Coastal Financial Reports Strongest Q3 Earnings Yet
News related to:Coastal Financial Corporation · 3 min read
EVERETT, Wash., Oct. 29, 2026 /CourierPR/ -- Coastal Financial Corporation reported its financial results for the quarter ended September 30, 2026, marking a significant improvement over the previous quarter. The company reported a net income of $13.8 million, or $0.89 per diluted common share, for the quarter, compared to a net loss of $(42.1) million, or $(2.76) per diluted common share, for the quarter ended June 30, 2026. The net income for the quarter ended September 30, 2025, was $13.6 million, or $0.88 per diluted common share.
In a management discussion of the third quarter results, Eric Sprink, the Chief Executive Officer of Coastal, highlighted the company's improved financial performance.
The company's Business as a Service (BaaS) segment, known as CCBX, saw a significant growth in program fee income. The segment reported a total BaaS program fee income of $14.1 million for the quarter, up $2.1 million, or 17.6%, from the second quarter and $6.3 million, or 79.6%, from the same quarter last year. The growth in BaaS program fee income was attributed to the strength and stability of the broader partner portfolio.
On the community bank side, deposits grew by $63.2 million, or 4.0%, to $1.64 billion in the quarter, with a cost of deposits of just 1.54%. The company's off-balance sheet credit card accounts now stand at 1.3 million, which is approximately 236% more than where they were at the end of the third quarter of 2025. Eight of the company's active partner programs are in various stages of expanding into additional products.
Coastal Financial Corporation ended the quarter well capitalized, with strong cash reserves and a strong pipeline. The company's capital efficient model, including ongoing loan sales and off-balance sheet deposit and card programs, continues to support internal capital generation. The company's common equity Tier 1 ratio was 11.47%, its Tier 1 leverage ratio was 8.81%, and its total risk-based capital ratio was 13.82%, all above the levels required to be considered well capitalized.
The company's noninterest expense decreased significantly by $56.3 million to $84.8 million in the third quarter of 2026 from $141.1 million in the second quarter. The decline primarily reflected the absence of the second quarter's $46.0 million credit enhancement receivable valuation adjustment related to the affected partner, a $5.9 million reduction in data processing and software license expenses, and a $4.7 million reduction in BaaS loan expense. These reductions were partially offset by a $1.6 million increase in legal and professional fees, partly related to the affected partner, and a $440,000 increase in FDIC deposit insurance assessments.
Noninterest income was reduced by $477,000 in unrealized gain on equity securities, reflecting a $565,000 downward valuation adjustment on a strategic equity investment. Coastal Financial Corporation's leadership has also implemented expense discipline, including a voluntary reduction in the CEO's salary from $874,000 to $500,000 effective immediately. The company's search for a permanent Chief Financial Officer is ongoing, and Brian Hamilton has stepped down as President of Coastal, having led the modernization of CCBX's technology platform.
The company's capital efficient model, including ongoing loan sales and off-balance sheet deposit and card programs, continues to support internal capital generation. Coastal Financial Corporation's common equity Tier 1 ratio was 11.47%, its Tier 1 leverage ratio was 8.81%, and its total risk-based capital ratio was 13.82%, all 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.