Coastal Financial in Everett, Wash., reported a quarterly loss and disclosed that it is no longer in talks to buy deposits and assets from Evolve Bank & Trust in West Memphis, Ark.
The $5.5 billion-asset company said in a press release that it lost $42.1 million in the second quarter, largely reflecting a $68.8 million credit expense tied to a single fintech partner relationship.
Otherwise positive results were “offset by decisive action we took on a single non-public company partner relationship,” CEO Eric Sprink said in a press release. “Based on our assessment, we recorded the potential impact fully and in accordance with our credit protection framework. We believe this is an isolated issue pertaining to one partner and does not reflect a change in our view of our broader partner portfolio or BaaS model.”
Coastal said its quarterly results included a $22.8 million loan-loss provision and a $46 million valuation adjustment to the credit enhancement asset. Both were tied to the one partner and are not expected to be fully collected under its indemnification arrangement.
Coastal disclosed an end to talks with Evolve during its quarterly call with analysts.