0001437958FALSE00014379582025-01-282025-01-28

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):  January 28, 2025
COASTAL FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Washington001-3858956-2392007
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
5415 Evergreen Way, Everett, Washington 98203
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:  (425) 257-9000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common stock, no par value per shareCCBThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company    ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ⃞


Item 2.02    Results of Operations and Financial Condition
On January 28, 2025 Coastal Financial Corporation (the “Company”) issued a press release announcing its results of operations and financial condition for the fiscal quarter ended December 31, 2024 (the “Press Release”). The Press Release is “furnished” as Exhibit 99.1 to this Current Report on Form 8-K pursuant to General Instruction B.2 of Form 8-K and the information provided in Item 2.02 of this report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section. The information provided in Item 2.02 of this report, including Exhibit 99.1, shall not be deemed incorporated by reference into any filings the Company has made or may make under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.
Item 9.01    Financial Statements and Exhibits
Exhibits
Number
Description
99.1
104Cover Page Interactive Data File (Embedded within the Inline XBRL document)


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
COASTAL FINANCIAL CORPORATION
Date: January 28, 2025
By:/s/ Joel G. Edwards
Joel G. Edwards
Executive Vice President and Chief Financial Officer


Exhibit 99.1
coastal-logoxcolorxonxdark2.jpg
COASTAL FINANCIAL CORPORATION ANNOUNCES FOURTH QUARTER 2024 RESULTS
Company Release: January 28, 2025
Everett, WA – 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 with an industry leading banking as a service ("BaaS") segment, today reported unaudited financial results for the quarter ended December 31, 2024, including net income of $13.4 million, or $0.94 per diluted common share, compared to $13.5 million, or $0.97 per diluted common share, for the three months ended September 30, 2024 and $45.2 million, or $3.26 per diluted common share, for the year ended December 31, 2024, compared to $44.6 million, or $3.27 per diluted common share for the year ended December 31, 2023.

Management Discussion of the Quarter and Full-year Results

“2024 was highlighted by the completion of our $98.0 million capital raise during the fourth quarter, which we will utilize to support growth of the Bank including in our CCBX segment,” said CEO Eric Sprink. “We saw high quality net loan growth of $67.7 million despite selling $845.5 million in loans during the fourth quarter, and our CCBX program fee income continued to increase which was up 56.9% for full-year 2024 relative to the prior year. We continue to invest heavily in CCBX to support future growth, and we are pleased to have three letters of intent ("LOI") signed going into 2025 with an active pipeline.”

Key Points for Fourth Quarter and Our Go-Forward Strategy

•Completed Capital Raise Allows CCBX Growth to Continue. During the fourth quarter of 2024, we completed a $98.0 million common equity raise, which was priced at $71.00/share. Proceeds will be used for general corporate purposes and to support growth of the Bank including in our CCBX segment. As of December 31, 2024 we had three signed LOIs and continue to have an active pipeline for 2025. The growth in common-equity tier 1 and total risk-based capital to 12.04% and 14.67%, respectively, includes the benefit of the capital raise.

•Strong Annual Growth in CCBX Program Fees. Total BaaS program fee income was $25.6 million for the year ended December 31, 2024, an increase of $9.3 million, or 56.9%, from the year ended December 31, 2023, and is representative of growth in partner transaction activity and expanded product offerings within our CCBX operating segment. Trends in CCBX noninterest income were also positive during the quarter, with total program fees of $8.2 million for the three months ended December 31, 2024, an increase of $1.8 million, or 27.6%, from the three months ended September 30, 2024.

•Investments for Growth Continues. Total non-interest expense of $64.2 million was down $1.4 million, or 2.1%, as compared to $65.6 million in the third quarter of 2024, mainly driven by lower BaaS loan expense, partially offset by higher salaries and employee benefits, point of sale expense, and legal and professional expenses. As we increase the number of new CCBX partners and programs launching in 2025, we expect that expenses will tend to be front-loaded with a focus on compliance and operational risk before any new program reaches significant revenues.

•Off Balance Sheet Activity Update. During the fourth quarter of 2024, we sold $845.5 million of loans, the majority of which were credit card receivables, and swept $273.2 million of deposits off balance-sheet. We are able to retain a portion of the fee income on these sold credit card loans. As of December 31, 2024 there were 182,449 credit cards with fee earning potential, an increase of 101,023 compared to the quarter ended September 30, 2024 and an increase of 172,400 from December 31, 2023.
1


•Continued Monitoring of CCBX Risk. We remain fully indemnified against fraud and 98.7% indemnified against credit risk with our CCBX partners as of year-end of 2024.
Fourth Quarter 2024 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)December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023
Income Statement Data:
Interest and dividend income$96,587 $105,079 $97,487 $90,472 $88,243 
Interest expense30,071 32,892 31,250 29,536 28,586 
Net interest income66,516 72,187 66,237 60,936 59,657 
Provision for credit losses61,867 70,257 62,325 83,158 60,789 
Net interest (expense)/ income after
provision for credit losses
4,649 1,930 3,912 (22,222)(1,132)
Noninterest income76,756 80,068 69,918 86,955 64,694 
Noninterest expense64,206 65,616 58,809 56,018 51,703 
Provision for income tax3,832 2,926 3,425 1,915 2,847 
Net income13,367 13,456 11,596 6,800 9,012 
As of and for the Three Month Period
December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023
Balance Sheet Data:
Cash and cash equivalents$452,513 $484,026 $487,245 $515,128 $483,128 
Investment securities47,321 48,620 49,213 50,090 150,364 
Loans held for sale20,600 7,565 — 797 — 
Loans receivable3,486,565 3,418,832 3,326,460 3,199,554 3,026,092 
Allowance for credit losses(176,994)(170,263)(147,914)(139,258)(116,958)
Total assets4,121,208 4,065,821 3,961,546 3,865,258 3,753,366 
Interest bearing deposits3,057,808 3,047,861 2,949,643 2,888,867 2,735,161 
Noninterest bearing deposits527,524 579,427 593,789 574,112 625,202 
Core deposits (1)
3,123,434 3,190,869 3,528,339 3,447,864 3,342,004 
Total deposits3,585,332 3,627,288 3,543,432 3,462,979 3,360,363 
Total borrowings47,884 47,847 47,810 47,771 47,734 
Total shareholders’ equity438,704 331,930 316,693 303,709 294,978 
Share and Per Share Data (2):
Earnings per share – basic$0.97 $1.00 $0.86 $0.51 $0.68 
Earnings per share – diluted$0.94 $0.97 $0.84 $0.50 $0.66 
Dividends per share—————
Book value per share (3)
$29.37 $24.51 $23.54 $22.65 $22.17 
Tangible book value per share (4)
$29.37 $24.51 $23.54 $22.65 $22.17 
Weighted avg outstanding shares – basic13,828,60513,447,06613,412,66713,340,99713,286,828
Weighted avg outstanding shares – diluted14,268,22913,822,27013,736,50813,676,91713,676,513
Shares outstanding at end of period14,935,29813,543,28213,453,80513,407,32013,304,339
Stock options outstanding at end of period186,354198,370286,119309,069354,969
See footnotes that follow the tables below
2

As of and for the Three Month Period
December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023
Credit Quality Data:
Nonperforming assets (5) to total assets
1.52 %1.63 %1.34 %1.42 %1.43 %
Nonperforming assets (5) to loans receivable and OREO
1.80 %1.94 %1.60 %1.71 %1.78 %
Nonperforming loans (5) to total loans receivable
1.80 %1.94 %1.60 %1.71 %1.78 %
Allowance for credit losses to nonperforming loans282.5 %256.5 %278.1 %253.8 %217.2 %
Allowance for credit losses to total loans receivable5.08 %4.98 %4.45 %4.35 %3.86 %
Gross charge-offs$61,585 $53,305 $55,207 $58,994 $47,652 
Gross recoveries$5,646 $4,069 $1,973 $1,776 $2,781 
Net charge-offs to average loans (6)
6.51 %5.65 %6.57 %7.34 %5.92 %
Capital Ratios:
Company
Tier 1 leverage capital10.78 %8.40 %8.31 %8.24 %8.10 %
Common equity Tier 1 risk-based capital12.04 %9.24 %9.03 %8.98 %9.10 %
Tier 1 risk-based capital12.14 %9.34 %9.13 %9.08 %9.20 %
Total risk-based capital14.67 %11.89 %11.70 %11.70 %11.87 %
Bank
Tier 1 leverage capital10.64 %9.29 %9.24 %9.19 %9.06 %
Common equity Tier 1 risk-based capital11.99 %10.34 %10.15 %10.14 %10.30 %
Tier 1 risk-based capital11.99 %10.34 %10.15 %10.14 %10.30 %
Total risk-based capital13.28 %11.63 %11.44 %11.43 %11.58 %
(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 1.30% for the quarter ended December 31, 2024 compared to 1.34% and 0.97% for the quarters ended September 30, 2024 and December 31, 2023, respectively.  ROA for the quarter ended December 31, 2024, decreased 0.04% and increased 0.33% compared to September 30, 2024 and December 31, 2023, respectively. Noninterest expenses were lower for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 largely due to a decrease in BaaS loan expense, which is directly related to the amount of interest earned on CCBX loans, and higher than the quarter ended December 31, 2023 largely due to an increase in salaries and employee benefits, data processing and software licenses, legal and professional expenses and point of sale 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 1.14% and 0.99%, respectively, for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024. This decrease is due to a combination of factors. We continue to refine our credit approach with partners, widening the scope of loans that we are moving to nonaccrual, which decreased loan interest income in the quarter ended December 31, 2024 as compared to prior quarters. Average loans receivable as of December 31, 2024 decreased $45.4 million compared to September 30, 2024 as we continue to sell
3

CCBX loans as part of our on-going strategy to manage the loan portfolio and credit quality. New loans are being booked with enhanced credit standards, which typically results in a lower interest rate than some of the higher risk loans that have paid off or we have chosen to sell.

The following table shows the Company’s key performance ratios for the periods indicated.  
Three Months EndedTwelve Months Ended
(unaudited)December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023		December 31,
2024		December 31,
2023
Return on average assets (1)
1.30 %1.34 %1.21 %0.73 %0.97 %1.15 %1.28 %
Return on average equity (1)
14.90 %16.67 %15.22 %9.21 %12.35 %14.11 %16.41 %
Yield on earnings assets (1)
9.65 %10.79 %10.49 %10.07 %9.77 %10.25 %9.82 %
Yield on loans receivable (1)
10.44 %11.43 %11.23 %10.85 %10.71 %10.99 %10.60 %
Cost of funds (1)
3.24 %3.62 %3.60 %3.52 %3.39 %3.49 %2.91 %
Cost of deposits (1)
3.21 %3.59 %3.58 %3.49 %3.36 %3.46 %2.87 %
Net interest margin (1)
6.65 %7.41 %7.13 %6.78 %6.61 %6.99 %7.10 %
Noninterest expense to average assets (1)
6.23 %6.54 %6.14 %6.04 %5.56 %6.24 %5.90 %
Noninterest income to average assets (1)
7.45 %7.98 %7.30 %9.38 %6.95 %8.00 %5.97 %
Efficiency ratio44.81 %43.10 %43.19 %37.88 %41.58 %42.21 %45.92 %
Loans receivable to deposits (2)
97.82 %94.46 %93.88 %92.42 %90.05 %97.8 %90.1 %
(1)Annualized calculations shown for quarterly periods presented.
(2)Includes loans held for sale.
Management Outlook; CEO Eric Sprink

“As we look forward to 2025, our strategy involves selectively expanding our current base of CCBX partners while continuing to invest in and enhance our technology and risk management infrastructure. This will enable us to support the next phase of growth within CCBX more efficiently. Additionally, we are focused on growing noninterest income through increased transaction activity and new product offerings with our established partners. We plan to continue selling credit card loans while retaining a portion of the fee income for our role in processing transactions, which offers an additional source of noninterest income without adding on-balance-sheet risk. We believe that by increasing noninterest income, we can mitigate the uncertainties associated with fluctuating interest rates and provide a more stable income stream in the future.” 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 24 relationships, at varying stages, including three signed letters of intent as of December 31, 2024.  We continue to refine the criteria for CCBX partnerships, exploring relationships with larger more established partners, with experienced management teams, existing customer bases and strong financial positions and will continue to exit relationships where it makes sense for us to do so.
As we explore relationships with new partners we plan to continue expanding product offerings with our 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 positions us to reach a wide and established customer base with a modest increase in regulatory risk given that we have already vetted existing partners and have an operational history. Increases in partner activity/transaction counts is positively impacting noninterest income and we expect that trend to continue as products launched earlier in the year gain traction. We plan to continue selling loans as part of our strategy to balance partner and lending limits, and manage the
4

loan portfolio and credit quality. We retain a portion of the fee income for our role in processing transactions on sold credit card balances, and plan to continue this strategy to provide an on-going and passive revenue stream with no on balance sheet risk.

The following table illustrates the activity and evolution in CCBX relationships for the periods presented.
As of
(unaudited)December 31, 2024September 30,
2024		December 31, 2023
Active191919
Friends and family / testing111
Implementation / onboarding111
Signed letters of intent310
Wind down - active but preparing to exit relationship000
Total CCBX relationships242221

CCBX loans increased $82.3 million, or 5.4%, to $1.60 billion despite selling $845.5 million loans during the three months ended December 31, 2024. In accordance with the program agreement for one partner, effective April 1, 2024, the portion of the CCBX portfolio that we are responsible for losses on decreased from 10% to 5%. At December 31, 2024 the portion of this portfolio for which we are responsible represented $20.6 million in loans.

The following table details the CCBX loan portfolio:
CCBXAs of
December 31, 2024September 30, 2024December 31, 2023
(dollars in thousands; unaudited)Balance% to TotalBalance% to TotalBalance% to Total
Commercial and industrial loans:
Capital call lines$109,017 6.8 %$103,924 6.8 %$87,494 7.3 %
All other commercial & industrial loans
33,961 2.1 36,494 2.4 54,298 4.5 
Real estate loans:
Residential real estate loans267,707 16.7 265,402 17.5 238,035 19.9 
Consumer and other loans:
Credit cards528,554 33.0 633,691 41.6 505,837 42.3 
Other consumer and other loans664,780 41.4 482,228 31.7 310,574 26.0 
Gross CCBX loans receivable1,604,019 100.0 %1,521,739 100.0 %1,196,238 100.0 %
Net deferred origination (fees) costs(442)(447)(300)
Loans receivable$1,603,577 $1,521,292 $1,195,938 
Loan Yield - CCBX (1)(2)
15.28 %17.35 %17.36 %
(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 December 31, 2024, includes an increase of $77.4 million or 6.9%, in consumer and other loans, an increase of $5.1 million, or 4.9%, in capital call lines as a result of normal balance fluctuations and business activities, and an increase of $2.3 million, or 0.9%, in residential real estate loans. We continue to monitor and manage the CCBX loan portfolio, and sold $845.5 million in CCBX loans during the quarter ended December 31, 2024 compared to sales of $423.7 million in the quarter ended September 30, 2024. We continue to reposition ourselves by managing CCBX credit and concentration levels in an effort to optimize our loan portfolio and generate off balance sheet fee income.

CCBX loan yield decreased 2.06% for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 as a result of our widening the scope of loans that we are moving to nonaccrual, which decreased loan interest income in the quarter ended December 31, 2024. Also contributing to the decrease are lower interest rates on new CCBX loans,
5

which are replacing higher risk and higher rate loans that have paid off or were sold as part of our strategy to manage the loan portfolio and credit quality. The recent decrease in the Fed funds interest rate further contributed to the change.

The following chart show the growth in credit card accounts that we are able to generate fee income from. 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, but that we are still able to generate fee income on.
chart-d6915c5637e54fefa13.jpg

The following table details the CCBX deposit portfolio:
CCBXAs of
December 31, 2024September 30, 2024December 31, 2023
(dollars in thousands; unaudited)Balance% to TotalBalance% to TotalBalance% to Total
Demand, noninterest bearing$55,686 2.7 %$60,655 2.9 %$63,630 3.4 %
Interest bearing demand and
   money market		1,958,459 94.9 1,991,858 94.6 1,794,168 96.3 
Savings5,710 0.3 5,204 0.3 4,964 0.3 
Total core deposits2,019,855 97.9 2,057,717 97.8 1,862,762 100.0 
Other deposits44,233 2.1 47,046 2.2 — — 
Total CCBX deposits$2,064,088 100.0 %$2,104,763 100.0 %$1,862,762 100.0 %
Cost of deposits (1)
4.19 %4.82 %4.90 %
(1)Cost of deposits is annualized for the three months ended for each period presented.

CCBX deposits decreased $40.7 million, or 1.9%, in the three months ended December 31, 2024 to $2.06 billion as a result of normal balance fluctuations. This excludes the $273.2 million in CCBX deposits that were transferred off balance sheet for increased Federal Deposit Insurance Corporation ("FDIC") insurance coverage and sweep purposes, compared to $214.5 million for the quarter ended September 30, 2024. 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 December 31, 2024, the community bank saw net loans decrease $14.6 million, or 0.8%, to $1.88 billion.

6

The following table details the Community Bank loan portfolio:
Community BankAs of
December 31, 2024September 30, 2024December 31, 2023
(dollars in thousands; unaudited)Balance% to TotalBalance% to TotalBalance% to Total
Commercial and industrial loans$150,395 8.0 %$152,161 8.0 %$149,502 8.2 %
Real estate loans:
Construction, land and land development loans148,198 7.8 163,051 8.6 157,100 8.5 
Residential real estate loans202,064 10.7 212,467 11.2 225,391 12.3 
Commercial real estate loans1,374,801 72.8 1,362,452 71.5 1,303,533 70.9 
Consumer and other loans:
Other consumer and other loans13,542 0.7 14,173 0.7 1,628 0.1 
Gross Community Bank loans receivable1,889,000 100.0 %1,904,304 100.0 %1,837,154 100.0 %
Net deferred origination fees(6,012)(6,764)(7,000)
Loans receivable$1,882,988 $1,897,540 $1,830,154 
Loan Yield(1)
6.53 %6.64 %6.32 %
(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 loans decreased $14.9 million in construction, land and land development loans, decreased $1.8 million in commercial and industrial loans and decreased $631,000 in consumer and other loans, and were partially offset by an increase in commercial real estate loans of $12.3 million during the quarter ended December 31, 2024.

The following table details the community bank deposit portfolio:
Community BankAs of
December 31, 2024September 30, 2024December 31, 2023
(dollars in thousands; unaudited)Balance% to TotalBalance% to TotalBalance% to Total
Demand, noninterest bearing$471,838 31.0 %$518,772 34.1 %$561,572 37.5 %
Interest bearing demand and
   money market		570,625 37.5 552,108 36.3 846,072 56.5 
Savings61,116 4.0 62,272 4.1 71,598 4.8 
Total core deposits1,103,579 72.5 1,133,152 74.5 1,479,242 98.8 
Other deposits400,118 26.3 373,681 24.5 1 0.0 
Time deposits less than $100,0005,920 0.4 6,305 0.4 8,109 0.5 
Time deposits $100,000 and over11,627 0.8 9,387 0.6 10,249 0.7 
Total Community Bank deposits$1,521,244 100.0 %$1,522,525 100.0 %$1,497,601 100.0 %
Cost of deposits(1)
1.86 %1.92 %1.57 %
(1)Cost of deposits is annualized for the three months ended for each period presented.

Community bank deposits decreased $1.3 million, or 0.1%, during the three months ended December 31, 2024 to $1.52 billion as result of normal balance fluctuations. The community bank segment includes noninterest bearing deposits of $471.8 million, or 31.0%, of total community bank deposits, resulting in a cost of deposits of 1.86%, which compared to 1.92% for the quarter ended September 30, 2024, largely due to the decreases in the Fed funds rate late in the third quarter and during the fourth quarter of 2024. The cost of community bank deposits are projected to decline further as the Fed funds rate had a decrease of 0.25%, which occurred in December 2024 and the full quarterly effect of that decrease will not be recognized until the first quarter of 2025.
7

Net Interest Income and Margin Discussion
Net interest income was $66.5 million for the quarter ended December 31, 2024, a decrease of $5.7 million, or 7.9%, from $72.2 million for the quarter ended September 30, 2024, and an increase of $6.9 million, or 11.5%, from $59.7 million for the quarter ended December 31, 2023. The decrease in net interest income compared to September 30, 2024, was a result of a decrease in average loans receivable as a result of selling $845.5 million in CCBX loans during the quarter ended December 31, 2024, the recent decrease in the Fed funds interest rate, and continued enhancements to our partner credit practices that resulted in a reduction of interest income on loans. The increase in net interest income compared to December 31, 2023 was largely related to increased yield on loans resulting from higher interest rates and growth in higher yielding loans, partially offset by an increase in cost of funds relating to higher interest rates and growth in interest bearing deposits.  
Net interest margin was 6.65% for the three months ended December 31, 2024, compared to 7.41% for the three months ended September 30, 2024, largely due to lower 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 4.16% for the three months ended December 31, 2024, compared to 4.06% for the three months ended September 30, 2024. Net interest margin was 6.61% for the three months ended December 31, 2023. The increase in net interest margin for the three months ended December 31, 2024 compared to the three months ended December 31, 2023 was largely due to an increase in loan yield, partially offset by higher interest rates on interest bearing deposits. Interest and fees on loans receivable decreased $9.9 million, or 9.9%, to $89.7 million for the three months ended December 31, 2024, compared to $99.6 million for the three months ended September 30, 2024, as a result of loan sales and a decrease in the Fed funds interest rate. Additionally, as we continue to refine our credit approach with partners, we are widening the scope of loans that we are moving to nonaccrual which decreased interest income in the quarter ended December 31, 2024 and lowered loan yield and net interest margin; however this also decreased BaaS loan expense (which is in noninterest expense) resulting in no impact to net income. Interest and fees on loans receivable increased $8.6 million, or 10.5%, compared to $81.2 million for the three months ended December 31, 2023, due to an increase in outstanding balances and higher interest rates. 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.) increased 0.10% for the three months ended December 31, 2024, compared to the three months ended September 30, 2024 and increased 0.25% compared the three months ended December 31, 2023.
8

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

ConsolidatedAs of and for the Three Months EndedAs of and for the Twelve Months Ended
(dollars in thousands; unaudited)December 31
2024		September 30
2024		December 31
2023		December 31
2024		December 31
2023
Net interest margin, net of BaaS loan expense:
Net interest margin (1)
6.65 %7.41 %6.61 %6.99 %7.10 %
Earning assets3,980,0783,875,9113,581,7723,802,2753,364,406
Net interest income (GAAP)66,51672,18759,657265,876238,727
Less: BaaS loan expense          (24,859)          (32,612)      (24,310)       (111,384)       (86,900) 
Net interest income, net of BaaS loan expense(2)
$41,657$39,575$35,347$154,492$151,827
Net interest margin, net of BaaS loan expense (1)(2)
4.16 %4.06 %3.92 %4.06 %4.51 %
Loan income net of BaaS loan expense divided by average loans:
Loan yield (GAAP)(1)
10.44 %11.43 %10.71 %10.99 %10.60 %
Total average loans receivable$3,419,476$3,464,871$3,007,289$3,320,582$2,936,908
Interest and earned fee income on loans (GAAP)89,71499,59081,159364,869311,441
BaaS loan expense      (24,859)       (32,612) (24,310)      (111,384)       (86,900) 
Net loan income(2)
$64,855$66,978$56,849$253,485$224,541
Loan income, net of BaaS loan expense, divided by average loans (1)(2)
7.55 %7.69 %7.50 %7.63 %7.65 %
(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 $820,000 to $48.2 million compared to the three months ended September 30, 2024 and decreased $101.5 million compared to the three months ended December 31, 2023 as a result of principal paydowns and maturing securities.
Cost of funds was 3.24% for the quarter ended December 31, 2024, a decrease of 38 basis points from the quarter ended September 30, 2024 and a decrease of 16 basis points from the quarter ended December 31, 2023. Cost of deposits for the quarter ended December 31, 2024 was 3.21%, compared to 3.59% for the quarter ended September 30, 2024, and 3.36% for the quarter ended December 31, 2023. The decreased cost of funds and deposits compared to September 30, 2024 and December 31, 2023 was largely due to the recent reductions in the Fed funds rate.

The following table summarizes the average yield on loans receivable and cost of deposits:
For the Three Months Ended
December 31, 2024September 30, 2024December 31, 2023
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 Bank6.53%1.86%6.64%1.92%6.32%1.57%
CCBX (1)
15.28%4.19%17.35%4.82%17.36%4.90%
Consolidated10.44%3.21%11.43%3.59%10.71%3.36%
(1)Annualized calculations for periods shown 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 shown.
9

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
December 31, 2024September 30, 2024December 31, 2023
(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$58,671 15.28 %$67,692 17.35 %$52,327 17.36 %
Less: BaaS loan expense24,859 6.48 %32,612 8.36 %24,310 8.06 %
Net BaaS loan income (1)
$33,812 8.81 %$35,080 8.99 %$28,017 9.30 %
Average BaaS Loans(3)
$1,527,178 $1,552,443 $1,196,137 
(1) A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.
(2) Annualized calculations shown for quarterly periods presented.
(3) Includes loans held for sale.
Noninterest Income Discussion
Noninterest income was $76.8 million for the three months ended December 31, 2024, a decrease of $3.3 million from $80.1 million for the three months ended September 30, 2024, and an increase of $12.1 million from $64.7 million for the three months ended December 31, 2023.  The decrease in noninterest income for the quarter ended December 31, 2024 as compared to the quarter ended September 30, 2024 was primarily due to a decrease of $3.3 million in total BaaS income.  The $3.3 million decrease in total BaaS income included an $8.0 million decrease in BaaS credit enhancements related to the provision for credit losses, partially offset by a a $3.0 million increase in BaaS fraud enhancements and an increase of $1.8 million in BaaS program income. The $1.8 million increase in BaaS program income is largely due to higher reimbursement of expenses as well as an increase in transaction fees and interchange fees, our primary BaaS source for recurring fee income, as well as higher reimbursement of expenses (see “Appendix B” for more information on the accounting for BaaS allowance for credit losses and credit and fraud enhancements).

The $12.1 million increase in noninterest income over the quarter ended December 31, 2023 was primarily due to a $7.9 million increase in BaaS credit and fraud enhancements and an increase of $3.8 million in BaaS program income.

Noninterest Expense Discussion

Total noninterest expense decreased $1.4 million to $64.2 million for the three months ended December 31, 2024, compared to $65.6 million for the three months ended September 30, 2024, and increased $12.5 million from $51.7 million for the three months ended December 31, 2023. The decrease in noninterest expense for the quarter ended December 31, 2024, as compared to the quarter ended September 30, 2024, was primarily due to a $4.8 million decrease in BaaS expense from a $7.8 million decrease in BaaS loan expense, partially offset by a $3.0 million increase in BaaS fraud expense. 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. Other variances that partially offset the net decrease in noninterest expense include an increase of $1.4 million in point of sale expenses as a result of increased partner transaction activity, an increase of $893,000 in salaries and employee benefits and an increase of $1.0 million in legal and professional fees as part of our continued investments in technology and risk management.

The increase in noninterest expenses for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023 was largely due to an increase of $4.8 million in BaaS partner expense primarily from a $4.3 million increase in BaaS fraud expense, a $549,000 increase in BaaS loan expense, a $2.0 million increase in legal and professional expenses, a $1.8 million increase in point of sale expenses, a $1.5 million increase in salary and employee benefits, and a $1.2 million increase in data processing and software licenses due to enhancements in technology.

10

Certain noninterest expenses are reimbursed by our CCBX partners. In accordance with GAAP we recognize all expenses in noninterest expense and all 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 the understanding of how the increases in noninterest expense are related to expenses incurred for and reimbursed by CCBX partners:

Three Months Ended
December 31,September 30,December 31,
(dollars in thousands; unaudited)202420242023
Total noninterest expense (GAAP)$64,206 $65,616 $51,703 
Less: BaaS loan expense24,859 32,612 24,310 
Less: BaaS fraud expense5,043 2,084 779 
Less: Reimbursement of expenses (Baas) 3,468 1,843 1,076 
Noninterest expense, net of Baas loan expense, BaaS fraud expense
   and reimbursement of expenses (BaaS) (1)
$30,836 $29,077 $25,538 
(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 $3.8 million for the three months ended December 31, 2024, $2.9 million for the three months ended September 30, 2024 and $2.8 million for the fourth quarter of 2023.  The income tax provision was higher for the three months ended December 31, 2024 compared to the quarter ended September 30, 2024 as a result of the deductibility of certain equity awards which reduced tax expense during the quarter ended September 30, 2024 compared to the quarter ended December 31, 2024 despite net income being higher fairly even, and higher than the quarter ended December 31, 2023, primarily due to higher net income compared to that quarter, partially offset by the deductibility of certain equity awards.

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 2.63% for calculating the provision for state income taxes.
Financial Condition Overview
Total assets increased $55.4 million, or 1.4%, to $4.12 billion at December 31, 2024 compared to $4.07 billion at September 30, 2024.  The increase is primarily due to stronger loan growth, partially offset by lower cash balances. Total loans receivable increased $67.7 million to $3.49 billion at December 31, 2024, from $3.42 billion at September 30, 2024.
As of December 31, 2024, the Company had the capacity to borrow up to a total of $642.1 million from the Federal Reserve Bank discount window and Federal Home Loan Bank, and an additional $50.0 million from a correspondent bank. There were no borrowings outstanding on these lines as of December 31, 2024.
The Company completed a $98.0 million capital raise during the quarter ended December 31, 2024. After contributing $50.0 million to the Bank, the Company had a cash balance of $47.7 million as of December 31, 2024, which is retained for general operating purposes, including debt repayment, and for funding $480,000 in commitments to bank technology investment funds.  
Uninsured deposits were $543.0 million as of December 31, 2024, compared to $542.2 million as of September 30, 2024.
Total shareholders’ equity as of December 31, 2024 increased $106.8 million since September 30, 2024.  The increase in shareholders’ equity was primarily due to an increase of $93.4 million in common stock outstanding as a result of the aforementioned capital raise and, to a lessor extent, equity awards exercised during the three months ended December 31, 2024 combined with $13.4 million in net earnings.
11

The Company and the Bank remained well capitalized at December 31, 2024, as summarized in the following table.
(unaudited)Coastal Community BankCoastal Financial Corporation
Minimum Well Capitalized Ratios under Prompt Corrective Action (1)
Tier 1 Leverage Capital (to average assets)10.64 %10.78 %5.00 %
Common Equity Tier 1 Capital (to risk-weighted assets)11.99 %12.04 %6.50 %
Tier 1 Capital (to risk-weighted assets)11.99 %12.14 %8.00 %
Total Capital (to risk-weighted assets)13.28 %14.67 %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 total allowance for credit losses was $177.0 million and 5.08% of loans receivable at December 31, 2024 compared to $170.3 million and 4.98% at September 30, 2024 and $117.0 million and 3.86% at December 31, 2023. The allowance for credit loss allocated to the CCBX portfolio was $158.1 million and 9.86% of CCBX loans receivable at December 31, 2024, with $18.9 million of allowance for credit loss allocated to the community bank or 1.00% 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 December 31, 2024As of September 30, 2024As of December 31, 2023
(dollars in thousands; unaudited)Community BankCCBXTotalCommunity BankCCBXTotalCommunity BankCCBXTotal
Loans receivable$1,882,988 $1,603,577 $3,486,565 $1,897,540 $1,521,292 $3,418,832 $1,830,154 $1,195,938 $3,026,092 
Allowance for
   credit losses		(18,924)(158,070)(176,994)(20,132)(150,131)(170,263)(21,595)(95,363)(116,958)
Allowance for
   credit losses to
   total loans
   receivable		1.00 %9.86 %5.08 %1.06 %9.87 %4.98 %1.18 %7.97 %3.86 %
Net charge-offs totaled $55.9 million for the quarter ended December 31, 2024, compared to $49.2 million for the quarter ended September 30, 2024 and $44.9 million for the quarter ended December 31, 2023. Net charge-offs as a percent of average loans increased to 6.51% for the quarter ended December 31, 2024 compared to 5.65% for the quarter ended September 30, 2024. 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 $324.6 million loan portfolio. At December 31, 2024, our portion of this portfolio represented $20.6 million in loans. Net charge-offs for this $20.6 million in loans were $1.1 million for the three months ended December 31, 2024, compared to $1.1 million for the three months ended September 30, 2024 and $1.5 million for the three months ended December 31, 2023.
12

The following table details net charge-offs for the community bank and CCBX for the period indicated:
Three Months Ended
December 31, 2024September 30, 2024December 31, 2023
(dollars in thousands; unaudited)Community BankCCBXTotalCommunity BankCCBXTotalCommunity BankCCBXTotal
Gross charge-offs$139 $61,446 $61,585 $398 $52,907 $53,305 $2 $47,650 $47,652 
Gross recoveries(3)(5,643)(5,646)(3)(4,066)(4,069)(4)(2,777)(2,781)
Net charge-offs$136 $55,803 $55,939 $395 $48,841 $49,236 $(2)$44,873 $44,871 
Net charge-offs to
   average loans (1)
0.03 %14.54 %6.51 %0.08 %12.52 %5.65 %0.00 %14.88 %5.92 %
(1) Annualized calculations shown for periods presented.
During the quarter ended December 31, 2024, a $63.7 million provision for credit losses was recorded for CCBX partner loans, compared to the $72.1 million provision for credit losses was recorded for CCBX partner loans for the quarter ended September 30, 2024, the provision was based on management's analysis, bringing the CCBX allowance for credit losses to $158.1 million at December 31, 2024 compared to $150.1 million at September 30, 2024. The increase in the allowance is due to the addition of new loans, partially offset by loan sales. 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.
The factors used in management’s analysis for community bank credit losses indicated that a provision recapture of $1.1 million and was needed for the quarter ended December 31, 2024 compared to a provision recapture of $519,000 and provision of $277,000 for the quarters ended September 30, 2024 and December 31, 2023, respectively. The recapture in the current period was due to the decrease in the community bank loan portfolio combined with an improvement in the forward look, which is driven by the future projected unemployment and GDP curves, which flattened since last quarter, lessening the impact of this factor.
The following table details the provision expense/(recapture) for the community bank and CCBX for the period indicated:
Three Months Ended
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
Community bank$(1,071)$(519)$277 
CCBX63,741 72,104 60,467 
Total provision expense$62,670 $71,585 $60,744 
A recapture for unfunded commitments of $803,000 was recorded for the quarter ended December 31, 2024 as a result of a decrease in the overall available balance combined with an improvement in the reserve rates.
At December 31, 2024, our nonperforming assets were $62.7 million, or 1.52%, of total assets, compared to $66.4 million, or 1.63%, of total assets, at September 30, 2024, and $53.8 million, or 1.43%, of total assets, at December 31, 2023. These ratios are impacted by nonperforming CCBX loans that are covered by CCBX partner credit enhancements. As of December 31, 2024, $60.8 million of the $62.6 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements described above.
Nonperforming assets decreased $3.7 million during the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024. This change is due to a decrease in CCBX and community bank nonaccrual loans. Community bank nonperforming loans decreased $1.0 million from September 30, 2024 to $100,000 as of December 31, 2024, and CCBX nonperforming loans decreased $2.7 million to $62.6 million from September 30, 2024. The decrease in CCBX
13

nonperforming loans is due to an decrease of $570,000 in nonaccrual loans from September 30, 2024 to $19.5 million. Some CCBX partners have a collection practice that places certain loans on nonaccrual status to improve collectability. $17.2 million of these loans are less than 90 days past due as of December 31, 2024. Additionally, there was a $2.2 million decrease 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 anticipate that balances 90 days past due or more and still accruing will generally increase as those loan portfolios grow. 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 December 31, 2024. Our nonperforming loans to loans receivable ratio was 1.80% at December 31, 2024, compared to 1.94% at September 30, 2024, and 1.78% at December 31, 2023.
For the quarter ended December 31, 2024, there were $136,000 community bank net charge-offs and $55.8 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.
ConsolidatedAs of
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
Nonaccrual loans:
Commercial and industrial loans$334 $531 $— 
Real estate loans:
Residential real estate— 44 170 
Commercial real estate— 831 7,145 
Consumer and other loans:
Credit cards10,262 7,987 — 
Other consumer and other loans8,967 11,713 — 
Total nonaccrual loans19,563 21,106 7,315 
Accruing loans past due 90 days or more:
Commercial & industrial loans
1,006 1,566 2,086 
Real estate loans:
Residential real estate loans2,608 3,025 1,115 
Consumer and other loans:
Credit cards34,490 34,562 34,835 
Other consumer and other loans4,989 6,111 8,488 
Total accruing loans past due 90 days or more43,093 45,264 46,524 
Total nonperforming loans62,656 66,370 53,839 
Real estate owned— — — 
Repossessed assets— — — 
Total nonperforming assets$62,656 $66,370 $53,839 
Total nonaccrual loans to loans receivable0.56 %0.62 %0.24 %
Total nonperforming loans to loans receivable1.80 %1.94 %1.78 %
Total nonperforming assets to total assets1.52 %1.63 %1.43 %
14

The following tables detail the CCBX and community bank nonperforming assets which are included in the total nonperforming assets table above.
CCBXAs of
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
Nonaccrual loans:
Commercial and industrial loans:
All other commercial & industrial loans
$234 $333 $— 
Consumer and other loans:
Credit cards10,262 7,987 — 
Other consumer and other loans8,967 11,713 — 
Total nonaccrual loans19,463 20,033 — 
Accruing loans past due 90 days or more:
Commercial & industrial loans
1,006 1,566 2,086 
Real estate loans:
Residential real estate loans2,608 3,025 1,115 
Consumer and other loans:
Credit cards34,490 34,562 34,835 
Other consumer and other loans4,989 6,111 8,488 
Total accruing loans past due 90 days or more43,093 45,264 46,524 
Total nonperforming loans62,556 65,297 46,524 
Other real estate owned— — — 
Repossessed assets— — — 
Total nonperforming assets$62,556 $65,297 $46,524 
Total CCBX nonperforming assets to total consolidated assets1.52 %1.61 %1.24 %
Community BankAs of
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
Nonaccrual loans:
Commercial and industrial loans$100 $198 $— 
Real estate:
Residential real estate— 44 170 
Commercial real estate— 831 7,145 
Total nonaccrual loans100 1,073 7,315 
Accruing loans past due 90 days or more:
Total accruing loans past due 90 days or more— — — 
Total nonperforming loans100 1,073 7,315 
Other real estate owned— — — 
Repossessed assets— — — 
Total nonperforming assets$100 $1,073 $7,315 
Total community bank nonperforming assets to total consolidated assets< 0.01 %0.03 %0.19 %
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 $4.12 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 broker-dealers, 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
15

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 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.
16

COASTAL FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands; unaudited)
ASSETS
December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023
Cash and due from banks$36,533 $45,327 $59,995 $32,790 $31,345 
Interest earning deposits with other banks
415,980 438,699 427,250 482,338 451,783 
Investment securities, available for sale, at fair value35 38 39 41 99,504 
Investment securities, held to maturity, at amortized cost47,286 48,582 49,174 50,049 50,860 
Other investments10,800 10,757 10,664 10,583 10,227 
Loans held for sale20,600 7,565 — 797 — 
Loans receivable3,486,565 3,418,832 3,326,460 3,199,554 3,026,092 
Allowance for credit losses(176,994)(170,263)(147,914)(139,258)(116,958)
Total loans receivable, net3,309,571 3,248,569 3,178,546 3,060,296 2,909,134 
CCBX credit enhancement asset181,890 167,251 143,485 137,276 107,921 
CCBX receivable14,138 16,060 11,520 10,369 9,088 
Premises and equipment, net27,431 25,833 24,526 22,995 22,090 
Lease right-of-use assets5,219 5,427 5,635 5,756 5,932 
Accrued interest receivable21,104 23,664 23,617 24,681 26,819 
Bank-owned life insurance, net13,375 13,255 13,132 12,991 12,870 
Deferred tax asset, net3,600 3,083 2,221 2,221 3,806 
Other assets13,646 11,711 11,742 12,075 11,987 
Total assets$4,121,208 $4,065,821 $3,961,546 $3,865,258 $3,753,366 
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits$3,585,332 $3,627,288 $3,543,432 $3,462,979 $3,360,363 
Subordinated debt, net44,293 44,256 44,219 44,181 44,144 
Junior subordinated debentures, net3,591 3,591 3,591 3,590 3,590 
Deferred compensation332 369 405 442 479 
Accrued interest payable962 1,070 999 1,061 892 
Lease liabilities5,398 5,609 5,821 5,946 6,124 
CCBX payable29,171 39,188 34,536 33,095 33,651 
Other liabilities13,425 12,520 11,850 10,255 9,145 
Total liabilities3,682,504 3,733,891 3,644,853 3,561,549 3,458,388 
SHAREHOLDERS’ EQUITY
Common Stock228,177 134,769 132,989 131,601 130,136 
Retained earnings210,529 197,162 183,706 172,110 165,311 
Accumulated other comprehensive
   loss, net of tax		(2)(1)(2)(2)(469)
Total shareholders’ equity438,704 331,930 316,693 303,709 294,978 
Total liabilities and
   shareholders’ equity		$4,121,208 $4,065,821 $3,961,546 $3,865,258 $3,753,366 
17

COASTAL FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts; unaudited)

Three Months Ended
December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans$89,714 $99,590 $90,944 $84,621 $81,159 
Interest on interest earning deposits with
   other banks		6,021 4,781 5,683 4,780 5,687 
Interest on investment securities661 675 686 1,034 1,225 
Dividends on other investments191 33 174 37 172 
Total interest income96,587 105,079 97,487 90,472 88,243 
INTEREST EXPENSE
Interest on deposits29,404 32,083 30,578 28,867 27,916 
Interest on borrowed funds667 809 672 669 670 
Total interest expense30,071 32,892 31,250 29,536 28,586 
Net interest income66,516 72,187 66,237 60,936 59,657 
PROVISION FOR CREDIT LOSSES61,867 70,257 62,325 83,158 60,789 
Net interest income/(expense) after
   provision for credit losses		4,649 1,930 3,912 (22,222)(1,132)
NONINTEREST INCOME
Service charges and fees932 952 946 908 957 
Loan referral fees— — — 168 — 
Unrealized gain (loss) on equity securities,
   net		1 2 9 15 80 
Other income473 486 257 308 60 
Noninterest income, excluding BaaS program income and BaaS indemnification income
1,406 1,440 1,212 1,399 1,097 
Servicing and other BaaS fees1,043 1,044 1,525 1,131 1,015 
Transaction fees1,783 1,696 1,309 1,122 1,006 
Interchange fees1,916 1,853 1,625 1,539 1,272 
Reimbursement of expenses3,468 1,843 1,637 1,033 1,076 
BaaS program income8,210 6,436 6,096 4,825 4,369 
BaaS credit enhancements62,097 70,108 60,826 79,808 58,449 
BaaS fraud enhancements5,043 2,084 1,784 923 779 
BaaS indemnification income67,140 72,192 62,610 80,731 59,228 
Total noninterest income76,756 80,068 69,918 86,955 64,694 
NONINTEREST EXPENSE
Salaries and employee benefits17,994 17,101 17,005 17,984 16,490 
Occupancy958 964 985 1,029 976 
Data processing and software licenses4,010 4,297 3,625 3,381 2,781 
Legal and professional expenses4,606 3,597 3,631 3,672 2,649 
Point of sale expense2,745 1,351 852 869 899 
Excise taxes778 762 (706)320 449 
Federal Deposit Insurance Corporation
   ("FDIC") assessments		750 740 690 683 665 
Director and staff expenses683 559 470 400 478 
Marketing28 67 14 53 138 
Other expense1,752 1,482 1,383 1,867 1,089 
Noninterest expense, excluding BaaS loan and BaaS fraud expense34,304 30,920 27,949 30,258 26,614 
18

BaaS loan expense24,859 32,612 29,076 24,837 24,310 
BaaS fraud expense5,043 2,084 1,784 923 779 
BaaS loan and fraud expense29,902 34,696 30,860 25,760 25,089 
Total noninterest expense64,206 65,616 58,809 56,018 51,703 
Income before provision for income
   taxes		17,199 16,382 15,021 8,715 11,859 
PROVISION FOR INCOME TAXES3,832 2,926 3,425 1,915 2,847 
NET INCOME$13,367 $13,456 $11,596 $6,800 $9,012 
Basic earnings per common share$0.97 $1.00 $0.86 $0.51 $0.68 
Diluted earnings per common share$0.94 $0.97 $0.84 $0.50 $0.66 
Weighted average number of common shares
   outstanding:
Basic13,828,60513,447,06613,412,66713,340,99713,286,828
Diluted14,268,22913,822,27013,736,50813,676,91713,676,513
19

COASTAL FINANCIAL CORPORATION
AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY
(Dollars in thousands; unaudited)
For the Three Months Ended
December 31, 2024September 30, 2024December 31, 2023
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		$501,654 $6,021 4.77 %$350,915 $4,781 5.42 %$413,127 $5,687 5.46 %
Investment securities, available for sale (2)
39 — — 40 — — 100,204 546 2.16 
Investment securities, held to maturity (2)
48,126 661 5.46 48,945 675 5.49 49,469 679 5.45 
Other investments10,783 191 7.05 11,140 33 1.18 11,683 172 5.84 
Loans receivable (3)
3,419,476 89,714 10.44 3,464,871 99,590 11.43 3,007,289 81,159 10.71 
Total interest earning assets3,980,078 96,587 9.65 3,875,911 105,079 10.79 3,581,772 88,243 9.77 
Noninterest earning assets:
Allowance for credit losses(156,687)(151,292)(95,391)
Other noninterest earning assets277,922 268,903 204,052 
Total assets$4,101,313 $3,993,522 $3,690,433 
Liabilities and Shareholders’ Equity
Interest bearing liabilities:
Interest bearing deposits$3,068,357 $29,404 3.81 %$2,966,527 $32,083 4.30 %$2,660,235 $27,916 4.16 %
FHLB advances and other borrowings— 1 — 9,717 140 5.73 3 — — 
Subordinated debt44,272 599 5.38 44,234 598 5.38 44,121 598 5.38 
Junior subordinated debentures3,591 67 7.42 3,591 71 7.87 3,590 72 7.96 
Total interest bearing liabilities3,116,220 30,071 3.84 3,024,069 32,892 4.33 2,707,949 28,586 4.19 
Noninterest bearing deposits577,453 588,178 640,424 
Other liabilities50,824 60,101 52,450 
Total shareholders' equity356,816 321,174 289,612 
Total liabilities and shareholders' equity$4,101,313 $3,993,522 $3,690,435 
Net interest income$66,516 $72,187 $59,657 
Interest rate spread5.82 %6.46 %5.59 %
Net interest margin (4)
6.65 %7.41 %6.61 %
(1)Yields and costs are annualized.
(2)For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(3)Includes loans held for sale and nonaccrual loans.
(4)Net interest margin represents net interest income divided by the average total interest earning assets.
20

COASTAL FINANCIAL CORPORATION
SELECTED AVERAGE BALANCES, YIELDS, AND RATES – BY SEGMENT - QUARTERLY
(Dollars in thousands; unaudited)
For the Three Months Ended
December 31, 2024September 30, 2024December 31, 2023
(dollars in thousands, unaudited)Average
Balance		Interest &
Dividends
Yield /
Cost (1)
Average
Balance		Interest &
Dividends
Yield /
Cost (1)
Average
Balance		Interest &
Dividends
Yield /
Cost (1)
Community Bank
Assets
Interest earning assets:
Loans receivable (2)
$1,892,298 $31,043 6.53 %$1,912,428 $31,898 6.64 %$1,811,152 $28,832 6.32 %
Total interest earning
    assets		1,892,298 31,043 6.53 1,912,428 31,898 6.64 1,811,152 28,832 6.32 
Liabilities
Interest bearing liabilities:
Interest bearing
   deposits		1,029,346 7,161 2.77 %982,280 7,264 2.94 %951,148 6,090 2.54 %
Intrabank liability357,442 4,290 4.77 406,641 5,540 5.42 275,995 3,799 5.46 
Total interest bearing
   liabilities		1,386,788 11,451 3.28 1,388,921 12,804 3.67 1,227,143 9,889 3.20 
Noninterest bearing
   deposits		505,510 523,507 584,009 
Net interest income$19,592 $19,094 $18,943 
Net interest margin(3)
4.12 %3.97 %4.15 %
CCBX
Assets
Interest earning assets:
Loans receivable (2)(4)
$1,527,178 $58,671 15.28 %$1,552,443 $67,692 17.35 %$1,196,137 $52,327 17.36 %
Intrabank asset583,776 7,007 4.78 496,475 6,764 5.42 569,365 7,837 5.46 
Total interest earning
    assets		2,110,954 65,678 12.38 2,048,918 74,456 14.46 1,765,502 60,164 13.52 
Liabilities
Interest bearing liabilities:
Interest bearing
   deposits		2,039,011 22,243 4.34 %1,984,247 24,819 4.98 %1,709,087 21,826 5.07 %
Total interest bearing
   liabilities		2,039,011 22,243 4.34 1,984,247 24,819 4.98 1,709,087 21,826 5.07 
Noninterest bearing
   deposits		71,943 64,671 56,415 
Net interest income$43,435 $49,637 $38,338 
Net interest margin(3)
8.19 %9.64 %8.62 %
Net interest margin, net
   of Baas loan expense (5)
3.50 %3.31 %3.15 %
21

For the Three Months Ended
December 31, 2024September 30, 2024December 31, 2023
(dollars in thousands, unaudited)Average
Balance		Interest &
Dividends
Yield /
Cost (1)
Average
Balance		Interest &
Dividends
Yield /
Cost (1)
Average
Balance		Interest &
Dividends
Yield /
Cost (1)
Treasury & Administration
Assets
Interest earning assets:
Interest earning
   deposits with
   other banks		$501,654 $6,021 4.77 %$350,915 $4,781 5.42 %$413,127 $5,687 5.46 %
Investment securities,
   available for sale (6)
39 — — 40 — — 100,204 546 2.16 
Investment securities,
   held to maturity (6)
48,126 661 5.46 48,945 675 5.49 49,469 679 5.45 
Other investments10,783 191 7.05 11,140 33 1.18 11,683 172 5.84 
Total interest
   earning assets		560,602 6,873 4.88 %411,040 — 5,489 5.31 %574,483 7,084 4.89 %
Liabilities
Interest bearing
   liabilities:
FHLB advances
   and borrowings		$— $1 — %9,717 140 5.73 %3 — — %
Subordinated debt44,272 599 5.38 %44,234 598 5.38 %44,121 598 5.38 %
Junior subordinated
   debentures		3,591 67 7.42 3,591 71 7.87 3,590 72 7.96 
Intrabank liability, net (7)
226,334 2,717 4.78 89,834 1,224 5.42 293,370 4,038 5.46 
Total interest
   bearing liabilities		274,197 3,384 4.91 147,376 2,033 5.49 341,084 4,708 5.48 
Net interest income$3,489 $3,456 $2,376 
Net interest margin(3)
2.48 %3.34 %1.64 %
(1)Yields and costs are annualized.
(2)Includes loans held for sale and nonaccrual loans.
(3)Net interest margin represents net interest income divided by the average total interest earning assets.
(4)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, fraud 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.
(5)Net interest margin, net of BaaS loan expense, includes the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release.
(6)For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(7)Intrabank assets and liabilities are consolidated for period calculations and presented as intrabank asset, net or intrabank liability, net in the table above.

Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance.
However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.
The following non-GAAP measures are presented to illustrate the impact of BaaS loan expense on net loan income and yield on loans and CCBX loans and the impact of BaaS loan expense on net interest income and net interest margin.
Loan income, net of BaaS loan expense, divided by average loans, is a non-GAAP measure that includes the impact BaaS loan expense on loan income and the yield on loans. The most directly comparable GAAP measure is yield on loans.
22

Net BaaS loan income divided by average CCBX loans is a non-GAAP measure that includes the impact BaaS loan expense on net BaaS loan income and the yield on CCBX loans. The most directly comparable GAAP measure is yield on CCBX loans.
Net interest income, net of BaaS loan expense, is a non-GAAP measure that includes the impact BaaS loan expense on net interest income. The most directly comparable GAAP measure is net interest income.
CCBX net interest margin, net of BaaS loan expense, is a non-GAAP measure that includes the impact of BaaS loan expense on net interest rate margin. The most directly comparable GAAP measure is CCBX net interest margin.
Reconciliations of the GAAP and non-GAAP measures are presented below.
CCBXAs of and for the Three Months Ended As of and for the Twelve Months Ended
(dollars in thousands; unaudited)December 31
2024		September 30
2024		December 31
2023		December 31
2024		December 31
2023
Net BaaS loan income divided by average CCBX loans:
CCBX loan yield (GAAP)(1)
15.28 %17.35 %17.36 %16.89 %16.89 %
Total average CCBX loans receivable$1,527,178$1,552,443$1,196,137$1,427,571$1,210,413
Interest and earned fee income on CCBX loans (GAAP)58,67167,69252,327241,134204,458
BaaS loan expense          (24,859)          (32,612)          (24,310)      (111,384)       (86,900) 
Net BaaS loan income$33,812$35,080$28,017$129,750$117,558
Net BaaS loan income divided by average CCBX loans (1)
8.81 %8.99 %9.30 %9.09 %9.71 %
CCBX net interest margin, net of BaaS loan expense:
CCBX net interest margin (1)
8.19 %9.64 %8.62 %8.87 %9.65 %
CCBX earning assets2,110,9542,048,9181,765,5021,999,6951,574,334
Net interest income (GAAP)43,43549,63738,338177,320151,883
Less: BaaS loan expense          (24,859)          (32,612)          (24,310)      (111,384)       (86,900) 
Net interest income, net of BaaS
   loan expense
$18,576$17,025$14,028$65,936$64,983
CCBX net interest margin, net of BaaS loan expense (1)
3.50 %3.31 %3.15 %3.30 %4.13 %
ConsolidatedAs of and for the Three Months EndedAs of and for the Twelve Months Ended
(dollars in thousands; unaudited)December 31
2024		September 30
2024		December 31
2023		December 31
2024		December 31
2023
Net interest margin, net of BaaS loan expense:
Net interest margin (1)
6.65 %7.41 %6.61 %6.99 %7.10 %
Earning assets3,980,0783,875,9113,581,7723,802,2753,364,406
Net interest income (GAAP)66,51672,18759,657265,876238,727
Less: BaaS loan expense          (24,859)          (32,612)      (24,310)       (111,384)       (86,900) 
Net interest income, net of BaaS loan expense$41,657$39,575$35,347$154,492$151,827
Net interest margin, net of BaaS loan expense (1)
4.16 %4.06 %3.92 %4.06 %4.51 %
Loan income net of BaaS loan expense divided by average loans:
Loan yield (GAAP)(1)
10.44 %11.43 %10.71 %10.99 %10.60 %
Total average loans receivable$3,419,476$3,464,871$3,007,289$3,320,582$2,936,908
Interest and earned fee income on loans (GAAP)89,71499,59081,159364,869311,441
BaaS loan expense      (24,859)       (32,612) (24,310)      (111,384)       (86,900) 
Net loan income$64,855$66,978$56,849$253,485$224,541
Loan income, net of BaaS loan expense, divided by average loans (1)
7.55 %7.69 %7.50 %7.63 %7.65 %
(1) Annualized calculations for periods presented.

23

The following non-GAAP measure is presented to illustrate the impact of BaaS loan expense, BaaS fraud expense and reimbursement of expenses (BaaS) on noninterest expense. The most comparable GAAP measure is noninterest expense.
As of and for the Three Months Ended
(dollars in thousands, unaudited)December 31,
2024		September 30,
2024		December 31,
2023
Noninterest expense, net of reimbursement of expenses (BaaS)
Noninterest expense (GAAP)$64,206 $65,616 $51,703 
Less: BaaS loan expense24,859 32,612 24,310 
Less: BaaS fraud expense5,043 2,084 779 
Less: Reimbursement of expenses3,468 1,843 1,076 
Noninterest expense, net of BaaS loan expense, BaaS fraud expense
   and reimbursement of expenses		$30,836 $29,077 $25,538 
24

APPENDIX A -
As of December 31, 2024
Industry Concentration
We have a diversified loan portfolio, representing a wide variety of industries. Our major categories of loans are commercial real estate, consumer and other loans, residential real estate, commercial and industrial, and construction, land and land development loans. Together they represent $3.49 billion in outstanding loan balances. When combined with $1.96 billion in unused commitments the total of these categories is $5.46 billion.
Commercial real estate loans represent the largest segment of our loans, comprising 39.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $34.2 million, and the combined total in commercial real estate loans represents $1.41 billion, or 25.8% of our total outstanding loans and loan commitments.
The following table summarizes our loan commitment by industry for our commercial real estate portfolio as of December 31, 2024:
(dollars in thousands; unaudited)Outstanding BalanceAvailable Loan CommitmentsTotal Outstanding Balance & Available Commitment
% of Total Loans
(Outstanding Balance &
Available Commitment)
Average Loan BalanceNumber of Loans
Apartments$405,561 $4,953 $410,514 7.5 %$3,937 103
Hotel/Motel154,691 68 154,759 2.8 6,726 23
Convenience Store139,735 575 140,310 2.6 2,329 60
Office122,897 7,687 130,584 2.4 1,366 90
Retail103,312 414 103,726 1.9 993 104
Warehouse103,130 — 103,130 1.9 1,748 59
Mixed use91,607 5,365 96,972 1.8 1,160 79
Mini Storage80,837 10,183 91,020 1.7 3,674 22
Strip Mall43,894 — 43,894 0.8 6,271 7
Manufacturing37,617 1,200 38,817 0.7 1,297 29
Groups < 0.70% of total91,520 3,777 95,297 1.7 1,173 78
Total$1,374,801 $34,222 $1,409,023 25.8 %$2,102 654
Consumer loans comprise 34.6% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $735.8 million, and the combined total in consumer and other loans represents $1.94 billion, or 35.6% of our total outstanding loans and loan commitments. As illustrated in the table below, our CCBX partners bring in a large number of mostly smaller dollar loans, resulting in an average consumer loan balance of just $1,000. CCBX consumer loans are underwritten to CCBX credit standards and underwriting of these loans is regularly tested, including quarterly testing for partners with portfolio balances greater than $10.0 million.
25

The following table summarizes our loan commitment by industry for our consumer and other loan portfolio as of December 31, 2024:
(dollars in thousands; unaudited)Outstanding Balance
Available Loan Commitments (1)
Total Outstanding Balance & Available Commitment (1)
% of Total Loans
(Outstanding Balance &
Available Commitment)
Average Loan BalanceNumber of Loans
CCBX consumer loans
Credit cards$528,554 $717,198 $1,245,752 22.8 %$1.8 301,799
Installment loans656,797 15,806 672,603 12.3 1.0 690,596
Lines of credit722 1 723 0.0 1.4 524
Other loans7,261 — 7,261 0.1 — 163,026
Community bank consumer loans
Installment loans1,917 2 1,919 0.1 68.5 28
Lines of credit181 344 525 0.0 5.7 32
Other loans11,444 2,400 13,844 0.3 30.6 374
Total$1,206,876 $735,751 $1,942,627 35.6 %$1.0 1,156,379
(1)Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.
Residential real estate loans comprise 13.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $499.5 million, and the combined total in residential real estate loans represents $969.3 million, or 17.8% of our total outstanding loans and loan commitments.
The following table summarizes our loan commitment by industry for our residential real estate loan portfolio as of December 31, 2024:
(dollars in thousands; unaudited)Outstanding Balance
Available Loan Commitments (1)
Total Outstanding Balance & Available Commitment (1)
% of Total Loans
(Outstanding Balance &
Available Commitment)
Average Loan BalanceNumber of Loans
CCBX residential real estate loans
Home equity line of credit$267,707 $453,369 $721,076 13.2 %$27 10,092
Community bank residential real estate loans
Closed end, secured by first liens165,433 2,080 167,513 3.1 537 308
Home equity line of credit25,506 43,102 68,608 1.3 109 234
Closed end, second liens11,125 965 12,090 0.2 371 30
Total$469,771 $499,516 $969,287 17.8 %$44 10,664
(1)Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.
Commercial and industrial loans comprise 8.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $645.5 million, and the combined total in commercial and industrial loans represents $938.9 million, or 17.2% of our total outstanding loans and loan commitments. Included in commercial and industrial loans is $109.0 million in outstanding capital call lines, with an additional $550.9 million in available loan commitments which is limited to a $350.0 million portfolio maximum. Capital call lines are provided to venture capital firms through one of our CCBX BaaS clients. These loans are secured by the capital call rights and are individually underwritten to the Bank’s credit standards and the underwriting is reviewed by the Bank on every capital call line.
26

The following table summarizes our loan commitment by industry for our commercial and industrial loan portfolio as of December 31, 2024:
(dollars in thousands; unaudited)Outstanding Balance
Available Loan Commitments (1)
Total Outstanding Balance & Available Commitment (1)
% of Total Loans
(Outstanding Balance &
Available Commitment)
Average Loan BalanceNumber of Loans
Consolidated C&I loans
Capital Call Lines$109,017 $550,948 $659,965 12.1 %$808 135
Construction/Contractor Services24,367 36,343 60,710 1.1 121 202
Financial Institutions48,648 — 48,648 0.9 4,054 12
Retail28,533 5,664 34,197 0.6 14 2,052
Manufacturing5,604 4,581 10,185 0.2 147 38
Medical / Dental / Other Care7,074 2,641 9,715 0.2 544 13
Groups < 0.20% of total70,130 45,360 115,490 2.1 55 1,275
Total$293,373 $645,537 $938,910 17.2 %$79 3,727
(1)Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits.
Construction, land and land development loans comprise 4.2% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $47.8 million, and the combined total in construction, land and land development loans represents $196.0 million, or 3.6% of our total outstanding loans and loan commitments.
The following table details our loan commitment for our construction, land and land development portfolio as of December 31, 2024:
(dollars in thousands; unaudited)Outstanding BalanceAvailable Loan CommitmentsTotal Outstanding Balance & Available Commitment
% of Total Loans
(Outstanding Balance &
Available Commitment)
Average Loan BalanceNumber of Loans
Commercial construction$83,216 $30,500 $113,716 2.1 %$6,935 12
Residential construction40,940 10,873 51,813 0.9 2,408 17
Developed land loans8,305 456 8,761 0.2 489 17
Undeveloped land loans8,665 4,816 13,481 0.2 619 14
Land development7,072 1,157 8,229 0.2 643 11
Total$148,198 $47,802 $196,000 3.6 %$2,087 71
27

Exposure and risk in our construction, land and land development portfolio is declining compared to previous periods as indicated in the following table:
Outstanding Balance as of
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023
Commercial construction$83,216 $97,792 $110,372 $102,099 $81,489 
Residential construction40,940 35,822 34,652 28,751 34,213 
Undeveloped land loans8,665 8,606 8,372 8,190 7,890 
Developed land loans8,305 14,863 13,954 14,307 20,515 
Land development7,072 5,968 5,714 7,515 12,993 
Total$148,198 $163,051 $173,064 $160,862 $157,100 
Commitments to extend credit total $1.96 billion at December 31, 2024, however we do not anticipate our customers using the $1.96 billion that is showing as available due to CCBX partner and portfolio limits.
The following table presents outstanding commitments to extend credit as of December 31, 2024:
Consolidated
(dollars in thousands; unaudited)As of December 31, 2024
Commitments to extend credit:
Commercial and industrial loans$94,589 
Commercial and industrial loans - capital call lines550,948 
Construction – commercial real estate loans36,873 
Construction – residential real estate loans10,929 
Residential real estate loans499,516 
Commercial real estate loans34,222 
Credit cards717,198 
Consumer and other loans18,553 
Total commitments to extend credit$1,962,828 
We have individual CCBX partner portfolio limits with our each of our partners to manage loan concentration risk, liquidity risk, and counter-party partner risk. For example, as of December 31, 2024, capital call lines outstanding balance totaled $109.0 million, and while commitments totaled $550.9 million, the commitments are limited to a maximum of $350.0 million by agreement with the partner. If a CCBX partner goes over their individual limit, it would be a breach of their contract and the Bank may impose penalties and would have the choice to fund the loan.
28

See the table below for CCBX portfolio maximums and related available commitments:
CCBX
(dollars in thousands; unaudited)BalancePercent of CCBX loans receivable
Available Commitments (1)
Maximum Portfolio Size
Cash Reserve/Pledge Account Amount (2)
Commercial and industrial loans:
Capital call lines$109,017 6.8 %$550,948 $350,000 $— 
All other commercial & industrial loans
33,961 2.1 19,104 480,000 834 
Real estate loans:
Home equity lines of credit (3)
267,707 16.7 453,369 375,000 36,241
Consumer and other loans:
Credit cards - cash secured211 — — 
Credit cards - unsecured528,343 717,198 26,742
Credit cards - total528,554 33.0 717,198 807,484 26,742
Installment loans - cash secured127,014 15,806 — 
Installment loans - unsecured529,783 — 5,332
Installment loans - total656,797 40.9 15,806 1,787,118 5,332
Other consumer and other loans7,983 0.5 1 5,398 196
Gross CCBX loans receivable1,604,019 100.0 %1,756,426 3,805,000 $69,345 
Net deferred origination fees(442)
Loans receivable$1,603,577 
(1) Remaining commitment available, net of outstanding balance.
(2) Balances are as of January 8, 2025.
(3) These home equity lines of credit are secured by residential real estate and are accessed by using a credit card, but are classified as 1-4 family residential properties per regulatory guidelines.
29

APPENDIX B -
As of December 31, 2024
CCBX – BaaS Reporting Information
During the quarter ended December 31, 2024, $62.1 million was recorded in BaaS credit enhancements related to the provision for credit losses - loans and reserve for unfunded commitments for CCBX partner loans and negative deposit accounts. Agreements with our CCBX partners provide for a credit enhancement provided by the partner 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, unfunded commitments and negative deposit accounts. When the provision for credit losses - loans and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements) in recognition of the CCBX partner legal commitment to indemnify or reimburse losses. The credit enhancement asset is relieved as credit enhancement payments and recoveries are received from the CCBX partner or taken from the partner's cash reserve account. Agreements with our CCBX partners also provide protection to the Bank from fraud by indemnifying or reimbursing incurred fraud losses. BaaS fraud includes noncredit fraud losses on loans and deposits originated through partners. Fraud losses are recorded when incurred as losses in noninterest expense, and the enhancement received from the CCBX partner is recorded in noninterest income, resulting in a net impact of zero to the income statement. Many CCBX partners also pledge a cash reserve account at the Bank which the Bank can collect from when losses occur that is then replenished by the partner on a regular interval. Although agreements with our CCBX partners provide for credit enhancements that provide protection to the Bank from credit and fraud losses by indemnifying or reimbursing incurred credit and fraud losses, if our partner is unable to fulfill their contracted obligation then the bank would be exposed to additional loan and deposit losses if the cash flows on the loans were not sufficient to fund the reimbursement of loan losses, as a result of this counterparty risk. If a CCBX partner does not replenish their cash reserve account the Bank may consider an alternative plan for funding the cash reserve. This may involve the possibility of adjusting the funding amounts or timelines to better align with the partner's specific situation. If a mutually agreeable funding plan is not agreed to, the Bank could declare the agreement in default, take over servicing and cease paying the partner for servicing the loan and providing credit enhancements. The Bank would evaluate any remaining credit enhancement asset from the CCBX partner in the event the partner failed to determine if a write-off is appropriate. If a write-off occurs, the Bank would retain the full yield and any fee income on the loan portfolio going forward, and our BaaS loan expense would decrease once default occurred and payments to the CCBX partner were stopped.
The Bank records contractual interest earned from the borrower on CCBX partner loans in interest income, adjusted for origination costs which are paid or payable to the CCBX partner. BaaS loan expense represents the amount paid or payable to partners for credit and fraud enhancements and originating & servicing CCBX loans. To determine net revenue (Net BaaS loan income) earned from CCBX loan relationships, the Bank takes BaaS loan interest income and deducts BaaS loan expense to arrive at Net BaaS loan income (A reconciliation of the non-GAAP measures are set forth in the preceding section of this earnings release.) which can be compared to interest income on the Company’s community bank loans.
The following table illustrates how CCBX partner loan income and expenses are recorded in the financial statements:
Loan income and related loan expenseThree Months Ended
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
Yield on loans (1)
15.28 %17.35 %17.36 %
BaaS loan interest income$58,671 $67,692 $52,327 
Less: BaaS loan expense24,859 32,612 24,310 
Net BaaS loan income (2)
$33,812 $35,080 $28,017 
Net BaaS loan income divided by average BaaS loans (1)(2)
8.81 %8.99 %9.30 %
(1) Annualized calculation for quarterly periods shown.
(2) A reconciliation of the non-GAAP measures are set forth in the preceding section of this earnings release.
A decrease in average CCBX loans receivable resulted in decreased interest income on CCBX loans during the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024. The decrease in average CCBX loans receivable was primarily due to loan sales in the CCBX loan portfolio as part of our strategy to optimize the CCBX loan portfolio and strengthen our balance sheet through originating higher quality new loans and enhanced credit standards. These higher quality loans also have lower stated rates and expected losses. As a result, our yield on loans and our BaaS loan expense decrease by similar amounts. We continue to reposition ourselves by managing CCBX credit and
30

concentration levels in an effort to optimize our loan portfolio and generate off balance sheet fee income. Growth in CCBX loans and deposits has resulted in increases in interest income and expense for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023.
The following tables are a summary of the interest components, direct fees, and expenses of BaaS for the periods indicated and are not inclusive of all income and expense related to BaaS.
Interest incomeThree Months Ended
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
Loan interest income$58,671 $67,692 $52,327 
Total BaaS interest income$58,671 $67,692 $52,327 
Interest expenseThree Months Ended
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
BaaS interest expense$22,243 $24,819 $21,826 
Total BaaS interest expense$22,243 $24,819 $21,826 
BaaS incomeThree Months Ended
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
BaaS program income:
Servicing and other BaaS fees$1,043 $1,044 $1,015 
Transaction fees1,783 1,696 1,006 
Interchange fees1,916 1,853 1,272 
Reimbursement of expenses3,468 1,843 1,076 
BaaS program income8,210 6,436 4,369 
BaaS indemnification income:
BaaS credit enhancements62,097 70,108 58,449 
BaaS fraud enhancements5,043 2,084 779 
BaaS indemnification income67,140 72,192 59,228 
Total noninterest BaaS income$75,350 $78,628 $63,597 
Servicing and other BaaS fees decreased $1,000 in the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 while transaction fees and interchange fees increased $87,000 and $63,000, respectively. We expect servicing and other BaaS fees to decrease and transaction and interchange fees to increase as partner activity grows and contracted minimum fees are replaced with recurring fees and then exceed those minimum fees. Increases in BaaS reimbursement of fees offsets increases in noninterest expense from BaaS expenses covered by CCBX partners.
BaaS loan and fraud expense:Three Months Ended
(dollars in thousands; unaudited)December 31,
2024		September 30,
2024		December 31,
2023
BaaS loan expense$24,859 $32,612 $24,310 
BaaS fraud expense5,043 2,084 779 
Total BaaS loan and fraud expense$29,902 $34,696 $25,089 
31
v3.24.4
Cover
Jan. 28, 2025
Cover [Abstract]  
Document Type 8-K
Document Period End Date Jan. 28, 2025
Entity Registrant Name COASTAL FINANCIAL CORPORATION
Entity Incorporation, State or Country Code WA
Entity File Number 001-38589
Entity Tax Identification Number 56-2392007
Entity Address, Address Line One 5415 Evergreen Way
Entity Address, City or Town Everett
Entity Address, State or Province WA
Entity Address, Postal Zip Code 98203
City Area Code (425)
Local Phone Number 257-9000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, no par value per share
Trading Symbol CCB
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001437958
Amendment Flag false
Coastal Financial (NASDAQ:CCB)
Graphique Historique de l'Action
De Déc 2024 à Jan 2025 Plus de graphiques de la Bourse Coastal Financial
Coastal Financial (NASDAQ:CCB)
Graphique Historique de l'Action
De Jan 2024 à Jan 2025 Plus de graphiques de la Bourse Coastal Financial