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Five Star Bancorp Announces First Quarter 2025 Results

RANCHO CORDOVA, Calif., April 28, 2025 (GLOBE NEWSWIRE) -- Five Star Bancorp听(Nasdaq: FSBC) (鈥淔ive Star鈥� or the 鈥淐ompany鈥�), a holding company that operates through its wholly owned banking subsidiary, Five Star Bank (the 鈥淏ank鈥�), today reported net income of $13.1 million for the three months ended March听31, 2025, as compared to $13.3 million for the three months ended December听31, 2024 and $10.6 million for the three months ended March听31, 2024.

First Quarter Highlights

Performance and operating highlights for the Company for the periods noted below included the following:

James E. Beckwith, President and Chief Executive Officer, commented:

鈥淭he strength of Five Star Bank鈥檚 first quarter 2025 financial results is emblematic of a reputation built on an unwavering commitment to customers and community partners who rely on our speed to serve and certainty of execution for their own successes. This differentiated customer experience has created great demand for our services and seized market opportunities in San Francisco. As we continue to grow our presence, we now have 31 San Francisco Bay Area employees. As of March听31, 2025 our San Francisco Bay Area operations had $379.8 million in total deposits.

At the Company level, total loans held for investment increased by $89.1 million, or 2.52% (10.09% when annualized). Total deposits increased by $178.4 million, or 5.01% (20.05% when annualized), with wholesale deposits increasing by $130.0 million, or 23.21%, and non-wholesale deposits increasing by $48.4 million, or 1.61%. Short-term borrowings remained at zero as of March听31, 2025 and December听31, 2024. Net interest margin increased by nine basis points to 3.45% and our efficiency ratio increased to 42.58%, as compared to 41.21% for the fourth quarter of 2024, while cost of funds decreased nine basis points to 2.56%.

In the first quarter of 2025, we were pleased to declare another cash dividend of $0.20 per share. We were also pleased to have been ranked third among best-performing banks in the nation by S&P Global Market Intelligence (among banks with assets between $3 billion and $10 billion).

As we execute on the expansion of industry verticals and our presence in new geographies to meet customer demand, we expect the ongoing acceleration of our growth to benefit our customers, employees, and shareholders. We also expect our demonstrated ability to adapt to changing economic conditions to serve us well into the future as we remain vigilant and focused on disciplined business practices. We thank our employees for their outstanding commitment to ensuring Five Star Bank remains a safe, trusted, and steadfast banking partner.鈥�

Financial highlights during the quarter included the following:

• The San Francisco Bay Area team increased from 27 to 31 employees who generated deposit balances totaling $379.8 million at March听31, 2025, an increase of $87.4 million from December听31, 2024.
• Cash and cash equivalents were $452.6 million, representing 12.11% of total deposits at March听31, 2025, as compared to 9.90% at December听31, 2024.
• Total deposits increased by $178.4听million, or 5.01%, during the three months ended March听31, 2025, due to increases in both non-wholesale and wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits. During the three months ended March听31, 2025, non-wholesale deposits increased by $48.4 million, or 1.61%, and wholesale deposits increased by $130.0 million, or 23.21%.
• The Company had no short-term borrowings at March听31, 2025 or December听31, 2024.
• Consistent, disciplined management of expenses contributed to our efficiency ratio of 42.58% for the three months ended March听31, 2025, as compared to 41.21% for the three months ended December听31, 2024.
• For the three months ended March听31, 2025, net interest margin was 3.45%, as compared to 3.36% for the three months ended December听31, 2024 and 3.14% for the three months ended March听31, 2024. The effective Federal Funds rate was 4.33% as of March听31, 2025, remaining constant from December听31, 2024 and decreasing from 5.33% at March听31, 2024.
• Other comprehensive income was $0.7 million during the three months ended March听31, 2025. Unrealized losses, net of tax effect, on available-for-sale securities were $11.6 million as of March听31, 2025. Total carrying value of held-to-maturity and available-for-sale securities represented 0.06% and 2.35% of total interest-earning assets, respectively, as of March听31, 2025.
• The Company鈥檚 common equity Tier 1 capital ratio was 11.00% and 11.02% as of March听31, 2025 and December听31, 2024, respectively. The Bank continues to meet all requirements to be considered 鈥渨ell-capitalized鈥� under applicable regulatory guidelines.
• Loan and deposit growth in the three and twelve months ended March听31, 2025 was as follows:

• The ratio of nonperforming loans to loans held for investment at period end remained at 0.05% from December听31, 2024 to March听31, 2025.
• The Company鈥檚 Board of Directors declared on January听16, 2025, and the Company subsequently paid, a cash dividend of $0.20 per share during the three months ended March听31, 2025. The Company鈥檚 Board of Directors subsequently declared another cash dividend of $0.20 per share on April听17, 2025, which the Company expects to pay on May听12, 2025 to shareholders of record as of May听5, 2025.

Summary Results

Three months ended March听31, 2025, as compared to three months ended December听31, 2024

The Company鈥檚 net income was $13.1 million for the three months ended March听31, 2025, as compared to $13.3 million for the three months ended December听31, 2024. Net interest income increased by $0.5 million, primarily due to a decrease in interest expense due to lower average rates on deposits, partially offset by a decrease in interest income driven by lower balances and yields on interest-earning deposits in banks, as compared to the three months ended December听31, 2024. The provision for credit losses increased by $0.6 million, reflecting adjustments to expectations for credit losses based on economic trends and forecasts in the three months ended March听31, 2025 compared to the three months ended December听31, 2024. Non-interest income decreased by $0.3 million, primarily due to a reduction in income received on equity investments in venture-backed funds during the three months ended March听31, 2025, as compared to the three months ended December听31, 2024. Non-interest expense increased by $0.6 million, primarily related to an increase in salaries and employee benefits, partially offset by decreases in advertising, promotional, and other operating expenses during the three months ended March听31, 2025, as compared to the three months ended December听31, 2024.

Three months ended March听31, 2025, as compared to three months ended March听31, 2024

The Company鈥檚 net income was $13.1 million for the three months ended March听31, 2025, as compared to $10.6 million for the three months ended March听31, 2024. Net interest income increased by $7.2 million, primarily due to an increase in interest income driven by a higher balance of loans with higher yields, partially offset by an increase in interest expense due to larger average deposit balances, as compared to the three months ended March听31, 2024. The provision for credit losses increased by $1.0 million, relating to loan growth and adjustments to expectations for credit losses based on economic trends and forecasts during the three months ended March听31, 2025, as compared to the three months ended March听31, 2024. Non-interest income decreased by $0.5 million, primarily due to a reduction in income received on equity investments in venture-backed funds during the three months ended March听31, 2025, as compared to the three months ended March听31, 2024. Non-interest expense increased by $2.3 million during the three months ended March听31, 2025, as compared to the three months ended March听31, 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鈥檚 operating results and performance ratios for the periods indicated:

Balance Sheet Summary

• Insured and collateralized deposits were approximately $2.5 billion, representing 67.55% of total deposits as of March听31, 2025, as compared to 66.92% as of December听31, 2024. Net uninsured and uncollateralized deposits were approximately $1.2 billion as of March听31, 2025, remaining constant from December听31, 2024.
• Non-wholesale deposit accounts constituted 81.53% of total deposits as of March听31, 2025, as compared to 84.26% at December听31, 2024. Deposit relationships of greater than $5 million represented 60.87% of total deposits, as compared to 61.13% as of December听31, 2024, and had an average age of approximately 8.80 years as of March听31, 2025, as compared to 9.28 years as of December听31, 2024.
• Cash and cash equivalents as of March听31, 2025 were $452.6 million, representing 12.11% of total deposits at March听31, 2025, as compared to 9.90% as of December听31, 2024.
• Total liquidity (consisting of cash and cash equivalents and unused and immediately available borrowing capacity as set forth below) was approximately $2.0 billion as of March听31, 2025, as compared to $1.9 billion at December听31, 2024.

The increase in total assets from December听31, 2024 to March听31, 2025 was primarily due to a $100.2 million听increase in cash and cash equivalents and an $89.1 million听increase in total loans held for investment. The $100.2 million increase in cash and cash equivalents primarily resulted from net cash inflows related to financing and operating activities of $174.1 million and $15.5 million, respectively, partially offset by net cash outflows related to investing activities of $89.3 million. The $89.1 million increase in total loans held for investment between December听31, 2024 and March听31, 2025 was a result of $259.3 million in loan originations and advances, partially offset by $65.6 million and $104.6 million in loan payoffs and paydowns, respectively. The $89.1 million increase in total loans held for investment included $19.8 million in purchases of loans within the consumer concentration of the loan portfolio.

The increase in total liabilities from December听31, 2024 to March听31, 2025 was primarily due to an increase in interest-bearing deposits of $167.3 million. The increase in interest-bearing deposits was largely due to increases in time and money market deposits of $131.2 million and $52.2 million, respectively.

The increase in total shareholders鈥� equity from December听31, 2024 to March听31, 2025 was primarily a result of net income recognized of $13.1 million and a $0.7 million increase in accumulated other comprehensive income, partially offset by $4.3 million in cash dividends paid during the period.

Net Interest Income and Net Interest Margin

The following is a summary of the components of net interest income for the periods indicated:

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

Net interest income during the three months ended March听31, 2025 increased $0.5 million, or 1.46%, to $34.0 million compared to $33.5 million during the three months ended December听31, 2024. Net interest margin totaled 3.45% for the three months ended March听31, 2025, an increase of nine basis points compared to the prior quarter. The increase in net interest income is primarily attributable to a $1.1 million decrease in interest expense, driven by a 15 basis point decrease in the average rate on interest-bearing deposits compared to the prior quarter. The decrease in interest expense was partially offset by a $0.7 million decrease in interest income, primarily due to a $35.3 million, or 9.69%, decrease in the average balance of interest-earning deposits in banks, combined with a 33 basis point decrease in the average yield on interest-earning deposits in banks.

As compared to the three months ended March听31, 2024, net interest income increased $7.2 million, or 27.05%, to $34.0 million from $26.7 million. Net interest margin totaled 3.45% for the three months ended March听31, 2025, an increase of 31 basis points compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $9.1 million in loan interest income due to a $485.7 million, or 15.76%, increase in the average balance of loans and a 31 basis point improvement in the average yield on loans during the three months ended March听31, 2025 compared to the same quarter of the prior year. The increase in interest income was partially offset by a $2.4 million increase in deposit interest expense compared to the same quarter of the prior year. The increase in deposit interest expense is primarily attributable to a $478.9 million, or 15.42%, increase in the average balance of deposits and a five basis point increase in the average cost of deposits during the three months ended March听31, 2025 compared to the same quarter of the prior year.

Loans by Type

The following table provides loan balances, excluding deferred loan fees, by type as of March听31, 2025:

Interest-bearing Deposits

The following table provides interest-bearing deposit balances by type as of March听31, 2025:

Asset Quality

Allowance for Credit Losses

At March听31, 2025, the Company鈥檚 allowance for credit losses was $39.2 million, as compared to $37.8 million at December听31, 2024. The $1.4 million increase in the allowance is due to a $2.2 million provision for credit losses recorded during the three months ended March听31, 2025, partially offset by net charge-offs mainly attributable to commercial and industrial loans of $0.7 million, during the same period.

The Company鈥檚 ratio of nonperforming loans to loans held for investment remained at 0.05% from December听31, 2024 to March听31, 2025. Loans designated as watch decreased from $123.4 million to $112.0 million between December听31, 2024 and March听31, 2025. Loans designated as substandard increased from $2.6 million to $3.7 million between December听31, 2024 and March听31, 2025. There were no loans with doubtful risk grades at March听31, 2025 or December听31, 2024.

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

The ratio of allowance for credit losses to loans held for investment was 1.08% at March听31, 2025, as compared to 1.07% at December听31, 2024.

Non-interest Income

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

Service charges on deposit accounts. The increase resulted primarily from individually immaterial increases in fees earned for services and products to support deposit accounts including, but not limited to, service charges, check order fees, and debit card income.

Gain on sale of loans. The decrease resulted from a decline in the volume and effective yield of loans sold. During the three months ended March听31, 2025, approximately $1.7 million of loans were sold with an effective yield of 7.24%, as compared to approximately $2.0 million of loans sold with an effective yield of 7.60% during the three months ended December听31, 2024.

Other income. The decrease resulted primarily from $0.3 million of income received on equity investments in venture-backed funds during the three months ended December听31, 2024 which did not reoccur during the three months ended March听31, 2025.

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

Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold. During the three months ended March听31, 2025, approximately $1.7 million of loans were sold with an effective yield of 7.24%, as compared to approximately $5.2 million of loans sold with an effective yield of 7.08% during the three months ended March听31, 2024.

Other income. The decrease related primarily to $0.3 million of income received on equity investments in venture-backed funds during the three months ended March听31, 2024, which did not reoccur during the three months ended March听31, 2025.

Non-interest Expense

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

Salaries and employee benefits. The increase related primarily to: (i) a $0.9 million increase in salaries, benefits, and bonus expense; and (ii) a $0.3 million decrease in loan origination costs due to fewer loan originations, net of purchased consumer loans. The increase was partially offset by a $0.5 million decrease in commissions expense due to fewer loan originations, net of purchased consumer loans, period-over-period.

Professional services. The increase was primarily due to $0.1 million in fees paid for compensation consulting services, which did not occur in the three months ended December听31, 2024.

Advertising and promotional. The decrease related primarily to a $0.1 million decrease in expenses related to sponsored events and partnerships and $0.1 million decrease related to business development expenses.

Other operating expenses. The decrease was primarily due to a $0.1 million decrease in director expenses, such as conferences and meetings, combined with individually immaterial decreases in expenses related to operations, including administrative and operational expenses.

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

Salaries and employee benefits. The increase related primarily to: (i) a $1.6 million increase in salaries, benefits, and bonus expense, mainly related to a 13.19% increase in headcount between March听31, 2024 and March听31, 2025; and (ii) a $0.1 million increase in commissions paid. This increase was partially offset by a $0.2 million increase in loan origination costs due to a greater number of loan originations, net of purchased consumer loans, period-over-period.

Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; and (iii) an increased number of licenses required for new users on our loan origination and documentation system.

Professional services. The increase was primarily due to $0.1 million in fees paid for compensation consulting services and $0.1 million in consulting services relating to operations in San Francisco, neither of which occurred in the three months ended March听31, 2024.

Other operating expenses. The increase was primarily due to individually immaterial increases in expenses related to operations, including administrative and operational expenses such as travel, subscriptions, and professional association memberships.

Provision for Income Taxes

Three months ended March听31, 2025, as compared to three months ended December听31, 2024

Provision for income taxes decreased to $5.3 million for the three months ended March听31, 2025 from $6.1 million for the three months ended December听31, 2024, which was primarily due to: (i) a slight decline in taxable income recognized during the three months ended March听31, 2025; and (ii) a $0.6 million provision to return true-up recorded during the three months ended December听31, 2024 related primarily to the timing of recognition of low income housing tax credits, which did not reoccur during the three months ended March听31, 2025. The effective tax rates were 28.71% and 31.24% for the three months ended March听31, 2025 and December听31, 2024, respectively.

Three months ended March听31, 2025, as compared to three months ended March听31, 2024

Provision for income taxes increased by $1.0 million, or 21.94%, for the three months ended March听31, 2025 compared to the three months ended March听31, 2024. This increase was primarily driven by an increase in taxable income. The effective tax rates were 28.71% and 28.94% for the three months ended March听31, 2025 and March听31, 2024, respectively.

Webcast Details

Five Star Bancorp will host a live webcast for analysts and investors on Tuesday, April 29, 2025 at 1:00 PM ET (10:00 AM PT) to discuss its first quarter financial results. To view the live webcast, visit the 鈥淣ews & Events鈥� section of the Company鈥檚 website under 鈥淓vents鈥� at https://investors.fivestarbank.com/news-events/events. The webcast will be archived on the Company鈥檚 website for a period of 90 days.

About听Five Star Bancorp

Five Star is a bank holding company headquartered in Rancho Cordova, California. Five Star operates through its wholly owned banking subsidiary, Five Star Bank. The Bank has eight branches in Northern California.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of the Company鈥檚 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 鈥渕ay,鈥� 鈥渃ould,鈥� 鈥渟hould,鈥� 鈥渨ill,鈥� 鈥渨ould,鈥� 鈥渂elieve,鈥� 鈥渁nticipate,鈥� 鈥渆stimate,鈥� 鈥渆xpect,鈥� 鈥渁im,鈥� 鈥渋ntend,鈥� 鈥減lan,鈥� or words or phases of similar meaning. The Company cautions that the forward-looking statements are based largely on the Company鈥檚 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鈥檚 control. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company鈥檚 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鈥檚 forward-looking information and statements proves incorrect, then the Company鈥檚 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鈥檚 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鈥檚 Annual Report on Form 10-K for the year ended December听31, 2024 under the section entitled 鈥淩isk Factors,鈥� 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)

_{⁽¹⁾ See the section entitled 鈥淣on-GAAP Reconciliation (Unaudited)鈥� 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.}

_{⁽¹⁾ See the section entitled 鈥淣on-GAAP Reconciliation (Unaudited)鈥� for a reconciliation of this non-GAAP financial measure.}

Non-GAAP Reconciliation (Unaudited)

The Company uses financial information in its analysis of the Company鈥檚 performance that is not in conformity with accounting principles generally accepted in the United States of America (鈥淕AAP鈥�). The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company鈥檚 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鈥� 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鈥� equity to total assets. Management believes that tangible shareholders鈥� equity to tangible assets is a useful financial measure because it enables management, investors, and others to assess the Company鈥檚 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鈥� equity to tangible assets is the same as total shareholders鈥� equity to total assets at the end of each of the periods indicated.

Tangible book value per share is defined as total shareholders鈥� 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鈥檚 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鈥檚 ability to generate operating profit and capital.

The following reconciliation table provides a more detailed analysis of this non-GAAP financial measure:

Investor Contact:
Heather C. Luck, Chief Financial Officer
Five Star Bancorp
(916) 626-5008
[email protected]

Media Contact:
Shelley R. Wetton, Chief Marketing Officer
Five Star Bancorp
(916) 284-7827
[email protected]