Executive Summary

Q4 revenue was $143.3M, down 5.9% q/q, while diluted EPS was $0.94 (vs. $0.97 in Q3) but up 42% y/y from $0.66; net income was $13.4M (flat q/q) .
Net interest income fell 7.9% q/q to $66.5M as CCB sold $845.5M of loans (mostly credit card receivables), the Fed’s December cut reduced yields, and more loans were moved to nonaccrual; NIM declined to 6.65% .
Deposit costs fell to 3.21% from 3.59% q/q; NIM net of BaaS loan expense improved to 4.16% (from 4.06%), indicating underlying spread health despite headline NIM compression .
Capital raised: $98.0M common equity at $71/share lifted Company CET1 to 12.04% and Total RBC to 14.67%, positioning for growth (esp. in CCBX) .
CCBX program fee income rose 27.6% q/q to $8.2M; management will keep selling credit card loans while retaining fee income and expects slight NIM expansion as deposit costs reprice faster than loan yields .

What Went Well and What Went Wrong

What Went Well

CCBX fee monetization accelerated: program fees reached $8.2M, +27.6% q/q, and +56.9% for FY24; CEO: “We continue to invest heavily in CCBX... we are pleased to have three letters of intent signed going into 2025 with an active pipeline.” .
Funding costs improved: consolidated cost of deposits fell to 3.21% (from 3.59% q/q), with community bank deposit costs at 1.86% (down from 1.92%) .
Balance sheet strength: completed $98.0M equity raise; Company CET1 rose to 12.04%, Total capital to 14.67%, supporting growth and risk absorption .

What Went Wrong

Spread pressure: net interest income decreased 7.9% q/q to $66.5M and NIM fell to 6.65% as loan sales, a Fed cut, and broader nonaccrual designation weighed on asset yields .
Credit costs remain elevated in CCBX: provision was $61.9M (vs. $70.3M in Q3); net charge-offs were $55.9M in the quarter; note most CCBX losses are indemnified by partners (see below) .
BaaS fraud expense rose by $3.0M q/q, partially offsetting declines in BaaS loan expense; legal and professional fees also increased with risk/infrastructure investment .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Total Revenue ($M)	$124.4	$152.3	$143.3
Net Interest Income ($M)	$59.7	$72.2	$66.5
Noninterest Income ($M)	$64.7	$80.1	$76.8
Provision for Credit Losses ($M)	$60.8	$70.3	$61.9
Noninterest Expense ($M)	$51.7	$65.6	$64.2
Net Income ($M)	$9.0	$13.5	$13.4
Diluted EPS ($)	$0.66	$0.97	$0.94

Margins & Ratios	Q4 2023	Q3 2024	Q4 2024
Net Interest Margin (NIM)	6.61%	7.41%	6.65%
NIM net of BaaS Loan Expense	3.92%	4.06%	4.16%
Return on Average Assets (ROA)	0.97%	1.34%	1.30%
Efficiency Ratio	41.58%	43.10%	44.81%
Cost of Deposits (Consolidated)	3.36%	3.59%	3.21%

Segment KPIs	Q4 2023	Q3 2024	Q4 2024
CCBX Gross Loans ($M)	$1,196.2	$1,521.7	$1,604.0
Community Bank Loans ($M)	$1,830.2	$1,897.5	$1,883.0
CCBX Deposits ($M)	$1,862.8	$2,104.8	$2,064.1
Community Bank Deposits ($M)	$1,497.6	$1,522.5	$1,521.2
CCBX Loan Yield (GAAP)	17.36%	17.35%	15.28%
Community Bank Loan Yield	6.32%	6.64%	6.53%
CCBX Cost of Deposits	4.90%	4.82%	4.19%
Community Bank Cost of Deposits	1.57%	1.92%	1.86%
Company CET1 Ratio	9.10%	9.24%	12.04%

Additional CCBX/Operational KPIs	Q4 2023	Q3 2024	Q4 2024
BaaS Program Income ($M)	$4.37	$6.44	$8.21
BaaS Loan Expense ($M)	$24.31	$32.61	$24.86
Provision for Credit Losses ($M)	$60.79	$70.26	$61.87
Net Charge-offs ($M)	$44.87	$49.24	$55.94
Loans Sold in Quarter ($M)	—	$423.7	$845.5
Deposits Swept Off-B/S ($M)	—	$214.5	$273.2
Credit Cards with Fee Potential (units)	10,049 [implied YOY delta; see note]	81,426	182,449

Note: CCB cites 182,449 credit cards with fee-earning potential as of 12/31/24 (+101,023 q/q; +172,400 y/y); the prior period levels are disclosed as deltas rather than an explicit Q4’23 count .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin (directional)	2025	Not provided	“Expect net interest margin will expand slightly as interest-sensitive deposits reprice faster than loans”	New qualitative
Deposit Costs	Q1 2025	Not provided	Community bank cost of deposits projected to decline further as Dec 2024 rate cut flows through	New qualitative
Loan Sales Strategy	2025	Ongoing	Continue selling credit card loans while retaining fee income; focus on higher-quality originations	Maintained
Noninterest Income Mix	2025	Not provided	Increase noninterest income via transaction activity and new products with partners	New qualitative
Capital Deployment	2025	Not provided	Use $98M raise to support growth (esp. CCBX); Company CET1 at 12.04%	New capital in place

No numerical revenue/EPS/OpEx/tax guidance was provided in company materials reviewed.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
CCBX strategy and pipeline	Focus on expanding products with existing partners; selective new partners; loan sales to manage limits and optimize portfolio	24 relationships incl. 3 signed LOIs; continued loan sales; emphasis on larger, established partners; program fees +56.9% FY	Strengthening pipeline; monetization accelerating
Interest rate sensitivity & deposit costs	Modestly liability sensitive; expected benefit from Fed cuts (late Q3 cut timing)	Deposit costs fell; expect further community bank cost declines in Q1’25; slight NIM expansion expected	Improving funding costs; cautious NIM optimism
Credit/charge-offs & indemnification	Elevated CCBX charge-offs but indemnified; building ACL	Net charge-offs $55.9M; 97.9% of CCBX NCOs reimbursed; ACL/Loans 5.08% (CCBX 9.86%)	High but indemnified; reserves robust
Capital & compliance investment	Risk/compliance investments; reorganization to support growth	$98M equity raise; CET1 12.04%; 30% of staff in risk functions; continued tech/risk spend	Capital & infra in place for next phase
Fee-income model	Growing program/transaction/interchange fees	Retain fees on sold credit card balances; BaaS fees (credit/fraud enhancements) remain large/non-cash offset	Increasing recurring fee mix

Management Commentary

“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.” — 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… We plan to continue selling credit card loans while retaining a portion of the fee income… to provide a more stable income stream in the future.” — CEO Eric Sprink .

Q&A Highlights

An earnings call transcript for Q4 2024 was not available in our document search; therefore, Q&A highlights and any on-call guidance clarifications are unavailable.

Estimates Context

Wall Street consensus estimates (S&P Global) were unavailable at the time of this analysis due to access limits. As a result, we cannot present a formal beat/miss versus consensus for revenue or EPS this quarter.

Key Takeaways for Investors

Spread normalization underway: headline NIM declined with loan sales and yield headwinds, but NIM net of BaaS expense improved and deposit costs fell, pointing to underlying spread stabilization/improvement into 2025 .
Capital to grow CCBX: $98M equity raise boosted CET1 to 12.04%, enabling partner/product expansion while managing concentration and credit limits .
Fee-income flywheel: CCBX program fees rose 27.6% q/q to $8.2M, and management will continue to sell credit card loans while retaining fee income, diversifying revenue away from rate sensitivity .
Credit risk elevated but largely indemnified: net charge-offs remain high in CCBX, but ~98% are reimbursed by partners; ACL coverage is strong (CCBX ACL 9.86% of CCBX loans) .
Cost discipline vs. growth investments: noninterest expense declined q/q with lower BaaS loan expense, though fraud expense and legal/tech spend rose to support risk systems at scale .
Tactical catalysts: further deposit cost declines from the December cut, additional loan sales with fee retention, and conversion of three LOIs in CCBX could lift core earnings momentum and narrative around fee-based growth .

COASTAL FINANCIAL CORP (CCB)·Q4 2024 Earnings Summary