Coastal Financial Corporation Announces Fiscal 2006 Third Quarter Earnings

Coastal Financial Corporation (NASDAQ:CFCP) today
announced earnings for the third quarter and nine months ended June
30, 2006.
   Net income for the third quarter of fiscal 2006 increased 13.3% to
$4.9 million or $0.25 per share ($0.24 per share diluted), as compared
to $4.4 million or $0.22 per share ($0.21 per share diluted) for the
same period of fiscal 2005.
   Net income for the first three quarters of fiscal 2006 increased
11.9% to $14.0 million or $0.72 per share ($0.69 per share diluted),
compared to $12.5 million or $0.65 per share ($0.61 per share diluted)
for the same period of fiscal 2005.
   At June 30, 2006, assets totaled $1.6 billion, an increase of
9.7%, or $143.5 million, from $1.5 billion at June 30, 2005. Customer
deposits increased 5.8% to $927.1 million at June 30, 2006, as
compared to $876.6 million at June 30, 2005 and Shareholders' equity
grew by 7.0% during the same period.
   Returns on average assets and average equity were 1.21% and
19.48%, respectively, for the three months ended June 30, 2006,
compared to 1.19% and 18.80%, respectively, for the prior year period.
   At June 30, 2006, non-performing assets to total assets were 0.12%
as compared with 0.29% at June 30, 2005.
   Michael C. Gerald, President and Chief Executive Officer of
Coastal Financial Corporation, said: "Our financial performance during
this quarter, and year-to-date, reflects well on our region's
continuing economic strength and on Coastal Financial's ability to
effectively execute its strategic plans. The increase in Customer
deposits and loans through internal growth and de novo branching
activities coupled with our steadfast dedication to our QUEST FOR
EXCELLENCE Business Model have also been key factors in our
exceptional financial performance through the first nine months of
fiscal 2006."
   "During the third quarter, we announced a 12.3% increase in fiscal
2006 second quarter net income over the comparable prior year quarter,
and a five cents ($.05) per share cash dividend which was paid July
21, 2006 to Shareholders of record as of July 7, 2006.
   "Other notable events and accomplishments during this quarter
include the opening of our newest branch office in Conway, South
Carolina, the acquisition of a site for a new branch office at the
intersection of Highway17 and Windy Hill Road in North Myrtle Beach,
South Carolina, and the nearing of completion of new branch offices at
the intersection of Highways 544 and Singleton Ridge Road in Conway,
South Carolina and at Sayebrook Village West in Surfside Beach, South
Carolina. These events and accomplishments clearly indicate the
progress we made during the third quarter toward our Basic Corporate
Objective of Maximizing The Value Of Our Shareholders' Investment and
our Long-Term Goal of Being The Best Financial Services Company In Our
Marketplace," 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 $1.6 billion, is a federally chartered
and FDIC insured Community Bank with twenty-two 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.

   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.
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.

   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 consolidate accounts should contact the Transfer
Agent at 1-800-866-1340, Ext. 2514, or Investor Relations.
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   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
    [phone]
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   Forward Looking Statements

   This report may contain certain "forward-looking statements"
within the meaning of Section 27A of the Securities Exchange Act of
1934, as amended, that represent the Company's expectations or beliefs
concerning future events. All forward-looking statements are based on
assumptions and involve risks and uncertainties, many of which are
beyond the Company's control and which may cause its actual results,
performance or achievements to differ materially from the results,
performance or achievements contemplated by the forward-looking
statements. Forward-looking statements can be identified by the fact
that they do not relate strictly to historical or current facts. They
often include words such as "believe," "expect," "anticipate,"
"intend," "plan," "estimate" or words of similar meaning, or future or
conditional verbs such as "will," "would," "should," "could" or "may."
Forward-looking statements speak only as of the date they are made.
Such risks and uncertainties include, among other things:

   --  Competitive pressures among depository and other financial
        institutions in the Company's market areas may increase
        significantly.

   --  Adverse changes in the economy or business conditions, either
        nationally or in the Company's market areas, could increase
        credit-related losses and expenses and/or limit growth.

   --  Increases in defaults by borrowers and other delinquencies
        could result in increases in the Company's provision for
        losses on loans and related expenses.

   --  The Company's inability to manage growth effectively,
        including the successful expansion of the Company's Customer
        support, administrative infrastructure and internal management
        systems, could adversely affect the Company's results of
        operations and prospects.

   --  Fluctuations in interest rates and market prices could reduce
        the Company's net interest margin and asset valuations and
        increase expenses.

   --  The consequences of continued bank acquisitions and mergers in
        the Company's market areas, resulting in fewer but much larger
        and financially stronger competitors, could increase
        competition for financial services to the Company's detriment.

   --  The Company's continued growth will depend in part on its
        ability to enter new markets successfully and capitalize on
        other growth opportunities.

   --  Changes in legislative or regulatory requirements, or actions
        by the Securities and Exchange Commission ("SEC"), the
        Financial Accounting Standards Board ("FASB"), or the Public
        Company Accounting Oversight Board, applicable to the Company
        and its subsidiaries could increase costs, limit certain
        operations and adversely affect results of operations.

   --  Changes in tax requirements, including tax rate changes, new
        tax laws and revised tax law interpretations may increase the
        Company's tax expense or adversely affect its Customers'
        businesses.

   --  Company initiatives now in place or introduced in the future,
        not producing results consistent with historic growth rates or
        results which justify their costs.

   In light of these risks, uncertainties and assumptions, you should
not place undue reliance on any forward-looking statements in this
report. Except as may be required by applicable law or regulation, the
Company undertakes no obligation to publicly update or otherwise
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
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                     COASTAL FINANCIAL CORPORATION
                   CONSOLIDATED FINANCIAL HIGHLIGHTS
       (Unaudited - Dollars in Thousands Except Per Share Data)

                 Three Months Ended         Nine Months Ended
                  June 30,   June 30,  %     June 30,  June 30,   %
                    2006      2005   Change   2006      2005    Change
                 -----------------------------------------------------

Interest Income    $25,572  $20,337   25.74% $72,748  $57,195   27.19%
Interest Expense    11,662    7,831   48.92%  32,393   21,278   52.24%
                   -------  -------          -------  -------
Net Interest
 Income             13,910   12,506   11.23%  40,355   35,917   12.36%

Provision for Loan
 Losses                430      550  -21.82%   1,160    1,525  -23.93%
                   -------  -------          -------  -------
Net Interest
 Income After
 Provision for
  Loan Losses       13,480   11,956   12.75%  39,195   34,392   13.97%

Other Income(a)      4,672    3,101   50.66%  12,461    9,204   35.39%

General &
 Administrative
 Expenses           10,556    8,420   25.37%  30,162   24,520   23.01%
                   -------  -------          -------  -------
Earnings Before
 Taxes               7,596    6,637   14.45%  21,494   19,076   12.68%

Income Taxes         2,659    2,281   16.57%   7,469    6,541   14.19%
                   -------  -------          -------  -------

Net Income         $ 4,937  $ 4,356   13.34% $14,025  $12,535   11.89%
                   =======  =======          =======  =======
Earnings Per
 Common Share

  Basic            $  0.25  $  0.22   13.64% $  0.72  $  0.65   10.77%
                   =======  =======          =======  =======
  Diluted          $  0.24  $  0.21   14.29% $  0.69  $  0.61   13.11%
                   =======  =======          =======  =======
Average Common
 Shares
 Outstanding
Basic (in
 thousands)         19,609   19,423    0.96%  19,518   19,314    1.06%

Average Common
 Shares
 Outstanding
Diluted (in
 thousands)         20,436   20,497   -0.30%  20,404   20,400    0.02%

Net Interest
 Margin               3.68%    3.71%  -0.81%    3.65%    3.68%  -0.82%

Return on Average
 Assets               1.21%    1.19%   1.68%    1.17%    1.19%  -1.68%

Return on Average
 Equity              19.48%   18.80%   3.62%   18.74%   18.56%   0.97%


(a) Losses on sales of securities of $443,000 and $459,000 are
    included in other income for the quarter and nine months ended
    June 30, 2006, respectively. For the quarter and nine months
    ended June 30, 2005, gains (losses) on sales of securities were
    ($127,000) and $279,000, respectively.



                     COASTAL FINANCIAL CORPORATION
                   CONSOLIDATED FINANCIAL HIGHLIGHTS
       (Unaudited - Dollars in Thousands Except Per Share Data)
                              (CONTINUED)
                                                            Percentage
                              At          At         At    Change from
                            June 30,    Sept 30,   June 30,  Sept. 30,
                             2006        2005       2005       2005
 .....................................................................

Total Assets (1)           $1,624,081  $1,543,459  $1,480,547    5.22%

Loans Receivable, Net      $1,053,077  $  942,381  $  911,828   11.75%

Customer Deposits (1) (2)  $  927,071  $  901,013  $  876,610    2.89%

Shareholders' Equity       $  102,577  $   97,221  $   95,829    5.51%

Non-Performing Assets
  to Total Assets (3)            0.12%       0.22%       0.29% -45.45%

Allowance for Loan Losses
 as a Percentage of Total Net
 Loans                           1.19%       1.25%       1.30%  -4.80%

Tangible Book Value
  Per Share                $     5.21  $     5.00  $     4.93    4.20%


                               At or             At or
                              for the           for the
                             Three Months     Three Months
                               Ended             Ended
                              June 30,          Sept. 30,   Percentage
                               2006              2005         Change
                            ............    ............  ............

Credit Quality:
  Non-Performing Loans           $   1,290   $    2,641        -51.15%
  Non-Performing Loans as a
  % of Loans                          0.12%        0.28%       -57.14%
  Allowance for Loan Losses as a
   % of Non-Performing Loans        973.18%      444.83%       118.78%
  Non-Performing Assets (3)      $   1,930   $    3,459        -44.20%
  Non-Performing Assets as a %
   of Loans and Foreclosed
   Property                           0.18%        0.37%       -51.35%
  Net Loan Charge-Offs
   as a % of Average Loans
   (Annualized)                       0.03%        0.12%       -75.00%

Stock Performance
At quarter end:
  Market Price Per Share of
   Common Stock                  $   13.04   $    13.65         -4.47%
  Indicated Annual Dividend      $    0.20   $     0.18         11.11%
  Dividend Yield                      1.53%        1.32%        15.91%
  Price/Book Ratio                  250.00%      273.00%        -8.42%
  Market Capitalization          $ 256,605   $  265,689         -3.42%

(1) Total Assets and Customer Deposits in prior periods have been
    reclassified to conform to the June 30, 2006 presentation.

(2) Customer Deposits exclude brokered deposits.  Brokered deposits
    were $135,177, $169,905 and $125,486 at June 30, 2006,
    September 30, 2005 and June 30, 2005, respectively.

(3) Non-performing assets consist of non-accrual loans 90 days or
    more past due and real estate owned.
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