Coastal is a bank holding company that provides traditional banking products and services through its wholly owned subsidiary, Coastal Community Bank. Coastal also operates CCBX, a banking-as-a-service (“BaaS”) platform through which it partners with digital financial service providers, companies, and brands to offer banking and other financial services to their customers.
The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Specifically, the lawsuit alleges that throughout the Class Period, Defendants misrepresented and failed to disclose key facts concerning the credit risks associated with Coastal’s CCBX business, including the extent of the Company’s exposure to credit losses and the effectiveness and value of its contractual indemnification protections. Defendants issued a series of materially false and misleading statements that led investors to believe that Coastal was adequately protected against credit losses associated with its CCBX partner relationships.
Investors learned the truth on July 30, 2026, when Coastal announced a GAAP net loss of $42.1 million for the second quarter of 2026, driven primarily by a $68.8 million credit expense related to a single CCBX partner relationship. Defendants revealed that the charge included a $46 million valuation adjustment to a credit enhancement asset and a $22.8 million provision for credit losses associated with the partner’s indemnification agreement, and that the affected portfolio consisted of approximately $500 million in underlying loans and related reimbursement exposure. On this news, Coastal’s stock price fell $30.75 per share, or 43.5%, to close at $39.91 per share on July 30, 2026, erasing approximately $470 million in market capitalization.
