📰 What This Document Is

This document is an 8-K (Current Report) filed by CoastalSouth Bancshares, Inc. It serves as an immediate announcement detailing the bank’s financial performance for the first quarter of 2026. Because this is an earnings release, it provides a detailed look at the bank's income, balance sheet health, and operational activities compared to recent past periods.

👉 This report tells investors exactly how the bank performed in its most recent quarter and provides insight into key strategies, like managing deposits and growing loans.

🏢 What The Company Does

CoastalSouth Bancshares, Inc. is a bank holding company headquartered in Atlanta, Georgia. Through its wholly owned subsidiary, Coastal States Bank, it operates as a South Carolina state-chartered commercial bank. The bank provides a comprehensive range of banking services, targeting businesses, real estate professionals, and consumers who are looking for a close relationship with their bank.

👉 In simple terms, the bank acts as a financial hub, offering various products—from deposits and loans to commercial services—to help its clients with their everyday financial needs.

💰 Financial Highlights

The most important section for any investor is the bottom line. This summary provides the key profitability metrics for the first quarter of 2026, showing how the bank generated income and how strong its capital base remains.

• Net Income: The company reported net income of $6.3 million, or $0.51 per diluted share, for Q1 2026. This was a decrease compared to the $7.1 million ($0.58) seen in Q4 2025, but an increase from $5.1 million ($0.47) reported in Q1 2025.
• Return Ratios: The bank reported a Return on average assets ("ROAA") of 1.10%, a Return on average equity ("ROAE") of 9.71%, and a Return on average tangible common equity ("ROATCE") of 9.90%. These percentages measure how efficiently the bank used its assets and equity to generate profits.
• Metrics Deep Dive:
  • The total deposits increased by $69.5 million, showing a 3.5% jump from the end of December 2025.
  • The total assets stood at $2.35 billion as of March 31, 2026, representing a 1.8% increase from $2.31 billion at the end of Q4 2025.

📜 Dividend Declaration and Payout

CoastalSouth announced a quarterly dividend, which is essentially a share of the profits paid out directly to the company's owners (shareholders).

• The Dividend: On April 17, 2026, the Board of Directors declared a quarterly dividend of $0.05 per share.
• Payment Schedule: This dividend will be paid on May 28, 2026.
• Key Dates: Shareholders must have outstanding shares as of the close of business on May 14, 2026, which is the official record date.

💰 Core Income and Operational Performance

This section details the primary ways the bank makes money: earning interest on deposits and lending money out.

• Net Interest Income (NII): NII totaled $19.7 million for Q1 2026. While this was an increase of 17.8% compared to Q1 2025, it was a slight decrease of 0.6% from Q4 2025 ($19.9 million).
  • Why it matters: The bank's net interest margin was 3.59% for Q1 2026, which is a minor decline (1 basis point) from the 3.60% seen in Q4 2025.
• Noninterest Income: This category covers income from sources other than interest, such as fees. It totaled $2.0 million in Q1 2026, which marked a decrease of 14.3% compared to Q4 2025.
• Interest Expense: The bank's total cost of funds (the expense of deposits) was 2.55% in Q1 2026. This reflects a decrease compared to the fourth quarter of 2025.

💎 Deposit and Loan Growth Details

The bank is highly focused on its core funding source—deposits—and its ability to grow its loan book.

• Core Deposit Strength: CEO Stephen R. Stone highlighted that the bank "started strong in 2026 by growing $117.9 million in core deposits" during Q1.
  • Why it matters: Core deposits (money from established, loyal customers) are considered the most stable and low-cost source of funding for a bank. Strong growth here allows the bank to reduce its reliance on more expensive "alternative funding sources."
• Loan Production: The bank produced $166.7 million in loans held for investment (LHFI) during Q1 2026.
  • Pipeline Health: The total LHFI saw growth of $9.9 million, which represents a 2.5% annualized increase from Q4 2025.
  • Strategy: The CEO noted that the loan pipeline "continued to grow, particularly with the addition of new commercial bankers across the franchise," signaling an ongoing focus on expanding lending capacity.

🏦 Balance Sheet Composition

This section gives a snapshot of the bank's financial structure, showing where its money came from (deposits) and where it is invested (assets).

• Total Deposits: Total deposits hit $2.06 billion at the end of Q1 2026, an increase of $69.5 million, or 3.5%.
  • Shifts in Funding: A notable detail is that "Brokered certificates of deposit" decreased by $48.4 million (or 15.8%), which suggests a shift in how the bank is funding its operations.
• Asset Composition:
  • Loans held for sale (LHFS) amounted to $202.6 million at March 31, 2026. This represents an 18.5% increase from the $170.9 million recorded at the end of Q4 2025.
  • The Gross LHFI were $1.63 billion at March 31, 2026, showing a slight increase of 0.6% from the previous quarter.

📉 Credit Quality and Risk Metrics

Credit quality measures how likely the bank's borrowers are to repay their loans. Banks must maintain robust risk management to protect themselves from potential losses.

• Loan Loss Provisions: The company recorded a provision for credit losses of $382 thousand during Q1 2026. This figure was significantly lower than the $1.2 million provision recorded in Q4 2025.
• Nonperforming Assets (NPA): Total nonperforming assets were $18.2 million, representing 0.77% of total assets.
  • Note: The adjusted nonperforming assets (excluding guaranteed portions of nonaccrual loans) were $14.5 million, or 0.62% of total assets, showing stability compared to December 31, 2025.
• Annualized Charge-offs: The annualized net charge-offs ratio was 0.01% for Q1 2026, compared to 0.00% during Q4 2025.

🗺️ Corporate Structure and History

To give context to the numbers, this section outlines the company's structure and its market presence.

• About CoastalSouth Bancshares, Inc.: The company is a bank holding company based in Atlanta, Georgia. It operates Coastal States Bank, which is a commercial bank chartered in South Carolina.
• Scope: The bank aims to provide a "full range of banking products and services" tailored specifically for local businesses, real estate professionals, and consumers.

📞 Contacts and Relationship Resources

This section provides the vital contacts for investors and media who need to follow up on the information presented in the filing.

• Executive Leadership:
  • Stephen R. Stone: President and Chief Executive Officer
  • Anthony P. Valduga: Chief Financial Officer / Chief Operating Officer
• Contact Details:
  • Phone: 678-396-4605
  • Email: [email protected]
  • Coastal States Bank Website: www.coastalstatesbank.com

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🧠 The Analogy

Think of a bank like a large plumbing company. Your deposits are like water flowing into the main reservoir. CoastalSouth’s job is to take that water (deposits), clean it, and then send it out through pipes (loans) to businesses and people. When they report strong core deposit growth, it’s like having a consistent, reliable source of high-quality water coming into the system. This stability means they don't have to pay extra (using expensive alternative funding) or risk the pipes breaking (credit losses), allowing them to continue supplying necessary financial services to the community.

🧩 Final Takeaway

CoastalSouth Bancshares reported a solid quarter marked by strong core deposit growth and robust loan pipeline activity. While net income was down year-over-year, the underlying strength in stable funding sources suggests a healthy foundation for continued, strategic lending growth.