Coastal Financial Corporation (CCB) Investigation

Coastal Financial Corporation (CCB) Investigation Overview: What Went Wrong?

The investigation focuses on whether Coastal Financial and certain executives issued materially false and misleading statements, or failed to disclose material adverse facts regarding the true credit quality, risk profile, and underwriting oversight of loans originated through its CCBX BaaS segment.

Coastal Financial enables digital financial service providers, brands, and fintech partners to offer banking services via its CCBX platform. Historically, the company maintained that robust internal safeguards protected its balance sheet. Specifically, public filings emphasized:

• Strict Partner Screening: Prior to launching any lending product, partner institutions were allegedly required to submit all policies, scorecards, and lending models to Coastal Financial for review and approval to ensure alignment with strict internal risk profiles.
• Ongoing Internal & External Oversight: Management repeatedly assured investors that the company performed rigorous internal credit risk management alongside independent third-party professional firms tasked with regular loan reviews and accurate asset classifications.

The Q2 2026 Disclosure and 43% Market Collapse

The effectiveness of Coastal’s credit risk management and internal controls faced market skepticism on July 30, 2026, when the company reported its Q2 2026 financial results:

• Significant Financial Loss: Coastal posted a net loss of $42.1 million (or -$2.76 per diluted share), drastically missing consensus profit estimates.

• Rising Credit Expenses: The losses were driven overwhelmingly by $68.8 million in pre-tax charges tied to a single CCBX partner relationship and associated consumer loan portfolios, including a $46 million valuation adjustment to credit enhancement assets and a $22.8 million spike in credit loss provisions.

• CFO Departure: Compounding market instability, the company announced the impending departure of its Chief Financial Officer just ahead of the earnings release.

• Immediate Stock Decline: CCB shares crashed $30.75 per share, or 43.5%, in a single trading session, dropping from a close of $70.66 to close at $39.91 on heavy volume.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the CCB investigation about?

We are focused on when Coastal first detected this single partner problem and whether it may have misled investors about the effectiveness of its initial underwriting and ongoing credit risk management.

WHAT SHOULD I DO?

I worked at CCB. What should I do?

If you were an employee of CCB, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICIPATE?

Am I affected? What do I need to do to participate?

If you were an investor in CCB, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any CCB investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.