Executive Summary

Q1 2025 delivered diluted EPS of $0.63, down from $0.94 in Q4 2024 but up from $0.50 in Q1 2024, with noninterest expense up 6.8% sequentially on front‑loaded CCBX onboarding and technology/risk investments .
Total revenue was $139.5M, down 4.7% q/q; net interest margin improved to 7.48% as loan yields rose and deposit costs fell; ROA was 0.93% vs 1.30% in Q4 .
Wall Street consensus vs actual: EPS missed ($0.845 vs $0.63); on SPGI’s revenue basis, actual $83.8M was below $158.7M, while Coastal’s reported total revenue was $139.5M (definition differences) .
Strong deposit growth (+$205.9M; +5.7% q/q), launch of T‑Mobile deposits on April 1, and continued loan sales ($744.6M) support liquidity and off‑balance‑sheet fee streams .
Near‑term catalyst: expense normalization by Q3 per management; medium‑term drivers include deposit program launches (Robinhood in H2 2025), slight NIM expansion as deposits reprice faster than loans .

What Went Well and What Went Wrong

Deposit growth accelerated: total deposits rose to $3.79B (+$205.9M; +5.7% q/q), driven by CCBX programs; deposit sweep capability enhanced liquidity and insurance coverage .
CCBX program fee income rose to $6.28M (+$0.72M q/q); transaction and interchange fees increased as partner activity expanded .
Management expects slight NIM expansion as interest‑rate‑sensitive deposits reprice faster than CCBX loans and cost of deposits declined (3.08% vs 3.21% in Q4) .

Key quotes:

“We anticipate that the revenue and earnings from these investments will be highly valuable over the long‑term” — CEO Eric Sprink .
“Our risk reduction efforts… continued to function as expected despite the volatile macroeconomics conditions” .
“We plan to continue selling loans… and will continue this strategy to provide an on‑going and passive revenue source with no on balance sheet risk” .

EPS declined q/q as noninterest expense rose to $72.0M (+6.8%), led by salaries/benefits, legal/professional, and BaaS loan expense despite lower BaaS fraud expense .
Noninterest income fell to $63.5M (−$10.6M q/q), primarily on lower BaaS credit enhancements; indemnification components drove sequential decline .
Efficiency ratio worsened to 51.59% (from 46.02% in Q4), reflecting elevated onboarding/compliance costs ahead of revenue from new CCBX partners .

Metric	Q3 2024	Q4 2024	Q1 2025
Diluted EPS ($)	$0.97	$0.94	$0.63
Total Revenue ($USD Millions)	$151.1	$146.5	$139.5
Net Interest Margin (%)	7.41%	6.65%	7.48%
ROA (%)	1.34%	1.30%	0.93%
Efficiency Ratio (%)	43.10%	44.81%	51.59%

Segment snapshot (Q1 2025):

Segment Metric	Community Bank	CCBX
Deposits ($USD Millions)	$1,524.2	$2,267.0
Cost of Deposits (annualized)	1.76%	4.01%
Loans Receivable ($USD Millions)	$1,866.5	$1,650.8
Loan Yield (annualized)	6.53%	16.88% (gross, excludes BaaS loan expense)

KPIs (Q1 2025):

KPI	Value
Deposit growth q/q ($USD Millions)	+$205.9
Loans sold in quarter ($USD Millions)	$744.6
Credit card accounts with fee earning potential	237,024 (vs 182,449 in Q4; +54,575 q/q; +210,723 y/y)

Metric	Period	Previous Guidance	Current Guidance	Change
Noninterest Expense	Q2 2025	Not quantified	“May experience a similar level of expenses again in second quarter before returning to a more historical level in third quarter 2025”	Maintained elevated near-term, normalize in Q3
Net Interest Margin	2025	Not quantified	Expect slight NIM expansion as deposits reprice faster than CCBX loans	Raised (directional)
Deposits – T‑Mobile	Q2 2025	N/A	T-Mobile program deposits to be reflected in Q2 totals	New program launch
Deposits – Robinhood	H2 2025	N/A	New deposit products expected to launch H2 2025	New program launch

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
CCBX partner pipeline/expansion	22 relationships; focus on larger partners; new products with existing partners	24 relationships; capital raise to support growth; 3 LOIs	25 relationships (2 testing, 3 onboarding, 1 LOI); robust pipeline into 2026	Expanding
Risk/compliance investments	Co-sourcing and infrastructure scaling	Elevated legal/professional expenses; risk management builds	Elevated compliance/BSA/audit/legal; expect normalization by Q3	Near-term elevated, then normalize
Loan sales/off-BS strategy	$423.7M loan sales; off-BS fee income strategy	$845.5M loan sales; retention of fee streams	$744.6M loan sales; continued off-BS fee model	Ongoing
Deposit programs (partners)	Liability-sensitive positioning	No major program launch yet	T‑Mobile live 4/1; Robinhood H2 2025; deposit sweep capability	Acceleration
Macro/rates	Fed funds cuts late Q3 affect deposit costs	Further rate decrease helps deposits	Lower cost of deposits (3.08% vs 3.21% q/q)	Improving funding costs

“First quarter of 2025 was impacted by elevated expenses related to the onboarding and implementation costs of several new partnerships and products within CCBX and investments in technology” — CEO Eric Sprink .
“Looking ahead to the balance of 2025, elevated onboarding activity is expected to continue into the second quarter… We plan to continue to invest in and enhance our technology and risk management infrastructure” .
“We plan to continue selling loans… retain a portion of the fee income on sold credit card balances… provide an on‑going and passive revenue source with no on balance sheet risk or capital requirement” .

No published earnings call transcript was found for Q1 2025; Q&A highlights are unavailable from primary sources.

Metric	Q1 2025 Consensus	Q1 2025 Actual
Primary EPS Consensus Mean	0.845*	0.63*
Net Income Normalized Consensus Mean ($USD)	12.9M*	9.73M*
Revenue Consensus Mean ($USD)	158.7M*	83.8M*

Values retrieved from S&P Global. Company-reported total revenue was $139.5M, which differs from SPGI’s revenue definition for banks .

Implications:

EPS missed consensus; expense front‑loading and lower indemnification income weighed on earnings .
On SPGI’s revenue basis, actual missed; note definitional differences for bank “revenue.” Coastal’s reported total revenue declined 4.7% q/q .

Near‑term margin tailwind: NIM improved to 7.48% and should expand slightly as deposit costs decline faster than loan yields; watch deposit repricing vs loan repricing .
Expense trajectory: Elevated in Q2 due to onboarding/compliance; plan to normalize to “more historical” levels by Q3 — a key inflection for operating leverage .
Liquidity and funding: Deposits up $205.9M; T‑Mobile and upcoming Robinhood deposits plus sweep mechanics enhance liquidity and insurance coverage .
Fee model durability: Continued loan sales with retention of transaction/interchange fee streams supports recurring off‑balance‑sheet income with reduced capital usage .
Credit dynamics contained by indemnifications: Net charge‑offs remain high in CCBX by design but are largely indemnified (98.8% credit risk coverage; 100% fraud indemnified), mitigating P&L volatility; monitor counterparty risk in credit enhancements .
Capital and balance sheet: CET1 12.13% and total risk‑based 14.73% at company level; strong cash and borrowing capacity vs uninsured deposits underpin resilience .
Estimate resets likely: EPS miss and definitional revenue mismatch suggest consensus may shift lower near-term; normalization of expenses and deposit program ramps are catalysts for H2 recovery .