COASTAL FINANCIAL CORP

Restatement Background

In connection with the preparation of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, the Company concluded that it had not appropriately accounted for recognition of interest income and BaaS expense for certain BaaS partner loans in its CCBX segment. In addition, the Company concluded that reimbursement of expenses associated with certain BaaS partners had not been appropriately accounted for under Topic 606, where the Company acts as an agent.

On March 13, 2025, the Audit Committee (the “Audit Committee”), after discussion with senior management and the Company’s independent registered public accountants, concluded that these errors had no impact on consolidated pre-tax income or net income in the Consolidated Income Statement and an overstatement of assets and liabilities in the Consolidated Balance Sheet and concluded that these errors had no impact on retained earnings. In addition, these errors impacted net change in operating activities and investing activities in the Consolidated Statement of Cash flows.

The Company’s Board of Directors, after discussion with senior management and the Company’s independent registered public accountants, concluded that the errors were material to the Company's previously issued Consolidated Financial Statements (“Prior Financial Statements”) and the Prior Financial Statements as of and for the fiscal year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, should no longer be relied upon due to the impact of the errors noted above.

In addition, these errors included in the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, September 30, 2024, March 31, 2023, June 30, 2023 and September 30, 2023 (collectively, the “Prior Interim Financial Statements”) and the Prior Interim Financial Statements should no longer be relied upon.

Additionally, the Company determined any previously issued earnings releases and investor presentations or other communications including or describing the Prior Financial Statements and Prior Interim Financial Statements should no longer be relied upon.

This Annual Report on Form 10-K includes a restated Consolidated Income Statement, Consolidated Balance Sheet and Consolidated Statement of Cash flows as of and for the year ended December 31, 2023. In addition, the Company has restated its unaudited quarterly Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income and Cash Flows for the first three quarters of and each of the years ended December 31, 2024 and December 31, 2023.

Refer to Note 23, Restatement of Prior Period Financial Statements, in the accompanying Consolidated Financial Statements included in Part II, Item 8 for additional information, including the impact on the specific accounts.

Impact on Internal Controls over Financial Reporting

See Item 9A, Controls and Procedures, for information related to identified material weaknesses in internal control over financial reporting and the related remedial measures.

Items Restated in this Form 10-K

The following items have been restated, as appropriate, to correct the errors noted above:

•Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

•Part II, Item 8. Financial Statements and Supplementary Data