CCB

Coastal is a fast-growing balance sheet wrapped around a Banking-as-a-Service engine: total assets jumped +15.0% to $4.74B and cash swelled +62.9% to $737M in FY2025. But the growth isn't translating to shareholder economics. Net income rose only +3.9% to $47.0M and diluted EPS actually fell -6.1% to $3.06 — earnings are decelerating across the five-year arc ($27.0M→$40.6M→$44.6M→$45.2M→$47.0M), with the last two years essentially flat. Return on equity is a pedestrian 9.6%, well below what a high-quality bank earns, and book value is roughly $32/share ($491M equity / 15.2M shares). At $76.95 the stock trades at 25.1x earnings and ~2.4x book — multiples reserved for compounding franchises, not a bank whose EPS is going backwards.

The filing flags exactly where the risk lives. The auditor's sole Critical Audit Matter is the $170M allowance for credit losses on loans — a figure 3.6x annual net income and ~35% of total equity — and specifically the 'especially challenging and subjective' qualitative reserve factors management uses to set it. That subjectivity is the tell for Coastal's CCBX/BaaS partner-lending model: rapid asset growth funded by reserves whose adequacy rests on management judgment and 'reasonable and supportable forecasts.' If those qualitative factors prove optimistic as the partner-loan book seasons, provisions rise and the already-thin 9.6% ROE compresses further. The 10-K also explicitly cites interest-rate risk to earnings.