What they do
CoastalSouth Bancshares is the Atlanta holding company for Coastal States Bank, which has 12 branches in the South Carolina Lowcountry, Savannah and metro Atlanta. Next to the community bank it runs four specialty lending lines: senior housing, marine vessel loans, government-guaranteed loans and mortgage warehouse finance. It listed on the NYSE in July 2025.
Why we picked it
- 013.70%
The bank earns more on its money. The net interest margin was 3.70% in the September 2026 quarter, against 3.58% a year earlier and 3.21% at the end of 2024. Deposit costs fell to 2.48% from 2.72%, and net interest income rose 12% to $21.5M.
- 02$11.1M
Earnings grew before any help from loan-loss reserves. Pre-tax, pre-provision earnings were $11.1M in the quarter, up 18% from $9.4M a year earlier, and up 20% over nine months. Quarterly net income was $8.8M against $6.7M, and nine-month net income $22.4M against $17.8M.
- 03+15%
Loans are growing and bad assets are shrinking. Loans held for investment were $1.79B at 30 Sep, up 15% in a year. Nonperforming assets fell to $15.1M, 0.62% of assets, from $18.3M (0.79%) at the end of 2025, and net charge-offs ran at an annualized 0.01%.
- 041.24x
Capital is going back to shareholders at a modest price. Since its $15M buyback started in May the company has bought 334,206 shares, about 2.8% of the stock, and the quarterly dividend is going to $0.06 from $0.05. At $27.10 the stock trades at 1.24 times tangible book of $21.90 and about 11 times the last four quarters' earnings of $2.39 a share.
The risk
The catch: part of the quarter will not repeat. A $429K release of loan-loss reserves replaced a $653K charge a year earlier, and gains on selling government-guaranteed loans jumped to $1.56M from $0.61M. Lending is concentrated: senior housing is 17.3% of loans and its substandard loans rose to $10.9M from $6.4M a year earlier, marine loans are 17.9% and income-producing commercial real estate 25.1%. Core deposits fell $20.0M in the quarter, and Patriot, a private equity firm that has backed the bank since 2017, cut its stake to 4.8% from 9.67%.
The full analysis
CoastalSouth Bancshares ($COSO): a wider margin, a buyback, and a price near tangible book
Our view: bullish, because CoastalSouth is earning more on its money, its earnings grew before any help from loan-loss reserves, credit is holding, and it is buying back stock at 1.24 times tangible book.
The thesis
CoastalSouth Bancshares is the Atlanta holding company for Coastal States Bank, which has 12 branches in the South Carolina Lowcountry, Savannah and metro Atlanta. Next to the community bank it runs four specialty lending lines: senior housing, marine vessel loans, government-guaranteed loans and mortgage warehouse finance. It listed on the NYSE in July 2025. We think the market is still pricing it like an ordinary small bank, while its margin has widened for most of the last two years and the company has started returning capital through a buyback and a higher dividend.
The evidence
The bank earns more on its money. The net interest margin was 3.70% in the September 2026 quarter, against 3.58% a year earlier and 3.21% in the December 2024 quarter. Deposit costs fell to 2.48% from 2.72%, and net interest income rose 12% to $21.5M (Q3 releases, Oct 2025 and Oct 2026).
Earnings grew before any help from reserves. Pre-tax, pre-provision earnings were $11.1M in the quarter, up 18% from $9.4M a year earlier, and up 20% over nine months, to $29.3M from $24.4M. Quarterly net income was $8.8M against $6.7M, and nine-month net income $22.4M against $17.8M (Q3 release, Oct 2026).
Loans are growing and bad assets are shrinking. Loans held for investment were $1.79B at 30 Sep 2026, up 15% from $1.55B a year earlier. Nonperforming assets fell to $15.1M, 0.62% of assets, from $18.3M (0.79%) at the end of 2025, and net charge-offs ran at an annualized 0.01% (Q3 release).
Capital is going back to shareholders. Under the $15M buyback that started on 1 May 2026, the company bought 334,206 shares by 30 Sep, 48,491 at $25.48 in the June quarter and 285,715 at $27.10 in the September quarter, about 2.8% of the stock (buyback 8-K, May 2026; Q2 10-Q; Q3 release). The quarterly dividend goes to $0.06 from $0.05, payable 24 Nov.
What the market is missing
At the 20 Oct close of $27.10 the stock trades at 1.24 times tangible book of $21.90 a share and about 11 times the last four quarters' earnings of $2.39 a share, for a market value of about $318M. That is the price of a plain community bank, for one whose margin has risen from 3.21% to 3.70% in under two years and whose pre-tax earnings before reserves grew 18% in the quarter. About $6.0M was left on the buyback after September, and the plan runs to 30 Apr 2027.
The risks
Part of the quarter will not repeat. A $429K release of loan-loss reserves replaced a $653K charge a year earlier, and gains on selling government-guaranteed loans jumped to $1.56M from $0.61M. Lending is concentrated: senior housing, mostly assisted living and memory care, is 17.3% of loans, and its substandard loans rose to $10.9M from $6.4M a year earlier; marine loans are 17.9% and income-producing commercial real estate 25.1%. Total loans were flat in the quarter because loans held for sale fell, and core deposits fell $20.0M. Insider buying is token, a director and the CFO sold more than insiders bought this year, and Patriot, a private equity firm that has backed the bank since 2017, cut its stake to 4.8% from 9.67% at the proxy date.
What would change our mind
The margin turning down for more than a quarter, senior housing substandard loans rising again when the 10-Q gives the detail, nonperforming assets climbing back above the end-2025 level, or the buyback stopping while large holders keep selling.
Sources: CoastalSouth Q3 2026 results release (19 Oct 2026); Q3 2025 results release (20 Oct 2025); Q2 2026 results release (20 Jul 2026); Q2 2026 10-Q (7 Aug 2026); 10-K for 2025 (12 Mar 2026); buyback 8-K (1 May 2026); proxy statement (13 Mar 2026); Patriot Financial Partners 13G/A (18 Aug 2026); close from Yahoo Finance and Nasdaq, 20 Oct 2026.
By the numbers
| Quarter | Revenue | Gross margin | Net income | Cash | Debt | Diluted shares | Filing |
|---|---|---|---|---|---|---|---|
| Q2 2630 June 2026 | n/a | n/a | $7.3M | $34.2M | n/a | 12.4M | 10-Q, 7 August 2026 |
| Q1 2631 March 2026 | n/a | n/a | $6.3M | $62.6M | n/a | 12.4M | 10-Q, 8 May 2026 |
| Q4 25*31 December 2025 | n/a | n/a | $7.1M | $79.8M | n/a | n/a | 10-K, 12 March 2026 |
| Q3 2530 September 2025 | n/a | n/a | $6.7M | $26.3M | n/a | 12.3M | 10-Q, 7 November 2025 |
| Q2 2530 June 2025 | n/a | n/a | $6.0M | $43.3M | n/a | 10.6M | 10-Q, 7 August 2026 |
| Q1 2531 March 2025 | n/a | n/a | $5.0M | $98.5M | n/a | 10.6M | 10-Q, 8 May 2026 |
| Q4 24*31 December 2024 | n/a | n/a | $5.7M | $68.0M | n/a | n/a | 10-K, 12 March 2026 |
| Q3 2430 September 2024 | n/a | n/a | $7.9M | $61.3M | n/a | 10.5M | 10-Q, 7 November 2025 |
Source: the company's 10-Q and 10-K filings on SEC EDGAR, as tagged in their XBRL data. Each quarter uses the most recent filing that reports it, so restated quarters compare cleanly. Quarters are labelled by the calendar quarter they end in. Debt is current plus long-term debt; net income is as reported, including any discontinued operations. *Fourth quarter: the full year in the 10-K less the first nine months. n/a: not reported for that quarter on its own.
Insiders
Directors and executive officers as a group (13 persons), including 354,500 exercisable options and 34,000 vesting RSUs own 15.11% of the shares (Director Joseph Topper Jr. 4.34% is the largest insider; Patriot Financial Partners, a private equity backer since 2017, is separate and cut its stake to 4.8% at 14 Aug 2026 from 9.67% in the proxy), according to the DEF 14A 2026 filed 13 March 2026, as of 5 March 2026.
| Date | Who | Shares bought | Price | Value | Filing |
|---|---|---|---|---|---|
| 7 August 2026 | James S MacleodDirector | 238 | $28.15 | $7K | Form 4 |
| 6 August 2026 | James S MacleodDirector | 96 | $27.61 | $3K | Form 4 |
| 9 March 2026 | Stephen R. StonePRESIDENT AND CEO | 200 | $24.15 | $5K | Form 4 |
| 10 February 2026 | Michael B HighDirector | 1,500 | $25.14 | $38K | Form 4 |
Open-market purchases (Form 4, transaction code P) over the last twelve months. Sales, grants and option exercises are not shown.
What to watch
- By 16 Nov 2026
The Q3 2026 10-Q, with the full loan detail, including the senior housing book after its $60.0M increase in the quarter (45-day deadline for a non-accelerated filer; last year's came on 7 Nov). 10-K for 2025 (filer status); Q3 2026 results release
- 24 Nov 2026
First payment of the higher $0.06 quarterly dividend, up from $0.05 (record date 10 Nov). Q3 2026 results release (19 Oct 2026)
- 30 Apr 2027
The $15M buyback plan expires unless extended; about $6.0M was left after the September quarter. 8-K (1 May 2026); Q2 2026 10-Q; Q3 2026 results release
Sources: Q3 2026 results release (19 Oct 2026), Q2 2026 10-Q, close 20 Oct 2026.
Market value: shares outstanding on the latest SEC filing cover page, times the latest price.