CoastalSouth Bancshares, Inc. Reports Earnings for Third Quarter 2026

Higher lending income and a credit-loss recovery accompanied lower core deposits and a decline in book value per share.

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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 $8.8 million, or $0.71 per diluted share, for the third quarter of 2026, compared to approximately $7.3 million, or $0.59 per diluted share, for the second quarter of 2026, and $6.7 million, or $0.54 per diluted share, for the third quarter of 2025. For the nine months ended September 30, 2026, the Company reported net income of $22.4 million, or $1.81 per diluted share, compared with $17.8 million, or $1.58 per diluted share, for the same period in 2025.

Additionally, on October 19, 2026, the Board of Directors of CoastalSouth Bancshares, Inc. declared a per share quarterly dividend of $0.06. The dividend will be paid to shareholders of record as of the close of business on November 10, 2026, the record date. The dividend shall be paid on November 24, 2026.

Commenting on the Company’s third quarter performance, President and Chief Executive Officer Stephen R. Stone stated, "We delivered record earnings of $0.71 per share in the third quarter, driven by strong loan production and robust gain-on-sale revenue from our government-guaranteed lending business. We saw outstanding loan production² of $248.2 million during the third quarter, driving an $81.6 million increase in loans held-for-investment, or 19.0% annualized. The majority of production in the third quarter continued to come from the community bank, although our specialty lines of business also had a strong production quarter. As we head into the fourth quarter, we remain focused on building deep client relationships, maintaining disciplined underwriting, and investing in talented bankers across our footprint."

Third Quarter 2026 Performance Highlights:

• Net income of $8.8 million or $0.71 per diluted share
• Return on average assets ("ROAA") of 1.45%
• Return on average equity ("ROAE") of 12.88%; Return on average tangible common equity¹ ("ROATCE") of 13.12%
• Net interest margin of 3.70%, an increase of 4 basis points from the second quarter of 2026
• Total deposits increased $53.1 million, although core deposits¹ were down quarter over quarter approximately $20.0 million which is primarily attributable to seasonal outflows associated with our property management clients
• Loans held-for-investment ("LHFI") production² of $248.2 million during the third quarter of 2026 led to LHFI growth of $81.6 million, up 19.0% annualized from the second quarter of 2026
• Accumulated other comprehensive loss ("AOCL") increased by $8.3 million from prior quarter due to increased unrealized losses in our available-for-sale securities portfolio
• Book value per share decreased $0.15, or 2.65% annualized, to $22.32 at September 30, 2026; Tangible book value¹ per common share decreased $0.16, or 2.88% annualized, to $21.90 at September 30, 2026 from the second quarter of 2026
• Share repurchase program launched May 1, 2026; 285,715 shares repurchased during the third quarter of 2026 with a weighted-average price of $27.10
• Total shareholders' equity to total assets of 10.81%, compared to 11.14% as of the second quarter of 2026; Tangible common equity¹ to tangible assets¹ of 10.63%, compared to 10.96% as of June 30, 2026
• Net charge-offs to average loans held for investment of 0.01%
• Nonperforming assets to total assets of 0.62%; adjusted nonperforming assets to total assets¹ of 0.45%
• Allowance for credit losses ("ACL") on LHFI to total LHFI of 1.10%; total ACL on LHFI to nonperforming loans of 130.13%

______________________________
1	Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP financial measures in tables 10A - 10E.
2	The Company defines production as original loan commitment amount, which includes both funded and unfunded balances at the time of origination. As of September 30, 2026, these loans had funded balances of $148.9 million and unfunded commitments of $74.1 million.

Operating Highlights

Net interest income totaled $21.5 million for the third quarter of 2026, an increase of $862 thousand, or 4.2%, from $20.7 million for the second quarter of 2026, and an increase of $2.3 million, or 12.2% from the third quarter of 2025. The Company’s net interest margin increased by 4 basis points to 3.70% for the third quarter of 2026, compared to 3.66% for the second quarter of 2026, and increased 12 basis points from the third quarter of 2025.

The yield on average interest-earning assets for the third quarter of 2026 increased to 5.99% from 5.94% for the second quarter of 2026. This increase was primarily related to an overall yield increase in average interest-earning assets across the board, principally investment securities, LHFI and loans held-for-sale ("LHFS"). Compared to the third quarter of 2025, yields on earning assets decreased 15 basis points to 5.99% from 6.14%. The decrease was primarily attributable to interest rate cuts during 2025, notwithstanding $186.0 million of growth in average total earning assets.

The Company’s total cost of funds was 2.51% for the third quarter of 2026, an increase of 1 basis point compared to the second quarter of 2026, and a decrease of 28 basis points compared to the third quarter of 2025. Deposit costs were 2.48% for the third quarter of 2026, similar to 2.48% for the second quarter of 2026, and compared to 2.72% for the third quarter of 2025, a decrease of 24 basis points from the third quarter of 2025. The cost of interest-bearing deposits increased 2 basis points during the third quarter of 2026 to 2.97%, compared with 2.95% in the second quarter of 2026, reflecting continued repricing of our interest-bearing deposits to align with competitive rate pressure associated with the markets expectation of the Federal Reserve hiking rates during the third quarter of 2026.

Noninterest income totaled $3.3 million for the third quarter of 2026, an increase of $1.1 million, or 51.2%, from the second quarter of 2026, primarily attributable to an increase in gain on sale of government guaranteed loans by $1.3 million; offset by a net decrease in other categories within noninterest income. Noninterest expense totaled $13.7 million for the third quarter of 2026, an increase of $336 thousand, or 2.5%, from the second quarter of 2026. This increase was primarily due to higher salaries and employee benefits of $299 thousand, coupled with a net increase in other noninterest expense categories. The Company continues to focus on organic growth and expansion through banker recruiting across the franchise.

The Company’s effective tax rate for the third quarter of 2026 was 24.2%, compared to 17.0% for the second quarter of 2026, and 23.2% for the third quarter of 2025. The increase in effective tax rate from the second quarter of 2026 was primarily due to a reduction in the deferred tax asset related to state taxes during the third quarter of 2026 of approximately $641 thousand. Excluding discrete items related to this write-down and stock based compensation activity, the Company's effective tax rate at the end of the third quarter of 2026 was 20.05%.

Balance Sheet Trends

Total assets were $2.42 billion at September 30, 2026, an increase of approximately $117.2 million, or 5.1%, from $2.31 billion at December 31, 2025. LHFS were $142.4 million at September 30, 2026, a decrease of $28.5 million, or 16.7%, from $170.9 million at December 31, 2025. Gross LHFI were $1.79 billion at September 30, 2026, an increase of approximately $169.6 million, or 10.5%, from $1.62 billion at December 31, 2025.

Total deposits were $2.10 billion at September 30, 2026, an increase of $113.1 million, or 5.7%, from $1.99 billion at December 31, 2025. Noninterest-bearing deposits were $340.4 million at September 30, 2026, or 16.2% 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 $257.0 million at September 30, 2026, as compared to $307.0 million at December 31, 2025, a decrease of $50.0 million, or 16.3%.

Credit Quality

During the third quarter of 2026, the Company recorded a recovery for credit losses of $429 thousand, compared to a provision for credit losses of $658 thousand and $653 thousand during the second quarter of 2026 and the third quarter of 2025, respectively. The recovery for credit losses recorded during the third quarter of 2026 was due to changes in the economic forecast and loan mix, offset by new loan production. The Company's annualized net charge-offs to average LHFI ratio was 0.01% for the third quarter of 2026 as compared to 0.01% and 0.03% during the second quarter of 2026 and the third quarter of 2025, respectively.

Nonperforming assets totaled $15.1 million, or 0.62% of total assets, at September 30, 2026 compared to $18.3 million, or 0.79% of total assets at December 31, 2025. The decrease in nonperforming loans was primarily due to a $4.2 million paydown of one nonaccrual senior housing loan, offset by modest additions to nonaccrual loans. Adjusted nonperforming assets³, which excludes the guaranteed portions of nonaccrual loans, was $10.9 million, or 0.45% of total assets, at September 30, 2026 compared to $14.2 million, or 0.62% of total assets, at December 31, 2025.

______________________________
3	Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP financial measures in tables 10A - 10E.

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.

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 cyber-attack incidents or 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 Exchange Act of 1934, 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.

COASTALSOUTH BANCSHARES, INC. AND SUBSIDIARY FINANCIAL TABLES
Financial Highlights (unaudited)																											Table 1A
			As of and for the Three Months Ended																			As of and for the Nine Months Ended
(dollars in thousands except			September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
per share amounts)			2026				2026				2026				2025				2025				2026				2025
Selected Operating Data:
Interest income		$	34,878			$	33,558			$	32,568			$	33,006			$	32,890			$	101,004			$	94,707
Interest expense			13,351				12,893				12,824				13,143				13,700				39,068				40,680
Net interest income			21,527				20,665				19,744				19,863				19,190				61,936				54,027
(Recovery) provision for credit losses			(429	)			658				382				1,162				653				611				2,034
Noninterest income			3,329				2,202				1,967				2,295				2,100				7,498				5,776
Noninterest expense			13,710				13,374				13,044				12,262				11,856				40,128				35,367
Income tax expense			2,803				1,502				1,956				1,598				2,040				6,261				4,646
Net income			8,772				7,333				6,329				7,136				6,741				22,434				17,756
Share and Per Share Data:
Basic earnings per share		$	0.73			$	0.61			$	0.53			$	0.60			$	0.57			$	1.87			$	1.64
Diluted earnings per share		$	0.71			$	0.59			$	0.51			$	0.58			$	0.54			$	1.81			$	1.58
Dividends per share		$	0.05			$	0.05			$	0.05			$	n/a			$	n/a			$	0.15			$	n/a
Book value per share		$	22.32			$	22.47			$	21.94			$	21.66			$	20.91			$	22.32			$	20.91
Tangible book value per common share (1)		$	21.90			$	22.06			$	21.52			$	21.25			$	20.49			$	21.90			$	20.49
Shares of common stock outstanding			11,734,134				12,003,040				11,985,414				11,980,412				11,978,921				11,734,134				11,978,921
Weighted average diluted shares outstanding			12,371,522				12,447,791				12,440,809				12,387,619				12,325,462				12,421,421				11,217,972
Selected Balance Sheet Data:
Total assets		$	2,423,766			$	2,420,993			$	2,348,547			$	2,306,586			$	2,255,389			$	2,423,766			$	2,255,389
Securities available-for-sale, at fair value (2)			332,664				348,582				347,533				330,503				334,955				332,664				334,955
Gross loans held for investment			1,786,923				1,705,370				1,627,261				1,617,315				1,552,976				1,786,923				1,552,976
Loans held for sale			142,399				223,112				202,615				170,933				231,593				142,399				231,593
Allowance for credit losses			19,623				19,817				18,826				18,743				18,028				19,623				18,028
Goodwill and other intangible assets			6,307				6,246				6,243				6,262				6,186				6,307				6,186
Total deposits			2,100,746				2,047,671				2,057,144				1,987,684				1,949,672				2,100,746				1,949,672
Core deposits (1)			1,773,730				1,793,743				1,798,553				1,680,650				1,654,764				1,773,730				1,654,764
Other borrowings			30,000				75,000				-				30,000				25,000				30,000				25,000
Total shareholders' equity			261,920				269,703				262,923				259,529				250,438				261,920				250,438

(1)	Considered non-GAAP financial measure - See "Non-GAAP Financial Measures” and reconciliation of GAAP to non-GAAP financial measures in tables 10A - 10E.
(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																			As of and for the Nine Months Ended
			September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
(dollars in thousands)			2026				2026				2026				2025				2025				2026				2025
Performance Ratios:
Pre-tax, pre-provision net revenue (PPNR) (1)		$	11,146			$	9,493			$	8,667			$	9,896			$	9,434			$	29,306			$	24,436
Return on average assets (ROAA) (2)			1.45		%		1.24		%		1.10		%		1.24		%		1.20		%		1.27		%		1.09		%
Return on average equity (2)			12.88				11.02				9.71				11.02				10.84				11.23				10.91
Return on average tangible common equity (ROATCE) (1)(2)			13.12				11.23				9.90				11.24				11.07				11.44				11.17
Dividend payout ratio			6.92				8.33				9.69				n/a				n/a				8.16				n/a
Net interest rate spread (2)			2.99				2.97				2.90				2.87				2.83				2.95				2.76
Net interest margin (2)			3.70				3.66				3.59				3.60				3.58				3.65				3.48
Efficiency ratio			55.16				58.49				60.08				55.34				55.69				57.79				59.14
Noninterest income to average total assets (2)			0.55				0.37				0.34				0.40				0.37				0.42				0.35
Noninterest expense to average total assets (2)			2.26				2.27				2.27				2.13				2.11				2.27				2.17
Average interest-earning assets to average interest-bearing liabilities			130.86				130.15				129.61				130.41				129.16				130.22				127.34
Average equity to average total assets			11.22				11.29				11.34				11.22				11.08				11.28				9.99
Asset Quality Data:
Net charge-offs to average LHFI (2)			0.01		%		0.01		%		0.01		%		0.00		%		0.03		%		0.01		%		0.03		%
Net charge-offs to total average loans (2)			0.01				0.01				0.01				0.00				0.03				0.01				0.03
Total allowance for credit losses to total LHFI			1.10				1.16				1.16				1.16				1.16				1.10				1.16
Total allowance for credit losses to total loans			1.02				1.03				1.03				1.05				1.01				1.02				1.01
Total allowance for credit losses to nonperforming loans			130.13				108.16				103.54				102.39				127.03				130.13				127.03
Nonperforming loans to gross LHFI			0.84				1.07				1.12				1.13				0.91				0.84				0.91
Nonperforming assets to total assets			0.62				0.76				0.77				0.79				0.63				0.62				0.63
Adjusted nonperforming assets to total assets (1)			0.45				0.61				0.62				0.62				0.43				0.45				0.43
Balance Sheet and Capital Ratios:
Loan-to-deposit ratio			91.84		%		94.18		%		88.95		%		89.97		%		91.53		%		91.84		%		91.53		%
Noninterest-bearing deposits to total deposits			16.21				17.38				15.12				15.71				16.08				16.21				16.08
Total shareholders' equity to total assets			10.81				11.14				11.20				11.25				11.10				10.81				11.10
Tangible common equity to tangible assets (1)			10.63				10.96				11.01				11.06				10.91				10.63				10.91
Tier 1 leverage ratio (3)			11.07				11.12				11.21				11.18				11.15				11.07				11.15
Common equity tier 1 ratio (3)			12.30				12.30				12.19				12.30				11.94				12.30				11.94
Tier 1 risk-based capital ratio (3)			12.30				12.30				12.19				12.30				11.94				12.30				11.94
Total risk-based capital ratio (3)			13.36				13.39				13.25				13.31				12.90				13.36				12.90
Other:
Number of branches			12				11				11				11				11				12				11
Number of full-time equivalent employees			210				201				201				196				194				207				187

(1)	Considered non-GAAP financial measure - See "Non-GAAP Financial Measures” and reconciliation of GAAP to non-GAAP financial measures in tables 10A - 10E.
(2)	Represents annualized data.
(3)	Ratios are for Coastal States Bank only. Ratios for September 30, 2026 are preliminary.

Quarter End Balance Sheets (unaudited)																	Table 2
	September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)	2026				2026				2026				2025				2025
Assets
Cash and due from banks	$	25,443			$	24,262			$	22,546			$	41,538			$	20,088
Federal funds sold		19,775				9,960				40,011				38,229				6,191
Investment securities (1)		341,590				359,635				355,014				339,262				342,990
Loans held for sale (LHFS)		142,399				223,112				202,615				170,933				231,593
Loans held for investment (LHFI)		1,786,923				1,705,370				1,627,261				1,617,315				1,552,976
Allowance for credit losses on LHFI		(19,623	)			(19,817	)			(18,826	)			(18,743	)			(18,028	)
Loans held for investment, net		1,767,300				1,685,553				1,608,435				1,598,572				1,534,948
Bank-owned life insurance		49,694				49,218				48,752				48,296				47,833
Premises, furniture and equipment, net		18,378				18,611				18,810				18,122				18,186
Deferred tax asset		17,613				15,740				16,910				16,370				16,262
Goodwill & intangible assets (2)		6,307				6,246				6,243				6,262				6,186
Other assets		35,267				28,656				29,211				29,002				31,112
Total assets	$	2,423,766			$	2,420,993			$	2,348,547			$	2,306,586			$	2,255,389
Liabilities and shareholders' equity
Liabilities
Deposits
Noninterest-bearing transaction accounts	$	340,427			$	355,941			$	311,054			$	312,251			$	313,604
Interest-bearing transaction accounts		213,146				194,896				235,422				214,620				198,753
Savings and money market		800,988				772,809				775,962				673,609				634,826
Time deposits		746,185				724,025				734,706				787,204				802,489
Total deposits		2,100,746				2,047,671				2,057,144				1,987,684				1,949,672
Federal Home Loan Bank of Atlanta advances		30,000				75,000				-				30,000				25,000
Other liabilities		31,100				28,619				28,480				29,373				30,279
Total liabilities		2,161,846				2,151,290				2,085,624				2,047,057				2,004,951
Shareholders' equity
Voting common stock		11,734				12,003				11,853				10,868				10,449
Nonvoting common stock		-				-				132				1,112				1,530
Capital surplus		181,518				188,851				190,160				189,882				189,654
Accumulated income		87,489				79,324				72,602				66,886				59,750
Accumulated other comprehensive loss		(18,821	)			(10,475	)			(11,824	)			(9,219	)			(10,945	)
Total shareholders' equity		261,920				269,703				262,923				259,529				250,438
Total liabilities and shareholders' equity	$	2,423,766			$	2,420,993			$	2,348,547			$	2,306,586			$	2,255,389

(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 approximately $1.4 million, $1.3 million, $1.3 million, $1.3 million, and $1.2 million at September 30, 2026, June 30, 2026, March 31, 2026, December 31, 2025 and September 30, 2025, respectively.

Statements of Operations (unaudited)																									Table 3
	Three Months Ended																				Nine Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
(dollars in thousands)	2026				2026				2026				2025				2025				2026				2025
Interest income
Interest on cash and due from banks	$	132			$	121			$	125			$	109			$	129			$	378			$	375
Interest on federal funds sold		486				409				792				624				616				1,687				2,277
Interest and dividends on investment securities		4,066				3,892				3,611				3,734				4,125				11,569				11,800
Interest and fees on LHFS		2,781				3,162				2,915				3,771				3,422				8,858				9,537
Interest and fees on LHFI		27,413				25,974				25,125				24,768				24,598				78,512				70,718
Total interest income		34,878				33,558				32,568				33,006				32,890				101,004				94,707
Interest expense
Deposits		12,835				12,545				12,592				12,925				13,274				37,972				39,355
Other borrowings		516				348				232				218				426				1,096				1,325
Total interest expense		13,351				12,893				12,824				13,143				13,700				39,068				40,680
Net interest income		21,527				20,665				19,744				19,863				19,190				61,936				54,027
(Recovery) provision for credit losses		(429	)			658				382				1,162				653				611				2,034
Net interest income after provision for credit losses		21,956				20,007				19,362				18,701				18,537				61,325				51,993
Noninterest income
Mortgage banking related income		375				403				394				330				299				1,172				846
Interchange and card fee income		244				256				273				230				238				773				761
Service charges on deposit accounts		268				236				232				256				208				736				634
Bank-owned life insurance		476				466				456				462				461				1,398				1,349
Gain on sale of government guaranteed loans		1,558				307				337				682				613				2,202				878
Other noninterest income		408				534				275				335				281				1,217				1,308
Total noninterest income		3,329				2,202				1,967				2,295				2,100				7,498				5,776
Noninterest expense
Salaries and employee benefits		8,613				8,314				8,046				7,644				6,985				24,973				20,676
Occupancy and equipment		944				875				886				864				850				2,705				2,452
Data processing		560				682				655				640				647				1,897				1,924
Other professional services		503				632				595				391				571				1,730				2,237
Software and other technology expense		894				861				826				808				788				2,581				2,210
Regulatory assessment		353				308				371				369				419				1,032				1,124
Other noninterest expense		1,843				1,702				1,665				1,546				1,596				5,210				4,744
Total noninterest expense		13,710				13,374				13,044				12,262				11,856				40,128				35,367
Net income before taxes		11,575				8,835				8,285				8,734				8,781				28,695				22,402
Income tax expense		2,803				1,502				1,956				1,598				2,040				6,261				4,646
Net income	$	8,772			$	7,333			$	6,329			$	7,136			$	6,741			$	22,434			$	17,756

QTD Average Balances and Yields/Rates (unaudited)																														Table 4
		Three Months Ended
		September 30, 2026												June 30, 2026												September 30, 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		$	23,841			$	132				2.20	%		$	23,889			$	121				2.03	%		$	21,058			$	129				2.43	%
Federal funds sold			51,509				486				3.74	%			44,172				409				3.71	%			52,240				616				4.68	%
Investment securities			356,044				4,066				4.53	%			358,658				3,892				4.35	%			339,619				4,125				4.82	%
Loans held for sale			145,169				2,781				7.60	%			170,135				3,162				7.45	%			167,424				3,422				8.11	%
Loans held for investment			1,733,109				27,413				6.28	%			1,668,045				25,974				6.25	%			1,543,363				24,598				6.32	%
Total earning assets			2,309,672				34,878				5.99	%			2,264,899				33,558				5.94	%			2,123,704				32,890				6.14	%
Noninterest-earning assets:
Allowance for credit losses on LHFI			(19,815	)											(18,834	)											(17,504	)
Bank-owned life insurance			49,414												48,944												47,569
Premises, furniture and equipment, net			18,538												18,760												18,241
Deferred tax asset			16,226												16,702												17,159
Goodwill & intangible assets			6,235												6,229												6,176
Other assets			27,919												27,734												30,633
Total noninterest-earning assets			98,517												99,535												102,274
Total assets		$	2,408,189											$	2,364,434											$	2,225,978
Interest-bearing liabilities:
Interest-bearing deposits		$	1,712,756			$	12,835				2.97	%		$	1,704,027			$	12,545				2.95	%		$	1,631,767			$	13,274				3.23	%
Federal Home Loan Bank of Atlanta advances			52,175				516				3.92	%			36,209				348				3.85	%			272				3				4.38	%
Subordinated debt, net			-				-				0.00	%			-				-				0.00	%			12,191				423				13.77	%
Total interest-bearing liabilities			1,764,931				13,351				3.00	%			1,740,236				12,893				2.97	%			1,644,230				13,700				3.31	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits			343,110												328,644												306,133
Other liabilities			29,996												28,580												28,927
Total noninterest-bearing liabilities			373,106												357,224												335,060
Shareholders' equity			270,152												266,974												246,688
Total liabilities and shareholders' equity		$	2,408,189											$	2,364,434											$	2,225,978
Net interest income						$	21,527											$	20,665											$	19,190
Net interest spread											2.99	%											2.97	%											2.83	%
Net interest margin											3.70	%											3.66	%											3.58	%
Cost of total deposits (1)											2.48	%											2.48	%											2.72	%
Cost of total funding (1)											2.51	%											2.50	%											2.79	%

(1)	Includes noninterest-bearing deposits.

YTD Average Balances and Yields/Rates (unaudited)																					Table 5
		Nine Months Ended
		September 30, 2026												September 30, 2025
		Average								Yield/				Average								Yield/
(dollars in thousands)		Balance				Interest				Rate				Balance				Interest				Rate
Earning assets:
Cash and due from banks		$	24,180			$	378				2.09	%		$	21,509			$	375				2.33	%
Federal funds sold			60,421				1,687				3.73	%			67,659				2,277				4.50	%
Investment securities			352,870				11,569				4.38	%			337,852				11,800				4.67	%
Loans held for sale			157,918				8,858				7.50	%			157,409				9,537				8.10	%
Loans held for investment			1,673,572				78,512				6.27	%			1,493,081				70,718				6.33	%
Total earning assets			2,268,961				101,004				5.95	%			2,077,510				94,707				6.09	%
Noninterest-earning assets:
Allowance for credit losses on LHFI			(19,136	)											(17,245	)
Bank-owned life insurance			48,952												47,123
Premises, furniture and equipment, net			18,586												18,044
Deferred tax asset			16,367												17,379
Goodwill & intangible assets			6,245												6,224
Other assets			27,641												29,935
Total noninterest-earning assets			98,655												101,460
Total assets		$	2,367,616											$	2,178,970
Interest-bearing liabilities:
Interest-bearing deposits		$	1,704,661			$	37,972				2.98	%		$	1,608,583			$	39,355				3.27	%
Federal funds purchased			-				-				0.00	%			13				1				10.28	%
Federal Home Loan Bank of Atlanta advances			37,784				1,096				3.88	%			3,809				131				4.60	%
Revolving commercial line of credit, net			-				-				0.00	%			5,141				300				7.80	%
Subordinated debt, net			-				-				0.00	%			13,882				893				8.60	%
Total interest-bearing liabilities			1,742,445				39,068				3.00	%			1,631,428				40,680				3.33	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits			329,028												301,997
Other liabilities			29,002												27,944
Total noninterest-bearing liabilities			358,030												329,941
Shareholders' equity			267,141												217,601
Total liabilities and shareholders' equity		$	2,367,616											$	2,178,970
Net interest income						$	61,936											$	54,027
Net interest spread											2.95	%											2.76	%
Net interest margin											3.65	%											3.48	%
Cost of total deposits (1)											2.50	%											2.75	%
Cost of total funding (1)											2.52	%											2.81	%

(1)	Includes noninterest-bearing deposits.

Loan Data (unaudited)																																	Table 6
	As of the Quarter Ended
	September 30, 2026								June 30, 2026								March 31, 2026								December 31, 2025								September 30, 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	$	134,395				7.5	%		$	144,436				8.5	%		$	130,398				8.0	%		$	119,352				7.4	%		$	106,787				6.9	%
Income producing commercial real estate ("CRE")		449,103				25.1				416,965				24.5				376,260				23.1				378,179				23.4				371,670				23.9
Owner-occupied CRE		140,420				7.9				127,285				7.5				107,344				6.6				92,787				5.7				96,287				6.2
Senior housing		308,295				17.3				248,282				14.5				254,445				15.6				259,529				16.0				223,719				14.4
Commercial and industrial		113,656				6.4				139,313				8.1				138,964				8.6				145,380				9.0				135,039				8.7
Retail Loans
Marine vessels		320,682				17.9				313,230				18.4				307,746				18.9				312,096				19.3				318,246				20.5
Residential mortgages		203,476				11.4				202,768				11.9				202,503				12.5				199,991				12.4				190,220				12.2
Cash value life insurance line of credit ("LOC")		93,210				5.2				89,305				5.2				86,610				5.3				87,172				5.4				90,115				5.8
Other consumer		23,686				1.3				23,786				1.4				22,991				1.4				22,829				1.4				20,893				1.4
Gross loans held for investment	$	1,786,923				100.0	%		$	1,705,370				100.0	%		$	1,627,261				100.0	%		$	1,617,315				100.0	%		$	1,552,976				100.0	%
Core LHFI		1,743,128								1,657,581								1,573,972								1,561,791								1,492,992
Acquired LHFI (1)		43,795								47,789								53,289								55,524								59,984
Gross loans held for investment	$	1,786,923							$	1,705,370							$	1,627,261							$	1,617,315							$	1,552,976
Allowance for credit losses on LHFI		19,623								19,817								18,826								18,743								18,028
Net loans held for investment	$	1,767,300							$	1,685,553							$	1,608,435							$	1,598,572							$	1,534,948
Total loans held-for-sale		142,399								223,112								202,615								170,933								231,593
Total loans	$	1,929,322							$	1,928,482							$	1,829,876							$	1,788,248							$	1,784,569

(1)	Includes loans acquired through business combinations.

Nonperforming Assets (unaudited)																Table 7
	As of the Quarter Ended
(dollars in thousands)	September 30, 2026				June 30, 2026				March 31, 2026				December 31, 2025				September 30, 2025
Nonaccrual loans	$	15,055			$	18,322			$	18,183			$	18,306			$	14,171
Past due loans 90 days and still accruing		25				-				-				-				21
Total nonperforming loans	$	15,080			$	18,322			$	18,183			$	18,306			$	14,192
Other real estate owned		-				-				-				-				-
Total nonperforming assets	$	15,080			$	18,322			$	18,183			$	18,306			$	14,192
Nonperforming loans to gross LHFI		0.84	%			1.07	%			1.12	%			1.13	%			0.91	%
Nonaccrual loans to total assets		0.62	%			0.76	%			0.77	%			0.79	%			0.63	%
Nonperforming assets to total assets		0.62	%			0.76	%			0.77	%			0.79	%			0.63	%

Allowance for Credit Losses (unaudited)																										Table 8
		As of and for the Three Months Ended																				As of and for the Nine Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
(dollars in thousands)		2026				2026				2026				2025				2025				2026				2025
Allowance for credit losses on LHFI
Balance, beginning of period		$	19,817			$	18,826			$	18,743			$	18,028			$	17,497			$	18,743			$	17,118
Net charge-offs/(recoveries):
Commercial Loans
Acquisition, development and construction			-				-				-				-				-				-				-
Income producing CRE			-				-				-				-				-				-				-
Owner-occupied CRE			-				-				-				-				-				-				-
Senior housing			-				-				-				-				-				-				-
Commercial and industrial			(5	)			4				(6	)			(4	)			(29	)			(7	)			(9	)
Retail Loans
Marine vessels			-				27				-				-				162				27				162
Residential mortgages			(1	)			(2	)			-				(29	)			(2	)			(3	)			(6	)
Cash value life insurance LOC			-				-				-				-				-				-				-
Other consumer			35				(4	)			47				20				(6	)			78				201
Total net charge-offs/(recoveries)		$	29			$	25			$	41			$	(13	)		$	125			$	95			$	348
(Recovery) provision for loan credit losses			(165	)			1,016				124				702				656				975				1,258
Balance, ending of period		$	19,623			$	19,817			$	18,826			$	18,743			$	18,028			$	19,623			$	18,028
Allowance for credit losses for unfunded commitments
Period beginning balance		$	3,856			$	4,214			$	3,956			$	3,496			$	3,499			$	3,956			$	2,720
(Recovery) provision for credit losses			(264	)			(358	)			258				460				(3	)			(364	)			776
Period ending balance		$	3,592			$	3,856			$	4,214			$	3,956			$	3,496			$	3,592			$	3,496
Balance, end of period - Allowance for credit losses: LHFI and unfunded commitments		$	23,215			$	23,673			$	23,040			$	22,699			$	21,524			$	23,215			$	21,524
Total loans held for investment		$	1,786,923			$	1,705,370			$	1,627,261			$	1,617,315			$	1,552,976			$	1,786,923			$	1,552,976
Credit Analysis
Net charge-offs to average LHFI			0.01	%			0.01	%			0.01	%			0.00	%			0.03	%			0.01	%			0.03	%
Total allowance for credit losses on LHFI to total LHFI			1.10	%			1.16	%			1.16	%			1.16	%			1.16	%			1.10	%			1.16	%
Total allowance for credit losses on LHFI to nonaccrual loans			130.34	%			108.16	%			103.54	%			102.39	%			127.22	%			130.34	%			127.22	%
Total allowance for credit losses on LHFI to total nonperforming loans			130.13	%			108.16	%			103.54	%			102.39	%			127.03	%			130.13	%			127.03	%

Loan Risk Ratings (1) (2) (unaudited)																Table 9
	As of the Quarter Ended
(dollars in thousands)	September 30, 2026				June 30, 2026				March 31, 2026				December 31, 2025				September 30, 2025
Acquisition, development and construction (1)
Pass	$	134,395			$	144,436			$	130,398			$	119,352			$	106,787
Special mention		-				-				-				-				-
Substandard		-				-				-				-				-
Total acquisition, development and construction	$	134,395			$	144,436			$	130,398			$	119,352			$	106,787
Income producing CRE (1)
Pass	$	448,028			$	416,501			$	375,791			$	377,711			$	370,788
Special mention		-				-				-				-				-
Substandard		1,075				464				469				468				882
Total income producing CRE	$	449,103			$	416,965			$	376,260			$	378,179			$	371,670
Owner-occupied CRE (1)
Pass	$	129,245			$	116,429			$	97,706			$	82,959			$	86,533
Special mention		2,461				2,485				2,509				2,739				3,579
Substandard		8,714				8,371				7,129				7,089				6,175
Total owner-occupied CRE	$	140,420			$	127,285			$	107,344			$	92,787			$	96,287
Senior housing (1)
Pass	$	297,434			$	233,501			$	239,788			$	236,816			$	205,330
Special mention		-				-				3,940				11,934				12,006
Substandard		10,861				14,781				10,717				10,779				6,383
Total senior housing	$	308,295			$	248,282			$	254,445			$	259,529			$	223,719
Commercial and industrial (1)
Pass	$	109,955			$	135,851			$	135,295			$	141,020			$	128,468
Special mention		-				-				141				212				2,402
Substandard		3,701				3,462				3,528				4,148				4,169
Total commercial and industrial	$	113,656			$	139,313			$	138,964			$	145,380			$	135,039
Marine vessels (2)
Performing	$	320,682			$	313,230			$	307,746			$	312,096			$	318,246
Nonperforming		-				-				-				-				-
Total marine vessels	$	320,682			$	313,230			$	307,746			$	312,096			$	318,246
Residential mortgages (2)
Performing	$	203,088			$	202,380			$	202,114			$	199,601			$	190,059
Nonperforming		388				388				389				390				161
Total residential mortgages	$	203,476			$	202,768			$	202,503			$	199,991			$	190,220
Cash value life insurance LOC (2)
Performing	$	93,210			$	89,305			$	86,610			$	87,172			$	90,115
Nonperforming		-				-				-				-				-
Total cash value life insurance LOC	$	93,210			$	89,305			$	86,610			$	87,172			$	90,115
Other consumer (2)
Performing	$	23,661			$	23,786			$	22,991			$	22,829			$	20,872
Nonperforming		25				-				-				-				21
Total other consumer	$	23,686			$	23,786			$	22,991			$	22,829			$	20,893
Gross loans held for investment	$	1,786,923			$	1,705,370			$	1,627,261			$	1,617,315			$	1,552,976

(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 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 Common Share / Tangible Common Equity to Tangible Assets (unaudited)																		Table 10A
		As of
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands, except per share data)		2026				2026				2026				2025				2025
Tangible Common Equity:
Total shareholders' equity		$	261,920			$	269,703			$	262,923			$	259,529			$	250,438
Less: Goodwill and intangibles			(6,307	)			(6,246	)			(6,243	)			(6,262	)			(6,186	)
Adjusted for: Mortgage servicing rights			1,402				1,313				1,280				1,266				1,156
Tangible Common Equity		$	257,015			$	264,770			$	257,960			$	254,533			$	245,408
Common shares outstanding			11,734,134				12,003,040				11,985,414				11,980,412				11,978,921
Book value per common share			22.32				22.47				21.94				21.66				20.91
Tangible book value per common share			21.90				22.06				21.52				21.25				20.49
Tangible assets:
Total assets		$	2,423,766			$	2,420,993			$	2,348,547			$	2,306,586			$	2,255,389
Less: Goodwill and intangibles			(6,307	)			(6,246	)			(6,243	)			(6,262	)			(6,186	)
Adjusted for: Mortgage servicing rights			1,402				1,313				1,280				1,266				1,156
Tangible assets		$	2,418,861			$	2,416,060			$	2,343,584			$	2,301,590			$	2,250,359
Tangible common equity to tangible assets			10.63	%			10.96	%			11.01	%			11.06	%			10.91	%

ROATCE (unaudited)																									Table 10B
		As of and for the Three Months Ended																				As of and for the Nine Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
(dollars in thousands)		2026				2026				2026				2025				2025				2026				2025
Net income		$	8,772			$	7,333			$	6,329			$	7,136			$	6,741			$	22,434			$	17,756
Average shareholders' equity			270,152				266,974				264,232				256,814				246,688				267,141				217,601
Return on average shareholders' equity (1)			12.88	%			11.02	%			9.71	%			11.02	%			10.84	%			11.23	%			10.91	%
Average Tangible Common Equity:
Average shareholders' equity		$	270,152			$	266,974			$	264,232			$	256,814			$	246,688			$	267,141			$	217,601
Less: Average goodwill and intangibles			(6,235	)			(6,229	)			(6,270	)			(6,166	)			(6,176	)			(6,245	)			(6,224	)
Adjusted for: Average mortgage servicing rights			1,315				1,281				1,291				1,155				1,128				1,296				1,136
Average tangible common equity		$	265,232			$	262,026			$	259,253			$	251,803			$	241,640			$	262,192			$	212,513
Return on average tangible common (1) equity			13.12	%			11.23	%			9.90	%			11.24	%			11.07	%			11.44	%			11.17	%

(1)	Represents annualized data.

Adjusted Nonperforming Assets to Total Assets (unaudited)																		Table 10C
		As of
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2026				2026				2026				2025				2025
Total nonperforming assets		$	15,080			$	18,322			$	18,183			$	18,306			$	14,192
Total assets			2,423,766				2,420,993				2,348,547				2,306,586				2,255,389
GAAP-based nonperforming assets to total assets			0.62	%			0.76	%			0.77	%			0.79	%			0.63	%
Total nonperforming assets		$	15,080			$	18,322			$	18,183			$	18,306			$	14,192
Adjusted for:
Guaranteed portions of nonaccrual loans			(4,217	)			(3,542	)			(3,657	)			(4,089	)			(4,457	)
Adjusted nonperforming assets		$	10,863			$	14,780			$	14,526			$	14,217			$	9,735
Total assets		$	2,423,766			$	2,420,993			$	2,348,547			$	2,306,586			$	2,255,389
Adjusted nonperforming assets to total assets			0.45	%			0.61	%			0.62	%			0.62	%			0.43	%

PPNR (unaudited)																									Table 10D
		As of and for the Three Months Ended																				As of and for the Nine Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,				September 30,
(dollars in thousands)		2026				2026				2026				2025				2025				2026				2025
Net income (GAAP-based)		$	8,772			$	7,333			$	6,329			$	7,136			$	6,741			$	22,434			$	17,756
Plus:
Income tax expense			2,803				1,502				1,956				1,598				2,040				6,261				4,646
(Recovery) provision for credit losses			(429	)			658				382				1,162				653				611				2,034
Pre-tax, pre-provision net revenue		$	11,146			$	9,493			$	8,667			$	9,896			$	9,434			$	29,306			$	24,436

Core Deposits (unaudited)																		Table 10E
		As of
		September 30,				June 30,				March 31,				December 31,				September 30,
(dollars in thousands)		2026				2026				2026				2025				2025
Total Deposits		$	2,100,746			$	2,047,671			$	2,057,144			$	1,987,684			$	1,949,672
Less:
Brokered CDs			257,016				253,928				258,591				307,034				294,908
ICS money market One-Way Buy			70,000				-				-				-				-
Core deposits (1)		$	1,773,730			$	1,793,743			$	1,798,553			$	1,680,650			$	1,654,764

(1)	The Company defines its core deposits as total deposits, less brokered certificates of deposit and IntraFi Cash Service ("ICS") One-Way Buy demand and money market deposits.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20261019245095/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

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.

core deposits financial

Core deposits are the stable, everyday customer balances a bank keeps—like checking and savings accounts and regular business deposits—that are unlikely to be withdrawn suddenly. Think of them as a household’s paycheck direct-deposits: predictable, low-cost funding the bank can rely on. For investors, a larger share of core deposits means steadier cash available, lower borrowing needs and interest expenses, and therefore more predictable earnings and lower risk.

available-for-sale securities financial

Available-for-sale securities are investments in stocks, bonds or similar instruments that a company does not intend to trade frequently but may sell before they mature. They matter to investors because changes in the market value of these holdings show up as paper gains or losses on the company's balance sheet rather than immediately in profit, so they can affect reported net worth and the timing of income without changing day-to-day earnings. Think of them like items on a household shelf you might sell later: their value moves with the market even if you haven’t cashed out.

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.