8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 26, 2005

COASTAL FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 0-19684
(Commission
File Number) 57-0925911
(IRS Employer
Identification No.)

2619 Oak Street, Myrtle Beach, South Carolina 29577
(Address of principal executive offices) (Zip Code)

(843)205-2000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02     Results of Operations and Financial Condition

        On January 26, 2005, Coastal Financial Corporation announced its financial results for the first fiscal quarter ended December 31, 2004. The press release announcing financial results for the first fiscal quarter ended December 31, 2004 is filed as Exhibit 99.1 and incorporated herein by reference.

Item 9.01     Financial Statements and Exhibits.

Exhibit 99.1          Press Release dated January 26, 2005.

SIGNATURES

           Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

COASTAL FINANCIAL CORPORATION



By:  /s/ Michael C. Gerald
        ————————————————
        Michael C. Gerald
        President and Chief Executive Officer

EX-99.1

NEWS ANNOUNCEMENT

Date:

Contact:

To:

Release Date: January 26, 2005

Susan J. Cooke

News Media

Immediate

COASTAL FINANCIAL CORPORATION
ANNOUNCES FISCAL 2005 FIRST QUARTER EARNINGS

Myrtle Beach, South Carolina, (January 26, 2005) . . . Coastal Financial Corporation (Nasdaq/CFCP) today announced earnings for the first fiscal quarter ended December 31, 2004.

Net income for the first quarter of fiscal 2005 increased 21.9% to $4.0 million or $0.23 per share ($0.22 per share diluted), as compared to $3.3 million or $0.19 per share ($0.18 per share diluted) for the same period of fiscal 2004.

At December 31, 2004, assets totaled $1.38 billion, an increase of 12.9% from $1.23 billion at December 31, 2003. During the same period, deposits increased 9.5%, from $682.2 million to $747.0 million, and net loans receivable increased 13.3%, from $721.6 million to $817.5 million. In comparing the first quarters of fiscal 2004 and 2005, net interest income after provision for loan losses grew 20.6% to $11.2 million.

Returns on average assets and average equity were 1.20% and 18.5%, respectively, for the three months ended December 31, 2004, as compared to 1.10% and 17.7% for the comparable period in fiscal 2004.

At December 31, 2004, asset quality continued to be good with non-performing assets to total assets of 0.46% as compared with 0.68% at December 31, 2003.

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Michael C. Gerald, President and Chief Executive Officer of Coastal Financial Corporation, said, “We are very pleased with the performance of Coastal Financial Corporation for the first quarter of fiscal 2005, particularly given the strong competition for deposits and loans. During the first quarter of fiscal 2005, we commenced our fifth year of operational initiatives under the guidance of our Vision 2005 strategic plan. Throughout fiscal 2004 and during the first quarter of fiscal 2005, we have made good progress toward the goals established under this plan. Our operating results for this quarter indicate that we continue to be rewarded for these initiatives.”

“During the first quarter of fiscal 2005, we announced a 29.0% increase in fiscal 2004 diluted per share net income and a $.045 per share cash dividend. Other notable events and accomplishments during this quarter include the nearing completion of the construction on our permanent banking office at 17^th Street in Wilmington, North Carolina and the commencement of The Experience of FANtastic! Customer Service and The Carolinas’ Best Totally Free Checking With A Gift Convenience/Service initiatives. These activities are indicative of the continued growth and progress envisioned under our Vision 2005 Plan, and are an outgrowth of our QUEST FOR EXCELLENCE Operating Philosophy,” concluded Mr. Gerald.

Coastal Financial Corporation, headquartered in Myrtle Beach, South Carolina, offers a broad range of commercial, consumer and mortgage financial services through two subsidiaries, Coastal Federal Bank and Coastal Retirement, Estate and Tax Planners, Inc. Coastal Federal Bank, with assets over $1.3 billion, is a federally chartered and FDIC insured community bank with eighteen offices serving the communities of Horry and Georgetown Counties, South Carolina and Brunswick and New Hanover Counties, North Carolina. Coastal Retirement, Estate and Tax Planners offers professional, objective, fee-based financial planning services. Additional information about Coastal Federal is available on its web site at www.coastalfederal.com.

Stock Trading Information

The common stock of Coastal Financial Corporation is traded on the Nasdaq Stock Market under the symbol “CFCP.” For information, contact Raymond James Financial Services at 1-843-918-7600, Herzog, Heine, Geduld, Inc. at 1-800-523-4936, Knight Securities at 212-336-8690, Spear, Leeds & Kellogg at 1-800-526-3160 or Trident Securities at 1-800-222-2618.

Dividend Reinvestment and Direct Stock Purchase Plan

Coastal Financial Corporation offers Shareholders a Dividend Reinvestment and Direct Stock Purchase Plan which provides existing and new Shareholders a convenient means for making purchases of Coastal Financial shares free of fees and brokerage commissions and at a discount to market price. Additional cash contributions, up to $1,000 per quarter, can be made to purchase additional shares. For more information, contact the Transfer Agent at 1-800-866-1340, Ext. 2514, or Investor Relations.

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Shareholder Services

Shareholders desiring to enroll in the Coastal Financial Corporation Dividend Reinvestment Plan, change the name, address, or ownership of their stock certificates, report lost or stolen certificates, or to consolidate accounts should contact the Transfer Agent at 1-800-866-1340, Ext. 2514, or Investor Relations.

Investor Relations

Analysts, investors and others seeking financial information should contact:
               Susan J. Cooke – Senior Vice President and Secretary
               Coastal Financial Corporation
               2619 Oak Street
               Myrtle Beach, South Carolina 29577
               (843)205-2676

Forward Looking Statements

This news release may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, that represent Coastal Financial Corporation’s (the “Company”) expectations or beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Factors that could influence the matters discussed in certain forward-looking statements include the timing and amount of revenues that may be recognized by the Company, continuation of current revenue and expense trends (including trends affecting charge-offs), absence of unforeseen changes in the Company’s markets, legal and regulatory changes, and general changes in the economy (particularly in the markets served by the Company). Because of the risks and uncertainties inherent in forward looking statements, readers are cautioned not to place undue reliance on them, whether included in this news release or made elsewhere from time to time by the Company or on its behalf. Except as may be required by applicable law or regulation, the Company disclaims any obligation to update such forward-looking statements.

###

COASTAL FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in Thousands Except Per Share Data)

	Three Months Ended
	Dec. 31, 2004			Dec. 31, 2003			Percentage             Change
Interest Income	$	17,957		$	15,535		15.59	%
Interest Expense		6,442			5,725		12.52	%
Net Interest Income		11,515			9,810		17.38	%
Provision for Loan Losses		350			550		-36.36	%
Net Interest Income After
Provision for Loan Losses		11,165			9,260		20.57	%
Other Income*		2,767			2,326		18.96	%
General & Administrative
Expenses **		7,780			6,614		17.63	%
Earnings Before Taxes		6,152			4,972		23.73	%
Income Taxes		2,107			1,653		27.47	%
Net Income	$	4,045		$	3,319		21.87	%
Earnings Per Common Share ***
Basic	$	0.23		$	0.19		21.05	%
Diluted	$	0.22		$	0.18		22.22	%
Average Common Shares Outstanding
Basic (in thousands) ***		17,510			17,218		1.70	%
Average Common Shares Outstanding
Diluted (in thousands) ***		18,513			18,315		1.08	%
Net Interest Margin		3.66	%		3.51	%	4.27	%
Return on Average Assets		1.20	%		1.10	%	9.09	%
Return on Average Equity		18.51	%		17.70	%	4.58	%

*Gains (losses) on sales of securities of $158,000 and ($200,000) are included in other income for the quarter ended December 31, 2004 and 2003, respectively.

**Prepayment penalties on FHLB advances of $0 and $9,000 are included in general and administrative expenses for the quarter ended December 31, 2004 and 2003, respectively.

***All share and per share data have been restated to reflect three 10% stock dividends declared on February 18, 2004, July 30, 2004, and December 15, 2004.

COASTAL FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in Thousands Except Per Share Data)
(CONTINUED)

	At Dec. 31, 2004			At Sept. 30, 2004			At Dec. 31, 2003			Percentage Change from September 30, 2004
Total Assets	$	1,383,899		$	1,305,485		$	1,225,338		6.01%
Loans Receivable, Net	$	817,511		$	798,976		$	721,578		2.32%
Deposits	$	746,966		$	753,379		$	682,242		-0.85%
Shareholders' Equity	$	89,436		$	85,348		$	76,288		4.79%
Non-Performing Assets
to Total Assets *		0.46	%		0.51	%		0.68	%	-9.80%
Allowance for Loan Losses as a
Percentage of Total Net Loans		1.40	%		1.39	%		1.43	%	0.72%
Tangible Book Value
Per Share	$	5.10		$	4.88		$	4.42		4.51%

* Non-performing assets consist of nonaccrual loans, accruing loans 90 days or more past due and real estate owned.

	At or for the Three Months Ended Dec. 31, 2004			At or for the Three Months Ended Sept. 30, 2004			Percentage Change
Credit Quality:
Non-Performing Loans	$	5,630		$	5,856		-3.86%
Non-Performing Loans as a % of Loans		0.69	%		0.73	%	-5.48%
Allowance for Loan Losses as a % of
Non-Performing Loans		202.70	%		189.16	%	7.16%
Non-Performing Assets *	$	6,305		$	6,641		-5.06%
Non-Performing Assets as a % of Loans
and Foreclosed Property*		0.77	%		0.83	%	-7.23%
Net Loan Charge-Offs
as a % of Average Loans (Annualized)		0.01	%		0.13	%	-92.31%
Stock Performance
At quarter end:
Market Price Per Share of Common Stock**	$	17.42		$	13.14		32.57%
Indicated Annual Dividend**	$	0.18		$	0.18		n/a
Dividend Yield		1.03	%		1.38	%	-25.36%
Price/Book Ratio		342.00	%		269.00	%	27.14%
Market Capitalization	$	305,485		$	229,713		32.99%

**All share and per share data have been restated to reflect three 10% stock dividends declared on February 18, 2004, July 30, 2004, and December 15, 2004.