CoastalSouth Bancshares, Inc. Reports Earnings for First Quarter 2026

Key Terms

net interest margin financial

Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.

brokered certificates of deposit financial

Brokered certificates of deposit are time-deposit savings instruments issued by banks but sold through independent brokerage firms, like buying a fixed-term bond through a shop rather than directly at a bank branch. They matter to investors because they often offer higher interest rates and the ability to buy different bank issuers in one place, but they carry trade-off of reduced liquidity and potential price fluctuations if you sell before maturity; FDIC protection applies up to insured limits per bank.

nonperforming assets financial

Nonperforming assets are loans or investments that are not generating expected payments or returns because the borrower has fallen behind on payments or the investment has lost value. They matter to investors because a high level of nonperforming assets can indicate financial trouble for a bank or institution, potentially affecting its stability and profitability.

allowance for credit losses financial

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

loans held for investment financial

Loans held for investment are loans a bank or lender plans to keep on its balance sheet and collect payments from, rather than sell to another party. Think of it like owning a rental property instead of flipping it: the owner expects steady income but also carries the risk that borrowers may stop paying, so investors watch this line to judge a lender’s interest income stability, credit quality, and liquidity needs.

loans held for sale financial

Loans held for sale are loans a bank or lender has made but intends to sell to another investor rather than keep on its books. Think of it like a shop buying products specifically to resell: the practice shows how active the lender is in originating loans, affects near-term cash flow and profit prospects, and signals how much credit risk the lender plans to transfer off its balance sheet—information investors use to assess liquidity, earnings volatility and risk exposure.

return on average assets financial

Return on average assets (ROAA) measures how efficiently a company turns its assets into profit by comparing profit after expenses to the average value of its assets over a period (usually the average of beginning and ending assets). It matters to investors because it shows how well management uses the company’s resources to generate returns—think of it as how much profit a baker earns from the oven space they actually used over time.

effective tax rate financial

The effective tax rate is the percentage of a company's profits that it pays in taxes. It shows how much of its earnings go to taxes after all deductions and credits are considered. For investors, it indicates how much of the company's income is taken by taxes, impacting overall profitability and financial health.

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ATLANTA--(BUSINESS WIRE)-- CoastalSouth Bancshares, Inc. (“CoastalSouth” or the “Company”) (NYSE: COSO), the holding company for Coastal States Bank (the “Bank” or "CSB"), today reported net income of $6.3 million, or $0.51 per diluted share, for the first quarter of 2026, compared to approximately $7.1 million, or $0.58 per diluted share, for the fourth quarter of 2025, and $5.1 million, or $0.47 per diluted share, for the first quarter of 2025.

Additionally, on April 17, 2026 the Board of Directors of CoastalSouth Bancshares, Inc. declared a per share quarterly dividend of $0.05. The dividend will be paid in cash to all shareholders with outstanding shares as of the close of business on May 14, 2026, the record date. The dividend shall be paid on May 28, 2026.

Commenting on the Company’s results, President and Chief Executive Officer, Stephen R. Stone stated, “We started strong in 2026 by growing $117.9 million in core deposits¹ during the first quarter. Our core deposit growth has allowed us to reduce alternative funding sources and will provide liquidity for continued loan growth. We were pleased to see core deposit growth across all of our markets. We also produced $166.7 million in loans held for investment in the first quarter and our loan pipeline continued to grow, particularly with the addition of new commercial bankers across the franchise."

First Quarter 2026 Performance Highlights:

• Net income of $6.3 million or $0.51 per diluted share
• Return on average assets ("ROAA") of 1.10%
• Return on average equity ("ROAE") of 9.71%; Return on average tangible common equity¹ ("ROATCE") of 9.90%
• Net interest margin of 3.59%, a decrease of 1 basis point from the fourth quarter of 2025
• Total deposits increased $69.5 million, driven by growth of $117.9 million in core deposits¹ and a decrease in brokered certificates of deposits of $48.4 million
• Loans held for investment ("LHFI") production² of $166.7 million during the first quarter of 2026 led to LHFI growth of $9.9 million, up 2.5% annualized from the fourth quarter of 2025
• Book value per share growth of $0.28, or 5.24% annualized, to $21.94 at March 31, 2026; Tangible book value¹ per share growth of $0.27, or 5.15% annualized, to $21.52 at March 31, 2026 from the fourth quarter of 2025
• Total shareholders' equity to total assets of 11.20%, compared to 11.25% as of the fourth quarter of 2025; Tangible common equity¹ to tangible assets¹ of 11.01%, compared to 11.06% at December 31, 2025
• Net charge-offs to average loans held for investment of 0.01%
• Nonperforming assets to total assets of 0.77%; adjusted nonperforming assets to total assets¹ of 0.62%
• Allowance for credit losses ("ACL") on LHFI to total LHFI of 1.16%; ACL on LHFI to nonperforming loans of 103.54%

Operating Highlights

Net interest income totaled $19.7 million for the first quarter of 2026, a decrease of approximately $119 thousand, or 0.6%, from $19.9 million for the fourth quarter of 2025, and an increase of approximately $3.0 million, or 17.8% from the first quarter of 2025. The Company’s net interest margin decreased by 1 basis point to 3.59% for the first quarter of 2026, compared to 3.60% for the fourth quarter of 2025, and increased 21 basis points from the first quarter of 2025.

The yield on average interest-earning assets for the first quarter of 2026 decreased to 5.92% from 5.98% for the fourth quarter of 2025. This decrease was primarily related to an overall yield decrease in interest-earning assets, primarily federal funds sold, loans held for sale, and investment securities due to recent interest rate cuts, notwithstanding significant growth in average total earning assets. Compared to the first quarter of 2025, yields on earning assets decreased 13 basis points to 5.92% from 6.05%. The decrease was primarily attributable to the aforementioned interest rate cuts during 2025.

The Company’s total cost of funds was 2.55% for the first quarter of 2026, a decrease of 5 basis points and 30 basis points compared with the fourth and first quarters of 2025, respectively. Deposit costs decreased 5 and 26 basis points during the first quarter of 2026 to 2.54%, compared to 2.59% and 2.80% in the fourth and first quarters of 2025, respectively. The cost of interest-bearing deposits decreased 8 basis points during the first quarter of 2026 to 3.01%, compared with 3.09% in the fourth quarter of 2025, reflecting continued repricing of certificates of deposits in the first quarter of 2026.

Noninterest income totaled $2.0 million for the first quarter of 2026, a decrease of $328 thousand, or 14.3%, from the fourth quarter of 2025, primarily attributable to a decrease in gain on sale of government guaranteed loans ("GGL"), net of other categories within noninterest income. Noninterest expense totaled $13.0 million for the first quarter of 2026, an increase of $782 thousand, or 6.4%, from the fourth quarter of 2025. This increase was primarily due to higher salaries and employee benefits, other professional services, and other noninterest expense. The Company continues to focus on organic growth and expansion through banker recruiting across the franchise.

The Company’s effective tax rate for the first quarter of 2026 was 23.6%, compared to 18.3% for the fourth quarter of 2025, and 23.4% for the first quarter of 2025. The increase in effective tax rate from the fourth quarter of 2025 was primarily due to a lower recognition of benefits from tax credits in the first quarter of 2026.

Balance Sheet Trends

Total assets were $2.35 billion at March 31, 2026, an increase of approximately $42.0 million, or 1.8%, from $2.31 billion at December 31, 2025. Loans held for sale ("LHFS") were $202.6 million at March 31, 2026, an increase of $31.7 million, or 18.5%, from $170.9 million at December 31, 2025. Gross LHFI were $1.63 billion at March 31, 2026, an increase of approximately $9.9 million, or 0.6%, from $1.62 billion at December 31, 2025.

Total deposits were $2.06 billion at March 31, 2026, an increase of $69.5 million, or 3.5%, from $1.99 billion at December 31, 2025. Noninterest-bearing deposits were $311.1 million at March 31, 2026, or 15.1% of total deposits, compared to $312.3 million, or 15.7% of total deposits, at December 31, 2025. Brokered certificates of deposit, a component of time deposits, were $258.6 million at March 31, 2026, as compared to $307.0 million at December 31, 2025, a decrease of $48.4 million, or 15.8%.

Credit Quality

During the first quarter of 2026, the Company recorded a provision for credit losses of $382 thousand, compared to $1.2 million and $629 thousand during the fourth and first quarters of 2025, respectively. The provision expense recorded during the first quarter of 2026 was due to loan production and mix and economic factors, offset with other changes in loss rates. The Company's annualized net charge-offs to average LHFI ratio was 0.01% for the first quarter of 2026 as compared to 0.00% and 0.00% during the fourth and first quarters of 2025, respectively.

Nonperforming assets totaled $18.2 million, or 0.77% of total assets, at March 31, 2026 compared to $18.3 million, or 0.79% of total assets at December 31, 2025. The $123 thousand decrease in nonperforming assets at March 31, 2026 from December 31, 2025 was primarily due to payments on nonaccrual assets, offset with additions to nonaccrual assets. Adjusted nonperforming assets³, which excludes the guaranteed portions of nonaccrual loans, was $14.5 million, or 0.62% of total assets, at March 31, 2026 compared to $14.2 million, or 0.62% of total assets, at December 31, 2025.

About CoastalSouth Bancshares, Inc.

CoastalSouth Bancshares, Inc. is a bank holding company headquartered in Atlanta, Georgia. Through our wholly owned subsidiary, Coastal States Bank, a South Carolina state-chartered commercial bank, we offer a full range of banking products and services designed for businesses, real estate professionals, and consumers looking for a deep and meaningful relationship with their bank. To learn more about Coastal States Bank, visit www.coastalstatesbank.com.

_________________________
1	Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP financial measures in tables 9A - 9E.
2	The Company defines production as original loan commitment amount, which includes both funded and unfunded balances. As of March 31, 2026 these loans had funded balances of $99.5 million and unfunded commitments of $59.9 million.
3	Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP financial measures in tables 9A - 9E.

Forward-Looking Statements

Statements in this press release regarding future events and our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets, constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical in nature and may be identified by references to a future period or periods by the use of the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” The forward-looking statements in this press release should not be relied on because they are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of known and unknown risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, and other factors, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this press release and could cause us to make changes to our future plans.

Factors that might cause such differences include, but are not limited to: the impact of current and future economic conditions, particularly those affecting the financial services industry, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing; potential impacts of any adverse developments in the banking industry, including any impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; changes in the interest rate environment, including changes to the federal funds rate; changes in prices, values and sales volumes of residential and commercial real estate; competition in our markets that may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income; interest rate fluctuations, which could have an adverse effect on the Company’s profitability; a breach in security of our information systems, including the occurrence of a cyber-attack incidents or a deficiencies in cyber security; risks related to potential acquisitions; government actions or inactions, including a prolonged shutdown of the federal government, tariffs, or trade wars (including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, and decreased demand for other banking products and services), legislation or regulatory changes which could adversely affect the ability of the consolidated Company to conduct business combinations or new operations; changes in tax laws; significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities; the effects of war or other conflicts, domestic civil unrest and tyranny, and changes in the overall geopolitical landscape; and adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized.

Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the section titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in the Company’s 2025 Annual Report on Form 10-K under the Securities Act of 1933, as amended, filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2026, and in other documents that we file with the SEC from time to time, which are available on the SEC’s website, http://www.sec.gov.

In addition, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release or to make predictions based solely on historical financial performance.

Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, express or implied, included in this press release are qualified in their entirety by this cautionary statement.

Financial Highlights (unaudited)																							Table 1A
			As of and for the Three Months Ended
			March 31,					December 31,					September 30,					June 30,					March 31,
(dollars in thousands except per share amounts)			2026					2025					2025					2025					2025
Selected Operating Data:
Interest income		$		32,568			$		33,006			$		32,890			$		31,793			$		30,024
Interest expense				12,824					13,143					13,700					13,715					13,265
Net interest income				19,744					19,863					19,190					18,078					16,759
Provision for credit losses				382					1,162					653					752					629
Noninterest income				1,967					2,295					2,100					1,795					1,881
Noninterest expense				13,044					12,262					11,856					12,092					11,419
Income tax expense				1,956					1,598					2,040					1,064					1,542
Net income				6,329					7,136					6,741					5,965					5,050
Share and Per Share Data:
Basic earnings per share		$		0.53			$		0.60			$		0.57			$		0.58			$		0.49
Diluted earnings per share		$		0.51			$		0.58			$		0.54			$		0.57			$		0.47
Book value per share		$		21.94			$		21.66			$		20.91			$		20.37			$		19.67
Tangible book value per share (1)		$		21.52			$		21.25			$		20.49			$		19.88			$		19.17
Shares of common stock outstanding				11,985,414					11,980,412					11,978,921					10,278,921					10,274,271
Weighted average diluted shares outstanding				12,440,809					12,387,619					12,325,462					10,612,255					10,642,078
Selected Balance Sheet Data:
Total assets		$		2,348,547			$		2,306,586			$		2,255,389			$		2,221,245			$		2,190,391
Securities available-for-sale, at fair value (2)				347,533					330,503					334,955					331,760					325,478
Gross loans held for investment				1,627,261					1,617,315					1,552,976					1,527,199					1,472,232
Loans held for sale				202,615					170,933					231,593					209,101					187,481
Allowance for credit losses				18,826					18,743					18,028					17,497					17,104
Goodwill and other intangible assets				6,243					6,262					6,186					6,190					6,199
Total deposits				2,057,144					1,987,684					1,949,672					1,968,301					1,937,693
Core deposits (1)				1,798,553					1,680,650					1,654,764					1,660,409					1,650,358
Other borrowings				-					30,000					25,000					14,753					20,738
Total Shareholders' equity				262,923					259,529					250,438					209,365					202,104

(1)	Considered non-GAAP financial measure - See "Non-GAAP Financial Measures” and reconciliation of GAAP to non-GAAP financial measures in tables 9A - 9E.
(2)	The Company did not have securities held to maturity in any of the periods presented.

Financial Highlights - continued (unaudited)																							Table 1B
			As of and for the Three Months Ended
			March 31,					December 31,					September 30,					June 30,					March 31,
(dollars in thousands)			2026					2025					2025					2025					2025
Performance Ratios:
Pre-tax, pre-provision net revenue (PPNR) (1)		$		8,667			$		9,896			$		9,434			$		7,781			$		7,221
Return on average assets (ROAA) (2)				1.10		%			1.24		%			1.20		%			1.09		%			0.97		%
Return on average equity (2)				9.71					11.02					10.84					11.62					10.25
Return on average tangible common equity (ROATCE) (1)(2)				9.90					11.24					11.07					11.92					10.52
Net interest rate spread (2)				2.90					2.87					2.83					2.76					2.67
Net interest margin (2)				3.59					3.60					3.58					3.46					3.38
Efficiency ratio				60.08					55.34					55.69					60.85					61.26
Noninterest income to average total assets (2)				0.34					0.40					0.37					0.33					0.36
Noninterest expense to average total assets (2)				2.27					2.13					2.11					2.21					2.19
Average interest-earning assets to average interest-bearing liabilities				129.61					130.41					129.16					126.50					126.31
Average equity to average total assets				11.34					11.22					11.08					9.37					9.46
Asset Quality Data:
Net charge-offs to average LHFI (2)				0.01		%			0.00		%			0.03		%			0.06		%			0.00		%
Net charge-offs to total average loans (2)				0.01					0.00					0.03					0.05					0.00
Total allowance for credit losses to total LHFI				1.16					1.16					1.16					1.15					1.16
Total allowance for credit losses to total loans				1.03					1.05					1.01					1.01					1.03
Total allowance for credit losses to nonperforming loans				103.54					102.39					127.03					118.99					117.11
Nonperforming loans to gross LHFI				1.12					1.13					0.91					0.96					0.99
Nonperforming assets to total assets				0.77					0.79					0.63					0.66					0.70
Adjusted nonperforming assets to total assets (1)				0.62					0.62					0.43					0.46					0.49
Balance Sheet and Capital Ratios:
Loan-to-deposit ratio				88.95		%			89.97		%			91.53		%			88.21		%			85.65		%
Noninterest-bearing deposits to total deposits				15.12					15.71					16.08					15.92					15.52
Total shareholders' equity to total assets				11.20					11.25					11.10					9.43					9.23
Tangible common equity to tangible assets (1)				11.01					11.06					10.91					9.22					9.01
Tier 1 leverage ratio (3)				11.21					11.18					11.15					10.22					10.62
Common equity tier 1 ratio (3)				12.19					12.30					11.94					11.09					11.55
Tier 1 risk-based capital ratio (3)				12.19					12.30					11.94					11.09					11.55
Total risk-based capital ratio (3)				13.25					13.31					12.90					12.04					12.52
Other:
Number of branches				11					11					11					11					11
Number of full-time equivalent employees				201					196					194					188					180

(1)	Considered non-GAAP financial measure - See "Non-GAAP Financial Measures” and reconciliation of GAAP to non-GAAP financial measures in tables 9A - 9E.
(2)	Represents annualized data.
(3)	Ratios are for Coastal States Bank only. Ratios for March 31, 2026 are preliminary.

Quarter End Balance Sheets (unaudited)																	Table 2
	March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)	2026				2025				2025				2025				2025
Assets
Cash and due from banks	$	22,546			$	41,538			$	20,088			$	23,245			$	19,380
Federal funds sold		40,011				38,229				6,191				20,045				79,153
Investment securities (1)		355,014				339,262				342,990				338,601				332,312
Loans held for sale (LHFS)		202,615				170,933				231,593				209,101				187,481
Loans held for investment (LHFI)		1,627,261				1,617,315				1,552,976				1,527,199				1,472,232
Allowance for credit losses on LHFI		(18,826	)			(18,743	)			(18,028	)			(17,497	)			(17,104	)
Loans held for investment, net		1,608,435				1,598,572				1,534,948				1,509,702				1,455,128
Bank-owned life insurance		48,752				48,296				47,833				47,373				46,924
Premises, furniture and equipment, net		18,810				18,122				18,186				18,166				17,837
Deferred tax asset		16,910				16,370				16,262				17,211				17,123
Goodwill & intangible assets (2)		6,243				6,262				6,186				6,190				6,199
Other assets		29,211				29,002				31,112				31,611				28,854
Total assets	$	2,348,547			$	2,306,586			$	2,255,389			$	2,221,245			$	2,190,391
Liabilities and shareholders' equity
Liabilities
Deposits
Noninterest-bearing transaction accounts	$	311,054			$	312,251			$	313,604			$	313,386			$	300,678
Interest-bearing transaction accounts		235,422				214,620				198,753				209,816				191,452
Savings and money market		775,962				673,609				634,826				628,729				650,050
Time deposits		734,706				787,204				802,489				816,370				795,513
Total deposits		2,057,144				1,987,684				1,949,672				1,968,301				1,937,693
Federal Home Loan Bank of Atlanta advances		-				30,000				25,000				-				-
Subordinated debt, net		-				-				-				14,753				14,741
Revolving commercial line of credit, net		-				-				-				-				5,997
Other liabilities		28,480				29,373				30,279				28,826				29,856
Total liabilities		2,085,624				2,047,057				2,004,951				2,011,880				1,988,287
Shareholders' equity
Voting common stock		11,853				10,868				10,449				8,107				8,102
Nonvoting common stock		132				1,112				1,530				2,172				2,172
Capital surplus		190,160				189,882				189,654				159,267				158,997
Accumulated income		72,602				66,886				59,750				53,009				47,044
Accumulated other comprehensive loss		(11,824	)			(9,219	)			(10,945	)			(13,190	)			(14,211	)
Total shareholders' equity		262,923				259,529				250,438				209,365				202,104
Total liabilities and shareholders' equity	$	2,348,547			$	2,306,586			$	2,255,389			$	2,221,245			$	2,190,391

(1)	No ACL on investment securities was recognized for the periods presented; includes securities available-for-sale and non-marketable equity securities.
(2)	Includes commercial mortgage servicing rights of $1.3 million, $1.3 million, $1.2 million, $1.1 million, and $1.1 million at March 31, 2026, December 31, 2025, September 30, 2025, June 30, 2025 and March 31, 2025, respectively.

Statements of Operations (unaudited)																	Table 3
	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)	2026				2025				2025				2025				2025
Interest income
Interest on cash and due from banks	$	125			$	109			$	129			$	111			$	135
Interest on federal funds sold		792				624				616				698				963
Interest and dividends on investment securities		3,611				3,734				4,125				3,875				3,800
Interest and fees on LHFS		2,915				3,771				3,422				3,296				2,819
Interest and fees on LHFI		25,125				24,768				24,598				23,813				22,307
Total interest income		32,568				33,006				32,890				31,793				30,024
Interest expense
Deposits		12,592				12,925				13,274				13,251				12,830
Other borrowings		232				218				426				464				435
Total interest expense		12,824				13,143				13,700				13,715				13,265
Net interest income		19,744				19,863				19,190				18,078				16,759
Provision for credit losses		382				1,162				653				752				629
Net interest income after provision for credit losses		19,362				18,701				18,537				17,326				16,130
Noninterest income
Mortgage banking related income		394				330				299				326				221
Interchange and card fee income		273				230				238				257				266
Service charges on deposit accounts		232				256				208				215				211
Bank-owned life insurance		456				462				461				449				440
Gain on sale of government guaranteed loans		337				682				613				265				-
Losses on sale of available-for-sale securities		-				-				(10	)			-				-
Other noninterest income		275				335				291				283				743
Total noninterest income		1,967				2,295				2,100				1,795				1,881
Noninterest expense
Salaries and employee benefits		8,046				7,644				6,985				6,997				6,694
Occupancy and equipment		886				864				850				814				788
Data processing		655				640				647				653				624
Other professional services		595				391				571				973				693
Software and other technology expense		826				808				788				719				703
Regulatory assessment		371				369				419				344				361
Other noninterest expense		1,665				1,546				1,596				1,592				1,556
Total noninterest expense		13,044				12,262				11,856				12,092				11,419
Net income before taxes		8,285				8,734				8,781				7,029				6,592
Income tax expense		1,956				1,598				2,040				1,064				1,542
Net income	$	6,329			$	7,136			$	6,741			$	5,965			$	5,050

QTD Average Balances and Yields/Rates (unaudited)																														Table 4
		Three Months Ended
		March 31, 2026												December 31, 2025												March 31, 2025
		Average								Yield/				Average								Yield/				Average								Yield/
(dollars in thousands)		Balance				Interest				Rate				Balance				Interest				Rate				Balance				Interest				Rate
Earning assets:
Cash and due from banks		$	24,822			$	125				2.04	%		$	21,271			$	109				2.03	%		$	22,725			$	135				2.41	%
Federal funds sold			85,959				792				3.74	%			62,215				624				3.98	%			88,478				963				4.41	%
Investment securities			343,772				3,611				4.26	%			340,416				3,734				4.35	%			335,254				3,800				4.60	%
Loans held for sale			158,597				2,915				7.45	%			198,119				3,771				7.55	%			136,849				2,819				8.35	%
Loans held for investment			1,618,301				25,125				6.30	%			1,567,471				24,768				6.27	%			1,428,405				22,307				6.33	%
Total earning assets			2,231,451				32,568				5.92	%			2,189,492				33,006				5.98	%			2,011,711				30,024				6.05	%
Noninterest-earning assets:
Allowance for credit losses on LHFI			(18,746	)											(18,034	)											(17,116	)
Bank-owned life insurance			48,487												48,038												46,672
Premises, furniture and equipment, net			18,458												18,160												17,851
Deferred tax asset			16,173												15,841												17,803
Goodwill & intangible assets			6,270												6,166												6,328
Other assets			27,365												28,695												27,947
Total noninterest-earning assets			98,007												98,866												99,485
Total assets		$	2,329,458											$	2,288,358											$	2,111,196
Interest-bearing liabilities:
Interest-bearing deposits		$	1,697,024			$	12,592				3.01	%		$	1,658,037			$	12,925				3.09	%		$	1,566,856			$	12,830				3.32	%
Federal funds purchased			-				-				0.00	%			8				-				0.00	%			-				-				0.00	%
Federal Home Loan Bank of Atlanta advances			24,667				232				3.81	%			20,924				218				4.13	%			1,166				13				4.52	%
Revolving commercial line of credit, net			-				-				0.00	%			-				-				0.00	%			9,863				187				7.69	%
Subordinated debt, net			-				-				0.00	%			-				-				0.00	%			14,735				235				6.47	%
Total interest-bearing liabilities			1,721,691				12,824				3.02	%			1,678,969				13,143				3.11	%			1,592,620				13,265				3.38	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits			315,023												323,687												293,387
Other liabilities			28,512												28,888												25,426
Total noninterest-bearing liabilities			343,535												352,575												318,813
Shareholders' equity			264,232												256,814												199,763
Total liabilities and shareholders' equity		$	2,329,458											$	2,288,358											$	2,111,196
Net interest income						$	19,744											$	19,863											$	16,759
Net interest spread											2.90	%											2.87	%											2.67	%
Net interest margin											3.59	%											3.60	%											3.38	%
Cost of total deposits (1)											2.54	%											2.59	%											2.80	%
Cost of total funding (1)											2.55	%											2.60	%											2.85	%

(1)	Includes noninterest-bearing deposits.

Loan Data (unaudited)																																	Table 5
	As of the Quarter Ended
	March 31, 2026								December 31, 2025								September 30, 2025								June 30, 2025								March 31, 2025
(dollars in thousands)	Amount				% of Total				Amount				% of Total				Amount				% of Total				Amount				% of Total				Amount				% of Total
Loans held for investment ("LHFI"):
Commercial Loans
Acquisition, development and construction	$	130,398				8.0	%		$	119,352				7.4	%		$	106,787				6.9	%		$	100,528				6.6	%		$	76,453				5.2	%
Income producing CRE		376,260				23.1				378,179				23.4				371,670				23.9				372,142				24.4				352,693				24.0
Owner-occupied CRE		107,344				6.6				92,787				5.7				96,287				6.2				91,147				6.0				90,204				6.1
Senior housing		254,445				15.6				259,529				16.1				223,719				14.4				236,474				15.5				245,292				16.7
Commercial and industrial		138,964				8.5				145,380				9.0				135,039				8.7				131,716				8.6				145,784				9.8
Retail Loans
Marine vessels		307,746				18.9				312,096				19.3				318,246				20.5				301,327				19.7				284,305				19.3
Residential mortgages		202,503				12.4				199,991				12.4				190,220				12.3				185,527				12.1				176,794				12.1
Cash value life insurance LOC		86,610				5.3				87,172				5.4				90,115				5.8				87,135				5.7				80,503				5.5
Other consumer		22,991				1.4				22,829				1.4				20,893				1.4				21,203				1.4				20,204				1.4
Gross loans held for investment	$	1,627,261				100.0	%		$	1,617,315				100.0	%		$	1,552,976				100.0	%		$	1,527,199				100.0	%		$	1,472,232				100.0	%
Core LHFI		1,573,972								1,561,791								1,492,992								1,464,200								1,406,199
Acquired LHFI (1)		53,289								55,524								59,984								62,999								66,033
Gross loans held for investment	$	1,627,261							$	1,617,315							$	1,552,976							$	1,527,199							$	1,472,232
Allowance for credit losses on LHFI		18,826								18,743								18,028								17,497								17,104
Net loans held for investment	$	1,608,435							$	1,598,572							$	1,534,948							$	1,509,702							$	1,455,128
Total loans held-for-sale		202,615								170,933								231,593								209,101								187,481
Total loans	$	1,829,876							$	1,788,248							$	1,784,569							$	1,736,300							$	1,659,713

(1)	Includes loans acquired through business combinations.

Nonperforming Assets (unaudited)																Table 6
	As of the Quarter Ended
(dollars in thousands)	March 31, 2026				December 31, 2025				September 30, 2025				June 30, 2025				March 31, 2025
Nonaccrual loans	$	18,183			$	18,306			$	14,171			$	14,611			$	14,599
Past due loans 90 days and still accruing		-				-				21				93				6
Total nonperforming loans	$	18,183			$	18,306			$	14,192			$	14,704			$	14,605
Other real estate owned		-				-				-				-				765
Total nonperforming assets	$	18,183			$	18,306			$	14,192			$	14,704			$	15,370
Nonperforming loans to gross LHFI		1.12	%			1.13	%			0.91	%			0.96	%			0.99	%
Nonaccrual loans to total assets		0.77	%			0.79	%			0.63	%			0.66	%			0.67	%
Nonperforming assets to total assets		0.77	%			0.79	%			0.63	%			0.66	%			0.70	%

Allowance for Credit Losses (unaudited)																		Table 7
		As of and for the Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2026				2025				2025				2025				2025
Allowance for credit losses on LHFI
Balance, beginning of period		$	18,743			$	18,028			$	17,497			$	17,104			$	17,118
Net charge-offs/(recoveries):
Commercial Loans
Commercial and industrial			(6	)			(4	)			(29	)			19				1
Retail Loans
Marine vessels			-				-				162				-				-
Residential mortgages			-				(29	)			(2	)			(2	)			(2	)
Other consumer			47				20				(6	)			191				16
Total net charge-offs/(recoveries)		$	41			$	(13	)		$	125			$	208			$	15
Provision for loan credit losses			124				702				656				601				1
Balance, ending of period		$	18,826			$	18,743			$	18,028			$	17,497			$	17,104
Allowance for credit losses for unfunded commitments
Period beginning balance		$	3,956			$	3,496			$	3,499			$	3,348			$	2,720
Provision (recovery) for credit losses			258				460				(3	)			151				628
Period ending balance		$	4,214			$	3,956			$	3,496			$	3,499			$	3,348
Balance, end of period - Allowance for credit losses: LHFI and unfunded commitments		$	23,040			$	22,699			$	21,524			$	20,996			$	20,452
Total loans held for investment		$	1,627,261			$	1,617,315			$	1,552,976			$	1,527,199			$	1,472,232
Credit Analysis
Net charge-offs to average LHFI			0.01	%			0.00	%			0.03	%			0.06	%			0.00	%
Total allowance for credit losses on LHFI to total LHFI			1.16	%			1.16	%			1.16	%			1.15	%			1.16	%
Total allowance for credit losses on LHFI to nonaccrual loans			103.54	%			102.39	%			127.22	%			119.75	%			117.16	%
Total allowance for credit losses on LHFI to total nonperforming loans			103.54	%			102.39	%			127.03	%			118.99	%			117.11	%

Loan Risk Ratings (1) (2) (unaudited)																Table 8
	As of the Quarter Ended
(dollars in thousands)	March 31, 2026				December 31, 2025				September 30, 2025				June 30, 2025				March 31, 2025
Acquisition, development and construction (1)
Pass	$	130,398			$	119,352			$	106,787			$	100,528			$	76,453
Special mention		-				-				-				-				-
Substandard		-				-				-				-				-
Total acquisition, development and construction	$	130,398			$	119,352			$	106,787			$	100,528			$	76,453
Income producing CRE (1)
Pass	$	375,791			$	377,711			$	370,788			$	371,255			$	352,281
Special mention		-				-				-				-				-
Substandard		469				468				882				887				412
Total income producing CRE	$	376,260			$	378,179			$	371,670			$	372,142			$	352,693
Owner-occupied CRE (1)
Pass	$	97,706			$	82,959			$	86,533			$	81,244			$	83,711
Special mention		2,509				2,739				3,579				3,612				-
Substandard		7,129				7,089				6,175				6,291				6,493
Total owner-occupied CRE	$	107,344			$	92,787			$	96,287			$	91,147			$	90,204
Senior housing (1)
Pass	$	239,788			$	236,816			$	205,330			$	217,971			$	208,922
Special mention		3,940				11,934				12,006				12,078				24,814
Substandard		10,717				10,779				6,383				6,425				11,556
Total senior housing	$	254,445			$	259,529			$	223,719			$	236,474			$	245,292
Commercial and industrial (1)
Pass	$	135,295			$	141,020			$	128,468			$	124,979			$	141,202
Special mention		141				212				2,402				2,199				-
Substandard		3,528				4,148				4,169				4,538				4,582
Total commercial and industrial	$	138,964			$	145,380			$	135,039			$	131,716			$	145,784
Marine vessels (2)
Performing	$	307,746			$	312,096			$	318,246			$	301,327			$	284,305
Nonperforming		-				-				-				-				-
Total marine vessels	$	307,746			$	312,096			$	318,246			$	301,327			$	284,305
Residential mortgages (2)
Performing	$	202,114			$	199,601			$	190,059			$	185,162			$	176,633
Nonperforming		389				390				161				365				161
Total residential mortgages	$	202,503			$	199,991			$	190,220			$	185,527			$	176,794
Cash value life insurance LOC (2)
Performing	$	86,610			$	87,172			$	90,115			$	87,135			$	80,503
Nonperforming		-				-				-				-				-
Total cash value life insurance LOC	$	86,610			$	87,172			$	90,115			$	87,135			$	80,503
Other consumer (2)
Performing	$	22,991			$	22,829			$	20,872			$	21,203			$	20,204
Nonperforming		-				-				21				-				-
Total other consumer	$	22,991			$	22,829			$	20,893			$	21,203			$	20,204
Gross loans held for investment	$	1,627,261			$	1,617,315			$	1,552,976			$	1,527,199			$	1,472,232

(1)	There were no commercial loans classified as doubtful.
(2)	Retail loans are classified as either performing or nonperforming.

Non-GAAP Financial Measures

The measures entitled return on average tangible common shareholders' equity, tangible book value per common share, tangible common equity, tangible assets, adjusted nonperforming assets to total assets, adjusted nonperforming assets, pre-tax, pre-provision net revenue ("PPNR"), tangible common equity to tangible assets and core deposits are not measures recognized under accounting principles generally accepted in the United States of America (“GAAP”) and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are return on average shareholders’ equity, book value per share, total shareholders’ equity, total assets, total nonperforming assets to total assets, total nonperforming assets, net income, total common equity to total assets, and total deposits, respectively.

Management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view the Company’s performance using the same tools that management uses to evaluate the Company’s past performance and prospects for future performance. While management believes that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures should be considered as additional views of the way the Company’s financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies.

COASTALSOUTH BANCSHARES, INC. AND SUBSIDIARY
FINANCIAL TABLES
Non-GAAP Reconciliations
Tangible Book Value per Share / Tangible Common Equity to Tangible Assets (unaudited)																		Table 9A
		As of
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands, except per share data)		2026				2025				2025				2025				2025
Tangible Common Equity:
Total shareholders' equity		$	262,923			$	259,529			$	250,438			$	209,365			$	202,104
Less: Goodwill and intangibles			(6,243	)			(6,262	)			(6,186	)			(6,191	)			(6,199	)
Adjusted for: Mortgage servicing rights			1,280				1,266				1,156				1,122				1,093
Tangible Common Equity		$	257,960			$	254,533			$	245,408			$	204,296			$	196,998
Common shares outstanding			11,985,414				11,980,412				11,978,921				10,278,921				10,274,271
Book value per common share			21.94				21.66				20.91				20.37				19.67
Tangible book value per common share			21.52				21.25				20.49				19.88				19.17
Tangible assets:
Total assets		$	2,348,547			$	2,306,586			$	2,255,389			$	2,221,245			$	2,190,391
Less: Goodwill and intangibles			(6,243	)			(6,262	)			(6,186	)			(6,191	)			(6,199	)
Adjusted for: Mortgage servicing rights			1,280				1,266				1,156				1,122				1,093
Tangible assets		$	2,343,584			$	2,301,590			$	2,250,359			$	2,216,176			$	2,185,285
Tangible common equity to tangible assets			11.01	%			11.06	%			10.91	%			9.22	%			9.01	%

ROATCE (unaudited)																		Table 9B
		As of and for the Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2026				2025				2025				2025				2025
Net income		$	6,329			$	7,136			$	6,741			$	5,965			$	5,050
Average shareholders' equity			264,232				256,814				246,688				205,837				199,763
Return on average shareholders' equity (1)			9.71	%			11.02	%			10.84	%			11.62	%			10.25	%
Average Tangible Common Equity:
Average shareholders' equity		$	264,232			$	256,814			$	246,688			$	205,837			$	199,763
Less: Average goodwill and intangibles			(6,270	)			(6,166	)			(6,176	)			(6,168	)			(6,328	)
Adjusted for: Average mortgage servicing rights			1,291				1,155				1,128				1,082				1,198
Average tangible common equity		$	259,253			$	251,803			$	241,640			$	200,751			$	194,633
Return on average tangible common (1) shareholders' equity			9.90	%			11.24	%			11.07	%			11.92	%			10.52	%

(1)	Represents annualized data.

Adjusted Nonperforming Assets to Total Assets (unaudited)																		Table 9C
		As of
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2026				2025				2025				2025				2025
Total nonperforming assets		$	18,183			$	18,306			$	14,192			$	14,704			$	15,370
Total assets			2,348,547				2,306,586				2,255,389				2,221,245				2,190,391
GAAP-based nonperforming assets to total assets			0.77	%			0.79	%			0.63	%			0.66	%			0.70	%
Total nonperforming assets		$	18,183			$	18,306			$	14,192			$	14,704			$	15,370
Adjusted for:
Guaranteed portions of nonaccrual loans			3,657				4,089				4,457				4,583				4,692
Adjusted total nonperforming assets		$	14,526			$	14,217			$	9,735			$	10,121			$	10,678
Total assets		$	2,348,547			$	2,306,586			$	2,255,389			$	2,221,245			$	2,190,391
Adjusted nonperforming assets to total assets			0.62	%			0.62	%			0.43	%			0.46	%			0.49	%

PPNR (unaudited)																		Table 9D
		As of and for the Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2026				2025				2025				2025				2025
Net income (GAAP-based)		$	6,329			$	7,136			$	6,741			$	5,965			$	5,050
Plus:
Income tax expense			1,956				1,598				2,040				1,064				1,542
Provision for credit losses			382				1,162				653				752				629
Pre-tax, pre-provision net revenue		$	8,667			$	9,896			$	9,434			$	7,781			$	7,221

Core Deposits (unaudited)																		Table 9E
		As of
		March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2026				2025				2025				2025				2025
Total Deposits		$	2,057,144			$	1,987,684			$	1,949,672			$	1,968,301			$	1,937,693
Less:
Brokered CDs			258,591				307,034				294,908				307,892				287,335
Core deposits (1)		$	1,798,553			$	1,680,650			$	1,654,764			$	1,660,409			$	1,650,358

(1)	The Company defines its core deposits as total deposits, less brokered certificates of deposit.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20260420651504/en/

Stephen R. Stone
President and Chief Executive Officer

Anthony P. Valduga
Chief Financial Officer / Chief Operating Officer

678-396-4605
investorrelations@coastalstatesbank.com

Source: CoastalSouth Bancshares