News Details

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 first 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 Officer Stephen R. Stone stated, "We saw outstanding loan production² 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-offs. 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 financial results and we look forward to building upon this performance in the second half of the year."

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 ¹("ROATCE") of 11.23%
• Net interest margin of 3.66%, an increase of 7 basis points from the first quarter of 2026
• Total deposits decreased $9.5 million, principally driven by a decrease of $4.8 million in core deposits ¹ and a decrease in brokered certificates of deposit of $4.7 million
• Loans held for investment ("LHFI") production ² of $181.6 million during the second quarter of 2026 led to LHFI growth of $78.1 million, up 19.3% annualized from the first 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 ¹ per common share growth of $0.54, or 10.06% annualized, to $22.06 at June 30, 2026 from the first quarter of 2026
• Total shareholders' equity to total assets of 11.14%, compared to 11.20% as of the first quarter of 2026; Tangible common equity ¹ to tangible assets ¹ of 10.96%, compared to 11.01% as of March 31, 2026
• Net charge-offs to average loans held for investment of 0.01%
• Nonperforming assets to total assets of 0.76%; adjusted nonperforming assets to total assets ¹ 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.

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 first 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 first 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 first quarter of 2026. This increase was primarily related to an overall yield increase in average interest-earning assets, principally investment securities; offset 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 first 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 first 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 first quarter of 2026, reflecting continued repricing of certificates 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 first 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 first quarter of 2026. This increase was primarily due to higher salaries and employee benefits, coupled with a net increase in other noninterest expense categories, principally in other professional services, software and other technology expense, and other noninterest expense; offset 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 effective tax rate for the second quarter of 2026 was 17.0%, compared to 23.6% for the first quarter of 2026, and 15.1% for the second quarter of 2025. The decrease in effective tax rate from the first quarter of 2026 was primarily due to a higher recognition of benefits 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 certificates of deposit, a component of time deposits, were $253.9 million at June 30, 2026, as compared to $307.0 million at December 31, 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 first 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, offset with other changes in loss rates. The Company's annualized net charge-offs to average LHFI ratio was 0.01% for the second quarter of 2026 as compared to 0.01% and 0.06% during the first 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 assets³, 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.

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 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.