Earnings release
Page 1
NEWS RELEASE Coastal Financial Corporation Announces Third Quarter 2026Results 2026-10-29 Coastal Financial Corporation Reports Strong Third Quarter 2026 Earnings Driven by CCBX Program Growth EVERETT, Wash., Oct. 29, 2026 (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 nancial results for the quarter ended September 30, 2026, including net income of $13.8 million, or $0.89 per diluted common share, compared to net loss of $(42.1) million, or $(2.76) per diluted common share, for the three months ended June 30, 2026 and $13.6 million, or $0.88 per diluted common share, for the three months ended September 30, 2025. Management Discussion of the Third Quarter Results “The third quarter better re ects the underlying earnings power of Coastal’s business, following a challenging second quarter for our shareholders. During the quarter we updated our assessment of the a ected relationship, including loan portfolio performance, expected credit losses and our assessment of the collectability of amounts due under the partner's indemni cation arrangement. The results of that review substantially supported the estimates established at June 30, 2026. I am pleased with the momentum we saw across the segments,” said Eric Sprink, Chief Executive O cer of Coastal. “Beyond this relationship, we returned to pro tability with net income of $13.8 million and diluted earnings per share of $0.89, and our ROA was 1.01%. BaaS program fee income grew to $14.1 million, up $2.1 million, or 17.6%, from second quarter, and $6.3 million, or 79.6%, from the same quarter last year, re ecting the strength and stability of our broader partner portfolio. Our o -balance sheet credit card accounts now stand at 1.3 million, which is approximately 236% more than where we ended the third quarter of 2025, and eight of our active partner programs are in various stages of expanding into additional products. On the community bank side, deposits grew $63.2 million, or 4.0%, to $1.64 billion in the quarter, at a cost of deposits of just 1.54%. “We ended the quarter well capitalized, with strong cash reserves and a strong pipeline. I believe the fundamentals of this business remain strong, with solid fee income growth, robust partner activity and continued capital strength, and that we are well-positioned to continue executing on our long-term strategy.” 1
Page 2
Key Points for Third Quarter CCBX Growth, Partner and Product Diversi cation. As of September 30, 2026 we had one partner in testing, two in implementation/onboarding, and three signed letters of intent (LOIs). Our active pipeline positions us for continued growth, with new partnership opportunities and product launches expected for the remainder of 2026. Total BaaS program fee income was $14.1 million for the three months ended September 30, 2026, an increase of $2.1 million, or 17.6%, from the three months ended June 30, 2026. As previously announced, one of our partners, Bluevine, Inc. ("Bluevine") has entered into a de nitive agreement to be acquired by Valley National Bancorp ("Valley"), subject to regulatory and other customary approvals. Valley has indicated it expects the transaction to close in the second quarter of 2027, at which time the Bluevine relationship is expected to terminate, with associated deposits anticipated to transition out. At September 30, 2026, the Bank held $452.4 million in Bluevine deposits on its balance sheet and swept $1.85 billion o -balance sheet to other banks. The Bank held $3.0 million in Bluevine originated loans at quarter-end. Separately, the Bank held a $6.8 million commercial loan to Bluevine at quarter-end. Bluevine is part of a broader, diversi ed CCBX deposit platform. Coastal expects to replace related on-balance sheet funding through its existing sweep capabilities and other funding sources and does not expect a material adverse e ect on liquidity or funding as a result of the anticipated termination of the Bluevine relationship. Partner Credit Performance Stabilizing. Following the $22.8 million speci c provision for credit losses and $46.0 million credit enhancement asset valuation adjustment recorded in the second quarter of 2026 related to one partner ("The Partner"), we updated our assessment of the loan portfolio performance, expected credit losses and the collectability of amounts due under the indemni cation arrangement as of September 30, 2026. Overall, the loan portfolio performance remained generally consistent with the expectations underlying the June 30 assessment, although actual charge-o s were modestly higher than previously projected. Additional provision expense recognized during the third quarter was driven in part by these higher charge-o s, as well as new loan originations and normal updates to assumptions used in the Company's allowance for credit losses methodology. Based on management's assessment as of September 30, 2026, projected cash ows under the Partner's program agreement continued to support our accounting treatment to record substantially all of the corresponding incremental credit enhancement amounts. Approximately $3.1 million of additional provision expense was not o set by credit enhancement income because collection of that portion was not considered probable. The $22.8 million speci c allowance remained unchanged, while the valuation allowance against the credit enhancement asset decreased modestly to $45.6 million from $46.0 million at June 30, 2026. Taken together, the results of management's updated assessment substantially supported the loss estimates established in the second quarter. Management continues to closely monitor the Partner's credit performance and its ability to satisfy its contractual obligations and will update its estimates as additional information becomes available. Positive On- and O -Balance Sheet Trends Continue. At September 30, 2026 we swept o -balance sheet $6.29 billion 2
Page 3
in deposits for Federal Deposit Insurance Corporation ("FDIC") insurance and liquidity purposes, and generated $1.4 million in noninterest income during the quarter ended September 30, 2026, an increase of $193,000, or 16.4%, from $1.2 million for the quarter ended June 30, 2026 and an increase of $1.1 million, or 340.5%, from $311,000 for the quarter ended September 30, 2025. During the third quarter of 2026, we sold $5.99 billion of loans, including $4.69 billion of additional credit card receivables originated through ongoing cardholder spend and revolving activity and sold under existing forward ow arrangements, compared to $4.56 billion of sold loans in the quarter ended June 30, 2026, including $3.68 billion sold under the same forward ow arrangements. As of September 30, 2026 there were 1.3 million o -balance sheet credit cards with fee earning potential, an increase of 452,984, or 51.38%, compared to the quarter ended June 30, 2026 and an increase of 937,831, or 236.34%, from September 30, 2025. Nonperforming assets decreased $14.7 million quarter over quarter driven by improvements across both the community bank and CCBX portfolios. The decline in CCBX nonperforming assets is consistent with the stabilization in partner credit performance and net charge-o s trending down during the quarter. Noninterest Expense Declined Signi cantly Quarter Over Quarter. Total noninterest expense decreased $56.3 million to $84.8 million in the third quarter of 2026 from $141.1 million in the second quarter. The decline primarily re ected the absence of the second quarter’s $46.0 million credit enhancement receivable valuation adjustment related to The Partner, a $5.9 million reduction in data processing and software license expenses, re ecting the absence of $4.4 million in second-quarter accelerated depreciation and lower current-quarter amortization, a $4.7 million reduction in BaaS loan expense and a $1.6 million reduction in salaries and employee bene ts, comprised of $1.3 million in lower salaries and $290,000 in lower severance expense. These reductions were partially o set by a $1.6 million increase in legal and professional fees, partly related to The Partner, and a $440,000 increase in FDIC deposit insurance assessments. The latter re ected a second-quarter assessment true-up and a higher assessment rate e ective in the third quarter of 2026, partly attributable to the second-quarter net loss’s e ect on the FDIC assessment rate calculation. Separately, noninterest income was reduced by $477,000 in unrealized gain on equity securities, re ecting a $565,000 downward valuation adjustment on a strategic equity investment. Expense Discipline and Stronger Operating Leverage: Coastal prioritizes operational e ciency and greater operating leverage. After investing signi cantly in people, technology and risk infrastructure to build a scaled, regulated platform, the Company is shifting its focus to achieving more consistent pro tability. Management is actively managing operating expenses and has launched targeted initiatives to lower noninterest expense, with further progress expected as technology modernization matures and operational e ciencies materialize. These e orts include reviewing vendors, contractors and discretionary spending; eliminating duplication; replacing legacy systems with more e cient technology; and applying clear risk-adjusted return standards to every partner program and product. The Company is also using AI to improve employee e ectiveness and productivity and reduce future costs. We have identi ed up to $20.0 million in potential annualized savings in noninterest expenses and expect to gradually 3
Page 4
achieve these potential savings over the next 4–6 quarters. These expenses exclude BaaS loan and fraud expenses, which are generally reimbursed by our CCBX partners and recognized in noninterest income in accordance with GAAP. Lastly, and as part of the expense discipline discussed above, Eric Sprink, in his role as Chief Executive O cer, voluntarily agreed to a nearly 43% reduction in his Base Salary from $874,000 to $500,000 e ective immediately. Leadership Updates: As previously announced, Joel Edwards, who served as Coastal’s Chief Financial O cer until his retirement in 2025, returned as interim Chief Financial O cer following the departure of Brandon Soto in August 2026. The Company's search for a permanent Chief Financial O cer is ongoing and in its nal stages. In addition, Brian Hamilton has stepped down as President of Coastal, having led the modernization of CCBX's technology platform, including integral investments in CCBX’s infrastructure that have positioned the business for its next phase. Mr. Hamilton will remain on the Company's Board of Directors and as an advisor to the Company to support continuity across CCBX. Capital and Liquidity The Company and the Bank remained well capitalized at September 30, 2026, with a Company common equity Tier 1 ratio of 11.47%, a Tier 1 leverage ratio of 8.81%, and a total risk-based capital ratio of 13.82%, each above the levels required to be considered well capitalized. The Company retained $803.6 million of cash and cash equivalents and $827.4 million of additional contingent borrowing capacity, with no borrowings outstanding as of September 30, 2026. The Company’s capital e cient model, including ongoing loan sales and o -balance sheet deposit and card programs, continues to support internal capital generation. Third Quarter 2026 Financial Highlights The tables below outline some of our key operating metrics. Three Months Ended(Dollars in thousands, except share and pershare data; unaudited)September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025Income Statement Data: Interest and dividend income$ 121,183 $ 118,554 $ 111,681 $ 107,886 $ 109,027 Interest expense 32,897 29,187 28,324 28,521 31,126 Net interest income 88,286 89,367 83,357 79,365 77,901 Provision for credit losses 46,019 92,157 51,398 48,041 56,598 Net interest income (loss) after provisionfor credit losses 42,267 (2,790) 31,959 31,324 21,303 Noninterest income 61,040 88,707 66,077 58,661 66,777 Noninterest expense 84,843 141,111 83,452 72,804 70,172 Provision (bene t) for income tax 4,676 (13,089) 2,565 4,538 4,316 Net income (loss)$ 13,788 $ (42,105) $ 12,019 $ 12,643 $ 13,592 As of and for the Three Month Period September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025Balance Sheet Data: Cash and cash equivalents$ 803,551 $1,008,448 $1,495,467 $ 736,970 $ 642,258 Investment securities 44,720 45,246 46,169 48,247 43,942 L hldf l 140337107838124039 71216 42894 4
Page 5
Loans held for sale 140,337 107,838 124,039 71,216 42,894 Loans receivable 4,185,529 4,208,270 3,859,379 3,749,531 3,703,848 Allowance for credit losses (208,104) (213,724) (172,427) (169,530) (173,813)Total assets 5,276,427 5,456,152 5,663,829 4,741,437 4,553,076 Interest bearing deposits 4,047,804 4,249,420 4,462,003 3,564,583 3,408,160 Noninterest bearing deposits 631,027 612,478 579,161 579,616 564,403 Core deposits(1) 4,669,114 4,850,783 5,028,967 4,131,911 3,959,360 Total deposits 4,678,831 4,861,898 5,041,164 4,144,199 3,972,563 Total borrowings 48,150 48,112 48,074 48,036 47,999 Total shareholders’ equity$ 478,267 $ 463,447 $ 503,762 $ 490,959 $ 475,277 Share and Per Share Data(2): Earnings (loss) per share – basic$ 0.90 $ (2.76) $ 0.79 $ 0.84 $ 0.90 Earnings (loss) per share – diluted$ 0.89 $ (2.76) $ 0.78 $ 0.82 $ 0.88 Dividends per share — — — — — Book value per share(3) $ 31.28 $ 30.33 $ 33.05 $ 32.43 $ 31.45 Tangible book value per share(4) $ 31.02 $ 30.05 $ 32.76 $ 32.13 $ 31.45 Weighted avg outstanding shares – basic 15,256,873 15,243,357 15,179,447 15,116,005 15,093,274 Weighted avg outstanding shares – diluted 15,417,178 15,243,357 15,422,822 15,455,856 15,443,987 Shares outstanding at end of period 15,288,479 15,280,689 15,241,491 15,140,192 15,112,000 Stock options outstanding at end of period 63,890 65,835 68,585 118,881 122,206 As of and for the Three Month Period September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025Credit Quality Data: Nonperforming assets(5)to total assets 1.15% 1.38% 1.19% 1.35% 1.31% Nonperforming assets(5)to loansreceivable and OREO 1.44% 1.79% 1.75% 1.71% 1.61% Nonperforming loans(5)to total loansreceivable 1.44% 1.79% 1.75% 1.71% 1.61%Allowance for credit losses tononperforming loans 344.2% 284.2% 259.3% 264.4% 290.8%Allowance for credit losses to total loansreceivable 4.97% 5.08% 4.47% 4.52% 4.69%Gross charge-o s$ 57,794 $ 58,218 $ 54,523 $ 55,189 $ 54,534 Gross recoveries$ 7,877 $ 7,583 $ 4,936 $ 5,114 $ 5,289 Net charge-o s to average loans(6) 4.43% 4.90% 5.13% 5.31% 5.37% Capital Ratios: Company Tier 1 leverage capital 8.81% 9.11% 10.09% 10.62% 10.54%Common equity Tier 1 risk-based capital 11.47% 10.86% 12.08% 12.43% 12.33%Tier 1 risk-based capital 11.56% 10.94% 12.17% 12.52% 12.42%Total risk-based capital 13.82% 13.30% 14.54% 14.95% 14.88%Bank Tier 1 leverage capital 9.30% 9.12% 10.10% 10.60% 10.49%Common equity Tier 1 risk-based capital 12.22% 10.97% 12.19% 12.50% 12.37%Tier 1 risk-based capital 12.22% 10.97% 12.19% 12.50% 12.37%Total risk-based capital 13.52% 12.27% 13.48% 13.79% 13.66% (1) Core deposits are de ned 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 5
Page 6
outstanding number of our common shares at the end of each period. (4) Tangible book value per share is a non-GAAP nancial 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 nancial measure is book value per share. See reconciliation of the non-GAAP measures at the end of this earnings release for the impact of intangible assets on book value. (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 1.01% for the quarter ended September 30, 2026 compared to (3.32)% and 1.19% for the quarters ended June 30, 2026 and September 30, 2025, respectively. The signi cant decline in ROA for the quarter ended June 30, 2026 was driven primarily by charges related to The Partner, including a valuation adjustment to the related credit enhancement asset and an increase in the provision for credit losses. The decrease year over year is largely due to lower yield on interest earning assets and an increase in average assets. Compared to the quarter ended June 30, 2026, yield on earning assets declined 0.60% while yield on loans receivable decreased by 0.71%. Average loans receivable as of September 30, 2026 increased $326.1 million compared to June 30, 2026. While reported loan yield declined quarter over quarter, loan income net of BaaS loan expense divided by average loans, a non-GAAP measure the Company believes is more re ective of what the Bank actually earns, improved to 6.86% from 6.83% for the quarter ended June 30, 2026 (a reconciliation of the non-GAAP measures are set forth in the Non-GAAP Financial Measures section of this earnings release).Compared to the quarter ended September 30, 2025, yield on earning assets declined 0.75% and yield on loans receivable declined by 0.92%. Average loans receivable as of September 30, 2026 increased $837.9 million compared to September 30, 2025. The quarter over quarter change in the e ciency ratio and noninterest income to average asset performance metrics were driven by changes in the credit enhancement on CCBX loans, which is included within noninterest income, due to changes in CCBX provision expense. Although these items have historically been largely o setting, a portion of The Partner's expected lifetime loan losses was not expected to be fully recovered under its indemni cation arrangement, and management established a valuation allowance against the indemni cation asset; similarly in the third quarter, management maintained the valuation allowance, adjusting for current collectability expectations, with substantially less impact, as The Partner's portfolio continued to perform near expectations. The following table shows the Company’s key performance ratios for the periods indicated. Three Months Ended (unaudited) September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025 Return on average assets(1) 1.01 % (3.32)% 0.98 % 1.09 % 1.19 % Return on average equity(1) 11.64 % (33.10)% 9.80 % 10.41 % 11.52 % Yield on earnings assets(1) 9.05 % 9.65 % 9.38 % 9.55 % 9.80 %(1) 6
Page 7
Yield on loans receivable(1) 10.03 % 10.74 % 10.76 % 10.63 % 10.95 % Cost of funds(1) 2.67 % 2.62 % 2.59 % 2.77 % 3.07 % Cost of deposits(1) 2.61 % 2.57 % 2.56 % 2.74 % 3.04 % Net interest margin(1) 6.59 % 7.27 % 7.00 % 7.03 % 7.00 %Noninterest expense to average assets(1) 6.20 % 11.13 % 6.78 % 6.25 % 6.13 % Noninterest income to average assets(1) 4.46 % 7.00 % 5.37 % 5.04 % 5.83 %E ciency ratio 56.82 % 79.24 % 55.85 % 52.75 % 48.50 % Loans receivable to deposits(2) 92.46 % 88.77 % 79.02 % 92.20 % 94.32 % (1) Annualized calculations shown for quarterly periods presented. (2) Includes loans held for sale. Third Quarter Conference Call The Company will host its third quarter conference call on October 29, 2026 at 8 a.m. ET (5 a.m. PT). A live webcast of the conference call, as well as a replay, will be available online on the Investor Relations section of the Company’s investor website at https://ir.coastalbank.com/ Q3 Earnings Call Webcast Link: Link to Earnings Call 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 31 relationships, at varying stages, including one partner in testing, two in implementation/onboarding, three signed LOIs and four winding down as of September 30, 2026. We continue to focus on the composition of our partner portfolio by emphasizing relationships with well-established organizations that align with our long-term strategy, while continually evaluating our portfolio to ensure it re ects our risk and return objectives. As part of this disciplined approach, we remain focused on strengthening existing partnerships, thoughtfully expanding product o erings, winding down less promising relationships and selectively adding new relationships that complement our platform and support sustainable growth. Our strategy is centered on building long-term partnerships and leveraging the scale of our existing relationships to drive continued growth while maintaining a strong focus on prudent risk management and operational excellence. Increasing partner activity and transaction volumes will drive growth in noninterest income, a trend we expect to continue as existing products scale and new o erings are introduced. As part of our strategy to manage partner and lending limits, as well as overall portfolio composition and credit quality, we plan to continue selling loans. We also retain a portion of the 7
Page 8
fee income associated with processing transactions on sold credit card loans. This revenue stream continues to grow and is expected to provide ongoing income without adding balance sheet risk or capital requirements. As our deposit base grows, we expect to continue moving deposits on and o the balance sheet, subject to applicable agreements, to manage liquidity, FDIC insurance coverage and deposit program operations. This deposit sweep capability allows us to better manage liquidity and deposit programs. At September 30, 2026 we swept o -balance sheet $6.29 billion in deposits for FDIC insurance and liquidity purposes, and generated $1.4 million in noninterest income during the quarter ended September 30, 2026, compared to $1.2 million for the quarter ended June 30, 2026. During the quarter ended September 30, 2026, eight partner programs were in various stages of expansion to include additional products, such as lines of credit, deposit programs, asset backed credit cards, credit cards and other lending products. The expansion of these and other partner initiatives is expected to drive higher partner revenue in upcoming periods. The following table illustrates the activity and evolution in CCBX relationships for the periods presented. As of (unaudited) September 30,2026June 30, 2026September 30,2025 Active(1) 21 22 20Friends and family / testing1 1 2Implementation / onboarding2 1 4Signed letters of intent 3 3 2Wind down - active but preparing to exit relationship4 3 1Total CCBX relationships 31 30 29 Total exited relationships life to date10 10 8 (1) Includes Bluevine, which has entered into a de nitive agreement to be acquired by Valley, subject to regulatory approvals. Valley has indicated it expects the transaction to close in the second quarter of 2027, at which time the Bluevine relationship is expected to terminate, with associated deposits anticipated to transition out. CCBX loans decreased $18.9 million, or 0.8%, to $2.21 billion as a result of selling $5.99 billion in loans during the three months ended September 30, 2026, $4.69 billion of which was new activity on previously sold credit card loans. The following table details the CCBX loan portfolio: CCBX As of September 30, 2026 June 30, 2026 September 30, 2025(dollars in thousands;unaudited) Balance % to Total Balance % to Total Balance % to TotalCommercial and industrialloans: Capital call lines $209,701 9.5% $204,835 9.2% $177,530 9.8%All other commercial &industrial loans 23,797 1.1 24,638 1.1 22,710 1.3 Real estate loans: Residential real estate loans 330,909 15.0 324,873 14.6 374,129 20.7 Consumer and other loans: Credit cards 552,078 25.0 753,171 33.8 563,324 31.2 Other consumer and otherloans 1,091,049 49.4 918,779 41.3 667,062 37.0 G CCBXl 8
Page 9
Gross CCBX loansreceivable 2,207,534 100.0% 2,226,296 100.0% 1,804,755 100.0%Net deferred origination fees (635) (544) (579) Loans receivable $2,206,899 $2,225,752 $1,804,176 Loan Yield - CCBX(1)(2) 12.73% 14.56% 15.65% (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 decrease in CCBX loans in the quarter ended September 30, 2026, includes a decrease of $28.8 million, or 1.7%, in consumer and other loans, partially o set by an increase of $6.0 million, or 1.9%, in residential real estate and an increase of $4.9 million, or 2.4%, in capital call lines as a result of normal balance uctuations and business activities. We sold $5.99 billion in CCBX loans during the quarter ended September 30, 2026 compared to sales of $4.56 billion in the quarter ended June 30, 2026. We continue to manage CCBX credit and concentration levels in an e ort to optimize our loan portfolio earnings and generate o -balance sheet fee income. CCBX loan yield decreased 1.83% for the quarter ended September 30, 2026 compared to the quarter ended June 30, 2026 due to a change in overall mix of loans between quarters, which is impacted by loan sales and tightening underwriting standards; however, net BaaS loan income divided by average CCBX loans, a non-GAAP measure the Company believes is more re ective of what the Bank actually earns on its CCBX portfolio, declined only modestly to 7.02% from 7.07% for the quarter ended June 30, 2026, re ecting the stability of the Bank's net earnings on CCBX loans (a reconciliation of the non-GAAP measures are set forth in the Non-GAAP Financial Measures section of this earnings release). CCBX active debit cards, a key source of interchange income, increased by 1.8 million cards, or 20.0%, quarter over quarter and by 6.0 million cards, or 118.7%, year over year. The following charts show the growth and quarter over quarter changes 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, both of which generate fee income. During the current quarter, on-balance sheet accounts declined as loan sales shifted a portion of the accounts o -balance sheet, increasing the o -balance sheet count. The following table details the CCBX deposit portfolio: CCBX As of September 30, 2026 June 30, 2026 September 30, 2025(dollars in thousands;unaudited) Balance % to Total Balance % to Total Balance % to TotalDemand, noninterest bearing $139,685 4.6% $109,634 3.3% $ 64,681 2.7%It tbi d d 9
Page 10
Interest bearing demandand money market 2,428,569 79.8 2,723,084 82.8 2,300,113 96.9 Savings 473,253 15.6 455,014 13.9 10,168 0.4 Total core deposits 3,041,507 100.0 3,287,732 100.0 2,374,962 100.0 Other deposits — 0.0 — 0.0 — — Total CCBX deposits $3,041,507 100.0% $3,287,732 100.0% $2,374,962 100.0% Cost of deposits(1) 3.17% 3.19% 3.90% Swept deposits $6,290,544 $4,261,255 $672,327 (1) Cost of deposits is annualized for the three months ended for each period presented. CCBX deposits reported on the balance sheet decreased $246.2 million, or 7.5%, in the three months ended September 30, 2026 to $3.04 billion. The decline was primarily attributable to increased use of o -balance sheet sweep arrangements and does not re ect a decline in underlying partner deposit activity. Deposits swept o -balance sheet for increased FDIC insurance coverage and liquidity purposes increased to $6.29 billion at September 30, 2026, compared to $4.26 billion for the quarter ended June 30, 2026, demonstrating continued growth in partner balances despite lower reported on-balance- sheet balances. Community Bank Performance Update In the quarter ended September 30, 2026, the community bank saw net loans decrease $3.9 million, or 0.2%, to $1.98 billion, as a result of normal balance uctuations. The following table details the community bank loan portfolio: Community Bank As of September 30, 2026 June 30, 2026 September 30, 2025(dollars in thousands;unaudited) Balance % to Total Balance % to Total Balance % to TotalCommercial and industrial loans $241,401 12.2% $237,176 11.9% $170,847 9.0%Real estate loans: Construction, land andland development loans 248,766 12.5 221,562 11.2 218,061 11.4 Residential real estate loans 191,980 9.7 199,530 10.0 202,979 10.7 Commercial real estateloans 1,291,700 65.1 1,319,798 66.4 1,300,335 68.2 Consumer and other loans: Other consumer and otherloans 10,736 0.5 10,760 0.5 14,181 0.7 Gross community bankloans receivable 1,984,583 100.0% 1,988,826 100.0% 1,906,403 100.0%Net deferred origination fees (5,953) (6,308) (6,731) Loans receivable $1,978,630 $1,982,518 $1,899,672 Loan Yield(1) 6.66% 6.57% 6.51% (1) Loan yield is annualized for the three months ended for each period presented and includes loans held for sale and nonaccrual loans. The decrease in community bank loans consisted of a decrease of $28.1 million in commercial real estate loans, $7.6 million in residential real estate loans and $24,000 in consumer and other loans, partially o set by an increase of $27.2 10
Page 11
million in construction, land and land development loans and $4.2 million in commercial and industrial loans during the quarter ended September 30, 2026. The following table details the community bank deposit portfolio: Community Bank As of September 30, 2026 June 30, 2026 September 30, 2025(dollars in thousands;unaudited) Balance % to Total Balance % to Total Balance % to TotalDemand, noninterest bearing $491,342 30.0% $502,844 31.9% $499,722 31.3%Interest bearing demandand money market 1,084,783 66.3 1,005,748 63.9 1,025,929 64.2 Savings 51,482 3.1 54,459 3.5 58,747 3.7 Total core deposits 1,627,607 99.4 1,563,051 99.3 1,584,398 99.2 Other deposits 1 0.0 1 0.0 1 0.0 Time deposits less than$250,000 6,133 0.4 7,283 0.5 4,834 0.3 Time deposits $250,000 andover 3,583 0.2 3,831 0.2 8,368 0.5 Total community bankdeposits $1,637,324 100.0% $1,574,166 100.0% $1,597,601 100.0% Cost of deposits(1) 1.54% 1.46% 1.77% (1) Cost of deposits is annualized for the three months ended for each period presented. Community bank deposits increased $63.2 million, or 4.0%, during the three months ended September 30, 2026 to $1.64 billion as a result of normal growth and balance uctuations. The community bank segment includes noninterest bearing deposits of $491.3 million, or 30.0%, of total community bank deposits, resulting in a cost of deposits of 1.54%, which is up slightly from 1.46% for the quarter ended June 30, 2026, and down from 1.77% for the quarter ended September 30, 2025. Net Interest Income and Margin Discussion Net interest income was $88.3 million for the quarter ended September 30, 2026, a decrease of $1.1 million, or 1.2%, from $89.4 million for the quarter ended June 30, 2026, and an increase of $10.4 million, or 13.4%, from $77.9 million for the quarter ended September 30, 2025. Net interest income compared to June 30, 2026 was lower primarily due to an increase in interest expense on interest bearing accounts due primarily to an increase in average interest bearing deposits. Net interest income was higher compared to September 30, 2025 primarily due to higher loan interest resulting from an increase in average loans receivable partially o set by a decrease in loan rates. Net interest margin was 6.59% for the three months ended September 30, 2026, compared to 7.27% for the three months ended June 30, 2026 and 7.00% for the three months ended September 30, 2025. The decrease in net interest margin for the three months ended September 30, 2026 compared to the three months ended June 30, 2026 was primarily driven by a decrease in average loan yield driven by a change in loan mix. 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 3.93% for the three months ended September 30, 2026, compared to 3.98% for the three months ended June 30, 2026 and 4.05% for the three months ended September 30, 2025. The quarter-over-quarter decrease in net interest margin, net of BaaS loan expense, was also primarily driven by a decrease in average loan yield due to a change in 11
Page 12
loan mix. Interest and fees on loans receivable increased $2.0 million, or 1.8%, to $113.1 million for the three months ended September 30, 2026, compared to $111.1 million for the three months ended June 30, 2026, as a result of an increase in average loans receivable. Interest and fees on loans receivable increased $12.7 million, or 12.7%, compared to $100.4 million for the three months ended September 30, 2025, due to loan growth, partially o set by a decrease in loan yield. The following table illustrates how net interest margin and loan yield is a ected by BaaS loan expense: Consolidated As of and for the Three Months Ended (dollars in thousands; unaudited) September 30 2026 June 30 2026 September 30 2025Net interest margin, net of BaaS loan expense: Net interest margin(1) 6.59% 7.27% 7.00%Earning assets 5,311,128 4,928,350 4,413,529 Net interest income (GAAP) 88,286 89,367 77,901 Less: BaaS loan expense (35,715) (40,409) (32,840) Net interest income, net of BaaS loan expense(2) $ 52,571 $ 48,958 $ 45,061 Net interest margin, net of BaaS loan expense(1)(2) 3.93% 3.98% 4.05%Loan income net of BaaS loan expense divided by average loans: Loan yield (GAAP)(1) 10.03% 10.74% 10.95%Total average loans receivable $4,474,470 $4,148,380 $3,636,545 Interest and earned fee income on loans (GAAP) 113,082 111,097 100,367 BaaS loan expense (35,715) (40,409) (32,840) Net loan income(2) $ 77,367 $ 70,688 $ 67,527 Loan income, net of BaaS loan expense, divided by average loans(1) (2) 6.86% 6.83% 7.37% (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 $772,000 to $45.0 million compared to the three months ended June 30, 2026 as a result of maturities and principal paydowns, and decreased $26,000 compared to the three months ended September 30, 2025. Cost of funds was 2.67% for the quarter ended September 30, 2026, an increase of ve basis points from the quarter ended June 30, 2026, and a decrease of 40 basis points from the quarter ended September 30, 2025. Cost of deposits for the quarter ended September 30, 2026 was 2.61%, compared to 2.57% for the quarter ended June 30, 2026, and 3.04% for the quarter ended September 30, 2025. The decreased cost of funds and deposits compared to September 30, 2025 was largely due to the reductions in the Fed funds rate in 2025; however, the 0.25% increase to the Fed funds rate e ective September 17, 2026, along with any future changes in the rate, will impact cost of funds and deposits in the future. The following table summarizes the average yield on loans receivable and cost of deposits: For the Three Months Ended September 30, 2026 June 30, 2026 September 30, 2025Yield on(2) Cost of(2)Yield on(2) Cost of(2)Yield on(2) Cost of(2) 12
Page 13
Loans(2) Deposits(2) Loans(2) Deposits(2) Loans(2) Deposits(2) Community Bank6.66% 1.54% 6.57% 1.46% 6.51% 1.77% CCBX(1) 12.73% 3.17% 14.56% 3.19% 15.65% 3.90%Consolidated10.03% 2.61% 10.74% 2.57% 10.95% 3.04% (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 a ected by BaaS loan expense resulting in net BaaS loan income and the associated yield: For the Three Months Ended September 30, 2026 June 30, 2026 September 30, 2025 (dollars in thousands;unaudited) Income /Expense Income /expensedivided byaverage CCBX loans(2) Income /Expense Income /expensedivided byaverage CCBX loans(2) Income /Expense Income /expensedivided byaverage CCBX loans(2) BaaS loan interest income $ 79,623 12.73% $ 78,580 14.56% $ 69,643 15.65%Less: BaaS loan expense 35,715 5.71% 40,409 7.49% 32,840 7.38% Net BaaS loan income(1) $ 43,908 7.02% $ 38,171 7.07% $ 36,803 8.27% Average BaaS Loans(3) $2,480,545 $2,164,634 $1,764,957 (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 $61.0 million for the three months ended September 30, 2026, a decrease of $27.7 million from $88.7 million for the three months ended June 30, 2026, and a decrease of $5.7 million from $66.8 million for the three months ended September 30, 2025. The decrease in noninterest income for the quarter ended September 30, 2026 as compared to the quarter ended June 30, 2026 was primarily due to a $29.0 million decrease in credit enhancement income, which moved in tandem with a corresponding decrease in the provision for credit losses, both driven by change in loan mix and sales of loans and expected losses based upon an analysis of the CCBX loan portfolio, partially o set by an additional $3.1 million downwards adjustment to credit enhancement income related to The Partner whose indemni cation of credit losses is not expected to be fully collectable, a $183,000 decrease in BaaS fraud enhancements and a $477,000 decrease in unrealized gain on equity securities re ecting a $565,000 downward valuation adjustment on a strategic equity investment, partially o set by an increase of $2.1 million in BaaS program income (see “Appendix B” for more information on the 13
Page 14
accounting for BaaS allowance for credit losses and credit and fraud enhancements). The $5.7 million decrease in noninterest income over the quarter ended September 30, 2025 was primarily due to an $11.6 million decrease in BaaS credit and fraud enhancements, partially o set by an increase of $6.3 million in BaaS program income. Noninterest Expense Discussion Total noninterest expense decreased $56.3 million to $84.8 million for the three months ended September 30, 2026, compared to $141.1 million for the three months ended June 30, 2026, and increased $14.7 million from $70.2 million for the three months ended September 30, 2025. The $56.3 million decrease in noninterest expense for the quarter ended September 30, 2026, as compared to the quarter ended June 30, 2026, was primarily due to a $46.0 million credit enhancement receivable valuation adjustment recorded in the second quarter of 2026 related to the assessment of collectability for The Partner that did not recur in the third quarter of 2026, a $5.9 million decrease in data processing and software licenses re ecting the absence of $4.4 million in second-quarter accelerated depreciation and lower current- quarter amortization and a $1.6 million decrease in salaries and employee bene ts, partially o set by a $1.6 million increase in legal and professional fees. Also contributing to the variance was a $4.7 million decrease in BaaS loan expense and a $183,000 decrease in BaaS fraud expense. BaaS loan expense represents the amount paid or payable to partners for credit 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 $14.7 million increase in noninterest expense for the quarter ended September 30, 2026 compared to the quarter ended September 30, 2025 was largely due to a $3.8 million increase in legal and professional expenses, a $2.3 million increase in data processing and software licenses due to enhancements and investments in technology and a $1.9 million increase in salaries and employee bene ts. Also contributing to the variance is a $2.9 million increase in BaaS loan expense and a $2.0 million increase in BaaS fraud expense. Certain operating expenses associated with CCBX programs 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 partners in noninterest income. The $51.7 million decrease in noninterest expense net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses for the quarter ended September 30, 2026, as compared to the quarter ended June 30, 2026, was primarily due to a $46.0 million credit enhancement receivable valuation adjustment recorded in the second quarter related to the assessment of collectability for The Partner that did not recur in the third quarter. The following table re ects the portion of noninterest expenses that are reimbursed by partners to assist in understanding how the increases in noninterest expense are related to expenses incurred and reimbursed by CCBX partners: Three Months Ended September 30, June 30, September 30,(dollars in thousands; unaudited) 2026 2026 2025 Total noninterest expense (GAAP) $ 84,843 $ 141,111 $ 70,172Less: BaaS loan expense 35,715 40,409 32,840Less: BaaS fraud expense 4,129 4,312 2,127Less: Reimbursement of expenses (BaaS) 2,592 2,259 1,412Noninterest expense, net of BaaS loan expense, BaaS fraud expense and(1) 14
Page 15
reimbursement of expenses (BaaS)(1) $ 42,407 $ 94,131 $ 33,793 (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 re ected an expense of $4.7 million for the three months ended September 30, 2026, compared to tax bene t of $13.1 million for the three months ended June 30, 2026 and expense of $4.3 million for the three months ended September 30, 2025. The tax bene t recognized during the three months ended June 30, 2026 was primarily attributable to the pre-tax loss incurred during the period, while di erences between periods also re ect changes in the taxability of certain equity awards. As CCBX activities and employee presence expand into additional states, the Company becomes subject to additional state tax jurisdictions, which has increased the overall tax rate used in calculating the provision for income taxes. The Company uses a federal statutory tax rate of 21.0% as a basis for calculating provision for federal income taxes and 3.64% for calculating the provision for state income taxes. Financial Condition Overview Total assets decreased $179.7 million, or 3.3%, to $5.28 billion at September 30, 2026, compared to $5.46 billion at June 30, 2026. The decrease is primarily comprised of a $202.5 million decrease in interest earning deposits with other banks and a $22.7 million decrease in loans receivable, partially o set by a $32.5 million increase in loans held for sale. The decrease in loans receivable is primarily the result of $5.99 billion in loan sales during the quarter. As of September 30, 2026, in addition to the $803.6 million in cash on hand, the Company had borrowing capacity of up to a total of $621.4 million from the Federal Reserve Bank discount window and Federal Home Loan Bank, plus an additional $206.0 million available under credit facilities with banker's banks. There were no borrowings outstanding on these lines as of September 30, 2026. The Company, on a stand alone basis, had a cash balance of $14.5 million as of September 30, 2026, a portion of which is retained for general operating purposes, including debt repayment, and for funding $2.5 million in commitments to bank technology investment funds, with the remaining cash available to be contributed to the Bank as capital. Uninsured deposits were estimated at $899.6 million as of September 30, 2026, compared to $1.35 billion as of June 30, 2026. While uninsured deposits decreased from the prior quarter, they may uctuate due to the composition and timing of certain partner deposit balances, including the periodic use of sweep arrangements. Total shareholders’ equity as of September 30, 2026 increased $14.8 million since June 30, 2026. The increase in shareholders’ equity was primarily comprised of $13.8 million in net income and an increase of $1.0 million in common stock outstanding as a result of equity awards vested and exercised during the three months ended September 30, 2026. During the quarter ended September 30, 2026, the Company contributed $25.0 million of capital to the Bank to support the Bank’s capital position and capacity for continued growth. 15
Page 16
The Company and the Bank remained well capitalized at September 30, 2026, as summarized in the following table. (unaudited) CoastalCommunityBank CoastalFinancialCorporation Minimum WellCapitalizedRatios underPromptCorrective Action(1) Tier 1 Leverage Capital (to average assets) 9.30% 8.81% 5.00%Common Equity Tier 1 Capital (to risk-weighted assets) 12.22% 11.47% 6.50%Tier 1 Capital (to risk-weighted assets) 12.22% 11.56% 8.00%Total Capital (to risk-weighted assets) 13.52% 13.82% 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 allowance for credit losses was $208.1 million and 4.97% of loans receivable at September 30, 2026, compared to $213.7 million and 5.08% at June 30, 2026 and $173.8 million and 4.69% at September 30, 2025. The allowance for credit loss allocated to the CCBX portfolio was $192.0 million and 8.70% of CCBX loans receivable at September 30, 2026, with $16.1 million of allowance for credit loss allocated to the community bank, or 0.81% of total community bank loans receivable. The decline in CCBX’s allowance ratio primarily re ected a reduced reserve on certain overdraft receivables under an agreement for the partner to purchase them at 60 days past due, before the Bank’s customary charge-o point. Changes in loan mix and an updated prepayment study also a ected the allowance. The following table details the allocation of the allowance for credit loss as of the period indicated: As of September 30, 2026 As of June 30, 2026 As of September 30, 2025(dollars inthousands;unaudited) CommunityBank CCBX Total CommunityBank CCBX Total CommunityBank CCBX TotalLoansreceivable $1,978,630 $2,206,899 $4,185,529 $1,982,518 $2,225,752 $4,208,270 $1,899,672 $1,804,176 $3,703,848 Allowancefor creditlosses (16,094) (192,010) (208,104) (15,723) (198,001) (213,724) (18,354) (155,459) (173,813)Allowancefor creditlosses tototal loansreceivable 0.81% 8.70% 4.97% 0.79% 8.90% 5.08% 0.97% 8.62% 4.69% Net charge-o s totaled $49.9 million for the quarter ended September 30, 2026, compared to $50.6 million for the quarter ended June 30, 2026 and $49.2 million for the quarter ended September 30, 2025. Net charge-o s as a percent of average loans decreased to 4.43% for the quarter ended September 30, 2026 compared to 4.90% for the quarter ended June 30, 16
Page 17
2026, and 5.37% for the quarter ended September 30, 2025. Under one partner program, the Company retains ownership of approximately 5% of a $167.5 million loan portfolio and retains the provision for credit losses for that portfolio. Loan sales during the quarter temporarily increased its retained share to approximately 15% of the $167.5 million portfolio, or $25.1 million in loans. Net charge-o s for this $25.1 million in loans were $778,000 for the three months ended September 30, 2026, $1.0 million for the three months ended June 30, 2026 and $1.0 million for the three months ended September 30, 2025. The following table details net charge-o s for the community bank and CCBX for the period indicated: Three Months Ended September 30, 2026 June 30, 2026 September 30, 2025(dollars inthousands;unaudited) CommunityBank CCBX Total CommunityBank CCBX Total CommunityBank CCBX TotalGross charge-o s $ 4 $57,790 $57,794 $ 56 $58,162 $58,218 $ 18 $54,516 $54,534 Gross recoveries (3) (7,874) (7,877) (2) (7,581) (7,583) (19) (5,270) (5,289)Net charge-o s(recoveries) $ 1 $49,916 $49,917 $ 54 $50,581 $50,635 $ (1) $49,246 $49,245 Net charge-o sto average loans(1) 0.00% 7.98% 4.43% 0.01% 9.37% 4.90% 0.00% 11.07% 5.37% (1) Annualized calculations shown for periods presented. During the quarter ended September 30, 2026, a $43.9 million provision for credit losses was recorded for CCBX partner loans, compared to $94.3 million for the quarter ended June 30, 2026. The decrease primarily re ected that the $22.8 million speci c provision recorded in the quarter ended June 30, 2026 for credit losses not expected to be fully recovered under The Partner's indemni cation arrangement remained unchanged in the current quarter with no incremental provision required for the quarter ended September 30, 2026. Changes in portfolio composition and weighted average lives also impacted the current quarter provision. The CCBX allowance for credit losses was $192.0 million at September 30, 2026, compared to $198.0 million at June 30, 2026. In general, CCBX loans have a higher level of expected losses than our community bank loans, which is re ected in the factors for the allowance for credit losses. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassi ed negative deposit accounts, with expected losses re ected in the allowance for credit losses. When provision expense is recognized for CCBX credit losses and unfunded commitments that are subject to partner indemni cation, we also record a credit enhancement asset through noninterest income (BaaS credit enhancements) representing amounts contractually due under the applicable partner agreements. We evaluate the collectability of the credit enhancement asset each reporting period and record a valuation adjustment when collection of all or a portion of the asset is no longer considered probable. The credit enhancement asset is reduced as indemni cation payments are received from CCBX partners. Management regularly evaluates and manages counterparty risk associated with its CCBX partners, as the Bank could incur additional credit losses to the extent a partner is unable to ful ll its contractual obligations. The factors used in management’s analysis for community bank credit losses indicated that a provision of $372,000 was 17
Page 18
needed for the quarter ended September 30, 2026 compared to a provision recapture of $2.4 million and $583,000 for the quarters ended June 30, 2026 and September 30, 2025, respectively. The provision in the current period was due to a change in prepayment speeds and changes in the overall mix of the portfolio. The following table details the provision expense (recapture) for loans by segment for the period indicated: Three Months Ended (dollars in thousands; unaudited) September 30, 2026 June 30, 2026 September 30, 2025Community bank $ 372 $ (2,377) $ (583)CCBX 43,925 94,309 58,847 Total provision expense - loans receivable $ 44,297 $ 91,932 $ 58,264 In addition, there was a $1.4 million provision for unfunded commitments, recorded primarily due to an increase in unfunded commitments. At September 30, 2026, our nonperforming assets were $60.5 million, or 1.15% of total assets, compared to $75.2 million, or 1.38% of total assets, at June 30, 2026 and $59.8 million, or 1.31% of total assets, at September 30, 2025. These ratios are impacted by nonperforming CCBX loans that are covered by CCBX partner credit enhancements. As of September 30, 2026, $52.8 million of the $54.6 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements described above. Additionally, certain CCBX partners employ collection practices that place speci c loans on nonaccrual status to enhance collectability. As of September 30, 2026, $18.7 million of these loans are less than 90 days past due. Nonperforming assets decreased $14.7 million during the quarter ended September 30, 2026, compared to the quarter ended June 30, 2026. Community bank nonperforming loans decreased $380,000 from June 30, 2026 to $5.8 million as of September 30, 2026. CCBX nonperforming loans decreased $14.3 million to $54.6 million from June 30, 2026. The decrease in CCBX nonperforming loans is due to a decrease of $7.2 million in nonaccrual loans from June 30, 2026 to $23.3 million, combined with a $7.2 million decrease in CCBX loans that are past due 90 days or more and still accruing interest. As a result of the type of loans (primarily consumer loans) originated through our CCBX partners, we would typically anticipate that balances 90 days past due or more and still accruing will generally increase as those loan portfolios grow. Consumer loans originated through CCBX lending partners may continue to accrue interest beyond 90 days past due. Installment (closed-end) loans generally continue to accrue until 120 past due while revolving (open-end) loans generally continue to accrue until 180 days past due. There were no repossessed assets or other real estate owned at September 30, 2026. Our nonperforming loans to loans receivable ratio was 1.44% at September 30, 2026, compared to 1.79% at June 30, 2026 and 1.61% at September 30, 2025. The following table details the Company’s nonperforming assets for the periods indicated. Consolidated As of (dollars in thousands; unaudited)September 30, 2026 June 30, 2026 September 30, 2025Nonaccrual loans: Commercial and industrial loans$ 198 $ 243 $ 2,297 Real estate loans: Ct ti l ddl ddl t 1697 18
Page 19
Construction, land and land development — — 1,697 Residential real estate 1,695 1,705 — Commercial real estate 4,000 4,344 348 Consumer and other loans: Credit cards 18,161 26,670 19,677 Other consumer and other loans 5,071 3,729 2,820 Total nonaccrual loans 29,125 36,691 26,839 Accruing loans past due 90 days or more: Commercial & industrial loans 346 504 910 Real estate loans: Residential real estate loans 1,610 1,446 1,575 Consumer and other loans: Credit cards 17,536 27,077 22,626 Other consumer and other loans 11,851 9,472 7,813 Total accruing loans past due 90 days or more 31,343 38,499 32,924 Total nonperforming loans 60,468 75,190 59,763 Real estate owned — — — Repossessed assets — — — Total nonperforming assets$ 60,468 $ 75,190 $ 59,763 Total nonaccrual loans to loans receivable 0.70% 0.87% 0.72%Total nonperforming loans to loans receivable 1.44% 1.79% 1.61%Total nonperforming assets to total assets 1.15% 1.38% 1.31% The following tables detail the CCBX and community bank nonperforming assets, which are included in the total nonperforming assets table above. CCBX As of (dollars in thousands; unaudited)September 30, 2026 June 30, 2026 September 30, 2025Nonaccrual loans: Commercial and industrial loans: All other commercial & industrial loans$ 49 $ 68 $ 157 Consumer and other loans: Credit cards 18,161 26,670 19,677 Other consumer and other loans 5,071 3,729 2,820 Total nonaccrual loans 23,281 30,467 22,654 Accruing loans past due 90 days or more: Commercial & industrial loans 346 504 910 Real estate loans: Residential real estate loans 1,610 1,446 1,575 Consumer and other loans: Credit cards 17,536 27,077 22,626 Other consumer and other loans 11,851 9,472 7,813 Total accruing loans past due 90 days or more 31,343 38,499 32,924 Total nonperforming loans 54,624 68,966 55,578 Other real estate owned — — — Repossessed assets — — — Total nonperforming assets$ 54,624 $ 68,966 $ 55,578 Total CCBX nonperforming assets to total consolidated assets 1.04% 1.26% 1.22% Community Bank As of (dollars in thousands; unaudited)September 30, 2026 June 30, 2026 September 30, 2025Nonaccrual loans: Commercial and industrial loans$ 149 $ 175 $ 2,140 Real estate: Construction, land and land development — — 1,697 Ridtil l tt 1695 1705 19
Page 20
Residential real estate 1,695 1,705 — Commercial real estate 4,000 4,344 348 Total nonaccrual loans 5,844 6,224 4,185 Accruing loans past due 90 days or more: Total accruing loans past due 90 days or more — — — Total nonperforming loans 5,844 6,224 4,185 Other real estate owned — — — Repossessed assets — — — Total nonperforming assets$ 5,844 $ 6,224 $ 4,185 Total community bank nonperforming assets to total consolidated assets 0.11% 0.11% 0.09% Negative deposit account balances are reclassi ed as loans for nancial reporting purposes and are included in the Company's allowance for credit losses under its CECL methodology. Because these balances do not accrue interest, they are not included in nonaccrual loans. Management monitors the aging, collectability and expected credit losses associated with these balances as part of its ongoing credit risk management process. Consistent with the second quarter of 2026, The Partner's reclassi ed negative deposit account, which was outstanding for more than 90 days both quarters, remains included in loans receivable at $22.8 million, with no change quarter over quarter. Management established a 100% speci c reserve against this balance in the second quarter of 2026 that was unchanged at September 30, 2026, re ecting its assessment that full collection is not expected under the applicable indemni cation arrangement. 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 $5.28 billion Bank provides service through 14 full-service branches in Snohomish, Island and King Counties, one loan production o ce in King County, the Internet and its mobile banking application. The Bank provides banking as a service to digital nancial service providers, companies and brands that want to provide nancial 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 O cer, esprink@coastalbank.com Joel G. Edwards, Chief Financial O cer, jedwards@coastalbank.com 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 re ect our current views with respect to, among other things, future events and our nancial 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 20
Page 21
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 nancial trends that we believe may a ect our nancial condition, results of operations, business strategy and nancial needs. Our actual results could di er materially from those anticipated in such forward-looking statements as a result of risks, uncertainties and assumptions that are di cult to predict. Factors that could cause actual results to di er materially from those in the forward-looking statements include, without limitation, our ability to e ectively evaluate and manage counterparty risk associated with CCBX partners and the risk that the con icts in the Middle East and/or changes in U.S. trade policies, including the imposition of tari s and retaliatory tari s, may adversely impact our business, nancial 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 led and in any of our subsequent lings 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 di er 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 re ect events or circumstances after the date on which the statement is made or to re ect the occurrence of unanticipated events, except as required by law. COASTAL FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in thousands; unaudited) ASSETS September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025Cash and due from banks$ 45,707 $ 48,088 $ 52,695 $ 34,241 $ 34,928 Interest earning deposits with other banks 757,844 960,360 1,442,772 702,729 607,330 Investment securities, available-for-sale, atfair value 25 27 28 29 31 Investment securities, held-to-maturity, atamortized cost 44,695 45,219 46,141 48,218 43,911 Other investments 18,803 14,177 14,023 12,837 12,778 Loans held for sale 140,337 107,838 124,039 71,216 42,894 Loans receivable 4,185,529 4,208,270 3,859,379 3,749,531 3,703,848 Allowance for credit losses (208,104) (213,724) (172,427) (169,530) (173,813)Total loans receivable, net 3,977,425 3,994,546 3,686,952 3,580,001 3,530,035 CCBX credit enhancement asset, net 150,327 154,346 180,587 177,657 177,741 CCBX receivable 34,456 28,134 24,926 23,047 16,260 Premises and equipment, net 27,088 25,736 29,710 29,325 29,114 Lease right-of-use assets 4,093 4,368 4,641 4,821 4,788 Accrued interest receivable 24,969 20,937 20,139 18,613 20,493 Bank-owned life insurance, net 14,337 14,199 14,044 13,910 13,777 Deferred tax asset, net 17,164 16,196 — — — Intangible assets, net 3,981 4,207 4,434 4,536 — Other assets 15,176 17,774 18,698 20,257 18,996 Total assets $5,276,427 $5,456,152 $5,663,829 $4,741,437 $4,553,076 LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES Deposits $4,678,831 $4,861,898 $5,041,164 $4,144,199 $3,972,563 Subordinated debt, net 44,555 44,518 44,480 44,443 44,406 Junior subordinated debentures, net 3,595 3,594 3,594 3,593 3,593 Df d ti 221 236 251 267 281 21
Page 22
Deferred compensation 221 236 251 267 281 Accrued interest payable 1,229 2,178 2,665 1,435 1,106 Lease liabilities 4,241 4,522 4,799 4,984 4,956 CCBX payable 18,780 32,980 28,410 27,492 31,221 Deferred tax liability, net — — 1,656 853 799 Other liabilities 46,708 42,779 33,048 23,212 18,874 Total liabilities 4,798,160 4,992,705 5,160,067 4,250,478 4,077,799 SHAREHOLDERS’ EQUITY Common Stock 237,044 236,012 234,222 233,438 230,399 Retained earnings 241,224 227,436 269,541 257,522 244,879 Accumulated other comprehensive loss,net of tax (1) (1) (1) (1) (1)Total shareholders’ equity 478,267 463,447 503,762 490,959 475,277 Total liabilities and shareholders’equity $5,276,427 $5,456,152 $5,663,829 $4,741,437 $4,553,076 COASTAL FINANCIAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts; unaudited) Three Months Ended September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025INTEREST AND DIVIDEND INCOME Interest and fees on loans$ 113,082 $ 111,097 $ 102,887 $ 100,206 $ 100,367Interest on interest earning deposits withother banks 7,286 6,607 8,128 6,810 8,007Interest on investment securities 609 612 622 635 616Dividends on other investments 206 238 44 235 37Total interest income 121,183 118,554 111,681 107,886 109,027INTEREST EXPENSE Interest on deposits 30,931 28,043 27,670 27,863 30,466Interest on borrowed funds 1,966 1,144 654 658 660Total interest expense 32,897 29,187 28,324 28,521 31,126Net interest income 88,286 89,367 83,357 79,365 77,901PROVISION FOR CREDIT LOSSES 46,019 92,157 51,398 48,041 56,598Net interest income (expense) afterprovision for credit losses 42,267 (2,790) 31,959 31,324 21,303NONINTEREST INCOME Service charges and fees 979 1,016 850 882 903Gain on sales of loans, net 7 — — — —Unrealized (loss) gain onequity securities, net (502) (25) 126 — 9Other income 533 667 410 459 461Noninterest income, excluding BaaSprogram income and BaaSindemni cation income 1,017 1,658 1,386 1,341 1,373Servicing and other BaaS fees 3,509 2,917 2,623 2,113 1,575Transaction and interchange fees 8,026 6,836 5,873 4,924 4,878Reimbursement of expenses 2,592 2,259 2,392 1,868 1,412BaaS program income 14,127 12,012 10,888 8,905 7,865BaaS credit enhancements 41,767 70,725 50,744 47,325 55,412BaaS fraud enhancements 4,129 4,312 3,059 1,090 2,127BaaS indemni cation income 45,896 75,037 53,803 48,415 57,539Total noninterest income 61,040 88,707 66,077 58,661 66,777NONINTEREST EXPENSE Salaries and employee bene ts 22,003 23,615 23,164 22,787 20,146Occupancy 932 890 859 1,091 952Data processing and software licenses 8,441 14,348 7,643 6,978 6,114Legal and professional expenses 7,792 6,197 7,002 4,447 3,957Point of sale expense 427 464 445 105 69Excise taxes 1,059 988 1,169 756 696FdlD itI C ti 22
Page 23
Federal Deposit Insurance Corporation("FDIC") assessments 1,269 829 573 817 815Director and sta expenses 655 718 668 870 544Marketing 7 6 38 259 272Credit enhancement receivable valuationadjustment — 46,009 — — —Other expense 2,414 2,326 1,892 2,348 1,640Noninterest expense, excluding BaaSloan and BaaS fraud expense 44,999 96,390 43,453 40,458 35,205BaaS loan expense 35,715 40,409 36,940 31,256 32,840BaaS fraud expense 4,129 4,312 3,059 1,090 2,127BaaS loan and fraud expense 39,844 44,721 39,999 32,346 34,967Total noninterest expense 84,843 141,111 83,452 72,804 70,172Income (loss) before provision forincome taxes 18,464 (55,194) 14,584 17,181 17,908PROVISION (BENEFIT) FOR INCOME TAXES 4,676 (13,089) 2,565 4,538 4,316NET INCOME (LOSS)$ 13,788 $ (42,105) $ 12,019 $ 12,643 $ 13,592 Basic earnings (loss) per common share$ 0.90 $ (2.76) $ 0.79 $ 0.84 $ 0.90Diluted earnings (loss) per common share$ 0.89 $ (2.76) $ 0.78 $ 0.82 $ 0.88Weighted average number of commonshares outstanding: Basic 15,256,873 15,243,357 15,179,447 15,116,005 15,093,274Diluted 15,417,178 15,243,357 15,422,822 15,455,856 15,443,987 COASTAL FINANCIAL CORPORATION AVERAGE BALANCES, YIELDS, AND RATES – QUARTERLY (Dollars in thousands; unaudited) For the Three Months Ended September 30, 2026 June 30, 2026 September 30, 2025 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 earningdeposits with otherbanks $775,638 $7,286 3.73% $717,893 $6,607 3.69% $719,191 $8,007 4.42%Investmentsecurities, available- for-sale(2) 27 — — 28 — — 33 — — Investmentsecurities, held-to- maturity(2) 45,010 609 5.37 45,781 612 5.36 45,030 616 5.43 Other investments 15,983 206 5.11 16,268 238 5.87 12,730 37 1.15 Loans receivable(3) 4,474,470 113,082 10.03 4,148,380 111,097 10.74 3,636,545 100,367 10.95 Total interest earningassets 5,311,128 121,183 9.05 4,928,350 118,554 9.65 4,413,529 109,027 9.80 Noninterest earningassets: Allowance for creditlosses (207,116) (171,130) (158,525) Other noninterestearning assets 321,863 327,580 286,002 Total assets$5,425,875 $5,084,800 $4,541,006 Liabilities andShareholders’ Equity Interest bearingliabilities: Interest bearingd it $4078051$30931301%$3781107$28043297%$3394664$30466356% 23
Page 24
deposits$4,078,051 $30,931 3.01% $3,781,107 $28,043 2.97% $3,394,664 $30,466 3.56%Fed funds borrowings 122,119 1,167 3.79 1,099 11 4.01 — — — FHLB advances andother borrowings 13,370 135 4.01 48,725 480 3.95 — — — Subordinated debt 44,531 608 5.42 44,494 598 5.39 44,383 598 5.35 Junior subordinateddebentures 3,594 56 6.18 3,594 55 6.14 3,592 62 6.85 Total interest bearingliabilities 4,261,665 32,897 3.06 3,879,019 29,187 3.02 3,442,639 31,126 3.59 Noninterest bearingdeposits 627,962 588,188 577,820 Other liabilities 66,445 107,447 52,447 Total shareholders'equity 469,803 510,146 468,100 Total liabilities andshareholders' equity$5,425,875 $5,084,800 $4,541,006 Net interest income $88,286 $89,367 $77,901 Interest rate spread 5.99% 6.63% 6.21% Net interest margin(4) 6.59% 7.27% 7.00% (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 CORPORATION SELECTED AVERAGE BALANCES, YIELDS, AND RATES – BY SEGMENT - QUARTERLY (Dollars in thousands; unaudited) For the Three Months Ended September 30, 2026 June 30, 2026 September 30, 2025 (dollars in thousands;unaudited)Average Balance Interest & Dividends Yield / Cost(1) Average Balance Interest & Dividends Yield / Cost(1) Average Balance Interest & Dividends Yield / Cost(1) Community Bank Assets Interest earningassets: Loans receivable(2)$1,993,925 $33,459 6.66% $1,983,746 $32,517 6.57% $1,871,588 $30,724 6.51%Total interestearning assets 1,993,925 33,459 6.66 1,983,746 32,517 6.57 1,871,588 30,724 6.51 Liabilities Interest bearing liabilities: Interestbearing deposits 1,121,204 6,320 2.24% 1,062,196 5,657 2.14% 1,096,883 7,136 2.58%Intrabank liability 363,768 3,420 3.73 426,969 3,931 3.69 271,961 3,028 4.42 Total interestbearing liabilities 1,484,972 9,740 2.60 1,489,165 9,588 2.58 1,368,844 10,164 2.95 Noninterestbearing deposits 508,953 494,581 502,744 Net interest income $23,719 $22,929 $20,560 Net interest margin(3) 4.72% 4.64% 4.36% CCBX Assets Interest earning t 24
Page 25
assets: Loans receivable(2) (4) $2,480,545 $79,623 12.73% $2,164,634 $78,580 14.56% $1,764,957 $69,643 15.65%Intrabank asset 595,311 5,578 3.72 647,884 5,962 3.69 607,900 6,768 4.42 Total interestearning assets 3,075,856 85,201 10.99 2,812,518 84,542 12.06 2,372,857 76,411 12.78 Liabilities Interest bearing liabilities: Interestbearing deposits 2,956,847 24,611 3.30% 2,718,911 22,386 3.30% 2,297,781 23,330 4.03%Total interestbearing liabilities 2,956,847 24,611 3.30 2,718,911 22,386 3.30 2,297,781 23,330 4.03 Noninterestbearing deposits 119,009 93,607 75,076 Net interest income $60,590 $62,156 $53,081 Net interest margin(3) 7.82% 8.86% 8.88%Net interest margin,net of BaaS loan expense(5) 3.21% 3.10% 3.38% For the Three Months Ended September 30, 2026 June 30, 2026 September 30, 2025 (dollars in thousands;unaudited)Average Balance Interest & Dividends Yield / Cost(1) Average Balance Interest & Dividends Yield / Cost(1) Average Balance Interest & Dividends Yield / Cost(1) Treasury & Administration Assets Interest earning assets: Interest earningdeposits with otherbanks $775,638 $7,286 3.73% $717,893 $6,607 3.69% $719,191 $8,007 4.42%Investmentsecurities, available-for- sale(6) 27 — 3.37 28 — 3.52 33 — — Investmentsecurities, held-to- maturity(6) 45,010 609 5.37 45,781 612 5.36 45,030 616 5.43 Other investments 15,983 206 5.11 16,268 238 5.87 12,730 37 1.15 Total interest earningassets 836,658 8,101 3.84% 779,970 7,457 3.83% 776,984 8,660 4.42%Liabilities Interest bearing liabilities: Fed funds borrowings$122,119 1,167 3.79% $1,099 11 4.01% $ — — —%FHLB advances andborrowings 13,370 135 4.01 48,725 480 3.95 — — — Subordinated debt 44,531 608 5.42 44,494 598 5.39 44,383 598 5.35 Juniorsubordinated debentures 3,594 56 6.18 3,594 55 6.14 3,592 62 6.85 Intrabank liability, net(7) 231,543 2,158 3.70 220,915 2,031 3.69 335,939 3,740 4.42 Total interest bearingliabilities 415,157 4,124 3.94 318,827 3,175 3.99 383,914 4,400 4.55 Net interest income $3,977 $4,282 $4,260 Net interest margin(3) 1.89% 2.20% 2.18% (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. 25
Page 26
(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 nancial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of nancial performance. However, these non-GAAP nancial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use di erent 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 of 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 of 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 of 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) September 30 2026 June 30 2026 September 30 2025CCBX loan income net of BaaS loan expense divided by average CCBX loans:(1) 26
Page 27
CCBX loan yield (GAAP)(1) 12.73% 14.56% 15.65%Total average CCBX loans receivable $2,480,545 $2,164,634 $1,764,957 Interest and earned fee income on CCBX loans (GAAP) 79,623 78,580 69,643 BaaS loan expense (35,715) (40,409) (32,840)Net BaaS loan income $ 43,908 $ 38,171 $ 36,803 Net BaaS loan income divided by average CCBX loans(1) 7.02% 7.07% 8.27%CCBX net interest margin, net of BaaS loan expense: CCBX net interest margin(1) 7.82% 8.86% 8.88%CCBX earning assets 3,075,856 2,812,518 2,372,857 Net interest income (GAAP) 60,590 62,156 53,081 Less: BaaS loan expense (35,715) (40,409) (32,840)Net interest income, net of BaaS loan expense $ 24,875 $ 21,747 $ 20,241 CCBX net interest margin, net of BaaS loan expense(1) 3.21% 3.10% 3.38% Consolidated As of and for the Three Months Ended (dollars in thousands; unaudited) September 30 2026 June 30 2026 September 30 2025Loan income net of BaaS loan expense divided by average loans: Loan yield (GAAP)(1) 10.03% 10.74% 10.95%Total average loans receivable $4,474,470 $4,148,380 $3,636,545 Interest and earned fee income on loans (GAAP) 113,082 111,097 100,367 BaaS loan expense (35,715) (40,409) (32,840)Net loan income $ 77,367 $ 70,688 $ 67,527 Loan income, net of BaaS loan expense, divided by average loans(1) 6.86% 6.83% 7.37%Net interest margin, net of BaaS loan expense: Net interest margin(1) 6.59% 7.27% 7.00%Earning assets 5,311,128 4,928,350 4,413,529 Net interest income (GAAP) 88,286 89,367 77,901 Less: BaaS loan expense (35,715) (40,409) (32,840)Net interest income, net of BaaS loan expense $ 52,571 $ 48,958 $ 45,061 Net interest margin, net of BaaS loan expense(1) 3.93% 3.98% 4.05% (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 partners in noninterest income. This non-GAAP measure is intended to help investors distinguish between noninterest expenses borne by the Company and those incurred for, and reimbursed by, CCBX partners. The most comparable GAAP measure is noninterest expense. The $51.7 million decrease in noninterest expense net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses for the quarter ended September 30, 2026, as compared to the quarter ended June 30, 2026, was primarily due to a $46.0 million credit enhancement receivable valuation adjustment recorded in the second quarter of 2026 related to the assessment of collectability for The Partner that did not recur in the third quarter. As of and for the Three Months EndedSeptember30,June30,September30, 27
Page 28
(dollars in thousands; unaudited) September 30, 2026 June 30, 2026 September 30, 2025Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses (BaaS)Noninterest expense (GAAP) $ 84,843 $ 141,111 $ 70,172Less: BaaS loan expense 35,715 40,409 32,840Less: BaaS fraud expense 4,129 4,312 2,127Less: Reimbursement of expenses 2,592 2,259 1,412Noninterest expense, net of BaaS loan expense, BaaS fraud expense andreimbursement of expenses $ 42,407 $ 94,131 $ 33,793 The following non-GAAP measure is presented to illustrate the impact of intangible assets on book value per share. 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 nancial measure is book value per share. As of(dollars in thousands, except per shareinformation; unaudited) September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025Tangible book value per share Book value (GAAP) $ 31.28 $ 30.33 $ 33.05 $ 32.43 $ 31.45Total shareholders' equity 478,267 463,447 503,762 490,959 475,277Less: Intangible assets 3,981 4,207 4,434 4,536 —Tangible book value $ 474,286 $ 459,240 $ 499,328 $ 486,423 $ 475,277Common shares outstanding 15,288,479 15,280,689 15,241,491 15,140,192 15,112,000Tangible book value per share $ 31.02 $ 30.05 $ 32.76 $ 32.13 $ 31.45 APPENDIX A As of September 30, 2026 Industry Concentration We have a diversi ed 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 $4.19 billion in outstanding loan balances. When combined with $2.74 billion in unused commitments, the total of these categories is $6.93 billion. Commercial real estate loans represent the largest segment of our loans, comprising 30.8% of our total balance of outstanding loans as of September 30, 2026. Unused commitments to extend credit represents an additional $34.7 million, and the combined total in commercial real estate loans represents $1.33 billion, or 19.1% of our total outstanding loans and loan commitments. The following table summarizes our loan commitments by industry for our commercial real estate portfolio as of September 30, 2026: 28
Page 29
(dollars in thousands;unaudited) OutstandingBalance AvailableLoanCommitments TotalOutstandingBalance &AvailableCommitments % of TotalLoans (OutstandingBalance & AvailableCommitments) AverageLoanBalance Number ofLoansApartments $ 343,787 $ 10,162 $ 353,949 5.1% $ 3,657 94Hotel/Motel 190,380 4,350 194,730 2.8 7,615 25Convenience Store 144,155 3,824 147,979 2.1 2,184 66Retail 108,901 616 109,517 1.6 1,224 89Warehouse 100,392 250 100,642 1.4 2,049 49Mixed use 94,067 6,893 100,960 1.5 1,057 89O ce 80,797 3,775 84,572 1.2 1,063 76Mini Storage 63,144 — 63,144 0.9 4,510 14Strip Mall 42,293 — 42,293 0.6 6,042 7Manufacturing 37,813 2,216 40,029 0.6 1,304 29Groups < 0.50% of total 85,971 2,640 88,611 1.3 1,246 69Total $1,291,700 $ 34,726 $1,326,426 19.1% $ 2,128 607 Consumer loans comprise 39.5% of our total balance of outstanding loans as of September 30, 2026. Unused commitments to extend credit represents an additional $1.15 billion, and the combined total in consumer and other loans represents $2.81 billion, or 40.5% of our total outstanding loans and loan commitments. The $1.15 billion in commitments is subject to CCBX partner/portfolio maximum limits. 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 $400. CCBX consumer loans are underwritten to CCBX credit standards, and underwriting of these loans is regularly tested, including quarterly testing for partners with the largest exposures. The following table summarizes our loan commitments by industry for our consumer and other loan portfolio as of September 30, 2026: (dollars in thousands;unaudited) OutstandingBalance Available Loan Commitments(1) TotalOutstandingBalance &Available Commitments(1) % of TotalLoans (OutstandingBalance & AvailableCommitments) AverageLoanBalance Number ofLoansCCBX consumer loansCredit cards $ 552,078 $ 947,245 $ 1,499,323 21.6% $ 1.5 378,057Installment loans 797,363 41,645 839,008 12.1 0.3 2,637,339Lines of credit 251,707 147,114 398,821 5.8 0.2 1,336,947Other loans 41,979 — 41,979 0.6 0.1 358,418Community bank consumer loansInstallment loans 672 — 672 0.0 26.9 25Lines of credit 196 362 558 0.0 5.8 34Other loans 9,868 16,000 25,868 0.4 26.0 380Total $1,653,863 $ 1,152,366 $ 2,806,229 40.5% $ 0.4 4,711,200 (1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. Residential real estate loans comprise 12.5% of our total balance of outstanding loans as of September 30, 2026. Unused commitments to extend credit represents an additional $810.3 million, which is subject to partner/portfolio maximum limits, and the combined total in residential real estate loans represents $1.33 billion, or 19.2% of our total outstanding loans and loan commitments. Community bank residential real estate loans are closed-end loans secured by rst liens on 29
Page 30
homes and include loans to investors who purchase and lease homes to others. The following table summarizes our loan commitments by industry for our residential real estate loan portfolio as of September 30, 2026: (dollars in thousands;unaudited) OutstandingBalance Available Loan Commitments(1) TotalOutstandingBalance &Available Commitments(1) % of TotalLoans (OutstandingBalance & AvailableCommitments) AverageLoanBalance Number ofLoansCCBX residential real estate loansHome equity lines of credit $ 330,909 $ 756,231 $ 1,087,140 15.7% $ 30 10,984Community bank residential real estate loansClosed end, secured by rstliens 145,597 283 145,880 2.1 522 279Home equity lines of credit 34,628 51,382 86,010 1.2 128 271Closed end, second liens 11,755 2,363 14,118 0.2 336 35Total $ 522,889 $ 810,259 $ 1,333,148 19.2% $ 45 11,569 (1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. Commercial and industrial loans comprise 11.3% of our total balance of outstanding loans as of September 30, 2026. Unused commitments to extend credit represents an additional $695.6 million, and the combined total in commercial and industrial loans represents $1.17 billion, or 16.9% of our total outstanding loans and loan commitments. Included in commercial and industrial loans is $209.7 million in outstanding capital call lines, with an additional $572.5 million in available loan commitments, which is limited to a $350.0 million portfolio maximum. Capital call lines are provided to venture capital rms 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 September 30, 2026: (dollars in thousands;unaudited) OutstandingBalance Available Loan Commitments(1) TotalOutstandingBalance &Available Commitments(1) % of TotalLoans (OutstandingBalance & AvailableCommitments) AverageLoanBalance Number ofLoansCCBX C&I loansCapital call lines $ 209,701 $ 572,540 $ 782,241 11.3% $ 1,626 129Retail and other loans 23,797 31,605 55,402 0.8 1 30,673Community bank C&I loansFinancial institutions 101,145 — 101,145 1.5 4,214 24Other Venture Capital 56,782 25,000 81,782 1.2 11,356 5Construction/Contractorservices 40,585 34,595 75,180 1.1 235 173Medical / Dental / Other care 3,563 1,791 5,354 0.1 274 13Transportation 4,127 15 4,142 0.1 590 7Manufacturing 4,513 2,421 6,934 0.1 146 31Groups < 0.10% of total 30,686 27,678 58,364 0.7 158 194Total $ 474,899 $ 695,645 $ 1,170,544 16.9% $ 15 31,249 30
Page 31
(1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. Construction, land and land development loans comprise 5.9% of our total balance of outstanding loans as of September 30, 2026. Unused commitments to extend credit represent an additional $47.8 million, and the combined total in construction, land and land development loans represents $296.6 million, or 4.3% 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 September 30, 2026: (dollars in thousands;unaudited) OutstandingBalance AvailableLoanCommitments TotalOutstandingBalance &AvailableCommitments % of TotalLoans (OutstandingBalance & AvailableCommitments) AverageLoanBalance Number ofLoansCommercial construction $ 123,848 $ 12,491 $ 136,339 2.0% $ 12,385 10Residential construction 54,754 29,290 84,044 1.2 1,480 37Land development 37,308 5,655 42,963 0.6 3,109 12Undeveloped land loans 17,482 — 17,482 0.3 1,345 13Developed land loans 15,374 368 15,742 0.2 1,281 12Total $ 248,766 $ 47,804 $ 296,570 4.3% $ 2,962 84 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) September 30, 2026 June 30, 2026 March 31, 2026 December 31, 2025 September 30, 2025Commercial construction $ 123,848 $ 121,058 $ 138,232 $ 124,894 $ 124,240Residential construction 54,754 43,162 34,241 37,395 35,929Undeveloped land loans 17,482 17,011 20,633 20,704 20,584Developed land loans 15,374 15,578 18,855 20,559 22,756Land development 37,308 24,753 22,950 18,523 14,552Total $ 248,766 $ 221,562 $ 234,911 $ 222,075 $ 218,061 Commitments to extend credit for on-balance sheet loans total $2.74 billion at September 30, 2026, however we do not anticipate our customers using the $2.74 billion that is showing as available due to CCBX partner and portfolio limits. As of September 30, 2026, commitments associated with sold credit card receivables subject to receivable sale agreements totaled $7.78 billion. While we retain the customer account relationship, receivables generated under these programs are periodically sold to BaaS partners pursuant to the applicable receivable sale agreements and remain subject to the Company's established partner and portfolio limits. The following table presents commitments associated with outstanding commitments to extend credit for on-balance sheet loans, CCBX sold credit card receivable commitments, standby and commercial letters of credit and equity 31
Page 32
investment commitments as of September 30, 2026: Consolidated (dollars in thousands; unaudited) As of September 30,2026 (1)Commitments to extend credit: Credit cards $ 947,245Residential real estate loans 810,259Commercial and industrial loans – capital call lines 572,540Consumer and other loans 205,121Commercial and industrial loans 123,105Commercial real estate loans 34,726Construction – residential real estate loans 29,290Construction – commercial real estate loans 18,513Commitments to extend credit $ 2,740,799 CCBX sold receivable commitment $ 7,778,833Standby letters of credit $ 2,051Equity investment commitment $ 2,475 (1) Total exposure on CCBX loans is subject to CCBX partner/portfolio maximum limits. We have portfolio limits with each of our partners to manage loan concentration risk, liquidity risk and counterparty partner risk. For example, as of September 30, 2026, capital call lines outstanding balance totaled $209.7 million, and while commitments totaled $572.5 million the commitments are cancelable, and are also limited to a maximum of $350.0 million by agreement with each partner. These limits allow us to manage portfolio concentrations with partners and by loan type. See the table below for CCBX portfolio maximums and related available commitments for on-balance sheet loans: CCBX (dollars in thousands; unaudited) Balance Percent ofCCBX LoansReceivable Available Commitments(1) MaximumPortfolio Size CashReserve/PledgeAccountAmountCommercial and industrial loans: Capital call lines $ 209,701 9.5%$ 572,540 $ 350,000$ — All other commercial & industrial loans 23,797 1.1 31,605 307,752 2,088 Real estate loans: Home equity lines of credit(2) 330,909 15.0 756,231 403,846 31,406 Consumer and other loans: Credit cards - cash secured 56 19 — Credit cards - unsecured 552,022 947,226 46,960 Credit cards - total 552,078 25.0 947,245 1,101,741 46,960 Installment loans - cash secured 265,952 41,645 — Installment loans - unsecured 531,411 — (16,580)Installment loans - total 797,363 36.1 41,645 1,666,661 (16,580)Other consumer and other loans 293,686 13.3 147,114 775,000 21,086 Gross CCBX loans receivable 2,207,534 100.0%$ 2,496,380 $ 4,605,000$ 84,960 Net deferred origination fees (635) Loans receivable $2,206,899 (1) Remaining commitment available, net of outstanding balance. (2) These home equity lines of credit are secured by residential real estate and are accessed by using a credit card, but are 32
Page 33
classi ed as 1-4 family residential properties per regulatory guidelines. APPENDIX B As of September 30, 2026 CCBX – BaaS Reporting Information During the quarter ended September 30, 2026, $41.8 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 a credit enhancement under which the partner indemni es or reimburses the Bank for covered credit losses on loans, unfunded commitments and negative deposit accounts. In accordance with U.S. GAAP, we estimate expected credit losses on these exposures and record the related provision for credit losses and reserve for unfunded commitments. Concurrently, a credit enhancement asset is recognized through noninterest income (BaaS credit enhancements) representing the expected reimbursement from the partner. The collectability of the credit enhancement asset is evaluated each reporting period and a valuation adjustment is recorded when collection of all or a portion of the asset is no longer considered probable. 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. Management regularly evaluates and manages counterparty risk associated with its CCBX partners, as the Bank could incur additional credit losses to the extent a partner is unable to ful ll its contractual obligations. Agreements with our CCBX partners also provide protection to the Bank from fraud by indemnifying or reimbursing covered 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 rst 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 if our partner is unable to ful ll their contractual obligation and if the cash ows on the loans were not su cient to fund the reimbursement of loan losses, then the Bank would be exposed to additional loan and deposit 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 speci c 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. In the event of a partner default, the Bank would evaluate any remaining credit enhancement asset associated with that partner to determine whether a write-o is appropriate. If a write-o occurs, the Bank would stop payments to the CCBX partner and retain the full yield and any fee income on the loan portfolio going forward, decreasing our BaaS loan expense. The Bank records contractual interest earned from the borrowers on CCBX partner loans in interest income, adjusted for 33
Page 34
origination costs, which are paid or payable to the CCBX partners. 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 nancial statements: Loan income and related loan expense Three Months Ended (dollars in thousands; unaudited) September 30, 2026 June 30, 2026 September 30, 2025 Yield on loans(1) 12.73% 14.56% 15.65%BaaS loan interest income $ 79,623 $ 78,580 $ 69,643 Less: BaaS loan expense 35,715 40,409 32,840 Net BaaS loan income(2) $ 43,908 $ 38,171 $ 36,803 Net BaaS loan income divided by average BaaS loans(1)(2) 7.02% 7.07% 8.27% (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 loans receivable resulted in increased interest income and net BaaS loan income on CCBX loans during the quarter ended September 30, 2026 compared to the quarter ended June 30, 2026. Our strategy is 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 tend to have lower stated rates and expected losses than some of our CCBX loans historically. We continue to manage CCBX credit and concentration levels in an e ort to optimize our loan portfolio and also generate o -balance sheet fee income. Growth in CCBX loans has resulted in an increase in interest income for the quarter ended September 30, 2026 compared to the quarter ended September 30, 2025, as well as an increase in net BaaS loan income. 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) September 30, 2026 June 30, 2026 September 30, 2025BaaS loan interest income $ 79,623 $ 78,580 $ 69,643Total BaaS loan interest income $ 79,623 $ 78,580 $ 69,643 Interest expense Three Months Ended (dollars in thousands; unaudited) September 30, 2026 June 30, 2026 September 30, 2025BaaS interest expense $ 24,611 $ 22,386 $ 23,330$ 24611$ 22386$ 23330 34
Page 35
CCBX Credit Cards CCBX Credit Cards Quarter over Quarter Change in CCBX Credit Cards Quarter over Quarter Change in CCBX Credit Cards Total BaaS interest expense $ 24,611 $ 22,386 $ 23,330 BaaS income Three Months Ended (dollars in thousands; unaudited) September 30, 2026 June 30, 2026 September 30, 2025BaaS program income: Servicing and other BaaS fees $ 3,509 $ 2,917 $ 1,575Transaction and interchange fees 8,026 6,836 4,878Reimbursement of expenses 2,592 2,259 1,412Total BaaS program income 14,127 12,012 7,865BaaS indemni cation income: BaaS credit enhancements 41,767 70,725 55,412BaaS fraud enhancements 4,129 4,312 2,127BaaS indemni cation income 45,896 75,037 57,539Total noninterest BaaS income $ 60,023 $ 87,049 $ 65,404 Servicing and other BaaS fees increased $592,000, and transaction and interchange fees increased $1.2 million in the quarter ended September 30, 2026 compared to the quarter ended June 30, 2026. We expect servicing and other BaaS fees to be higher when bringing on new partners and then to decrease when transaction and interchange fees increase as partner activity grows and these recurring fees exceed contracted minimum fees. Increases in BaaS reimbursement of fees o set increases in noninterest expense from BaaS expenses covered by CCBX partners. BaaS loan and fraud expense: Three Months Ended (dollars in thousands; unaudited) September 30, 2026 June 30, 2026 September 30, 2025BaaS loan expense $ 35,715 $ 40,409 $ 32,840BaaS fraud expense 4,129 4,312 2,127Total BaaS loan and fraud expense $ 39,844 $ 44,721 $ 34,967 Graphs accompanying this announcement are available at: https://www.globenewswire.com/NewsRoom/AttachmentNg/99ab0b8d-d005-4239-bf58-5bf3dce3ba05 https://www.globenewswire.com/NewsRoom/AttachmentNg/01d76f54-f8e6-4350-aea0-0b281a73069e Source: Coastal Financial Corporation --> 35