Coastal Financial Corporation (CCB) Earnings
Coastal Financial Corporation is expected to report next earnings on November 4, 2026 (in NaN days), with a consensus EPS estimate of $0.98. CCB has beaten EPS estimates in 3 of its last 12 reported quarters (average surprise -106.8% over the last four).
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| Jul 30, 2026 | $1.01 | $-2.76 | -373.3% | $178M | +19.9% |
| Apr 29, 2026 | $1.02 | $0.78 | -23.5% | $149M | +7.8% |
| Jan 29, 2026 | $1.16 | $0.82 | -29.3% | $167M | +12.7% |
| Oct 29, 2025 | $0.89 | $0.88 | -1.1% | $141M | +2.0% |
| Jul 29, 2025 | $0.87 | $0.71 | -18.4% | $115M | -27.1% |
| Jan 28, 2025 | $0.96 | $0.94 | -2.1% | $108M | -31.2% |
| Jan 30, 2024 | $0.73 | $0.66 | -9.6% | $88M | -6.7% |
| Oct 27, 2023 | $0.93 | $0.75 | -19.4% | $71M | -43.7% |
| Jul 27, 2023 | $0.97 | $0.95 | -2.1% | $97M | -21.5% |
| Apr 27, 2023 | $0.87 | $0.91 | +4.6% | $84M | -8.9% |
| Jan 27, 2023 | $0.85 | $0.96 | +12.9% | $72M | -17.4% |
| Oct 27, 2022 | $0.80 | $0.82 | +2.5% | $56M | -21.3% |
Source: company filings + earnings calendar. For informational purposes only — not investment advice.
Earnings call summary
Q2 FY2026 · July 30, 2026
AI summary of management’s prepared remarks and analyst Q&A. For informational purposes only — not investment advice.
Management highlights
### Executive Leadership Update - Chris Adams was appointed Executive Chairman, shifting focus to long-term strategy, external engagement, leadership development, operating leverage, and profitability; Eric Sprink remains CEO responsible for day-to-day operations, risk management, and execution. - Outgoing CFO Brandon Soto will depart to lead a non-competing financial institution; long-time former CFO Joel Edwards will return as interim CFO during a permanent search. ### Portfolio Issue Transparency - Q2 2026 GAAP net loss of $42.1 million ($2.76 per diluted share) driven almost entirely by a $68.8 million pre-tax charge related to a single partner's defined consumer loan portfolio: $46 million valuation adjustment to a credit enhancement asset, $22.8 million provision for credit losses under the partner's indemnification agreement, plus a $4.4 million accelerated amortization charge for capitalized software with shortened useful lives due to technology modernization. - An independent third-party review found no evidence of partner or customer impropriety; the affected portfolio is fully identified, isolated, and separately monitored. - A full review of the remaining CCBX portfolio confirmed no comparable issues, with all partners current on cash collateral obligations and improving core credit metrics. - Management is exercising all contractual rights to recover losses and evaluating all strategic alternatives for the affected portfolio. ### Core Business Strengths - The company remains well-capitalized post-charge: common equity tier 1 ratio of 10.86%, tier 1 leverage ratio of 9.11%, total risk-based capital ratio of 13.30% (a 1 percentage point reduction from the charge, still well above regulatory requirements). - Holding $1.01 billion in cash and $1.1 billion in additional contingent borrowing capacity, with no short-term borrowings outstanding. - Off-balance sheet deposit sweep activity grew to $4.26 billion, generating $1.2 million in sweep fee income during the quarter, while improving liquidity and providing FDIC insurance coverage for consumers. ### Strategic Focus Going Forward - The company is no longer pursuing the planned acquisition of assets and deposits from Evolve Bank and Trust. - Management will prioritize improving operating leverage and profitability via a full review of vendor spending, contractor costs, discretionary expenses, organizational duplication, and product-level profitability; core investments in compliance, risk management, cybersecurity, and data will be maintained. - All new and existing partnerships will be evaluated based on risk-adjusted profitability, capital usage, and liquidity impact.
Guidance
Management did not provide formal updated quantitative financial guidance for 2026 or future periods, and declined to provide pro forma profitability estimates. Key directional forward-looking outlooks are: - Expense growth containment and operating efficiency will be a top corporate priority for the second half of 2026 and beyond, as the company looks to translate prior infrastructure investments into more consistent profitability. - The Banking as a Service (BAS/CCBX) growth strategy remains intact, but the company will be more deliberate and selective in onboarding and scaling new partners to prioritize risk-adjusted returns. - Provisioning expense will increase alongside continued loan growth, with enhanced ongoing monitoring of the affected defined portfolio to reflect real-time changes in expected losses. - Off-balance sheet deposit sweep activity will continue to moderate on-balance sheet deposit growth while driving fee income growth and improving liquidity.
Segment performance
Coastal Financial Corporation operates two core segments: Coastal Community Bank and CCBX (Banking as a Service, or BAS). For the second quarter of 2026: 1. **Coastal Community Bank**: Net interest income reached a record $89.4 million, up 16.4% year-over-year and 7.2% quarter-over-quarter, with a stable, slightly improving net interest margin of 7.27%. Total loans grew 9% quarter-over-quarter to $4.21 billion, and total deposits ended the quarter at $4.86 billion. Credit quality remained extremely strong, with annualized net charge-offs of approximately 0.01% as a share of average loans. This segment contributed 80.3% of total net interest income for the quarter. 2. **CCBX (Banking as a Service)**: BAS program fee income was $12 million, up 10.3% quarter-over-quarter. The off-balance sheet credit card program grew to 881,000 fee-earning accounts, a 32% increase from the prior quarter. Total underlying loans in the CCBX portfolio were $2.2 billion at quarter end: $500 million in the affected defined portfolio, and $1.7 billion in the remaining core portfolio, which saw improving net charge-off and delinquency trends, with all partners current on contractual cash collateral obligations. $4.56 billion in CCBX loans were sold during the quarter to manage capital and liquidity, generating retained processing and transaction fee income. CCBX fee income contributed 100% of the company's non-interest fee growth for the quarter.
Risks & headwinds
- The ultimate outcome of the single-partner defined portfolio issue could differ from the $68.8 million pre-tax charge recorded in Q2 2026, with potential for additional unfavorable losses if collections, recoveries, or counterparty performance worsen beyond current estimates, or favorable outcomes if recoveries exceed expectations. - Resolving the affected portfolio issue could take anywhere from 1-2 quarters to 12-18 months, creating ongoing uncertainty around quarterly earnings volatility. - Broad market tightening in pricing for risk-based loan sales has been observed, which could impact future loan sale economics for the CCBX segment. - Prior period expense growth has outpaced expectations, and cost containment efforts may not deliver the expected improvements in operating leverage and profitability. - The existing credit monitoring framework failed to identify the need for the charge prior to Q2 2026, creating risk that unrecognized issues could exist in other partner portfolios, despite management's recent full review.
Analyst Q&A
Q: Core operating expenses were up 22% year-over-year this quarter, ahead of expectations. What steps will you take to contain expense growth in the back half of the year, and what profitability targets are you working toward? /
A: Management confirmed that expense control and improved profitability are top priorities for the board and executive team, with Chris Adams's new role specifically focused on driving efficiency out of the existing infrastructure the company has already built. Management declined to provide specific numerical profitability targets or formal guidance, reinforcing that this focus will shape all decision-making going forward.
Q: What makes this affected partner and loan portfolio unique, and why should investors be confident this is a one-off issue not present in the rest of the CCBX portfolio? /
A: The change in assessment stemmed from a combination of sustained underperformance in portfolio collections, recoveries, and deterioration in the partner's financial condition that was not seen in any other partner relationship. Management reviewed the entire remaining CCBX portfolio against the same rigorous standards applied to the affected partner, and found no comparable combination of negative signals, confirming the issue is isolated to this one portfolio.
Q: Will the new focus on profitability change your approach to CCBX partner growth, and will you be more selective going forward? /
A: The company's core BAS growth strategy remains fully intact, as management still sees significant long-term opportunity in digital banking services for partner brands. The shift to profitability focus means the company will be more deliberate and disciplined in evaluating and onboarding new partners, prioritizing risk-adjusted returns rather than just growth for growth's sake.
Q: Is the affected partner still operating, do you have a claim on the partner's assets beyond the loan pool, and why was the valuation charge necessary if the partner is obligated to indemnify Coastal for losses? /
A: The partner is still operating, and the valuation charge does not change or waive any of the partner's contractual indemnification obligations. The charge reflects management's updated assessment of expected collectability based on data available as of quarter end, per accounting requirements; management will continue to monitor the situation closely and is hopeful for a positive resolution over time.