Five Star Bancorp Announces Second Quarter 2025 Results

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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 % ChangeLoans 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 % ChangeLoans 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 % ChangeSelected 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: