Coastal Financial Corporation Reports $9.73 Million Net Income in Q1 2025

Coastal Financial Corporation reported a net income of $9.73 million for the first quarter of 2025, translating to earnings of $0.63 per diluted share, a significant increase from the $6.8 million, or $0.50 per diluted share, recorded in the same period last year. This growth in profitability was primarily driven by a $13.2 million rise in interest income, attributed to an increase in average loans and higher interest rates, alongside a reduction in interest expenses on deposits. The company’s total interest income reached $104.9 million, up from $91.7 million year-over-year, while total interest expenses decreased to $28.8 million from $29.5 million.

In terms of operational metrics, Coastal Financial's total loans receivable increased by $30.8 million, or 0.9%, to $3.52 billion as of March 31, 2025, compared to $3.49 billion at the end of 2024. The growth was driven by a $47.2 million increase in loans from the CCBX segment, which provides banking as a service (BaaS) to digital financial service providers. However, community bank loans saw a slight decline of $16.5 million, or 0.9%. The company also reported a total deposit increase of $205.9 million, or 5.7%, to $3.79 billion, with CCBX deposits contributing significantly to this growth.

Strategically, Coastal Financial has been refining its CCBX partnerships, which numbered 25 as of March 31, 2025. The company is focusing on establishing relationships with larger, more stable partners while also considering smaller firms that align with its operational goals. The CCBX segment's performance is expected to enhance noninterest income, which totaled $63.5 million for the quarter, down from $86.2 million a year earlier, largely due to a decrease in BaaS credit enhancement income.

The company’s allowance for credit losses increased to $183.2 million, or 5.21% of total loans, compared to $177 million, or 5.08%, at the end of 2024. This increase reflects the higher expected losses associated with CCBX loans, which are subject to credit enhancements from partners. Coastal Financial continues to manage its liquidity effectively, with $624.3 million in cash and the capacity to borrow up to $662.4 million from the Federal Home Loan Bank and the Federal Reserve Bank discount window, ensuring a robust liquidity position amid changing economic conditions.

Looking ahead, Coastal Financial aims to continue optimizing its loan portfolio and enhancing its CCBX segment's offerings. The company is also focused on leveraging technology to improve operational efficiency and reduce future expense growth. The recent launch of the T-Mobile deposit program is expected to further bolster deposit growth in the upcoming quarters, contributing positively to the company's financial outlook.