Core Insights - Five Star Bancorp is expanding its presence in the Bay Area with a new office in Walnut Creek, reflecting its commitment to providing concierge commercial banking services to local businesses and non-profits [1][2][3] Group 1: Expansion Strategy - The new Walnut Creek office, approximately 4,128 square feet, is set to open in the third quarter of 2025, enhancing Five Star Bank's ability to serve a growing client portfolio in the East Bay [2][3] - This expansion follows the opening of a San Francisco office in September 2024, indicating a broader growth strategy in Northern California [2][3] Group 2: Market Opportunity - Walnut Creek has seen steady commercial growth and increased demand for high-tech financial services, driven by post-pandemic migration and a vibrant small business sector [2] - Existing client relationships in Walnut Creek, including local businesses like Original Joe's and Calicraft Brewing Co., position Five Star Bank to effectively meet the needs of East Bay clients [2] Group 3: Community Commitment - The new office is described as a natural extension of Five Star Bank's commitment to the East Bay communities, emphasizing personalized, relationship-based banking [3] - The location is chosen for its thriving business landscape, skilled workforce, and strong community values, aligning with the bank's strategic investment goals [3]

Part I: Financial Information [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20(unaudited)) The company reported increased assets and net income in Q1 2025, driven by loan growth and higher net interest income [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet reflects significant asset growth, primarily in loans and cash, funded by increased deposits and shareholders' equity Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Assets** | **$4,245,057** | **$4,053,278** | **+4.7%** | | Cash and cash equivalents | $452,571 | $352,343 | +28.4% | | Loans held for investment, net | $3,582,595 | $3,494,895 | +2.5% | | **Total Liabilities** | **$3,838,606** | **$3,656,654** | **+5.0%** | | Total deposits | $3,736,354 | $3,557,994 | +5.0% | | **Total Shareholders' Equity** | **$406,451** | **$396,624** | **+2.5%** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income increased significantly due to higher net interest income, despite increased provision for credit losses and non-interest expenses - Net income for Q1 2025 increased by **23.3%** to **$13,111 thousand**, primarily due to a **27.1%** increase in net interest income to **$33,977 thousand**, with diluted EPS remaining flat at **$0.62** year-over-year[12](index=12&type=chunk) Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $33,977 | $26,744 | +27.1% | | Provision for credit losses | $1,900 | $900 | +111.1% | | Non-interest Income | $1,359 | $1,833 | -25.9% | | Non-interest Expense | $15,045 | $12,716 | +18.3% | | **Net Income** | **$13,111** | **$10,631** | **+23.3%** | | Diluted EPS | $0.62 | $0.62 | 0.0% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased significantly, primarily driven by financing activities offsetting cash used in investing - Cash and cash equivalents increased by **$100,228 thousand** for Q1 2025, primarily due to **$174,094 thousand** from financing activities, offsetting **$89,338 thousand** used in investing activities[19](index=19&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $15,472 | $247 | | Net cash used in investing activities | ($89,338) | ($11,923) | | Net cash provided by (used in) financing activities | $174,094 | ($124,575) | | **Net change in cash and cash equivalents** | **$100,228** | **($136,251)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, loan and deposit composition, credit quality, and capital adequacy, confirming the company's well-capitalized status - The company operates as a single banking segment, primarily serving small to medium-sized businesses and individuals in Northern California[25](index=25&type=chunk) - The loan portfolio is heavily concentrated in real estate, comprising **86.62%** of total loans as of March 31, 2025[126](index=126&type=chunk) - As of March 31, 2025, **104** deposit relationships exceeded **$5.0 million** each, totaling **$2.3 billion** and representing **60.87%** of total deposits[127](index=127&type=chunk) - A cash dividend of **$0.20 per share** was declared and paid in Q1 2025, with another **$0.20 per share** declared in April 2025[113](index=113&type=chunk)[133](index=133&type=chunk) [Management's Discussion and Analysis (MD&A)](index=31&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights strong Q1 2025 performance driven by loan and deposit growth, improved net interest margin, robust credit quality, and strong capital ratios [Executive Summary & Highlights](index=35&type=section&id=Executive%20Summary) The executive summary outlines key financial achievements including asset growth, strong credit quality, improved net interest margin, and robust capital - Total assets grew by **4.73%** to **$4.2 billion** in Q1 2025, driven by a **$89.1 million (2.52%)** increase in loans and a **$178.4 million (5.01%)** increase in deposits[150](index=150&type=chunk) - Credit quality remains strong, with non-accrual loans at **0.05%** of total loans and the allowance for credit losses stable at **1.08%**[150](index=150&type=chunk) - Net interest margin improved to **3.45%** for Q1 2025, up from **3.14%** in Q1 2024, driven by higher loan balances and yields[150](index=150&type=chunk) - All capital ratios exceed well-capitalized regulatory thresholds, with a Tier 1 leverage ratio of **10.17%** as of March 31, 2025[150](index=150&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Operating results show increased net interest income driven by loan growth and yields, offset by higher provision for credit losses and non-interest expenses Change in Net Interest Income (Q1 2025 vs Q1 2024, in thousands) | Component | Change due to Volume | Change due to Yield/Rate | Total Change | | :--- | :--- | :--- | :--- | | **Interest Income** | **$7,858** | **$1,688** | **$9,546** | | Loans | $6,916 | $2,229 | $9,145 | | **Interest Expense** | **$3,605** | **($1,292)** | **$2,313** | | **Change in Net Interest Income** | **$4,253** | **$2,980** | **$7,233** | - The provision for credit losses increased to **$1,900 thousand** in Q1 2025 from **$900 thousand** in Q1 2024, reflecting loan growth and economic forecast adjustments[164](index=164&type=chunk) - Non-interest income decreased by **$500 thousand (25.9%)** year-over-year, mainly due to lower gains on loan sales and reduced income from equity investments[167](index=167&type=chunk)[168](index=168&type=chunk) - Salaries and employee benefits increased by **$1,600 thousand (20.6%)**, driven by a **13.19%** increase in headcount and higher commissions[172](index=172&type=chunk)[173](index=173&type=chunk) [Financial Condition](index=42&type=section&id=Financial%20Condition%20Summary) Financial condition shows asset and loan portfolio growth, strong asset quality, increased deposits, and higher shareholders' equity Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2025 | % of Total | | :--- | :--- | :--- | | Commercial Real Estate | $2,941,201 | 81.11% | | Commercial Construction | $113,002 | 3.12% | | Commercial (Secured & Unsecured) | $205,495 | 5.66% | | Consumer and other | $277,093 | 7.64% | | Other Real Estate & Farmland | $83,443 | 2.30% | | **Total Loans Held for Investment** | **$3,623,790** | **99.93%** | - Commercial real estate loan concentration was **576.23%** of risk-based capital as of March 31, 2025, remaining within internal limits[199](index=199&type=chunk) - Asset quality remains strong with nonperforming loans at **$1,800 thousand**, or **0.05%** of total loans, and an allowance for credit losses to nonperforming loans of **2,222%**[213](index=213&type=chunk) - Total deposits grew by **$178.4 million** in Q1 2025, with non-interest-bearing deposits increasing by **$11.0 million** to **$933.7 million**, representing **24.99%** of total deposits[228](index=228&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and capital, with available liquidity of **$2.0 billion** and capital ratios exceeding well-capitalized thresholds Total Liquidity as of March 31, 2025 (in thousands) | Source | Available Amount | | :--- | :--- | | FHLB advances | $544,572 | | Federal Reserve Discount Window | $856,366 | | Correspondent bank lines of credit | $175,000 | | Cash and cash equivalents | $452,571 | | **Total** | **$2,028,509** | Capital Ratios as of March 31, 2025 | Ratio | Bancorp | Bank | Well-Capitalized Minimum (Bank) | | :--- | :--- | :--- | :--- | | Total capital (to risk-weighted assets) | 13.97% | 13.50% | 10.00% | | Tier 1 capital (to risk-weighted assets) | 11.00% | 12.48% | 8.00% | | Common equity tier 1 capital | 11.00% | 12.48% | 6.50% | | Tier 1 leverage | 10.17% | 11.52% | 5.00% | - The company's primary parent company liquidity source is Bank dividends, subject to regulatory limitations, which management believes will not impact its ability to meet obligations[244](index=244&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=63&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company manages interest rate risk by monitoring NII and EVE sensitivity, showing a liability-sensitive position in rising rate scenarios Interest Rate Sensitivity Analysis as of March 31, 2025 | Change in Interest Rates (bps) | Estimated Change in NII (%) | Estimated Change in EVE (%) | | :--- | :--- | :--- | | +300 | (5.26)% | (10.22)% | | +200 | (3.52)% | (7.04)% | | +100 | (1.95)% | (3.55)% | | -100 | 2.03% | 3.16% | | -200 | 4.29% | 5.87% | | -300 | 7.61% | 8.99% | - Interest rate risk management policies are overseen by the Management and Director Asset Liability Committees[294](index=294&type=chunk) [Controls and Procedures](index=64&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[299](index=299&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2025[300](index=300&type=chunk) Part II: Other Information [Other Disclosures (Items 1-5)](index=65&type=section&id=ITEM%201.%20Legal%20Proceedings) This section confirms no material legal proceedings, no changes to risk factors, and no unregistered equity sales or issuer purchases - The company is not a party to any pending legal proceedings expected to have a material adverse effect on its business[302](index=302&type=chunk) - No material changes to risk factors previously disclosed in the Company's 2024 Annual Report on Form 10-K have occurred[303](index=303&type=chunk) - No unregistered sales or issuer purchases of equity securities occurred during the quarter[304](index=304&type=chunk)[306](index=306&type=chunk)

Core Insights - Five Star Bancorp has expanded its food and agribusiness vertical to enhance support for clients across the nation, reflecting its commitment to the food supply chain [1][2] - The new vertical, named Food, Agribusiness & Diversified Industries, will focus on various sectors including production agriculture, wholesale distribution, retail, manufacturing, food processing, and food distribution services [2] - The initiative is led by a team of experienced professionals, including Cliff Cooper, who has over 35 years of banking expertise in the food and agribusiness sector [2][3] Company Strategy - The enhanced vertical aligns with Five Star Bank's organic growth strategy, emphasizing a high-tech and high-touch approach to business banking [3] - The company aims to build strong relationships with clients in the agricultural community, recognizing the importance of trust and in-person interactions [4] - Five Star Bank is dedicated to honoring the work of those involved in the food supply chain, ensuring they receive exceptional banking services [4] Company Overview - Five Star Bancorp is headquartered in Rancho Cordova, California, and operates through its wholly owned banking subsidiary, Five Star Bank [5] - The bank currently has eight branches located in Northern California [5]

Company Overview - Five Star Bancorp's asset size reached $4245 million as of March 31, 2025 [20] - Loans held for investment (HFI) totaled $3600 million [20] - Total deposits amounted to $3700 million [20] Financial Highlights - Loans held for investment increased by $891 million since December 31, 2024 [29] - Non-wholesale deposits increased by $484 million since December 31, 2024 [29] - Non-interest-bearing deposits comprised 2499% of total deposits [29] - Insured and collateralized deposits represented 6755% of total deposits [29] - Cash and cash equivalents were $4526 million, representing 1211% of total deposits [29] Loan Portfolio - Commercial real estate loans accounted for 8111% of the loan portfolio [36] - Manufactured home community loans within CRE totaled $918864 thousand, representing 3124% of CRE loans [37] - RV Park loans within CRE totaled $378525 thousand, representing 1287% of CRE loans [37] Financial Performance - Net income for the three months ended March 31, 2025, was $13111 thousand [77] - Return on average assets (ROAA) was 130% [77] - Net interest margin was 345% [77]

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $13.1 million, with a return on average assets of 1.3% and return on average equity of 13.28% [11] - Total loans held for investment increased by $89.1 million or 2.52% from the prior quarter, with average loan yields rising by one basis point to 6.02% [4][11] - Net interest margin improved by nine basis points to 3.45% from 3.36% in the previous quarter, primarily due to lower average cost of deposits [11] - Non-interest income decreased to $1.4 million from $1.7 million in the previous quarter, mainly due to reduced income from equity investments [12] Business Line Data and Key Metrics Changes - The commercial real estate segment of the loan portfolio increased from 80.75% to 81.11% quarter over quarter, indicating a strong focus on this area [5] - Loan originations for the first quarter were $259.3 million, while payoffs and pay downs were $65.6 million and $104.6 million respectively [5] - Non-performing loans remained stable at 0.05% of loans held for investment [6] Market Data and Key Metrics Changes - Deposits increased by $178.4 million or 5% compared to the previous quarter, driven by increases in non-interest bearing demand and various types of interest-bearing deposits [6][9] - Non-interest bearing deposits as a percentage of total deposits decreased slightly to 24.99% from 25.93% in the prior quarter [8] - Wholesale deposits increased by $130 million or 23.21% quarter over quarter, while non-wholesale deposits rose by $48.4 million or 1.61% [9] Company Strategy and Development Direction - The company is focused on organic growth and disciplined business practices, aiming to benefit customers, employees, community, and shareholders [14] - Expansion into the San Francisco Bay Area is a key strategic initiative, supported by the addition of seasoned professionals [4][14] - The company aims to maintain a fortress balance sheet with a target of 10% in cash and a loan-to-deposit ratio of less than 100% [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to adapt to changing economic conditions, projecting loan growth of 10% to 12% for the remainder of the year [20][21] - Concerns regarding tariffs and economic slowdown were acknowledged, but management believes the bank is well-positioned due to the composition of its loan portfolio [30] - The company remains optimistic about the demand for loans, particularly in the mobile home park and RV park sectors, which have historically performed well [30] Other Important Information - The company declared a cash dividend of $0.20 per share, expected to be paid on May 12, 2025 [10] - Five Star Bancorp was ranked third on the S&P Global Market Intelligence List of best-performing community banks in the nation for banks with assets between $3 billion and $10 billion [64] Q&A Session Summary Question: Loan growth outlook for the year - Management is bullish on loan growth, projecting 10% to 12% for the rest of the year, supported by a strong sales force [20][21] Question: Reason for higher cost wholesale funding - Management indicated that core deposit growth is expected to match loan growth, and they do not anticipate additional wholesale funding [22][23] Question: Impact of tariffs on RV manufactured housing business - Management feels comfortable with their portfolio's performance in the face of tariffs, citing historical resilience during economic downturns [30] Question: Changes in allowance for loan losses - The increase in allowance was driven by portfolio growth and revised economic forecasts from the FOMC [36][37] Question: Loan pricing competition - Management acknowledged competitive pricing but remains satisfied with their current loan spreads [40][41] Question: Small business borrowers' response to economic uncertainty - Management noted that small business borrowers face high costs of borrowing, but they maintain a high level of reserves against this book [55][57]

Financial Data and Key Metrics Changes - Net income for the first quarter of 2025 was $13.1 million, with a return on average assets of 1.3% and return on average equity of 13.28% [10] - Average loan yields increased by one basis point to 6.02%, while net interest margin improved to 3.45% from 3.36% in the previous quarter [10] - Total loans held for investment rose by $89.1 million or 2.52% from the prior quarter [4] Business Line Data and Key Metrics Changes - The commercial real estate segment of the loan portfolio increased to 81.11% from 80.75% quarter over quarter [5] - Loan originations for the first quarter were $259.3 million, with payoffs and pay downs totaling $65.6 million and $104.6 million respectively [5] - Non-performing loans remained stable at 0.05% of loans held for investment [6] Market Data and Key Metrics Changes - Deposits increased by $178.4 million or 5% compared to the previous quarter, driven by increases in non-interest bearing demand and various types of interest-bearing deposits [6][7] - Non-wholesale deposits increased by $48.4 million or 1.61% quarter over quarter [8] - The cost of total deposits decreased by 10 basis points to 2.48% during the first quarter [9] Company Strategy and Development Direction - The company is focused on organic growth and disciplined business practices, aiming to benefit customers, employees, community, and shareholders [14] - Expansion into the San Francisco Bay Area is supported by adding seasoned professionals and increasing core deposit accounts [4] - The company aims to maintain a fortress balance sheet with a target of 10% cash and a loan-to-deposit ratio below 100% [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to adapt to changing economic conditions, projecting loan growth of 10% to 12% for the remainder of the year [19][20] - Concerns regarding tariffs and economic slowdown were acknowledged, but management believes the bank is well-positioned due to the composition of its loan portfolio [30] - The company remains optimistic about the demand for its services, particularly in the mobile home park and RV park sectors [29] Other Important Information - The company declared a cash dividend of $0.20 per share, expected to be paid on May 12, 2025 [9] - Five Star Bancorp was ranked third on the S&P Global Market Intelligence List of best-performing community banks among banks with assets between $3 billion and $10 billion [61] Q&A Session Summary Question: Loan growth outlook for the year - Management is bullish on loan growth, projecting 10% to 12% for the remainder of the year due to a strong sales force and solid pipelines [19][20] Question: Reason for higher cost wholesale funding - Management indicated that core deposit growth is expected to match loan growth, and they do not anticipate additional wholesale funding [22] Question: Impact of tariffs on RV manufactured housing business - Management feels comfortable with their portfolio's performance in the face of tariffs, citing historical resilience during economic downturns [30] Question: Changes in allowance for loan losses - The increase in allowance was driven by portfolio growth and revised economic forecasts from the FOMC [35] Question: Loan pricing competition - Management acknowledged competitive pricing but remains satisfied with their current loan spreads [40] Question: Customer hesitancy to borrow - Management noted strong demand in certain asset classes and emphasized their robust sales team as a key factor in maintaining loan growth [46][47] Question: Loan demand differences across regions - Management reported no significant challenges in the Bay Area, highlighting strong opportunities and a growing client base [49][50] Question: Small business borrowers' response to economic uncertainty - Management indicated that small business borrowers face high costs of borrowing, but they maintain a high level of reserves against this book [52][54]

Financial Data and Key Metrics Changes - Net income for the first quarter of 2025 was $13.1 million, with a return on average assets of 1.3% and return on average equity of 13.28% [10] - The net interest margin improved to 3.45% from 3.36% in the previous quarter, driven by lower average cost of deposits [10] - Total loans held for investment increased by $89.1 million or 2.52% from the prior quarter [4][10] - Non-performing loans remained stable at 0.05% of loans held for investment [6] Business Line Data and Key Metrics Changes - The commercial real estate segment of the loan portfolio increased from 80.75% to 81.11% quarter over quarter [5] - Loan originations during the first quarter were $259.3 million, while payoffs and pay downs were $65.6 million and $104.6 million respectively [5] - Non-interest income decreased to $1.4 million from $1.7 million in the previous quarter, primarily due to a reduction in income from equity investments [11] Market Data and Key Metrics Changes - Deposits increased by $178.4 million or 5% compared to the previous quarter, driven by increases in non-interest bearing demand and various types of interest-bearing deposits [6][7] - Non-wholesale deposits increased by $48.4 million or 1.61% quarter over quarter [8] - Local agency deposits accounted for 22.4% of total deposits as of March 31, 2025 [8] Company Strategy and Development Direction - The company is focused on organic growth and disciplined business practices, aiming to benefit customers, employees, community, and shareholders [13] - Expansion into the San Francisco Bay Area is a key strategic initiative, supported by the addition of seasoned professionals [4][12] - The company aims to maintain a fortress balance sheet with a target of 10% in cash and a loan-to-deposit ratio below 100% [21] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to adapt to changing economic conditions [13] - The company anticipates loan growth of 10% to 12% for the remainder of the year, supported by a strong sales force [18][19] - Concerns regarding tariffs and economic slowdown were acknowledged, but management believes the company is well-positioned relative to competitors [30] Other Important Information - The company declared a cash dividend of $0.20 per share, expected to be paid on May 12, 2025 [9] - Five Star Bancorp was ranked third on the S&P Global Market Intelligence List of best-performing community banks in the nation [61] Q&A Session Summary Question: Loan growth outlook for the year - Management is bullish on loan growth, expecting 10% to 12% for the remainder of the year, supported by a strong sales force [18][19] Question: Reason for higher cost wholesale funding - Management indicated that core deposit growth is expected to match loan growth, and they do not anticipate additional wholesale funding [21] Question: Impact of tariffs on RV manufactured housing business - Management feels comfortable about the portfolio's performance, citing historical resilience during economic downturns [30] Question: Changes in allowance for loan losses - The increase in allowance was driven by portfolio growth and revised economic forecasts from the FOMC [34][35] Question: Loan pricing competition - Management acknowledged competitive pricing but remains satisfied with current spreads [38][39] Question: Customer hesitancy to borrow - Management noted strong demand in certain asset classes and emphasized the effectiveness of their sales force [46][47] Question: Small business borrowers' response to economic uncertainty - Management indicated that small business borrowers face high costs of borrowing, but reserves against this book remain high [53][55]

Group 1 - Five Star Bancorp (FSBC) reported quarterly earnings of $0.62 per share, exceeding the Zacks Consensus Estimate of $0.61 per share, with an earnings surprise of 1.64% [1] - The company posted revenues of $35.34 million for the quarter ended March 2025, which was below the Zacks Consensus Estimate by 0.18%, compared to $28.58 million in the same quarter last year [2] - Over the last four quarters, Five Star Bancorp has surpassed consensus EPS estimates two times and topped consensus revenue estimates once [2] Group 2 - The stock has underperformed the market, losing about 10.3% since the beginning of the year, while the S&P 500 declined by 6.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.66 on revenues of $36.9 million, and for the current fiscal year, it is $2.62 on revenues of $150.6 million [7] - The Zacks Industry Rank for Banks - West is currently in the bottom 33% of over 250 Zacks industries, indicating potential challenges for the stock's performance [8]

[Q1 2025 Financial Performance Overview](index=1&type=section&id=Five%20Star%20Bancorp%20Announces%20First%20Quarter%202025%20Results) This section provides a comprehensive overview of Five Star Bancorp's Q1 2025 financial results, including income statement analysis and key performance drivers [Q1 2025 Performance Highlights](index=1&type=section&id=First%20Quarter%20Highlights) Five Star Bancorp reported a strong Q1 2025 with net income of **$13.1 million**, a significant **23.3% increase year-over-year**, though slightly down from the previous quarter, driven by robust loan and deposit growth, an expanded net interest margin of **3.45%**, and continued expansion in the San Francisco Bay Area, while maintaining a stable dividend of **$0.20 per share** and earning recognition as a top-performing bank by S&P Global Market Intelligence | (in thousands, except per share data) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income | $13,111 | $13,317 | $10,631 | | Diluted EPS | $0.62 | $0.63 | $0.62 | | ROAA | 1.30% | 1.31% | 1.22% | | ROAE | 13.28% | 13.48% | 14.84% | | Net Interest Margin | 3.45% | 3.36% | 3.14% | - Total loans held for investment grew by **$89.1 million** (**2.52% QoQ**) and total deposits increased by **$178.4 million** (**5.01% QoQ**)[4](index=4&type=chunk) - The company declared a cash dividend of **$0.20 per share**, consistent with the previous quarter[5](index=5&type=chunk)[7](index=7&type=chunk) - Expansion in the San Francisco Bay Area continues, with the team growing to **31 employees** and generating **$379.8 million** in total deposits as of March 31, 2025[3](index=3&type=chunk)[8](index=8&type=chunk) [Income Statement Analysis](index=3&type=section&id=Summary%20Results) Net income for Q1 2025 was **$13.1 million**, decreasing slightly by **1.55%** QoQ due to higher non-interest expenses and provision for credit losses, while growing strongly by **23.33%** YoY, primarily driven by a **$7.2 million** increase in net interest income [QoQ Performance Comparison (Q1 2025 vs. Q4 2024)](index=3&type=section&id=Three%20months%20ended%20March%2031%2C%202025%2C%20as%20compared%20to%20three%20months%20ended%20December%2031%2C%202024) Net income decreased by **$0.2 million** to **$13.1 million** from Q4 2024, driven by increased provision for credit losses and non-interest expense, partially offset by higher net interest income from lower deposit interest costs | (in thousands) | Q1 2025 | Q4 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $33,977 | $33,489 | $488 | 1.46% | | Provision for credit losses | $1,900 | $1,300 | $600 | 46.15% | | Non-interest income | $1,359 | $1,666 | ($307) | (18.43)% | | Non-interest expense | $15,045 | $14,488 | $557 | 3.84% | | Net income | $13,111 | $13,317 | ($206) | (1.55)% | [YoY Performance Comparison (Q1 2025 vs. Q1 2024)](index=3&type=section&id=Three%20months%20ended%20March%2031%2C%202025%2C%20as%20compared%20to%20three%20months%20ended%20March%2031%2C%202024) Net income increased by **$2.5 million** (**23.3%**) to **$13.1 million** from Q1 2024, primarily fueled by a **$7.2 million** increase in net interest income, partially offset by higher provision for credit losses and non-interest expenses | (in thousands) | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $33,977 | $26,744 | $7,233 | 27.05% | | Provision for credit losses | $1,900 | $900 | $1,000 | 111.11% | | Non-interest expense | $15,045 | $12,716 | $2,329 | 18.32% | | Net income | $13,111 | $10,631 | $2,480 | 23.33% | [Net Interest Income and Margin](index=5&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income (NII) for Q1 2025 was **$34.0 million**, with a net interest margin (NIM) of **3.45%**, showing QoQ growth due to lower deposit interest costs and YoY expansion driven by increased loan balances and yields - QoQ, NII increased by **1.46%** to **$34.0 million**, and NIM rose to **3.45%** from **3.36%** in Q4 2024, primarily due to a **$1.1 million** decrease in interest expense[20](index=20&type=chunk)[22](index=22&type=chunk) - YoY, NII increased by **27.05%** from **$26.7 million**, and NIM expanded to **3.45%** from **3.14%** in Q1 2024, driven by a **$485.7 million** increase in average loan balance and a **31 basis point** improvement in loan yields[20](index=20&type=chunk)[23](index=23&type=chunk) | (in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Average Interest-Earning Assets | $3,997,037 | $3,965,867 | $3,424,469 | | Net Interest Income | $33,977 | $33,489 | $26,744 | | Net Interest Margin | 3.45% | 3.36% | 3.14% | | Cost of Funds | 2.56% | 2.65% | 2.62% | [Non-Interest Income](index=8&type=section&id=Non-interest%20Income) Total non-interest income for Q1 2025 was **$1.4 million**, decreasing both QoQ and YoY primarily due to the non-recurrence of income from equity investments in venture-backed funds and lower gain on sale of loans - QoQ, non-interest income fell by **$0.3 million**, mainly because **$0.3 million** income from venture-backed fund investments in Q4 2024 did not recur[29](index=29&type=chunk)[31](index=31&type=chunk) - YoY, non-interest income fell by **$0.5 million**, also due to non-recurring income from venture-backed funds and a **$0.2 million** decrease in gain on sale of loans[31](index=31&type=chunk)[32](index=32&type=chunk) [Non-Interest Expense](index=9&type=section&id=Non-interest%20Expense) Non-interest expense totaled **$15.0 million** in Q1 2025, increasing both QoQ and YoY primarily due to higher salaries and employee benefits reflecting increased headcount for company expansion - QoQ, non-interest expense increased by **$0.6 million**, with salaries and benefits rising by **$0.8 million** due to higher salary, bonus, and lower deferred loan origination costs[33](index=33&type=chunk) - YoY, non-interest expense increased by **$2.3 million**, with salaries and benefits rising by **$1.6 million** largely due to a **13.19%** increase in headcount, alongside a **$0.3 million** increase in data processing and software costs[36](index=36&type=chunk)[37](index=37&type=chunk) [Provision for Income Taxes](index=10&type=section&id=Provision%20for%20Income%20Taxes) The provision for income taxes was **$5.3 million** in Q1 2025, with an effective tax rate of **28.71%**, decreasing QoQ due to a non-recurring true-up adjustment and increasing YoY due to higher pre-tax income - The effective tax rate was **28.71%** in Q1 2025, compared to **31.24%** in Q4 2024 and **28.94%** in Q1 2024[40](index=40&type=chunk)[41](index=41&type=chunk) - The QoQ decrease in tax provision was due to slightly lower taxable income and a **$0.6 million** provision true-up in Q4 2024 that did not recur[40](index=40&type=chunk) [Balance Sheet and Asset Quality](index=4&type=section&id=Balance%20Sheet%20and%20Asset%20Quality) This section analyzes the company's balance sheet structure, loan and deposit portfolio composition, and asset quality metrics as of Q1 2025 [Balance Sheet Analysis](index=4&type=section&id=Balance%20Sheet%20Summary) As of March 31, 2025, total assets grew to **$4.25 billion**, a **4.73%** increase QoQ, driven by strong loan and cash growth, with total deposits increasing by **5.01%** to **$3.74 billion**, while maintaining approximately **$2.0 billion** in liquidity and no short-term borrowings | (in thousands) | Mar 31, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Assets | $4,245,057 | $4,053,278 | 4.73% | | Total Loans Held for Investment | $3,621,819 | $3,532,686 | 2.52% | | Total Deposits | $3,736,354 | $3,557,994 | 5.01% | | Total Shareholders' Equity | $406,451 | $396,624 | 2.48% | - Total liquidity, including cash and available borrowing capacity, was approximately **$2.0 billion**[16](index=16&type=chunk)[17](index=17&type=chunk) - Insured and collateralized deposits represented **67.55%** of total deposits, up slightly from **66.92%** in the prior quarter[13](index=13&type=chunk) - The company had no short-term borrowings at the end of Q1 2025, consistent with the prior quarter[8](index=8&type=chunk) [Loan and Deposit Portfolio Composition](index=7&type=section&id=Loans%20and%20Deposits%20by%20Type) The loan portfolio as of March 31, 2025, totaled **$3.62 billion**, heavily concentrated in commercial real estate at **$2.94 billion**, while the **$2.80 billion** interest-bearing deposit base is dominated by money market and time accounts Loan Composition (in thousands) | Loan Type | Amount | | :--- | :--- | | Commercial Real Estate | $2,941,201 | | Commercial (Secured & Unsecured) | $205,495 | | Consumer and other | $277,093 | | Other Real Estate & Construction | $199,948 | | **Total Loans Held for Investment** | **$3,621,819** | Interest-Bearing Deposit Composition (in thousands) | Deposit Type | Amount | | :--- | :--- | | Money market accounts | $1,577,473 | | Time accounts | $801,386 | | Interest-bearing transaction accounts | $295,633 | | Savings accounts | $128,210 | | **Total Interest-Bearing Deposits** | **$2,802,702** | [Asset Quality and Allowance for Credit Losses](index=8&type=section&id=Asset%20Quality) Asset quality remained strong in Q1 2025, with nonperforming loans to total loans held for investment stable at **0.05%**, and the allowance for credit losses increasing to **$39.2 million** (**1.08%** of loans) reflecting provisions partially offset by net charge-offs - The ratio of nonperforming loans to loans held for investment remained stable at **0.05%**[27](index=27&type=chunk) - The allowance for credit losses increased by **$1.4 million** to **$39.2 million**, representing **1.08%** of loans held for investment[26](index=26&type=chunk)[28](index=28&type=chunk) - Loans designated as 'watch' decreased from **$123.4 million** to **$112.0 million**, while 'substandard' loans increased slightly from **$2.6 million** to **$3.7 million**[27](index=27&type=chunk) [Supplementary and Non-GAAP Information](index=11&type=section&id=Supplementary%20Information) This section presents unaudited condensed financial data and reconciliations of non-GAAP financial measures to their GAAP equivalents [Condensed Financial Data (Unaudited)](index=12&type=section&id=Condensed%20Financial%20Data%20%28Unaudited%29) This section provides detailed unaudited financial statements for the quarter ended March 31, 2025, with comparative data, including the income statement, balance sheet, and key financial ratios - Provides detailed breakdowns of the income statement, balance sheet, per share data, financial ratios, and credit quality metrics[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) [Non-GAAP Reconciliation](index=16&type=section&id=Non-GAAP%20Reconciliation%20%28Unaudited%29) The company provides reconciliations for non-GAAP financial measures, such as Pre-tax, pre-provision income, which was **$20.3 million** for Q1 2025, to their most directly comparable GAAP measures - The company uses non-GAAP measures like Tangible Book Value Per Share and Pre-tax, Pre-provision Income to supplement GAAP results[51](index=51&type=chunk) Pre-tax, pre-provision income reconciliation (in thousands) | | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Pre-tax income (GAAP) | $18,391 | $19,367 | $14,961 | | Add: provision for credit losses | $1,900 | $1,300 | $900 | | **Pre-tax, pre-provision income (Non-GAAP)** | **$20,291** | **$20,667** | **$15,861** |

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