COASTAL FINANCIAL CORP (CCB)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 diluted EPS was $0.88, up from $0.71 in Q2 2025 and down from $0.97 in Q3 2024; net income was $13.6M . Versus consensus, EPS modestly beat and revenue missed on S&P Global’s standardized basis (see Estimates Context).
• Net interest income rose to $77.9M (+1.5% q/q, +7.8% y/y); noninterest income increased to $66.8M (+56% q/q, −15% y/y); net interest margin compressed to 7.00% (7.06% in Q2; 7.42% in Q3 2024) as loan yields eased with the Fed cut .
• Expense discipline improved: noninterest expense fell $2.7M q/q to $70.2M, driven by lower legal/professional and salaries/benefits; efficiency ratio improved to 48.5% (from 61.0% in Q2) .
• BaaS (CCBX) momentum continued: program fee income was $7.6M (ex-Q2 nonrecurring), partner pipeline advanced (one active, three in implementation), and off-balance credit cards with fee potential grew to 396,812 (+83k q/q) .
• Near-term stock catalysts: continued partner launches (Robinhood deposit program ramp in Q4), deposit sweep expansion ($672.3M swept off balance sheet in Q3), and operating leverage from tech/risk investments as programs scale .

What Went Well and What Went Wrong

What Went Well

• “Loans receivable increased by $163.5 million, representing a 4.6% rise, alongside another period of solid deposit growth totaling $59.0 million, or 1.5%,” said CEO Eric Sprink, highlighting balanced growth .
• Expense control and operating efficiency improved: noninterest expense down $2.7M q/q to $70.2M; efficiency ratio improved to 48.50% from 60.98% in Q2 .
• CCBX pipeline and fee momentum: two partners testing, four onboarding, two LOIs; BaaS program income $7.6M; off-balance fee-generating credit cards up to 396,812; deposit sweep fee income of $311k .

What Went Wrong

• Margin pressure: consolidated NIM fell to 7.00% (7.06% in Q2; 7.42% in Q3 2024) as loan yields declined following the 25 bp Fed funds cut; CCBX loan yield declined to 15.65% (16.22% in Q2) .
• Elevated credit costs in CCBX: provision for credit losses rose to $56.6M (from $32.2M in Q2); CCBX provision was $58.8M with net charge-offs totaling $49.2M; allowance for credit losses increased to $173.8M .
• Noninterest income down y/y: $66.8M vs $78.8M in Q3 2024, primarily due to lower BaaS credit/fraud enhancements amid portfolio performance changes; and NIM (net of BaaS loan expense) flat to slightly down y/y .

Financial Results

Segment breakdown (key operating measures):

KPIs and credit quality:

Notes: Off-balance card count YoY increase was +315,386 to 396,812; Q2 count was 313,827 .

Guidance Changes

No formal numerical guidance (revenue, margins, OpEx, tax, or dividends) was provided in the quarter’s materials .

Earnings Call Themes & Trends

(Transcript not available; theme tracking based on quarterly releases)

Management Commentary

• CEO Eric Sprink: “During the third quarter of 2025, loans receivable increased by $163.5 million… alongside another period of solid deposit growth totaling $59.0 million…we saw positive partner progression…while our CCBX program fee income continues its upward trajectory” .
• Outlook: “We expect to see additional new partner engagements…committed to investing in our technology and risk management infrastructure…projected to drive future operational efficiencies, boost automation, and lower costs…Credit quality remains central…slightly liability sensitive balance sheet…well-positioned for future interest rate changes” .

Q&A Highlights

Earnings call transcript for Q3 2025 was not available via our sources; no Q&A details to report (we reviewed SEC filings and company releases exhaustively) .

Estimates Context

Values retrieved from S&P Global.
Interpretation: EPS slightly beat; revenue missed on S&P Global’s standardized definition. Note that bank “revenue” definitions vary (net interest income plus noninterest income vs standardized revenue), contributing to discrepancies with company-reported line items .

Key Takeaways for Investors

• Operating efficiency inflected positively: q/q expense decline and a materially improved efficiency ratio (48.5%), suggesting near-term operating leverage as partner volumes scale .
• CCBX growth story intact: advancing partner pipeline, higher program fees, rising off-balance fee-generating cards, and growing sweep deposits—drivers of recurring noninterest income with lower balance sheet intensity .
• Margin headwinds manageable: NIM compression tied to loan mix and Fed cuts; deposit costs trending lower, partly offsetting yield pressure; watch product mix (capital call lines vs consumer HELOC/cards) .
• Credit costs elevated but indemnified: CCBX provisions and net charge-offs remain high, with partner credit enhancements covering the bulk of exposures; monitor counterparty risk and indemnification performance .
• Liquidity optionality: $672.3M of deposit sweeps off-balance enhances FDIC coverage and liquidity management; incremental sweep fee income emerging .
• Near-term catalysts: Robinhood deposit program ramp in Q4 2025, continued partner launches/expansions, potential further margin stabilization if rate environment bottoms .
• Positioning: Constructive medium-term thesis on scalable BaaS economics and improving efficiency; near-term trading sensitive to credit cost prints and NIM trajectory.