COASTALSOUTH BANCSHARES, INC. REPORTS EARNINGS FOR FOURTH QUARTER 2025 (Form 8-K)

COASTALSOUTH BANCSHARES, INC. REPORTS EARNINGS FOR FOURTH QUARTER 2025

ATLANTA, GA (January 20, 2026) - 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 $7.1 million, or $0.58 per diluted share, for the fourth quarter of 2025, compared to approximately $6.7 million, or $0.54 per diluted share, for the third quarter of 2025, and $5.7 million, or $0.54 per diluted share, for the fourth quarter of 2024. For the year ended December 31, 2025, the Company reported net income of $24.9 million, or $2.16 per diluted share, compared with $21.9 million, or $2.09 per diluted share, for the year ended December 31, 2024.

Commenting on the Company's results, President and Chief Executive Officer, Stephen R. Stone stated, "We are pleased to report record net income for the year of $24.9 million and pre-tax pre-provision net revenue1 ("PPNR") of $34.3 million, which is an increase of 23.6% compared to December 31, 2024. We also produced over $776.0 million in loan commitments and grew core deposits1 by over $120.7 million."

Mr. Stone also announced the Company's strategic expansion into the Charleston, SC market. "This expansion builds upon the strong foundation we have established in the Lowcountry and reflects our continued investment in this dynamic region," said Stone. "CSB has assembled a locally based commercial banking team with extensive experience serving businesses throughout Charleston and the broader Lowcountry market. The team we have assembled, led by Edward Vaughan, Charleston Market President, will help us continue to drive strong loan and deposit growth."

Fourth Quarter 2025 Performance Highlights:

Operating Highlights

Net interest income totaled $19.9 million for the fourth quarter of 2025, an increase of $673 thousand, or 3.5%, from $19.2 million for the third quarter of 2025 and an increase of $3.6 million, or 22.1% from the fourth quarter of 2024. The Company's net interest margin expanded to 3.60% for the fourth quarter of 2025, a 2 basis point increase from the third quarter of 2025 and a 39 basis point increase from the fourth quarter of 2024.

The yield on average interest-earning assets for the fourth quarter of 2025 decreased to 5.98% from 6.14% for the third quarter of 2025. This decrease was primarily related to an overall yield decrease in all interest-earning assets, primarily due to the recent interest rate cuts, albeit a significant growth in average total earning assets. Compared to the fourth quarter of 2024, yields on earning assets decreased 4 basis points to 5.98% from 6.02%. The decrease was primarily attributable to the aforementioned interest rate cuts during 2025, offset by significant growth of $171.9 million in average total earning assets, primarily in LHFI.

1 Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP financial measures in tables 10A - 10I.

2 The Company defines production as original loan commitment, which includes both funded and unfunded balances.

The Company's total cost of funds was 2.60% for the fourth quarter of 2025, a decrease of 19 basis points and 39 basis points compared with the third quarter of 2025 and fourth quarter of 2024, respectively. Deposit costs decreased 13 basis points during the fourth quarter of 2025 to 2.59%, compared to 2.72% in the third quarter of 2025. The cost of interest-bearing deposits decreased 14 basis points during the fourth quarter of 2025 to 3.09%, compared with 3.23% in the third quarter of 2025, reflecting continued repricing of certificates of deposits in the fourth quarter of 2025.

Noninterest income totaled $2.3 million for the fourth quarter of 2025, an increase of $195 thousand, or 9.3%, from the third quarter of 2025, primarily attributable to an increase in gain on sale of government guaranteed loans ("GGL"), service charges on deposits, mortgage banking related income and other noninterest income. Noninterest expense totaled $12.3 million for the fourth quarter of 2025, an increase of $406 thousand, or 3.4%, from the third quarter of 2025, primarily due to higher salaries and employee benefits; offset by decreases in other categories, primarily other professional services.

The Company's effective tax rate for the fourth quarter of 2025 was 18.3%, compared to 23.2% for the third quarter of 2025 and 14.3% for the fourth quarter of 2024. The decrease in effective tax rate from the third quarter of 2025 was primarily due to a higher recognition of benefits from tax credits in the fourth quarter of 2025.

Balance Sheet Trends

Total assets were $2.31 billion at December 31, 2025, an increase of $207.9 million, or 9.9%, from $2.10 billion at December 31, 2024. Loans held for sale ("LHFS") were $170.9 million at December 31, 2025, a decrease of $3.1 million, or 1.8%, from $174.0 million at December 31, 2024. Gross LHFI were $1.62 billion at December 31, 2025, an increase of $207.9 million, or 14.7%, from $1.41 billion at December 31, 2024.

Total deposits were $1.99 billion at December 31, 2025, an increase of $152.9 million, or 8.3%, from $1.83 billion at December 31, 2024. Noninterest-bearing deposits were $312.3 million at December 31, 2025, or 15.7% 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 $307.0 million at December 31, 2025, as compared to $274.9 million at December 31, 2024, an increase of $32.1 million, or 11.7%.

Credit Quality

During the fourth quarter of 2025, the Company recorded a provision for credit losses of $1.2 million, compared to $653 thousand and $1.2 million during the third quarter of 2025 and fourth quarter of 2024, respectively. The provision expense recorded during the fourth quarter of 2025 was due to increased loan production and other changes in loss rates and economic factors. The Company's annualized net charge-offs (recoveries) to average LHFI ratio was 0.00% for the fourth quarter of 2025 as compared to 0.03% and (0.02)% during the third quarter of 2025 and fourth quarter of 2024, respectively.

Nonperforming assets totaled $18.3 million, or 0.79% of total assets, at December 31, 2025 compared to $15.9 million, or 0.76% of total assets at December 31, 2024. The $2.4 million increase in nonperforming assets at December 31, 2025 from December 31, 2024 was primarily due to the transfer of one senior housing loan to nonaccrual. This is a construction loan for an assisted living facility that is approximately 92% complete and has a current loan-to-value of 55%. Adjusted nonperforming assets3, which excludes the guaranteed portions of nonaccrual loans, was $14.2 million, or 0.62% of total assets, at December 31, 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.

3 Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of GAAP to non-GAAP financial measures in tables 10A - 10I.