FSBC Five Star Bancorp

NASDAQ
$46.75

Five Star Bancorp Announces Second Quarter 2026 Results

Wednesday, July 22, 2026 · 4:01 PM ET GlobeNewswire

RANCHO CORDOVA, Calif., July 22, 2026 (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 $19.4 million for the three months ended June 30, 2026, as compared to $18.6 million for the three months ended March 31, 2026 and $14.5 million for the three months ended June 30, 2025.

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,
2026		 March 31,
2026		 June 30,
2025
Return on average assets (“ROAA”) 1.49%  1.55%  1.37%
Return on average equity (“ROAE”) 16.67%  16.73%  14.17%
Pre-tax income$26,089  $25,031  $20,099 
Pre-tax, pre-provision income(1)$28,339  $27,706  $22,599 
Net income$19,399  $18,621  $14,508 
Basic earnings per common share$0.91  $0.87  $0.68 
Diluted earnings per common share$0.91  $0.87  $0.68 
Weighted average basic common shares outstanding 21,273,902   21,253,085   21,225,831 
Weighted average diluted common shares outstanding 21,338,903   21,313,078   21,269,265 
Shares outstanding at end of period 21,402,864   21,376,153   21,360,991 
            

(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 differentiated customer experience and reputation continue to power demand for our services. In the second quarter of 2026, we are pleased that net income increased to $19.4 million, compared to $18.6 million for the first quarter of 2026, and earnings per share increased to $0.91, up $0.04 from the first quarter of 2026 and up $0.23 from the second quarter of 2025. Net interest margin decreased by seven basis points to 3.63%. Total loans held for investment increased by $306.3 million, or 7% (approximately 29% when annualized), and total deposits increased by $330.0 million, or 7% (approximately 30% when annualized). We are also pleased with the continued execution of our strategic plan, including the payment of a cash dividend of $0.25 per share to shareholders. In the second quarter, Five Star Bank was honored to be named the Best Place to Work by the San Francisco Business Times, ranking first overall among participating businesses with 25 to 49 employees in the San Francisco Bay Area. This recognition reflects our purpose-driven culture, which is a meaningful differentiator and an important contributor to our continued performance. I am proud of our team’s accomplishments and look forward to the continued momentum of our organic growth story.”

Financial highlights as of and during the three months ended June 30, 2026 included the following:

  • Total deposits increased by $330.0 million, or 7.38%, during the three months ended June 30, 2026, with growth in non-wholesale deposits exceeding declines in wholesale deposits. The Company defines wholesale deposits as brokered deposits and California Time Deposit Program deposits. During the three months ended June 30, 2026, non-wholesale deposits increased by $463.1 million, or 11.33%, and wholesale deposits decreased by $133.1 million, or 34.74%.
  • The number of Business Development Officers increased from 43 at March 31, 2026 to 45 at June 30, 2026.
  • Cash and cash equivalents were $685.1 million, representing 14.27% of total deposits at June 30, 2026, as compared to 14.42% at March 31, 2026.
  • Consistent, disciplined management of expenses contributed to our efficiency ratio of 40.91% for the three months ended June 30, 2026, as compared to 38.57% for the three months ended March 31, 2026 and 41.03% for the three months ended June 30, 2025.
  • Net interest margin expanded by 10 basis points year-over-year, increasing from 3.53% for the three months ended June 30, 2025 to 3.63% for the three months ended June 30, 2026, demonstrating the Company's ability to grow its margin even as the effective federal funds rate declined 70 basis points over the same period from 4.33% at June 30, 2025 to 3.63% at June 30, 2026. Net interest margin for the three months ended June 30, 2026 contracted by seven basis points from 3.70% for the three months ended March 31, 2026, reflecting that strong quarter-over-quarter growth in net interest income was primarily volume driven, as rapid balance sheet expansion modestly diluted the overall yield on earning assets.
  • Other comprehensive income was $0.7 million during the three months ended June 30, 2026. Unrealized losses, net of tax effect, on available-for-sale securities were $9.4 million as of June 30, 2026. Total carrying value of held-to-maturity and available-for-sale securities represented 0.04% and 1.72% of total interest-earning assets, respectively, as of June 30, 2026.
  • The Company’s common equity Tier 1 capital ratio was 9.98% and 10.45% as of June 30, 2026 and March 31, 2026, respectively. The Bank continues to meet all requirements to be considered “well-capitalized” under applicable regulatory guidelines.
  • Loan and deposit growth as of the dates provided below was as follows:
(in thousands)June 30,
2026		 March 31,
2026		 $ Change % Change
Loans held for investment$4,519,681 $4,213,393 $306,288  7.27%
Non-interest-bearing deposits 1,174,406  1,232,696  (58,290) (4.73)%
Interest-bearing deposits 3,624,977  3,236,657  388,320  12.00%
        
(in thousands)June 30,
2026		 June 30,
2025		 $ Change % Change
Loans held for investment$4,519,681 $3,758,025 $761,656  20.27%
Non-interest-bearing deposits 1,174,406  1,004,061  170,345  16.97%
Interest-bearing deposits 3,624,977  2,890,561  734,416  25.41%
             
  • The ratio of nonperforming loans to loans held for investment at period end increased from 0.07% at March 31, 2026 to 0.30% at June 30, 2026, due to one Community Reinvestment Act loan that was placed on non-accrual status. The balance of the loan is $11.4 million as of June 30, 2026 and was originally downgraded to substandard in 2025.
  • The Company’s Board of Directors declared, and the Company subsequently paid, a cash dividend of $0.25 per share during the three months ended June 30, 2026. The Company’s Board of Directors declared an additional cash dividend of $0.25 per share on July 16, 2026, which the Company expects to pay on August 10, 2026 to shareholders of record as of August 3, 2026.

Summary Results

Three months ended June 30, 2026, as compared to three months ended March 31, 2026

The Company’s net income was $19.4 million for the three months ended June 30, 2026, as compared to $18.6 million for the three months ended March 31, 2026. Net interest income increased by $2.6 million during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026, primarily due to an increase in interest income driven by loan growth and higher interest-earning deposits in banks, partially offset by an increase in interest expense driven by deposit growth. The provision for credit losses decreased by $0.4 million during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026, reflecting lower loss estimates driven by strong loan growth concentrated in pools with relatively lower loss rates. Non-interest income increased by $0.2 million during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026, primarily due to an overall improvement in earnings related to investments in venture-backed funds, partially offset by lower fees from swap referrals, and the absence of a special FHLB stock dividend. Non-interest expense increased by $2.2 million during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026, primarily due to a $1.0 million loss contingency release on a U.S. Small Business Administration (“SBA”) loan that benefitted the three months ended March 31, 2026, which did not reoccur during the three months ended June 30, 2026, as well as higher advertising, promotional, data processing, and software expenses tied to continued organizational growth.

Three months ended June 30, 2026, as compared to three months ended June 30, 2025

The Company’s net income was $19.4 million for the three months ended June 30, 2026, as compared to $14.5 million for the three months ended June 30, 2025. Net interest income increased by $9.6 million during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to an increase in interest income driven by loan growth and higher interest-earning deposits in banks, partially offset by an increase in interest expense driven by deposit growth, though moderated by a decrease in the average cost of deposits. The provision for credit losses decreased by $0.3 million, reflecting lower net charge-offs in the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Non-interest income increased by $0.1 million during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily reflecting higher loan referral income and fees from swap referrals, as well as an overall improvement in earnings related to investments in venture-backed funds. These increases were partially offset by lower FHLB stock dividends and an intentional reduction in gain on sale of loans. Non-interest expense increased by $3.9 million during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, driven primarily by increased salaries and employee benefits from increased headcount, along with growth in other operating expenses reflecting continued organizational expansion.

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,
2026		 March 31,
2026		 $ Change % Change
Selected operating data:        
Net interest income $46,083  $43,457  $2,626  6.04%
Provision for credit losses  2,250   2,675   (425) (15.89)%
Non-interest income  1,872   1,643   229  13.94%
Non-interest expense  19,616   17,394   2,222  12.77%
Pre-tax income  26,089   25,031   1,058  4.23%
Provision for income taxes  6,690   6,410   280  4.37%
Net income $19,399  $18,621  $778  4.18%
Earnings per common share:        
Basic $0.91  $0.87  $0.04  4.60%
Diluted $0.91  $0.87  $0.04  4.60%
Performance and other financial ratios:        
ROAA  1.49%  1.55%    
ROAE  16.67%  16.73%    
Net interest margin  3.63%  3.70%    
Total cost of funds(1)  2.23%  2.20%    
Efficiency ratio  40.91%  38.57%    


  Three months ended    
(in thousands, except per share data) June 30,
2026		 June 30,
2025		 $ Change % Change
Selected operating data:        
Net interest income $46,083  $36,515  $9,568  26.20%
Provision for credit losses  2,250   2,500   (250) (10.00)%
Non-interest income  1,872   1,810   62  3.43%
Non-interest expense  19,616   15,726   3,890  24.74%
Pre-tax income  26,089   20,099   5,990  29.80%
Provision for income taxes  6,690   5,591   1,099  19.66%
Net income $19,399  $14,508  $4,891  33.71%
Earnings per common share:        
Basic $0.91  $0.68  $0.23  33.82%
Diluted $0.91  $0.68  $0.23  33.82%
Performance and other financial ratios:        
ROAA  1.49%  1.37%    
ROAE  16.67%  14.17%    
Net interest margin  3.63%  3.53%    
Total cost of funds(1)  2.23%  2.53%    
Efficiency ratio  40.91%  41.03%    
             

(1) Total cost of funds reflects the average cost of all funding sources, including both interest-bearing and non-interest-bearing deposits and borrowings.

Balance Sheet Summary

(in thousands) June 30,
2026		  March 31,
2026		  $ Change % Change
Selected financial condition data:          
Total assets $5,377,062  $5,031,751  $345,311  6.86%
Cash and cash equivalents  685,074   644,359   40,715  6.32%
Total loans held for investment  4,519,681   4,213,393   306,288  7.27%
Total investments  92,719   93,850   (1,131) (1.21)%
Total liabilities  4,903,291   4,573,232   330,059  7.22%
Total deposits  4,799,383   4,469,353   330,030  7.38%
Subordinated notes, net  74,114   74,077   37  0.05%
Total shareholders’ equity  473,771   458,519   15,252  3.33%
                
  • Insured and collateralized deposits were approximately $3.2 billion, representing 65.80% of total deposits as of June 30, 2026, as compared to 65.55% as of March 31, 2026. Net uninsured and uncollateralized deposits were approximately $1.6 billion as of June 30, 2026, increasing from $1.5 billion at March 31, 2026.
  • Non-wholesale deposit balances constituted 94.79% of total deposits as of June 30, 2026, as compared to 91.43% as of March 31, 2026. Deposit relationships of greater than $5 million represented 63.88% of total deposits as of June 30, 2026, as compared to 60.67% as of March 31, 2026, and had an average age of approximately 7.39 years as of June 30, 2026, as compared to 7.98 years as of March 31, 2026.
  • Total deposits as of June 30, 2026 were $4.8 billion, an increase of $330.0 million, or 7.38%, from March 31, 2026, comprised of an increase in interest-bearing deposits, partially offset by a decrease in non-interest-bearing deposits.
  • Cash and cash equivalents as of June 30, 2026 were $685.1 million, representing 14.27% of total deposits at June 30, 2026, as compared to 14.42% as of March 31, 2026.
  • Total liquidity (consisting of cash and cash equivalents as well as unused and immediately available borrowing capacity as set forth below) was approximately $2.3 billion as of June 30, 2026, as compared to $2.2 billion at March 31, 2026.
  June 30, 2026
(in thousands) Line of Credit Letters of
Credit Issued		 Borrowings Available
Federal Home Loan Bank of San Francisco (“FHLB”) advances $1,629,065 $1,297,500 $— $331,565
Federal Reserve Discount Window  1,074,577  —  —  1,074,577
Correspondent bank lines of credit  185,000  —  —  185,000
Cash and cash equivalents  —  —  —  685,074
Total $2,888,642 $1,297,500 $— $2,276,216


(in thousands) June 30,
2026		 December 31,
2025		 $ Change % Change
Selected financial condition data:        
Total assets 5,377,062 4,754,861 622,201  13.09%
Cash and cash equivalents 685,074 506,851 178,223  35.16%
Total loans held for investment 4,519,681 4,074,929 444,752  10.91%
Total investments 92,719 96,889 (4,170) (4.30)%
Total liabilities 4,903,291 4,309,029 594,262  13.79%
Total deposits 4,799,383 4,201,084 598,299  14.24%
Subordinated notes, net 74,114 74,041 73  0.10%
Total shareholders’ equity 473,771 445,832 27,939  6.27%
           

The increase in total assets from December 31, 2025 to June 30, 2026 was primarily comprised of a $444.8 million increase in total loans held for investment and a $178.2 million increase in cash and cash equivalents. The $444.8 million increase in total loans held for investment between December 31, 2025 and June 30, 2026 was a result of $1.0 billion in loan originations and advances, partially offset by $162.1 million and $421.9 million in loan payoffs and paydowns, respectively. The $444.8 million increase in total loans held for investment included $145.0 million in purchased loans within the consumer section of the loan portfolio. The $178.2 million increase in cash and cash equivalents primarily resulted from the net increase in cash inflows from growth in total deposits of $598.3 million and cash outflows from growth in total loans held for investment of $444.8 million.

The increase in total liabilities from December 31, 2025 to June 30, 2026 was primarily due to an increase in deposits of $598.3 million. The increase in deposits was largely due to increases in money market, interest-bearing transaction, and non-interest-bearing deposits of $590.7 million, $156.1 million, and $89.9 million, respectively, partially offset by a $246.6 million decrease in time deposits, mainly attributable to a $215.0 million decline in wholesale deposits.

The increase in total shareholders’ equity from December 31, 2025 to June 30, 2026 was primarily a result of $38.0 million recognized as net income during the period, partially offset by $10.7 million in cash dividends paid during the period and a $0.3 million increase in accumulated other comprehensive loss.

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,
2026		 March 31,
2026		 $ Change % Change
Interest and fee income $72,327  $67,347  $4,980 7.39%
Interest expense  26,244   23,890   2,354 9.85%
Net interest income $46,083  $43,457  $2,626 6.04%
Net interest margin  3.63%  3.70%    
         
  Three months ended    
(in thousands) June 30,
2026		 June 30,
2025		 $ Change % Change
Interest and fee income $72,327  $60,580  $11,747 19.39%
Interest expense  26,244   24,065   2,179 9.05%
Net interest income $46,083  $36,515  $9,568 26.20%
Net interest margin  3.63%  3.53%    
             

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

  Three months ended
  June 30, 2026 March 31, 2026 June 30, 2025
(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 $677,149 $6,253 3.70% $512,308 $4,687 3.71% $361,866 $3,987 4.42%
Investment securities  93,553  509 2.18%  96,787  544 2.28%  97,886  577 2.37%
Loans held for investment and sale  4,328,304  65,565 6.08%  4,150,446  62,116 6.07%  3,691,616  56,016 6.09%
Total interest-earning assets  5,099,006  72,327 5.69%  4,759,541  67,347 5.74%  4,151,368  60,580 5.85%
Interest receivable and other assets, net  123,354      118,967      101,632    
Total assets $5,222,360     $4,878,508     $4,253,000    
                   
Liabilities and shareholders’ equity                  
Interest-bearing transaction accounts $389,136 $1,297 1.34% $343,663 $1,133 1.34% $283,369 $1,043 1.48%
Savings accounts  143,818  844 2.35%  138,125  830 2.44%  121,692  801 2.64%
Money market accounts  2,556,482  19,318 3.03%  2,185,347  15,851 2.94%  1,647,628  13,270 3.23%
Time accounts  396,923  3,623 3.66%  531,031  4,915 3.75%  726,295  7,790 4.30%
Subordinated notes and other borrowings  74,091  1,162 6.29%  74,072  1,161 6.36%  73,967  1,161 6.30%
Total interest-bearing liabilities  3,560,450  26,244 2.96%  3,272,238  23,890 2.96%  2,852,951  24,065 3.38%
Demand accounts  1,163,991      1,122,062      957,034    
Interest payable and other liabilities  31,140      32,739      32,406    
Shareholders’ equity  466,779      451,469      410,609    
Total liabilities & shareholders’ equity $5,222,360     $4,878,508     $4,253,000    
                   
Net interest spread     2.73%     2.78%     2.47%
Net interest income/margin   $46,083 3.63%   $43,457 3.70%   $36,515 3.53%
                         

Net interest income during the three months ended June 30, 2026 increased by $2.6 million, or 6.04%, to $46.1 million, as compared to $43.5 million during the three months ended March 31, 2026. Net interest margin totaled 3.63% for the three months ended June 30, 2026, a decrease of seven basis points compared to the prior quarter, reflecting that strong quarter-over-quarter growth in net interest income was primarily volume driven, as rapid balance sheet expansion modestly diluted the overall yield on earning assets. The increase in net interest income is primarily attributable to a $5.0 million increase in interest income, mainly due to a $177.9 million, or 4.29%, increase in the average balance of loans and a $164.8 million, or 32.18%, increase in the average balance of interest-earning deposits in banks (deposits placed with other financial institutions to earn interest). The increase in interest income was partially offset by a $2.4 million increase in interest expense due to a $330.1 million, or 7.64%, increase in the average balance of deposits, combined with a three basis point increase in the average cost of deposits. The average balance of non-interest bearing deposits increased by $41.9 million, or 3.74%, quarter-over-quarter, helping to partially offset the rise in deposit funding costs.

As compared to the three months ended June 30, 2025, net interest income during the three months ended June 30, 2026 increased by $9.6 million, or 26.20%, to $46.1 million from $36.5 million. Net interest margin totaled 3.63% for the three months ended June 30, 2026, an increase of 10 basis points compared to the same quarter of the prior year. The improvement was driven by balance sheet growth and a favorable shift in funding mix, which more than offset pressure from declining federal funds rates over the same period. The increase in net interest income is primarily attributable to an $11.7 million increase in interest income, mainly due to a $636.7 million, or 17.25%, increase in the average balance of loans and a $315.3 million, or 87.13%, increase in the average balance of interest-earning deposits in banks (deposits placed with other financial institutions to earn interest). This increase in interest income was partially offset by a $2.2 million increase in interest expense, stemming from a $914.3 million, or 24.47%, increase in the average balance of deposits during the three months ended June 30, 2026, moderated by a 30 basis point decrease in average cost of deposits compared to the same quarter of the prior year. Further supporting the decreasing average cost of deposits, the average balance of non-interest-bearing deposits increased by $207.0 million, or 21.62%, 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) June 30, 2026 March 31, 2026
Real estate:    
Commercial $3,597,173  $3,421,902 
Commercial land and development  2,507   2,519 
Commercial construction  124,053   108,179 
Residential construction  21,809   17,808 
Residential  41,874   43,195 
Farmland  59,900   61,090 
Commercial:    
Secured  258,736   243,140 
Unsecured  41,263   41,971 
Consumer and other  374,614   275,891 
Net deferred loan fees  (2,248)  (2,302)
Total loans held for investment $4,519,681  $4,213,393 
         

Interest-bearing Deposits

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

(in thousands) June 30, 2026  March 31, 2026 
Interest-bearing transaction accounts $500,256  $349,138 
Savings accounts  147,435   141,961 
Money market accounts  2,669,295   2,291,215 
Time accounts  307,991   454,343 
Total interest-bearing deposits $3,624,977  $3,236,657 
         

Asset Quality

Allowance for Credit Losses

At June 30, 2026, the Company’s allowance for credit losses was $47.3 million, as compared to $44.4 million at December 31, 2025. The $2.9 million increase in the allowance is due to a $4.6 million provision for credit losses recorded during the six months ended June 30, 2026, partially offset by net charge-offs of $1.6 million, primarily attributable to commercial and industrial loans, during the same period.

The Company’s nonperforming loans increased from $3.1 million to $13.4 million between December 31, 2025 and June 30, 2026, increasing the ratio of nonperforming loans to loans held for investment from 0.08% at December 31, 2025 to 0.30% at June 30, 2026. This increase was due to one Community Reinvestment Act loan that was placed on non-accrual status during the period. The balance of the loan is $11.4 million as of June 30, 2026, and it was originally downgraded to substandard in 2025. This was partially offset by improvements across the remainder of the nonperforming loan portfolio. Loans designated as watch increased from $101.9 million to $154.6 million between December 31, 2025 and June 30, 2026. Loans designated as special mention increased from $37.5 million to $44.9 million between December 31, 2025 and June 30, 2026. Loans designated as substandard decreased from $22.3 million to $20.3 million between December 31, 2025 and June 30, 2026. There were no loans with doubtful risk grades at June 30, 2026 or December 31, 2025.

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

  June 30, 2026 December 31, 2025
(in thousands) Amount % of Total Amount % of Total
Real estate:        
Commercial $28,371 59.92% $25,219 56.77%
Commercial land and development  90 0.19%  56 0.13%
Commercial construction  4,444 9.39%  4,050 9.12%
Residential construction  533 1.13%  213 0.48%
Residential  419 0.89%  362 0.82%
Farmland  468 0.99%  467 1.05%
   34,325 72.51%  30,367 68.37%
Commercial:        
Secured  9,594 20.27%  11,204 25.23%
Unsecured  486 1.03%  482 1.09%
   10,080 21.30%  11,686 26.32%
Consumer and other  2,930 6.19%  2,356 5.31%
Total allowance for credit losses $47,335 100.00% $44,409 100.00%
             

The ratio of allowance for credit losses to loans held for investment was 1.05% at June 30, 2026, as compared to 1.09% at December 31, 2025.

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,
2026		 March 31,
2026		 $ Change % Change
Service charges on deposit accounts $122 $135  $(13) (9.63)%
Loan-related fees  679  1,265   (586) (46.32)%
FHLB stock dividends  191  762   (571) (74.93)%
Earnings on bank-owned life insurance  265  225   40  17.78%
Other income  615  (744)  1,359  (182.66)%
Total non-interest income $1,872 $1,643  $229  13.94%
               

Loan-related fees. The decrease resulted primarily from a decrease of $0.7 million in fees from swap referrals during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026, partially offset by an increase of $0.1 million in loan referral income.

FHLB stock dividends. The decrease related primarily to a $0.4 million special cash dividend from the FHLB during the three months ended March 31, 2026 that did not reoccur during the three months ended June 30, 2026. The remainder of the decrease primarily related to the FHLB’s transition to a tier-based dividend structure, which lowered the Bank’s effective dividend rate received.

Other income. The increase related primarily to an overall improvement in earnings related to investments in venture-backed funds during the three months ended June 30, 2026, as compared to the three months ended March 31, 2026.

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

  Three months ended    
(in thousands) June 30,
2026		 June 30,
2025		  $ Change % Change
Service charges on deposit accounts $122 $196  $(74) (37.76)%
Gain on sale of loans  —  119   (119) (100.00)%
Loan-related fees  679  468   211  45.09%
FHLB stock dividends  191  325   (134) (41.23)%
Earnings on bank-owned life insurance  265  220   45  20.45%
Other income  615  482   133  27.59%
Total non-interest income $1,872 $1,810  $62  3.43%
               

Gain on sale of loans. The decrease related to an overall decline in the volume of SBA loans sold due to a strategic, intentional reduction in originations of loans held for sale. During the three months ended June 30, 2026, no SBA 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 $0.1 million in loan referral income, combined with an increase of $0.1 million in fees from swap referrals during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

FHLB stock dividends. The decrease related primarily to the FHLB’s transition to a tier-based dividend structure, which lowered the Bank’s effective dividend rate received.

Other income. The increase related primarily to an overall improvement in earnings related to investments in venture-backed funds during the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

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,
2026		 March 31,
2026		  $ Change % Change
Salaries and employee benefits $11,421 $11,430  $(9) (0.08)%
Occupancy and equipment  873  829   44  5.31%
Data processing and software  1,709  1,551   158  10.19%
Federal Deposit Insurance Corporation (“FDIC”) insurance  585  545   40  7.34%
Professional services  952  926   26  2.81%
Advertising and promotional  959  744   215  28.90%
Loan-related expenses  304  247   57  23.08%
Other operating expenses  2,813  1,122   1,691  150.71%
Total non-interest expense $19,616 $17,394  $2,222  12.77%
               

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.

Advertising and promotional. The increase related primarily to additional expenses incurred to support the expansion of the Bank’s business development teams, including $0.1 million related to business development expenses and $0.1 million related to donations, sponsorships, and advertising expenses.

Other operating expenses. The increase related primarily to the release of a $1.0 million loss contingency on an SBA loan during the three months ended March 31, 2026. No such release occurred during the three months ended June 30, 2026. The remainder of the increase was primarily due to: (i) a $0.4 million increase in employee-related expenses such as travel, conferences, and training; (ii) a $0.1 million increase in administrative charges, including bank charges; and (iii) a $0.1 million increase in operational losses.

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

  Three months ended     
(in thousands) June 30,
2026		 June 30,
2025		  $ Change % Change
Salaries and employee benefits $11,421 $8,910  $2,511  28.18%
Occupancy and equipment  873  657   216  32.88%
Data processing and software  1,709  1,508   201  13.33%
FDIC insurance  585  470   115  24.47%
Professional services  952  918   34  3.70%
Advertising and promotional  959  865   94  10.87%
Loan-related expenses  304  423   (119) (28.13)%
Other operating expenses  2,813  1,975   838  42.43%
Total non-interest expense $19,616 $15,726  $3,890  24.74%
               

Salaries and employee benefits. The increase related primarily to: (i) a $2.8 million increase in salaries, benefits, and bonus expense, mainly related to a 13.30% increase in headcount between June 30, 2025 and June 30, 2026; and (ii) a $0.7 million increase in commissions primarily due to higher loan originations period-over-period. This increase was partially offset by a $0.9 million increase in deferred loan origination costs due to higher loan originations period-over-period.

Occupancy and equipment. The increase was primarily due to expenses for the Walnut Creek branch office and Newport Beach non-depository office during the three months ended June 30, 2026, which did not exist for the three months ended June 30, 2025.

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.

FDIC insurance. The increase was primarily due to a $916.2 million increase in the assessment base period-over-period.

Loan-related expenses. The decrease related primarily to lower inspection and legal expenses. Although loan originations were higher period-over-period, a greater mix of purchased loans and large credit relationships reduced per-unit inspection costs, and inspection activity was delayed relative to the prior period.

Other operating expenses. The increase related primarily to: (i) a $0.3 million increase in employee-related expenses such as travel and professional association memberships; (ii) a $0.2 million increase in bank charges; (iii) a $0.1 million increase in operational losses; (iv) a $0.1 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network; and (v) a $0.1 million increase in armored car and courier services.

Provision for Income Taxes

Three months ended June 30, 2026, as compared to three months ended March 31, 2026

Provision for income taxes increased by $0.3 million, or 4.37%, for the three months ended June 30, 2026, as compared to the three months ended March 31, 2026, which was primarily due to an increase in taxable income. The effective tax rates were 25.64% and 25.61% for the three months ended June 30, 2026 and March 31, 2026, respectively.

Three months ended June 30, 2026, as compared to three months ended June 30, 2025

Provision for income taxes increased by $1.1 million, or 19.66%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. This increase was primarily driven by an increase in taxable income, partially offset by a $0.2 million benefit recorded during the three months ended June 30, 2026 related to the purchase of transferable tax credits that did not occur during the three months ended June 30, 2025. The effective tax rates were 25.64% and 27.82% for the three months ended June 30, 2026 and June 30, 2025, respectively.

Webcast Details

Five Star Bancorp will host a live webcast for analysts and investors on Thursday, July 23, 2026 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 ten branches in California, following the opening of a branch in Lodi in July 2026.

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 phrases 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, 2025 and Quarterly Report on Form 10-Q for the three months ended March 31, 2026, 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,
2026		 March 31,
2026		 June 30,
2025
Revenue and Expense Data      
Interest and fee income $72,327  $67,347  $60,580 
Interest expense  26,244   23,890   24,065 
Net interest income  46,083   43,457   36,515 
Provision for credit losses  2,250   2,675   2,500 
Net interest income after provision  43,833   40,782   34,015 
Non-interest income:      
Service charges on deposit accounts  122   135   196 
Gain on sale of loans  —   —   119 
Loan-related fees  679   1,265   468 
FHLB stock dividends  191   762   325 
Earnings on bank-owned life insurance  265   225   220 
Other income  615   (744)  482 
Total non-interest income  1,872   1,643   1,810 
Non-interest expense:      
Salaries and employee benefits  11,421   11,430   8,910 
Occupancy and equipment  873   829   657 
Data processing and software  1,709   1,551   1,508 
FDIC insurance  585   545   470 
Professional services  952   926   918 
Advertising and promotional  959   744   865 
Loan-related expenses  304   247   423 
Other operating expenses  2,813   1,122   1,975 
Total non-interest expense  19,616   17,394   15,726 
Income before provision for income taxes  26,089   25,031   20,099 
Provision for income taxes  6,690   6,410   5,591 
Net income $19,399  $18,621  $14,508 
       
Comprehensive Income      
Net income $19,399  $18,621  $14,508 
Net unrealized holding gain (loss) on securities available-for-sale during the period  946   (1,173)  190 
Less: Income tax expense (benefit) related to other comprehensive income (loss)  246   (201)  502 
Other comprehensive income (loss)  700   (972)  (312)
Total comprehensive income $20,099  $17,649  $14,196 
       
Share and Per Share Data      
Earnings per common share:      
Basic $0.91  $0.87  $0.68 
Diluted $0.91  $0.87  $0.68 
Book value per share $22.14  $21.45  $19.51 
Tangible book value per share(1) $22.14  $21.45  $19.51 
Weighted average basic common shares outstanding  21,273,902   21,253,085   21,225,831 
Weighted average diluted common shares outstanding  21,338,903   21,313,078   21,269,265 
Shares outstanding at end of period  21,402,864   21,376,153   21,360,991 
       
Selected Financial Ratios      
ROAA  1.49%  1.55%  1.37%
ROAE  16.67%  16.73%  14.17%
Net interest margin  3.63%  3.70%  3.53%
Loan to deposit(2)  94.17%  94.27%  96.50%
             

(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,
2026		 March 31,
2026		 June 30,
2025
Balance Sheet Data      
Cash and due from financial institutions $45,966  $46,123  $53,724 
Interest-bearing deposits in banks  639,108   598,236   430,086 
Time deposits in banks  —   100   849 
Securities - available-for-sale, at fair value  90,584   91,715   94,990 
Securities - held-to-maturity, at amortized cost  2,135   2,135   2,585 
Loans held for sale  —   —   309 
Loans held for investment  4,519,681   4,213,393   3,758,025 
Allowance for credit losses  (47,335)  (46,439)  (40,167)
Loans held for investment, net of allowance for credit losses  4,472,346   4,166,954   3,717,858 
FHLB stock  15,000   15,000   15,000 
Operating leases, right-of-use asset  10,138   10,428   7,094 
Premises and equipment, net  2,333   2,090   1,606 
Bank-owned life insurance  28,759   28,494   23,466 
Interest receivable and other assets  70,693   70,476   65,906 
Total assets $5,377,062  $5,031,751  $4,413,473 
       
Non-interest-bearing deposits $1,174,406  $1,232,696  $1,004,061 
Interest-bearing deposits  3,624,977   3,236,657   2,890,561 
Total deposits  4,799,383   4,469,353   3,894,622 
Subordinated notes, net  74,114   74,077   73,968 
Operating lease liability  11,262   11,547   7,744 
Interest payable and other liabilities  18,532   18,255   20,397 
Total liabilities  4,903,291   4,573,232   3,996,731 
       
Common stock  304,868   304,372   303,155 
Retained earnings  178,318   164,262   125,545 
Accumulated other comprehensive loss, net of taxes  (9,415)  (10,115)  (11,958)
Total shareholders’ equity  473,771   458,519   416,742 
Total liabilities and shareholders’ equity $5,377,062  $5,031,751  $4,413,473 
       
Quarterly Average Balance Data      
Average loans held for investment and sale $4,328,304  $4,150,446  $3,691,616 
Average interest-earning assets  5,099,006   4,759,541   4,151,368 
Average total assets  5,222,360   4,878,508   4,253,000 
Average deposits  4,650,350   4,320,228   3,736,018 
Average total equity  466,779   451,469   410,609 
       
Credit Quality      
Allowance for credit losses to nonperforming loans  354.57%  1,649.11%  1,763.26%
Nonperforming loans to loans held for investment  0.30%  0.07%  0.06%
Nonperforming assets to total assets  0.25%  0.06%  0.05%
Nonperforming loans plus performing loan modifications to loans held for investment  0.30%  0.07%  0.06%
Capital Ratios      
Total shareholders’ equity to total assets  8.81%  9.11%  9.44%
Tangible shareholders’ equity to tangible assets(1)  8.81%  9.11%  9.44%
Total capital (to risk-weighted assets)  12.51%  13.17%  13.73%
Tier 1 capital (to risk-weighted assets)  9.98%  10.45%  10.85%
Common equity Tier 1 capital (to risk-weighted assets)  9.98%  10.45%  10.85%
Tier 1 leverage ratio  9.21%  9.56%  10.03%
             

(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,
2026		 March 31,
2026		 June 30,
2025
Pre-tax, pre-provision income      
Pre-tax income $26,089 $25,031 $20,099
Add: provision for credit losses  2,250  2,675  2,500
Pre-tax, pre-provision income $28,339 $27,706 $22,599
          

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

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


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Source: Five Star Bank
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