Investors who bought Coastal Financial Corporation common stock between October 28, 2024 and July 29, 2026 may be covered by a proposed class action alleging Coastal Financial hid that a roughly $500 million loan portfolio tied to one of its CCBX fintech partners had materially deteriorated. No class has been certified and there is nothing to file yet.
Allegations Only · No Settlement Yet
This article describes a class action complaint. The statements below are unproven allegations. Coastal Financial Corporation and its executives have not been found liable, there is no certified class, and nothing to claim at this time. This page is informational and is not legal advice.
What Is This About?
A Pennsylvania public pension fund filed a proposed securities class action against Coastal Financial Corporation on October 2, 2026 in the U.S. District Court for the Western District of Washington, in Seattle. The case is Allegheny County Employees’ Retirement System v. Coastal Financial Corporation, No. 2:26-cv-03746. It is brought on behalf of investors who bought or otherwise acquired Coastal common stock between October 28, 2024 and July 29, 2026.Coastal, based in Everett, Washington, is the bank holding company for Coastal Community Bank, and its stock trades on Nasdaq under the ticker CCB. The complaint alleges that Coastal and three of its executives promoted the growth and credit quality of its CCBX banking-as-a-service business without disclosing that the loans tied to one large CCBX partner had materially deteriorated. On July 30, 2026, Coastal reported a $42.1 million quarterly net loss driven by a $68.8 million credit expense tied to that single partner, and the complaint says the stock fell 43.5% the same day.
The case is at the complaint stage. No lead plaintiff has been appointed, no class has been certified, and there is no settlement, fund or claim form.
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Coastal’s CCBX Business
Coastal reports three business segments: the community bank, CCBX, and a treasury and administration segment. The bank serves consumers and small and mid-sized businesses through 14 branches in Snohomish, Island and King counties, along with online and mobile banking. Through CCBX, Coastal provides banking as a service, letting fintech companies and other brands offer banking and lending products to their own customers.According to the complaint, CCBX grew into nearly half of Coastal’s lending during the class period. CCBX loans were $1.60 billion, or 45.9% of total loans, at the end of 2024 and $1.81 billion, or 48.1%, at the end of 2025. By June 30, 2026, the complaint says, gross CCBX loans had reached about $2.23 billion across 22 active partner relationships.
What the Complaint Alleges Was Misleading
The complaint quotes a series of earnings releases and investor presentations from October 2024 through April 2026. In them, Coastal described CCBX partner and product growth while saying it would stay selective in adding partners to manage risk and capital, and its chief executive said the company was “laser focused” on building out its risk management infrastructure. Investor presentations in April and July 2025 said risk personnel had grown to 29% and then one-third of Coastal’s staff. In April 2025 and again in April 2026, Coastal said its partner contracts fully indemnified it against fraud and covered 98.8% of credit risk on CCBX loan balances.On April 29, 2026, according to the complaint, the chief executive said Coastal had been “intentional about how we grow,” including a focus on credit quality as CCBX portfolios matured. The complaint alleges these statements were misleading because they left out three things:
- that the credit quality of one CCBX partner’s loan portfolio, about $500 million and nearly 23% of all CCBX loans, had materially deteriorated;
- that Coastal therefore faced significant exposure to credit losses despite its statements about the protection its partner agreements provided; and
- that Coastal’s risk management and credit monitoring were not adequate to identify, account for and limit that deterioration.
The July 30, 2026 Results and Stock Drop
Before the market opened on July 30, 2026, Coastal reported a second-quarter GAAP net loss of $42.1 million. It also held its first earnings call, where, as quoted in the complaint, management said the quarter included “significant and unusual items that warrant a direct explanation.”According to the complaint, the loss was driven mainly by a $68.8 million credit expense tied to a single CCBX partner relationship. That figure combined a $46 million valuation adjustment to a related credit enhancement asset and a $22.8 million provision for credit losses connected to the partner’s indemnification obligations. Management described the affected loans as a defined portfolio of about $500 million, plus the related reimbursement exposure.
The complaint says Coastal’s stock fell $30.75 a share, or 43.5%, to close at $39.91 on July 30, 2026, erasing about $470 million in market value. The complaint does not name the CCBX partner.
What the Complaint Says About the Executives
A securities fraud claim requires the plaintiff to show the defendants knew, or were reckless in not knowing, that their statements were misleading. To support that element, the complaint points to the size of the affected partner relationship, nearly a quarter of CCBX loans, and to the $68.8 million charge, which it calculates at nearly 14% of that partner’s portfolio. It argues that a company with a third of its staff in risk roles should have identified the problem.The complaint also says the chief executive sold about $12 million of Coastal stock and the longtime chief financial officer sold about $3.8 million during the class period. It points to two executive departures: Coastal’s chief risk officer resigned effective September 29, 2025, and on July 22, 2026, eight days before the earnings release, Coastal announced that its chief financial officer would step down effective August 15, 2026. These are allegations the defendants have not yet answered in court.
Who Is Being Sued and Under Which Laws
The defendants are Coastal Financial Corporation; Eric M. Sprink, its chief executive officer and a director; Joel Edwards, its chief financial officer from 2012 until his retirement in 2025, who returned as interim CFO effective August 15, 2026; and Brandon Soto, executive vice president and CFO from October 1, 2025 through August 15, 2026.The complaint asserts two claims:
- Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, against all defendants.
- Section 20(a) of the Exchange Act, a control-person claim against Sprink, Edwards and Soto.
The complaint seeks class certification, compensatory damages in an amount to be proven at trial, interest, and costs and fees, and demands a jury trial. None of the allegations has been tested in court.
Who Is in the Proposed Class?
The proposed class is every person and entity that bought or otherwise acquired Coastal’s publicly traded common stock between October 28, 2024 and July 29, 2026, inclusive. The defendants, Coastal’s present and former executive officers and directors, their immediate families, their legal representatives, heirs, successors and assigns, entities the defendants control, and Coastal’s affiliates are excluded. The class exists only as a proposal until a court certifies it, and its definition can change as the case proceeds.What Happens Next
The Private Securities Litigation Reform Act requires the first plaintiff in a securities class action to publish a notice of the case, after which investors have 60 days to ask the court to appoint them lead plaintiff. According to the PSLRA notice published by plaintiff’s counsel, that deadline in the Coastal case is December 1, 2026, which is 60 days after the October 2 filing. The date comes from the notice, not from a court order. After the court picks a lead plaintiff and lead counsel, an amended complaint usually follows, and the defendants typically move to dismiss.The complaint was filed by Grant & Eisenhofer P.A., with Cotchett, Pitre & McCarthy, LLP as liaison counsel in Seattle. The case is assigned to Judge David W. Christel, according to the court docket. As of October 25, 2026, Coastal’s most recent SEC filings, including its August 7, 2026 quarterly report and a September 28, 2026 current report, predate the lawsuit, and the company had not addressed it in an SEC filing. Members of a proposed securities class generally remain in the class without seeking the lead plaintiff role. There is no money available unless the case produces a settlement or judgment, which would come with its own notice and claim process.
Questions
Who is covered by the Coastal Financial securities class action?
The proposed class is every person and entity that bought or otherwise acquired Coastal Financial Corporation common stock between October 28, 2024 and July 29, 2026, inclusive. The defendants, Coastal’s current and former executive officers and directors, their immediate families, legal representatives, heirs, successors and assigns, entities the defendants control and Coastal’s affiliates are excluded. No class has been certified.
What is the December 1, 2026 deadline in the Coastal Financial case?
According to the PSLRA notice published by plaintiff’s counsel, December 1, 2026 is the deadline for investors to ask the court to appoint them lead plaintiff under the Private Securities Litigation Reform Act. That date is 60 days after the October 2, 2026 filing, the window the statute sets. It is not a claim deadline. Members of a proposed securities class generally remain in the class without seeking that role, and there is no money or claim form available.
What does the Coastal Financial lawsuit claim was misleading?
The complaint alleges that while Coastal promoted the growth of its CCBX banking-as-a-service segment, its focus on risk management and credit quality, and partner contracts indemnifying it against 98.8% of credit risk, it did not disclose that a roughly $500 million loan portfolio tied to one CCBX partner had materially deteriorated. Coastal has not been found liable.
What did Coastal Financial disclose on July 30, 2026?
Coastal reported a second-quarter 2026 GAAP net loss of $42.1 million, driven mainly by a $68.8 million credit expense tied to a single CCBX partner relationship. According to the complaint, that expense combined a $46 million valuation adjustment to a credit enhancement asset with a $22.8 million provision for credit losses. The complaint says the stock fell 43.5% that day, to $39.91.
Is there a Coastal Financial settlement to claim?
There is no settlement, fund or claim form. The case is at the complaint stage, no lead plaintiff has been appointed and no class has been certified. Money would become available only if the case produced a settlement or judgment, which would come with its own court-approved notice and claim process.
Sources
- Class action complaint — Allegheny County Employees’ Retirement System v. Coastal Financial Corporation, filed October 2, 2026 (18 pages)
- Court docket — No. 2:26-cv-03746 (W.D. Wash.) (CourtListener)
- Coastal Financial Corporation SEC filings — EDGAR company filing index
