• Five Star Bancorp Announces First Quarter 2025 Results

    Source: Nasdaq GlobeNewswire / 28 Apr 2025 18:30:01   America/New_York

    RANCHO CORDOVA, Calif., April 28, 2025 (GLOBE NEWSWIRE) -- Five Star Bancorp (Nasdaq: FSBC) (“Five Star” or the “Company”), a holding company that operates through its wholly owned banking subsidiary, Five Star Bank (the “Bank”), today reported net income of $13.1 million for the three months ended March 31, 2025, as compared to $13.3 million for the three months ended December 31, 2024 and $10.6 million for the three months ended March 31, 2024.

    First Quarter Highlights

    Performance and operating highlights for the Company for the periods noted below included the following:

     Three months ended
    (in thousands, except per share and share data)March 31,
    2025    		 December 31,
    2024    		 March 31,
    2024
    Return on average assets (“ROAA”) 1.30%  1.31%  1.22%
    Return on average equity (“ROAE”) 13.28%  13.48%  14.84%
    Pre-tax income$18,391  $19,367  $14,961 
    Pre-tax, pre-provision income(1)$20,291  $20,667  $15,861 
    Net income$13,111  $13,317  $10,631 
    Basic earnings per common share$0.62  $0.63  $0.62 
    Diluted earnings per common share$0.62  $0.63  $0.62 
    Weighted average basic common shares outstanding 21,209,881   21,182,143   17,190,867 
    Weighted average diluted common shares outstanding 21,253,588   21,235,318   17,272,994 
    Shares outstanding at end of period 21,329,235   21,319,083   17,353,251 
                
    (1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.
                

    James E. Beckwith, President and Chief Executive Officer, commented:

    “The strength of Five Star Bank’s first quarter 2025 financial results is emblematic of a reputation built on an unwavering commitment to customers and community partners who rely on our speed to serve and certainty of execution for their own successes. This differentiated customer experience has created great demand for our services and seized market opportunities in San Francisco. As we continue to grow our presence, we now have 31 San Francisco Bay Area employees. As of March 31, 2025 our San Francisco Bay Area operations had $379.8 million in total deposits.

    At the Company level, total loans held for investment increased by $89.1 million, or 2.52% (10.09% when annualized). Total deposits increased by $178.4 million, or 5.01% (20.05% when annualized), with wholesale deposits increasing by $130.0 million, or 23.21%, and non-wholesale deposits increasing by $48.4 million, or 1.61%. Short-term borrowings remained at zero as of March 31, 2025 and December 31, 2024. Net interest margin increased by nine basis points to 3.45% and our efficiency ratio increased to 42.58%, as compared to 41.21% for the fourth quarter of 2024, while cost of funds decreased nine basis points to 2.56%.

    In the first quarter of 2025, we were pleased to declare another cash dividend of $0.20 per share. We were also pleased to have been ranked third among best-performing banks in the nation by S&P Global Market Intelligence (among banks with assets between $3 billion and $10 billion).

    As we execute on the expansion of industry verticals and our presence in new geographies to meet customer demand, we expect the ongoing acceleration of our growth to benefit our customers, employees, and shareholders. We also expect our demonstrated ability to adapt to changing economic conditions to serve us well into the future as we remain vigilant and focused on disciplined business practices. We thank our employees for their outstanding commitment to ensuring Five Star Bank remains a safe, trusted, and steadfast banking partner.”

    Financial highlights during the quarter included the following:

    • The San Francisco Bay Area team increased from 27 to 31 employees who generated deposit balances totaling $379.8 million at March 31, 2025, an increase of $87.4 million from December 31, 2024.
    • Cash and cash equivalents were $452.6 million, representing 12.11% of total deposits at March 31, 2025, as compared to 9.90% at December 31, 2024.
    • Total deposits increased by $178.4 million, or 5.01%, during the three months ended March 31, 2025, due to increases in both non-wholesale and wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits. During the three months ended March 31, 2025, non-wholesale deposits increased by $48.4 million, or 1.61%, and wholesale deposits increased by $130.0 million, or 23.21%.
    • The Company had no short-term borrowings at March 31, 2025 or December 31, 2024.
    • Consistent, disciplined management of expenses contributed to our efficiency ratio of 42.58% for the three months ended March 31, 2025, as compared to 41.21% for the three months ended December 31, 2024.
    • For the three months ended March 31, 2025, net interest margin was 3.45%, as compared to 3.36% for the three months ended December 31, 2024 and 3.14% for the three months ended March 31, 2024. The effective Federal Funds rate was 4.33% as of March 31, 2025, remaining constant from December 31, 2024 and decreasing from 5.33% at March 31, 2024.
    • Other comprehensive income was $0.7 million during the three months ended March 31, 2025. Unrealized losses, net of tax effect, on available-for-sale securities were $11.6 million as of March 31, 2025. Total carrying value of held-to-maturity and available-for-sale securities represented 0.06% and 2.35% of total interest-earning assets, respectively, as of March 31, 2025.
    • The Company’s common equity Tier 1 capital ratio was 11.00% and 11.02% as of March 31, 2025 and December 31, 2024, respectively. The Bank continues to meet all requirements to be considered “well-capitalized” under applicable regulatory guidelines.
    • Loan and deposit growth in the three and twelve months ended March 31, 2025 was as follows:
     (in thousands)March 31,
    2025    		 December 31,
    2024    		 $ Change % Change
     Loans held for investment$3,621,819 $3,532,686 $89,133 2.52%
     Non-interest-bearing deposits 933,652  922,629  11,023 1.19%
     Interest-bearing deposits 2,802,702  2,635,365  167,337 6.35%
             
     (in thousands)March 31,
    2025    		 March 31,
    2024    		 $ Change % Change
     Loans held for investment$3,621,819 $3,104,130 $517,689 16.68%
     Non-interest-bearing deposits 933,652  817,388  116,264 14.22%
     Interest-bearing deposits 2,802,702  2,138,384  664,318 31.07%
                 
    • The ratio of nonperforming loans to loans held for investment at period end remained at 0.05% from December 31, 2024 to March 31, 2025.
    • The Company’s Board of Directors declared on January 16, 2025, and the Company subsequently paid, a cash dividend of $0.20 per share during the three months ended March 31, 2025. The Company’s Board of Directors subsequently declared another cash dividend of $0.20 per share on April 17, 2025, which the Company expects to pay on May 12, 2025 to shareholders of record as of May 5, 2025.

    Summary Results

    Three months ended March 31, 2025, as compared to three months ended December 31, 2024

    The Company’s net income was $13.1 million for the three months ended March 31, 2025, as compared to $13.3 million for the three months ended December 31, 2024. Net interest income increased by $0.5 million, primarily due to a decrease in interest expense due to lower average rates on deposits, partially offset by a decrease in interest income driven by lower balances and yields on interest-earning deposits in banks, as compared to the three months ended December 31, 2024. The provision for credit losses increased by $0.6 million, reflecting adjustments to expectations for credit losses based on economic trends and forecasts in the three months ended March 31, 2025 compared to the three months ended December 31, 2024. Non-interest income decreased by $0.3 million, primarily due to a reduction in income received on equity investments in venture-backed funds during the three months ended March 31, 2025, as compared to the three months ended December 31, 2024. Non-interest expense increased by $0.6 million, primarily related to an increase in salaries and employee benefits, partially offset by decreases in advertising, promotional, and other operating expenses during the three months ended March 31, 2025, as compared to the three months ended December 31, 2024.

    Three months ended March 31, 2025, as compared to three months ended March 31, 2024

    The Company’s net income was $13.1 million for the three months ended March 31, 2025, as compared to $10.6 million for the three months ended March 31, 2024. Net interest income increased by $7.2 million, primarily due to an increase in interest income driven by a higher balance of loans with higher yields, partially offset by an increase in interest expense due to larger average deposit balances, as compared to the three months ended March 31, 2024. The provision for credit losses increased by $1.0 million, relating to loan growth and adjustments to expectations for credit losses based on economic trends and forecasts during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. Non-interest income decreased by $0.5 million, primarily due to a reduction in income received on equity investments in venture-backed funds during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. Non-interest expense increased by $2.3 million during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, with an increase in salaries and employee benefits related to increased headcount as the leading driver.

    The following is a summary of the components of the Company’s operating results and performance ratios for the periods indicated:

      Three months ended    
    (in thousands, except per share data) March 31,
    2025    		 December 31,
    2024    		 $ Change % Change
    Selected operating data:        
    Net interest income $33,977  $33,489  $488  1.46%
    Provision for credit losses  1,900   1,300   600  46.15%
    Non-interest income  1,359   1,666   (307) (18.43)%
    Non-interest expense  15,045   14,488   557  3.84%
    Pre-tax income  18,391   19,367   (976) (5.04)%
    Provision for income taxes  5,280   6,050   (770) (12.73)%
    Net income $13,111  $13,317  $(206) (1.55)%
    Earnings per common share:        
    Basic $0.62  $0.63  $(0.01) (1.59)%
    Diluted $0.62  $0.63  $(0.01) (1.59)%
    Performance and other financial ratios:        
    ROAA  1.30%  1.31%    
    ROAE  13.28%  13.48%    
    Net interest margin  3.45%  3.36%    
    Cost of funds  2.56%  2.65%    
    Efficiency ratio  42.58%  41.21%    
             
      Three months ended    
    (in thousands, except per share data) March 31,
    2025    		 March 31,
    2024    		 $ Change % Change
    Selected operating data:        
    Net interest income $33,977  $26,744  $7,233  27.05%
    Provision for credit losses  1,900   900   1,000  111.11%
    Non-interest income  1,359   1,833   (474) (25.86)%
    Non-interest expense  15,045   12,716   2,329  18.32%
    Pre-tax income  18,391   14,961   3,430  22.93%
    Provision for income taxes  5,280   4,330   950  21.94%
    Net income $13,111  $10,631  $2,480  23.33%
    Earnings per common share:        
    Basic $0.62  $0.62  $—  —%
    Diluted $0.62  $0.62  $—  —%
    Performance and other financial ratios:        
    ROAA  1.30%  1.22%    
    ROAE  13.28%  14.84%    
    Net interest margin  3.45%  3.14%    
    Cost of funds  2.56%  2.62%    
    Efficiency ratio  42.58%  44.50%    
                 

    Balance Sheet Summary

    (in thousands) March 31,
    2025    		 December 31,
    2024    		 $ Change % Change
    Selected financial condition data:        
    Total assets $4,245,057 $4,053,278 $191,779  4.73%
    Cash and cash equivalents  452,571  352,343  100,228  28.45%
    Total loans held for investment  3,621,819  3,532,686  89,133  2.52%
    Total investments  99,696  100,914  (1,218) (1.21)%
    Total liabilities  3,838,606  3,656,654  181,952  4.98%
    Total deposits  3,736,354  3,557,994  178,360  5.01%
    Subordinated notes, net  73,932  73,895  37  0.05%
    Total shareholders’ equity  406,451  396,624  9,827  2.48%
                  
    • Insured and collateralized deposits were approximately $2.5 billion, representing 67.55% of total deposits as of March 31, 2025, as compared to 66.92% as of December 31, 2024. Net uninsured and uncollateralized deposits were approximately $1.2 billion as of March 31, 2025, remaining constant from December 31, 2024.
    • Non-wholesale deposit accounts constituted 81.53% of total deposits as of March 31, 2025, as compared to 84.26% at December 31, 2024. Deposit relationships of greater than $5 million represented 60.87% of total deposits, as compared to 61.13% as of December 31, 2024, and had an average age of approximately 8.80 years as of March 31, 2025, as compared to 9.28 years as of December 31, 2024.
    • Cash and cash equivalents as of March 31, 2025 were $452.6 million, representing 12.11% of total deposits at March 31, 2025, as compared to 9.90% as of December 31, 2024.
    • Total liquidity (consisting of cash and cash equivalents and unused and immediately available borrowing capacity as set forth below) was approximately $2.0 billion as of March 31, 2025, as compared to $1.9 billion at December 31, 2024.
       March 31, 2025
     (in thousands) Line of Credit Letters of Credit Issued Borrowings Available
     Federal Home Loan Bank of San Francisco (“FHLB”) advances $1,276,072 $731,500 $— $544,572
     Federal Reserve Discount Window  856,366  —  —  856,366
     Correspondent bank lines of credit  175,000  —  —  175,000
     Cash and cash equivalents  —  —  —  452,571
     Total $2,307,438 $731,500 $— $2,028,509
                  

    The increase in total assets from December 31, 2024 to March 31, 2025 was primarily due to a $100.2 million increase in cash and cash equivalents and an $89.1 million increase in total loans held for investment. The $100.2 million increase in cash and cash equivalents primarily resulted from net cash inflows related to financing and operating activities of $174.1 million and $15.5 million, respectively, partially offset by net cash outflows related to investing activities of $89.3 million. The $89.1 million increase in total loans held for investment between December 31, 2024 and March 31, 2025 was a result of $259.3 million in loan originations and advances, partially offset by $65.6 million and $104.6 million in loan payoffs and paydowns, respectively. The $89.1 million increase in total loans held for investment included $19.8 million in purchases of loans within the consumer concentration of the loan portfolio.

    The increase in total liabilities from December 31, 2024 to March 31, 2025 was primarily due to an increase in interest-bearing deposits of $167.3 million. The increase in interest-bearing deposits was largely due to increases in time and money market deposits of $131.2 million and $52.2 million, respectively.

    The increase in total shareholders’ equity from December 31, 2024 to March 31, 2025 was primarily a result of net income recognized of $13.1 million and a $0.7 million increase in accumulated other comprehensive income, partially offset by $4.3 million in cash dividends paid during the period.

    Net Interest Income and Net Interest Margin

    The following is a summary of the components of net interest income for the periods indicated:

      Three months ended    
    (in thousands) March 31,
    2025    		 December 31,
    2024    		 $ Change % Change
    Interest and fee income $57,087  $57,745  $(658) (1.14)%
    Interest expense  23,110   24,256   (1,146) (4.72)%
    Net interest income $33,977  $33,489  $488  1.46%
    Net interest margin  3.45%  3.36%    
             
      Three months ended    
    (in thousands) March 31,
    2025    		 March 31,
    2024    		 $ Change % Change
    Interest and fee income $57,087  $47,541  $9,546  20.08%
    Interest expense  23,110   20,797   2,313  11.12%
    Net interest income $33,977  $26,744  $7,233  27.05%
    Net interest margin  3.45%  3.14%    


    The following table shows the components of net interest income and net interest margin for the quarterly periods indicated:

      Three months ended
      March 31, 2025 December 31, 2024 March 31, 2024
    (in thousands) Average
    Balance    		 Interest
    Income/
    Expense    		 Yield/
    Rate    		 Average
    Balance    		 Interest
    Income/
    Expense    		 Yield/
    Rate    		 Average
    Balance    		 Interest
    Income/
    Expense    		 Yield/
    Rate
    Assets                  
    Interest-earning deposits in banks $328,571 $3,575 4.41% $363,828 $4,335 4.74% $233,002 $3,102 5.35%
    Investment securities  100,474  581 2.34%  103,930  607 2.33%  109,177  653 2.41%
    Loans held for investment and sale  3,567,992  52,931 6.02%  3,498,109  52,803 6.01%  3,082,290  43,786 5.71%
    Total interest-earning assets  3,997,037  57,087 5.79%  3,965,867  57,745 5.79%  3,424,469  47,541 5.58%
    Interest receivable and other assets, net  93,543      91,736      93,983    
    Total assets $4,090,580     $4,057,603     $3,518,452    
                       
    Liabilities and shareholders’ equity                  
    Interest-bearing transaction accounts $303,822 $1,112 1.48% $298,518 $1,249 1.66% $300,325 $1,126 1.51%
    Savings accounts  123,599  772 2.53%  127,298  887 2.77%  124,561  861 2.78%
    Money market accounts  1,540,879  12,435 3.27%  1,596,116  13,520 3.37%  1,410,264  12,155 3.47%
    Time accounts  706,528  7,629 4.38%  617,596  7,438 4.79%  429,586  5,369 5.03%
    Subordinated notes and other borrowings  73,908  1,162 6.37%  73,872  1,162 6.25%  82,775  1,286 6.25%
    Total interest-bearing liabilities  2,748,736  23,110 3.41%  2,713,400  24,256 3.56%  2,347,511  20,797 3.56%
    Demand accounts  910,954      921,881      842,105    
    Interest payable and other liabilities  30,389      29,234      40,730    
    Shareholders’ equity  400,501      393,088      288,106    
    Total liabilities & shareholders’ equity $4,090,580     $4,057,603     $3,518,452    
                       
    Net interest spread     2.38%     2.23%     2.02%
    Net interest income/margin   $33,977 3.45%   $33,489 3.36%   $26,744 3.14%


    Net interest income during the three months ended March 31, 2025 increased $0.5 million, or 1.46%, to $34.0 million compared to $33.5 million during the three months ended December 31, 2024. Net interest margin totaled 3.45% for the three months ended March 31, 2025, an increase of nine basis points compared to the prior quarter. The increase in net interest income is primarily attributable to a $1.1 million decrease in interest expense, driven by a 15 basis point decrease in the average rate on interest-bearing deposits compared to the prior quarter. The decrease in interest expense was partially offset by a $0.7 million decrease in interest income, primarily due to a $35.3 million, or 9.69%, decrease in the average balance of interest-earning deposits in banks, combined with a 33 basis point decrease in the average yield on interest-earning deposits in banks.

    As compared to the three months ended March 31, 2024, net interest income increased $7.2 million, or 27.05%, to $34.0 million from $26.7 million. Net interest margin totaled 3.45% for the three months ended March 31, 2025, an increase of 31 basis points compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $9.1 million in loan interest income due to a $485.7 million, or 15.76%, increase in the average balance of loans and a 31 basis point improvement in the average yield on loans during the three months ended March 31, 2025 compared to the same quarter of the prior year. The increase in interest income was partially offset by a $2.4 million increase in deposit interest expense compared to the same quarter of the prior year. The increase in deposit interest expense is primarily attributable to a $478.9 million, or 15.42%, increase in the average balance of deposits and a five basis point increase in the average cost of deposits during the three months ended March 31, 2025 compared to the same quarter of the prior year.

    Loans by Type

    The following table provides loan balances, excluding deferred loan fees, by type as of March 31, 2025:

    (in thousands)  
    Real estate:  
    Commercial $2,941,201 
    Commercial land and development  3,556 
    Commercial construction  113,002 
    Residential construction  5,747 
    Residential  34,053 
    Farmland  43,643 
    Commercial:  
    Secured  170,525 
    Unsecured  34,970 
    Consumer and other  277,093 
    Net deferred loan fees  (1,971)
    Total loans held for investment $3,621,819 


    Interest-bearing Deposits

    The following table provides interest-bearing deposit balances by type as of March 31, 2025:

    (in thousands)  
    Interest-bearing transaction accounts $295,633 
    Money market accounts  1,577,473 
    Savings accounts  128,210 
    Time accounts  801,386 
    Total interest-bearing deposits $2,802,702 


    Asset Quality

    Allowance for Credit Losses

    At March 31, 2025, the Company’s allowance for credit losses was $39.2 million, as compared to $37.8 million at December 31, 2024. The $1.4 million increase in the allowance is due to a $2.2 million provision for credit losses recorded during the three months ended March 31, 2025, partially offset by net charge-offs mainly attributable to commercial and industrial loans of $0.7 million, during the same period.

    The Company’s ratio of nonperforming loans to loans held for investment remained at 0.05% from December 31, 2024 to March 31, 2025. Loans designated as watch decreased from $123.4 million to $112.0 million between December 31, 2024 and March 31, 2025. Loans designated as substandard increased from $2.6 million to $3.7 million between December 31, 2024 and March 31, 2025. There were no loans with doubtful risk grades at March 31, 2025 or December 31, 2024.

    A summary of the allowance for credit losses by loan class is as follows:

      March 31, 2025 December 31, 2024
    (in thousands) Amount % of Total Amount % of Total
    Real estate:        
    Commercial $27,027 68.91% $25,864 68.44%
    Commercial land and development  70 0.18%  78 0.21%
    Commercial construction  2,227 5.68%  2,268 6.00%
    Residential construction  78 0.20%  64 0.17%
    Residential  279 0.71%  270 0.71%
    Farmland  598 1.52%  607 1.61%
       30,279 77.20%  29,151 77.14%
    Commercial:        
    Secured  5,905 15.05%  5,866 15.52%
    Unsecured  403 1.03%  278 0.74%
       6,308 16.08%  6,144 16.26%
    Consumer and other  2,637 6.72%  2,496 6.60%
    Total allowance for credit losses $39,224 100.00% $37,791 100.00%


    The ratio of allowance for credit losses to loans held for investment was 1.08% at March 31, 2025, as compared to 1.07% at December 31, 2024.

    Non-interest Income

    The following table presents the key components of non-interest income for the periods indicated:

      Three months ended    
    (in thousands) March 31,
    2025    		 December 31,
    2024    		 $ Change % Change
    Service charges on deposit accounts $215 $179 $36  20.11%
    Gain on sale of loans  125  150  (25) (16.67)%
    Loan-related fees  448  400  48  12.00%
    FHLB stock dividends  331  332  (1) (0.30)%
    Earnings on bank-owned life insurance  161  182  (21) (11.54)%
    Other income  79  423  (344) (81.32)%
    Total non-interest income $1,359 $1,666 $(307) (18.43)%


    Service charges on deposit accounts.     The increase resulted primarily from individually immaterial increases in fees earned for services and products to support deposit accounts including, but not limited to, service charges, check order fees, and debit card income.

    Gain on sale of loans. The decrease resulted from a decline in the volume and effective yield of loans sold. During the three months ended March 31, 2025, approximately $1.7 million of loans were sold with an effective yield of 7.24%, as compared to approximately $2.0 million of loans sold with an effective yield of 7.60% during the three months ended December 31, 2024.

    Other income. The decrease resulted primarily from $0.3 million of income received on equity investments in venture-backed funds during the three months ended December 31, 2024 which did not reoccur during the three months ended March 31, 2025.

    The following table presents the key components of non-interest income for the periods indicated:

      Three months ended   
    (in thousands) March 31,
    2025    		 March 31,
    2024    		 $ Change % Change
    Service charges on deposit accounts $215 $188 $27  14.36%
    Gain on sale of loans  125  369  (244) (66.12)%
    Loan-related fees  448  429  19  4.43%
    FHLB stock dividends  331  332  (1) (0.30)%
    Earnings on bank-owned life insurance  161  142  19  13.38%
    Other income  79  373  (294) (78.82)%
    Total non-interest income $1,359 $1,833 $(474) (25.86)%


    Gain on sale of loans.     The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold. During the three months ended March 31, 2025, approximately $1.7 million of loans were sold with an effective yield of 7.24%, as compared to approximately $5.2 million of loans sold with an effective yield of 7.08% during the three months ended March 31, 2024.

    Other income. The decrease related primarily to $0.3 million of income received on equity investments in venture-backed funds during the three months ended March 31, 2024, which did not reoccur during the three months ended March 31, 2025.

    Non-interest Expense

    The following table presents the key components of non-interest expense for the periods indicated:

      Three months ended    
    (in thousands) March 31,
    2025    		 December 31,
    2024    		 $ Change % Change
    Salaries and employee benefits $9,134 $8,360 $774  9.26%
    Occupancy and equipment  637  649  (12) (1.85)%
    Data processing and software  1,457  1,369  88  6.43%
    Federal Deposit Insurance Corporation (“FDIC”) insurance  455  440  15  3.41%
    Professional services  913  774  139  17.96%
    Advertising and promotional  522  752  (230) (30.59)%
    Loan-related expenses  319  321  (2) (0.62)%
    Other operating expenses  1,608  1,823  (215) (11.79)%
    Total non-interest expense $15,045 $14,488 $557  3.84%


    Salaries and employee benefits.     The increase related primarily to: (i) a $0.9 million increase in salaries, benefits, and bonus expense; and (ii) a $0.3 million decrease in loan origination costs due to fewer loan originations, net of purchased consumer loans. The increase was partially offset by a $0.5 million decrease in commissions expense due to fewer loan originations, net of purchased consumer loans, period-over-period.

    Professional services. The increase was primarily due to $0.1 million in fees paid for compensation consulting services, which did not occur in the three months ended December 31, 2024.

    Advertising and promotional. The decrease related primarily to a $0.1 million decrease in expenses related to sponsored events and partnerships and $0.1 million decrease related to business development expenses.

    Other operating expenses. The decrease was primarily due to a $0.1 million decrease in director expenses, such as conferences and meetings, combined with individually immaterial decreases in expenses related to operations, including administrative and operational expenses.

    The following table presents the key components of non-interest expense for the periods indicated:

      Three months ended    
    (in thousands) March 31,
    2025    		 March 31,
    2024    		 $ Change % Change
    Salaries and employee benefits $9,134 $7,577 $1,557 20.55%
    Occupancy and equipment  637  626  11 1.76%
    Data processing and software  1,457  1,157  300 25.93%
    FDIC insurance  455  400  55 13.75%
    Professional services  913  707  206 29.14%
    Advertising and promotional  522  460  62 13.48%
    Loan-related expenses  319  297  22 7.41%
    Other operating expenses  1,608  1,492  116 7.77%
    Total non-interest expense $15,045 $12,716 $2,329 18.32%


    Salaries and employee benefits.     The increase related primarily to: (i) a $1.6 million increase in salaries, benefits, and bonus expense, mainly related to a 13.19% increase in headcount between March 31, 2024 and March 31, 2025; and (ii) a $0.1 million increase in commissions paid. This increase was partially offset by a $0.2 million increase in loan origination costs due to a greater number of loan originations, net of purchased consumer loans, period-over-period.

    Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; and (iii) an increased number of licenses required for new users on our loan origination and documentation system.

    Professional services. The increase was primarily due to $0.1 million in fees paid for compensation consulting services and $0.1 million in consulting services relating to operations in San Francisco, neither of which occurred in the three months ended March 31, 2024.

    Other operating expenses. The increase was primarily due to individually immaterial increases in expenses related to operations, including administrative and operational expenses such as travel, subscriptions, and professional association memberships.

    Provision for Income Taxes

    Three months ended March 31, 2025, as compared to three months ended December 31, 2024

    Provision for income taxes decreased to $5.3 million for the three months ended March 31, 2025 from $6.1 million for the three months ended December 31, 2024, which was primarily due to: (i) a slight decline in taxable income recognized during the three months ended March 31, 2025; and (ii) a $0.6 million provision to return true-up recorded during the three months ended December 31, 2024 related primarily to the timing of recognition of low income housing tax credits, which did not reoccur during the three months ended March 31, 2025. The effective tax rates were 28.71% and 31.24% for the three months ended March 31, 2025 and December 31, 2024, respectively.

    Three months ended March 31, 2025, as compared to three months ended March 31, 2024

    Provision for income taxes increased by $1.0 million, or 21.94%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This increase was primarily driven by an increase in taxable income. The effective tax rates were 28.71% and 28.94% for the three months ended March 31, 2025 and March 31, 2024, respectively.

    Webcast Details

    Five Star Bancorp will host a live webcast for analysts and investors on Tuesday, April 29, 2025 at 1:00 PM ET (10:00 AM PT) to discuss its first quarter financial results. To view the live webcast, visit the “News & Events” section of the Company’s website under “Events” at https://investors.fivestarbank.com/news-events/events. The webcast will be archived on the Company’s website for a period of 90 days.

    About Five Star Bancorp

    Five Star is a bank holding company headquartered in Rancho Cordova, California. Five Star operates through its wholly owned banking subsidiary, Five Star Bank. The Bank has eight branches in Northern California.

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of the Company’s beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. The Company cautions that the forward-looking statements are based largely on the Company’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company’s control. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company’s control) and are subject to risks and uncertainties, which change over time, and other factors, which could cause actual results to differ materially from those currently anticipated. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. If one or more of the factors affecting the Company’s forward-looking information and statements proves incorrect, then the Company’s actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this press release. Therefore, the Company cautions you not to place undue reliance on the Company’s forward-looking information and statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 under the section entitled “Risk Factors,” and other documents filed by the Company with the Securities and Exchange Commission from time to time.

    The Company disclaims any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law.


    Condensed Financial Data (Unaudited)

      Three months ended
    (in thousands, except per share and share data) March 31,
    2025    		 December 31,
    2024    		 March 31,
    2024
    Revenue and Expense Data      
    Interest and fee income $57,087  $57,745  $47,541 
    Interest expense  23,110   24,256   20,797 
    Net interest income  33,977   33,489   26,744 
    Provision for credit losses  1,900   1,300   900 
    Net interest income after provision  32,077   32,189   25,844 
    Non-interest income:      
    Service charges on deposit accounts  215   179   188 
    Gain on sale of loans  125   150   369 
    Loan-related fees  448   400   429 
    FHLB stock dividends  331   332   332 
    Earnings on bank-owned life insurance  161   182   142 
    Other income  79   423   373 
    Total non-interest income  1,359   1,666   1,833 
    Non-interest expense:      
    Salaries and employee benefits  9,134   8,360   7,577 
    Occupancy and equipment  637   649   626 
    Data processing and software  1,457   1,369   1,157 
    FDIC insurance  455   440   400 
    Professional services  913   774   707 
    Advertising and promotional  522   752   460 
    Loan-related expenses  319   321   297 
    Other operating expenses  1,608   1,823   1,492 
    Total non-interest expense  15,045   14,488   12,716 
    Income before provision for income taxes  18,391   19,367   14,961 
    Provision for income taxes  5,280   6,050   4,330 
    Net income $13,111  $13,317  $10,631 
           
    Comprehensive Income      
    Net income $13,111  $13,317  $10,631 
    Net unrealized holding gain (loss) on securities available-for-sale during the period  1,030   (3,747)  (955)
    Less: Income tax expense (benefit) related to other comprehensive income (loss)  305   (1,108)  (282)
    Other comprehensive income (loss)  725   (2,639)  (673)
    Total comprehensive income $13,836  $10,678  $9,958 
           
    Share and Per Share Data      
    Earnings per common share:      
    Basic $0.62  $0.63  $0.62 
    Diluted  0.62   0.63   0.62 
    Book value per share  19.06   18.60   16.86 
    Tangible book value per share(1)  19.06   18.60   16.86 
    Weighted average basic common shares outstanding  21,209,881   21,182,143   17,190,867 
    Weighted average diluted common shares outstanding  21,253,588   21,235,318   17,272,994 
    Shares outstanding at end of period  21,329,235   21,319,083   17,353,251 
           
    Selected Financial Ratios      
    ROAA  1.30%  1.31%  1.22%
    ROAE  13.28%  13.48%  14.84%
    Net interest margin  3.45%  3.36%  3.14%
    Loan to deposit(2)  97.01%  99.38%  105.37%

    (1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.
    (2) Loan balance in loan to deposit ratio is total loans held for investment and sale at period end. Deposit balance in loan to deposit ratio is total deposits at period end.


    (in thousands) March 31,
    2025    		 December 31,
    2024    		 March 31,
    2024
    Balance Sheet Data      
    Cash and due from financial institutions $42,473  $33,882  $29,750 
    Interest-bearing deposits in banks  410,098   318,461   155,575 
    Time deposits in banks  4,024   4,121   5,878 
    Securities - available-for-sale, at fair value  97,111   98,194   105,006 
    Securities - held-to-maturity, at amortized cost  2,585   2,720   3,000 
    Loans held for sale  2,669   3,247   10,243 
    Loans held for investment  3,621,819   3,532,686   3,104,130 
    Allowance for credit losses  (39,224)  (37,791)  (34,653)
    Loans held for investment, net of allowance for credit losses  3,582,595   3,494,895   3,069,477 
    FHLB stock  15,000   15,000   15,000 
    Operating leases, right-of-use asset  5,944   6,245   6,932 
    Premises and equipment, net  1,524   1,584   1,569 
    Bank-owned life insurance  23,246   19,375   18,872 
    Interest receivable and other assets  57,788   55,554   55,058 
    Total assets $4,245,057  $4,053,278  $3,476,360 
           
    Non-interest-bearing deposits $933,652  $922,629  $817,388 
    Interest-bearing deposits  2,802,702   2,635,365   2,138,384 
    Total deposits  3,736,354   3,557,994   2,955,772 
    Subordinated notes, net  73,932   73,895   73,786 
    Other borrowings  —   —   120,000 
    Operating lease liability  6,591   6,857   7,320 
    Interest payable and other liabilities  21,729   17,908   26,902 
    Total liabilities  3,838,606   3,656,654   3,183,780 
           
    Common stock  302,788   302,531   220,804 
    Retained earnings  115,309   106,464   84,216 
    Accumulated other comprehensive loss, net of taxes  (11,646)  (12,371)  (12,440)
    Total shareholders’ equity  406,451   396,624   292,580 
    Total liabilities and shareholders’ equity $4,245,057  $4,053,278  $3,476,360 
           
    Quarterly Average Balance Data      
    Average loans held for investment and sale $3,567,992  $3,498,109  $3,082,290 
    Average interest-earning assets  3,997,037   3,965,867   3,424,469 
    Average total assets  4,090,580   4,057,603   3,518,452 
    Average deposits  3,585,782   3,561,409   3,106,841 
    Average total equity  400,501   393,088   288,106 
           
    Credit Quality      
    Allowance for credit losses to nonperforming loans  2,222.32%  2,101.78%  1,806.73%
    Nonperforming loans to loans held for investment  0.05%  0.05%  0.06%
    Nonperforming assets to total assets  0.04%  0.05%  0.06%
    Nonperforming loans plus performing loan modifications to loans held for investment  0.05%  0.05%  0.06%
           
    Capital Ratios      
    Total shareholders’ equity to total assets  9.57%  9.79%  8.42%
    Tangible shareholders’ equity to tangible assets(1)  9.57%  9.79%  8.42%
    Total capital (to risk-weighted assets)  13.97%  13.99%  12.34%
    Tier 1 capital (to risk-weighted assets)  11.00%  11.02%  9.13%
    Common equity Tier 1 capital (to risk-weighted assets)  11.00%  11.02%  9.13%
    Tier 1 leverage ratio  10.17%  10.05%  8.63%

    (1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.


    Non-GAAP Reconciliation (Unaudited)

    The Company uses financial information in its analysis of the Company’s performance that is not in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company’s financial condition, results of operations, and cash flows computed in accordance with GAAP. However, the Company acknowledges that its non-GAAP financial measures have a number of limitations. As such, investors should not view these disclosures as a substitute for results determined in accordance with GAAP. Additionally, these non-GAAP measures are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses, but may calculate them differently. Investors should understand how the Company and other companies each calculate their non-GAAP financial measures when making comparisons.

    Tangible shareholders’ equity to tangible assets is defined as total equity less goodwill and other intangible assets, divided by total assets less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholders’ equity to total assets. Management believes that tangible shareholders’ equity to tangible assets is a useful financial measure because it enables management, investors, and others to assess the Company’s financial health based on tangible capital. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible shareholders’ equity to tangible assets is the same as total shareholders’ equity to total assets at the end of each of the periods indicated.

    Tangible book value per share is defined as total shareholders’ equity less goodwill and other intangible assets, divided by the outstanding number of common shares at the end of the period. The most directly comparable GAAP financial measure is book value per share. Management believes that tangible book value per share is a useful financial measure because it enables management, investors, and others to assess the Company’s value and use of equity. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible book value per share is the same as book value per share at the end of each of the periods indicated.

    Pre-tax, pre-provision income is defined as pre-tax income plus provision for credit losses. The most directly comparable GAAP financial measure is pre-tax income. Management believes that pre-tax, pre-provision income is a useful financial measure because it enables management, investors, and others to assess the Company’s ability to generate operating profit and capital.

    The following reconciliation table provides a more detailed analysis of this non-GAAP financial measure:

      Three months ended
    (in thousands) March 31,
    2025    		 December 31,
    2024    		 March 31,
    2024
    Pre-tax, pre-provision income      
    Pre-tax income $18,391 $19,367 $14,961
    Add: provision for credit losses  1,900  1,300  900
    Pre-tax, pre-provision income $20,291 $20,667 $15,861


    Investor Contact:
    Heather C. Luck, Chief Financial Officer
    Five Star Bancorp
    (916) 626-5008
    hluck@fivestarbank.com

    Media Contact:
    Shelley R. Wetton, Chief Marketing Officer
    Five Star Bancorp
    (916) 284-7827
    swetton@fivestarbank.com


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