CoastalSouth Bancshares, Inc. Reports Earnings for First Quarter 2026

Published: 2026-04-20 16:01:05 ET COSO

Published on 04/20/2026 at 04:01 pm EDT

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:

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.

_________________________

Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP financial measures in tables 9A - 9E.

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.

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

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

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

1.15

1.16

Total allowance for credit losses to total loans

1.03

1.05

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

0.43

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

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

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

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

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

Federal Home Loan Bank of Atlanta advances

24,667

232

3.81

20,924

218

4.13

1,166

4.52

Revolving commercial line of credit, net

0.00

9,863

187

7.69

Subordinated debt, net

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

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

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

)

(29

)

Retail Loans

Marine vessels

162

Residential mortgages

(29

)

Other consumer

)

191

Total net charge-offs/(recoveries)

(13

)

125

208

Provision for loan credit losses

124

702

656

601

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

)

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

1.15

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

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

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

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

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

0.43

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

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

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.

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