Earnings release
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NEWS RELEASE CoastalSouth Bancshares, Inc. Reports Earnings for Second Quarter 2026 2026-07-20 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 $7.3 million, or $0.59 per diluted share, for the second quarter of 2026, compared to approximately $6.3 million, or $0.51 per diluted share, for the rst quarter of 2026, and $6.0 million, or $0.57 per diluted share, for the second quarter of 2025. For the six months ended June 30, 2026, the Company reported net income of $13.7 million, or $1.10 per diluted share, compared with $11.0 million, or $1.04 per diluted share, for the same period in 2025. Additionally, on July 20, 2026 the Board of Directors of CoastalSouth Bancshares, Inc. declared a per share quarterly dividend of $0.05. The dividend will be paid to shareholders of record as of the close of business on August 13, 2026, the record date. The dividend shall be paid on August 27, 2026. Commenting on the Company’s second quarter performance, President and Chief Executive O cer Stephen R. Stone stated, "We saw outstanding loan production of $181.6 million during the second quarter, driving a $78.1 million increase in loans held for investment, or 19.3% annualized. The majority of production in the second quarter continued to come from the community bank with each region, including our new Charleston team, providing meaningful contributions. We are pleased to have achieved this growth while expanding our net interest margin and maintaining low net charge-o s. We continue to see opportunities to invest in new CSB team members across our footprint particularly as a result of recent M&A activity. We are pleased with our nancial results and we look forward to building upon this performance in the second half of the year." 2 1
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Second Quarter 2026 Performance Highlights: Net income of $7.3 million or $0.59 per diluted share Return on average assets ("ROAA") of 1.24% Return on average equity ("ROAE") of 11.02%; Return on average tangible common equity ("ROATCE") of 11.23% Net interest margin of 3.66%, an increase of 7 basis points from the rst quarter of 2026 Total deposits decreased $9.5 million, principally driven by a decrease of $4.8 million in core deposits and a decrease in brokered certi cates of deposit of $4.7 million Loans held for investment ("LHFI") production of $181.6 million during the second quarter of 2026 led to LHFI growth of $78.1 million, up 19.3% annualized from the rst quarter of 2026 Book value per share growth of $0.53, or 9.69% annualized, to $22.47 at June 30, 2026; Tangible book value per common share growth of $0.54, or 10.06% annualized, to $22.06 at June 30, 2026 from the rst quarter of 2026 Total shareholders' equity to total assets of 11.14%, compared to 11.20% as of the rst quarter of 2026; Tangible common equity to tangible assets of 10.96%, compared to 11.01% as of March 31, 2026 Net charge-o s to average loans held for investment of 0.01% Nonperforming assets to total assets of 0.76%; adjusted nonperforming assets to total assets of 0.61% Allowance for credit losses ("ACL") on LHFI to total LHFI of 1.16%; ACL on LHFI to nonperforming loans of 108.16% Share repurchase program launched May 1, 2026; 48,491 shares repurchased during the second quarter of 2026 with weighted-average price per share of $25.48. ___________________________________________Considered non-GAAP nancial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP nancial measures in tables10A - 10E.The Company de nes production as original loan commitment amount, which includes both funded and unfunded balances at the time oforigination. As of June 30, 2026, these loans had funded balances of $126.0 million and unfunded commitments of $53.9 million. Operating Highlights Net interest income totaled $20.7 million for the second quarter of 2026, an increase of $921 thousand, or 4.7%, from $19.7 million for the rst quarter of 2026, and an increase of $2.6 million, or 14.3% from the second quarter of 2025. The Company’s net interest margin increased by 7 basis points to 3.66% for the second quarter of 2026, compared to 3.59% for the rst quarter of 2026, and increased 20 basis points from the second quarter of 2025. The yield on average interest-earning assets for the second quarter of 2026 increased to 5.94% from 5.92% for the 1 1 2 1 1 1 1 1 2 2
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rst quarter of 2026. This increase was primarily related to an overall yield increase in average interest-earning assets, principally investment securities; o set by a decrease in yield in LHFI. Compared to the second quarter of 2025, yields on earning assets decreased 14 basis points to 5.94% from 6.08%. The decrease was primarily attributable to interest rate cuts during 2025, notwithstanding a $169.0 million growth in average total earning assets. The Company’s total cost of funds was 2.50% for the second quarter of 2026, a decrease of 5 basis points compared to the rst quarter of 2026, and 30 basis points compared to the second quarter of 2025. Deposit costs were 2.48% for the second quarter of 2026, compared to 2.54% for the rst quarter of 2026, a decrease of 6 basis points, and 2.75% for the second quarter of 2025, a decrease of 27 basis points. The cost of interest-bearing deposits decreased 6 basis points during the second quarter of 2026 to 2.95%, compared with 3.01% in the rst quarter of 2026, re ecting continued repricing of certi cates of deposits during the second quarter of 2026. Noninterest income totaled $2.2 million for the second quarter of 2026, an increase of $235 thousand, or 12.0%, from the rst quarter of 2026, primarily attributable to gain on sale of other loans, coupled with a net increase in other categories within noninterest income. Noninterest expense totaled $13.4 million for the second quarter of 2026, an increase of $330 thousand, or 2.5%, from the rst quarter of 2026. This increase was primarily due to higher salaries and employee bene ts, coupled with a net increase in other noninterest expense categories, principally in other professional services, software and other technology expense, and other noninterest expense; o set by a decrease in regulatory assessment expense. The Company continues to focus on organic growth and expansion through banker recruiting across the franchise. The Company’s e ective tax rate for the second quarter of 2026 was 17.0%, compared to 23.6% for the rst quarter of 2026, and 15.1% for the second quarter of 2025. The decrease in e ective tax rate from the rst quarter of 2026 was primarily due to a higher recognition of bene ts from tax credits during the second quarter of 2026. Balance Sheet Trends Total assets were $2.42 billion at June 30, 2026, an increase of approximately $114.4 million, or 5.0%, from $2.31 billion at December 31, 2025. Loans held for sale ("LHFS") were $223.1 million at June 30, 2026, an increase of $52.2 million, or 30.5%, from $170.9 million at December 31, 2025. Gross LHFI were $1.71 billion at June 30, 2026, an increase of approximately $88.1 million, or 5.4%, from $1.62 billion at December 31, 2025. Total deposits were $2.05 billion at June 30, 2026, an increase of $60.0 million, or 3.0%, from $1.99 billion at December 31, 2025. Noninterest-bearing deposits were $355.9 million at June 30, 2026, or 17.4% of total deposits, compared to $312.3 million, or 15.7% of total deposits, at December 31, 2025. Brokered certi cates of deposit, a component of time deposits, were $253.9 million at June 30, 2026, as compared to $307.0 million at December 31, 3
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2025, a decrease of $53.1 million, or 17.3%. Credit Quality During the second quarter of 2026, the Company recorded a provision for credit losses of $658 thousand, compared to $382 thousand and $752 thousand during the rst quarter of 2026 and the second quarter of 2025, respectively. The provision expense recorded during the second quarter of 2026 was due to loan production and updated collateral values on individually reviewed loans, o set with other changes in loss rates. The Company's annualized net charge-o s to average LHFI ratio was 0.01% for the second quarter of 2026 as compared to 0.01% and 0.06% during the rst quarter of 2026 and the second quarter of 2025, respectively. Nonperforming assets totaled $18.3 million, or 0.76% of total assets, at June 30, 2026 compared to $18.3 million, or 0.79% of total assets at December 31, 2025. Adjusted nonperforming assets, which excludes the guaranteed portions of nonaccrual loans, was $14.8 million, or 0.61% of total assets, at June 30, 2026 compared to $14.2 million, or 0.62% of total assets, at December 31, 2025. ___________________________________________Considered non-GAAP nancial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP nancial measures in tables10A - 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 o er 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 nancial performance and nancial 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 identi ed 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 3 3 4
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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 di cult to predict and beyond our control. As a result of those risks and uncertainties, and other factors, our actual nancial results in the future could di er, 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 di erences include, but are not limited to: the impact of current and future economic conditions, particularly those a ecting the nancial services industry, including the e ects of declines in the real estate market, high unemployment rates, in ationary pressures, elevated interest rates and slowdowns in economic growth, as well as the nancial stress on borrowers as a result of the foregoing; potential impacts of any adverse developments in the banking industry, including any impacts on customer con dence, deposit out ows, 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 uctuations, which could have an adverse e ect on the Company’s pro tability; a breach in security of our information systems, including the occurrence of cyber-attack incidents or de ciencies in cyber security; risks related to potential acquisitions; government actions or inactions, including a prolonged shutdown of the federal government, tari s, 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 a ect the ability of the consolidated Company to conduct business combinations or new operations; changes in tax laws; signi cant turbulence or a disruption in the capital or nancial markets and the e ect of a fall in stock market prices on our investment securities; the e ects of war or other con icts, 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 nancial 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, led with the Securities and Exchange Commission (the “SEC”) on March 12, 2026, and in other documents that we le with the SEC from time to time, which are available on the SEC’s website, http://www.sec.gov. 5
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In addition, our actual nancial results in the future may di er 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 nancial 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 quali ed in their entirety by this cautionary statement. COASTALSOUTH BANCSHARES, INC. AND SUBSIDIARYFINANCIAL TABLESFinancial Highlights(unaudited) Table 1A As of and for the Three Months EndedAs of and for the Six Months Ended (dollars in thousandsJune 30,March 31,December 31,September 30,June 30,June 30,June 30, except per share amounts) 202620262025 202520252026 2025 Selected OperatingData: Interest income$ 33,558$ 32,568$ 33,006$ 32,890$ 31,793$ 66,126$ 61,817Interest expense12,89312,824 13,143 13,70013,715 25,717 26,980Net interest income20,66519,744 19,863 19,19018,078 40,409 34,837Provision for creditlosses 658 382 1,162 653 752 1,040 1,381Noninterest income2,2021,967 2,295 2,1001,795 4,169 3,676Noninterest expense13,37413,044 12,262 11,85612,092 26,418 23,511Income tax expense1,5021,956 1,598 2,0401,064 3,458 2,606Net income7,3336,329 7,136 6,7415,965 13,662 11,015 Share and Per ShareData: Basic earnings pershare $ 0.61$ 0.53$ 0.60$ 0.57$ 0.58$ 1.14$ 1.07Diluted earnings pershare $ 0.59$ 0.51$ 0.58$ 0.54$ 0.57$ 1.10$ 1.04Dividends per share$ 0.05$ 0.05$ n/a$ n/a$ n/a$ 0.10$ n/aBook value per share$ 22.47$ 21.94$ 21.66$ 20.91$ 20.37$ 22.47$ 20.37Tangible book valueper common share$ 22.06$ 21.52$ 21.25$ 20.49$ 19.88$ 22.06$ 19.88Shares of commonstock outstanding12,003,04011,985,41411,980,41211,978,92110,278,92112,003,04010,278,921Weighted averagediluted sharesoutstanding12,447,79112,440,80912,387,61912,325,46210,612,25512,444,88410,636,997 Selected BalanceSheet Data: Total assets$2,420,993$ 2,348,547$ 2,306,586$ 2,255,389$2,221,245$ 2,420,993$ 2,221,245Securities available-for-sale, at fair value348,582347,533330,503334,955331,760348,582 331,760Gross loans held forinvestment1,705,3701,627,2611,617,3151,552,9761,527,1991,705,3701,527,199Loans held for sale223,112202,615170,933231,593209,101223,112 209,101Allowance for creditlosses 19,81718,826 18,743 18,02817,497 19,817 17,497Goodwill and otherintangible assets6,2466,243 6,262 6,1866,190 6,246 6,190Total deposits2,047,6712,057,1441,987,6841,949,6721,968,3012,047,6711,968,301Core deposits1,793,7431,798,5531,680,6501,654,7641,660,4091,793,7431,660,409Other borrowings75,000 - 30,000 25,00014,753 75,000 14,753Total Shareholders'equity 269,703262,923259,529250,438209,365269,703 209,365 (1) (2) (1) 6
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Considered non-GAAP nancial measure - See "Non-GAAP Financial Measures” and reconciliation of GAAP to non-GAAP nancial measures in tables10A - 10E.The Company did not have securities held to maturity in any of the periods presented. FinancialHighlights -continued(unaudited) Table 1B As of and for the Three Months EndedAs of and for the Six Months Ended June 30,March 31,December31, September30, June 30,June 30,June 30, (dollars in thousands) 20262026202520252025 2026 2025 PerformanceRatios: Pre-tax, pre-provision netrevenue (PPNR)$ 9,493$ 8,667$ 9,896$ 9,434$ 7,781$ 18,160$ 15,002Return onaverage assets(ROAA) 1.24% 1.10% 1.24% 1.20% 1.09% 1.17% 1.03%Return onaverage equity11.02 9.71 11.02 10.8411.62 10.37 10.95Return onaverage tangiblecommon equity(ROATCE)11.23 9.90 11.24 11.0711.92 10.57 11.23Dividend payoutratio 8.33 9.69 n/a n/a n/a 8.96 n/aNet interest ratespread 2.97 2.90 2.87 2.83 2.76 2.93 2.72Net interestmargin 3.66 3.59 3.60 3.58 3.46 3.62 3.42E ciency ratio58.49 60.08 55.34 55.6960.85 59.26 61.05Noninterestincome toaverage totalassets 0.37 0.34 0.40 0.37 0.33 0.36 0.34Noninterestexpense toaverage totalassets 2.27 2.27 2.13 2.11 2.21 2.27 2.20Average interest-earning assets toaverage interest-bearing liabilities130.15129.61130.41129.16126.50 129.88 126.41Average equity toaverage totalassets 11.29 11.34 11.22 11.08 9.37 11.32 9.41 Asset QualityData: Net charge-o sto average LHFI0.01% 0.01% 0.00% 0.03% 0.06% 0.01% 0.03%Net charge-o sto total averageloans 0.01 0.01 0.00 0.03 0.05 0.01 0.03Total allowancefor credit lossesto total LHFI1.16 1.16 1.16 1.16 1.15 1.16 1.15Total allowancefor credit lossesto total loans1.03 1.03 1.05 1.01 1.01 1.03 1.01Total allowancefor credit lossestononperformingloans 108.16103.54102.39127.03118.99 108.16 118.99Nonperformingl (1) (2) (1) (2) (2) (1)(2) (2) (2) (2) (2) (2) (2) 7
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loans to grossLHFI 1.07 1.12 1.13 0.91 0.96 1.07 0.96Nonperformingassets to totalassets 0.76 0.77 0.79 0.63 0.66 0.76 0.66Adjustednonperformingassets to totalassets 0.61 0.62 0.62 0.43 0.46 0.61 0.46 Balance Sheetand CapitalRatios: Loan-to-depositratio 94.18% 88.95% 89.97% 91.53% 88.21% 94.18% 88.21%Noninterest-bearing depositsto total deposits17.38 15.12 15.71 16.0815.92 17.38 15.92Totalshareholders'equity to totalassets 11.14 11.20 11.25 11.10 9.43 11.14 9.43Tangiblecommon equityto tangibleassets 10.96 11.01 11.06 10.91 9.22 10.96 9.22Tier 1 leverageratio 11.12 11.21 11.18 11.1510.22 11.12 10.22Common equitytier 1 ratio12.30 12.19 12.30 11.9411.09 12.30 11.09Tier 1 risk-basedcapital ratio12.30 12.19 12.30 11.9411.09 12.30 11.09Total risk-basedcapital ratio13.39 13.25 13.31 12.9012.04 13.39 12.04 Other: Number ofbranches 11 11 11 11 11 11 11Number of full-time equivalentemployees201 201 196 194 188 201 183 Considered non-GAAP nancial measure - See "Non-GAAP Financial Measures” and reconciliation of GAAP to non-GAAP nancial measures in tables10A - 10E.Represents annualized data.Ratios are for Coastal States Bank only. Ratios for June 30, 2026 are preliminary. Quarter End Balance Sheets (unaudited)Table 2 June 30,March 31,December 31,September 30,June 30, (dollars in thousands) 202620262025 2025 2025 Assets Cash and due from banks$ 24,262$ 22,546$ 41,538$ 20,088$ 23,245Federal funds sold 9,960 40,011 38,229 6,191 20,045Investment securities 359,635355,014339,262342,990338,601Loans held for sale (LHFS)223,112202,615170,933231,593209,101Loans held for investment (LHFI)1,705,3701,627,2611,617,3151,552,9761,527,199 Allowance for credit losses on LHFI(19,817) (18,826) (18,743) (18,028) (17,497) Loans held for investment, net1,685,5531,608,4351,598,5721,534,9481,509,702Bank-owned life insurance49,21848,752 48,296 47,83347,373Premises, furniture and equipment, net18,61118,810 18,122 18,18618,166Deferred tax asset 15,74016,910 16,370 16,26217,211Goodwill & intangible assets6,246 6,243 6,262 6,186 6,190 Other assets 28,65629,211 29,002 31,11231,611 Total assets $2,420,993$2,348,547$2,306,586$2,255,389$2,221,245 Liabilities and shareholders' equityLiabilities DepositsNoninterest-bearing transaction accounts$ 355,941$ 311,054$ 312,251$ 313,604$ 313,386I b i i 194896 235422 214620 198753 209816 (1) (1) (3) (3) (3) (3) (1) (2) (3) (1) (2) 8
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Interest-bearing transaction accounts194,896235,422214,620198,753209,816Savings and money market772,809775,962673,609634,826628,729 Time deposits 724,025734,706787,204802,489816,370 Total deposits 2,047,6712,057,1441,987,6841,949,6721,968,301Federal Home Loan Bank of Atlanta advances75,000 - 30,000 25,000 -Subordinated debt, net - - - - 14,753 Other liabilities 28,61928,480 29,373 30,27928,826 Total liabilities2,151,2902,085,6242,047,0572,004,9512,011,880Shareholders' equity Voting common stock 12,00311,853 10,868 10,4498,107Nonvoting common stock- 132 1,112 1,530 2,172Capital surplus 188,851190,160189,882189,654159,267Accumulated income 79,32472,602 66,886 59,75053,009 Accumulated other comprehensive loss(10,475) (11,824) (9,219) (10,945) (13,190) Total shareholders' equity269,703262,923259,529250,438209,365Total liabilities and shareholders'equity $2,420,993$2,348,547$2,306,586$2,255,389$2,221,245 No ACL on investment securities was recognized for the periods presented; includes securities available-for-sale and non-marketable equitysecurities.Includes commercial mortgage servicing rights of approximately $1.3 million, $1.3 million, $1.3 million, $1.2 million, and $1.1 million at June 30,2026, March 31, 2026, December 31, 2025, September 30, 2025 and June 30, 2025, respectively. Statements ofOperations (unaudited) Table 3 Three Months EndedSix Months Ended June 30,March 31,December 31,September 30,June 30,June 30,June 30, (dollars in thousands)202620262025 2025202520262025 Interest income Interest on cash and due frombanks $ 121$ 125$ 109$ 129$ 111$ 246$ 246Interest on federal funds sold409 792 624 616 698 1,201 1,661Interest and dividends oninvestment securities3,892 3,611 3,734 4,125 3,875 7,503 7,675Interest and fees on LHFS3,162 2,915 3,771 3,422 3,296 6,077 6,115 Interest and fees on LHFI25,97425,125 24,768 24,59823,81351,09946,120 Total interest income33,55832,568 33,006 32,89031,79366,12661,817 Interest expense Deposits 12,54512,592 12,925 13,27413,25125,13726,081 Other borrowings348 232 218 426 464 580 899 Total interest expense12,89312,824 13,143 13,70013,71525,71726,980 Net interest income20,66519,744 19,863 19,19018,07840,40934,837 Provision for credit losses658 382 1,162 653 752 1,040 1,381 Net interest income afterprovision for credit losses20,00719,362 18,701 18,53717,32639,36933,456 Noninterest income Mortgage banking relatedincome 403 394 330 299 326 797 547Interchange and card feeincome 256 273 230 238 257 529 523Service charges on depositaccounts 236 232 256 208 215 468 426Bank-owned life insurance466 456 462 461 449 922 889Gain on sale of governmentguaranteed loans307 337 682 613 265 644 265 Other noninterest income534 275 335 281 283 809 1,026 Total noninterest income2,202 1,967 2,295 2,100 1,795 4,169 3,676 Noninterest expense Salaries and employee bene ts8,314 8,046 7,644 6,985 6,99716,36013,691Occupancy and equipment875 886 864 850 814 1,761 1,602Data processing682 655 640 647 653 1,337 1,277Other professional services632 595 391 571 973 1,227 1,666Sf dh hl (1) (2) 9
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Software and other technologyexpense 861 826 808 788 719 1,687 1,422Regulatory assessment308 371 369 419 344 679 705 Other noninterest expense1,702 1,665 1,546 1,596 1,592 3,367 3,148 Total noninterest expense13,37413,044 12,262 11,85612,09226,41823,511Net income before taxes8,835 8,285 8,734 8,781 7,02917,12013,621Income tax expense1,502 1,956 1,598 2,040 1,064 3,458 2,606 Net income$ 7,333$ 6,329$ 7,136$ 6,741$ 5,965$13,662$11,015 QTD Average Balances and Yields/Rates(unaudited) Table 4 Three Months Ended June 30, 2026March 31, 2026June 30, 2025 AverageYield/AverageYield/AverageYield/ (dollars in thousands) BalanceInterestRateBalanceInterestRateBalanceInterestRate Earning assets: Cash and due frombanks $ 23,889$ 121 2.03%$ 24,822$ 125 2.04%$ 20,762$ 111 2.14%Federal funds sold44,172409 3.71% 85,959792 3.74% 62,656698 4.47%Investment securities358,6583,8924.35% 343,7723,6114.26% 338,6353,8754.59%Loans held for sale170,1353,1627.45% 158,5972,9157.45% 167,6173,2967.89%Loans held forinvestment1,668,04525,9746.25%1,618,30125,1256.30%1,506,21123,8136.34% Total earning assets2,264,89933,5585.94%2,231,45132,5685.92%2,095,88131,7936.08% Noninterest-earningassets: Allowance for creditlosses on LHFI(18,834) (18,746) (17,110)Bank-owned lifeinsurance 48,944 48,487 47,119Premises, furnitureand equipment, net18,760 18,458 18,034Deferred tax asset16,702 16,173 17,182Goodwill & intangibleassets 6,229 6,270 6,168 Other assets27,734 27,365 29,442 Total noninterest-earning assets99,535 98,007 100,835 Total assets$2,364,434 $2,329,458 $2,196,716 Interest-bearingliabilities: Interest-bearing deposits$1,704,027$12,5452.95%$1,697,024$12,5923.01%$1,626,415$13,2513.27%Federal funds purchased- - 0.00% - - 0.00% 38 1 10.56%Federal Home Loan Bankof Atlanta advances36,209348 3.85% 24,667232 3.81% 10,000116 4.65%Revolving commercial lineof credit, net - - 0.00% - - 0.00% 5,667112 7.93% Subordinated debt, net- - 0.00% - - 0.00% 14,747235 6.39% Total interest-bearingliabilities 1,740,23612,8932.97%1,721,69112,8243.02%1,656,86713,7153.32% Noninterest-bearingliabilities: Noninterest-bearingdeposits 328,644 315,023 306,330 Other liabilities28,580 28,512 27,682 Total noninterest-bearing liabilities357,224 343,535 334,012 Shareholders' equity266,974 264,232 205,837 Total liabilities andshareholders'equity $2,364,434 $2,329,458 $2,196,716 Net interest income$20,665 $19,744 $18,078 Net interest spread 2.97% 2.90% 2.76% Net interest margin 3.66% 3.59% 3.46% Cost of total deposits 2.48% 2.54% 2.75%Cost of total funding 2.50% 2.55% 2.80% (1) (1) 10
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Includes noninterest-bearing deposits. YTD Average Balances and Yields/Rates (unaudited)Table 5 Six Months Ended June 30, 2026 June 30, 2025 Average Yield/Average Yield/ (dollars in thousands)BalanceInterestRateBalanceInterestRate Earning assets: Cash and due from banks$ 24,353$ 246 2.04%$ 21,738$ 246 2.28%Federal funds sold 64,9501,201 3.73% 75,4961,661 4.44%Investment securities351,2567,503 4.31% 336,9547,675 4.59%Loans held for sale 164,3986,077 7.45% 152,3186,115 8.10% Loans held for investment1,643,31051,0996.27% 1,467,52346,1206.34% Total earning assets2,248,26766,1265.93% 2,054,02961,8176.07% Noninterest-earning assets: Allowance for credit losses on LHFI(18,790) (17,113)Bank-owned life insurance48,717 46,897Premises, furniture and equipment, net18,610 17,943Deferred tax asset 16,439 17,491Goodwill & intangible assets6,250 6,248 Other assets 27,501 29,582 Total noninterest-earning assets98,727 101,048 Total assets $2,346,994 $2,155,077 Interest-bearing liabilities: Interest-bearing deposits$1,700,545$ 25,1372.98%$1,596,799$ 26,0813.29%Federal funds purchased- - 0.00% 19 1 10.61%Federal Home Loan Bank of Atlanta advances30,470 580 3.84% 5,607 128 4.60%Revolving commercial line of credit, net- - 0.00% 7,754 300 7.80% Subordinated debt, net - - 0.00% 14,741 470 6.43% Total interest-bearing liabilities1,731,01525,7173.00% 1,624,92026,9803.35% Noninterest-bearing liabilities: Noninterest-bearing deposits321,871 299,895 Other liabilities 28,497 27,445 Total noninterest-bearing liabilities350,368 327,340 Shareholders' equity265,611 202,817 Total liabilities and shareholders' equity$2,346,994 $2,155,077 Net interest income $ 40,409 $ 34,837 Net interest spread 2.93% 2.72% Net interest margin 3.62% 3.42% Cost of total deposits 2.51% 2.77%Cost of total funding 2.53% 2.83% Includes noninterest-bearing deposits. Loan Data(unaudited) Table 6 As of the Quarter Ended June 30, 2026March 31, 2026December 31, 2025September 30, 2025June 30, 2025 f f f f f (1) (1) (1) (1) 11
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(dollars in thousands)Amount% of TotalAmount% of TotalAmount% of TotalAmount% of TotalAmount% of TotalLoans held forinvestment("LHFI"):CommercialLoans Acquisition,developmentandconstruction$144,4368.5%$130,3988.0%$119,3527.4%$106,7876.9%$100,5286.6%Incomeproducing CRE416,96524.5376,26023.1378,17923.4371,67023.9372,14224.4Owner-occupied CRE127,2857.5107,3446.6 92,7875.7 96,2876.2 91,1476.0Senior housing248,28214.5254,44515.6259,52916.0223,71914.4236,47415.5Commercialand industrial139,3138.1138,9648.6145,3809.0135,0398.7131,7168.6 Retail Loans Marine vessels313,23018.4307,74618.9312,09619.3318,24620.5301,32719.7Residentialmortgages202,76811.9202,50312.5199,99112.4190,22012.3185,52712.1Cash value lifeinsurance LOC89,3055.2 86,6105.3 87,1725.4 90,1155.8 87,1355.7Otherconsumer23,7861.4 22,9911.4 22,8291.4 20,8931.4 21,2031.4 Gross loans heldfor investment$1,705,370100.0%$1,627,261100.0%$1,617,315100.0%$1,552,976100.0%$1,527,199100.0% Core LHFI1,657,5811,573,9721,561,791 1,492,992 1,464,200 Acquired LHFI47,789 53,289 55,524 59,984 62,999 Gross loans heldfor investment$1,705,370$1,627,261$1,617,315$1,552,976$1,527,199 Allowance forcredit losses onLHFI 19,817 18,826 18,743 18,028 17,497 Net loans heldfor investment$1,685,553$1,608,435$1,598,572$1,534,948$1,509,702Total loans held-for-sale223,112 202,615 170,933 231,593 209,101 Total loans$1,928,482$1,829,876$1,788,248$1,784,569$1,736,300 Includes loans acquired through business combinations. Nonperforming Assets (unaudited) Table 7 As of the Quarter Ended (dollars in thousands) June 30,2026March 31,2026December 31,2025September 30,2025June 30,2025 Nonaccrual loans $ 18,322$ 18,183$ 18,306$ 14,171$ 14,611 Past due loans 90 days and still accruing- - - 21 93 Total nonperforming loans$ 18,322$ 18,183$ 18,306$ 14,192$ 14,704 Other real estate owned - - - - - Total nonperforming assets$ 18,322$ 18,183$ 18,306$ 14,192$ 14,704 Nonperforming loans to gross LHFI1.07% 1.12% 1.13% 0.91% 0.96%Nonaccrual loans to total assets0.76% 0.77% 0.79% 0.63% 0.66%Nonperforming assets to total assets0.76% 0.77% 0.79% 0.63% 0.66% Allowance forCredit Losses( did) Tbl8 (1) (1) 12
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(unaudited) Table 8 As of and for the Three Months EndedAs of and for the Six Months Ended June 30,March 31,December 31,September 30,June 30,June 30,June 30, (dollars in thousands)202620262025 202520252026 2025 Allowance for credit losseson LHFI Balance, beginning ofperiod $ 18,826$ 18,743$ 18,028$ 17,497$ 17,104$ 18,743$ 17,118Net charge-o s/(recoveries): CommercialLoans Acquisition,development andconstruction- - - - - - -Income producingCRE - - - - - - -Owner-occupiedCRE - - - - - - -Senior housing- - - - - - -Commercial andindustrial 4 (6) (4) (29) 19 (2) 20 Retail Loans Marine vessels27 - - 162 - 27 -Residentialmortgages(2) - (29) (2) (2) (2) (5)Cash value lifeinsurance LOC- - - - - - - Other consumer(4) 47 20 (6) 191 43 208 Total netcharge-o s/(recoveries)$ 25$ 41$ (13)$ 125$ 208$ 66$ 223 Provision for loan creditlosses 1,016 124 702 656 601 1,140 602 Balance, ending ofperiod $ 19,817$ 18,826$ 18,743$ 18,028$ 17,497$ 19,817$ 17,497 Allowance for credit lossesfor unfunded commitments Period beginningbalance $ 4,214$ 3,956$ 3,496$ 3,499$ 3,348$ 3,956$ 2,720Provision (recovery) forcredit losses(358) 258 460 (3) 151 (100) 779 Period ending balance$ 3,856$ 4,214$ 3,956$ 3,496$ 3,499$ 3,856$ 3,499 Balance, end of period -Allowance for credit losses: LHFI andunfunded commitments$ 23,673$ 23,040$ 22,699$ 21,524$ 20,996$ 23,673$ 20,996 Total loans held forinvestment$1,705,370$1,627,261$ 1,617,315$ 1,552,976$1,527,199$ 1,705,370$ 1,527,199 Credit Analysis Net charge-o s toaverage LHFI0.01% 0.01% 0.00% 0.03% 0.06% 0.01% 0.03%Total allowance forcredit losses on LHFIto total LHFI1.16% 1.16% 1.16% 1.16% 1.15% 1.16% 1.15%Total allowance forcredit losses on LHFIto nonaccrual loans108.16% 103.54% 102.39% 127.22% 119.75% 108.16% 119.75%Total allowance forcredit losses on LHFIto totalnonperformingloans 108.16% 103.54% 102.39% 127.03% 118.99% 108.16% 118.99% Loan Risk Ratings (unaudited) Table 9 As of the Quarter Ended (dollars in thousands) June 30,2026March 31,2026December 31,2025September 30,2025June 30,2025Acquisition, development and construction Pass $ 144,436$ 130,398$ 119,352$ 106,787$ 100,528Special mention - - - - - Substandard - - - - - (1) (2) (1) 13
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Total acquisition, development and construction$ 144,436$ 130,398$ 119,352$ 106,787$ 100,528 Income producing CRE Pass $ 416,501$ 375,791$ 377,711$ 370,788$ 371,255Special mention - - - - - Substandard 464 469 468 882 887 Total income producing CRE$ 416,965$ 376,260$ 378,179$ 371,670$ 372,142 Owner-occupied CRE Pass $ 116,429$ 97,706$ 82,959$ 86,533$ 81,244Special mention 2,485 2,509 2,739 3,579 3,612 Substandard 8,371 7,129 7,089 6,175 6,291 Total owner-occupied CRE$ 127,285$ 107,344$ 92,787$ 96,287$ 91,147 Senior housing Pass $ 233,501$ 239,788$ 236,816$ 205,330$ 217,971Special mention - 3,940 11,934 12,00612,078 Substandard 14,78110,717 10,779 6,383 6,425 Total senior housing $ 248,282$ 254,445$ 259,529$ 223,719$ 236,474 Commercial and industrial Pass $ 135,851$ 135,295$ 141,020$ 128,468$ 124,979Special mention - 141 212 2,402 2,199 Substandard 3,462 3,528 4,148 4,169 4,538 Total commercial and industrial$ 139,313$ 138,964$ 145,380$ 135,039$ 131,716 Marine vessels Performing $ 313,230$ 307,746$ 312,096$ 318,246$ 301,327 Nonperforming - - - - - Total marine vessels $ 313,230$ 307,746$ 312,096$ 318,246$ 301,327 Residential mortgages Performing $ 202,380$ 202,114$ 199,601$ 190,059$ 185,162 Nonperforming 388 389 390 161 365 Total residential mortgages$ 202,768$ 202,503$ 199,991$ 190,220$ 185,527 Cash value life insurance LOC Performing $ 89,305$ 86,610$ 87,172$ 90,115$ 87,135 Nonperforming - - - - - Total cash value life insurance LOC$ 89,305$ 86,610$ 87,172$ 90,115$ 87,135 Other consumer Performing $ 23,786$ 22,991$ 22,829$ 20,872$ 21,203 Nonperforming - - - 21 - Total other consumer$ 23,786$ 22,991$ 22,829$ 20,893$ 21,203 Gross loans held for investment$1,705,370$1,627,261$ 1,617,315$ 1,552,976$1,527,199 There were no commercial loans classi ed as doubtful.Retail loans are classi ed 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 nancial 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. (1) (1) (1) (1) (2) (2) (2) (2) (1) (2) 14
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Management believes that these non-GAAP nancial 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 nancial 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 nancial information prepared in accordance with GAAP. Additionally, these non-GAAP nancial measures should be considered as additional views of the way the Company’s nancial measures are a ected by signi cant 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 TABLESNon-GAAP ReconciliationsTangible Book Value per Common Share / Tangible Common Equity to TangibleAssets (unaudited) Table 10A As of June 30,March 31,December 31,September 30,June 30, (dollars in thousands, except per share data)202620262025 2025 2025 Tangible Common Equity: Total shareholders' equity$ 269,703$ 262,923$ 259,529$ 250,438$ 209,365Less: Goodwill and intangibles(6,246) (6,243) (6,262) (6,186) (6,190) Adjusted for: Mortgage servicing rights1,313 1,280 1,266 1,156 1,122 Tangible Common Equity$ 264,770$ 257,960$ 254,533$ 245,408$ 204,297Common shares outstanding12,003,04011,985,41411,980,41211,978,92110,278,921Book value per common share22.47 21.94 21.66 20.91 20.37Tangible book value per common share22.06 21.52 21.25 20.49 19.88 Tangible assets: Total assets $2,420,993$2,348,547$ 2,306,586$ 2,255,389$2,221,245Less: Goodwill and intangibles(6,246) (6,243) (6,262) (6,186) (6,190) Adjusted for: Mortgage servicing rights1,313 1,280 1,266 1,156 1,122 Tangible assets $2,416,060$2,343,584$ 2,301,590$ 2,250,359$2,216,177 Tangible common equity to tangible assets10.96% 11.01% 11.06% 10.91% 9.22% ROATCE (unaudited) Table 10B As of and for the Three Months EndedAs of and for the Six Months Ended June 30,March 31,December 31,September 30,June 30,June 30,June 30, (dollars in thousands)202620262025 202520252026 2025 Net income$ 7,333$ 6,329$ 7,136$ 6,741$ 5,965$ 13,662$ 11,015Average shareholders'equity 266,974264,232256,814246,688205,837265,611 202,817Return on averageshareholders' equity11.02% 9.71% 11.02% 10.84% 11.62% 10.37% 10.95% Average TangibleCommon Equity: Averageshareholders'equity $266,974$ 264,232$ 256,814$ 246,688$205,837$ 265,611$ 202,817Less: Averagegoodwill andintangibles(6,229) (6,270) (6,166) (6,176) (6,168) (6,250) (6,248)Adjdf (1) 15
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Adjusted for:Average mortgageservicing rights1,2811,291 1,155 1,1281,082 1,286 1,140 Average tangiblecommon equity$262,026$ 259,253$ 251,803$ 241,640$200,751$ 260,647$ 197,709 Return onaverage tangiblecommonequity11.23% 9.90% 11.24% 11.07% 11.92% 10.57% 11.23% Represents annualized data. Adjusted Nonperforming Assets to Total Assets (unaudited)Table 10C As of June 30,March 31,December 31,September 30,June 30, (dollars in thousands) 202620262025 2025 2025 Total nonperforming assets$ 18,322$ 18,183$ 18,306$ 14,192$ 14,704Total assets 2,420,9932,348,5472,306,5862,255,3892,221,245GAAP-based nonperforming assets to total assets0.76% 0.77% 0.79% 0.63% 0.66%Total nonperforming assets$ 18,322$ 18,183$ 18,306$ 14,192$ 14,704Adjusted for: Guaranteed portions of nonaccrual loans3,542 3,657 4,089 4,457 4,583 Adjusted nonperforming assets$ 14,780$ 14,526$ 14,217$ 9,735$ 10,121Total assets $2,420,993$2,348,547$ 2,306,586$ 2,255,389$2,221,245Adjusted nonperforming assets to total assets0.61% 0.62% 0.62% 0.43% 0.46% PPNR (unaudited) Table 10D As of and for the Three Months EndedAs of and for the SixMonths Ended June 30,March 31,December 31,September 30,June 30,June 30,June 30, (dollars in thousands)202620262025 2025202520262025 Net income (GAAP-based)$ 7,333$ 6,329$ 7,136$ 6,741$ 5,965$ 13,662$ 11,015Plus:Income tax expense1,502 1,956 1,598 2,040 1,064 3,458 2,606 Provision for credit losses658 382 1,162 653 752 1,040 1,381 Pre-tax, pre-provision netrevenue $ 9,493$ 8,667$ 9,896$ 9,434$ 7,781$ 18,160$ 15,002 Core Deposits (unaudited) Table 10E As of June 30,March 31,December 31,September 30,June 30, (dollars in thousands) 202620262025 20252025 Total Deposits $2,047,671$2,057,144$ 1,987,684$ 1,949,672$1,968,301Less: Brokered CDs 253,928258,591307,034294,908307,892 Core deposits $1,793,743$1,798,553$ 1,680,650$ 1,654,764$1,660,409 (1) (1) (1) 16
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The Company de nes its core deposits as total deposits, less brokered certi cates of deposit.. Stephen R. Stone President and Chief Executive O cer Anthony P. Valduga Chief Financial O cer / Chief Operating O cer 678-396-4605 investorrelations@coastalstatesbank.com Source: CoastalSouth Bancshares (1) 17