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Coastal Financial Corporation Announces Fourth Quarter 2024 Results

1. CCB reported net income of $13.4 million, highlighting stability. 2. Capital raise of $98 million aims to fund CCBX growth. 3. BaaS program fees increased by 56.9% year-over-year. 4. Loan sales totaled $845.5 million, revealing risk management strategy. 5. CCBX partners signed three letters of intent for future business.

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FAQ

Why Bullish?

Stable earnings and capital raise indicate confidence in future growth, mirroring prior successes.

How important is it?

Positive financial results and strategic plans for CCBX directly affect CCB's market position.

Why Long Term?

Investments in CCBX and BaaS programs suggest sustainable growth over multiple years.

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EVERETT, Wash., Jan. 28, 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 with an industry leading banking as a service ("BaaS") segment, today reported unaudited financial results for the quarter ended December 31, 2024, including net income of $13.4 million, or $0.94 per diluted common share, compared to $13.5 million, or $0.97 per diluted common share, for the three months ended September 30, 2024 and $45.2 million, or $3.26 per diluted common share, for the year ended December 31, 2024, compared to $44.6 million, or $3.27 per diluted common share for the year ended December 31, 2023. Management Discussion of the Quarter and Full-year Results “2024 was highlighted by the completion of our $98.0 million capital raise during the fourth quarter, which we will utilize to support growth of the Bank including in our CCBX segment,” said CEO Eric Sprink. “We saw high quality net loan growth of $67.7 million despite selling $845.5 million in loans during the fourth quarter, and our CCBX program fee income continued to increase which was up 56.9% for full-year 2024 relative to the prior year. We continue to invest heavily in CCBX to support future growth, and we are pleased to have three letters of intent ("LOI") signed going into 2025 with an active pipeline.” Key Points for Fourth Quarter and Our Go-Forward Strategy Completed Capital Raise Allows CCBX Growth to Continue. During the fourth quarter of 2024, we completed a $98.0 million common equity raise, which was priced at $71.00/share. Proceeds will be used for general corporate purposes and to support growth of the Bank including in our CCBX segment. As of December 31, 2024 we had three signed LOIs and continue to have an active pipeline for 2025. The growth in common-equity tier 1 and total risk-based capital to 12.04% and 14.67%, respectively, includes the benefit of the capital raise.Strong Annual Growth in CCBX Program Fees. Total BaaS program fee income was $25.6 million for the year ended December 31, 2024, an increase of $9.3 million, or 56.9%, from the year ended December 31, 2023, and is representative of growth in partner transaction activity and expanded product offerings within our CCBX operating segment. Trends in CCBX noninterest income were also positive during the quarter, with total program fees of $8.2 million for the three months ended December 31, 2024, an increase of $1.8 million, or 27.6%, from the three months ended September 30, 2024.Investments for Growth Continues. Total non-interest expense of $64.2 million was down $1.4 million, or 2.1%, as compared to $65.6 million in the third quarter of 2024, mainly driven by lower BaaS loan expense, partially offset by higher salaries and employee benefits, point of sale expense, and legal and professional expenses. As we increase the number of new CCBX partners and programs launching in 2025, we expect that expenses will tend to be front-loaded with a focus on compliance and operational risk before any new program reaches significant revenues.Off Balance Sheet Activity Update. During the fourth quarter of 2024, we sold $845.5 million of loans, the majority of which were credit card receivables, and swept $273.2 million of deposits off balance-sheet. We are able to retain a portion of the fee income on these sold credit card loans. As of December 31, 2024 there were 182,449 credit cards with fee earning potential, an increase of 101,023 compared to the quarter ended September 30, 2024 and an increase of 172,400 from December 31, 2023.Continued Monitoring of CCBX Risk. We remain fully indemnified against fraud and 98.7% indemnified against credit risk with our CCBX partners as of year-end of 2024. Fourth Quarter 2024 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)December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Income Statement Data:         Interest and dividend income$96,587  $105,079  $97,487  $90,472  $88,243 Interest expense 30,071   32,892   31,250   29,536   28,586 Net interest income 66,516   72,187   66,237   60,936   59,657 Provision for credit losses 61,867   70,257   62,325   83,158   60,789 Net interest (expense)/ income after provision for credit losses 4,649   1,930   3,912   (22,222)  (1,132)Noninterest income 76,756   80,068   69,918   86,955   64,694 Noninterest expense 64,206   65,616   58,809   56,018   51,703 Provision for income tax 3,832   2,926   3,425   1,915   2,847 Net income 13,367   13,456   11,596   6,800   9,012            As of and for the Three Month Period December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Balance Sheet Data:         Cash and cash equivalents$452,513  $484,026  $487,245  $515,128  $483,128 Investment securities 47,321   48,620   49,213   50,090   150,364 Loans held for sale 20,600   7,565   —   797   — Loans receivable 3,486,565   3,418,832   3,326,460   3,199,554   3,026,092 Allowance for credit losses (176,994)  (170,263)  (147,914)  (139,258)  (116,958)Total assets 4,121,208   4,065,821   3,961,546   3,865,258   3,753,366 Interest bearing deposits 3,057,808   3,047,861   2,949,643   2,888,867   2,735,161 Noninterest bearing deposits 527,524   579,427   593,789   574,112   625,202 Core deposits (1) 3,123,434   3,190,869   3,528,339   3,447,864   3,342,004 Total deposits 3,585,332   3,627,288   3,543,432   3,462,979   3,360,363 Total borrowings 47,884   47,847   47,810   47,771   47,734 Total shareholders’ equity 438,704   331,930   316,693   303,709   294,978           Share and Per Share Data (2):         Earnings per share – basic$0.97  $1.00  $0.86  $0.51  $0.68 Earnings per share – diluted$0.94  $0.97  $0.84  $0.50  $0.66 Dividends per share —   —   —   —   — Book value per share (3)$29.37  $24.51  $23.54  $22.65  $22.17 Tangible book value per share (4)$29.37  $24.51  $23.54  $22.65  $22.17 Weighted avg outstanding shares – basic 13,828,605   13,447,066   13,412,667   13,340,997   13,286,828 Weighted avg outstanding shares – diluted 14,268,229   13,822,270   13,736,508   13,676,917   13,676,513 Shares outstanding at end of period 14,935,298   13,543,282   13,453,805   13,407,320   13,304,339 Stock options outstanding at end of period 186,354   198,370   286,119   309,069   354,969  See footnotes that follow the tables below  As of and for the Three Month Period December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Credit Quality Data:         Nonperforming assets (5) to total assets 1.52%  1.63%  1.34%  1.42%  1.43%Nonperforming assets (5) to loans receivable and OREO 1.80%  1.94%  1.60%  1.71%  1.78%Nonperforming loans (5) to total loans receivable 1.80%  1.94%  1.60%  1.71%  1.78%Allowance for credit losses to nonperforming loans 282.5%  256.5%  278.1%  253.8%  217.2%Allowance for credit losses to total loans receivable 5.08%  4.98%  4.45%  4.35%  3.86%Gross charge-offs$61,585  $53,305  $55,207  $58,994  $47,652 Gross recoveries$5,646  $4,069  $1,973  $1,776  $2,781 Net charge-offs to average loans (6) 6.51%  5.65%  6.57%  7.34%  5.92%          Capital Ratios:         Company         Tier 1 leverage capital 10.78%  8.40%  8.31%  8.24%  8.10%Common equity Tier 1 risk-based capital 12.04%  9.24%  9.03%  8.98%  9.10%Tier 1 risk-based capital 12.14%  9.34%  9.13%  9.08%  9.20%Total risk-based capital 14.67%  11.89%  11.70%  11.70%  11.87%Bank         Tier 1 leverage capital 10.64%  9.29%  9.24%  9.19%  9.06%Common equity Tier 1 risk-based capital 11.99%  10.34%  10.15%  10.14%  10.30%Tier 1 risk-based capital 11.99%  10.34%  10.15%  10.14%  10.30%Total risk-based capital 13.28%  11.63%  11.44%  11.43%  11.58% (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 1.30% for the quarter ended December 31, 2024 compared to 1.34% and 0.97% for the quarters ended September 30, 2024 and December 31, 2023, respectively.  ROA for the quarter ended December 31, 2024, decreased 0.04% and increased 0.33% compared to September 30, 2024 and December 31, 2023, respectively. Noninterest expenses were lower for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 largely due to a decrease in BaaS loan expense, which is directly related to the amount of interest earned on CCBX loans, and higher than the quarter ended December 31, 2023 largely due to an increase in salaries and employee benefits, data processing and software licenses, legal and professional expenses and point of sale expenses, all of which are related to the growth of Company and investments in technology and risk management. Yield on earning assets and yield on loans receivable decreased 1.14% and 0.99%, respectively, for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024. This decrease is due to a combination of factors. We continue to refine our credit approach with partners, widening the scope of loans that we are moving to nonaccrual, which decreased loan interest income in the quarter ended December 31, 2024 as compared to prior quarters. Average loans receivable as of December 31, 2024 decreased $45.4 million compared to September 30, 2024 as we continue to sell CCBX loans as part of our on-going strategy to manage the loan portfolio and credit quality. New loans are being booked with enhanced credit standards, which typically results in a lower interest rate than some of the higher risk loans that have paid off or we have chosen to sell. The following table shows the Company’s key performance ratios for the periods indicated.     Three Months Ended Twelve Months Ended(unaudited) December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023 December 31,2024 December 31,2023               Return on average assets (1) 1.30% 1.34% 1.21% 0.73% 0.97% 1.15% 1.28%Return on average equity (1) 14.90% 16.67% 15.22% 9.21% 12.35% 14.11% 16.41%Yield on earnings assets (1) 9.65% 10.79% 10.49% 10.07% 9.77% 10.25% 9.82%Yield on loans receivable (1) 10.44% 11.43% 11.23% 10.85% 10.71% 10.99% 10.60%Cost of funds (1) 3.24% 3.62% 3.60% 3.52% 3.39% 3.49% 2.91%Cost of deposits (1) 3.21% 3.59% 3.58% 3.49% 3.36% 3.46% 2.87%Net interest margin (1) 6.65% 7.41% 7.13% 6.78% 6.61% 6.99% 7.10%Noninterest expense to average assets (1) 6.23% 6.54% 6.14% 6.04% 5.56% 6.24% 5.90%Noninterest income to average assets (1) 7.45% 7.98% 7.30% 9.38% 6.95% 8.00% 5.97%Efficiency ratio 44.81% 43.10% 43.19% 37.88% 41.58% 42.21% 45.92%Loans receivable to deposits (2) 97.82% 94.46% 93.88% 92.42% 90.05% 97.8% 90.1% (1) Annualized calculations shown for quarterly periods presented.(2) Includes loans held for sale. Management Outlook; CEO Eric Sprink “As we look forward to 2025, our strategy involves selectively expanding our current base of CCBX partners while continuing to invest in and enhance our technology and risk management infrastructure. This will enable us to support the next phase of growth within CCBX more efficiently. Additionally, we are focused on growing noninterest income through increased transaction activity and new product offerings with our established partners. We plan to continue selling credit card loans while retaining a portion of the fee income for our role in processing transactions, which offers an additional source of noninterest income without adding on-balance-sheet risk. We believe that by increasing noninterest income, we can mitigate the uncertainties associated with fluctuating interest rates and provide a more stable income stream in the future.” 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 24 relationships, at varying stages, including three signed letters of intent as of December 31, 2024.  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 and will continue to exit relationships where it makes sense for us to do so. As we explore relationships with new partners we plan to continue expanding product offerings with our 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 positions us to reach a wide and established customer base with a modest increase in regulatory risk given that we have already vetted existing partners and have an operational history. Increases in partner activity/transaction counts is positively impacting noninterest income and we expect that trend to continue as products launched earlier in the year gain traction. 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 plan to continue this strategy to provide an on-going and passive revenue stream with no on balance sheet risk. The following table illustrates the activity and evolution in CCBX relationships for the periods presented.  As of(unaudited)December 31, 2024September 30,2024December 31, 2023Active191919Friends and family / testing111Implementation / onboarding111Signed letters of intent310Wind down - active but preparing to exit relationship000Total CCBX relationships242221     CCBX loans increased $82.3 million, or 5.4%, to $1.60 billion despite selling $845.5 million loans during the three months ended December 31, 2024. 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 December 31, 2024 the portion of this portfolio for which we are responsible represented $20.6 million in loans. The following table details the CCBX loan portfolio: CCBX As of  December 31, 2024 September 30, 2024 December 31, 2023(dollars in thousands; unaudited) Balance % to Total Balance % to Total Balance % to TotalCommercial and industrial loans:            Capital call lines $109,017  6.8% $103,924  6.8% $87,494  7.3%All other commercial & industrial loans  33,961  2.1   36,494  2.4   54,298  4.5 Real estate loans:            Residential real estate loans  267,707  16.7   265,402  17.5   238,035  19.9 Consumer and other loans:            Credit cards  528,554  33.0   633,691  41.6   505,837  42.3 Other consumer and other loans  664,780  41.4   482,228  31.7   310,574  26.0 Gross CCBX loans receivable  1,604,019  100.0%  1,521,739  100.0%  1,196,238  100.0%Net deferred origination (fees) costs  (442)    (447)    (300)  Loans receivable $1,603,577    $1,521,292    $1,195,938   Loan Yield - CCBX (1)(2)  15.28%    17.35%    17.36%                (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 December 31, 2024, includes an increase of $77.4 million or 6.9%, in consumer and other loans, an increase of $5.1 million, or 4.9%, in capital call lines as a result of normal balance fluctuations and business activities, and an increase of $2.3 million, or 0.9%, in residential real estate loans. We continue to monitor and manage the CCBX loan portfolio, and sold $845.5 million in CCBX loans during the quarter ended December 31, 2024 compared to sales of $423.7 million in the quarter ended September 30, 2024. We continue to reposition ourselves by managing CCBX credit and concentration levels in an effort to optimize our loan portfolio and generate off balance sheet fee income. CCBX loan yield decreased 2.06% for the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 as a result of our widening the scope of loans that we are moving to nonaccrual, which decreased loan interest income in the quarter ended December 31, 2024. Also contributing to the decrease are lower interest rates on new CCBX loans, which are replacing higher risk and higher rate loans that have paid off or were sold as part of our strategy to manage the loan portfolio and credit quality. The recent decrease in the Fed funds interest rate further contributed to the change. The following chart show the growth in credit card accounts that we are able to generate fee income from. 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, but that we are still able to generate fee income on. The following table details the CCBX deposit portfolio: CCBX As of  December 31, 2024 September 30, 2024 December 31, 2023(dollars in thousands; unaudited) Balance % to Total Balance % to Total Balance % to TotalDemand, noninterest bearing $55,686  2.7% $60,655  2.9% $63,630  3.4%Interest bearing demand and money market  1,958,459  94.9   1,991,858  94.6   1,794,168  96.3 Savings  5,710  0.3   5,204  0.3   4,964  0.3 Total core deposits  2,019,855  97.9   2,057,717  97.8   1,862,762  100.0 Other deposits  44,233  2.1   47,046  2.2   —  — Total CCBX deposits $2,064,088  100.0% $2,104,763  100.0% $1,862,762  100.0%Cost of deposits (1)  4.19%    4.82%    4.90%   (1)  Cost of deposits is annualized for the three months ended for each period presented.CCBX deposits decreased $40.7 million, or 1.9%, in the three months ended December 31, 2024 to $2.06 billion as a result of normal balance fluctuations. This excludes the $273.2 million in CCBX deposits that were transferred off balance sheet for increased Federal Deposit Insurance Corporation ("FDIC") insurance coverage and sweep purposes, compared to $214.5 million for the quarter ended September 30, 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 December 31, 2024, the community bank saw net loans decrease $14.6 million, or 0.8%, to $1.88 billion. The following table details the Community Bank loan portfolio: Community Bank As of  December 31, 2024 September 30, 2024 December 31, 2023(dollars in thousands; unaudited) Balance % to Total Balance % to Total Balance % to TotalCommercial and industrial loans $150,395  8.0% $152,161  8.0% $149,502  8.2%Real estate loans:            Construction, land and land development loans  148,198  7.8   163,051  8.6   157,100  8.5 Residential real estate loans  202,064  10.7   212,467  11.2   225,391  12.3 Commercial real estate loans  1,374,801  72.8   1,362,452  71.5   1,303,533  70.9 Consumer and other loans:            Other consumer and other loans  13,542  0.7   14,173  0.7   1,628  0.1 Gross Community Bank loans receivable  1,889,000  100.0%  1,904,304  100.0%  1,837,154  100.0%Net deferred origination fees  (6,012)    (6,764)    (7,000)  Loans receivable $1,882,988    $1,897,540    $1,830,154   Loan Yield(1)  6.53%    6.64%    6.32%   (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 $14.9 million in construction, land and land development loans, decreased $1.8 million in commercial and industrial loans and decreased $631,000 in consumer and other loans, and were partially offset by an increase in commercial real estate loans of $12.3 million during the quarter ended December 31, 2024. The following table details the community bank deposit portfolio: Community Bank As of  December 31, 2024 September 30, 2024 December 31, 2023(dollars in thousands; unaudited) Balance % to Total Balance % to Total Balance % to TotalDemand, noninterest bearing $471,838  31.0% $518,772  34.1% $561,572  37.5%Interest bearing demand and money market  570,625  37.5   552,108  36.3   846,072  56.5 Savings  61,116  4.0   62,272  4.1   71,598  4.8 Total core deposits  1,103,579  72.5   1,133,152  74.5   1,479,242  98.8 Other deposits  400,118  26.3   373,681  24.5   1  0.0 Time deposits less than $100,000  5,920  0.4   6,305  0.4   8,109  0.5 Time deposits $100,000 and over  11,627  0.8   9,387  0.6   10,249  0.7 Total Community Bank deposits $1,521,244  100.0% $1,522,525  100.0% $1,497,601  100.0%Cost of deposits(1)  1.86%    1.92%    1.57%   (1) Cost of deposits is annualized for the three months ended for each period presented.Community bank deposits decreased $1.3 million, or 0.1%, during the three months ended December 31, 2024 to $1.52 billion as result of normal balance fluctuations. The community bank segment includes noninterest bearing deposits of $471.8 million, or 31.0%, of total community bank deposits, resulting in a cost of deposits of 1.86%, which compared to 1.92% for the quarter ended September 30, 2024, largely due to the decreases in the Fed funds rate late in the third quarter and during the fourth quarter of 2024. The cost of community bank deposits are projected to decline further as the Fed funds rate had a decrease of 0.25%, which occurred in December 2024 and the full quarterly effect of that decrease will not be recognized until the first quarter of 2025. Net Interest Income and Margin Discussion Net interest income was $66.5 million for the quarter ended December 31, 2024, a decrease of $5.7 million, or 7.9%, from $72.2 million for the quarter ended September 30, 2024, and an increase of $6.9 million, or 11.5%, from $59.7 million for the quarter ended December 31, 2023. The decrease in net interest income compared to September 30, 2024, was a result of a decrease in average loans receivable as a result of selling $845.5 million in CCBX loans during the quarter ended December 31, 2024, the recent decrease in the Fed funds interest rate, and continued enhancements to our partner credit practices that resulted in a reduction of interest income on loans. The increase in net interest income compared to December 31, 2023 was largely related to increased yield on loans resulting from higher interest rates and 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 6.65% for the three months ended December 31, 2024, compared to 7.41% for the three months ended September 30, 2024, largely due to lower loan yield. 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 4.16% for the three months ended December 31, 2024, compared to 4.06% for the three months ended September 30, 2024. Net interest margin was 6.61% for the three months ended December 31, 2023. The increase in net interest margin for the three months ended December 31, 2024 compared to the three months ended December 31, 2023 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 decreased $9.9 million, or 9.9%, to $89.7 million for the three months ended December 31, 2024, compared to $99.6 million for the three months ended September 30, 2024, as a result of loan sales and a decrease in the Fed funds interest rate. Additionally, as we continue to refine our credit approach with partners, we are widening the scope of loans that we are moving to nonaccrual which decreased interest income in the quarter ended December 31, 2024 and lowered loan yield and net interest margin; however this also decreased BaaS loan expense (which is in noninterest expense) resulting in no impact to net income. Interest and fees on loans receivable increased $8.6 million, or 10.5%, compared to $81.2 million for the three months ended December 31, 2023, 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 0.10% for the three months ended December 31, 2024, compared to the three months ended September 30, 2024 and increased 0.25% compared the three months ended December 31, 2023. 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 EndedAs of and for the Twelve Months Ended(dollars in thousands; unaudited) December 312024 September 302024 December 312023December 312024 December 312023Net interest margin, net of BaaS loan expense:       Net interest margin (1)  6.65%  7.41%  6.61% 6.99%  7.10%Earning assets  3,980,078   3,875,911   3,581,772  3,802,275   3,364,406 Net interest income (GAAP)  66,516   72,187   59,657  265,876   238,727 Less: BaaS loan expense  (24,859)  (32,612)  (24,310) (111,384)  (86,900)Net interest income, net of BaaS loan expense(2) $41,657  $39,575  $35,347 $154,492  $151,827 Net interest margin, net of BaaS loan expense (1)(2)  4.16%  4.06%  3.92% 4.06%  4.51%Loan income net of BaaS loan expense divided by average loans:     Loan yield (GAAP)(1)  10.44%  11.43%  10.71% 10.99%  10.60%Total average loans receivable $3,419,476  $3,464,871  $3,007,289 $3,320,582  $2,936,908 Interest and earned fee income on loans (GAAP)  89,714   99,590   81,159  364,869   311,441 BaaS loan expense  (24,859)  (32,612)  (24,310) (111,384)  (86,900)Net loan income(2) $64,855  $66,978  $56,849 $253,485  $224,541 Loan income, net of BaaS loan expense, divided by average loans (1)(2)  7.55%  7.69%  7.50% 7.63%  7.65% (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 $820,000 to $48.2 million compared to the three months ended September 30, 2024 and decreased $101.5 million compared to the three months ended December 31, 2023 as a result of principal paydowns and maturing securities. Cost of funds was 3.24% for the quarter ended December 31, 2024, a decrease of 38 basis points from the quarter ended September 30, 2024 and a decrease of 16 basis points from the quarter ended December 31, 2023. Cost of deposits for the quarter ended December 31, 2024 was 3.21%, compared to 3.59% for the quarter ended September 30, 2024, and 3.36% for the quarter ended December 31, 2023. The decreased cost of funds and deposits compared to September 30, 2024 and December 31, 2023 was 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 December 31, 2024 September 30, 2024 December 31, 2023 Yield onLoans (2) Cost ofDeposits (2) Yield onLoans (2) Cost ofDeposits (2) Yield onLoans (2) Cost ofDeposits (2)Community Bank6.53% 1.86% 6.64% 1.92% 6.32% 1.57%CCBX (1)15.28% 4.19% 17.35% 4.82% 17.36% 4.90%Consolidated10.44% 3.21% 11.43% 3.59% 10.71% 3.36% (1) Annualized calculations for periods shown 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 shown. 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  December 31, 2024 September 30, 2024 December 31, 2023(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 $58,671 15.28% $67,692 17.35% $52,327 17.36%Less: BaaS loan expense  24,859 6.48%  32,612 8.36%  24,310 8.06%Net BaaS loan income (1) $33,812 8.81% $35,080 8.99% $28,017 9.30%Average BaaS Loans(3) $1,527,178   $1,552,443   $1,196,137   (1) A reconciliation of the non-GAAP measures are set forth at the end of this earnings release.(2) Annualized calculations shown for quarterly periods presented.(3) Includes loans held for sale. Noninterest Income Discussion Noninterest income was $76.8 million for the three months ended December 31, 2024, a decrease of $3.3 million from $80.1 million for the three months ended September 30, 2024, and an increase of $12.1 million from $64.7 million for the three months ended December 31, 2023. The decrease in noninterest income for the quarter ended December 31, 2024 as compared to the quarter ended September 30, 2024 was primarily due to a decrease of $3.3 million in total BaaS income. The $3.3 million decrease in total BaaS income included an $8.0 million decrease in BaaS credit enhancements related to the provision for credit losses, partially offset by a a $3.0 million increase in BaaS fraud enhancements and an increase of $1.8 million in BaaS program income. The $1.8 million increase in BaaS program income is largely due to higher reimbursement of expenses as well as an increase in transaction fees and interchange fees, our primary BaaS source for recurring fee income, as well as higher reimbursement of expenses (see “Appendix B” for more information on the accounting for BaaS allowance for credit losses and credit and fraud enhancements). The $12.1 million increase in noninterest income over the quarter ended December 31, 2023 was primarily due to a $7.9 million increase in BaaS credit and fraud enhancements and an increase of $3.8 million in BaaS program income. Noninterest Expense DiscussionTotal noninterest expense decreased $1.4 million to $64.2 million for the three months ended December 31, 2024, compared to $65.6 million for the three months ended September 30, 2024, and increased $12.5 million from $51.7 million for the three months ended December 31, 2023. The decrease in noninterest expense for the quarter ended December 31, 2024, as compared to the quarter ended September 30, 2024, was primarily due to a $4.8 million decrease in BaaS expense from a $7.8 million decrease in BaaS loan expense, partially offset by a $3.0 million increase in BaaS fraud expense. 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. Other variances that partially offset the net decrease in noninterest expense include an increase of $1.4 million in point of sale expenses as a result of increased partner transaction activity, an increase of $893,000 in salaries and employee benefits and an increase of $1.0 million in legal and professional fees as part of our continued investments in technology and risk management. The increase in noninterest expenses for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023 was largely due to an increase of $4.8 million in BaaS partner expense primarily from a $4.3 million increase in BaaS fraud expense, a $549,000 increase in BaaS loan expense, a $2.0 million increase in legal and professional expenses, a $1.8 million increase in point of sale expenses, a $1.5 million increase in salary and employee benefits, and a $1.2 million increase in data processing and software licenses due to enhancements in technology. Certain noninterest expenses are reimbursed by our CCBX partners. In accordance with GAAP we recognize all expenses in noninterest expense and all 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  December 31, September 30, December 31,(dollars in thousands; unaudited) 2024 2024 2023Total noninterest expense (GAAP) $64,206 $65,616 $51,703Less: BaaS loan expense  24,859  32,612  24,310Less: BaaS fraud expense  5,043  2,084  779Less: Reimbursement of expenses (Baas)  3,468  1,843  1,076Noninterest expense, net of Baas loan expense, BaaS fraud expense and reimbursement of expenses (BaaS) (1) $30,836 $29,077 $25,538 (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 $3.8 million for the three months ended December 31, 2024, $2.9 million for the three months ended September 30, 2024 and $2.8 million for the fourth quarter of 2023.  The income tax provision was higher for the three months ended December 31, 2024 compared to the quarter ended September 30, 2024 as a result of the deductibility of certain equity awards which reduced tax expense during the quarter ended September 30, 2024 compared to the quarter ended December 31, 2024 despite net income being higher fairly even, and higher than the quarter ended December 31, 2023, 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 2.63% for calculating the provision for state income taxes. Financial Condition Overview Total assets increased $55.4 million, or 1.4%, to $4.12 billion at December 31, 2024 compared to $4.07 billion at September 30, 2024.  The increase is primarily due to stronger loan growth, partially offset by lower cash balances. Total loans receivable increased $67.7 million to $3.49 billion at December 31, 2024, from $3.42 billion at September 30, 2024. As of December 31, 2024, the Company had the capacity to borrow up to a total of $642.1 million from the Federal Reserve Bank discount window and Federal Home Loan Bank, and an additional $50.0 million from a correspondent bank. There were no borrowings outstanding on these lines as of December 31, 2024. The Company completed a $98.0 million capital raise during the quarter ended December 31, 2024. After contributing $50.0 million to the Bank, the Company had a cash balance of $47.7 million as of December 31, 2024, which is retained for general operating purposes, including debt repayment, and for funding $480,000 in commitments to bank technology investment funds.   Uninsured deposits were $543.0 million as of December 31, 2024, compared to $542.2 million as of September 30, 2024. Total shareholders’ equity as of December 31, 2024 increased $106.8 million since September 30, 2024.  The increase in shareholders’ equity was primarily due to an increase of $93.4 million in common stock outstanding as a result of the aforementioned capital raise and, to a lessor extent, equity awards exercised during the three months ended December 31, 2024 combined with $13.4 million in net earnings. The Company and the Bank remained well capitalized at December 31, 2024, 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) 10.64% 10.78% 5.00%Common Equity Tier 1 Capital (to risk-weighted assets) 11.99% 12.04% 6.50%Tier 1 Capital (to risk-weighted assets) 11.99% 12.14% 8.00%Total Capital (to risk-weighted assets) 13.28% 14.67% 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 $177.0 million and 5.08% of loans receivable at December 31, 2024 compared to $170.3 million and 4.98% at September 30, 2024 and $117.0 million and 3.86% at December 31, 2023. The allowance for credit loss allocated to the CCBX portfolio was $158.1 million and 9.86% of CCBX loans receivable at December 31, 2024, with $18.9 million of allowance for credit loss allocated to the community bank or 1.00% 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 December 31, 2024 As of September 30, 2024 As of December 31, 2023(dollars in thousands; unaudited) Community Bank CCBX Total Community Bank CCBX Total Community Bank CCBX TotalLoans receivable $1,882,988  $1,603,577  $3,486,565  $1,897,540  $1,521,292  $3,418,832  $1,830,154  $1,195,938  $3,026,092 Allowance for credit losses  (18,924)  (158,070)  (176,994)  (20,132)  (150,131)  (170,263)  (21,595)  (95,363)  (116,958)Allowance for credit losses to total loans receivable  1.00%  9.86%  5.08%  1.06%  9.87%  4.98%  1.18%  7.97%  3.86%                                      Net charge-offs totaled $55.9 million for the quarter ended December 31, 2024, compared to $49.2 million for the quarter ended September 30, 2024 and $44.9 million for the quarter ended December 31, 2023. Net charge-offs as a percent of average loans increased to 6.51% for the quarter ended December 31, 2024 compared to 5.65% for the quarter ended September 30, 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 $324.6 million loan portfolio. At December 31, 2024, our portion of this portfolio represented $20.6 million in loans. Net charge-offs for this $20.6 million in loans were $1.1 million for the three months ended December 31, 2024, compared to $1.1 million for the three months ended September 30, 2024 and $1.5 million for the three months ended December 31, 2023. The following table details net charge-offs for the community bank and CCBX for the period indicated:   Three Months Ended  December 31, 2024 September 30, 2024 December 31, 2023(dollars in thousands; unaudited) Community Bank CCBX Total Community Bank CCBX Total Community Bank CCBX TotalGross charge-offs $139  $61,446  $61,585  $398  $52,907  $53,305  $2  $47,650  $47,652 Gross recoveries  (3)  (5,643)  (5,646)  (3)  (4,066)  (4,069)  (4)  (2,777)  (2,781)Net charge-offs $136  $55,803  $55,939  $395  $48,841  $49,236  $(2) $44,873  $44,871 Net charge-offs to average loans (1)  0.03%  14.54%  6.51%  0.08%  12.52%  5.65%  0.00%  14.88%  5.92% (1) Annualized calculations shown for periods presented. During the quarter ended December 31, 2024, a $63.7 million provision for credit losses was recorded for CCBX partner loans, compared to the $72.1 million provision for credit losses was recorded for CCBX partner loans for the quarter ended September 30, 2024, the provision was based on management's analysis, bringing the CCBX allowance for credit losses to $158.1 million at December 31, 2024 compared to $150.1 million at September 30, 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 recapture of $1.1 million and was needed for the quarter ended December 31, 2024 compared to a provision recapture of $519,000 and provision of $277,000 for the quarters ended September 30, 2024 and December 31, 2023, respectively. The recapture in the current period was due to the decrease in the community bank loan portfolio combined with an improvement in the forward look, which is driven by the future projected unemployment and GDP curves, which flattened since last quarter, lessening the impact of this factor. 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) December 31,2024 September 30,2024 December 31,2023Community bank $(1,071) $(519) $277CCBX  63,741   72,104   60,467Total provision expense $62,670  $71,585  $60,744 A recapture for unfunded commitments of $803,000 was recorded for the quarter ended December 31, 2024 as a result of a decrease in the overall available balance combined with an improvement in the reserve rates. At December 31, 2024, our nonperforming assets were $62.7 million, or 1.52%, of total assets, compared to $66.4 million, or 1.63%, of total assets, at September 30, 2024, and $53.8 million, or 1.43%, of total assets, at December 31, 2023. These ratios are impacted by nonperforming CCBX loans that are covered by CCBX partner credit enhancements. As of December 31, 2024, $60.8 million of the $62.6 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements described above. Nonperforming assets decreased $3.7 million during the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024. This change is due to a decrease in CCBX and community bank nonaccrual loans. Community bank nonperforming loans decreased $1.0 million from September 30, 2024 to $100,000 as of December 31, 2024, and CCBX nonperforming loans decreased $2.7 million to $62.6 million from September 30, 2024. The decrease in CCBX nonperforming loans is due to an decrease of $570,000 in nonaccrual loans from September 30, 2024 to $19.5 million. Some CCBX partners have a collection practice that places certain loans on nonaccrual status to improve collectability. $17.2 million of these loans are less than 90 days past due as of December 31, 2024. Additionally, there was a $2.2 million decrease in CCBX loans that are past due 90 days or more and still accruing interest. 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 December 31, 2024. Our nonperforming loans to loans receivable ratio was 1.80% at December 31, 2024, compared to 1.94% at September 30, 2024, and 1.78% at December 31, 2023. For the quarter ended December 31, 2024, there were $136,000 community bank net charge-offs and $55.8 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)December 31,2024 September 30,2024 December 31,2023Nonaccrual loans:     Commercial and industrial loans$334  $531  $— Real estate loans:     Residential real estate —   44   170 Commercial real estate —   831   7,145 Consumer and other loans:     Credit cards 10,262   7,987   — Other consumer and other loans 8,967   11,713   — Total nonaccrual loans 19,563   21,106   7,315 Accruing loans past due 90 days or more:     Commercial & industrial loans 1,006   1,566   2,086 Real estate loans:     Residential real estate loans 2,608   3,025   1,115 Consumer and other loans:     Credit cards 34,490   34,562   34,835 Other consumer and other loans 4,989   6,111   8,488 Total accruing loans past due 90 days or more 43,093   45,264   46,524 Total nonperforming loans 62,656   66,370   53,839 Real estate owned —   —   — Repossessed assets —   —   — Total nonperforming assets$62,656  $66,370  $53,839 Total nonaccrual loans to loans receivable 0.56%  0.62%  0.24%Total nonperforming loans to loans receivable 1.80%  1.94%  1.78%Total nonperforming assets to total assets 1.52%  1.63%  1.43%             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)December 31,2024 September 30,2024 December 31,2023Nonaccrual loans:     Commercial and industrial loans:     All other commercial & industrial loans$234  $333  $— Consumer and other loans:     Credit cards 10,262   7,987   — Other consumer and other loans 8,967   11,713   — Total nonaccrual loans 19,463   20,033   — Accruing loans past due 90 days or more:     Commercial & industrial loans 1,006   1,566   2,086 Real estate loans:     Residential real estate loans 2,608   3,025   1,115 Consumer and other loans:     Credit cards 34,490   34,562   34,835 Other consumer and other loans 4,989   6,111   8,488 Total accruing loans past due 90 days or more 43,093   45,264   46,524 Total nonperforming loans 62,556   65,297   46,524 Other real estate owned —   —   — Repossessed assets —   —   — Total nonperforming assets$62,556  $65,297  $46,524 Total CCBX nonperforming assets to total consolidated assets 1.52%  1.61%  1.24% Community BankAs of(dollars in thousands; unaudited)December 31,2024 September 30,2024 December 31,2023Nonaccrual loans:     Commercial and industrial loans$100 $198  $— Real estate:     Residential real estate —  44   170 Commercial real estate —  831   7,145 Total nonaccrual loans 100  1,073   7,315 Accruing loans past due 90 days or more:     Total accruing loans past due 90 days or more —  —   — Total nonperforming loans 100  1,073   7,315 Other real estate owned —  —   — Repossessed assets —  —   — Total nonperforming assets$100 $1,073  $7,315 Total community bank nonperforming assets to total consolidated assets< 0.01%  0.03%  0.19%           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 $4.12 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 broker-dealers, 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 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 December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Cash and due from banks$36,533  $45,327  $59,995  $32,790  $31,345 Interest earning deposits with other banks 415,980   438,699   427,250   482,338   451,783 Investment securities, available for sale, at fair value 35   38   39   41   99,504 Investment securities, held to maturity, at amortized cost 47,286   48,582   49,174   50,049   50,860 Other investments 10,800   10,757   10,664   10,583   10,227 Loans held for sale 20,600   7,565   —   797   — Loans receivable 3,486,565   3,418,832   3,326,460   3,199,554   3,026,092 Allowance for credit losses (176,994)  (170,263)  (147,914)  (139,258)  (116,958)Total loans receivable, net 3,309,571   3,248,569   3,178,546   3,060,296   2,909,134 CCBX credit enhancement asset 181,890   167,251   143,485   137,276   107,921 CCBX receivable 14,138   16,060   11,520   10,369   9,088 Premises and equipment, net 27,431   25,833   24,526   22,995   22,090 Lease right-of-use assets 5,219   5,427   5,635   5,756   5,932 Accrued interest receivable 21,104   23,664   23,617   24,681   26,819 Bank-owned life insurance, net 13,375   13,255   13,132   12,991   12,870 Deferred tax asset, net 3,600   3,083   2,221   2,221   3,806 Other assets 13,646   11,711   11,742   12,075   11,987 Total assets$4,121,208  $4,065,821  $3,961,546  $3,865,258  $3,753,366           LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES         Deposits$3,585,332  $3,627,288  $3,543,432  $3,462,979  $3,360,363 Subordinated debt, net 44,293   44,256   44,219   44,181   44,144 Junior subordinated debentures, net 3,591   3,591   3,591   3,590   3,590 Deferred compensation 332   369   405   442   479 Accrued interest payable 962   1,070   999   1,061   892 Lease liabilities 5,398   5,609   5,821   5,946   6,124 CCBX payable 29,171   39,188   34,536   33,095   33,651 Other liabilities 13,425   12,520   11,850   10,255   9,145 Total liabilities 3,682,504   3,733,891   3,644,853   3,561,549   3,458,388 SHAREHOLDERS’ EQUITY         Common Stock 228,177   134,769   132,989   131,601   130,136 Retained earnings 210,529   197,162   183,706   172,110   165,311 Accumulated other comprehensive loss, net of tax (2)  (1)  (2)  (2)  (469)Total shareholders’ equity 438,704   331,930   316,693   303,709   294,978 Total liabilities and shareholders’ equity$4,121,208  $4,065,821  $3,961,546  $3,865,258  $3,753,366  COASTAL FINANCIAL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME(Dollars in thousands, except per share amounts; unaudited)  Three Months Ended December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023INTEREST AND DIVIDEND INCOME         Interest and fees on loans$89,714 $99,590 $90,944  $84,621  $81,159 Interest on interest earning deposits with other banks 6,021  4,781  5,683   4,780   5,687 Interest on investment securities 661  675  686   1,034   1,225 Dividends on other investments 191  33  174   37   172 Total interest income 96,587  105,079  97,487   90,472   88,243 INTEREST EXPENSE         Interest on deposits 29,404  32,083  30,578   28,867   27,916 Interest on borrowed funds 667  809  672   669   670 Total interest expense 30,071  32,892  31,250   29,536   28,586 Net interest income 66,516  72,187  66,237   60,936   59,657 PROVISION FOR CREDIT LOSSES 61,867  70,257  62,325   83,158   60,789 Net interest income/(expense) after provision for credit losses 4,649  1,930  3,912   (22,222)  (1,132)NONINTEREST INCOME         Service charges and fees 932  952  946   908   957 Loan referral fees —  —  —   168   — Unrealized gain (loss) on equity securities, net 1  2  9   15   80 Other income 473  486  257   308   60 Noninterest income, excluding BaaS program income and BaaS indemnification income 1,406  1,440  1,212   1,399   1,097 Servicing and other BaaS fees 1,043  1,044  1,525   1,131   1,015 Transaction fees 1,783  1,696  1,309   1,122   1,006 Interchange fees 1,916  1,853  1,625   1,539   1,272 Reimbursement of expenses 3,468  1,843  1,637   1,033   1,076 BaaS program income 8,210  6,436  6,096   4,825   4,369 BaaS credit enhancements 62,097  70,108  60,826   79,808   58,449 BaaS fraud enhancements 5,043  2,084  1,784   923   779 BaaS indemnification income 67,140  72,192  62,610   80,731   59,228 Total noninterest income 76,756  80,068  69,918   86,955   64,694 NONINTEREST EXPENSE         Salaries and employee benefits 17,994  17,101  17,005   17,984   16,490 Occupancy 958  964  985   1,029   976 Data processing and software licenses 4,010  4,297  3,625   3,381   2,781 Legal and professional expenses 4,606  3,597  3,631   3,672   2,649 Point of sale expense 2,745  1,351  852   869   899 Excise taxes 778  762  (706)  320   449 Federal Deposit Insurance Corporation ("FDIC") assessments 750  740  690   683   665 Director and staff expenses 683  559  470   400   478 Marketing 28  67  14   53   138 Other expense 1,752  1,482  1,383   1,867   1,089 Noninterest expense, excluding BaaS loan and BaaS fraud expense 34,304  30,920  27,949   30,258   26,614 BaaS loan expense 24,859  32,612  29,076   24,837   24,310 BaaS fraud expense 5,043  2,084  1,784   923   779 BaaS loan and fraud expense 29,902  34,696  30,860   25,760   25,089 Total noninterest expense 64,206  65,616  58,809   56,018   51,703 Income before provision for income taxes 17,199  16,382  15,021   8,715   11,859 PROVISION FOR INCOME TAXES 3,832  2,926  3,425   1,915   2,847 NET INCOME$13,367 $13,456 $11,596  $6,800  $9,012 Basic earnings per common share$0.97 $1.00 $0.86  $0.51  $0.68 Diluted earnings per common share$0.94 $0.97 $0.84  $0.50  $0.66 Weighted average number of common shares outstanding:         Basic 13,828,605  13,447,066  13,412,667   13,340,997   13,286,828 Diluted 14,268,229  13,822,270  13,736,508   13,676,917   13,676,513  COASTAL FINANCIAL CORPORATIONAVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY(Dollars in thousands; unaudited)  For the Three Months Ended December 31, 2024 September 30, 2024 December 31, 2023 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$501,654  $6,021 4.77% $350,915  $4,781 5.42% $413,127  $5,687 5.46%Investment securities, available for sale (2) 39   — —   40   — —   100,204   546 2.16 Investment securities, held to maturity (2) 48,126   661 5.46   48,945   675 5.49   49,469   679 5.45 Other investments 10,783   191 7.05   11,140   33 1.18   11,683   172 5.84 Loans receivable (3) 3,419,476   89,714 10.44   3,464,871   99,590 11.43   3,007,289   81,159 10.71 Total interest earning assets 3,980,078   96,587 9.65   3,875,911   105,079 10.79   3,581,772   88,243 9.77 Noninterest earning assets:                 Allowance for credit losses (156,687)      (151,292)      (95,391)    Other noninterest earning assets 277,922       268,903       204,052     Total assets$4,101,313      $3,993,522      $3,690,433                       Liabilities and Shareholders’ Equity                 Interest bearing liabilities:                 Interest bearing deposits$3,068,357  $29,404 3.81% $2,966,527  $32,083 4.30% $2,660,235  $27,916 4.16%FHLB advances and other borrowings —   1 —   9,717   140 5.73   3   — — Subordinated debt 44,272   599 5.38   44,234   598 5.38   44,121   598 5.38 Junior subordinated debentures 3,591   67 7.42   3,591   71 7.87   3,590   72 7.96 Total interest bearing liabilities 3,116,220   30,071 3.84   3,024,069   32,892 4.33   2,707,949   28,586 4.19 Noninterest bearing deposits 577,453       588,178       640,424     Other liabilities 50,824       60,101       52,450     Total shareholders' equity 356,816       321,174       289,612     Total liabilities and shareholders' equity$4,101,313      $3,993,522      $3,690,435     Net interest income  $66,516     $72,187     $59,657  Interest rate spread    5.82%     6.46%     5.59%Net interest margin (4)    6.65%     7.41%     6.61% (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 December 31, 2024 September 30, 2024 December 31, 2023(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)$1,892,298 $31,043 6.53% $1,912,428 $31,898 6.64% $1,811,152 $28,832 6.32%Total interest earning assets 1,892,298  31,043 6.53   1,912,428  31,898 6.64   1,811,152  28,832 6.32 Liabilities                 Interest bearing liabilities:                Interest bearing deposits 1,029,346  7,161 2.77%  982,280  7,264 2.94%  951,148  6,090 2.54%Intrabank liability 357,442  4,290 4.77   406,641  5,540 5.42   275,995  3,799 5.46 Total interest bearing liabilities 1,386,788  11,451 3.28   1,388,921  12,804 3.67   1,227,143  9,889 3.20 Noninterest bearing deposits 505,510      523,507      584,009    Net interest income  $19,592     $19,094     $18,943  Net interest margin(3)    4.12%     3.97%     4.15%                  CCBX                 Assets                 Interest earning assets:                 Loans receivable (2)(4)$1,527,178 $58,671 15.28% $1,552,443 $67,692 17.35% $1,196,137 $52,327 17.36%Intrabank asset 583,776  7,007 4.78   496,475  6,764 5.42   569,365  7,837 5.46 Total interest earning assets 2,110,954  65,678 12.38   2,048,918  74,456 14.46   1,765,502  60,164 13.52 Liabilities                 Interest bearing liabilities:              Interest bearing deposits 2,039,011  22,243 4.34%  1,984,247  24,819 4.98%  1,709,087  21,826 5.07%Total interest bearing liabilities 2,039,011  22,243 4.34   1,984,247  24,819 4.98   1,709,087  21,826 5.07 Noninterest bearing deposits 71,943      64,671      56,415    Net interest income  $43,435     $49,637     $38,338  Net interest margin(3)    8.19%     9.64%     8.62%Net interest margin, net of Baas loan expense (5)    3.50%     3.31%     3.15%  For the Three Months Ended December 31, 2024 September 30, 2024 December 31, 2023(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$501,654 $6,021 4.77% $350,915 $4,781 5.42% $413,127 $5,687 5.46%Investment securities, available for sale (6) 39  — —   40  — —   100,204  546 2.16 Investment securities, held to maturity (6) 48,126  661 5.46   48,945  675 5.49   49,469  679 5.45 Other investments 10,783  191 7.05   11,140  33 1.18   11,683  172 5.84 Total interest earning assets 560,602  6,873 4.88%  411,040— 5,489 5.31%  574,483  7,084 4.89%Liabilities                 Interest bearing liabilities:                 FHLB advances and borrowings$— $1 —%  9,717  140 5.73%  3  — —%Subordinated debt 44,272  599 5.38%  44,234  598 5.38%  44,121  598 5.38%Junior subordinated debentures 3,591  67 7.42   3,591  71 7.87   3,590  72 7.96 Intrabank liability, net (7) 226,334  2,717 4.78   89,834  1,224 5.42   293,370  4,038 5.46 Total interest bearing liabilities 274,197  3,384 4.91   147,376  2,033 5.49   341,084  4,708 5.48 Net interest income  $3,489     $3,456     $2,376  Net interest margin(3)    2.48%     3.34%     1.64% (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 As of and for the Twelve Months Ended(dollars in thousands; unaudited) December 312024 September 302024 December 312023December 312024 December 312023Net BaaS loan income divided by average CCBX loans:   CCBX loan yield (GAAP)(1)  15.28%  17.35%  17.36% 16.89%  16.89%Total average CCBX loans receivable $1,527,178  $1,552,443  $1,196,137 $1,427,571  $1,210,413 Interest and earned fee income on CCBX loans (GAAP)  58,671   67,692   52,327  241,134   204,458 BaaS loan expense  (24,859)  (32,612)  (24,310) (111,384)  (86,900)Net BaaS loan income $33,812  $35,080  $28,017 $129,750  $117,558 Net BaaS loan income divided by average CCBX loans (1)  8.81%  8.99%  9.30% 9.09%  9.71%CCBX net interest margin, net of BaaS loan expense:       CCBX net interest margin (1)  8.19%  9.64%  8.62% 8.87%  9.65%CCBX earning assets  2,110,954   2,048,918   1,765,502  1,999,695   1,574,334 Net interest income (GAAP)  43,435   49,637   38,338  177,320   151,883 Less: BaaS loan expense  (24,859)  (32,612)  (24,310) (111,384)  (86,900)Net interest income, net of BaaS loan expense $18,576  $17,025  $14,028 $65,936  $64,983 CCBX net interest margin, net of BaaS loan expense (1)  3.50%  3.31%  3.15% 3.30%  4.13% Consolidated As of and for the Three Months EndedAs of and for the Twelve Months Ended(dollars in thousands; unaudited) December 312024 September 302024 December 312023December 312024 December 312023Net interest margin, net of BaaS loan expense:       Net interest margin (1)  6.65%  7.41%  6.61% 6.99%  7.10%Earning assets  3,980,078   3,875,911   3,581,772  3,802,275   3,364,406 Net interest income (GAAP)  66,516   72,187   59,657  265,876   238,727 Less: BaaS loan expense  (24,859)  (32,612)  (24,310) (111,384)  (86,900)Net interest income, net of BaaS loan expense $41,657  $39,575  $35,347 $154,492  $151,827 Net interest margin, net of BaaS loan expense (1)  4.16%  4.06%  3.92% 4.06%  4.51%Loan income net of BaaS loan expense divided by average loans:     Loan yield (GAAP)(1)  10.44%  11.43%  10.71% 10.99%  10.60%Total average loans receivable $3,419,476  $3,464,871  $3,007,289 $3,320,582  $2,936,908 Interest and earned fee income on loans (GAAP)  89,714   99,590   81,159  364,869   311,441 BaaS loan expense  (24,859)  (32,612)  (24,310) (111,384)  (86,900)Net loan income $64,855  $66,978  $56,849 $253,485  $224,541 Loan income, net of BaaS loan expense, divided by average loans (1)  7.55%  7.69%  7.50% 7.63%  7.65% (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. The most comparable GAAP measure is noninterest expense.   As of and for the Three Months Ended(dollars in thousands, unaudited) December 31,2024 September 30,2024 December 31,2023Noninterest expense, net of reimbursement of expenses (BaaS)Noninterest expense (GAAP) $64,206 $65,616 $51,703Less: BaaS loan expense  24,859  32,612  24,310Less: BaaS fraud expense  5,043  2,084  779Less: Reimbursement of expenses  3,468  1,843  1,076Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses $30,836 $29,077 $25,538 APPENDIX A - As of December 31, 2024 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 $3.49 billion in outstanding loan balances. When combined with $1.96 billion in unused commitments the total of these categories is $5.46 billion. Commercial real estate loans represent the largest segment of our loans, comprising 39.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $34.2 million, and the combined total in commercial real estate loans represents $1.41 billion, or 25.8% 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 December 31, 2024: (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 $405,561 $4,953 $410,514 7.5% $3,937 103Hotel/Motel  154,691  68  154,759 2.8   6,726 23Convenience Store  139,735  575  140,310 2.6   2,329 60Office  122,897  7,687  130,584 2.4   1,366 90Retail  103,312  414  103,726 1.9   993 104Warehouse  103,130  —  103,130 1.9   1,748 59Mixed use  91,607  5,365  96,972 1.8   1,160 79Mini Storage  80,837  10,183  91,020 1.7   3,674 22Strip Mall  43,894  —  43,894 0.8   6,271 7Manufacturing  37,617  1,200  38,817 0.7   1,297 29Groups < 0.70% of total  91,520  3,777  95,297 1.7   1,173 78Total $1,374,801 $34,222 $1,409,023 25.8% $2,102 654                   Consumer loans comprise 34.6% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $735.8 million, and the combined total in consumer and other loans represents $1.94 billion, or 35.6% 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 December 31, 2024: (dollars in thousands; unaudited) Outstanding Balance Available Loan Commitments (1) Total OutstandingBalance & Available Commitment (1) % of Total Loans(Outstanding Balance &Available Commitment) Average Loan Balance Number of LoansCCBX consumer loansCredit cards $528,554 $717,198 $1,245,752 22.8% $1.8 301,799Installment loans  656,797  15,806  672,603 12.3   1.0 690,596Lines of credit  722  1  723 0.0   1.4 524Other loans  7,261  —  7,261 0.1   — 163,026Community bank consumer loansInstallment loans  1,917  2  1,919 0.1   68.5 28Lines of credit  181  344  525 0.0   5.7 32Other loans  11,444  2,400  13,844 0.3   30.6 374Total $1,206,876 $735,751 $1,942,627 35.6% $1.0 1,156,379 (1)  Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. Residential real estate loans comprise 13.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $499.5 million, and the combined total in residential real estate loans represents $969.3 million, or 17.8% 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 December 31, 2024: (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 $267,707 $453,369 $721,076 13.2% $27 10,092Community bank residential real estate loansClosed end, secured by first liens  165,433  2,080  167,513 3.1   537 308Home equity line of credit  25,506  43,102  68,608 1.3   109 234Closed end, second liens  11,125  965  12,090 0.2   371 30Total $469,771 $499,516 $969,287 17.8% $44 10,664 (1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. Commercial and industrial loans comprise 8.4% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $645.5 million, and the combined total in commercial and industrial loans represents $938.9 million, or 17.2% of our total outstanding loans and loan commitments. Included in commercial and industrial loans is $109.0 million in outstanding capital call lines, with an additional $550.9 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 December 31, 2024: (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 LoansConsolidated C&I loansCapital Call Lines $109,017 $550,948 $659,965 12.1% $808 135Construction/Contractor Services  24,367  36,343  60,710 1.1   121 202Financial Institutions  48,648  —  48,648 0.9   4,054 12Retail  28,533  5,664  34,197 0.6   14 2,052Manufacturing  5,604  4,581  10,185 0.2   147 38Medical / Dental / Other Care  7,074  2,641  9,715 0.2   544 13Groups < 0.20% of total  70,130  45,360  115,490 2.1   55 1,275Total $293,373 $645,537 $938,910 17.2% $79 3,727 (1)  Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. Construction, land and land development loans comprise 4.2% of our total balance of outstanding loans as of December 31, 2024. Unused commitments to extend credit represents an additional $47.8 million, and the combined total in construction, land and land development loans represents $196.0 million, or 3.6% 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 December 31, 2024: (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 LoansCommercial construction $83,216 $30,500 $113,716 2.1% $6,935 12Residential construction  40,940  10,873  51,813 0.9   2,408 17Developed land loans  8,305  456  8,761 0.2   489 17Undeveloped land loans  8,665  4,816  13,481 0.2   619 14Land development  7,072  1,157  8,229 0.2   643 11Total $148,198 $47,802 $196,000 3.6% $2,087 71                   Exposure and risk in our construction, land and land development portfolio is declining compared to previous periods as indicated in the following table:   Outstanding Balance as of(dollars in thousands; unaudited) December 31,2024 September 30,2024 June 30,2024 March 31,2024 December 31,2023Commercial construction $83,216 $97,792 $110,372 $102,099 $81,489Residential construction  40,940  35,822  34,652  28,751  34,213Undeveloped land loans  8,665  8,606  8,372  8,190  7,890Developed land loans  8,305  14,863  13,954  14,307  20,515Land development  7,072  5,968  5,714  7,515  12,993Total $148,198 $163,051 $173,064 $160,862 $157,100                 Commitments to extend credit total $1.96 billion at December 31, 2024,   however we do not anticipate our customers using the $1.96 billion that is showing as available due to CCBX partner and portfolio limits. The following table presents outstanding commitments to extend credit as of December 31, 2024: Consolidated  (dollars in thousands; unaudited) As of December 31, 2024Commitments to extend credit:  Commercial and industrial loans $94,589Commercial and industrial loans - capital call lines  550,948Construction – commercial real estate loans  36,873Construction – residential real estate loans  10,929Residential real estate loans  499,516Commercial real estate loans  34,222Credit cards  717,198Consumer and other loans  18,553Total commitments to extend credit $1,962,828     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 December 31, 2024, capital call lines outstanding balance totaled $109.0 million, and while commitments totaled $550.9 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 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 $109,017  6.8%$550,948 $350,000$—All other commercial & industrial loans  33,961  2.1  19,104  480,000 834Real estate loans:        Home equity lines of credit (3)  267,707  16.7  453,369  375,000 36,241Consumer and other loans:      Credit cards - cash secured  211    —   —Credit cards - unsecured  528,343    717,198   26,742Credit cards - total  528,554  33.0  717,198  807,484 26,742Installment loans - cash secured  127,014    15,806   —Installment loans - unsecured  529,783    —   5,332Installment loans - total  656,797  40.9  15,806  1,787,118 5,332Other consumer and other loans  7,983  0.5  1  5,398 196Gross CCBX loans receivable  1,604,019  100.0% 1,756,426  3,805,000$69,345Net deferred origination fees  (442)      Loans receivable $1,603,577        (1) Remaining commitment available, net of outstanding balance.(2) Balances are as of January 8, 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 December 31, 2024 CCBX – BaaS Reporting Information During the quarter ended December 31, 2024, $62.1 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 noncredit fraud losses on loans and deposits originated through partners. 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 & 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) December 31,2024 September 30,2024 December 31,2023Yield on loans (1)  15.28%  17.35%  17.36%BaaS loan interest income $58,671  $67,692  $52,327 Less: BaaS loan expense  24,859   32,612   24,310 Net BaaS loan income (2) $33,812  $35,080  $28,017 Net BaaS loan income divided by average BaaS loans (1)(2)  8.81%  8.99%  9.30% (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. A decrease in average CCBX loans receivable resulted in decreased interest income on CCBX loans during the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024. The decrease in average CCBX loans receivable was primarily due to loan sales in the CCBX loan portfolio as part of our strategy to optimize the CCBX loan portfolio and strengthen our balance sheet through originating higher quality new loans and enhanced credit standards. These higher quality loans also have lower stated rates and expected losses. As a result, our yield on loans and our BaaS loan expense decrease by similar amounts. We continue to reposition ourselves by managing CCBX credit and concentration levels in an effort to optimize our loan portfolio and 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 December 31, 2024 compared to the quarter ended December 31, 2023. 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) December 31,2024 September 30,2024 December 31,2023Loan interest income $58,671 $67,692 $52,327Total BaaS interest income $58,671 $67,692 $52,327 Interest expense Three Months Ended(dollars in thousands; unaudited) December 31,2024 September 30,2024 December 31,2023BaaS interest expense $22,243 $24,819 $21,826Total BaaS interest expense $22,243 $24,819 $21,826 BaaS income Three Months Ended(dollars in thousands; unaudited) December 31,2024 September 30,2024 December 31,2023BaaS program income:      Servicing and other BaaS fees $1,043 $1,044 $1,015Transaction fees  1,783  1,696  1,006Interchange fees  1,916  1,853  1,272Reimbursement of expenses  3,468  1,843  1,076BaaS program income  8,210  6,436  4,369BaaS indemnification income:      BaaS credit enhancements  62,097  70,108  58,449BaaS fraud enhancements  5,043  2,084  779BaaS indemnification income  67,140  72,192  59,228Total noninterest BaaS income $75,350 $78,628 $63,597 Servicing and other BaaS fees decreased $1,000 in the quarter ended December 31, 2024 compared to the quarter ended September 30, 2024 while transaction fees and interchange fees increased $87,000 and $63,000, respectively. We expect servicing and other BaaS fees to decrease and transaction and interchange fees to increase as partner activity grows and contracted minimum fees are replaced with recurring fees and then exceed those 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) December 31,2024 September 30,2024 December 31,2023BaaS loan expense $24,859 $32,612 $24,310BaaS fraud expense  5,043  2,084  779Total BaaS loan and fraud expense $29,902 $34,696 $25,089 A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/20c5a089-a44b-483e-acb5-fccbbe07fc10

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