		Interest & Dividends		Yield / Cost⁽¹⁾
Assets
Interest earning assets:
Interest earning deposits with other banks	$	717,893	$	6,607	3.69	%	$	891,511	$	8,128	3.70	%	$	729,652	$	8,085	4.44	%
Investment securities, available-for-sale⁽²⁾		28		—	—			30		1	13.52			35		—	—
Investment securities, held-to-maturity⁽²⁾		45,781		612	5.36