Core Insights - Coastal Financial Corporation reported a net income of $11.0 million for Q2 2025, an increase from $9.7 million in Q1 2025 but a decrease from $11.6 million in Q2 2024 [1] - The company experienced a quality deposit growth of $122.3 million during Q2 2025, with CCBX program fee income increasing by 8.2% compared to the previous quarter [2][18] Financial Performance - Interest and dividend income for Q2 2025 was $107.8 million, up from $104.9 million in Q1 2025 and $97.4 million in Q2 2024 [5] - Net interest income increased to $76.7 million in Q2 2025 from $76.1 million in Q1 2025 and $66.2 million in Q2 2024 [38] - Noninterest income was $42.7 million in Q2 2025, down from $63.5 million in Q1 2025 [5] - Total assets reached $4.48 billion as of June 30, 2025, compared to $4.34 billion at the end of Q1 2025 [5] Credit Quality and Loss Provisions - Provision for credit losses decreased to $32.2 million in Q2 2025 from $55.8 million in Q1 2025, reflecting improved performance in the CCBX portfolio [5][12] - Nonperforming loans to total loans receivable ratio was 1.72% as of June 30, 2025, compared to 1.60% in Q1 2025 [7] CCBX Segment Performance - CCBX loans increased by $29.5 million, or 1.8%, to $1.68 billion despite selling $1.30 billion in loans during Q2 2025 [24] - The CCBX segment had 29 relationships as of June 30, 2025, with two partners in testing and five signed letters of intent [20] - Total BaaS program fee income was $6.8 million in Q2 2025, an increase of $512,000 from Q1 2025 [6] Community Bank Performance - The community bank segment saw net loans decrease by $6.5 million, or 0.3%, to $1.86 billion in Q2 2025 [35] - Community bank deposits increased by $29.2 million, or 1.9%, to $1.55 billion during the same period [37] Management Outlook - The company anticipates additional new partner engagements in the latter half of 2025, supported by a strong CCBX pipeline [18] - Continued investments in technology and risk management infrastructure are expected to yield future efficiencies and cost reductions [18]

Core Viewpoint - Canada Carbon Inc. has received all necessary permits to initiate its third drilling campaign at the Asbury Graphite Property, which is expected to enhance its resource estimates and support a pre-feasibility study by the end of 2025 [1][4][6]. Group 1: Drilling Campaign Details - The upcoming drilling campaign aims to complete up to 5,200 meters of core drilling across a 5-kilometer mineralization trend at Asbury [2]. - This campaign will add to previous drilling efforts from 2022 and 2023, bringing the total core samples to over 10,000 meters, which will aid in de-risking the project [2][4]. - The company plans to utilize the data from this campaign to update its NI 43-101 resource report and complete a pre-feasibility study by December 31, 2025 [4]. Group 2: Resource Estimates and Historical Context - The maiden resource estimate reported an inferred resource of 4.14 million tons (Mt) with an average grade of 3.05% carbon grade (Cg), using a cut-off grade of 1.0% Cg [4]. - Asbury was previously an operational graphite mining project from 1974 to 1988, producing high-quality concentrate [7]. Group 3: Stakeholder Engagement - The company has engaged with local stakeholders, including the municipality of Notre-Dame-du-Laus and the Kitigan Zibi Anishinaabeg community, to discuss the project and incorporate feedback [5]. Group 4: Management Commentary - The CEO of Canada Carbon expressed confidence in the drilling campaign, stating it will validate assumptions regarding mineralization at Asbury and contribute positively to the local economy [6][7].

Core Points - Canada Carbon Inc. has been granted a 30-day extension to close its non-brokered private placement of up to 35,000,000 units at a price of $0.02 per unit, aiming for aggregate gross proceeds of up to $700,000 [1] - Each unit consists of one common share and one common share purchase warrant, with the warrant allowing the holder to acquire one common share at a price of $0.06 for 60 months [1] - The closing of the offering is subject to regulatory approvals, including the approval of the TSX Venture Exchange [2] Financial Details - The offering proceeds will be utilized for corporate and general working capital purposes [2] - A finder's fee may be paid to eligible parties, consisting of a cash fee equal to 8% of the gross proceeds and finder's warrants equal to 8% of the units issued [3] Regulatory Information - All securities issued will be subject to a hold period of four months plus a day from the date of issuance [2] - The securities have not been registered under the U.S. Securities Act and cannot be offered or sold in the United States unless registered or exempt [4]

PART I. FINANCIAL INFORMATION This part provides the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Coastal Financial Corporation, including balance sheets, income statements, comprehensive income statements, statements of changes in shareholders' equity, and cash flow statements, along with detailed notes on business operations, accounting policies, investment securities, loans, credit losses, deposits, leases, stock-based compensation, fair value measurements, earnings per share, and segment reporting for the periods ended March 31, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the Company's financial position, detailing assets, liabilities, and shareholders' equity at specific dates | ASSETS (dollars in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------ | :------------- | :---------------- | | Cash and due from banks | $43,467 | $36,533 | | Interest earning deposits | $580,835 | $415,980 | | Total assets | $4,339,282 | $4,121,208 | | LIABILITIES (dollars in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------ | :------------- | :---------------- | | Deposits | $3,791,229 | $3,585,332 | | Total liabilities | $3,889,365 | $3,682,504 | | SHAREHOLDERS' EQUITY (dollars in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------ | :------------- | :---------------- | | Total shareholders' equity | $449,917 | $438,704 | - Total assets increased by **$218.1 million** (**5.3%**) from December 31, 2024, to March 31, 2025, primarily driven by an increase in interest-earning deposits with other banks and loans receivable[14](index=14&type=chunk)[210](index=210&type=chunk) - Total deposits increased by **$205.9 million** (**5.7%**) from December 31, 2024, to March 31, 2025[14](index=14&type=chunk)[265](index=265&type=chunk) [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section outlines the Company's financial performance, reporting revenues, expenses, and net income over specific periods | Income Statement (dollars in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Total interest income | $104,907 | $91,742 | | Total interest expense | $28,845 | $29,536 | | Net interest income | $76,062 | $62,206 | | Provision for credit losses | $55,781 | $83,158 | | Total noninterest income | $63,477 | $86,176 | | Total noninterest expense | $71,989 | $56,509 | | NET INCOME | $9,730 | $6,800 | | Basic earnings per common share | $0.65 | $0.51 | | Diluted earnings per common share | $0.63 | $0.50 | - Net income increased by **$2.9 million** (**43.1%**) to **$9.7 million** for the three months ended March 31, 2025, compared to **$6.8 million** in the prior year, driven by higher interest income and lower interest expense on deposits, partially offset by increased BaaS loan expense[19](index=19&type=chunk)[153](index=153&type=chunk) - Diluted EPS increased to **$0.63** for the three months ended March 31, 2025, from **$0.50** in the prior year[19](index=19&type=chunk)[153](index=153&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the Company's comprehensive income, including net income and other comprehensive income components | Comprehensive Income (dollars in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | NET INCOME | $9,730 | $6,800 | | OTHER COMPREHENSIVE INCOME (LOSS), net of tax | $1 | $466 | | COMPREHENSIVE INCOME | $9,731 | $7,266 | - Comprehensive income increased to **$9.7 million** for the three months ended March 31, 2025, from **$7.3 million** in the prior year, with a minimal other comprehensive income contribution in 2025 compared to **$466,000** in 2024[21](index=21&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) This section tracks changes in the Company's shareholders' equity, reflecting net income, stock-based compensation, and other comprehensive income | Shareholders' Equity (dollars in thousands) | Balance, December 31, 2024 | Net Income | Stock-based Compensation | Other Comprehensive Income | Balance, March 31, 2025 | | :------------------------------------------ | :------------------------- | :--------- | :----------------------- | :------------------------- | :---------------------- | | Common Stock Amount | $228,177 | — | $2,540 | — | $229,659 | | Retained Earnings | $210,529 | $9,730 | — | — | $220,259 | | Total Shareholders' Equity | $438,704 | $9,730 | $2,540 | $1 | $449,917 | - Total shareholders' equity increased by **$11.2 million** to **$449.9 million** as of March 31, 2025, from **$438.7 million** at December 31, 2024, primarily due to net income and stock-based compensation[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the Company's cash inflows and outflows from operating, investing, and financing activities | Cash Flows (dollars in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $71,684 | $56,764 | | Net cash used by investing activities | $(104,734) | $(127,665) | | Net cash provided by financing activities | $204,839 | $102,901 | | NET CHANGE IN CASH | $171,789 | $32,000 | | CASH, end of quarter | $624,302 | $515,128 | - Net cash provided by operating activities increased to **$71.7 million** for the three months ended March 31, 2025, from **$56.8 million** in the prior year, mainly due to higher net income and provision for credit losses[25](index=25&type=chunk) - Net cash provided by financing activities significantly increased to **$204.8 million** in Q1 2025 from **$102.9 million** in Q1 2024, driven by a net increase in demand, money market, and savings deposits[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents detailed notes that provide additional information and context to the unaudited condensed consolidated financial statements [Note 1 - Description of Business and Summary of Significant Accounting Policies](index=13&type=section&id=Note%201%20-%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the Company's business segments and outlines its significant accounting policies - Coastal Financial Corporation operates through three segments: Community Bank, CCBX (Banking as a Service), and Treasury & Administration. The CCBX segment had **25** relationships as of March 31, 2025[28](index=28&type=chunk) - On April 1, 2025, the T-Mobile deposit program went live, moving customer deposits to the Bank, which will impact second-quarter deposits[35](index=35&type=chunk) [Note 2 - Recent accounting standards](index=14&type=section&id=Note%202%20-%20Recent%20accounting%20standards) This note details the impact and

Core Viewpoint - Coastal Financial Corporation (CCB) reported quarterly earnings of $0.63 per share, missing the Zacks Consensus Estimate of $0.93 per share, representing a -32.26% earnings surprise [1] - The company posted revenues of $139.54 million for the quarter, missing the Zacks Consensus Estimate by 7.77% and down from $147.89 million a year ago [2] Financial Performance - Earnings per share (EPS) for the current quarter is $0.63, compared to $0.67 per share a year ago [1] - The company has surpassed consensus EPS estimates two times over the last four quarters [2] - Revenue for the quarter was $139.54 million, compared to $147.89 million in the same quarter last year [2] Market Performance - Coastal Financial shares have increased by approximately 3.6% since the beginning of the year, while the S&P 500 has declined by 6% [3] - The current Zacks Rank for Coastal Financial is 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.14 on revenues of $160 million, and for the current fiscal year, it is $4.59 on revenues of $669.5 million [7] - The outlook for the industry, specifically the Banks - West sector, is in the bottom 42% of over 250 Zacks industries, which may impact stock performance [8]

[First Quarter 2025 Results Overview](index=1&type=section&id=1.%20First%20Quarter%202025%20Results%20Overview) Coastal Financial Corporation reported **net income of $9.7 million** for Q1 2025, driven by strong deposit growth and BaaS program fee income, despite elevated expenses [Executive Summary](index=1&type=section&id=1.1.%20Executive%20Summary) Coastal Financial Corporation reported net income of **$9.7 million**, or **$0.63** per diluted common share, for Q1 2025, reflecting a decrease from Q4 2024 but an increase from Q1 2024 Key Financial Highlights (Q1 2025 vs. Prior Periods) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :----- | :------ | :------ | :------ | | Net Income | $9.7 million | $13.4 million | $6.8 million | | Diluted EPS | $0.63 | $0.94 | $0.50 | | Total Deposit Growth (QoQ) | $205.9 million (+5.7%) | - | - | | CCBX Program Fee Income (QoQ) | $6.3 million (+13.0%) | - | - | | CCBX Program Fee Income (YoY) | - | - | +55.2% | - Elevated expenses in Q1 2025 were due to onboarding and implementation costs of new CCBX partnerships and products, and investments in technology[2](index=2&type=chunk)[3](index=3&type=chunk) [Key Strategic Highlights and Outlook](index=1&type=section&id=1.2.%20Key%20Strategic%20Highlights%20and%20Outlook) The company continues to invest in CCBX growth, with a robust pipeline of new partners and products, focusing on compliance, operational risk, and expanding product offerings - CCBX segment has **25 relationships** as of March 31, 2025, including 2 partners in testing, 3 in implementation/onboarding, and 1 signed LOI, with a robust pipeline for 2025 and 2026[3](index=3&type=chunk)[15](index=15&type=chunk)[20](index=20&type=chunk) - Investments for growth continue, with a focus on compliance and operational risk for new CCBX programs, anticipating future revenue and earnings[3](index=3&type=chunk)[13](index=13&type=chunk) - The company remains fully indemnified against fraud and **98.8% indemnified** against credit risk with its CCBX partners[3](index=3&type=chunk) - Launched the T-Mobile deposit program on April 1, 2025, and expects to launch new RobinHood deposit products in the second half of 2025 to increase deposits and manage liquidity[3](index=3&type=chunk)[18](index=18&type=chunk) - Continued strategy of selling loans (e.g., **$744.6 million** in Q1 2025) to balance partner and lending limits, manage the loan portfolio, and generate off-balance sheet fee income[3](index=3&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=2.%20Consolidated%20Financial%20Performance) The company's Q1 2025 net income was **$9.7 million**, influenced by increased net interest income, higher credit loss provisions, and noninterest expenses [Income Statement Data](index=2&type=section&id=2.1.%20Income%20Statement%20Data) Net income for Q1 2025 was **$9.7 million**, a decrease from $13.4 million in Q4 2024, but an increase from $6.8 million in Q1 2024, influenced by higher net interest income, increased provision for credit losses, and noninterest expenses Consolidated Income Statement Data (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | QoQ Change | YoY Change | | :---------------------------------- | :------------- | :---------------- | :------------- | :--------- | :--------- | | Interest and dividend income | $104,907 | $102,448 | $91,742 | +2.40% | +14.35% | | Interest expense | $28,845 | $30,071 | $29,536 | -4.08% | -2.34% | | Net interest income | $76,062 | $72,377 | $62,206 | +5.10% | +22.28% | | Provision for credit losses | $55,781 | $61,867 | $83,158 | -9.99% | -32.92% | | Noninterest income | $63,477 | $74,100 | $86,176 | -14.33% | -26.34% | | Noninterest expense | $71,989 | $67,411 | $56,509 | +6.79% | +27.40% | | Provision for income tax | $2,039 | $3,832 | $1,915 | -46.79% | +6.48% | | Net income | $9,730 | $13,367 | $6,800 | -27.22% | +43.09% | | Diluted earnings per common share | $0.63 | $0.94 | $0.50 | -32.98% | +26.00% | [Balance Sheet Data](index=2&type=section&id=2.2.%20Balance%20Sheet%20Data) Total assets increased by 5.3% QoQ to **$4.34 billion** at March 31, 2025, driven by increases in cash and loans receivable, while total deposits grew by 5.7% QoQ to **$3.79 billion**, largely due to CCBX partner programs Consolidated Balance Sheet Data (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | QoQ Change | YoY Change | | :-------------------------- | :------------- | :---------------- | :------------- | :--------- | :--------- | | Cash and cash equivalents | $624,302 | $452,513 | $515,128 | +37.98% | +21.19% | | Loans receivable | $3,517,359 | $3,486,565 | $3,195,101 | +0.88% | +10.08% | | Allowance for credit losses | $(183,178) | $(176,994) | $(139,941) | +3.49% | +30.90% | | Total assets | $4,339,282 | $4,121,208 | $3,863,062 | +5.29% | +12.32% | | Total deposits | $3,791,229 | $3,585,332 | $3,462,979 | +5.74% | +9.48% | | Total shareholders' equity | $449,917 | $438,704 | $303,709 | +2.56% | +48.14% | [Key Performance Ratios](index=3&type=section&id=2.3.%20Key%20Performance%20Ratios) Return on average assets (ROA) decreased QoQ to **0.93%** but increased YoY, while return on average equity (ROE) decreased QoQ to **8.91%**, and the efficiency ratio increased to **51.59%** Consolidated Key Performance Ratios | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | QoQ Change (bps) | YoY Change (bps) | | :-------------------------- | :------------- | :---------------- | :------------- | :--------------- | :--------------- | | Return on average assets | 0.93 % | 1.30 % | 0.73 % | -37 | +20 | | Return on average equity | 8.91 % | 14.90 % | 9.21 % | -599 | -30 | | Yield on earnings assets | 10.32 % | 10.24 % | 10.21 % | +8 | +11 | | Yield on loans receivable | 11.33 % | 11.12 % | 11.01 % | +21 | +32 | | Cost of funds | 3.11 % | 3.24 % | 3.52 % | -13 | -41 | | Cost of deposits | 3.08 % | 3.21 % | 3.49 % | -13 | -41 | | Net interest margin | 7.48 % | 7.23 % | 6.92 % | +25 | +56 | | Noninterest expense to average assets | 6.87 % | 6.54 % | 6.10 % | +33 | +77 | | Efficiency ratio | 51.59 % | 46.02 % | 38.08 % | +557 | +1351 | [Net Interest Income and Margin](index=8&type=section&id=2.4.%20Net%20Interest%20Income%20and%20Margin) Net interest income increased by 5.1% QoQ to **$76.1 million**, driven by higher average loans, increased loan yield, and lower cost of funds, improving Net Interest Margin (NIM) to **7.48%** - Net interest income increased by **$3.7 million (5.1%)** QoQ to **$76.1 million**, and by **$13.9 million (22.3%)** YoY, driven by increased average loans, higher loan yield, and lower cost of funds[29](index=29&type=chunk) - Net interest margin (NIM) was **7.48%** in Q1 2025, up **25 bps** QoQ and **56 bps** YoY, primarily due to higher loan yield and lower cost of deposits[12](index=12&type=chunk)[30](index=30&type=chunk) - NIM, net of BaaS loan expense, was **4.28%** in Q1 2025, up **12 bps** QoQ and **26 bps** YoY[30](index=30&type=chunk)[31](index=31&type=chunk) - Cost of funds decreased by **13 bps** QoQ to **3.11%**, and cost of deposits decreased by **13 bps** QoQ to **3.08%**, largely due to recent reductions in the Fed funds rate[32](index=32&type=chunk) Yield on Loans and Cost of Deposits by Segment (Q1 2025) | Segment | Yield on Loans | Cost of Deposits | | :------------ | :------------- | :--------------- | | Community Bank | 6.53% | 1.76% | | CCBX | 16.88% | 4.01% | | Consolidated | 11.33% | 3.08% | [Noninterest Income](index=10&type=section&id=2.5.%20Noninterest%20Income) Total noninterest income decreased by **$10.6 million** QoQ to **$63.5 million**, primarily due to a decrease in BaaS credit and fraud enhancements, partially offset by an increase in BaaS program income Consolidated Noninterest Income (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | QoQ Change | YoY Change | | :-------------------------- | :------------- | :---------------- | :------------- | :--------- | :--------- | | Total noninterest income | $63,477 | $74,100 | $86,176 | -14.33% | -26.34% | | BaaS credit enhancements | $53,648 | $62,097 | $79,808 | -13.61% | -32.78% | | BaaS fraud enhancements | $1,993 | $5,043 | $923 | -60.48% | +115.93% | | BaaS program income | $6,278 | $5,554 | $4,046 | +13.04% | +55.17% | - The QoQ decrease in noninterest income was primarily due to an **$8.4 million** decrease in BaaS credit enhancements and a **$3.1 million** decrease in BaaS fraud enhancements, partially offset by a **$724,000** increase in BaaS program income[34](index=34&type=chunk) [Noninterest Expense](index=10&type=section&id=2.6.%20Noninterest%20Expense) Total noninterest expense increased by **$4.6 million** QoQ to **$72.0 million**, driven by higher salaries, legal fees, and BaaS loan expense, reflecting continued investments in growth and risk management Consolidated Noninterest Expense (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | QoQ Change | YoY Change | | :-------------------------- | :------------- | :---------------- | :------------- | :--------- | :--------- | | Total noninterest expense | $71,989 | $67,411 | $56,509 | +6.79% | +27.40% | | Salaries and employee benefits | $21,532 | $17,994 | $17,984 | +19.66% | +19.73% | | Legal and professional expenses | $6,488 | $4,606 | $3,672 | +40.86% | +76.68% | | BaaS loan expense | $32,507 | $30,720 | $26,107 | +5.82% | +24.51% | | BaaS fraud expense | $1,993 | $5,043 | $923 | -60.48% | +115.93% | - Legal and professional fees were elevated in Q1 2025 due to compliance, BSA, audit, legal, and project work for new partners, with similar levels expected in Q2 2025 before returning to historical levels in Q3 2025[9](index=9&type=chunk) Noninterest Expense, Net of BaaS Related Items (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------------------------------------------------------------ | :------------- | :---------------- | :------------- | | Total noninterest expense (GAAP) | $71,989 | $67,411 | $56,509 | | Less: BaaS loan expense | $32,507 | $30,720 | $26,107 | | Less: BaaS fraud expense | $1,993 | $5,043 | $923 | | Less: Reimbursement of expenses (BaaS) | $1,026 | $812 | $254 | | Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses | $36,463 | $30,836 | $29,225 | [Provision for Income Taxes](index=11&type=section&id=2.7.%20Provision%20for%20Income%20Taxes) The provision for income taxes was **$2.0 million** in Q1 2025, lower than Q4 2024 due to equity award deductibility but higher than Q1 2024 due to increased net income, with the overall tax rate rising from CCBX expansion Provision for Income Taxes (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | QoQ Change | YoY Change | | :-------------------------- | :------------- | :---------------- | :------------- | :--------- | :--------- | | Provision for income tax | $2,039 | $3,832 | $1,915 | -46.79% | +6.48% | - The QoQ decrease in tax provision was due to the deductibility of certain equity awards, while the YoY increase was primarily due to higher net income[40](index=40&type=chunk) - The overall tax rate has increased due to various state taxes as CCBX activities and employees expand into other states[41](index=41&type=chunk) [Segment Performance](index=4&type=section&id=3.%20Segment%20Performance) The CCBX segment demonstrated significant growth in loans and deposits, while the Community Bank segment maintained stable loan and deposit levels [CCBX Segment Performance](index=4&type=section&id=3.1.%20CCBX%20Segment%20Performance) The CCBX segment continues to grow and evolve, with **25 relationships** as of March 31, 2025, and increased loans by **2.9%** QoQ to **$1.65 billion** and deposits by **9.8%** QoQ to **$2.27 billion** [CCBX Relationships and Strategic Focus](index=4&type=section&id=3.1.1.%20CCBX%20Relationships%20and%20Strategic%20Focus) As of March 31, 2025, CCBX had **25 relationships**, including new partners in testing and implementation, with a strategy to cultivate new relationships with established partners and expand product offerings while managing risk CCBX Relationships Status | Status | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------ | :------------- | :---------------- | :------------- | | Active | 19 | 19 | 19 | | Friends and family / testing | 2 | 1 | 1 | | Implementation / onboarding | 3 | 1 | 1 | | Signed letters of intent | 1 | 3 | 0 | | Total CCBX relationships | 25 | 24 | 21 | - CCBX is refining partnership criteria, exploring relationships with larger, more established partners with experienced management teams, existing customer bases, and strong financial positions[15](index=15&type=chunk) - The company continues to expand product offerings with existing CCBX partners, aiming to cultivate new relationships that align with long-term goals and manage regulatory risk[16](index=16&type=chunk) [CCBX Loan Portfolio](index=5&type=section&id=3.1.2.%20CCBX%20Loan%20Portfolio) CCBX loans increased by **$47.2 million (2.9%)** QoQ to **$1.65 billion**, despite significant loan sales, with a diversified portfolio and a slight increase in loan yield to **16.88%** CCBX Loan Portfolio (Dollars in thousands) | Loan Category | March 31, 2025 Balance | % to Total | December 31, 2024 Balance | % to Total | March 31, 2024 Balance | % to Total | | :-------------------------- | :--------------------- | :--------- | :------------------------ | :--------- | :--------------------- | :--------- | | Capital call lines | $133,466 | 8.1% | $109,017 | 6.8% | $135,671 | 10.3% | | Residential real estate loans | $285,355 | 17.3% | $267,707 | 16.7% | $265,148 | 20.2% | | Credit cards | $532,775 | 32.2% | $528,554 | 33.0% | $505,706 | 38.6% | | Other consumer and other loans | $670,026 | 40.6% | $664,780 | 41.4% | $358,528 | 27.3% | | Gross CCBX loans receivable | $1,651,324 | 100.0% | $1,604,019 | 100.0% | $1,312,213 | 100.0% | - CCBX loans increased by **$47.2 million (2.9%)** QoQ to **$1.65 billion**, despite selling **$744.6 million** in loans during Q1 2025[20](index=20&type=chunk)[21](index=21&type=chunk) - CCBX loan yield increased by **0.07%** QoQ to **16.88%** for Q1 2025[21](index=21&type=chunk)[22](index=22&type=chunk) - The portion of one CCBX partner's portfolio for which the company is responsible for losses decreased from **10%** to **5%** as of April 1, 2024, representing **$19.9 million** in loans at March 31, 2025[20](index=20&type=chunk)[48](index=48&type=chunk) [CCBX Deposit Portfolio](index=6&type=section&id=3.1.3.%20CCBX%20Deposit%20Portfolio) CCBX deposits increased by **$202.9 million (9.8%)** QoQ to **$2.27 billion**, with interest-bearing demand and money market accounts forming the largest portion, and the cost of deposits decreasing to **4.01%** CCBX Deposit Portfolio (Dollars in thousands) | Deposit Category | March 31, 2025 Balance | % to Total | December 31, 2024 Balance | % to Total | March 31, 2024 Balance | % to Total | | :----------------------------------- | :--------------------- | :--------- | :------------------------ | :--------- | :--------------------- | :--------- | | Demand, noninterest bearing | $58,416 | 2.6% | $55,686 | 2.7% | $58,669 | 2.9% | | Interest bearing demand and money market | $2,145,608 | 94.6% | $1,958,459 | 94.9% | $1,964,942 | 96.8% | | Savings | $16,625 | 0.7% | $5,710 | 0.3% | $5,338 | 0.3% | | Total CCBX deposits | $2,267,008 | 100.0% | $2,064,088 | 100.0% | $2,028,949 | 100.0% | - CCBX deposits increased by **$202.9 million (9.8%)** QoQ to **$2.27 billion**[23](index=23&type=chunk) - Cost of CCBX deposits decreased by **18 bps** QoQ to **4.01%** for Q1 2025[23](index=23&type=chunk) - **$406.3 million** in CCBX deposits were transferred off-balance sheet for FDIC insurance and sweep purposes in Q1 2025[23](index=23&type=chunk) [Community Bank Segment Performance](index=6&type=section&id=3.2.%20Community%20Bank%20Segment%20Performance) The community bank segment experienced a slight decrease in net loans by **$16.5 million (0.9%)** QoQ to **$1.87 billion**, while deposits increased marginally by **$3.0 million (0.2%)** QoQ to **$1.52 billion** with a decreased cost of deposits [Community Bank Loan Portfolio](index=8&type=section&id=3.2.1.%20Community%20Bank%20Loan%20Portfolio) Community bank net loans decreased by **$16.5 million (0.9%)** QoQ to **$1.87 billion**, with commercial real estate loans as the largest category and a stable loan yield of **6.53%** Community Bank Loan Portfolio (Dollars in thousands) | Loan Category | March 31, 2025 Balance | % to Total | December 31, 2024 Balance | % to Total | March 31, 2024 Balance | % to Total | | :------------------------------------------ | :--------------------- | :--------- | :------------------------ | :--------- | :--------------------- | :--------- | | Commercial and industrial loans | $149,104 | 8.0% | $150,395 | 8.0% | $154,395 | 8.2% | | Construction, land and land development loans | $166,551 | 8.9% | $148,198 | 7.8% | $160,862 | 8.5% | | Residential real estate loans | $202,920 | 10.8% | $202,064 | 10.7% | $231,157 | 12.2% | | Commercial real estate loans | $1,340,647 | 71.6% | $1,374,801 | 72.8% | $1,342,489 | 71.0% | | Gross Community Bank loans receivable | $1,872,548 | 100.0% | $1,889,000 | 100.0% | $1,890,350 | 100.0% | - Community bank net loans decreased by **$16.5 million (0.9%)** QoQ to **$1.87 billion**[24](index=24&type=chunk) - Community Bank loan yield remained stable at **6.53%** QoQ for Q1 2025[27](index=27&type=chunk)[33](index=33&type=chunk) [Community Bank Deposit Portfolio](index=8&type=section&id=3.2.2.%20Community%20Bank%20Deposit%20Portfolio) Community bank deposits increased slightly by **$3.0 million (0.2%)** QoQ to **$1.52 billion**, with noninterest-bearing demand deposits representing 31.5% and the cost of deposits decreasing to **1.76%** Community Bank Deposit Portfolio (Dollars in thousands) | Deposit Category | March 31, 2025 Balance | % to Total | December 31, 2024 Balance | % to Total | March 31, 2024 Balance | % to Total | | :--------------------------------------------- | :--------------------- | :--------- | :------------------------ | :--------- | :--------------------- | :--------- | | Demand, noninterest bearing | $481,214 | 31.5% | $471,838 | 31.0% | $515,443 | 35.9% | | Interest bearing demand and money market | $560,416 | 36.8% | $570,625 | 37.5% | $834,725 | 58.2% | | Savings | $59,493 | 3.9% | $61,116 | 4.0% | $68,747 | 4.8% | | Total Community Bank deposits | $1,524,221 | 100.0% | $1,521,244 | 100.0% | $1,434,030 | 100.0% | - Community bank deposits increased by **$3.0 million (0.2%)** QoQ to **$1.52 billion**[28](index=28&type=chunk) - Cost of Community Bank deposits decreased by **10 bps** QoQ to **1.76%** for Q1 2025, largely due to decreases in the Fed funds rate[28](index=28&type=chunk)[33](index=33&type=chunk) [Financial Condition and Capital](index=11&type=section&id=4.%20Financial%20Condition%20and%20Capital) Total assets grew to **$4.34 billion**, with the company and bank remaining well-capitalized and maintaining strong liquidity [Financial Condition Overview](index=11&type=section&id=4.1.%20Financial%20Condition%20Overview) Total assets increased by **$218.1 million (5.3%)** QoQ to **$4.34 billion** at March 31, 2025, primarily due to increased cash and loans receivable, while total shareholders' equity grew by **$11.2 million** - Total assets increased by **$218.1 million (5.3%)** QoQ to **$4.34 billion** at March 31, 2025[42](index=42&type=chunk) - The increase in total assets was primarily comprised of a **$171.8 million** increase in cash and a **$30.8 million** increase in loans receivable[42](index=42&type=chunk) - Total shareholders' equity increased by **$11.2 million** QoQ, primarily due to **$9.7 million** in net earnings and **$1.5 million** from equity awards exercised[45](index=45&type=chunk) [Capital Ratios](index=3&type=section&id=4.2.%20Capital%20Ratios) Both Coastal Financial Corporation and Coastal Community Bank remained well-capitalized at March 31, 2025, exceeding all minimum regulatory requirements, with the company's Tier 1 leverage capital at **10.67%** and Common Equity Tier 1 risk-based capital at **12.13%** Capital Ratios (as of March 31, 2025) | Capital Ratio | Company | Bank | Minimum Well Capitalized Ratios | | :-------------------------------- | :------ | :--- | :------------------------------ | | Tier 1 leverage capital | 10.67 % | 10.57 % | 5.00 % | | Common equity Tier 1 risk-based capital | 12.13 % | 12.12 % | 6.50 % | | Tier 1 risk-based capital | 12.22 % | 12.12 % | 8.00 % | | Total risk-based capital | 14.73 % | 13.42 % | 10.00 % | - Both the Company and the Bank remained well capitalized at March 31, 2025, exceeding all minimum regulatory requirements[45](index=45&type=chunk)[46](index=46&type=chunk) [Liquidity and Uninsured Deposits](index=11&type=section&id=4.3.%20Liquidity%20and%20Uninsured%20Deposits) As of March 31, 2025, the company had **$624.3 million** in cash and **$662.4 million** in additional borrowing capacity, with uninsured deposits totaling **$558.8 million** - Cash on hand was **$624.3 million** as of March 31, 2025[43](index=43&type=chunk) - The company had an additional borrowing capacity of **$662.4 million** from the Federal Reserve Bank discount window and Federal Home Loan Bank, plus **$50.0 million** from a correspondent bank, with no outstanding borrowings[43](index=43&type=chunk) - Uninsured deposits were **$558.8 million** as of March 31, 2025, compared to **$543.0 million** as of December 31, 2024[44](index=44&type=chunk) [Asset Quality](index=3&type=section&id=5.%20Asset%20Quality) Asset quality metrics show an increased allowance for credit losses, primarily in the CCBX portfolio, with a decrease in net charge-offs and nonperforming assets [Allowance for Credit Losses](index=3&type=section&id=5.1.%20Allowance%20for%20Credit%20Losses) The total allowance for credit losses (ACL) increased to **$183.2 million**, representing **5.21%** of loans receivable, with the majority allocated to the CCBX portfolio reflecting higher expected losses Allowance for Credit Losses (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | :------------- | | Total allowance for credit losses | $183,178 | $176,994 | $139,941 | | ACL to total loans receivable | 5.21 % | 5.08 % | 4.38 % | | ACL allocated to CCBX | $164,186 | $158,070 | $118,557 | | ACL to CCBX loans receivable | 9.95 % | 9.86 % | 9.04 % | | ACL allocated to Community Bank | $18,992 | $18,924 | $21,384 | | ACL to Community Bank loans receivable | 1.02 % | 1.00 % | 1.14 % | - CCBX partner agreements provide credit enhancements that cover net charge-offs on CCBX loans and negative deposit accounts, indemnifying or reimbursing incurred losses, except for a **5%** portion of one partner's portfolio (**$19.9 million**)[48](index=48&type=chunk) [Net Charge-offs](index=3&type=section&id=5.2.%20Net%20Charge-offs) Net charge-offs decreased to **$48.2 million** in Q1 2025 from **$56.4 million** in Q4 2024, with the vast majority recorded on CCBX loans, reflecting their higher expected losses Net Charge-offs (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | QoQ Change | YoY Change | | :-------------------------- | :------------- | :---------------- | :------------- | :--------- | :--------- | | Total Net charge-offs | $48,200 | $56,362 | $56,958 | -14.5% | -15.4% | | Net charge-offs to average loans | 5.57 % | 6.56 % | 7.30 % | -99 bps | -173 bps | | CCBX Net charge-offs | $48,203 | $56,226 | $56,947 | -14.27% | -15.35% | | Community Bank Net charge-offs | $(3) | $136 | $11 | -102.21% | -127.27% | - A **$54.3 million** provision for credit losses was recorded for CCBX partner loans in Q1 2025, reflecting the higher level of expected losses in this portfolio[49](index=49&type=chunk)[52](index=52&type=chunk) - The community bank recorded a provision of **$65,000** in Q1 2025 due to a change in the mix of its loan portfolio and growth in construction loans, compared to a provision recapture in prior quarters[51](index=51&type=chunk)[52](index=52&type=chunk) [Nonperforming Assets](index=13&type=section&id=5.3.%20Nonperforming%20Assets) Nonperforming assets (NPA) decreased by **$6.3 million** QoQ to **$56.4 million**, representing **1.30%** of total assets, primarily due to a reduction in CCBX loans 90 days or more past due, with most covered by partner credit enhancements Consolidated Nonperforming Assets (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | QoQ Change | YoY Change | | :------------------------------------------ | :------------- | :---------------- | :------------- | :--------- | :--------- | | Total nonperforming assets | $56,367 | $62,656 | $54,866 | -10.0% | +2.7% | | Nonperforming assets to total assets | 1.30 % | 1.52 % | 1.42 % | -22 bps | -12 bps | | Total nonperforming loans | $56,367 | $62,656 | $54,866 | -10.0% | +2.7% | | Nonperforming loans to total loans receivable | 1.60 % | 1.80 % | 1.72 % | -20 bps | -12 bps | | CCBX nonperforming loans | $56,178 | $62,556 | $46,923 | -10.19% | +19.72% | | Community Bank nonperforming loans | $189 | $100 | $7,943 | +89.0% | -97.62% | - Nonperforming assets decreased by **$6.3 million** QoQ, primarily due to a **$7.1 million** decrease in CCBX loans 90 days or more past due and still accruing[54](index=54&type=chunk)[55](index=55&type=chunk) - **$54.1 million** of the **$56.2 million** in nonperforming CCBX loans were covered by CCBX partner credit enhancements[53](index=53&type=chunk) [Loan Portfolio Industry Concentration (Appendix A)](index=28&type=section&id=6.%20Loan%20Portfolio%20Industry%20Concentration%20(Appendix%20A)) The company's **$3.52 billion loan portfolio** is diversified across commercial real estate, consumer, and residential real estate, with significant unused commitments [Overview of Loan Portfolio and Commitments](index=28&type=section&id=6.1.%20Overview%20of%20Loan%20Portfolio%20and%20Commitments) The company maintains a diversified loan portfolio totaling **$3.52 billion** in outstanding balances, with total exposure reaching **$5.67 billion** when combined with **$2.14 billion** in unused commitments - Total outstanding loan balances were **$3.52 billion** as of March 31, 2025[85](index=85&type=chunk) - Total unused commitments to extend credit were **$2.14 billion**, bringing the combined total of outstanding loans and commitments to **$5.67 billion**[85](index=85&type=chunk)[92](index=92&type=chunk) - Commercial real estate loans (**38.0%**) and consumer loans (**34.5%**) represent the largest segments of the outstanding loan portfolio[86](index=86&type=chunk)[88](index=88&type=chunk) [Commercial Real Estate Loans](index=28&type=section&id=6.2.%20Commercial%20Real%20Estate%20Loans) Commercial real estate loans are the largest segment, comprising **38.0%** of total outstanding loans (**$1.34 billion**) and **24.2%** of total outstanding loans and commitments (**$1.37 billion**), with apartments as the largest sub-category Commercial Real Estate Loan Portfolio (Dollars in thousands, as of March 31, 2025) | Industry | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment | % of Total Loans & Commitments | | :---------------- | :------------------ | :------------------------- | :----------------------------------------------- | :----------------------------- | | Apartments | $392,740 | $4,488 | $397,228 | 7.0% | | Hotel/Motel | $149,859 | $61 | $149,920 | 2.6% | | Convenience Store | $138,838 | $561 | $139,399 | 2.5% | | Office | $121,346 | $7,183 | $128,529 | 2.3% | | Total | $1,340,647 | $29,401 | $1,370,048 | 24.2% | - Commercial real estate loans represent **38.0%** of total outstanding loans and **24.2%** of total outstanding loans and loan commitments[86](index=86&type=chunk) [Consumer and Other Loans](index=28&type=section&id=6.3.%20Consumer%20and%20Other%20Loans) Consumer loans represent **34.5%** of total outstanding loans (**$1.22 billion**) and **37.5%** of total outstanding loans and commitments (**$2.13 billion**), primarily driven by CCBX credit cards and installment loans with an average balance of **$1,000** Consumer and Other Loan Portfolio (Dollars in thousands, as of March 31, 2025) | Loan Category | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment | % of Total Loans & Commitments | | :-------------------------- | :------------------ | :------------------------- | :----------------------------------------------- | :----------------------------- | | CCBX Credit cards | $532,775 | $868,969 | $1,401,744 | 24.7% | | CCBX Installment loans | $654,844 | $29,027 | $683,871 | 12.1% | | Total | $1,216,127 | $910,758 | $2,126,885 | 37.5% | - Consumer loans comprise **34.5%** of total outstanding loans and **37.5%** of total outstanding loans and loan commitments[88](index=88&type=chunk) - The average consumer loan balance is **$1,000**, reflecting a large number of smaller dollar loans from CCBX partners[88](index=88&type=chunk) [Residential Real Estate Loans](index=29&type=section&id=6.4.%20Residential%20Real%20Estate%20Loans) Residential real estate loans comprise **13.9%** of total outstanding loans (**$488.3 million**) and **18.0%** of total outstanding loans and commitments (**$1.02 billion**), with CCBX home equity lines of credit as the largest component Residential Real Estate Loan Portfolio (Dollars in thousands, as of March 31, 2025) | Loan Category | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment | % of Total Loans & Commitments | | :------------------------------------- | :------------------ | :------------------------- | :----------------------------------------------- | :----------------------------- | | CCBX Home equity line of credit | $285,355 | $481,778 | $767,133 | 13.5% | | Community bank Closed end, first liens | $164,284 | $1,649 | $165,933 | 3.0% | | Total | $488,275 | $529,335 | $1,017,610 | 18.0% | - Residential real estate loans comprise **13.9%** of total outstanding loans and **18.0%** of total outstanding loans and loan commitments[90](index=90&type=chunk) - CCBX home equity lines of credit are limited to a **$375.0 million** portfolio maximum[91](index=91&type=chunk) [Commercial and Industrial Loans](index=29&type=section&id=6.5.%20Commercial%20and%20Industrial%20Loans) Commercial and industrial (C&I) loans represent **8.9%** of total outstanding loans (**$312.3 million**) and **16.1%** of total outstanding loans and commitments (**$913.2 million**), with capital call lines as a significant component Commercial and Industrial Loan Portfolio (Dollars in thousands, as of March 31, 2025) | Loan Category | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment | % of Total Loans & Commitments | | :--------------------------------------------- | :------------------ | :------------------------- | :----------------------------------------------- | :----------------------------- | | CCBX Capital Call Lines | $133,466 | $514,864 | $648,330 | 11.4% | | CCBX Retail and other loans | $29,702 | $21,736 | $51,438 | 0.9% | | Community bank Financial Institutions | $48,648 | — | $48,648 | 0.9% | | Total | $312,272 | $600,972 | $913,244 | 16.1% | - Commercial and industrial loans comprise **8.9%** of total outstanding loans and **16.1%** of total outstanding loans and loan commitments[92](index=92&type=chunk) - Capital call lines, provided through one of the CCBX BaaS clients, have a portfolio maximum of **$350.0 million**[92](index=92&type=chunk)[93](index=93&type=chunk) [Construction, Land and Land Development Loans](index=30&type=section&id=6.6.%20Construction,%20Land%20and%20Land%20Development%20Loans) Construction, land and land development loans comprise **4.7%** of total outstanding loans (**$166.6 million**) and **4.2%** of total outstanding loans and commitments (**$239.0 million**), with commercial construction as the largest sub-category Construction, Land and Land Development Loan Portfolio (Dollars in thousands, as of March 31, 2025) | Loan Category | Outstanding Balance | Available Loan Commitments | Total Outstanding Balance & Available Commitment | % of Total Loans & Commitments | | :-------------------------- | :------------------ | :------------------------- | :----------------------------------------------- | :----------------------------- | | Commercial construction | $96,716 | $41,654 | $138,370 | 2.4% | | Residential construction | $39,375 | $22,253 | $61,628 | 1.1% | | Undeveloped land loans | $16,684 | $4,185 | $20,869 | 0.4% | | Total | $166,551 | $72,476 | $239,027 | 4.2% | - Construction, land and land development loans comprise **4.7%** of total outstanding loans and **4.2%** of total outstanding loans and loan commitments[94](index=94&type=chunk) - Exposure and risk in the construction, land and land development portfolio increased compared to recent periods[96](index=96&type=chunk) [Commitments to Extend Credit and Portfolio Limits](index=31&type=section&id=6.7.%20Commitments%20to%20Extend%20Credit%20and%20Portfolio%20Limits) Total commitments to extend credit were **$2.14 billion** at March 31, 2025, with the company managing loan concentration and counter-party risk through individual CCBX partner portfolio maximum limits Outstanding Commitments to Extend Credit (Dollars in thousands, as of March 31, 2025) | Commitment Type | Amount | | :------------------------------------------ | :----- | | Commercial and industrial loans | $86,108 | | Commercial and industrial loans - capital call lines | $514,864 | | Construction – commercial real estate loans | $50,221 | | Construction – residential real estate loans | $22,255 | | Residential real estate loans | $529,335 | | Commercial real estate loans | $29,401 | | Credit cards | $868,969 | | Consumer and other loans | $41,789 | | Total commitments to extend credit | $2,142,942 | - The company has individual CCBX partner portfolio limits to manage loan concentration, liquidity, and counter-party risk[93](index=93&type=chunk) - If a CCBX partner exceeds their individual limit, it is a breach of contract, allowing the Bank to impose penalties or choose not to fund the loan[93](index=93&type=chunk) [BaaS Reporting Information (Appendix B)](index=33&type=section&id=7.%20BaaS%20Reporting%20Information%20(Appendix%20B)) BaaS accounting practices for credit and fraud enhancements ensure a net zero income statement impact, with growing BaaS loan income and expenses [BaaS Credit and Fraud Enhancements Accounting](index=33&type=section&id=7.1.%20BaaS%20Credit%20and%20Fraud%20Enhancements%20Accounting) The company records a provision for expected losses on CCBX loans and negative deposit accounts, recognizing a credit enhancement asset through noninterest income due to partner indemnification, with fraud losses and reimbursements resulting in a net zero income statement impact - A provision for expected losses on CCBX loans and negative deposit accounts is recorded, with a corresponding credit enhancement asset recognized through noninterest income (BaaS credit enhancements) due to partner indemnification[97](index=97&type=chunk) - Fraud losses are recorded as noninterest expense, and partner reimbursements are recorded in noninterest income, resulting in a net zero impact on the income statement[97](index=97&type=chunk) - The Bank is exposed to additional credit and deposit losses if a CCBX partner is unable to fulfill their contracted indemnification obligations, and management regularly evaluates this counterparty risk[97](index=97&type=chunk) [BaaS Loan Income and Expense](index=33&type=section&id=7.2.%20BaaS%20Loan%20Income%20and%20Expense) BaaS loan interest income increased in Q1 2025 due to growth in average CCBX loans receivable, while BaaS loan expense also increased, resulting in a net BaaS loan income divided by average BaaS loans of **8.79%** BaaS Loan Income and Expense (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | :------------- | | BaaS loan interest income | $67,855 | $64,532 | $55,839 | | Less: BaaS loan expense | $32,507 | $30,720 | $26,107 | | Net BaaS loan income | $35,348 | $33,812 | $29,732 | | Net BaaS loan income divided by average BaaS loans | 8.79 % | 8.81 % | 9.45 % | - An increase in average CCBX loans receivable resulted in increased BaaS loan interest income during Q1 2025[101](index=101&type=chunk) - The company is optimizing its CCBX loan portfolio by originating higher quality new loans with enhanced credit standards, which have lower stated rates and expected losses[101](index=101&type=chunk)[102](index=102&type=chunk) [Summary of BaaS Interest and Noninterest Components](index=34&type=section&id=7.3.%20Summary%20of%20BaaS%20Interest%20and%20Noninterest%20Components) Total BaaS interest income was **$67.9 million**, and total BaaS interest expense was **$21.6 million** in Q1 2025, with total noninterest BaaS income at **$61.9 million** and total BaaS loan and fraud expense at **$34.5 million** Summary of BaaS Interest and Noninterest Components (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :-------------------------- | :------------- | :---------------- | :------------- | | Total BaaS interest income | $67,855 | $64,532 | $55,839 | | Total BaaS interest expense | $21,581 | $22,243 | $22,854 | | Total BaaS program income | $6,278 | $5,554 | $4,046 | | Total BaaS indemnification income | $55,641 | $67,140 | $80,731 | | Total noninterest BaaS income | $61,919 | $72,694 | $84,777 | | Total BaaS loan and fraud expense | $34,500 | $35,763 | $27,030 | - Servicing and other BaaS fees increased when new partners are onboarded, then decrease as transaction and interchange fees increase with growing partner activity and exceed minimum fees[104](index=104&type=chunk) [Non-GAAP Financial Measures](index=24&type=section&id=8.%20Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP financial measures to provide supplemental information on operational performance, offering enhanced understanding beyond GAAP measures [Explanation of Non-GAAP Measures](index=24&type=section&id=8.1.%20Explanation%20of%20Non-GAAP%20Measures) The company uses non-GAAP financial measures to provide supplemental information on operational performance, including loan income net of BaaS loan expense and net interest income net of BaaS loan expense, which are not substitutes for GAAP but offer enhanced understanding - Non-GAAP financial measures are used to provide meaningful supplemental information regarding operational performance and enhance investors' overall understanding[73](index=73&type=chunk) - These non-GAAP measures are supplemental and not a substitute for an analysis based on GAAP measures[74](index=74&type=chunk) - Key non-GAAP measures include: Loan income, net of BaaS loan expense, divided by average loans; Net BaaS loan income divided by average CCBX loans; Net interest income, net of BaaS loan expense; and CCBX net interest margin, net of BaaS loan expense[75](index=75&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) [Reconciliations of GAAP and Non-GAAP Measures](index=26&type=section&id=8.2.%20Reconciliations%20of%20GAAP%20and%20Non-GAAP%20Measures) Reconciliations are provided for various GAAP and non-GAAP measures to illustrate the impact of BaaS loan expense on loan income, yield on loans, net interest income, and net interest margin, as well as the impact of BaaS loan and fraud expenses on noninterest expense Consolidated Net Interest Margin, Net of BaaS Loan Expense (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | :------------- | | Net interest margin (GAAP) | 7.48 % | 7.23 % | 6.92 % | | Net interest income (GAAP) | $76,062 | $72,377 | $62,206 | | Less: BaaS loan expense | $(32,507) | $(30,720) | $(26,107) | | Net interest income, net of BaaS loan expense | $43,555 | $41,657 | $36,099 | | Net interest margin, net of BaaS loan expense | 4.28 % | 4.16 % | 4.02 % | Consolidated Loan Income, Net of BaaS Loan Expense, Divided by Average Loans (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :---------------------------------------------------------- | :------------- | :---------------- | :------------- | | Loan yield (GAAP) | 11.33 % | 11.12 % | 11.01 % | | Total average loans receivable | $3,511,724 | $3,419,476 | $3,137,271 | | Interest and earned fee income on loans (GAAP) | $98,147 | $95,575 | $85,891 | | BaaS loan expense | $(32,507) | $(30,720) | $(26,107) | | Net loan income | $65,640 | $64,855 | $59,784 | | Loan income, net of BaaS loan expense, divided by average loans | 7.58 % | 7.55 % | 7.66 % | Noninterest Expense, Net of BaaS Loan Expense, BaaS Fraud Expense and Reimbursement of Expenses (Dollars in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------------------------------------------------------------ | :------------- | :---------------- | :------------- | | Noninterest expense (GAAP) | $71,989 | $67,411 | $56,509 | | Less: BaaS loan expense | $32,507 | $30,720 | $26,107 | | Less: BaaS fraud expense | $1,993 | $5,043 | $923 | | Less: Reimbursement of expenses | $1,026 | $812 | $254 | | Noninterest expense, net of BaaS loan expense, BaaS fraud expense and reimbursement of expenses | $36,463 | $30,836 | $29,225 | [Company Information and Forward-Looking Statements](index=16&type=section&id=9.%20Company%20Information%20and%20Forward-Looking%20Statements) Coastal Financial Corporation, a bank holding company, operates through its community bank and CCBX segments, providing forward-looking statements subject to inherent risks [About Coastal Financial Corporation](index=16&type=section&id=9.1.%20About%20Coastal%20Financial%20Corporation) Coastal Financial Corporation (Nasdaq: CCB) is an Everett, Washington-based bank holding company, with its subsidiary Coastal Community Bank operating through CCBX, community bank, and treasury & administration segments, serving customers via branches, online, and mobile banking - Coastal Financial Corporation (Nasdaq: CCB) is an Everett, Washington-based bank holding company[60](index=60&type=chunk) - Its wholly-owned subsidiary, Coastal Community Bank, operates through three segments: CCBX (banking as a service), the community bank, and treasury & administration[14](index=14&type=chunk)[60](index=60&type=chunk) - The Bank provides service through 14 branches in Snohomish, Island, and King Counties, the Internet, and its mobile banking application[60](index=60&type=chunk) [Forward-Looking Statements](index=18&type=section&id=9.2.%20Forward-Looking%20Statements) The earnings release contains forward-looking statements regarding future events and financial performance, which are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially - This earnings release contains forward-looking statements reflecting current views on future events and financial performance[62](index=62&type=chunk) - These statements are subject to risks, uncertainties, and assumptions that are difficult to predict and could cause actual results to differ materially[62](index=62&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and the company undertakes no obligation to update or revise them, except as required by law[63](index=63&type=chunk)

Core Insights - Coastal Financial Corporation reported a net income of $9.7 million for Q1 2025, a decrease from $13.4 million in Q4 2024 and an increase from $6.8 million in Q1 2024 [1] - The company experienced a significant deposit growth of $205.9 million, or 5.7%, during the first quarter, driven by its CCBX partner programs [2][6] - CCBX program fee income increased by 55.2% compared to the same period in 2024, reaching $6.3 million [2][6] Financial Performance - Interest and dividend income for Q1 2025 was $104.9 million, up from $97.4 million in Q1 2024 [5] - Net interest income increased to $76.1 million, a rise of 5.1% from Q4 2024 and 22.3% from Q1 2024 [33] - Noninterest expenses rose to $72.0 million, primarily due to higher salaries and employee benefits, legal and professional expenses, and BaaS loan expenses [6][11] CCBX Segment Update - As of March 31, 2025, the CCBX segment had 25 relationships, with two partners in testing and three in implementation/onboarding [17][21] - CCBX loans increased by $47.2 million, or 2.9%, to $1.65 billion despite selling $744.6 million in loans during the quarter [21][24] - The loan yield for CCBX was 16.88%, reflecting a slight increase from the previous quarter [22] Deposit and Loan Portfolio - Total deposits reached $3.79 billion, with CCBX deposits increasing by $202.9 million, or 9.8% [29][32] - Community bank loans decreased by $16.5 million, or 0.9%, to $1.87 billion due to normal balance fluctuations [30][31] - The cost of deposits for the community bank segment was 1.76%, down from 1.86% in the previous quarter [32] Management Outlook - The company anticipates continued elevated onboarding activity into Q2 2025, with a focus on technology and risk management infrastructure [15] - Future revenue sources are expected to grow as new partnerships and products are launched [15][18] - The company remains focused on managing credit quality and optimizing its loan portfolio earnings [24][18]

Core Viewpoint - The decision by the Commission de protection du territoire agricole du Québec (CPTAQ) to refuse the development of the Miller graphite project raises concerns about its implications for critical mineral projects and the Quebec mining industry as a whole [1][4]. Company Summary - Canada Carbon Inc. (CCB) is focused on the acquisition, exploration, and development of graphite deposits, having acquired two historic graphite mines, the Miller and Asbury mines, in Quebec [8]. - The company believes the CPTAQ's decision is flawed and disregards a Preliminary Economic Assessment that highlights the project's economic benefits [3][6]. - Canada Carbon is evaluating options in response to the CPTAQ's ruling, including a potential appeal [6]. Industry Summary - The CPTAQ's ruling on the Miller project is seen as a precedent that contradicts the Quebec government's goals to accelerate mining projects and the development of critical minerals [4][7]. - The Miller project is noted for its strong mineralogical potential for graphite, which is essential for Quebec's energy transition and aligns with government objectives [5][7].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________ FORM 10-K ________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38589 ________________________________ COASTAL FI ...

Core Points - Canada Carbon Inc. announced a non-brokered private placement of up to 35,000,000 units at a price of $0.02 per unit, aiming for aggregate gross proceeds of up to $700,000 [1] - Each unit consists of one common share and one common share purchase warrant, with the warrant allowing the holder to acquire one common share at a price of $0.06 for a period of 60 months [1] - The proceeds from the offering will be utilized for corporate and general working capital purposes [2] Offering Details - All securities issued will be subject to a hold period of four months plus a day from the date of issuance [2] - The closing of the offering is contingent upon receiving necessary regulatory approvals, including from the TSX Venture Exchange [2] - The company may pay a finder's fee of 8% of the gross proceeds and issue finder's warrants equal to 8% of the units issued [3] Regulatory Compliance - The offering does not constitute an offer to sell or a solicitation of an offer to sell any securities in the United States, as the securities have not been registered under the U.S. Securities Act [4] - The company disclaims any intention to update or revise forward-looking information unless required by law [6]