CoastalSouth Bancshares, Inc. Reports Earnings for Third Quarter 2025

CoastalSouth Bancshares, Inc. ("CoastalSouth" or the "Company") (NYSE:COSO), the holding company for Coastal States Bank (the "Bank"), today reported net income of $6.7 million, or $0.54 per diluted share, for the third quarter of 2025, compared to approximately $6.0 million, or $0.57 per diluted share, for the second quarter of 2025, and $7.9 million, or $0.75 per diluted share, for the third quarter of 2024. For the year-to-date period ending September 30, 2025, the Company reported net income of $17.8 million, or $1.58 per diluted share, compared with $16.2 million, or $1.55 per diluted share, for the same period in 2024.

Commenting on the Company's results, President and Chief Executive Officer, Stephen R. Stone stated, "Following the completion of our initial public offering on July 2, 2025, the Company continued to deliver excellent financial performance through the third quarter of 2025. Loan production continued to be robust with over $137.3 million in new commitments originated during the third quarter of 2025 while maintaining strong asset quality metrics. Given the recent acceleration of mergers and acquisition activity in our markets, we continue to focus on recruiting new bankers to expand our presence within our markets and grow new relationships."

Third Quarter 2025 Performance Highlights:

• Net income of $6.7 million or $0.54 per diluted share
• Return on average assets ("ROAA") of 1.20%
• Return on average equity ("ROAE") of 10.84%; Return on average tangible common equity ("ROATCE") of 11.07%¹
• Net interest margin of 3.58%, an increase of 12 basis points from the second quarter of 2025
• Efficiency ratio of 55.69% for the third quarter of 2025
• Loans held for investment ("LHFI") production of $137.3 million in commitments led to LHFI growth of $25.8 million, up 6.7% annualized from the second quarter of 2025
• Book value per share growth of $0.54, or 10.5% annualized, to $20.91 at September 30, 2025; Tangible book value¹ per share growth of $0.61, or 12.2% annualized, to $20.49 at September 30, 2025 from the second quarter of 2025
• Total shareholders' equity to total assets of 11.10%, compared to 9.43% at June 30, 2025; Tangible common equity¹ to tangible assets¹ of 10.91%, compared to 9.22% at June 30, 2025
• Net charge-offs to average loans held for investment of 0.03%
• Nonperforming assets to total assets of 0.63%; adjusted nonperforming assets to total assets¹ of 0.43%
• Allowance for credit losses ("ACL") on LHFI to total LHFI of 1.16%; ACL on LHFI to nonperforming loans of 127.03%
• Completed initial public offering of 2,035,000 shares on July 2, 2025 with an initial offering price of $21.50. The Company issued 1,700,000 shares for net proceeds of $30.2 million following discounts, commissions, and expenses
• Redeemed $15.0 million of subordinated debt; recognized $236 thousand of accelerated debt issuance expense

Operating Highlights

Net interest income totaled $19.2 million for the third quarter of 2025, an increase of $1.1 million, or 6.2%, from $18.1 million for the second quarter of 2025 and an increase of $2.2 million, or 13.1% from the third quarter of 2024. The Company's net interest margin expanded to 3.58% for the third quarter of 2025, a 12 basis point increase from the second quarter of 2025 and a 26 basis point increase from the third quarter of 2024.

The yield on average interest-earning assets for the third quarter of 2025 increased to 6.14% from 6.08% for the second quarter of 2025. This increase was primarily related to an overall yield increase in all categories except a 2 basis point decrease in yield on LHFI albeit with an increased average volume of approximately $37.2 million in the LHFI portfolio quarter over quarter. The yield on available-for-sale securities was positively impacted by $225 thousand of premium recognized on corporate bonds that were called ahead of maturity. Compared to the third quarter of 2024, yields on earning assets decreased 23 basis points to 6.14% from 6.37%. The decrease was primarily attributable to a 37 basis point decrease in LHFI, a 26 basis point decrease in the yield on the loans held for sale ("LHFS") portfolio, and a net decrease in other earning assets categories.

The Company's total cost of funds was 2.79% for the third quarter of 2025, a decrease of 1 basis point and 45 basis points compared with the second quarter of 2025 and third quarter of 2024, respectively. The cost of funds was impacted by the recognition of a $236 thousand debt issuance costs which were accelerated due to redemption of the Company's subordinated debt. Deposit costs decreased 3 basis points during the third quarter of 2025 to 2.72%, compared to 2.75% in the second quarter of 2025. The cost of interest-bearing deposits decreased 4 basis points during the third quarter of 2025 to 3.23%, compared with 3.27% in the second quarter of 2025, reflecting continued repricing of certificates of deposits in the third quarter of 2025.

Noninterest income totaled $2.1 million for the third quarter of 2025, an increase of $305 thousand, or 17.0%, from the second quarter of 2025, primarily attributable to an increase in gain on sale of government guaranteed loans ("GGL"). Noninterest expense totaled $11.9 million for the third quarter of 2025, a decrease of $236 thousand, or 2.0%, from the second quarter of 2025, primarily due to lower other professional fees, offset by a net increase in other noninterest expense categories.

The Company's effective tax rate for the third quarter of 2025 was 23.2%, compared to 15.1% for the second quarter of 2025 and 22.1% for the third quarter of 2024. The increase in effective tax rate from the second quarter of 2025 was primarily due to a higher recognition of renewable energy tax credits in the second quarter of 2025.

Balance Sheet Trends

Total assets were $2.26 billion at September 30, 2025, an increase of $156.7 million, or 7.5%, from $2.10 billion at December 31, 2024. LHFS were $231.6 million at September 30, 2025, an increase of $57.6 million, or 33.1%, from $174.0 million at December 31, 2024. Gross LHFI were $1.55 billion at September 30, 2025, an increase of $143.5 million, or 10.2%, from $1.41 billion at December 31, 2024.

Total deposits were $1.95 billion at September 30, 2025, an increase of $114.9 million, or 6.3%, from $1.83 billion at December 31, 2024. Noninterest-bearing deposits were $313.6 million at September 30, 2025, or 16.1% of total deposits, compared to $302.9 million, or 16.5% of total deposits, at December 31, 2024. Brokered certificates of deposits, a component of time deposits, were $294.9 million at September 30, 2025, as compared to $274.9 million at December 31, 2024, an increase of $20.0 million, or 7.3%.

Credit Quality

During the third quarter of 2025, the Company recorded a provision (recovery) for credit losses of $653 thousand, compared to $752 thousand and ($1.0) million during the second quarter of 2025 and third quarter of 2024, respectively. The provision expense recorded during the third quarter of 2025 was primarily due to increased loan production and current period net charge-offs, offset by other changes in loss rates and economic factors. The Company's annualized net charge-offs to average LHFI ratio was 0.03% for the third quarter of 2025 as compared to 0.06% and 0.02% during the second quarter of 2025 and third quarter of 2024, respectively.

Nonperforming assets totaled $14.2 million, or 0.63% of total assets, at September 30, 2025 compared to $15.9 million, or 0.76% of total assets at December 31, 2024. The $1.7 million decrease in nonperforming assets at September 30, 2025 from December 31, 2024 was due to the sale of other real estate owned and payments collected on nonaccrual loans during the period. Adjusted nonperforming assets², which excludes the guaranteed portions of nonaccrual loans, was $9.7 million, or 0.43% of total assets, at September 30, 2025 compared to $11.1 million, or 0.53% of total assets, at December 31, 2024.

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 a cyber-attack incidents or a deficiencies in cyber security; risks related to potential acquisitions; government actions or inactions, including a prolonged shutdown of the federal government, tariffs, or trade wards (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 final prospectus filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, filed with the Securities and Exchange Commission (the "SEC") on July 2, 2025 (Registration No. 333-287854), relating to our initial public offering, 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.