Coastal Financial

1 serious warning sign in Coastal Financial’s filings.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 27 Feb 2026, plus the 10-Q filed 7 Aug 2026 and 11 later 8-Ks.

• Its past accounts can't be relied on

  Serious

  It told the SEC its earlier accounts should no longer be relied on, usually because they contained errors.

  8-K Item 4.02 filed 17 Mar 2025: the company said its earlier financial statements should no longer be relied on.

  From an 8-K filed 17 March 2025: Previously issued accounts should no longer be relied on. Open the filing

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• Our use of artificial intelligence and automated technologies may expose us to operational, compliance and governance risks.

  Could happen

  We currently use, and may in the future evaluate or implement, artificial intelligence (“AI”), automation, and similar technologies to support certain internal processes or business functions. The use of these technologies involves inherent risks, including the risk of errors, model limitations, data quality issues, system failures, or unintended outcomes. If AI-enabled tools do not operate as intended or are not properly governed, our operations, risk management processes, or compliance with applicable laws and regulations could be adversely affected.

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• AI models may produce outcomes that are difficult to explain, validate or monitor.

  Could happen

  Certain AI techniques may rely on complex or opaque algorithms that can make it challenging to fully explain model outputs or identify the underlying drivers of specific results. Limitations in explainability or validation may increase model risk and complicate compliance with supervisory expectations, including those related to model risk management, internal controls, and auditability. Failure to appropriately manage these risks could result in restrictions or other actions by regulatory agencies on the use of such technologies.

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• We originate and purchase loans through our CCBX partners, which exposes us to increased lending and compliance risks.

  Could happen

  At December 31, 2025, $1.81 billion, or 48.1%, of our total loans were originated or purchased through CCBX partners. Our partners underwrite these loans in compliance with our credit standards and policies. Our CCBX partners service $1.60 billion of these loans. Our partners provide fraud and credit enhancements on many of our CCBX loans, but if they are unable to fulfill their contracted obligations, the Bank could be exposed to writing off all or a portion of the related credit enhancement asset and to additional credit losses as a result of this counterparty risk. In certain partner arrangements, the partner is required to maintain reserve, escrow or similar funding mechanisms (including replenishment obligations) intended to support servicing duties, representations and warranties, fraud losses and other credit-related obligations. These reserve or funding positions may decline below required levels or become negative due to loss activity, timing differences or other factors, and partners may be required to replenish such amounts. If a partner is unable or unwilling to fund or replenish required amounts on a timely basis, we could be exposed to higher credit losses, incur additional servicing or operational costs, accelerate loss recognition or write off all or a portion of the related credit enhancement asset. We evaluate partner funding capacity and reserve adequacy on an ongoing basis as part of our risk management framework and may exercise contractual remedies, which may include adjusting reserve requirements, suspending originations or purchases, or transferring servicing responsibilities, if warranted. We are subject to compliance and regulatory risk if partners do not follow our servicing policies, lending laws and regulations.

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• Our banking-as-a-service (“BaaS”) strategy faces increasing competition, including from institutions and partners that may no longer require a third-party bank.

  Could happen

  Competition in the BaaS market may also increase our operating and compliance costs, reduce pricing flexibility, or limit revenue growth. Any inability to compete effectively in this market could have an adverse effect on our business, financial condition, and results of operations.

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• Our banking-as-a-service (“BaaS”) strategy faces increasing competition, including from institutions and partners that may no longer require a third-party bank.

  Could happen

  In addition, certain current or prospective partners may seek to reduce their reliance on third-party banking relationships by obtaining their own bank charters or other regulatory approvals that would allow them to offer banking products directly. If such efforts are successful, demand for our BaaS services could decline, existing partner relationships could be reduced or terminated, and our ability to grow or maintain deposits, fee income, or other revenues associated with these relationships could be adversely affected.

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