COASTAL FINANCIAL (CCB)·Q4 2025 Earnings Summary

Coastal Financial Q4 2025: EPS Misses as BaaS Momentum Continues

January 29, 2026 · by Fintool AI Agent

Coastal Financial Corporation (CCB) reported Q4 2025 results with diluted EPS of $0.82, down 6.8% sequentially from $0.88 and 12.8% below the prior year's $0.94. Net income fell 7.0% QoQ to $12.6 million, weighed down by one-time restructuring costs and an employment settlement. However, the underlying BaaS business showed strength with program fee income surging 50.6% year-over-year.

Did Coastal Financial Beat Earnings?

No. Q4 2025 results came in below Q3 2025 across key profitability metrics:

The headline revenue decline of 4.6% is misleading. Total revenue dropped due to lower credit enhancement revenue (tied to lower provision for credit losses), which is a pass-through item with neutral net income impact. Core net revenue—the true operating metric—grew 6.8% QoQ and 18.2% YoY.

What drove the EPS miss? Two one-time items totaling $3.2 million:

• $2.5 million in employee restructuring costs (severance, accelerated equity vesting)
• $700,000 settlement of an employment-related matter

Management explicitly stated these costs "are not expected to continue in future periods."

What's Driving the Business?

BaaS (CCBX) Segment: The Growth Engine

The Banking-as-a-Service segment continues to deliver strong momentum:

Key CCBX developments this quarter:

• Robinhood's deposit program launched during Q4 and is having a "meaningful impact" on CCBX deposit growth
• Seven existing partners expanding to add new products (lines of credit, deposit programs, credit cards)
• Acquired GreenFi, a climate-focused consumer financial services brand
• $2.98 billion in loan sales during the quarter ($2.26B was new activity on previously sold credit cards)

The off-balance sheet credit card strategy is working: CCB retains fee income on sold receivables with no balance sheet risk or capital requirement.

Partner Pipeline Remains Robust

CCB exited its partnership with Albert during Q4 and one LOI did not materialize. Management's strategy is to focus on "larger, established partners with strong management, customer bases, and finances."

Community Bank: Steady Performance

The traditional community bank segment delivered solid but unspectacular results:

The community bank maintains conservative credit culture with virtually zero net charge-offs year-to-date and cost of deposits declining as Fed rate cuts flow through.

Net Interest Margin: Expanding Despite Rate Cuts

The GAAP NIM of 7.03% expanded 3 bps QoQ as deposit repricing outpaced loan yield compression. More importantly, NIM net of BaaS loan expense expanded 21 bps to 4.26%, the highest level in five quarters.

Management noted: "The decreased cost of funds and deposits compared to September 30, 2025 and December 31, 2024 were largely due to the reductions in the Fed funds rate in 2025."

Credit Quality: Improving Trends

While NPAs ticked up slightly, the allowance for credit losses ratio continues to decline as the portfolio quality improves. Net charge-offs of 5.31% are down significantly from 6.56% a year ago.

Critical context: 97.7% of the $50.1M in CCBX net charge-offs were reimbursed by partners under credit enhancement agreements. The community bank had just $22,000 in net charge-offs for the quarter.

Capital Position: Well Capitalized

Book value per share grew 3.1% QoQ to $32.43. The bank maintains substantial liquidity with $1.43 billion in combined cash and immediate borrowing capacity, representing 34.5% of total deposits.

What Did Management Say About the Future?

CEO Eric Sprink on Strategy

"As the banking landscape continues to evolve, including the development of new bank charters and alternative models that could change how banking services are delivered, we remain confident in the strength of our platform and relationships. Our continued investment in technology is critical to supporting the delivery of scalable, compliant, and differentiated solutions for our partners and customers."

CCBX President Brian Hamilton on Technology

"We are making steady progress in deploying artificial intelligence across the organization, with several use cases already implemented to improve efficiency, risk management, and the customer experience, and a roadmap focused on responsibly scaling these capabilities. In parallel, we are evaluating opportunities in digital assets and digital deposit solutions, where we believe our platform and regulatory framework position us well for future innovation and growth."

How Did the Stock React?

CCB shares traded around $100.95 following the earnings release, down from $104.58 the prior day. The stock has pulled back from its 52-week high of $120.05, reflecting broader concerns about BaaS regulatory environment and fintech partner health. The 52-week low is $76.11.

Key Takeaways

Positives:

• Core net revenue growth of 6.8% QoQ and 18.2% YoY demonstrates underlying business strength
• BaaS Program Fee Income surging 50.6% YoY with strong off-balance sheet card growth
• NIM net of BaaS expense expanded 21 bps to 4.26%
• Robinhood deposit program launching adds major partner momentum
• Credit quality improving with NCO rate declining YoY

Concerns:

• EPS missed due to $3.2M in one-time costs, but these masked underlying trends
• Loan yields continue to compress (-32 bps QoQ) as higher quality, lower rate loans originated
• Active partner count declined by 1 (exited Albert)
• Regulatory environment for BaaS remains uncertain per management comments

Bottom Line: The Q4 EPS miss was driven by one-time items that mask the underlying business momentum. Core metrics—fee income, deposit growth, off-balance sheet card counts, and NIM—all improved sequentially. The Robinhood partnership launch and seven partner product expansions set up a strong 2026, though investors should monitor regulatory developments and partner health.

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For more information, see CCB Company Page or read the Q4 2025 Earnings Call Transcript.