CoastalSouth earnings reached $8.8 million, or $0.71 per diluted share, in the third quarter of 2026, exceeding the $0.59 analyst estimate. The bank holding company announced the results on October 19, with stronger lending, higher loan-sale revenue and a credit-loss recovery supporting profit despite a seasonal decline in core deposits.
Key Takeaways
- Diluted earnings rose to $0.71 from $0.59 in the preceding quarter and $0.54 a year earlier.
- Loan production reached $248.2 million, while core deposits declined about $20 million.
- The board declared a $0.06 quarterly dividend, payable on November 24, 2026.
Table of Contents
- CoastalSouth earnings rise on lending and loan sales
- Loan growth contrasts with seasonal core-deposit outflows
- Credit recovery supports profit as expenses increase
- Dividend declared as book value edges lower
- Conclusion
CoastalSouth earnings rise on lending and loan sales
CoastalSouth’s third-quarter 2026 earnings release showed net income increasing from $7.3 million in the second quarter and $6.7 million a year earlier. For the first nine months of 2026, profit totaled $22.4 million, or $1.81 per diluted share, compared with $17.8 million, or $1.58 per share, in the corresponding 2025 period.
Net interest income rose 4.2% from the preceding quarter to $21.5 million. Net interest margin widened four basis points to 3.70%, while deposit costs were unchanged at 2.48%.
Noninterest income increased 51.2% sequentially to $3.3 million, primarily reflecting a $1.3 million increase in gains on sales of government-guaranteed loans. President and CEO Stephen R. Stone attributed the record per-share earnings to strong loan production and gain-on-sale revenue.
| Item | Details |
|---|---|
| Total assets at September 30, 2026 | $2.42 billion |
| Third-quarter return on average assets | 1.45% |
| Third-quarter return on average equity | 12.88% |
| Third-quarter share repurchases | 285,715 shares at a weighted-average price of $27.10 |
Loan growth contrasts with seasonal core-deposit outflows
Loan production of $248.2 million helped increase loans held for investment by $81.6 million during the quarter, a 19.0% annualized growth rate. CoastalSouth defines production as original loan commitments, including both funded and unfunded amounts, rather than cash advanced alone.
Total deposits increased $53.1 million during the quarter to $2.10 billion at September 30. Core deposits, however, declined approximately $20 million, primarily because of seasonal outflows associated with property-management clients.
The distinction matters: overall deposit growth did not reflect an increase across every funding category. CoastalSouth operates through Coastal States Bank, serving business and consumer customers.
Credit recovery supports profit as expenses increase
CoastalSouth recorded a $429,000 recovery for credit losses, compared with a $658,000 provision in the second quarter. The company attributed the recovery to changes in its economic forecast and loan mix, partly offset by new loan production. This added to the earnings improvement alongside higher revenue.
Nonperforming assets totaled $15.1 million, or 0.62% of assets, down from $18.3 million, or 0.79%, at year-end 2025. A $4.2 million paydown on one nonaccrual senior-housing loan accounted for much of the decline.
Noninterest expense rose 2.5% sequentially to $13.7 million, mainly because of higher salaries and benefits. The effective tax rate increased to 24.2% from 17.0%, partly reflecting an approximately $641,000 reduction in a state-tax deferred tax asset.
Dividend declared as book value edges lower
The board declared a quarterly dividend of $0.06 per share on October 19. It is payable on November 24 to shareholders of record at the close of business on November 10, 2026.
Despite higher earnings, book value per share declined $0.15 from the preceding quarter to $22.32. Accumulated other comprehensive loss increased by $8.3 million because of greater unrealized losses in the available-for-sale securities portfolio.
Conclusion
CoastalSouth’s stronger quarter combined lending growth, loan-sale gains and a credit-loss recovery, while seasonal core-deposit outflows and securities losses tempered the picture. The next confirmed shareholder dates are the November 10 dividend record date and November 24 payment.
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