Coastal Financial Corporation Reports $42.1 Million Net Loss in Q2 2026

Coastal Financial Corporation reported a net loss of $42.1 million for the second quarter of 2026, translating to a loss of $2.76 per diluted share, a significant decline from the net income of $11.0 million, or $0.73 per diluted share, recorded in the same quarter of the previous year. The downturn in profitability was primarily attributed to a $68.8 million credit expense linked to a specific CCBX partner relationship, which included a $46.0 million valuation adjustment on a credit enhancement receivable and a $20.5 million increase in the provision for credit losses. Total interest income for the quarter rose to $118.6 million, up from $107.8 million a year earlier, driven by an increase in average loans receivable, which reached $4.21 billion, a 12.2% increase from the previous year.

In comparison to the first half of 2025, Coastal Financial's net loss for the first six months of 2026 was $30.1 million, or $1.98 per diluted share, contrasting with a net income of $20.8 million, or $1.36 per diluted share, for the same period in 2025. The increase in the provision for credit losses to $143.6 million from $85.3 million was a key factor in this decline, reflecting both loan growth and a specific reserve established for a partner relationship. Noninterest income surged to $154.8 million, a 45.8% increase year-over-year, largely due to higher BaaS indemnification income and program fees.

Operationally, Coastal Financial's total assets increased by 15.1% to $5.46 billion as of June 30, 2026, driven by a $458.7 million rise in loans receivable and a $257.6 million increase in interest-earning deposits. The CCBX segment, which provides banking as a service, saw its total assets grow by 28.7% to $3.34 billion, with loans receivable increasing by 23.1% to $2.23 billion. The community bank segment also reported a modest increase in loans receivable, reaching $1.98 billion, while total deposits rose to $4.86 billion, a 17.3% increase from the end of 2025.

The company’s allowance for credit losses stood at $213.7 million, or 5.08% of total loans, up from $169.5 million, or 4.52%, at the end of 2025. This increase was primarily due to loan growth and the establishment of a specific provision related to one partner relationship. Coastal Financial's management continues to focus on maintaining a diversified loan portfolio while managing credit risk, particularly in light of the higher expected losses associated with CCBX loans compared to community bank loans. Looking ahead, the company remains committed to optimizing its loan portfolio and enhancing its operational efficiency, with expectations of continued growth in both its community bank and CCBX segments.