RANCHO CORDOVA, Calif., Oct. 27, 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 $16.3 million for the three months ended September 30, 2025, as compared to $14.5 million for the three months ended June 30, 2025 and $10.9 million for the three months ended September 30, 2024.
Third 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 September 30, June 30, September 30,
and share data) 2025 2025 2024
--------------- --------------- ---------------
Return on average
assets ("ROAA") 1.44% 1.37% 1.18%
Return on average
equity ("ROAE") 15.35% 14.17% 11.31%
Pre-tax income $ 22,234 $ 20,099 $ 15,241
Pre-tax,
pre-provision
income(1) $ 24,734 $ 22,599 $ 17,991
Net income $ 16,344 $ 14,508 $ 10,941
Basic earnings
per common
share $ 0.77 $ 0.68 $ 0.52
Diluted earnings
per common
share $ 0.77 $ 0.68 $ 0.52
Weighted average
basic common
shares
outstanding 21,231,563 21,225,831 21,182,143
Weighted average
diluted common
shares
outstanding 21,281,818 21,269,265 21,232,758
Shares
outstanding at
end of period 21,367,387 21,360,991 21,319,583
(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:
"Five Star Bank's third quarter results include outstanding growth in loans and core deposits attributable to our successful organic growth strategy that continues to fuel momentum and drive demand for our differentiated customer experience. During the quarter, total loans held for investment increased by $129.2 million, or 3.44% (13.76% when annualized), and total deposits increased by $208.8 million, or 5.36% (21.45% when annualized). Wholesale deposits decreased by $150.2 million, or 22.87%, while non-wholesale deposits increased by $359.0 million, or 11.09% (44.34% when annualized), during the same period.
Cost of funds decreased two basis points to 2.51% during the third quarter, while net interest margin increased by three basis points to 3.56%, and our efficiency ratio decreased to 40.13% compared to 41.03% for the second quarter. This quarter, we are pleased to have declared another cash dividend to shareholders, which exemplifies our commitment to shareholder value.
In the third quarter, we opened our ninth full-service office in Walnut Creek, California, in response to the demand for our services in the San Francisco Bay Area. Total deposits from the San Francisco Bay Area were $548.9 million as of September 30, 2025. In addition to the new Walnut Creek office, we are pleased with the growth of our previously announced Food, Agribusiness, and Diversified Industries business, where clients benefit from our Global Trade Services and exceptional treasury management tools.
Five Star Bank's success serves as a strong testimony to clients who value our team of committed professionals who provide authentic, relationship-based service. We will continue to ensure our technology stack, operating efficiencies, conservative underwriting practices, exceptional credit quality, and prudent approach to portfolio management benefit our customers, employees, community, and shareholders. As we look to the fourth quarter of 2025, we thank our employees for their outstanding commitment to ensuring Five Star Bank remains a safe, trusted, and steadfast banking partner."
Financial highlights as of and during the three months ended September 30, 2025 included the following:
-- The San Francisco Bay Area team increased from 34 to 36 employees and
generated deposit balances totaling $548.9 million at September 30, 2025,
an increase of $91.9 million from June 30, 2025.
-- The number of Business Development Officers remained steady at 40 from
June 30, 2025 to September 30, 2025.
-- Cash and cash equivalents were $580.4 million, representing 14.15% of
total deposits at September 30, 2025, as compared to 12.42% at June 30,
2025.
-- Total deposits increased by $208.8 million, or 5.36%, during the three
months ended September 30, 2025, with increases in non-wholesale deposits
exceeding decreases in wholesale deposits. The Company defines wholesale
deposits as brokered deposits and California Time Deposit Program
deposits. During the three months ended September 30, 2025, non-wholesale
deposits increased by $359.0 million, or 11.09%, and wholesale deposits
decreased by $150.2 million, or 22.87%.
-- The Company had no short-term borrowings at September 30, 2025 or
June 30, 2025.
-- Consistent, disciplined management of expenses contributed to our
efficiency ratio of 40.13% for the three months ended September 30, 2025,
as compared to 41.03% for the three months ended June 30, 2025 and 43.37%
for the three months ended September 30, 2024.
-- For the three months ended September 30, 2025, net interest margin was
3.56%, as compared to 3.53% for the three months ended June 30, 2025 and
3.37% for the three months ended September 30, 2024. The effective
federal funds rate decreased to 4.09% as of September 30, 2025 from 4.33%
at June 30, 2025 and 4.83% at September 30, 2024.
-- Other comprehensive loss was $2.1 million during the three months ended
September 30, 2025. Unrealized losses, net of tax effect, on
available-for-sale securities were $9.9 million as of September 30, 2025.
Total carrying value of held-to-maturity and available-for-sale
securities represented 0.05% and 2.12% of total interest-earning assets,
respectively, as of September 30, 2025.
-- The Company's common equity Tier 1 capital ratio was 10.77% and 10.85% as
of September 30, 2025 and June 30, 2025, 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
September 30, 2025 was as follows:
September June 30,
(in thousands) 30, 2025 2025 $ Change % Change
---------- ---------- -------- ----------
Loans held for
investment $3,887,259 $3,758,025 $129,234 3.44%
Non-interest-bearing
deposits 1,059,082 1,004,061 55,021 5.48%
Interest-bearing
deposits 3,044,356 2,890,561 153,795 5.32%
September September
(in thousands) 30, 2025 30, 2024 $ Change % Change
---------- ---------- -------- ----------
Loans held for
investment $3,887,259 $3,460,565 $426,694 12.33%
Non-interest-bearing
deposits 1,059,082 906,939 152,143 16.78%
Interest-bearing
deposits 3,044,356 2,493,040 551,316 22.11%
-- The ratio of nonperforming loans to loans held for investment at period
end decreased from 0.06% at June 30, 2025 to 0.05% at September 30, 2025.
-- The Company's Board of Directors declared on July 17, 2025, and the
Company subsequently paid, a cash dividend of $0.20 per share during the
three months ended September 30, 2025. The Company's Board of Directors
subsequently declared another cash dividend of $0.20 per share on
October 16, 2025, which the Company expects to pay on November 10, 2025
to shareholders of record as of November 3, 2025.
Summary Results
Three months ended September 30, 2025, as compared to three months ended June 30, 2025
The Company's net income was $16.3 million for the three months ended September 30, 2025, as compared to $14.5 million for the three months ended June 30, 2025. Net interest income increased by $2.8 million during the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, primarily due to an increase in interest income driven by loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth. The provision for credit losses remained at $2.5 million for the three months ended June 30, 2025 and September 30, 2025. Non-interest income increased by $0.2 million, primarily due to an increase in swap referral fees during the three months ended September 30, 2025, as compared to the three months ended June 30, 2025. Non-interest expense increased by $0.9 million during the three months ended September 30, 2025, as compared to the three months ended June 30, 2025, primarily due to salaries and employee benefits due to increased headcount.
Three months ended September 30, 2025, as compared to three months ended September 30, 2024
The Company's net income was $16.3 million for the three months ended September 30, 2025, as compared to $10.9 million for the three months ended September 30, 2024. Net interest income increased by $9.0 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to an increase in interest income driven by loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth. The provision for credit losses decreased by $0.3 million, with decreases in net charge-offs during the three months ended September 30, 2025 as the leading driver. Non-interest income increased by $0.6 million, primarily due to an overall improvement in earnings related to investments in venture-backed funds, partially offset by a decrease in the volume of loans sold during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Non-interest expense increased by $2.8 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to salaries and employee benefits due to increased headcount.
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 September June 30,
share data) 30, 2025 2025 $ Change % Change
-----------
Selected
operating
data:
Net interest
income $39,348 $36,515 $ 2,833 7.76%
Provision for
credit
losses 2,500 2,500 -- --%
Non-interest
income 1,966 1,810 156 8.62%
Non-interest
expense 16,580 15,726 854 5.43%
Pre-tax income 22,234 20,099 2,135 10.62%
Provision for
income taxes 5,890 5,591 299 5.35%
Net income $16,344 $14,508 $ 1,836 12.66%
====== ====== ===== ======
Earnings per
common share:
Basic $ 0.77 $ 0.68 $ 0.09 13.24%
Diluted $ 0.77 $ 0.68 $ 0.09 13.24%
Performance and
other financial
ratios:
ROAA 1.44% 1.37%
ROAE 15.35% 14.17%
Net interest
margin 3.56% 3.53%
Cost of funds 2.51% 2.53%
Efficiency
ratio 40.13% 41.03%
Three months ended
(in thousands,
except per September September
share data) 30, 2025 30, 2024 $ Change % Change
-----------
Selected
operating
data:
Net interest
income $39,348 $30,386 $ 8,962 29.49%
Provision for
credit
losses 2,500 2,750 (250) (9.09)%
Non-interest
income 1,966 1,381 585 42.36%
Non-interest
expense 16,580 13,776 2,804 20.35%
Pre-tax income 22,234 15,241 6,993 45.88%
Provision for
income taxes 5,890 4,300 1,590 36.98%
Net income $16,344 $10,941 $ 5,403 49.38%
====== ====== ===== ======
Earnings per
common share:
Basic $ 0.77 $ 0.52 $ 0.25 48.08%
Diluted $ 0.77 $ 0.52 $ 0.25 48.08%
Performance and
other financial
ratios:
ROAA 1.44% 1.18%
ROAE 15.35% 11.31%
Net interest
margin 3.56% 3.37%
Cost of funds 2.51% 2.72%
Efficiency
ratio 40.13% 43.37%
Balance Sheet Summary
September 30, June 30,
(in thousands) 2025 2025 $ Change % Change
------------- ---------- -------- ----------
Selected
financial
condition data:
Total assets $ 4,641,770 $4,413,473 $228,297 5.17%
Cash and cash
equivalents 580,447 483,810 96,637 19.97%
Total loans
held for
investment 3,887,259 3,758,025 129,234 3.44%
Total
investments 97,825 97,575 250 0.26%
Total
liabilities 4,210,462 3,996,731 213,731 5.35%
Total deposits 4,103,438 3,894,622 208,816 5.36%
Subordinated
notes, net 74,004 73,968 36 0.05%
Total
shareholders'
equity 431,308 416,742 14,566 3.50%
-- Insured and collateralized deposits were approximately $2.7 billion,
representing 65.25% of total deposits as of September 30, 2025, as
compared to 67.06% as of June 30, 2025. Net uninsured and
uncollateralized deposits were approximately $1.4 billion as of
September 30, 2025, increasing from $1.3 billion at June 30, 2025.
-- Non-wholesale deposit accounts constituted 87.66% of total deposits as of
September 30, 2025, as compared to 83.14% at June 30, 2025. Deposit
relationships of greater than $5 million represented 60.14% of total
deposits as of September 30, 2025, as compared to 59.91% as of June 30,
2025, and had an average age of approximately 7.98 years as of
September 30, 2025, as compared to 8.34 years as of June 30, 2025.
-- Total deposits as of September 30, 2025 were $4.1 billion, an increase of
$208.8 million, or 5.36%, from June 30, 2025, comprised of increases in
both interest-bearing and non-interest-bearing deposits. Interest-bearing
deposits added $171.6 million in growth, which was primarily due to the
opening of new money market deposit accounts during the quarter, adding
$141.3 million in new balances. Non-interest-bearing deposit growth was
driven by new accounts opened during the quarter, adding $28.8 million in
new balances.
-- Cash and cash equivalents as of September 30, 2025 were $580.4 million,
representing 14.15% of total deposits at September 30, 2025, as compared
to 12.42% as of June 30, 2025.
-- Total liquidity (consisting of cash and cash equivalents and unused and
immediately available borrowing capacity as set forth below) was
approximately $2.3 billion as of September 30, 2025, as compared to $2.2
billion at June 30, 2025.
September 30, 2025
----------------------------------------------------
Letters of
Line of Credit
(in thousands) Credit Issued Borrowings Available
------------- ----------- ------------ ----------
Federal Home
Loan Bank of
San Francisco
("FHLB")
advances $ 1,420,987 $ 762,500 $ -- $ 658,487
Federal Reserve
Discount
Window 918,370 -- -- 918,370
Correspondent
bank lines of
credit 185,000 -- -- 185,000
Cash and cash
equivalents -- -- -- 580,447
--------- ------- --- ------- ---------
Total $ 2,524,357 $ 762,500 $ -- $2,342,304
========= ======= === ======= =========
September December
(in thousands) 30, 2025 31, 2024 $ Change % Change
---------- ---------- --------- ----------
Selected
financial
condition data:
Total assets $4,641,770 $4,053,278 $588,492 14.52%
Cash and cash
equivalents 580,447 352,343 228,104 64.74%
Total loans
held for
investment 3,887,259 3,532,686 354,573 10.04%
Total
investments 97,825 100,914 (3,089) (3.06)%
Total
liabilities 4,210,462 3,656,654 553,808 15.15%
Total deposits 4,103,438 3,557,994 545,444 15.33%
Subordinated
notes, net 74,004 73,895 109 0.15%
Total
shareholders'
equity 431,308 396,624 34,684 8.74%
The increase in total assets from December 31, 2024 to September 30, 2025 was primarily comprised of a $354.6 million increase in total loans held for investment and a $228.1 million increase in cash and cash equivalents. The $354.6 million increase in total loans held for investment between December 31, 2024 and September 30, 2025 was a result of $931.8 million in loan originations and advances, partially offset by $219.8 million and $357.5 million in loan payoffs and paydowns, respectively. The $354.6 million increase in total loans held for investment included $70.7 million in purchases of loans within the consumer concentration of the loan portfolio. The $228.1 million increase in cash and cash equivalents primarily resulted from a $217.8 million increase in interest-bearing deposits in banks.
The increase in total liabilities from December 31, 2024 to September 30, 2025 was primarily due to an increase in deposits of $545.4 million. The increase in deposits was largely due to increases in money market and non-interest-bearing deposits of $446.9 million and $136.5 million, respectively.
The increase in total shareholders' equity from December 31, 2024 to September 30, 2025 was primarily a result of net income recognized of $44.0 million and a $2.5 million increase in accumulated other comprehensive income, partially offset by $12.8 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
------------------------
September June 30,
(in thousands) 30, 2025 2025 $ Change % Change
----------- ----------- ---------- ----------
Interest and fee
income $64,845 $60,580 $ 4,265 7.04%
Interest expense 25,497 24,065 1,432 5.95%
------ ------ ------ ------
Net interest
income $39,348 $36,515 $ 2,833 7.76%
====== ====== ====== ======
Net interest
margin 3.56% 3.53%
====== ======
Three months ended
------------------------
September September
(in thousands) 30, 2025 30, 2024 $ Change % Change
----------- ----------- ---------- ----------
Interest and fee
income $64,845 $52,667 $ 12,178 23.12%
Interest expense 25,497 22,281 3,216 14.43%
------ ------ ------ ------
Net interest
income $39,348 $30,386 $ 8,962 29.49%
====== ====== ====== ======
Net interest
margin 3.56% 3.37%
====== ======
The following table shows the components of net interest income and net interest margin for the quarterly periods indicated:
Three months ended
September 30, 2025 June 30, 2025 September 30, 2024
-------------------------------- -------------------------------- --------------------------------
Interest Interest Interest
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(in thousands) Balance Expense Rate Balance Expense Rate Balance Expense Rate
---------- ---------- -------- ---------- ---------- -------- ---------- ---------- --------
Assets
Interest-earning
deposits in banks $ 451,534 $ 5,009 4.40% $ 361,866 $ 3,987 4.42% $ 126,266 $ 1,657 5.22%
Investment
securities 96,806 579 2.38% 97,886 577 2.37% 106,256 620 2.32%
Loans held for
investment and
sale 3,831,851 59,257 6.14% 3,691,616 56,016 6.09% 3,354,050 50,390 5.98%
--------- ------ ---- --------- ------ ---- --------- ------ ----
Total
interest-earning
assets 4,380,191 64,845 5.87% 4,151,368 60,580 5.85% 3,586,572 52,667 5.84%
Interest receivable
and other assets,
net 110,118 101,632 91,965
--------- --------- ---------
Total assets $4,490,309 $4,253,000 $3,678,537
========= ========= =========
Liabilities and
shareholders'
equity
Interest-bearing
transaction
accounts $ 300,642 $ 1,194 1.58% $ 283,369 $ 1,043 1.48% $ 302,188 $ 1,237 1.63%
Savings accounts 130,973 895 2.71% 121,692 801 2.64% 124,851 979 3.12%
Money market
accounts 1,874,089 15,348 3.25% 1,647,628 13,270 3.23% 1,578,244 14,688 3.70%
Time accounts 639,434 6,899 4.28% 726,295 7,790 4.30% 326,640 4,172 5.08%
Subordinated notes
and other
borrowings 73,981 1,161 6.23% 73,967 1,161 6.30% 76,988 1,205 6.23%
--------- ------ ---- --------- ------ ---- --------- ------ ----
Total
interest-bearing
liabilities 3,019,119 25,497 3.35% 2,852,951 24,065 3.38% 2,408,911 22,281 3.68%
Demand accounts 1,016,560 957,034 852,872
Interest payable
and other
liabilities 32,210 32,406 32,062
Shareholders'
equity 422,420 410,609 384,692
--------- --------- ---------
Total liabilities &
shareholders'
equity $4,490,309 $4,253,000 $3,678,537
========= ========= =========
Net interest spread 2.52% 2.47% 2.16%
---------- ==== ---------- ==== ---------- ====
Net interest
income/margin $ 39,348 3.56% $ 36,515 3.53% $ 30,386 3.37%
====== ==== ====== ==== ====== ====
Net interest income during the three months ended September 30, 2025 increased $2.8 million, or 7.76%, to $39.3 million compared to $36.5 million during the three months ended June 30, 2025. Net interest margin totaled 3.56% for the three months ended September 30, 2025, an increase of three basis points compared to the prior quarter. The increase in net interest income is primarily attributable to an additional $4.3 million in interest income, mainly due to a $140.2 million, or 3.80%, increase in the average balance of loans and a five basis point improvement in the average yield on loans during the three months ended September 30, 2025 compared to the prior quarter. The increase in interest income was partially offset by an additional $1.4 million in interest expense, which was mainly driven by a $225.7 million, or 6.04%, increase in the average balance of deposits at an average rate of two basis points lower than the prior quarter. In addition, the average balance of non-interest bearing deposits increased by $59.5 million, or 6.22%, compared to the prior quarter.
As compared to the three months ended September 30, 2024, net interest income during the three months ended September 30, 2025 increased by $9.0 million, or 29.49%, to $39.3 million from $30.4 million. Net interest margin totaled 3.56% for the three months ended September 30, 2025, an increase of 19 basis points compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $12.2 million in interest income, mainly due to a $477.8 million, or 14.25%, increase in the average balance of loans and a 16 basis point improvement in the average yield on loans during the three months ended September 30, 2025 compared to the same quarter of the prior year. The increase in interest income was partially offset by an additional $3.2 million in interest expense compared to the same quarter of the prior year. The increase in interest expense is mainly attributable to a $776.9 million, or 24.39%, increase in the average balance of deposits at an average rate of 19 basis points lower during the three months ended September 30, 2025 compared to the same quarter of the prior year. In addition, the average balance of non-interest-bearing deposits increased by $163.7 million, or 19.19%, compared to the same period of the prior year.
Loans by Type
The following table provides loan balances, excluding deferred loan fees, by type as of the dates shown:
(in thousands) September 30, 2025 June 30, 2025
-------------------- -----------------
Real estate:
Commercial $ 3,144,303 $ 3,066,627
Commercial land and
development 934 1,422
Commercial construction 136,988 112,399
Residential construction 5,976 5,479
Residential 35,739 33,132
Farmland 57,572 51,579
Commercial:
Secured 191,170 173,855
Unsecured 38,658 37,568
Consumer and other 278,209 278,215
Net deferred loan fees (2,290) (2,251)
--------------- ----------
Total loans held for
investment $ 3,887,259 $ 3,758,025
=============== ==========
Interest-bearing Deposits
The following table provides interest-bearing deposit balances by type as of the dates shown:
(in thousands) September 30, 2025 June 30, 2025
-------------------- ---------------
Interest-bearing transaction
accounts $ 309,118 $ 292,257
Money market accounts 1,972,158 1,704,652
Savings accounts 137,500 121,567
Time accounts 625,580 772,085
---------------- -----------
Total interest-bearing deposits $ 3,044,356 $ 2,890,561
================ ===========
Asset Quality
Allowance for Credit Losses
At September 30, 2025, the Company's allowance for credit losses was $42.1 million, as compared to $37.8 million at December 31, 2024. The $4.3 million increase in the allowance is due to a $7.1 million provision for credit losses recorded during the nine months ended September 30, 2025, partially offset by net charge-offs of $2.8 million, primarily attributable to commercial and industrial loans, during the same period.
The Company's ratio of nonperforming loans to loans held for investment remained at 0.05% at September 30, 2025 and December 31, 2024. Loans designated as watch decreased from $123.4 million to $92.7 million between December 31, 2024 and September 30, 2025. As a result, loans designated as substandard increased from $2.6 million to $18.6 million between December 31, 2024 and September 30, 2025, primarily attributable to the downgrade of one special purpose commercial real estate loan whose borrower was experiencing financial difficulty. There were no loans with doubtful risk grades at September 30, 2025 or December 31, 2024.
A summary of the allowance for credit losses by loan class is as follows:
September 30, 2025 December 31, 2024
------------------------ ------------------------
(in thousands) Amount % of Total Amount % of Total
----------- ----------- ----------- -----------
Real estate:
Commercial $ 23,473 55.81% $ 25,864 68.44%
Commercial
land and
development 30 0.07% 78 0.21%
Commercial
construction 4,355 10.35% 2,268 6.00%
Residential
construction 108 0.26% 64 0.17%
Residential 351 0.83% 270 0.71%
Farmland 425 1.01% 607 1.61%
------- ------- ------- -------
28,742 68.33% 29,151 77.14%
------- ------- ------- -------
Commercial:
Secured 10,400 24.73% 5,866 15.52%
Unsecured 438 1.04% 278 0.74%
------- ------- ------- -------
10,838 25.77% 6,144 16.26%
Consumer and other 2,481 5.90% 2,496 6.60%
------- ------- ------- -------
Total
allowance
for credit
losses $ 42,061 100.00% $ 37,791 100.00%
======= ======= ======= =======
The ratio of allowance for credit losses to loans held for investment was 1.08% at September 30, 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
-------------------------
September 30, June 30,
(in thousands) 2025 2025 $ Change % Change
------------- ---------- ---------- -----------
Service charges
on deposit
accounts $ 185 $ 196 $ (11) (5.61)%
Gain on sale of
loans -- 119 (119) (100.00)%
Loan-related
fees 683 468 215 45.94%
FHLB stock
dividends 329 325 4 1.23%
Earnings on
bank-owned life
insurance 209 220 (11) (5.00)%
Other income 560 482 78 16.18%
--------- ------ ----- -------
Total
non-interest
income $ 1,966 $ 1,810 $ 156 8.62%
========= ====== ===== =======
Gain on sale of loans. The decrease related to an overall decline in the volume of loans sold. During the three months ended September 30, 2025, no loans were sold, as compared to approximately $1.6 million of loans sold with an effective yield of 7.60% during the three months ended June 30, 2025.
Loan-related fees. The increase resulted primarily from an increase of $0.2 million in swap referral fees recognized during the three months ended September 30, 2025, as compared to the three months ended June 30, 2025.
The following table presents the key components of non-interest income for the periods indicated:
Three months ended
-----------------------
September September
(in thousands) 30, 2025 30, 2024 $ Change % Change
---------- ----------- ---------- ------------
Service charges
on deposit
accounts $ 185 $ 165 $ 20 12.12%
Gain on sale of
loans -- 306 (306) (100.00)%
Loan-related
fees 683 406 277 68.23%
FHLB stock
dividends 329 327 2 0.61%
Earnings on
bank-owned life
insurance 209 162 47 29.01%
Other income 560 15 545 3,633.33%
--------- ------- ----- --------
Total
non-interest
income $ 1,966 $ 1,381 $ 585 42.36%
========= ======= ===== ========
Gain on sale of loans. The decrease related to an overall decline in the volume of loans sold. During the three months ended September 30, 2025, no loans were sold, as compared to approximately $4.4 million of loans sold with an effective yield of 7.03% during the three months ended September 30, 2024.
Loan-related fees. The increase resulted primarily from an increase of $0.3 million in swap referral fees recognized during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.
Other income. The increase related primarily to an overall improvement in earnings related to investments in venture-backed funds during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Non-interest Expense
The following table presents the key components of non-interest expense for the periods indicated:
Three months ended
-------------------------
September 30, June 30,
(in thousands) 2025 2025 $ Change % Change
------------- ---------- ---------- ----------
Salaries and
employee
benefits $ 9,716 $ 8,910 $ 806 9.05%
Occupancy and
equipment 700 657 43 6.54%
Data processing
and software 1,559 1,508 51 3.38%
Federal Deposit
Insurance
Corporation
("FDIC")
insurance 500 470 30 6.38%
Professional
services 932 918 14 1.53%
Advertising and
promotional 803 865 (62) (7.17)%
Loan-related
expenses 317 423 (106) (25.06)%
Other operating
expenses 2,053 1,975 78 3.95%
--------- ------ ----- ------
Total
non-interest
expense $ 16,580 $ 15,726 $ 854 5.43%
========= ====== ===== ======
Salaries and employee benefits. The increase related primarily to: (i) a $0.8 million increase in salaries, benefits, and bonus expense, mainly related to a 1.38% increase in headcount between June 30, 2025 and September 30, 2025; and (ii) a $0.1 million increase in commissions paid.
Loan-related expenses. The decrease related primarily to decreases in expenses related to loans, including amortization of servicing assets, inspections, and legal fees.
The following table presents the key components of non-interest expense for the periods indicated:
Three months ended
----------------------------
September 30, September 30,
(in thousands) 2025 2024 $ Change % Change
------------- ------------- ---------- ----------
Salaries and
employee
benefits $ 9,716 $ 7,969 $ 1,747 21.92%
Occupancy and
equipment 700 626 74 11.82%
Data processing
and software 1,559 1,327 232 17.48%
FDIC insurance 500 405 95 23.46%
Professional
services 932 830 102 12.29%
Advertising and
promotional 803 584 219 37.50%
Loan-related
expenses 317 292 25 8.56%
Other operating
expenses 2,053 1,743 310 17.79%
--------- --------- ------ ------
Total
non-interest
expense $ 16,580 $ 13,776 $ 2,804 20.35%
========= ========= ====== ======
Salaries and employee benefits. The increase related primarily to: (i) a $1.7 million increase in salaries, benefits, and bonus expense, mainly related to a 13.33% increase in headcount between September 30, 2024 and September 30, 2025; and (ii) a $0.5 million increase in commissions paid. This increase was partially offset by a $0.5 million increase in deferred 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 a $0.1 million increase in fees paid for business development consulting services.
Advertising and promotional. The increase related primarily to additional expenses incurred to support the expansion of the Bank's business development teams, including a $0.1 million increase in expenses related to sponsored events and partnerships and a $0.1 million increase related to client and prospective client development expenses.
Other operating expenses. The increase was primarily due to: (i) a $0.1 million increase in administrative charges, including subscription services and bank charges; (ii) a $0.1 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network; and (iii) a $0.1 million increase in armored car and courier expenses.
Provision for Income Taxes
On July 4, 2025, the President signed H.R. 1, the "One Big Beautiful Bill Act," into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also made certain changes to the deductibility of the cost of meals and charitable contributions that are effective for tax years beginning after December 31, 2025. These changes were not reflected in the income tax provision for the period ended September 30, 2025. The Company evaluated the impact on future periods and the legislation is not expected to have a significant impact on the Company's consolidated financial statements.
Three months ended September 30, 2025, as compared to three months ended June 30, 2025
Provision for income taxes increased to $5.9 million for the three months ended September 30, 2025 from $5.6 million for the three months ended June 30, 2025, which was primarily due to an increase in taxable income recognized during the three months ended September 30, 2025. The effective tax rates were 26.49% and 27.82% for the three months ended September 30, 2025 and June 30, 2025, respectively.
Three months ended September 30, 2025, as compared to three months ended September 30, 2024
Provision for income taxes increased by $1.6 million, or 36.98%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. This increase was primarily driven by an increase in taxable income. The effective tax rates were 26.49% and 28.21% for the three months ended September 30, 2025 and September 30, 2024, respectively.
Webcast Details
Five Star Bancorp will host a live webcast for analysts and investors on Tuesday, October 28, 2025 at 1:00 PM ET (10:00 AM PT) to discuss its third 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 nine 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 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2025 and June 30, 2025, in each case 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 September 30, June 30, September 30,
and share data) 2025 2025 2024
--------------- --------------- ---------------
Revenue and Expense
Data
Interest and fee
income $ 64,845 $ 60,580 $ 52,667
Interest expense 25,497 24,065 22,281
---------- ---------- ----------
Net interest income 39,348 36,515 30,386
Provision for credit
losses 2,500 2,500 2,750
---------- ---------- ----------
Net interest income
after provision 36,848 34,015 27,636
Non-interest
income:
Service charges on
deposit accounts 185 196 165
Gain on sale of
loans -- 119 306
Loan-related fees 683 468 406
FHLB stock
dividends 329 325 327
Earnings on
bank-owned life
insurance 209 220 162
Other income 560 482 15
---------- ---------- ----------
Total non-interest
income 1,966 1,810 1,381
Non-interest
expense:
Salaries and
employee
benefits 9,716 8,910 7,969
Occupancy and
equipment 700 657 626
Data processing
and software 1,559 1,508 1,327
FDIC insurance 500 470 405
Professional
services 932 918 830
Advertising and
promotional 803 865 584
Loan-related
expenses 317 423 292
Other operating
expenses 2,053 1,975 1,743
---------- ---------- ----------
Total non-interest
expense 16,580 15,726 13,776
---------- ---------- ----------
Income before
provision for
income taxes 22,234 20,099 15,241
Provision for
income taxes 5,890 5,591 4,300
---------- ---------- ----------
Net income $ 16,344 $ 14,508 $ 10,941
========== ========== ==========
Comprehensive
Income
Net income $ 16,344 $ 14,508 $ 10,941
Net unrealized
holding gain on
securities
available-for-sale
during the period 2,843 190 3,549
Less: Income tax
expense related to
other comprehensive
income (loss) 763 502 1,049
---------- ---------- ----------
Other comprehensive
income (loss) 2,080 (312) 2,500
---------- ---------- ----------
Total comprehensive
income $ 18,424 $ 14,196 $ 13,441
========== ========== ==========
Share and Per Share
Data
Earnings per common
share:
Basic $ 0.77 $ 0.68 $ 0.52
Diluted $ 0.77 $ 0.68 $ 0.52
Book value per share $ 20.19 $ 19.51 $ 18.29
Tangible book value
per share(1) $ 20.19 $ 19.51 $ 18.29
Weighted average
basic common shares
outstanding 21,231,563 21,225,831 21,182,143
Weighted average
diluted common
shares outstanding 21,281,818 21,269,265 21,232,758
Shares outstanding
at end of period 21,367,387 21,360,991 21,319,583
Selected Financial
Ratios
ROAA 1.44% 1.37% 1.18%
ROAE 15.35% 14.17% 11.31%
Net interest margin 3.56% 3.53% 3.37%
Loan to deposit(2) 94.73% 96.50% 101.87%
(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.
September 30, June 30, September 30,
(in thousands) 2025 2025 2024
-------------- -------------- --------------
Balance Sheet Data
Cash and due from
financial
institutions $ 44,147 $ 53,724 $ 44,531
Interest-bearing
deposits in banks 536,300 430,086 206,321
Time deposits in banks 100 849 4,118
Securities -
available-for-sale,
at fair value 95,635 94,990 104,238
Securities -
held-to-maturity, at
amortized cost 2,190 2,585 2,720
Loans held for sale -- 309 2,910
Loans held for
investment 3,887,259 3,758,025 3,460,565
Allowance for credit
losses (42,061) (40,167) (37,583)
--------- --------- ---------
Loans held for
investment, net of
allowance for credit
losses 3,845,198 3,717,858 3,422,982
FHLB stock 15,000 15,000 15,000
Operating leases,
right-of-use asset 9,751 7,094 6,590
Premises and
equipment, net 1,656 1,606 1,657
Bank-owned life
insurance 23,676 23,466 19,192
Interest receivable
and other assets 68,117 65,906 56,745
--------- --------- ---------
Total assets $4,641,770 $4,413,473 $3,887,004
========= ========= =========
Non-interest-bearing
deposits $1,059,082 $1,004,061 $ 906,939
Interest-bearing
deposits 3,044,356 2,890,561 2,493,040
--------- --------- ---------
Total deposits 4,103,438 3,894,622 3,399,979
Subordinated notes,
net 74,004 73,968 73,859
Other borrowings -- -- --
Operating lease
liability 10,431 7,744 7,101
Interest payable and
other liabilities 22,589 20,397 16,135
--------- --------- ---------
Total liabilities 4,210,462 3,996,731 3,497,074
--------- --------- ---------
Common stock 303,571 303,155 302,251
Retained earnings 137,615 125,545 97,411
Accumulated other
comprehensive loss,
net of taxes (9,878) (11,958) (9,732)
--------- --------- ---------
Total shareholders'
equity 431,308 416,742 389,930
--------- --------- ---------
Total liabilities
and
shareholders'
equity $4,641,770 $4,413,473 $3,887,004
========= ========= =========
Quarterly Average
Balance Data
Average loans held for
investment and sale $3,831,851 $3,691,616 $3,354,050
Average
interest-earning
assets 4,380,191 4,151,368 3,586,572
Average total assets 4,490,309 4,253,000 3,678,537
Average deposits 3,961,698 3,736,018 3,184,795
Average total equity 422,420 410,609 384,692
Credit Quality
Allowance for credit
losses to
nonperforming loans 1,975.62% 1,763.26% 2,041.44%
Nonperforming loans to
loans held for
investment 0.05% 0.06% 0.05%
Nonperforming assets
to total assets 0.05% 0.05% 0.05%
Nonperforming loans
plus performing loan
modifications to
loans held for
investment 0.05% 0.06% 0.05%
Capital Ratios
Total shareholders'
equity to total
assets 9.29% 9.44% 10.03%
Tangible shareholders'
equity to tangible
assets(1) 9.29% 9.44% 10.03%
Total capital (to
risk-weighted
assets) 13.59% 13.73% 13.94%
Tier 1 capital (to
risk-weighted
assets) 10.77% 10.85% 10.93%
Common equity Tier 1
capital (to
risk-weighted
assets) 10.77% 10.85% 10.93%
Tier 1 leverage ratio 9.78% 10.03% 10.83%
(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
--------------------------------------------
September 30, June 30, September 30,
(in thousands) 2025 2025 2024
--------------- ---------- ---------------
Pre-tax, pre-provision
income
Pre-tax income $ 22,234 $ 20,099 $ 15,241
Add: provision for credit
losses 2,500 2,500 2,750
----------- ------ -----------
Pre-tax, pre-provision
income $ 24,734 $ 22,599 $ 17,991
=========== ====== ===========
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
(END) Dow Jones Newswires
October 27, 2025 18:30 ET (22:30 GMT)
Comments