Five Star Bancorp Announces Second Quarter 2025 Results

Rhea-AI Summary

Five Star Bancorp (Nasdaq: FSBC) reported strong Q2 2025 financial results with net income of $14.5 million, up from $13.1 million in Q1 2025 and $10.8 million in Q2 2024. The bank demonstrated robust growth with total loans increasing by $136.2 million (3.76%) and total deposits growing by $158.3 million (4.24%) during the quarter.

Key performance metrics showed improvement with net interest margin increasing to 3.53% and efficiency ratio improving to 41.03%. The San Francisco Bay Area expansion continued successfully, with the team growing to 34 employees and generating $456.9 million in deposits. The bank maintained strong capital positions with a common equity Tier 1 ratio of 10.85% and declared a quarterly dividend of $0.20 per share.

The bank reported zero short-term borrowings and maintained strong liquidity with cash and cash equivalents at $483.8 million, representing 12.42% of total deposits. Credit quality remained exceptional with nonperforming loans at just 0.06% of total loans.

Positive

• None.

Negative

• Slight increase in nonperforming loans ratio to 0.06% from 0.05%
• Common equity Tier 1 capital ratio decreased to 10.85% from 11.00%
• Provision for credit losses increased by $0.6 million quarter-over-quarter
• Net charge-offs increased during the quarter

Insights

Banking Financial Analyst

Five Star Bancorp reports strong Q2 2025 with 34.56% YoY net income growth, driven by loan/deposit expansion and improved efficiency.

Five Star Bancorp delivered exceptional Q2 2025 results, with $14.5 million in net income, representing a 10.66% increase from Q1 2025 and a substantial 34.56% jump year-over-year. This translates to diluted EPS of $0.68, up from $0.62 in Q1 and $0.51 a year ago.

The bank's growth metrics are particularly impressive. Total loans increased by $136.2 million or 3.76% (annualizing to 15.04%) quarter-over-quarter, while deposits grew by $158.3 million or 4.24% (annualizing to 16.94%). The San Francisco Bay Area expansion has been especially successful, with deposits there reaching $456.9 million, a $77.2 million increase from the previous quarter.

Profitability metrics show meaningful improvement. Return on average assets (ROAA) increased to 1.37% from 1.30% in Q1 and 1.23% a year ago. Return on average equity (ROAE) reached 14.17%, up from 13.28% in Q1 and 11.72% year-over-year. The efficiency ratio improved to 41.03%, compared to 42.58% in Q1 and 44.07% a year ago.

Net interest margin (NIM) expanded to 3.53%, an 8 basis point improvement from Q1's 3.45% and 14 basis points higher than the 3.39% recorded a year ago. This expansion occurred despite the Federal Funds rate remaining constant at 4.33% since Q1 (though down from 5.33% a year ago).

The bank maintains strong liquidity with $483.8 million in cash and cash equivalents, representing 12.42% of total deposits. Total available liquidity stands at approximately $2.2 billion. Asset quality remains excellent with nonperforming loans at just 0.06% of total loans, up slightly from 0.05% in Q1.

Five Star continues its strategic expansion with five new Business Development Officers hired in Q2, bringing the total to 40. The bank also declared another quarterly dividend of $0.20 per share, demonstrating confidence in its financial position and commitment to shareholder returns.

RANCHO CORDOVA, Calif., July 23, 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 $14.5 million for the three months ended June 30, 2025, as compared to $13.1 million for the three months ended March 31, 2025 and $10.8 million for the three months ended June 30, 2024.

Second 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)		June 30, 2025				March 31, 2025				June 30, 2024
Return on average assets (“ROAA”)		1.37	%			1.30	%			1.23	%
Return on average equity (“ROAE”)		14.17	%			13.28	%			11.72	%
Pre-tax income	$	20,099			$	18,391			$	15,152
Pre-tax, pre-provision income(1)	$	22,599			$	20,291			$	17,152
Net income	$	14,508			$	13,111			$	10,782
Basic earnings per common share	$	0.68			$	0.62			$	0.51
Diluted earnings per common share	$	0.68			$	0.62			$	0.51
Weighted average basic common shares outstanding		21,225,831				21,209,881				21,039,798
Weighted average diluted common shares outstanding		21,269,265				21,253,588				21,058,085
Shares outstanding at end of period		21,360,991				21,329,235				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:

“We are very pleased to report an exceptional quarter where the continuation of our organic growth strategy fueled new account openings and resulted in growth in loans and deposits. Total loans held for investment increased by $136.2 million, or 3.76% (15.04% when annualized), and total deposits increased by $158.3 million, or 4.24% (16.94% when annualized). Net interest margin increased by eight basis points to 3.53%, while our efficiency ratio decreased to 41.03% compared to 42.58% for the first quarter of 2025. Short-term borrowings remained at zero as of June 30, 2025 and December 31, 2024. This quarter, we declared another dividend to shareholders, which exemplifies our commitment to shareholder value.

This success serves as a strong testimony to our people, technology, operating efficiencies, conservative underwriting practices, exceptional credit quality, and prudent approach to portfolio management, which we believe will continue to benefit our clients, employees, community, and shareholders. It is also attributable to our relationship-based banking approach, where clients receive high-tech and high-touch concierge business banking services.

We look forward to bringing these services to the Walnut Creek market, where we expect to open an office in the third quarter of 2025. Since our expansion in the San Francisco Bay Area began in June 2023, the team has grown to 34 employees with $456.9 million in deposits as of June 30, 2025. We also look forward to the continued growth of business verticals, including Food, Agribusiness, and Diversified Industries where we believe clients will benefit from our global trade services and exceptional treasury management tools.

As we look to the second half of 2025, we are humbled and proud of our team’s accomplishments. We also 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 June 30, 2025 included the following:

• The San Francisco Bay Area team increased from 31 to 34 employees and generated deposit balances totaling $456.9 million at June 30, 2025, an increase of $77.2 million from March 31, 2025.
• The Company hired five new Business Development Officers, increasing from 35 at March 31, 2025 to 40 at June 30, 2025.
• Cash and cash equivalents were $483.8 million, representing 12.42% of total deposits at June 30, 2025, as compared to 12.11% at March 31, 2025.
• Total deposits increased by $158.3 million, or 4.24%, during the three months ended June 30, 2025, due to increases in non-wholesale deposits that exceeded decreases in wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits. During the three months ended June 30, 2025, non-wholesale deposits increased by $191.6 million, or 6.29%, and wholesale deposits decreased by $33.4 million, or 4.84%.
• The Company had no short-term borrowings at June 30, 2025 or March 31, 2025.
• Consistent, disciplined management of expenses contributed to our efficiency ratio of 41.03% for the three months ended June 30, 2025, as compared to 42.58% for the three months ended March 31, 2025 and 44.07% for the three months ended June 30, 2024.
• For the three months ended June 30, 2025, net interest margin was 3.53%, as compared to 3.45% for the three months ended March 31, 2025 and 3.39% for the three months ended June 30, 2024. The effective Federal Funds rate was 4.33% as of June 30, 2025, remaining constant from March 31, 2025 and decreasing from 5.33% at June 30, 2024.
• Other comprehensive loss was $0.3 million during the three months ended June 30, 2025. Unrealized losses, net of tax effect, on available-for-sale securities were $12.0 million as of June 30, 2025. Total carrying value of held-to-maturity and available-for-sale securities represented 0.06% and 2.22% of total interest-earning assets, respectively, as of June 30, 2025.
• The Company’s common equity Tier 1 capital ratio was 10.85% and 11.00% as of June 30, 2025 and March 31, 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 June 30, 2025 was as follows:

(in thousands)	June 30, 2025				March 31, 2025				$ Change				% Change
Loans held for investment	$	3,758,025			$	3,621,819			$	136,206				3.76	%
Non-interest-bearing deposits		1,004,061				933,652				70,409				7.54	%
Interest-bearing deposits		2,890,561				2,802,702				87,859				3.13	%
(in thousands)	June 30, 2025				June 30, 2024				$ Change				% Change
Loans held for investment	$	3,758,025			$	3,266,291			$	491,734				15.05	%
Non-interest-bearing deposits		1,004,061				825,733				178,328				21.60	%
Interest-bearing deposits		2,890,561				2,323,898				566,663				24.38	%

• The ratio of nonperforming loans to loans held for investment at period end increased from 0.05% at March 31, 2025 to 0.06% at June 30, 2025. The increase was due to one commercial real estate loan being put on nonaccrual status during the quarter.
• The Company’s Board of Directors declared on April 17, 2025, and the Company subsequently paid, a cash dividend of $0.20 per share during the three months ended June 30, 2025. The Company’s Board of Directors subsequently declared another cash dividend of $0.20 per share on July 17, 2025, which the Company expects to pay on August 11, 2025 to shareholders of record as of August 4, 2025.

Summary Results

Three months ended June 30, 2025, as compared to three months ended March 31, 2025

The Company’s net income was $14.5 million for the three months ended June 30, 2025, as compared to $13.1 million for the three months ended March 31, 2025. Net interest income increased by $2.5 million during the three months ended June 30, 2025, as compared to the three months ended March 31, 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 increased by $0.6 million, with loan growth and increases in net charge-offs during the three months ended June 30, 2025 as the leading drivers. Non-interest income increased by $0.5 million, primarily due to an overall improvement in the estimated earnings related to investments in venture-backed funds during the three months ended June 30, 2025, as compared to the three months ended March 31, 2025. Non-interest expense increased by $0.7 million during the three months ended June 30, 2025, as compared to the three months ended March 31, 2025, primarily related to increases in business travel, conferences, training, and advertising and promotional expenses associated with expansion of the Bank’s business development teams, partially offset by an increase in deferred loan origination costs.

Three months ended June 30, 2025, as compared to three months ended June 30, 2024

The Company’s net income was $14.5 million for the three months ended June 30, 2025, as compared to $10.8 million for the three months ended June 30, 2024. Net interest income increased by $7.4 million during the three months ended June 30, 2025, as compared to the three months ended June 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 increased by $0.5 million, with increases in net charge-offs during the three months ended June 30, 2025 as the leading driver. Non-interest income increased by $0.2 million, primarily due to an overall improvement in the estimated earnings related to investments in venture-backed funds, partially offset by a decrease in the volume of loans sold during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. Non-interest expense increased by $2.2 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 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)		June 30, 2025				March 31, 2025				$ Change				% Change
Selected operating data:
Net interest income		$	36,515			$	33,977			$	2,538				7.47	%
Provision for credit losses			2,500				1,900				600				31.58	%
Non-interest income			1,810				1,359				451				33.19	%
Non-interest expense			15,726				15,045				681				4.53	%
Pre-tax income			20,099				18,391				1,708				9.29	%
Provision for income taxes			5,591				5,280				311				5.89	%
Net income		$	14,508			$	13,111			$	1,397				10.66	%
Earnings per common share:
Basic		$	0.68			$	0.62			$	0.06				9.68	%
Diluted		$	0.68			$	0.62			$	0.06				9.68	%
Performance and other financial ratios:
ROAA			1.37	%			1.30	%
ROAE			14.17	%			13.28	%
Net interest margin			3.53	%			3.45	%
Cost of funds			2.53	%			2.56	%
Efficiency ratio			41.03	%			42.58	%
		Three months ended
(in thousands, except per share data)		June 30, 2025				June 30, 2024					$ Change			% Change
Selected operating data:
Net interest income		$	36,515			$	29,092			$	7,423				25.52	%
Provision for credit losses			2,500				2,000				500				25.00	%
Non-interest income			1,810				1,573				237				15.07	%
Non-interest expense			15,726				13,513				2,213				16.38	%
Pre-tax income			20,099				15,152				4,947				32.65	%
Provision for income taxes			5,591				4,370				1,221				27.94	%
Net income		$	14,508			$	10,782			$	3,726				34.56	%
Earnings per common share:
Basic		$	0.68			$	0.51			$	0.17				33.33	%
Diluted		$	0.68			$	0.51			$	0.17				33.33	%
Performance and other financial ratios:
ROAA			1.37	%			1.23	%
ROAE			14.17	%			11.72	%
Net interest margin			3.53	%			3.39	%
Cost of funds			2.53	%			2.56	%
Efficiency ratio			41.03	%			44.07	%

Balance Sheet Summary

(in thousands)		June 30, 2025				March 31, 2025				$ Change				% Change
Selected financial condition data:
Total assets		$	4,413,473			$	4,245,057			$	168,416				3.97	%
Cash and cash equivalents			483,810				452,571				31,239				6.90	%
Total loans held for investment			3,758,025				3,621,819				136,206				3.76	%
Total investments			97,575				99,696				(2,121	)			(2.13	)%
Total liabilities			3,996,731				3,838,606				158,125				4.12	%
Total deposits			3,894,622				3,736,354				158,268				4.24	%
Subordinated notes, net			73,968				73,932				36				0.05	%
Total shareholders’ equity			416,742				406,451				10,291				2.53	%

• Insured and collateralized deposits were approximately $2.6 billion, representing 67.06% of total deposits as of June 30, 2025, as compared to 67.55% as of March 31, 2025. Net uninsured and uncollateralized deposits were approximately $1.3 billion as of June 30, 2025, increasing from $1.2 billion at March 31, 2025.
• Non-wholesale deposit accounts constituted 83.14% of total deposits as of June 30, 2025, as compared to 81.53% at March 31, 2025. Deposit relationships of greater than $5 million represented 59.91% of total deposits, as compared to 60.87% as of March 31, 2025, and had an average age of approximately 8.34 years as of June 30, 2025, as compared to 8.80 years as of March 31, 2025.
• Total deposits as of June 30, 2025 were $3.9 billion, an increase of $158.3 million, or 4.24%, from March 31, 2025 comprised of increases in both interest-bearing and non-interest-bearing deposits. The primary driver of interest-bearing deposit growth was new money market deposit accounts opened during the quarter, adding $87.4 million in new balances. Non-interest-bearing deposit growth was driven by new accounts opened during the quarter, adding $68.7 million in new balances.
• Cash and cash equivalents as of June 30, 2025 were $483.8 million, representing 12.42% of total deposits at June 30, 2025, as compared to 12.11% as of March 31, 2025.
• Total liquidity (consisting of cash and cash equivalents and unused and immediately available borrowing capacity as set forth below) was approximately $2.2 billion as of June 30, 2025, as compared to $2.0 billion at March 31, 2025.

		June 30, 2025
(in thousands)		Line of Credit				Letters of Credit Issued				Borrowings				Available
Federal Home Loan Bank of San Francisco (“FHLB”) advances		$	1,290,446			$	732,500			$	—			$	557,946
Federal Reserve Discount Window			926,573				—				—				926,573
Correspondent bank lines of credit			185,000				—				—				185,000
Cash and cash equivalents			—				—				—				483,810
Total		$	2,402,019			$	732,500			$	—			$	2,153,329

(in thousands)		June 30, 2025				December 31, 2024				$ Change				% Change
Selected financial condition data:
Total assets		$	4,413,473			$	4,053,278			$	360,195				8.89	%
Cash and cash equivalents			483,810				352,343				131,467				37.31	%
Total loans held for investment			3,758,025				3,532,686				225,339				6.38	%
Total investments			97,575				100,914				(3,339	)			(3.31	)%
Total liabilities			3,996,731				3,656,654				340,077				9.30	%
Total deposits			3,894,622				3,557,994				336,628				9.46	%
Subordinated notes, net			73,968				73,895				73				0.10	%
Total shareholders’ equity			416,742				396,624				20,118				5.07	%

The increase in total assets from December 31, 2024 to June 30, 2025 was primarily comprised of a $225.3 million increase in total loans held for investment and a $131.5 million increase in cash and cash equivalents. The $225.3 million increase in total loans held for investment between December 31, 2024 and June 30, 2025 was a result of $578.8 million in loan originations and advances, partially offset by $130.3 million and $223.1 million in loan payoffs and paydowns, respectively. The $225.3 million increase in total loans held for investment included $43.9 million in purchases of loans within the consumer concentration of the loan portfolio. The $131.5 million increase in cash and cash equivalents primarily resulted from net cash inflows related to financing and operating activities of $328.1 million and $28.1 million, respectively, partially offset by net cash outflows related to investing activities of $224.7 million.

The increase in total liabilities from December 31, 2024 to June 30, 2025 was primarily due to an increase in interest-bearing deposits of $255.2 million. The increase in interest-bearing deposits was largely due to increases in money market and time deposits of $179.4 million and $101.9 million, respectively.

The increase in total shareholders’ equity from December 31, 2024 to June 30, 2025 was primarily a result of net income recognized of $27.6 million and a $0.4 million increase in accumulated other comprehensive income, partially offset by $8.5 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)		June 30, 2025				March 31, 2025				$ Change				% Change
Interest and fee income		$	60,580			$	57,087			$	3,493				6.12	%
Interest expense			24,065				23,110				955				4.13	%
Net interest income		$	36,515			$	33,977			$	2,538				7.47	%
Net interest margin			3.53	%			3.45	%
		Three months ended
(in thousands)		June 30, 2025				June 30, 2024				$ Change				% Change
Interest and fee income		$	60,580			$	48,998			$	11,582				23.64	%
Interest expense			24,065				19,906				4,159				20.89	%
Net interest income		$	36,515			$	29,092			$	7,423				25.52	%
Net interest margin			3.53	%			3.39	%

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

		Three months ended
		June 30, 2025												March 31, 2025												June 30, 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		$	361,866			$	3,987				4.42	%		$	328,571			$	3,575				4.41	%		$	148,936			$	1,986				5.36	%
Investment securities			97,886				577				2.37	%			100,474				581				2.34	%			105,819				650				2.47	%
Loans held for investment and sale			3,691,616				56,016				6.09	%			3,567,992				52,931				6.02	%			3,197,921				46,362				5.83	%
Total interest-earning assets			4,151,368				60,580				5.85	%			3,997,037				57,087				5.79	%			3,452,676				48,998				5.71	%
Interest receivable and other assets, net			101,632												93,543												84,554
Total assets		$	4,253,000											$	4,090,580											$	3,537,230
Liabilities and shareholders’ equity
Interest-bearing transaction accounts		$	283,369			$	1,043				1.48	%		$	303,822			$	1,112				1.48	%		$	291,470			$	1,104				1.52	%
Savings accounts			121,692				801				2.64	%			123,599				772				2.53	%			120,080				856				2.87	%
Money market accounts			1,647,628				13,270				3.23	%			1,540,879				12,435				3.27	%			1,547,814				13,388				3.48	%
Time accounts			726,295				7,790				4.30	%			706,528				7,629				4.38	%			272,887				3,369				4.96	%
Subordinated notes and other borrowings			73,967				1,161				6.30	%			73,908				1,162				6.37	%			75,747				1,189				6.31	%
Total interest-bearing liabilities			2,852,951				24,065				3.38	%			2,748,736				23,110				3.41	%			2,307,998				19,906				3.47	%
Demand accounts			957,034												910,954												817,668
Interest payable and other liabilities			32,406												30,389												41,429
Shareholders’ equity			410,609												400,501												370,135
Total liabilities & shareholders’ equity		$	4,253,000											$	4,090,580											$	3,537,230
Net interest spread											2.47	%											2.38	%											2.24	%
Net interest income/margin						$	36,515				3.53	%						$	33,977				3.45	%						$	29,092				3.39	%

Net interest income during the three months ended June 30, 2025 increased $2.5 million, or 7.47%, to $36.5 million compared to $34.0 million during the three months ended March 31, 2025. Net interest margin totaled 3.53% for the three months ended June 30, 2025, an increase of eight basis points compared to the prior quarter. The increase in net interest income is primarily attributable to an additional $3.5 million in interest income, mainly due to a $123.6 million, or 3.46%, increase in the average balance of loans and a seven basis point improvement in the average yield on loans during the three months ended June 30, 2025 compared to the prior quarter. The increase in interest income was partially offset by an additional $1.0 million in interest expense, which was mainly driven by a $150.2 million, or 4.19%, increase in the average balance of deposits at an average rate of two basis points lower than the prior quarter.

As compared to the three months ended June 30, 2024, net interest income increased $7.4 million, or 25.52%, to $36.5 million from $29.1 million. Net interest margin totaled 3.53% for the three months ended June 30, 2025, an increase of 14 basis points compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $11.6 million in interest income, mainly due to a $493.7 million, or 15.44%, increase in the average balance of loans and a 26 basis point improvement in the average yield on loans during the three months ended June 30, 2025 compared to the same quarter of the prior year. The increase in interest income was partially offset by an additional $4.2 million in interest expense compared to the same quarter of the prior year. The increase in interest expense is mainly attributable to a $686.1 million, or 22.50%, increase in the average balance of deposits at an average rate of one basis point lower during the three months ended June 30, 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 the dates shown:

(in thousands)		June 30, 2025				March 31, 2025
Real estate:
Commercial		$	3,066,627			$	2,941,201
Commercial land and development			1,422				3,556
Commercial construction			112,399				113,002
Residential construction			5,479				5,747
Residential			33,132				34,053
Farmland			51,579				43,643
Commercial:
Secured			173,855				170,525
Unsecured			37,568				34,970
Consumer and other			278,215				277,093
Net deferred loan fees			(2,251	)			(1,971	)
Total loans held for investment		$	3,758,025			$	3,621,819

Interest-bearing Deposits

The following table provides interest-bearing deposit balances by type as of the dates shown:

(in thousands)		June 30, 2025				March 31, 2025
Interest-bearing transaction accounts		$	292,257			$	295,633
Money market accounts			1,704,652				1,577,473
Savings accounts			121,567				128,210
Time accounts			772,085				801,386
Total interest-bearing deposits		$	2,890,561			$	2,802,702

Asset Quality

Allowance for Credit Losses

At June 30, 2025, the Company’s allowance for credit losses was $40.2 million, as compared to $37.8 million at December 31, 2024. The $2.4 million increase in the allowance is due to a $4.6 million provision for credit losses recorded during the six months ended June 30, 2025, partially offset by net charge-offs of $2.2 million, primarily attributable to commercial and industrial loans, during the same period.

The Company’s ratio of nonperforming loans to loans held for investment increased from 0.05% at December 31, 2024 to 0.06% at June 30, 2025. Loans designated as watch decreased from $123.4 million to $106.5 million between December 31, 2024 and June 30, 2025. Loans designated as substandard increased from $2.6 million to $4.2 million between December 31, 2024 and June 30, 2025. There were no loans with doubtful risk grades at June 30, 2025 or December 31, 2024.

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

		June 30, 2025								December 31, 2024
(in thousands)		Amount				% of Total				Amount				% of Total
Real estate:
Commercial		$	27,792				69.19	%		$	25,864				68.44	%
Commercial land and development			33				0.08	%			78				0.21	%
Commercial construction			2,575				6.41	%			2,268				6.00	%
Residential construction			75				0.19	%			64				0.17	%
Residential			334				0.83	%			270				0.71	%
Farmland			723				1.80	%			607				1.61	%
			31,532				78.50	%			29,151				77.14	%
Commercial:
Secured			5,623				14.00	%			5,866				15.52	%
Unsecured			417				1.04	%			278				0.74	%
			6,040				15.04	%			6,144				16.26	%
Consumer and other			2,595				6.46	%			2,496				6.60	%
Total allowance for credit losses		$	40,167				100.00	%		$	37,791				100.00	%

The ratio of allowance for credit losses to loans held for investment remained at 1.07% at June 30, 2025 and 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)		June 30, 2025				March 31, 2025				$ Change				% Change
Service charges on deposit accounts		$	196			$	215			$	(19	)			(8.84	)%
Gain on sale of loans			119				125				(6	)			(4.80	)%
Loan-related fees			468				448				20				4.46	%
FHLB stock dividends			325				331				(6	)			(1.81	)%
Earnings on bank-owned life insurance			220				161				59				36.65	%
Other income			482				79				403				510.13	%
Total non-interest income		$	1,810			$	1,359			$	451				33.19	%

Other income. The increase resulted primarily from an overall improvement in the estimated earnings related to investments in venture-backed funds during the three months ended June 30, 2025 compared to 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)		June 30, 2025				June 30, 2024				$ Change				% Change
Service charges on deposit accounts		$	196			$	189			$	7				3.70	%
Gain on sale of loans			119				449				(330	)			(73.50	)%
Loan-related fees			468				370				98				26.49	%
FHLB stock dividends			325				329				(4	)			(1.22	)%
Earnings on bank-owned life insurance			220				158				62				39.24	%
Other income			482				78				404				517.95	%
Total non-interest income		$	1,810			$	1,573			$	237				15.07	%

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 June 30, 2025, approximately $1.6 million of loans were sold with an effective yield of 7.60%, as compared to approximately $6.8 million of loans sold with an effective yield of 6.60% during the three months ended June 30, 2024.

Other income. The increase related primarily to an overall improvement in the estimated earnings related to investments in venture-backed funds during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Non-interest Expense

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

		Three months ended
(in thousands)		June 30, 2025				March 31, 2025				$ Change				% Change
Salaries and employee benefits		$	8,910			$	9,134			$	(224	)			(2.45	)%
Occupancy and equipment			657				637				20				3.14	%
Data processing and software			1,508				1,457				51				3.50	%
Federal Deposit Insurance Corporation (“FDIC”) insurance			470				455				15				3.30	%
Professional services			918				913				5				0.55	%
Advertising and promotional			865				522				343				65.71	%
Loan-related expenses			423				319				104				32.60	%
Other operating expenses			1,975				1,608				367				22.82	%
Total non-interest expense		$	15,726			$	15,045			$	681				4.53	%

Salaries and employee benefits. The decrease related primarily to: (i) a $0.6 million increase in deferred loan origination costs due to greater loan originations, net of purchased consumer loans; and (ii) $0.1 million decrease in salaries, benefits, and bonus expense. The decrease was partially offset by a $0.5 million increase in commissions expense due to greater loan originations, net of purchased consumer loans, period-over-period.

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 related to business development expenses, a $0.1 million increase in expenses related to sponsored events and partnerships, and a $0.1 million increase in expenses related to donations.

Loan-related expenses. The increase related primarily to a $0.1 million increase in expenses related to inspections to support the increase in loan originations and annual loan reviews.

Other operating expenses. The increase was primarily due to a $0.2 million increase in business travel expenses and a $0.1 million increase in expenses related to conferences and trainings attended.

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

		Three months ended
(in thousands)		June 30, 2025				June 30, 2024				$ Change				% Change
Salaries and employee benefits		$	8,910			$	7,803			$	1,107				14.19	%
Occupancy and equipment			657				646				11				1.70	%
Data processing and software			1,508				1,235				273				22.11	%
FDIC insurance			470				390				80				20.51	%
Professional services			918				767				151				19.69	%
Advertising and promotional			865				615				250				40.65	%
Loan-related expenses			423				297				126				42.42	%
Other operating expenses			1,975				1,760				215				12.22	%
Total non-interest expense		$	15,726			$	13,513			$	2,213				16.38	%

Salaries and employee benefits. The increase related primarily to: (i) a $1.2 million increase in salaries, benefits, and bonus expense, mainly related to a 16.58% increase in headcount between June 30, 2024 and June 30, 2025; and (ii) a $0.1 million increase in commissions paid. This increase was partially offset by a $0.2 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 compensation and 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 business development expenses.

Loan-related expenses. The increase related primarily to a $0.1 million increase in expenses related to inspections to support the increase in loan originations and annual loan reviews.

Other operating expenses. The increase was primarily due to a $0.1 million increase in travel expense and a $0.1 million increase in expenses related to conferences, trainings, and professional association memberships.

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 Dec. 31, 2025. These changes were not reflected in the income tax provision for the period ended June 30, 2025, as enactment occurred after the balance sheet date. The Company is currently evaluating the impact on future periods.

Three months ended June 30, 2025, as compared to three months ended March 31, 2025

Provision for income taxes increased to $5.6 million for the three months ended June 30, 2025 from $5.3 million for the three months ended March 31, 2025, which was primarily due to an increase in taxable income recognized during the three months ended June 30, 2025. This increase was partially offset by a net $0.2 million reduction to the provision recorded during the three months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which requires a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasuring of the deferred tax assets and liabilities as of June 30, 2025. The effective tax rates were 27.82% and 28.71% for the three months ended June 30, 2025 and March 31, 2025, respectively.

Three months ended June 30, 2025, as compared to three months ended June 30, 2024

Provision for income taxes increased by $1.2 million, or 27.94%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. This increase was primarily driven by an increase in taxable income. This increase was partially offset by a net $0.2 million reduction to the provision recorded during the three months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which requires a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasuring of the deferred tax assets and liabilities as of June 30, 2025. The effective tax rates were 27.82% and 28.84% for the three months ended June 30, 2025 and June 30, 2024, respectively.

Webcast Details

Five Star Bancorp will host a live webcast for analysts and investors on Thursday, July 24, 2025 at 1:00 PM ET (10:00 AM PT) to discuss its second 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 and Quarterly Report on Form 10-Q for the three months ended March 31, 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 and share data)		June 30, 2025				March 31, 2025				June 30, 2024
Revenue and Expense Data
Interest and fee income		$	60,580			$	57,087			$	48,998
Interest expense			24,065				23,110				19,906
Net interest income			36,515				33,977				29,092
Provision for credit losses			2,500				1,900				2,000
Net interest income after provision			34,015				32,077				27,092
Non-interest income:
Service charges on deposit accounts			196				215				189
Gain on sale of loans			119				125				449
Loan-related fees			468				448				370
FHLB stock dividends			325				331				329
Earnings on bank-owned life insurance			220				161				158
Other income			482				79				78
Total non-interest income			1,810				1,359				1,573
Non-interest expense:
Salaries and employee benefits			8,910				9,134				7,803
Occupancy and equipment			657				637				646
Data processing and software			1,508				1,457				1,235
FDIC insurance			470				455				390
Professional services			918				913				767
Advertising and promotional			865				522				615
Loan-related expenses			423				319				297
Other operating expenses			1,975				1,608				1,760
Total non-interest expense			15,726				15,045				13,513
Income before provision for income taxes			20,099				18,391				15,152
Provision for income taxes			5,591				5,280				4,370
Net income		$	14,508			$	13,111			$	10,782
Comprehensive Income
Net income		$	14,508			$	13,111			$	10,782
Net unrealized holding gain on securities available-for-sale during the period			190				1,030				295
Less: Income tax expense related to other comprehensive (loss) income			502				305				87
Other comprehensive (loss) income			(312	)			725				208
Total comprehensive income		$	14,196			$	13,836			$	10,990
Share and Per Share Data
Earnings per common share:
Basic		$	0.68			$	0.62			$	0.51
Diluted		$	0.68			$	0.62			$	0.51
Book value per share		$	19.51			$	19.06			$	17.85
Tangible book value per share(1)		$	19.51			$	19.06			$	17.85
Weighted average basic common shares outstanding			21,225,831				21,209,881				21,039,798
Weighted average diluted common shares outstanding			21,269,265				21,253,588				21,058,085
Shares outstanding at end of period			21,360,991				21,329,235				21,319,583
Selected Financial Ratios
ROAA			1.37	%			1.30	%			1.23	%
ROAE			14.17	%			13.28	%			11.72	%
Net interest margin			3.53	%			3.45	%			3.39	%
Loan to deposit(2)			96.50	%			97.01	%			103.87	%
(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.

(in thousands)		June 30, 2025				March 31, 2025				June 30, 2024
Balance Sheet Data
Cash and due from financial institutions		$	53,724			$	42,473			$	28,572
Interest-bearing deposits in banks			430,086				410,098				161,787
Time deposits in banks			849				4,024				4,097
Securities - available-for-sale, at fair value			94,990				97,111				103,204
Securities - held-to-maturity, at amortized cost			2,585				2,585				2,973
Loans held for sale			309				2,669				5,322
Loans held for investment			3,758,025				3,621,819				3,266,291
Allowance for credit losses			(40,167	)			(39,224	)			(35,406	)
Loans held for investment, net of allowance for credit losses			3,717,858				3,582,595				3,230,885
FHLB stock			15,000				15,000				15,000
Operating leases, right-of-use asset			7,094				5,944				6,630
Premises and equipment, net			1,606				1,524				1,610
Bank-owned life insurance			23,466				23,246				19,030
Interest receivable and other assets			65,906				57,788				55,107
Total assets		$	4,413,473			$	4,245,057			$	3,634,217
Non-interest-bearing deposits		$	1,004,061			$	933,652			$	825,733
Interest-bearing deposits			2,890,561				2,802,702				2,323,898
Total deposits			3,894,622				3,736,354				3,149,631
Subordinated notes, net			73,968				73,932				73,822
Other borrowings			—				—				—
Operating lease liability			7,744				6,591				7,077
Interest payable and other liabilities			20,397				21,729				23,217
Total liabilities			3,996,731				3,838,606				3,253,747
Common stock			303,155				302,788				301,968
Retained earnings			125,545				115,309				90,734
Accumulated other comprehensive loss, net of taxes			(11,958	)			(11,646	)			(12,232	)
Total shareholders’ equity			416,742				406,451				380,470
Total liabilities and shareholders’ equity		$	4,413,473			$	4,245,057			$	3,634,217
Quarterly Average Balance Data
Average loans held for investment and sale		$	3,691,616			$	3,567,992			$	3,197,921
Average interest-earning assets			4,151,368				3,997,037				3,452,676
Average total assets			4,253,000				4,090,580				3,537,230
Average deposits			3,736,018				3,585,782				3,049,919
Average total equity			410,609				400,501				370,135
Credit Quality
Allowance for credit losses to nonperforming loans			1,763.26	%			2,222.32	%			1,882.30	%
Nonperforming loans to loans held for investment			0.06	%			0.05	%			0.06	%
Nonperforming assets to total assets			0.05	%			0.04	%			0.05	%
Nonperforming loans plus performing loan modifications to loans held for investment			0.06	%			0.05	%			0.06	%
Capital Ratios
Total shareholders’ equity to total assets			9.44	%			9.57	%			10.47	%
Tangible shareholders’ equity to tangible assets(1)			9.44	%			9.57	%			10.47	%
Total capital (to risk-weighted assets)			13.72	%			13.97	%			14.38	%
Tier 1 capital (to risk-weighted assets)			10.85	%			11.00	%			11.27	%
Common equity Tier 1 capital (to risk-weighted assets)			10.85	%			11.00	%			11.27	%
Tier 1 leverage ratio			10.03	%			10.17	%			11.05	%
(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)		June 30, 2025				March 31, 2025				June 30, 2024
Pre-tax, pre-provision income
Pre-tax income		$	20,099			$	18,391			$	15,152
Add: provision for credit losses			2,500				1,900				2,000
Pre-tax, pre-provision income		$	22,599			$	20,291			$	17,152

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

FAQ

What was Five Star Bancorp's (FSBC) net income for Q2 2025?

Five Star Bancorp reported net income of $14.5 million for Q2 2025, up from $13.1 million in Q1 2025 and $10.8 million in Q2 2024.

How much did FSBC's loans and deposits grow in Q2 2025?

Total loans increased by $136.2 million (3.76%) and total deposits grew by $158.3 million (4.24%) during Q2 2025.

What was Five Star Bancorp's net interest margin in Q2 2025?

The net interest margin was 3.53% in Q2 2025, up from 3.45% in Q1 2025 and 3.39% in Q2 2024.

How much is FSBC's quarterly dividend payment?

Five Star Bancorp declared a quarterly cash dividend of $0.20 per share, payable on August 11, 2025 to shareholders of record as of August 4, 2025.

What is Five Star Bancorp's asset quality status?

FSBC maintained strong asset quality with a nonperforming loans ratio of just 0.06% and a common equity Tier 1 capital ratio of 10.85%.

How successful is FSBC's San Francisco Bay Area expansion?

The San Francisco Bay Area team grew to 34 employees and generated $456.9 million in deposits, an increase of $77.2 million from the previous quarter.