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Coastal Financial Corporation Announces First Quarter 2025 Results

1. CCB reported Q1 2025 net income of $9.7 million, a decline from $13.4 million. 2. BaaS program fee income grew by 55.2% year-over-year, contributing to strong growth trends. 3. Total deposits increased by $205.9 million, driven by CCBX partnerships. 4. High expenses related to onboarding new partnerships will impact profitability in the short term. 5. CCBX loans increased despite selling $744.6 million in loans during Q1 2025.

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Why Neutral?

The decrease in net income indicates profitability challenges, but growth in deposits and fee income suggests resilience.

How important is it?

The earnings release highlights operational challenges and growth areas that could influence CCB's market perception and investor behavior.

Why Short Term?

Initial costs from onboarding new partners likely dampen near-term profitability but position CCB for longer-term growth.

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EVERETT, Wash., April 29, 2025 (GLOBE NEWSWIRE) -- Coastal Financial Corporation (Nasdaq: CCB) (the “Company”, "Coastal", "we", "our", or "us"), the holding company for Coastal Community Bank (the “Bank”), through which it operates a community-focused bank segment ("community bank") with an industry leading banking as a service ("BaaS") segment ("CCBX"), today reported unaudited financial results for the quarter ended March 31, 2025, including net income of $9.7 million, or $0.63 per diluted common share, compared to $13.4 million, or $0.94 per diluted common share, for the three months ended December 31, 2024 and $6.8 million, or $0.50 per diluted common share, for the three months ended March 31, 2024. Management Discussion of the First Quarter Results “First quarter of 2025 was impacted by elevated expenses related to the onboarding and implementation costs of several new partnerships and products within CCBX and investments in technology, however, we anticipate that the revenue and earnings from these investments will be highly valuable over the long-term,” stated CEO Eric Sprink. “We saw high quality deposit growth of $205.9 million during the first quarter, and our CCBX program fee income continued to increase, up 55.2% compared to the same period in 2024.” Key Points for First Quarter and Our Go-Forward Strategy Positive Growth Trends within CCBX Continue. As of March 31, 2025 we had two partners in testing, three in implementation/onboarding, one signed LOI and have an active pipeline of new partners and new products with existing partners for the balance of 2025 and into 2026. Total BaaS program fee income was $6.3 million for the three months ended March 31, 2025, an increase of $724,000, or 13.0%, from the three months ended December 31, 2024. We remain fully indemnified against fraud and 98.8% indemnified against credit risk with our CCBX partners as of March 31, 2025. Investments for Growth Continues. Total noninterest expense of $72.0 million was up $4.6 million, or 6.8%, as compared to $67.4 million in the quarter ended December 31, 2024, mainly driven by higher salaries and employee benefits, legal and professional expenses and BaaS loan expense partially offset by lower BaaS fraud expense. As we increase the number of new CCBX partners and products with existing partners launching in 2025, we expect that expenses will tend to be front-loaded with a focus on compliance and operational risk before any new programs or products generate significant revenues. We remain focused on building our future revenue sources. Strong Deposit Growth, Off Balance Sheet Activity Update. Total deposits of $3.79 billion, an increase of $205.9 million, or 5.7%, over the quarter ended December 31, 2024, driven primarily by growth in CCBX partner programs. On April 1, 2025 we launched the T-Mobile deposit program and those deposits will be reflected in the second quarter deposit totals. During the first quarter of 2025, we sold $744.6 million of loans, the majority of which were credit card receivables. We retain a portion of the fee income on sold credit card loans. As of March 31, 2025 there were 237,024 credit cards with fee earning potential, an increase of 54,575 compared to the quarter ended December 31, 2024 and an increase of 210,723 from March 31, 2024. First Quarter 2025 Financial Highlights The tables below outline some of our key operating metrics.  Three Months Ended(Dollars in thousands, except share and per share data; unaudited)March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024Income Statement Data:         Interest and dividend income$104,907  $102,448  $105,165  $97,422  $91,742 Interest expense 28,845   30,071   32,892   31,250   29,536 Net interest income 76,062   72,377   72,273   66,172   62,206 Provision for credit losses 55,781   61,867   70,257   62,325   83,158 Net interest (expense)/ income after provision for credit losses 20,281   10,510   2,016   3,847   (20,952)Noninterest income 63,477   74,100   78,790   69,138   86,176 Noninterest expense 71,989   67,411   64,424   57,964   56,509 Provision for income tax 2,039   3,832   2,926   3,425   1,915 Net income 9,730   13,367   13,456   11,596   6,800            As of and for the Three Month Period March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024Balance Sheet Data:         Cash and cash equivalents$624,302  $452,513  $484,026  $487,245  $515,128 Investment securities 46,991   47,321   48,620   49,213   50,090 Loans held for sale 42,132   20,600   7,565   —   797 Loans receivable 3,517,359   3,486,565   3,413,894   3,321,813   3,195,101 Allowance for credit losses (183,178)  (176,994)  (171,674)  (148,878)  (139,941)Total assets 4,339,282   4,121,208   4,064,472   3,959,549   3,863,062 Interest bearing deposits 3,251,599   3,057,808   3,047,861   2,949,643   2,888,867 Noninterest bearing deposits 539,630   527,524   579,427   593,789   574,112 Core deposits (1) 3,321,772   3,123,434   3,190,869   3,528,339   3,447,864 Total deposits 3,791,229   3,585,332   3,627,288   3,543,432   3,462,979 Total borrowings 47,923   47,884   47,847   47,810   47,771 Total shareholders’ equity 449,917   438,704   331,930   316,693   303,709           Share and Per Share Data (2):         Earnings per share – basic$0.65  $0.97  $1.00  $0.86  $0.51 Earnings per share – diluted$0.63  $0.94  $0.97  $0.84  $0.50 Dividends per share —   —   —   —   — Book value per share (3)$29.98  $29.37  $24.51  $23.54  $22.65 Tangible book value per share (4)$29.98  $29.37  $24.51  $23.54  $22.65 Weighted avg outstanding shares – basic 14,962,507   13,828,605   13,447,066   13,412,667   13,340,997 Weighted avg outstanding shares – diluted 15,462,041   14,268,229   13,822,270   13,736,508   13,676,917 Shares outstanding at end of period 15,009,225   14,935,298   13,543,282   13,453,805   13,407,320 Stock options outstanding at end of period 163,932   186,354   198,370   286,119   309,069  See footnotes that follow the tables below  As of and for the Three Month Period March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024Credit Quality Data:         Nonperforming assets (5) to total assets 1.30%  1.52%  1.63%  1.34%  1.42%Nonperforming assets (5) to loans receivable and OREO 1.60%  1.80%  1.94%  1.60%  1.72%Nonperforming loans (5) to total loans receivable 1.60%  1.80%  1.94%  1.60%  1.72%Allowance for credit losses to nonperforming loans 325.0%  282.5%  257.2%  278.6%  254.3%Allowance for credit losses to total loans receivable 5.21%  5.08%  5.03%  4.45%  4.35%Gross charge-offs$53,686  $61,585  $53,305  $55,207  $58,994 Gross recoveries$5,486  $5,223  $4,516  $2,254  $2,036 Net charge-offs to average loans (6) 5.57%  6.56%  5.60%  6.54%  7.30%          Capital Ratios:         Company         Tier 1 leverage capital 10.67%  10.78%  8.40%  8.31%  8.24%Common equity Tier 1 risk-based capital 12.13%  12.04%  9.24%  9.03%  8.98%Tier 1 risk-based capital 12.22%  12.14%  9.34%  9.13%  9.08%Total risk-based capital 14.73%  14.67%  11.89%  11.70%  11.70%Bank         Tier 1 leverage capital 10.57%  10.64%  9.29%  9.24%  9.19%Common equity Tier 1 risk-based capital 12.12%  11.99%  10.34%  10.15%  10.14%Tier 1 risk-based capital 12.12%  11.99%  10.34%  10.15%  10.14%Total risk-based capital 13.42%  13.28%  11.63%  11.44%  11.43% (1) Core deposits are defined as all deposits excluding brokered and time deposits.(2)Share and per share amounts are based on total actual or average common shares outstanding, as applicable.(3)We calculate book value per share as total shareholders’ equity at the end of the relevant period divided by the outstanding number of our common shares at the end of each period.(4)Tangible book value per share is a non-GAAP financial measure. We calculate tangible book value per share as total shareholders’ equity at the end of the relevant period, less goodwill and other intangible assets, divided by the outstanding number of our common shares at the end of each period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets as of any of the dates indicated. As a result, tangible book value per share is the same as book value per share as of each of the dates indicated.(5)Nonperforming assets and nonperforming loans include loans 90+ days past due and accruing interest.(6)Annualized calculations.   Key Performance Ratios Return on average assets ("ROA") was 0.93% for the quarter ended March 31, 2025 compared to 1.30% and 0.73% for the quarters ended December 31, 2024 and March 31, 2024, respectively.  ROA for the quarter ended March 31, 2025, decreased 0.37% and increased 0.19% compared to December 31, 2024 and March 31, 2024, respectively. Noninterest expenses were higher for the quarter ended March 31, 2025 compared to the quarter ended December 31, 2024 largely due to higher salaries and employee benefits, due to annual pay increases and for new hires that contribute to our continued investments in growth, technology and risk management, legal and professional expenses and increased BaaS loan expense, which is directly related to interest earned on CCBX loans. These increases were partially offset by a decrease in BaaS fraud expense. Noninterest expenses were higher than the quarter ended March 31, 2024 due primarily to an increase in salaries and employee benefits, data processing and software licenses and legal and professional expenses, all of which are related to the growth of Company and investments in technology and risk management. Legal and professional fees in first quarter were elevated in multiple areas including compliance, BSA, audit, legal and projects as we prepare for new partners, and we may experience a similar level of expenses again in second quarter before returning to a more historical level in third quarter 2025. Yield on earning assets and yield on loans receivable increased 0.07% and 0.23%, respectively, for the quarter ended March 31, 2025 compared to the quarter ended December 31, 2024. Average loans receivable as of March 31, 2025 increased $92.2 million compared to December 31, 2024 as net CCBX loans continue to grow, despite selling $744.6 million in CCBX loans during the quarter ended March 31, 2025. The following table shows the Company’s key performance ratios for the periods indicated.     Three Months Ended(unaudited) March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024           Return on average assets (1)  0.93%  1.30%  1.34%  1.21%  0.73%Return on average equity (1)  8.91%  14.90%  16.67%  15.22%  9.21%Yield on earnings assets (1)  10.32%  10.24%  10.79%  10.49%  10.21%Yield on loans receivable (1)  11.33%  11.12%  11.44%  11.22%  11.01%Cost of funds (1)  3.11%  3.24%  3.62%  3.60%  3.52%Cost of deposits (1)  3.08%  3.21%  3.59%  3.58%  3.49%Net interest margin (1)  7.48%  7.23%  7.42%  7.12%  6.92%Noninterest expense to average assets (1)  6.87%  6.54%  6.42%  6.05%  6.10%Noninterest income to average assets (1)  6.06%  7.19%  7.85%  7.22%  9.30%Efficiency ratio  51.59%  46.02%  42.65%  42.84%  38.08%Loans receivable to deposits (2)  93.89%  97.82%  94.33%  93.75%  92.29% (1)  Annualized calculations shown for quarterly periods presented.(2)  Includes loans held for sale.   Management Outlook; CEO Eric Sprink “Looking ahead to the balance of 2025, elevated onboarding activity is expected to continue into the second quarter as our CCBX pipeline remains very robust with high quality and potentially impactful opportunities. We plan to continue to invest in and enhance our technology and risk management infrastructure to support our next phase of CCBX growth. Our risk reduction efforts, namely our fraud and credit indemnifications via our partners, continued to function as expected despite the volatile macroeconomics conditions towards the end of first quarter. These efforts, plus additional growth in noninterest income should help mitigate the uncertainties associated with fluctuating interest rates and provide a stable, recurring income source.” said CEO Eric Sprink. Coastal Financial Corporation Overview The Company has one main subsidiary, the Bank, which consists of three segments: CCBX, the community bank and treasury & administration.  The CCBX segment includes all of our BaaS activities, the community bank segment includes all community banking activities and the treasury & administration segment includes treasury management, overall administration and all other aspects of the Company.   CCBX Performance Update Our CCBX segment continues to evolve, and we have 25 relationships, at varying stages, including two partners in testing, three in implementation/onboarding, one signed LOI as of March 31, 2025.  We continue to refine the criteria for CCBX partnerships, exploring relationships with larger more established partners, with experienced management teams, existing customer bases and strong financial positions. We also will consider promising medium and smaller sized partners that align with our approach and terms including financial wherewithal and will continue to exit relationships where it makes sense for us to do so. While we explore relationships with new partners we continue to expand our product offerings with existing CCBX partners. As we become more proficient in the BaaS space we aim to cultivate new relationships that align with our long-term goals. We believe that a strategy of adding new partnerships and launching new products with existing partners allows us to expand and grow our customer base with a modest increase in regulatory risk given our operational history with them. Increases in partner activity/transaction counts is positively impacting noninterest income and we expect this trend to continue as current products grow and new products are introduced . We plan to continue selling loans as part of our strategy to balance partner and lending limits, and manage the loan portfolio and credit quality. We retain a portion of the fee income for our role in processing transactions on sold credit card balances, and will continue this strategy to provide an on-going and passive revenue source with no on balance sheet risk or capital requirement. On April 1, 2025, we went live with the T-Mobile deposit program and our second quarter deposits will include those balances. As we build our deposit base, we will be able to sweep deposits off and on the balance sheet as needed. This deposit sweep capability allows us to better manage liquidity and deposit programs. At March 31, 2025 we swept off $406.3 million in deposits for FDIC insurance and liquidity purposes. We are also launching a new suite of deposit products with RobinHood, which are expected to launch in the back half of 2025. The introduction of theses products are expected to increase deposits. The following table illustrates the activity and evolution in CCBX relationships for the periods presented.  As of(unaudited)March 31, 2025 December 31,2024 March 31, 2024Active19 19 19Friends and family / testing2 1 1Implementation / onboarding3 1 1Signed letters of intent1 3 0Total CCBX relationships25 24 21       CCBX loans increased $47.2 million, or 2.9%, to $1.65 billion despite selling $744.6 million in loans during the three months ended March 31, 2025. In accordance with the program agreement for one partner, effective April 1, 2024, the portion of the CCBX portfolio that we are responsible for losses on decreased from 10% to 5%. At March 31, 2025 the portion of this portfolio for which we are responsible represented $19.9 million in loans. The following table details the CCBX loan portfolio: CCBX As of  March 31, 2025 December 31, 2024 March 31, 2024(dollars in thousands; unaudited) Balance % to Total Balance % to Total Balance % to TotalCommercial and industrial loans:            Capital call lines $133,466   8.1% $109,017   6.8% $135,671   10.3%All other commercial & industrial loans  29,702   1.8   33,961   2.1   47,160   3.6 Real estate loans:            Residential real estate loans  285,355   17.3   267,707   16.7   265,148   20.2 Consumer and other loans:            Credit cards  532,775   32.2   528,554   33.0   505,706   38.6 Other consumer and other loans  670,026   40.6   664,780   41.4   358,528   27.3 Gross CCBX loans receivable  1,651,324   100.0%  1,604,019   100.0%  1,312,213   100.0%Net deferred origination (fees) costs  (498)    (442)    (394)  Loans receivable $1,650,826    $1,603,577    $1,311,819   Loan Yield - CCBX (1)(2)  16.88%    16.81%    17.74%                (1)CCBX yield does not include the impact of BaaS loan expense.  BaaS loan expense represents the amount paid or payable to partners for credit enhancements and originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.(2)Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.   The increase in CCBX loans in the quarter ended March 31, 2025, includes an increase of $24.4 million, or 22.4%, in capital call lines as a result of normal balance fluctuations and business activities, an increase of $17.6 million, or 6.6%, in residential real estate loans and an increase of $9.5 million or 0.8%, in other consumer and other loans. We continue to monitor and manage the CCBX loan portfolio, and sold $744.6 million in CCBX loans during the quarter ended March 31, 2025 compared to sales of $845.5 million in the quarter ended December 31, 2024. We continue to reposition ourselves by managing CCBX credit and concentration levels in an effort to optimize our loan portfolio earnings and generate off balance sheet fee income. CCBX loan yield increased 0.07% for the quarter ended March 31, 2025 compared to the quarter ended December 31, 2024. The following chart shows the growth in credit card accounts that generate fee income. This includes accounts with balances, which are included in our loan totals, and accounts that have been sold and have no corresponding balance in our loan totals, and that generate fee income. The following table details the CCBX deposit portfolio: CCBX As of  March 31, 2025 December 31, 2024 March 31, 2024(dollars in thousands; unaudited) Balance % to Total Balance % to Total Balance % to TotalDemand, noninterest bearing $58,416   2.6% $55,686   2.7% $58,669   2.9%Interest bearing demand and money market  2,145,608   94.6   1,958,459   94.9   1,964,942   96.8 Savings  16,625   0.7   5,710   0.3   5,338   0.3 Total core deposits  2,220,649   97.9   2,019,855   97.9   2,028,949   100.0 Other deposits  46,359   2.1   44,233   2.1   —   — Total CCBX deposits $2,267,008   100.0% $2,064,088   100.0% $2,028,949   100.0%Cost of deposits (1)  4.01%    4.19%    4.93%   (1)Cost of deposits is annualized for the three months ended for each period presented.   CCBX deposits increased $202.9 million, or 9.8%, in the three months ended March 31, 2025 to $2.27 billion as a result of growth and normal balance fluctuations. This excludes the $406.3 million in CCBX deposits that were transferred off balance sheet for increased Federal Deposit Insurance Corporation ("FDIC") insurance coverage and sweep purposes, compared to $273.2 million for the quarter ended December 31, 2024. Amounts in excess of FDIC insurance coverage are transferred, using a third-party facilitator/vendor sweep product, to participating financial institutions. Community Bank Performance Update In the quarter ended March 31, 2025, the community bank saw net loans decrease $16.5 million, or 0.9%, to $1.87 billion, as a result of normal balance fluctuations. The following table details the Community Bank loan portfolio: Community Bank As of  March 31, 2025 December 31, 2024 March 31, 2024(dollars in thousands; unaudited) Balance % to Total Balance % to Total Balance % to TotalCommercial and industrial loans $149,104   8.0% $150,395   8.0% $154,395   8.2%Real estate loans:            Construction, land and land development loans  166,551   8.9   148,198   7.8   160,862   8.5 Residential real estate loans  202,920   10.8   202,064   10.7   231,157   12.2 Commercial real estate loans  1,340,647   71.6   1,374,801   72.8   1,342,489   71.0 Consumer and other loans:            Other consumer and other loans  13,326   0.7   13,542   0.7   1,447   0.1 Gross Community Bank loans receivable  1,872,548   100.0%  1,889,000   100.0%  1,890,350   100.0%Net deferred origination fees  (6,015)    (6,012)    (7,068)  Loans receivable $1,866,533    $1,882,988    $1,883,282   Loan Yield(1)  6.53%    6.53%    6.46%   (1)Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans.   Community bank loans decreased $34.2 million in commercial real estate loans, $1.3 million in commercial and industrial loans and $216,000 in consumer and other loans, partially offset by an increase of $18.4 million in construction, land and land development loans, during the quarter ended March 31, 2025. The following table details the community bank deposit portfolio: Community Bank As of  March 31, 2025 December 31, 2024 March 31, 2024(dollars in thousands; unaudited) Balance % to Total Balance % to Total Balance % to TotalDemand, noninterest bearing $481,214   31.5% $471,838   31.0% $515,443   35.9%Interest bearing demand and money market  560,416   36.8   570,625   37.5   834,725   58.2 Savings  59,493   3.9   61,116   4.0   68,747   4.8 Total core deposits  1,101,123   72.2   1,103,579   72.5   1,418,915   99.0 Other deposits  407,391   26.7   400,118   26.3   1   0.0 Time deposits less than $100,000  5,585   0.4   5,920   0.4   7,199   0.5 Time deposits $100,000 and over  10,122   0.7   11,627   0.8   7,915   0.6 Total Community Bank deposits $1,524,221   100.0% $1,521,244   100.0% $1,434,030   100.0%Cost of deposits(1)  1.76%    1.86%    1.66%   (1)  Cost of deposits is annualized for the three months ended for each period presented.   Community bank deposits increased $3.0 million, or 0.2%, during the three months ended March 31, 2025 to $1.52 billion as result of normal balance fluctuations. The community bank segment includes noninterest bearing deposits of $481.2 million, or 31.5%, of total community bank deposits, resulting in a cost of deposits of 1.76%, which compared to 1.86% for the quarter ended December 31, 2024, largely due to the decreases in the Fed funds rate late in the third quarter and during the fourth quarter of 2024. Net Interest Income and Margin Discussion Net interest income was $76.1 million for the quarter ended March 31, 2025, an increase of $3.7 million, or 5.1%, from $72.4 million for the quarter ended December 31, 2024, and an increase of $13.9 million, or 22.3%, from $62.2 million for the quarter ended March 31, 2024. Net interest income compared to December 31, 2024, was higher due to an increase in average loans receivable, an increase in loan yield and a decrease in cost of funds. The increase in net interest income compared to March 31, 2024 was largely related to growth in higher yielding loans, partially offset by an increase in cost of funds relating to higher interest rates and growth in interest bearing deposits.   Net interest margin was 7.48% for the three months ended March 31, 2025, compared to 7.23% for the three months ended December 31, 2024, largely due to higher loan yield and lower cost of deposits. Net interest margin, net of BaaS loan expense, (a reconciliation of the non-GAAP measures are set forth in the Non-GAAP Financial Measures section of this earnings release) was 4.28% for the three months ended March 31, 2025, compared to 4.16% for the three months ended December 31, 2024. Net interest margin was 6.92% for the three months ended March 31, 2024. The increase in net interest margin for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was largely due to an increase in loan yield, partially offset by higher interest rates on interest bearing deposits. Interest and fees on loans receivable increased $2.6 million, or 2.7%, to $98.1 million for the three months ended March 31, 2025, compared to $95.6 million for the three months ended December 31, 2024, as a result of loan growth. Interest and fees on loans receivable increased $12.3 million, or 14.3%, compared to $85.9 million for the three months ended March 31, 2024, due to an increase in outstanding balances and higher interest rates. Net interest margin, net of BaaS loan expense (a reconciliation of the non-GAAP measures are set forth in the Non-GAAP Financial Measures section of this earnings release) increased 0.12% for the three months ended March 31, 2025, compared to the three months ended December 31, 2024 and increased 0.26% compared the three months ended March 31, 2024. The following tables illustrate how net interest margin and loan yield is affected by BaaS loan expense: Consolidated As of and for the Three Months Ended(dollars in thousands; unaudited) March 312025 December 312024 March 312024Net interest margin, net of BaaS loan expense:    Net interest margin (1)  7.48%  7.23%  6.92%Earning assets  4,124,065   3,980,078   3,613,769 Net interest income (GAAP)  76,062   72,377   62,206 Less: BaaS loan expense  (32,507)  (30,720)  (26,107)Net interest income, net of BaaS loan expense(2) $43,555  $41,657  $36,099 Net interest margin, net of BaaS loan expense (1)(2)  4.28%  4.16%  4.02%Loan income net of BaaS loan expense divided by average loans:  Loan yield (GAAP)(1)  11.33%  11.12%  11.01%Total average loans receivable $3,511,724  $3,419,476  $3,137,271 Interest and earned fee income on loans (GAAP)  98,147   95,575   85,891 BaaS loan expense  (32,507)  (30,720)  (26,107)Net loan income(2) $65,640  $64,855  $59,784 Loan income, net of BaaS loan expense, divided by average loans (1)(2)  7.58%  7.55%  7.66% (1)Annualized calculations shown for periods presented.(2)A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.   Average investment securities decreased $974,000 to $47.2 million compared to the three months ended December 31, 2024 and decreased $68.2 million compared to the three months ended March 31, 2024 as a result of principal paydowns and maturing securities. Cost of funds was 3.11% for the quarter ended March 31, 2025, a decrease of 13 basis points from the quarter ended December 31, 2024 and a decrease of 42 basis points from the quarter ended March 31, 2024. Cost of deposits for the quarter ended March 31, 2025 was 3.08%, compared to 3.21% for the quarter ended December 31, 2024, and 3.49% for the quarter ended March 31, 2024. The decreased cost of funds and deposits compared to December 31, 2024 and March 31, 2024 were largely due to the recent reductions in the Fed funds rate. The following table summarizes the average yield on loans receivable and cost of deposits:  For the Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024 Yield onLoans (2) Cost ofDeposits (2) Yield onLoans (2) Cost ofDeposits (2) Yield onLoans (2) Cost ofDeposits (2)Community Bank 6.53%  1.76%  6.53%  1.86%  6.46%  1.66%CCBX (1) 16.88%  4.01%  16.81%  4.19%  17.74%  4.93%Consolidated 11.33%  3.08%  11.12%  3.21%  11.01%  3.49% (1)CCBX yield on loans does not include the impact of BaaS loan expense.  BaaS loan expense represents the amount paid or payable to partners for credit and fraud enhancements and originating & servicing CCBX loans. To determine Net BaaS loan income earned from CCBX loan relationships, the Company takes BaaS loan interest income and deducts BaaS loan expense to arrive at Net BaaS loan income which can be compared to interest income on the Company’s community bank loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.(2)Annualized calculations for periods presented.   The following table illustrates how BaaS loan interest income is affected by BaaS loan expense resulting in net BaaS loan income and the associated yield:   For the Three Months Ended  March 31, 2025 December 31, 2024 March 31, 2024(dollars in thousands, unaudited) Income / Expense Income / expense divided by average CCBX loans (2) Income / Expense Income / expense divided by average CCBX loans(2) Income / Expense Income / expense divided by average CCBX loans (2)BaaS loan interest income $67,855   16.88% $64,532   16.81% $55,839   17.74%Less: BaaS loan expense  32,507   8.09%  30,720   8.00%  26,107   8.29%Net BaaS loan income (1) $35,348   8.79% $33,812   8.81% $29,732   9.45%Average BaaS Loans(3) $1,630,088    $1,527,178    $1,265,857    (1)A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.(2)Annualized calculations shown for the periods presented.(3)Includes loans held for sale.   Noninterest Income Discussion Noninterest income was $63.5 million for the three months ended March 31, 2025, a decrease of $10.6 million from $74.1 million for the three months ended December 31, 2024, and a decrease of $22.7 million from $86.2 million for the three months ended March 31, 2024.  The decrease in noninterest income for the quarter ended March 31, 2025 as compared to the quarter ended December 31, 2024 was primarily due to a decrease of $10.8 million in total BaaS income.  The $10.8 million decrease in total BaaS income included an $8.4 million decrease in BaaS credit enhancements related to the provision for credit losses and a $3.1 million decrease in BaaS fraud enhancements partially offset by an increase of $724,000 in BaaS program income. The $724,000 increase in BaaS program income is largely due to higher reimbursement of CCBX partner expenses and an increase in transaction and interchange fees and servicing and other BaaS fees, (see “Appendix B” for more information on the accounting for BaaS allowance for credit losses and credit and fraud enhancements). The $22.7 million decrease in noninterest income over the quarter ended March 31, 2024 was primarily due to a $25.1 million decrease in BaaS credit and fraud enhancements and an increase of $2.2 million in BaaS program income. Noninterest Expense Discussion Total noninterest expense increased $4.6 million to $72.0 million for the three months ended March 31, 2025, compared to $67.4 million for the three months ended December 31, 2024, and increased $15.5 million from $56.5 million for the three months ended March 31, 2024. The $4.6 million increase in noninterest expense for the quarter ended March 31, 2025, as compared to the quarter ended December 31, 2024, was primarily due to a $3.5 million increase in salaries and benefits, $1.9 million increase in legal and professional fees, and $1.8 million increase in BaaS loan expense, partially offset by a $3.1 million decrease in BaaS fraud expense. The salaries and benefits and legal and professional fees increases were part of our continued investments in growth, technology and risk management. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, and originating & servicing CCBX loans. BaaS fraud expense represents non-credit fraud losses on partner’s customer loan and deposit accounts. A portion of this expense is realized during the quarter in which the loss occurs, and a portion is estimated based on historical or other information from our partners. The increase in noninterest expenses for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 was largely due to a $6.4 million increase in BaaS loan expense, a $1.1 million increase in BaaS fraud expense, a $2.8 million increase in legal and professional expenses, a $3.5 million increase in salary and employee benefits, and a $1.3 million increase in data processing and software licenses due to enhancements in technology all of which are related to the growth of Company and investments in technology and risk management. Certain noninterest expenses are reimbursed by our CCBX partners. In accordance with GAAP we recognize all expenses in noninterest expense and the reimbursement of expenses from our CCBX partner in noninterest income. The following table reflects the portion of noninterest expenses that are reimbursed by partners to assist the understanding of how the increases in noninterest expense are related to expenses incurred for and reimbursed by CCBX partners:  Three Months Ended March 31, December 31, March 31,(dollars in thousands; unaudited) 2025   2024   2024 Total noninterest expense (GAAP)$71,989  $67,411  $56,509 Less: BaaS loan expense 32,507   30,720   26,107 Less: BaaS fraud expense 1,993   5,043   923 Less: Reimbursement of expenses (BaaS) 1,026   812   254 Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses (BaaS) (1)$36,463  $30,836  $29,225  (1)A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.   Provision for Income Taxes The provision for income taxes was $2.0 million for the three months ended March 31, 2025, $3.8 million for the three months ended December 31, 2024 and $1.9 million for the first quarter of 2024.  The income tax provision was lower for the three months ended March 31, 2025 compared to the quarter ended December 31, 2024 as a result of the deductibility of certain equity awards which reduced tax expense during the quarter ended March 31, 2025, and was higher compared to the quarter ended March 31, 2024, primarily due to higher net income compared to that quarter, partially offset by the deductibility of certain equity awards. The Company is subject to various state taxes that are assessed as CCBX activities and employees expand into other states, which has increased the overall tax rate used in calculating the provision for income taxes in the current and future periods. The Company uses a federal statutory tax rate of 21.0% as a basis for calculating provision for federal income taxes and 2.55% for calculating the provision for state income taxes. Financial Condition Overview Total assets increased $218.1 million, or 5.3%, to $4.34 billion at March 31, 2025 compared to $4.12 billion at December 31, 2024.  The increase is primarily comprised of a $171.8 million increase in cash and a $30.8 million increase in loans receivable. Total loans receivable increased to $3.52 billion at March 31, 2025, from $3.49 billion at December 31, 2024. As of March 31, 2025, in addition to the $624.3 million in cash on hand the Company had the capacity to borrow up to a total of $662.4 million from the Federal Reserve Bank discount window and Federal Home Loan Bank, plus an additional $50.0 million from a correspondent bank. There were no borrowings outstanding on these lines as of March 31, 2025. The Company, on a stand alone basis, had a cash balance of $45.5 million as of March 31, 2025, which is retained for general operating purposes, including debt repayment, for funding $468,000 in commitments to bank technology investment funds and $40.0 million is available to be contributed to the Bank as capital.   Uninsured deposits were $558.8 million as of March 31, 2025, compared to $543.0 million as of December 31, 2024. Total shareholders’ equity as of March 31, 2025 increased $11.2 million since December 31, 2024.  The increase in shareholders’ equity was primarily comprised of an increase of $1.5 million in common stock outstanding as a result of equity awards exercised during the three months ended March 31, 2025 combined with $9.7 million in net earnings. The Company and the Bank remained well capitalized at March 31, 2025, as summarized in the following table. (unaudited) Coastal Community Bank Coastal Financial Corporation Minimum Well Capitalized Ratios under Prompt Corrective Action (1)Tier 1 Leverage Capital (to average assets)  10.57%  10.67%  5.00%Common Equity Tier 1 Capital (to risk-weighted assets)  12.12%  12.13%  6.50%Tier 1 Capital (to risk-weighted assets)  12.12%  12.22%  8.00%Total Capital (to risk-weighted assets)  13.42%  14.73%  10.00% (1)Presents the minimum capital ratios for an insured depository institution, such as the Bank, to be considered well capitalized under the Prompt Corrective Action framework. The minimum requirements for the Company to be considered well capitalized under Regulation Y include to maintain, on a consolidated basis, a total risk-based capital ratio of 10.0 percent or greater and a tier 1 risk-based capital ratio of 6.0 percent or greater.   Asset Quality The total allowance for credit losses was $183.2 million and 5.21% of loans receivable at March 31, 2025 compared to $177.0 million and 5.08% at December 31, 2024 and $139.9 million and 4.38% at March 31, 2024. The allowance for credit loss allocated to the CCBX portfolio was $164.2 million and 9.95% of CCBX loans receivable at March 31, 2025, with $19.0 million of allowance for credit loss allocated to the community bank or 1.02% of total community bank loans receivable. The following table details the allocation of the allowance for credit loss as of the period indicated:   As of March 31, 2025 As of December 31, 2024 As of March 31, 2024(dollars in thousands; unaudited) Community Bank CCBX Total Community Bank CCBX Total Community Bank CCBX TotalLoans receivable $1,866,533  $1,650,826  $3,517,359  $1,882,988  $1,603,577  $3,486,565  $1,883,282  $1,311,819  $3,195,101 Allowance for credit losses  (18,992)  (164,186)  (183,178)  (18,924)  (158,070)  (176,994)  (21,384)  (118,557)  (139,941)Allowance for credit losses to total loans receivable  1.02%  9.95%  5.21%  1.00%  9.86%  5.08%  1.14%  9.04%  4.38%                                      Net charge-offs totaled $48.2 million for the quarter ended March 31, 2025, compared to $56.4 million for the quarter ended December 31, 2024 and $57.0 million for the quarter ended March 31, 2024. Net charge-offs as a percent of average loans decreased to 5.57% for the quarter ended March 31, 2025 compared to 6.56% for the quarter ended December 31, 2024. CCBX partner agreements provide for a credit enhancement that covers the net-charge-offs on CCBX loans and negative deposit accounts by indemnifying or reimbursing incurred losses, except in accordance with the program agreement for one partner where the Company was responsible for credit losses on approximately 5% of a $299.8 million loan portfolio. At March 31, 2025, our portion of this portfolio represented $19.9 million in loans. Net charge-offs for this $19.9 million in loans were $1.1 million for the three months ended March 31, 2025 and December 31, 2024 and $2.1 million for the three months ended March 31, 2024. The following table details net charge-offs for the community bank and CCBX for the period indicated:   Three Months Ended  March 31, 2025 December 31, 2024 March 31, 2024(dollars in thousands; unaudited) Community Bank CCBX Total Community Bank CCBX Total Community Bank CCBX TotalGross charge-offs $4  $53,682  $53,686  $139  $61,446  $61,585  $15  $58,979  $58,994 Gross recoveries  (7)  (5,479)  (5,486)  (3)  (5,220)  (5,223)  (4)  (2,032)  (2,036)Net charge-offs $(3) $48,203  $48,200  $136  $56,226  $56,362  $11  $56,947  $56,958 Net charge-offs to average loans (1)  0.00%  11.99%  5.57%  0.03%  14.65%  6.56%  0.00%  18.09%  7.30% (1) Annualized calculations shown for periods presented.   During the quarter ended March 31, 2025, a $54.3 million provision for credit losses was recorded for CCBX partner loans, compared to the $63.7 million provision for credit losses was recorded for CCBX partner loans for the quarter ended December 31, 2024. The provision was based on management's analysis, bringing the CCBX allowance for credit losses to $164.2 million at March 31, 2025 compared to $158.1 million at December 31, 2024. The increase in the allowance is due to the addition of new loans, partially offset by loan sales. CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses. Agreements with our CCBX partners provide for a credit enhancement which protects the Bank by indemnifying or reimbursing incurred losses. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassified negative deposit accounts. When the provision for CCBX credit losses and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements). Expected losses are recorded in the allowance for credit losses. The credit enhancement asset is relieved when credit enhancement recoveries are received from the CCBX partner. If our partner is unable to fulfill their contracted obligations then the Bank could be exposed to additional credit losses. Management regularly evaluates and manages this counterparty risk. The factors used in management’s analysis for community bank credit losses indicated that a provision of $65,000 was needed for the quarter ended March 31, 2025 compared to a provision recapture of $1.1 million and $199,000 for the quarters ended December 31, 2024 and March 31, 2024, respectively. The provision in the current period was due to a change in the mix of the community bank loan portfolio and growth in construction loans. The following table details the provision expense/(recapture) for the community bank and CCBX for the period indicated:   Three Months Ended(dollars in thousands; unaudited) March 31,2025 December 31,2024 March 31,2024Community bank $65  $(1,071) $(199)CCBX  54,319   63,741   79,717 Total provision expense $54,384  $62,670  $79,518               A provision for unfunded commitments of $613,000 was recorded for the quarter ended March 31, 2025 as a result of a change in the loan mix of available balance. A provision for accrued interest receivable of $784,000 was recorded for the quarter ended March 31, 2025 on CCBX loans. At March 31, 2025, our nonperforming assets were $56.4 million, or 1.30%, of total assets, compared to $62.7 million, or 1.52%, of total assets, at December 31, 2024, and $54.9 million, or 1.42%, of total assets, at March 31, 2024. These ratios are impacted by nonperforming CCBX loans that are covered by CCBX partner credit enhancements. As of March 31, 2025, $54.1 million of the $56.2 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements described above. Nonperforming assets decreased $6.3 million during the quarter ended March 31, 2025, compared to the quarter ended December 31, 2024. This change is due to a decrease in CCBX loans 90 days or more past due and still on accrual. Community bank nonperforming loans increased $89,000 from December 31, 2024 to $189,000 as of March 31, 2025, and CCBX nonperforming loans decreased $6.4 million to $56.2 million from December 31, 2024. The decrease in CCBX nonperforming loans is due to a $7.1 million decrease in CCBX loans that are past due 90 days or more and still accruing interest partially offset by an increase of $707,000 in nonaccrual loans from December 31, 2024 to $20.2 million. Some CCBX partners have a collection practice that places certain loans on nonaccrual status to improve collectability. $16.1 million of these loans are less than 90 days past due as of March 31, 2025. As a result of the type of loans (primarily consumer loans) originated through our CCBX partners we anticipate that balances 90 days past due or more and still accruing will generally increase as those loan portfolios grow. Installment/closed-end and revolving/open-end consumer loans originated through CCBX lending partners will continue to accrue interest until 120 and 180 days past due, respectively and are reported as substandard, 90 days or more days past due and still accruing. There were no repossessed assets or other real estate owned at March 31, 2025. Our nonperforming loans to loans receivable ratio was 1.60% at March 31, 2025, compared to 1.80% at December 31, 2024, and 1.72% at March 31, 2024. The lower nonperforming loans to loans receivable ratio is a reflection of our on-going risk reduction efforts. For the quarter ended March 31, 2025, there were $3,000 community bank net recoveries and $48.2 million in net charge-offs were recorded on CCBX loans. These CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses. The following table details the Company’s nonperforming assets for the periods indicated. ConsolidatedAs of(dollars in thousands; unaudited)March 31,2025 December 31,2024 March 31,2024Nonaccrual loans:     Commercial and industrial loans$381  $334  $— Real estate loans:     Residential real estate —   —   212 Commercial real estate —   —   7,731 Consumer and other loans:     Credit cards 13,602   10,262   — Other consumer and other loans 6,376   8,967   — Total nonaccrual loans 20,359   19,563   7,943 Accruing loans past due 90 days or more:     Commercial & industrial loans 782   1,006   1,793 Real estate loans:     Residential real estate loans 2,407   2,608   1,796 Consumer and other loans:     Credit cards 27,187   34,490   37,603 Other consumer and other loans 5,632   4,989   5,731 Total accruing loans past due 90 days or more 36,008   43,093   46,923 Total nonperforming loans 56,367   62,656   54,866 Real estate owned —   —   — Repossessed assets —   —   — Total nonperforming assets$56,367  $62,656  $54,866 Total nonaccrual loans to loans receivable 0.58%  0.56%  0.25%Total nonperforming loans to loans receivable 1.60%  1.80%  1.72%Total nonperforming assets to total assets 1.30%  1.52%  1.42%             The following tables detail the CCBX and community bank nonperforming assets which are included in the total nonperforming assets table above. CCBXAs of(dollars in thousands; unaudited)March 31,2025 December 31,2024 March 31,2024Nonaccrual loans:     Commercial and industrial loans:     All other commercial & industrial loans$192  $234  $— Consumer and other loans:     Credit cards 13,602   10,262   — Other consumer and other loans 6,376   8,967   — Total nonaccrual loans 20,170   19,463   — Accruing loans past due 90 days or more:     Commercial & industrial loans 782   1,006   1,793 Real estate loans:     Residential real estate loans 2,407   2,608   1,796 Consumer and other loans:     Credit cards 27,187   34,490   37,603 Other consumer and other loans 5,632   4,989   5,731 Total accruing loans past due 90 days or more 36,008   43,093   46,923 Total nonperforming loans 56,178   62,556   46,923 Other real estate owned —   —   — Repossessed assets —   —   — Total nonperforming assets$56,178  $62,556  $46,923 Total CCBX nonperforming assets to total consolidated assets 1.29%  1.52%  1.21%             Community BankAs of(dollars in thousands; unaudited)March 31,2025 December 31,2024 March 31,2024Nonaccrual loans:     Commercial and industrial loans$189  $100  $— Real estate:     Residential real estate —   —   212 Commercial real estate —   —   7,731 Total nonaccrual loans 189   100   7,943 Accruing loans past due 90 days or more:     Total accruing loans past due 90 days or more —   —   — Total nonperforming loans 189   100   7,943 Other real estate owned —   —   — Repossessed assets —   —   — Total nonperforming assets$189  $100  $7,943 Total community bank nonperforming assets to total consolidated assets 0.01%  —%  0.21%             About Coastal Financial Coastal Financial Corporation (Nasdaq: CCB) (the “Company”), is an Everett, Washington based bank holding company whose wholly owned subsidiaries are Coastal Community Bank (“Bank”) and Arlington Olympic LLC.  The $4.34 billion Bank provides service through 14 branches in Snohomish, Island, and King Counties, the Internet and its mobile banking application.  The Bank provides banking as a service to digital financial service providers, companies and brands that want to provide financial services to their customers through the Bank's CCBX segment.  To learn more about the Company visit www.coastalbank.com. CCB-ER Contact Eric Sprink, Chief Executive Officer, (425) 357-3659Joel Edwards, Executive Vice President & Chief Financial Officer, (425) 357-3687 Forward-Looking Statements This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of or reference to forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of risks, uncertainties and assumptions that are difficult to predict. Factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, the risk that changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition, and results of operations and those other risks and uncertainties discussed under “Risk Factors” in our Annual Report on Form 10-K for the most recent period filed and in any of our subsequent filings with the Securities and Exchange Commission. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. You are cautioned not to place undue reliance on forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as required by law. COASTAL FINANCIAL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(Dollars in thousands; unaudited) ASSETS March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024Cash and due from banks$43,467  $36,533  $45,327  $59,995  $32,790 Interest earning deposits with other banks 580,835   415,980   438,699   427,250   482,338 Investment securities, available for sale, at fair value 34   35   38   39   41 Investment securities, held to maturity, at amortized cost 46,957   47,286   48,582   49,174   50,049 Other investments 12,589   10,800   10,757   10,664   10,583 Loans held for sale 42,132   20,600   7,565   —   797 Loans receivable 3,517,359   3,486,565   3,413,894   3,321,813   3,195,101 Allowance for credit losses (183,178)  (176,994)  (171,674)  (148,878)  (139,941)Total loans receivable, net 3,334,181   3,309,571   3,242,220   3,172,935   3,055,160 CCBX credit enhancement asset 183,377   181,890   173,600   149,096   142,412 CCBX receivable 12,685   14,138   16,060   11,520   10,369 Premises and equipment, net 28,639   27,431   25,833   24,526   22,995 Lease right-of-use assets 5,117   5,219   5,427   5,635   5,756 Accrued interest receivable 21,109   21,104   22,315   21,620   22,485 Bank-owned life insurance, net 13,501   13,375   13,255   13,132   12,991 Deferred tax asset, net 3,912   3,600   3,083   2,221   2,221 Other assets 10,747   13,646   11,711   11,742   12,075 Total assets$4,339,282  $4,121,208  $4,064,472  $3,959,549  $3,863,062           LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES         Deposits$3,791,229  $3,585,332  $3,627,288  $3,543,432  $3,462,979 Subordinated debt, net 44,331   44,293   44,256   44,219   44,181 Junior subordinated debentures, net 3,592   3,591   3,591   3,591   3,590 Deferred compensation 310   332   369   405   442 Accrued interest payable 1,107   962   1,070   999   1,061 Lease liabilities 5,293   5,398   5,609   5,821   5,946 CCBX payable 29,391   29,171   37,839   32,539   30,899 Other liabilities 14,112   13,425   12,520   11,850   10,255 Total liabilities 3,889,365   3,682,504   3,732,542   3,642,856   3,559,353 SHAREHOLDERS’ EQUITY         Common Stock 229,659   228,177   134,769   132,989   131,601 Retained earnings 220,259   210,529   197,162   183,706   172,110 Accumulated other comprehensive loss, net of tax (1)  (2)  (1)  (2)  (2)Total shareholders’ equity 449,917   438,704   331,930   316,693   303,709 Total liabilities and shareholders’ equity$4,339,282  $4,121,208  $4,064,472  $3,959,549  $3,863,062                      COASTAL FINANCIAL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME(Dollars in thousands, except per share amounts; unaudited)  Three Months Ended March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024INTEREST AND DIVIDEND INCOME         Interest and fees on loans$98,147  $95,575  $99,676  $90,879  $85,891 Interest on interest earning deposits with other banks 6,070   6,021   4,781   5,683   4,780 Interest on investment securities 650   661   675   686   1,034 Dividends on other investments 40   191   33   174   37 Total interest income 104,907   102,448   105,165   97,422   91,742 INTEREST EXPENSE         Interest on deposits 28,185   29,404   32,083   30,578   28,867 Interest on borrowed funds 660   667   809   672   669 Total interest expense 28,845   30,071   32,892   31,250   29,536 Net interest income 76,062   72,377   72,273   66,172   62,206 PROVISION FOR CREDIT LOSSES 55,781   61,867   70,257   62,325   83,158 Net interest income/(expense) after provision for credit losses 20,281   10,510   2,016   3,847   (20,952)NONINTEREST INCOME         Service charges and fees 860   932   952   946   908 Loan referral fees —   —   —   —   168 Unrealized gain (loss) on equity securities, net 16   1   2   9   15 Other income 682   473   486   257   308 Noninterest income, excluding BaaS program income and BaaS indemnification income 1,558   1,406   1,440   1,212   1,399 Servicing and other BaaS fees 1,419   1,043   1,044   1,525   1,131 Transaction and interchange fees 3,833   3,699   3,549   2,934   2,661 Reimbursement of expenses 1,026   812   565   857   254 BaaS program income 6,278   5,554   5,158   5,316   4,046 BaaS credit enhancements 53,648   62,097   70,108   60,826   79,808 BaaS fraud enhancements 1,993   5,043   2,084   1,784   923 BaaS indemnification income 55,641   67,140   72,192   62,610   80,731 Total noninterest income 63,477   74,100   78,790   69,138   86,176 NONINTEREST EXPENSE         Salaries and employee benefits 21,532   17,994   17,101   17,005   17,984 Occupancy 1,034   958   964   985   1,518 Data processing and software licenses 4,232   4,010   4,297   3,625   2,892 Legal and professional expenses 6,488   4,606   3,597   3,631   3,672 Point of sale expense 107   89   73   72   90 Excise taxes 722   778   762   (706)  320 Federal Deposit Insurance Corporation ("FDIC") assessments 755   750   740   690   683 Director and staff expenses 631   683   559   470   400 Marketing 50   28   67   14   53 Other expense 1,938   1,752   1,482   1,383   1,867 Noninterest expense, excluding BaaS loan and BaaS fraud expense 37,489   31,648   29,642   27,169   29,479 BaaS loan expense 32,507   30,720   32,698   29,011   26,107 BaaS fraud expense 1,993   5,043   2,084   1,784   923 BaaS loan and fraud expense 34,500   35,763   34,782   30,795   27,030 Total noninterest expense 71,989   67,411   64,424   57,964   56,509 Income before provision for income taxes 11,769   17,199   16,382   15,021   8,715 PROVISION FOR INCOME TAXES 2,039   3,832   2,926   3,425   1,915 NET INCOME$9,730  $13,367  $13,456  $11,596  $6,800 Basic earnings per common share$0.65  $0.97  $1.00  $0.86  $0.51 Diluted earnings per common share$0.63  $0.94  $0.97  $0.84  $0.50 Weighted average number of common shares outstanding:         Basic 14,962,507   13,828,605   13,447,066   13,412,667   13,340,997 Diluted 15,462,041   14,268,229   13,822,270   13,736,508   13,676,917                      COASTAL FINANCIAL CORPORATIONAVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY(Dollars in thousands; unaudited)  For the Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024 Average Balance Interest &Dividends Yield / Cost (1) Average Balance Interest &Dividends Yield / Cost (1) Average Balance Interest &Dividends Yield / Cost (1)Assets                 Interest earning assets:                 Interest earning deposits with other banks$553,393  $6,070   4.45% $501,654  $6,021   4.77% $350,868  $4,780   5.48%Investment securities, available for sale (2) 37   1   10.96   39   —   —   64,878   349   2.16 Investment securities, held to maturity (2) 47,154   649   5.58   48,126   661   5.46   50,490   685   5.46 Other investments 11,757   40   1.38   10,783   191   7.05   10,262   37   1.45 Loans receivable (3) 3,511,724   98,147   11.33   3,419,476   95,575   11.12   3,137,271   85,891   11.01 Total interest earning assets 4,124,065   104,907   10.32   3,980,078   102,448   10.24   3,613,769   91,742   10.21 Noninterest earning assets:                 Allowance for credit losses (170,542)      (156,687)      (114,985)    Other noninterest earning assets 296,993       277,922       229,437     Total assets$4,250,516      $4,101,313      $3,728,221                       Liabilities and Shareholders’ Equity                 Interest bearing liabilities:                 Interest bearing deposits$3,166,384  $28,185   3.61% $3,068,357  $29,404   3.81% $2,728,884  $28,867   4.25%FHLB advances and other borrowings —   1   —   —   1   —   5   —   — Subordinated debt 44,309   598   5.47   44,272   599   5.38   44,159   598   5.45 Junior subordinated debentures 3,592   61   6.89   3,591   67   7.42   3,590   71   7.95 Total interest bearing liabilities 3,214,285   28,845   3.64   3,116,220   30,071   3.84   2,776,638   29,536   4.28 Noninterest bearing deposits 543,784       577,453       595,693     Other liabilities 49,624       50,824       58,829     Total shareholders' equity 442,823       356,816       297,061     Total liabilities and shareholders' equity$4,250,516      $4,101,313      $3,728,221     Net interest income  $76,062      $72,377      $62,206   Interest rate spread     6.68%      6.40%      5.93%Net interest margin (4)     7.48%      7.23%      6.92% (1)Yields and costs are annualized.(2)For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.(3)Includes loans held for sale and nonaccrual loans.(4)Net interest margin represents net interest income divided by the average total interest earning assets.   COASTAL FINANCIAL CORPORATIONSELECTED AVERAGE BALANCES, YIELDS, AND RATES – BY SEGMENT - QUARTERLY(Dollars in thousands; unaudited)  For the Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024(dollars in thousands, unaudited)AverageBalance Interest &Dividends Yield / Cost (1) AverageBalance Interest &Dividends Yield / Cost (1) AverageBalance Interest &Dividends Yield / Cost (1)Community Bank                 Assets                 Interest earning assets:                 Loans receivable (2)$1,881,636  $30,292  6.53% $1,892,298  $31,043  6.53% $1,871,414  $30,052  6.46%Total interest earning assets 1,881,636   30,292  6.53   1,892,298   31,043  6.53   1,871,414   30,052  6.46 Liabilities                 Interest bearing liabilities:                Interest bearing deposits 1,045,971   6,604  2.56%  1,029,346   7,161  2.77%  922,340   6,013  2.62%Intrabank liability 356,337   3,909  4.45   357,442   4,290  4.77   410,993   5,599  5.48 Total interest bearing liabilities 1,402,308   10,513  3.04   1,386,788   11,451  3.28   1,333,333   11,612  3.50 Noninterest bearing deposits 479,329       505,510       538,081     Net interest income  $19,779      $19,592      $18,440   Net interest margin(3)    4.26%     4.12%     3.96%                  CCBX                 Assets                 Interest earning assets:                 Loans receivable (2)(4)$1,630,088  $67,855  16.88% $1,527,178  $64,532  16.81% $1,265,857  $55,839  17.74%Intrabank asset 554,781   6,085  4.45   583,776   7,007  4.78   598,299   8,151  5.48 Total interest earning assets 2,184,869   73,940  13.72   2,110,954   71,539  13.48   1,864,156   63,990  13.81 Liabilities                 Interest bearing liabilities:              Interest bearing deposits 2,120,413   21,581  4.13%  2,039,011   22,243  4.34%  1,806,544   22,854  5.09%Total interest bearing liabilities 2,120,413   21,581  4.13   2,039,011   22,243  4.34   1,806,544   22,854  5.09 Noninterest bearing deposits 64,455       71,943       57,612     Net interest income  $52,359      $49,296      $41,136   Net interest margin(3)    9.72%     9.29%     8.88%Net interest margin, net of BaaS loan expense(5)    3.68%     3.50%     3.24%                       For the Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024(dollars in thousands, unaudited)AverageBalance Interest &Dividends Yield / Cost (1) AverageBalance Interest &Dividends Yield / Cost (1) AverageBalance Interest &Dividends Yield / Cost (1)Treasury & Administration              Assets                 Interest earning assets:                 Interest earning deposits with other banks$553,393  $6,070  4.45% $501,654  $6,021  4.77% $350,868  $4,780  5.48%Investment securities, available for sale (6) 37   1  10.96   39   —  —   64,878   349  2.16 Investment securities, held to maturity (6) 47,154   649  5.58   48,126   661  5.46   50,490   685  5.46 Other investments 11,757   40  1.38   10,783   191  7.05   10,262   37  1.45 Total interest earning assets 612,341   6,760  4.48%  560,602   6,873  4.88%  476,498   5,851  4.94%Liabilities                 Interest bearing liabilities:                 FHLB advances and borrowings$—   1  —% $—   1  —% $5   —  —%Subordinated debt 44,309   598  5.47%  44,272   599  5.38%  44,159   598  5.45%Junior subordinated debentures 3,592   61  6.89   3,591   67  7.42   3,590   71  7.95 Intrabank liability, net (7) 198,444   2,176  4.45   226,334   2,717  4.78   187,306   2,552  5.48 Total interest bearing liabilities 246,345   2,836  4.67   274,197   3,384  4.91   235,060   3,221  5.51 Net interest income  $3,924      $3,489      $2,630   Net interest margin(3)    2.60%     2.48%     2.22% (1) Yields and costs are annualized.(2)Includes loans held for sale and nonaccrual loans.(3) Net interest margin represents net interest income divided by the average total interest earning assets.(4)CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of BaaS loan expense on CCBX loan yield.(5)Net interest margin, net of BaaS loan expense, includes the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, originating & servicing CCBX loans. See reconciliation of the non-GAAP measures at the end of this earnings release.(6)For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.(7) Intrabank assets and liabilities are consolidated for period calculations and presented as intrabank asset, net or intrabank liability, net in the table above.   Non-GAAP Financial Measures The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies. The following non-GAAP measures are presented to illustrate the impact of BaaS loan expense on net loan income and yield on loans and CCBX loans and the impact of BaaS loan expense on net interest income and net interest margin. Loan income, net of BaaS loan expense, divided by average loans, is a non-GAAP measure that includes the impact BaaS loan expense on loan income and the yield on loans. The most directly comparable GAAP measure is yield on loans. Net BaaS loan income divided by average CCBX loans is a non-GAAP measure that includes the impact BaaS loan expense on net BaaS loan income and the yield on CCBX loans. The most directly comparable GAAP measure is yield on CCBX loans. Net interest income, net of BaaS loan expense, is a non-GAAP measure that includes the impact BaaS loan expense on net interest income. The most directly comparable GAAP measure is net interest income. CCBX net interest margin, net of BaaS loan expense, is a non-GAAP measure that includes the impact of BaaS loan expense on net interest rate margin. The most directly comparable GAAP measure is CCBX net interest margin. Reconciliations of the GAAP and non-GAAP measures are presented below. CCBX As of and for the Three Months Ended (dollars in thousands; unaudited) March 312025 December 312024 March 312024Net BaaS loan income divided by average CCBX loans:CCBX loan yield (GAAP)(1)  16.88%  16.81%  17.74%Total average CCBX loans receivable $1,630,088  $1,527,178  $1,265,857 Interest and earned fee income on CCBX loans (GAAP)  67,855   64,532   55,839 BaaS loan expense  (32,507)  (30,720)  (26,107)Net BaaS loan income $35,348  $33,812  $29,732 Net BaaS loan income divided by average CCBX loans (1)  8.79%  8.81%  9.45%CCBX net interest margin, net of BaaS loan expense:    CCBX net interest margin (1)  9.72%  9.29%  8.88%CCBX earning assets  2,184,869   2,110,954   1,864,156 Net interest income (GAAP)  52,359   49,296   41,136 Less: BaaS loan expense  (32,507)  (30,720)  (26,107)Net interest income, net of BaaS loan expense $19,852  $18,576  $15,029 CCBX net interest margin, net of BaaS loan expense (1)  3.68%  3.50%  3.24%              Consolidated As of and for the Three Months Ended(dollars in thousands; unaudited) March 312025 December 312024 March 312024Net interest margin, net of BaaS loan expense:    Net interest margin (1)  7.48%  7.23%  6.92%Earning assets  4,124,065   3,980,078   3,613,769 Net interest income (GAAP)  76,062   72,377   62,206 Less: BaaS loan expense  (32,507)  (30,720)  (26,107)Net interest income, net of BaaS loan expense $43,555  $41,657  $36,099 Net interest margin, net of BaaS loan expense (1)  4.28%  4.16%  4.02%Loan income net of BaaS loan expense divided by average loans:  Loan yield (GAAP)(1)  11.33%  11.12%  11.01%Total average loans receivable $3,511,724  $3,419,476  $3,137,271 Interest and earned fee income on loans (GAAP)  98,147   95,575   85,891 BaaS loan expense  (32,507)  (30,720)  (26,107)Net loan income $65,640  $64,855  $59,784 Loan income, net of BaaS loan expense, divided by average loans (1)  7.58%  7.55%  7.66% (1)Annualized calculations for periods presented.   The following non-GAAP measure is presented to illustrate the impact of BaaS loan expense, BaaS fraud expense and reimbursement of expenses (BaaS) on noninterest expense. Certain noninterest expenses are reimbursed by our CCBX partners. In accordance with GAAP we recognize all expenses in noninterest expense and the reimbursement of expenses from our CCBX partner in noninterest income. This non-GAAP measure shows the portion of noninterest expenses that are reimbursed by partners to assist the understanding of how the increases in noninterest expense are related to expenses incurred for and reimbursed by CCBX partner. The most comparable GAAP measure is noninterest expense.   As of and for the Three Months Ended(dollars in thousands, unaudited) March 31,2025 December 31,2024 March 31,2024Noninterest expense, net of reimbursement of expenses (BaaS)Noninterest expense (GAAP) $71,989  $67,411  $56,509 Less: BaaS loan expense  32,507   30,720   26,107 Less: BaaS fraud expense  1,993   5,043   923 Less: Reimbursement of expenses  1,026   812   254 Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses $36,463  $30,836  $29,225               APPENDIX A - As of March 31, 2025 Industry Concentration We have a diversified loan portfolio, representing a wide variety of industries. Our major categories of loans are commercial real estate, consumer and other loans, residential real estate, commercial and industrial, and construction, land and land development loans. Together they represent $3.52 billion in outstanding loan balances. When combined with $2.14 billion in unused commitments the total of these categories is $5.67 billion. Commercial real estate loans represent the largest segment of our loans, comprising 38.0% of our total balance of outstanding loans as of March 31, 2025. Unused commitments to extend credit represents an additional $29.4 million, and the combined total in commercial real estate loans represents $1.37 billion, or 24.2% of our total outstanding loans and loan commitments. The following table summarizes our loan commitment by industry for our commercial real estate portfolio as of March 31, 2025: (dollars in thousands; unaudited) Outstanding Balance Available Loan Commitments Total Outstanding Balance & Available Commitment % of Total Loans(Outstanding Balance & Available Commitment) Average Loan Balance Number of LoansApartments $392,740  $4,488  $397,228  7.0% $3,927  100 Hotel/Motel  149,859   61   149,920  2.6   6,516  23 Convenience Store  138,838   561   139,399  2.5   2,314  60 Office  121,346   7,183   128,529  2.3   1,379  88 Retail  101,118   744   101,862  1.8   972  104 Warehouse  103,813   —   103,813  1.8   1,790  58 Mixed use  91,025   5,220   96,245  1.7   1,167  78 Mini Storage  73,172   8,022   81,194  1.4   3,659  20 Strip Mall  43,678   —   43,678  0.8   6,240  7 Manufacturing  36,887   370   37,257  0.7   1,272  29 Groups < 0.70% of total  88,171   2,752   90,923  1.6   1,145  77 Total $1,340,647  $29,401  $1,370,048  24.2% $2,082  644                         Consumer loans comprise 34.5% of our total balance of outstanding loans as of March 31, 2025. Unused commitments to extend credit represents an additional $910.8 million, and the combined total in consumer and other loans represents $2.13 billion, or 37.5% of our total outstanding loans and loan commitments. As illustrated in the table below, our CCBX partners bring in a large number of mostly smaller dollar loans, resulting in an average consumer loan balance of just $1,000. CCBX consumer loans are underwritten to CCBX credit standards and underwriting of these loans is regularly tested, including quarterly testing for partners with portfolio balances greater than $10.0 million. The following table summarizes our loan commitment by industry for our consumer and other loan portfolio as of March 31, 2025: (dollars in thousands; unaudited) Outstanding Balance Available Loan Commitments (1) Total Outstanding Balance & Available Commitment (1) % of Total Loans(Outstanding Balance & Available Commitment) Average Loan Balance Number of LoansCCBX consumer loansCredit cards $532,775  $868,969  $1,401,744  24.7% $1.7  314,203 Installment loans  654,844   29,027   683,871  12.1   0.8  776,669 Lines of credit  627   2   629  0.0   1.3  477 Other loans  14,555   —   14,555  0.3   0.1  185,894 Community bank consumer loansInstallment loans  1,846   3   1,849  0.0   65.9  28 Lines of credit  173   357   530  0.0   5.2  33 Other loans  11,307   12,400   23,707  0.4   34.6  327 Total $1,216,127  $910,758  $2,126,885  37.5% $1.0  1,277,631  (1)  Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. Residential real estate loans comprise 13.9% of our total balance of outstanding loans as of March 31, 2025. Unused commitments to extend credit represents an additional $529.3 million, and the combined total in residential real estate loans represents $1.02 billion, or 18.0% of our total outstanding loans and loan commitments. The following table summarizes our loan commitment by industry for our residential real estate loan portfolio as of March 31, 2025: (dollars in thousands; unaudited) Outstanding Balance Available Loan Commitments (1) Total Outstanding Balance & Available Commitment (1) % of Total Loans(Outstanding Balance & Available Commitment) Average Loan Balance Number of LoansCCBX residential real estate loansHome equity line of credit $285,355  $481,778  $767,133  13.5% $28  10,291 Community bank residential real estate loansClosed end, secured by first liens  164,284   1,649   165,933  3.0   533  308 Home equity line of credit  27,931   45,016   72,947  1.3   115  242 Closed end, second liens  10,705   892   11,597  0.2   357  30 Total $488,275  $529,335  $1,017,610  18.0% $45  10,871  (1)  Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. CCBX home equity lines of credit are limited to a $375.0 million portfolio maximum. Commercial and industrial loans comprise 8.9% of our total balance of outstanding loans as of March 31, 2025. Unused commitments to extend credit represents an additional $601.0 million, and the combined total in commercial and industrial loans represents $913.2 million, or 16.1% of our total outstanding loans and loan commitments. Included in commercial and industrial loans is $133.5 million in outstanding capital call lines, with an additional $514.9 million in available loan commitments which is limited to a $350.0 million portfolio maximum. Capital call lines are provided to venture capital firms through one of our CCBX BaaS clients. These loans are secured by the capital call rights and are individually underwritten to the Bank’s credit standards and the underwriting is reviewed by the Bank on every capital call line. The following table summarizes our loan commitment by industry for our commercial and industrial loan portfolio as of March 31, 2025: (dollars in thousands; unaudited) Outstanding Balance Available Loan Commitments (1) Total Outstanding Balance & Available Commitment (1) % of Total Loans(Outstanding Balance & Available Commitment) Average Loan Balance Number of LoansCCBX C&I LoansCapital Call Lines $133,466  $514,864  $648,330  11.4% $1,019  131 Retail and other loans  29,702   21,736   51,438  0.9   10  3,002 Community bank C&I LoansConstruction/Contractor Services  30,768   31,642   62,410  1.1   152  202 Financial Institutions  48,648   —   48,648  0.9   4,054  12 Medical / Dental / Other Care  6,721   2,739   9,460  0.2   517  13 Manufacturing  5,611   4,022   9,633  0.2   156  36 Groups < 0.20% of total  57,356   25,969   83,325  1.4   222  258 Total $312,272  $600,972  $913,244  16.1% $85  3,654  (1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. Construction, land and land development loans comprise 4.7% of our total balance of outstanding loans as of March 31, 2025. Unused commitments to extend credit represents an additional $72.5 million, and the combined total in construction, land and land development loans represents $239.0 million, or 4.2% of our total outstanding loans and loan commitments. The following table details our loan commitment for our construction, land and land development portfolio as of March 31, 2025: (dollars in thousands; unaudited) Outstanding Balance Available Loan Commitments Total Outstanding Balance & Available Commitment % of Total Loans(Outstanding Balance & Available Commitment) Average Loan Balance Number of Loans Commercial construction $96,716  $41,654  $138,370  2.4% $6,908  14 Residential construction  39,375   22,253   61,628  1.1   2,316  17 Developed land loans  7,788   2   7,790  0.1   556  14 Undeveloped land loans  16,684   4,185   20,869  0.4   1,112  15 Land development  5,988   4,382   10,370  0.2   665  9 Total $166,551  $72,476  $239,027  4.2% $2,414  69                         Exposure and risk in our construction, land and land development portfolio increased compared to recent periods as indicated in the following table:   Outstanding Balance as of(dollars in thousands; unaudited) March 31,2025 December 31,2024 September 30,2024 June 30,2024 March 31,2024Commercial construction $96,716  $83,216  $97,792  $110,372  $102,099 Residential construction  39,375   40,940   35,822   34,652   28,751 Undeveloped land loans  16,684   8,665   8,606   8,372   8,190 Developed land loans  7,788   8,305   14,863   13,954   14,307 Land development  5,988   7,072   5,968   5,714   7,515 Total $166,551  $148,198  $163,051  $173,064  $160,862                       Commitments to extend credit total $2.14 billion at March 31, 2025,   however we do not anticipate our customers using the $2.14 billion that is showing as available due to CCBX partner and portfolio limits. The following table presents outstanding commitments to extend credit as of March 31, 2025: Consolidated  (dollars in thousands; unaudited) As of March 31, 2025Commitments to extend credit:  Commercial and industrial loans $86,108 Commercial and industrial loans - capital call lines  514,864 Construction – commercial real estate loans  50,221 Construction – residential real estate loans  22,255 Residential real estate loans  529,335 Commercial real estate loans  29,401 Credit cards  868,969 Consumer and other loans  41,789 Total commitments to extend credit $2,142,942       We have individual CCBX partner portfolio limits with our each of our partners to manage loan concentration risk, liquidity risk, and counter-party partner risk. For example, as of March 31, 2025, capital call lines outstanding balance totaled $133.5 million and, while commitments totaled $514.9 million, the commitments are limited to a maximum of $350.0 million by agreement with the partner. If a CCBX partner goes over their individual limit, it would be a breach of their contract and the Bank may impose penalties and would have the choice to fund or not fund the loan. See the table below for CCBX portfolio maximums and related available commitments: CCBX        (dollars in thousands; unaudited) Balance Percent of CCBX loans receivableAvailable Commitments (1) Maximum Portfolio Size Cash Reserve/Pledge Account Amount (2)Commercial and industrial loans:      Capital call lines $133,466  8.1%$514,864  $350,000 $— All other commercial & industrial loans  29,702  1.8  21,736   475,720  541 Real estate loans:        Home equity lines of credit (3)  285,355  17.3  481,778   375,000  33,436 Consumer and other loans:      Credit cards - cash secured  339    —    — Credit cards - unsecured  532,436    868,969    27,589 Credit cards - total  532,775  32.2  868,969   850,000  27,589 Installment loans - cash secured  127,426    29,027    — Installment loans - unsecured  527,418    —    1,175 Installment loans - total  654,844  39.7  29,027   1,814,541  1,175 Other consumer and other loans  15,182  0.9  2   4,739  419 Gross CCBX loans receivable  1,651,324  100.0% 1,916,376   3,870,000 $63,160 Net deferred origination fees  (498)      Loans receivable $1,650,826        (1)Remaining commitment available, net of outstanding balance.(2)Balances are as of April 9, 2025.(3)These home equity lines of credit are secured by residential real estate and are accessed by using a credit card, but are classified as 1-4 family residential properties per regulatory guidelines.   APPENDIX B -As of March 31, 2025 CCBX – BaaS Reporting Information During the quarter ended March 31, 2025, $53.6 million was recorded in BaaS credit enhancements related to the provision for credit losses - loans and reserve for unfunded commitments for CCBX partner loans and negative deposit accounts. Agreements with our CCBX partners provide for a credit enhancement provided by the partner which protects the Bank by indemnifying or reimbursing incurred losses. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans, unfunded commitments and negative deposit accounts. When the provision for credit losses - loans and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements) in recognition of the CCBX partner legal commitment to indemnify or reimburse losses. The credit enhancement asset is relieved as credit enhancement payments and recoveries are received from the CCBX partner or taken from the partner's cash reserve account. Agreements with our CCBX partners also provide protection to the Bank from fraud by indemnifying or reimbursing incurred fraud losses. BaaS fraud includes non-credit fraud losses on loans and deposits originated through partners, generally fraud losses related to loans are comprised primarily of first payment defaults. Fraud losses are recorded when incurred as losses in noninterest expense, and the enhancement received from the CCBX partner is recorded in noninterest income, resulting in a net impact of zero to the income statement. Many CCBX partners also pledge a cash reserve account at the Bank which the Bank can collect from when losses occur that is then replenished by the partner on a regular interval. Although agreements with our CCBX partners provide for credit enhancements that provide protection to the Bank from credit and fraud losses by indemnifying or reimbursing incurred credit and fraud losses, if our partner is unable to fulfill their contracted obligation then the bank would be exposed to additional loan and deposit losses if the cash flows on the loans were not sufficient to fund the reimbursement of loan losses, as a result of this counterparty risk. If a CCBX partner does not replenish their cash reserve account the Bank may consider an alternative plan for funding the cash reserve. This may involve the possibility of adjusting the funding amounts or timelines to better align with the partner's specific situation. If a mutually agreeable funding plan is not agreed to, the Bank could declare the agreement in default, take over servicing and cease paying the partner for servicing the loan and providing credit enhancements. The Bank would evaluate any remaining credit enhancement asset from the CCBX partner in the event the partner failed to determine if a write-off is appropriate. If a write-off occurs, the Bank would retain the full yield and any fee income on the loan portfolio going forward, and our BaaS loan expense would decrease once default occurred and payments to the CCBX partner were stopped. The Bank records contractual interest earned from the borrower on CCBX partner loans in interest income, adjusted for origination costs which are paid or payable to the CCBX partner. BaaS loan expense represents the amount paid or payable to partners for credit and fraud enhancements and originating and servicing CCBX loans. To determine net revenue (Net BaaS loan income) earned from CCBX loan relationships, the Bank takes BaaS loan interest income and deducts BaaS loan expense to arrive at Net BaaS loan income (a reconciliation of the non-GAAP measures are set forth in the preceding section of this earnings release) which can be compared to interest income on the Company’s community bank loans. The following table illustrates how CCBX partner loan income and expenses are recorded in the financial statements: Loan income and related loan expense Three Months Ended(dollars in thousands; unaudited) March 31,2025 December 31,2024 March 31,2024Yield on loans (1)  16.88%  16.81%  17.74%BaaS loan interest income $67,855  $64,532  $55,839 Less: BaaS loan expense  32,507   30,720   26,107 Net BaaS loan income (2) $35,348  $33,812  $29,732 Net BaaS loan income divided by average BaaS loans (1)(2)  8.79%  8.81%  9.45% (1) Annualized calculation for quarterly periods shown.(2) A reconciliation of the non-GAAP measures are set forth in the preceding section of this earnings release. An increase in average CCBX loans receivable resulted in increased interest income on CCBX loans during the quarter ended March 31, 2025 compared to the quarter ended December 31, 2024. The increase in average CCBX loans receivable was primarily due to our strategy to optimize the CCBX loan portfolio and strengthen our balance sheet through originating higher quality new loans with enhanced credit standards. These higher quality loans also have lower stated rates and expected losses than some of our CCBX loans historically. Our yield on loans and our net interest margin net of BaaS loan expense slightly increased, as our CCBX portfolio is leveling out. Current loan sales and new loan growth are at more similar interest rates compared to prior periods when we were selling loans with higher risk and higher interest rates and replacing them with higher quality lower interest rate loans. We continue to reposition ourselves by managing CCBX credit and concentration levels in an effort to optimize our loan portfolio and also generate off balance sheet fee income. Growth in CCBX loans and deposits has resulted in increases in interest income and expense for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024. The following tables are a summary of the interest components, direct fees and expenses of BaaS for the periods indicated and are not inclusive of all income and expense related to BaaS. Interest income Three Months Ended(dollars in thousands; unaudited) March 31,2025 December 31,2024 March 31,2024Loan interest income $67,855  $64,532  $55,839 Total BaaS interest income $67,855  $64,532  $55,839               Interest expense Three Months Ended(dollars in thousands; unaudited) March 31,2025 December 31,2024 March 31,2024BaaS interest expense $21,581  $22,243  $22,854 Total BaaS interest expense $21,581  $22,243  $22,854               BaaS income Three Months Ended(dollars in thousands; unaudited) March 31,2025 December 31,2024 March 31,2024BaaS program income:      Servicing and other BaaS fees $1,419  $1,043  $1,131 Transaction and interchange fees  3,833   3,699   2,661 Reimbursement of expenses  1,026   812   254 Total BaaS program income  6,278   5,554   4,046 BaaS indemnification income:      BaaS credit enhancements  53,648   62,097   79,808 BaaS fraud enhancements  1,993   5,043   923 BaaS indemnification income  55,641   67,140   80,731 Total noninterest BaaS income $61,919  $72,694  $84,777               Servicing and other BaaS fees increased $376,000 and transaction and interchange fees increased $134,000 in the quarter ended March 31, 2025 compared to the quarter ended December 31, 2024. We expect servicing and other BaaS fees to be higher when we are bringing new partners on and then to decrease when transaction and interchange fees increase as partner activity grows and contracted minimum fees are replaced with these recurring fees when they exceed the minimum fees. Increases in BaaS reimbursement of fees offsets increases in noninterest expense from BaaS expenses covered by CCBX partners. BaaS loan and fraud expense: Three Months Ended(dollars in thousands; unaudited) March 31,2025 December 31,2024 March 31,2024BaaS loan expense $32,507  $30,720  $26,107 BaaS fraud expense  1,993   5,043   923 Total BaaS loan and fraud expense $34,500  $35,763  $27,030               A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/26a7ee4c-99dc-493e-8703-90dc906581e2

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