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Coastal Financial Q1 2025 Earnings Report
Coastal Financial reported a significant increase in net income and total assets for Q1 2025, driven by strong loan growth and increased BaaS program income, despite a decrease in BaaS credit enhancements.
Key Takeaways
Coastal Financial Corporation reported a net income of $9.73 million for the three months ended March 31, 2025, a significant increase from $6.8 million in the prior year. Total assets grew to $4.34 billion, up 5.3% from December 31, 2024, primarily due to increased interest-earning deposits and loans receivable. The company's CCBX segment showed strong loan growth and increased BaaS program income, contributing positively to the overall financial performance.
Net income increased to $9.73 million, up from $6.8 million in Q1 2024, reflecting improved profitability.
Total assets grew by 5.3% to $4.34 billion, driven by a $164.9 million increase in interest-earning deposits and a $30.8 million increase in loans receivable.
The CCBX segment experienced a 2.9% increase in loans receivable and a 9.8% increase in deposits, highlighting continued growth in banking-as-a-service operations.
Net interest income rose by 22.3% to $76.062 million, primarily due to higher-yielding loans and a decrease in interest expense on deposits.
Revenue by Segment
Forward Guidance
The company anticipates continued growth in its CCBX segment, with a focus on optimizing its portfolio and managing credit quality through strategic loan sales. They expect to expand product offerings and cultivate new partnerships while maintaining a modest increase in regulatory risk. The company also plans to manage liquidity by sweeping deposits off-balance sheet when not needed and back on when required.
Positive Outlook
- Continued growth in CCBX loan and deposit activity is expected to drive increased BaaS program income.
- Strategic loan sales in the CCBX segment will help manage portfolio size, credit quality, and partner limits.
- Expansion of product offerings and new partnerships are anticipated to grow the customer base.
- The ability to sweep deposits off and on the balance sheet will enhance liquidity management.
- Focus on increasing efficiency and using technology is expected to reduce future expense growth.
Challenges Ahead
- The proposed FDIC rule on custodial deposit accounts could increase operating costs for BaaS arrangements if finalized.
- Changes in market conditions and interest rates may impact the fair value of financial instruments and profitability.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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