CoastalSouth Bancshares, Inc. Reports Earnings for Third Quarter 2026

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.