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Five Star Bancorp Announces Third Quarter 2024 Results

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Five Star Bancorp (FSBC) reported Q3 2024 net income of $10.9 million, slightly up from $10.8 million in Q2 2024. Key highlights include: total loans held for investment increased by $194.3 million (5.95%), total deposits grew by $250.3 million (7.95%), and net interest margin slightly decreased to 3.37%. The bank expanded its presence in San Francisco's Financial District, with the Bay Area team growing to 24 employees and generating $189.0 million in deposits. The efficiency ratio improved to 43.37% from 44.07% in Q2. The company maintained strong asset quality with nonperforming loans at 0.05% and declared a quarterly cash dividend of $0.20 per share.

Five Star Bancorp (FSBC) ha riportato un utile netto di $10,9 milioni per il terzo trimestre del 2024, in lieve aumento rispetto ai $10,8 milioni del secondo trimestre del 2024. I punti salienti includono: i prestiti totali detenuti per investimento sono aumentati di $194,3 milioni (5,95%), i depositi totali sono cresciuti di $250,3 milioni (7,95%) e il margine di interesse netto è leggermente diminuito al 3,37%. La banca ha ampliato la sua presenza nel Distretto Finanziario di San Francisco, con il team della Bay Area che è passato a 24 dipendenti, generando $189,0 milioni in depositi. Il rapporto di efficienza è migliorato al 43,37% rispetto al 44,07% del secondo trimestre. L'azienda ha mantenuto una forte qualità degli attivi con prestiti in sofferenza allo 0,05% e ha dichiarato un dividendo in contante trimestrale di $0,20 per azione.

Five Star Bancorp (FSBC) reportó un ingreso neto de $10.9 millones para el tercer trimestre de 2024, ligeramente superior a los $10.8 millones del segundo trimestre de 2024. Los aspectos destacados incluyen: los préstamos totales mantenidos para inversión aumentaron en $194.3 millones (5.95%), los depósitos totales crecieron en $250.3 millones (7.95%) y el margen de interés neto disminuyó ligeramente al 3.37%. El banco amplió su presencia en el Distrito Financiero de San Francisco, con un equipo del Área de la Bahía que creció a 24 empleados y generó $189.0 millones en depósitos. El índice de eficiencia mejoró al 43.37% desde el 44.07% en el segundo trimestre. La empresa mantuvo una sólida calidad de activos con préstamos en mora al 0.05% y declaró un dividendo en efectivo trimestral de $0.20 por acción.

Five Star Bancorp (FSBC)는 2024년 3분기 순이익으로 $10.9 백만을 보고하였으며, 이는 2024년 2분기의 $10.8 백만에서 약간 증가한 수치입니다. 주요 하이라이트에는: 투자용으로 보유한 총 대출이 $194.3 백만 (5.95%) 증가하였고, 총 예금이 $250.3 백만 (7.95%) 증가하였으며, 순이자 마진은 3.37%로 조금 감소하였습니다. 은행은 샌프란시스코 금융 지구에서의 입지를 확장하였으며, 베이 에어리어 팀은 24명으로 증가하고 $189.0 백만의 예금을 창출하였습니다. 효율성 비율은 2분기의 44.07%에서 43.37%로 개선되었습니다. 이 회사는 비수익 대출이 0.05%인 강력한 자산 품질을 유지하였으며, 주당 $0.20의 분기 현금 배당금을 선언하였습니다.

Five Star Bancorp (FSBC) a rapporté un bénéfice net de $10,9 millions pour le troisième trimestre de 2024, légèrement supérieur aux $10,8 millions du deuxième trimestre de 2024. Les faits marquants incluent : les prêts totaux détenus pour investissement ont augmenté de $194,3 millions (5,95%), les dépôts totaux ont connu une croissance de $250,3 millions (7,95%) et la marge d'intérêt nette a légèrement diminué à 3,37%. La banque a élargi sa présence dans le quartier financier de San Francisco, avec une équipe de la Bay Area qui est passée à 24 employés, générant ainsi $189,0 millions de dépôts. Le ratio d'efficacité s'est amélioré à 43,37% contre 44,07% au deuxième trimestre. L'entreprise a maintenu une forte qualité des actifs, avec des prêts non performants à 0,05% et a déclaré un dividende en espèces trimestriel de $0,20 par action.

Five Star Bancorp (FSBC) berichtete für das dritte Quartal 2024 von einem Nettogewinn in Höhe von $10,9 Millionen, was einem leichten Anstieg im Vergleich zu $10,8 Millionen im zweiten Quartal 2024 entspricht. Zu den wichtigsten Punkten gehören: die insgesamt für Investitionen gehaltenen Kredite stiegen um $194,3 Millionen (5,95%), die Gesamteinlagen wuchsen um $250,3 Millionen (7,95%) und die Nettozinsspanne verringerte sich leicht auf 3,37%. Die Bank erweiterte ihre Präsenz im Finanzviertel von San Francisco, wobei das Team in der Bay Area auf 24 Mitarbeiter anwuchs und $189,0 Millionen an Einlagen generierte. Die Effizienzquote verbesserte sich auf 43,37% von 44,07% im zweiten Quartal. Das Unternehmen hielt eine starke Vermögensqualität mit einem Anteil an notleidenden Krediten von 0,05% aufrecht und erklärte eine vierteljährliche Barausschüttung von $0,20 pro Aktie.

Positive
  • Net income increased to $10.9 million in Q3 2024 from $10.8 million in Q2 2024
  • Total loans grew by $194.3 million (5.95%) quarter-over-quarter
  • Total deposits increased by $250.3 million (7.95%) quarter-over-quarter
  • Efficiency ratio improved to 43.37% from 44.07% in Q2 2024
  • Strong asset quality with nonperforming loans ratio of 0.05%
Negative
  • Net interest margin decreased to 3.37% from 3.39% in Q2 2024
  • Cost of funds increased 16 basis points to 2.72%
  • ROAA declined to 1.18% from 1.23% in Q2 2024
  • ROAE decreased to 11.31% from 11.72% in Q2 2024

Insights

The Q3 2024 results show mixed performance with some notable strengths and concerns. Net income slightly increased to $10.9 million from $10.8 million in Q2 2024, though down from $11.0 million in Q3 2023. Key positives include loan growth of 5.95% QoQ and deposit growth of 7.95% QoQ.

The bank maintained relatively stable net interest margin at 3.37% despite increasing cost of funds to 2.72%. The efficiency ratio improved to 43.37% from 44.07% QoQ, demonstrating good expense management. However, ROE declined to 11.31% from 16.09% YoY.

Asset quality remains strong with nonperforming loans at just 0.05% of total loans. The $0.20 quarterly dividend demonstrates confidence in capital position. Watch-rated loans increased substantially to $90.9 million from $39.6 million, warranting monitoring.

The San Francisco expansion strategy is showing early success, with the Bay Area team growing to 24 employees and generating $189 million in deposits. This geographic diversification could provide new growth opportunities but also increases operating expenses.

The bank's liquidity position remains solid with $1.8 billion in total available liquidity and cash representing 7.38% of deposits. The insured and collateralized deposits at 63.90% of total deposits provide stability. The 8.89 year average age of large deposit relationships (>$5M) indicates strong client retention.

RANCHO CORDOVA, Calif., Oct. 28, 2024 (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 $10.9 million for the three months ended September 30, 2024, as compared to $10.8 million for the three months ended June 30, 2024 and $11.0 million for the three months ended September 30, 2023.

Third 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)September 30,
2024		 June 30,
2024		 September 30,
2023
Return on average assets (“ROAA”) 1.18%  1.23%  1.30%
Return on average equity (“ROAE”) 11.31%  11.72%  16.09%
Pre-tax income$15,241  $15,152  $15,795 
Pre-tax, pre-provision income(1) 17,991   17,152   16,845 
Net income 10,941   10,782   11,045 
Basic earnings per common share$0.52  $0.51  $0.64 
Diluted earnings per common share 0.52   0.51   0.64 
Weighted average basic common shares outstanding 21,182,143   21,039,798   17,175,034 
Weighted average diluted common shares outstanding 21,232,758   21,058,085   17,194,825 
Shares outstanding at end of period 21,319,583   21,319,583   17,257,357 
            
(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 on the financial results:

“We are pleased to have opened a full-service office in San Francisco’s Financial District on September 3rd, further demonstrating our commitment to serving clients and communities in the San Francisco Bay Area. The San Francisco Bay Area now has 24 employees contributing $189.0 million in deposits since the bank’s expansion there began in June 2023. Five Star Bank’s high-tech and high-touch, relationship-based and purpose-driven banking continues to earn the trust and respect of those we serve.

We are also pleased with strong third quarter results. Total loans held for investment increased by $194.3 million, or 5.95%, and total deposits increased by $250.3 million, or 7.95%, during the third quarter. Non-wholesale loans held for investment increased by $75.2 million, or 2.42%, and wholesale loans held for investment, which we define as purchased loans, increased by $119.1 million, or 76.91%, in each case during the third quarter of 2024. Non-wholesale deposits increased by $92.9 million, or 3.21%, and wholesale deposits, which we define as brokered deposits and public time deposits, increased by $157.4 million, or 62.35%, in each case during the third quarter of 2024. Short-term borrowings remained at zero as of June 30, 2024 and September 30, 2024. We attribute this growth to the continued demand for our differentiated customer experience and the strength of our team.

Although cost of funds increased 16 basis points to 2.72%, we were able to maintain net interest margin which decreased by only two basis points to 3.37% during the third quarter of 2024. Our efficiency ratio decreased to 43.37% compared to 44.07% for the second quarter of 2024, exhibiting our ability to preserve disciplined business practices and expense management as we expand our footprint. We are also pleased that, in addition to first and second quarter cash dividends in 2024, we declared a third quarter cash dividend of $0.20 per share, exemplifying our focus on shareholder value.

In addition to numerous awards received in the first half of 2024, Five Star Bancorp was included among the Piper Sandler Sm-All Stars Class of 2024 and was also ranked number five by Bank Director Magazine’s RankingBanking study of the 2024 Best U.S. Banks with assets less than $5 billion. Bank Director Magazine’s RankingBanking study also ranked Five Star Bancorp as number 18 among the 2024 Top 25 U.S. Banks. Furthermore, a member of the Company’s leadership was recognized with a Sacramento Business Journal 40 Under 40 Award.”

Financial highlights during the quarter included the following:

  • The Company’s full-service office in San Francisco’s Financial District opened on September 3, 2024. The San Francisco Bay Area team increased from 19 to 24 employees who generated deposit balances totaling $189.0 million at September 30, 2024, an increase of $27.7 million from June 30, 2024.
  • Cash and cash equivalents were $250.9 million, representing 7.38% of total deposits at September 30, 2024, as compared to 6.04% at June 30, 2024.
  • Total deposits increased by $250.3 million, or 7.95%, during the three months ended September 30, 2024, due to increases in both non-wholesale and wholesale deposits, which the Company defines as brokered deposits and public time deposits. During the three months ended September 30, 2024, non-wholesale deposits increased by $92.9 million, or 3.21%, and wholesale deposits increased by $157.4 million.
  • The Company had no short-term borrowings at September 30, 2024 and June 30, 2024.
  • Consistent, disciplined management of expenses contributed to our efficiency ratio of 43.37% for the three months ended September 30, 2024, as compared to 44.07% for the three months ended June 30, 2024.
  • For the three months ended September 30, 2024, net interest margin was 3.37%, as compared to 3.39% for the three months ended June 30, 2024 and 3.31% for the three months ended September 30, 2023. The effective Federal Funds rate decreased to 4.83% as of September 30, 2024 from 5.33% at June 30, 2024 and September 30, 2023.
  • Other comprehensive income was $2.5 million during the three months ended September 30, 2024. Unrealized losses, net of tax effect, on available-for-sale securities were $9.7 million as of September 30, 2024. Total carrying value of held-to-maturity and available-for-sale securities represented 0.07% and 2.76% of total interest-earning assets, respectively, as of September 30, 2024.
  • The Company’s common equity Tier 1 capital ratio was 10.93% and 11.27% as of September 30, 2024 and June 30, 2024, respectively. The Bank continues to meet all requirements to be considered “well-capitalized” under applicable regulatory guidelines.
  • Loan and deposit growth in the three and twelve months ended September 30, 2024 was as follows:
(in thousands)September 30,
2024		 June 30,
2024		 $ Change % Change
Loans held for investment$3,460,565  $3,266,291  $194,274   5.95%
Non-interest-bearing deposits 906,939   825,733   81,206   9.83%
Interest-bearing deposits 2,493,040   2,323,898   169,142   7.28%
        
(in thousands)September 30,
2024		 September 30,
2023		 $ Change % Change
Loans held for investment$3,460,565  $3,009,930  $450,635   14.97%
Non-interest-bearing deposits 906,939   833,434   73,505   8.82%
Interest-bearing deposits 2,493,040   2,198,776   294,264   13.38%
                
  • The ratio of nonperforming loans to loans held for investment at period end decreased to 0.05% at September 30, 2024 from 0.06% at June 30, 2024.
  • The Company’s Board of Directors declared, and the Company subsequently paid, a cash dividend of $0.20 per share during the three months ended September 30, 2024. The Company’s Board of Directors subsequently declared another cash dividend of $0.20 per share on October 17, 2024, which the Company expects to pay on November 12, 2024 to shareholders of record as of November 4, 2024.

Summary Results

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

The Company’s net income was $10.9 million for the three months ended September 30, 2024, as compared to $10.8 million for the three months ended June 30, 2024. Net interest income increased by $1.3 million, primarily due to an increase in interest income driven by higher yields on new and repriced loans, partially offset by an increase in interest expense due to larger average deposit balances at higher rates, as compared to the three months ended June 30, 2024. The provision for credit losses increased by $0.8 million, relating to loan growth and net charge-offs of $0.8 million in the three months ended September 30, 2024, as compared to the three months ended June 30, 2024. Non-interest income decreased by $0.2 million, primarily due to a reduction in gains from loans sold during the three months ended September 30, 2024, as compared to the three months ended June 30, 2024. Non-interest expense increased by $0.3 million, primarily related to increases in: (i) salaries and employee benefits; and (ii) data processing and software, as compared to the three months ended June 30, 2024.

Three months ended September 30, 2024, as compared to three months ended September 30, 2023

The Company’s net income was $10.9 million for the three months ended September 30, 2024, as compared to $11.0 million for the three months ended September 30, 2023. Net interest income increased by $2.9 million, primarily due to an increase in interest income driven by higher yields on new and repriced loans, partially offset by an increase in interest expense due to larger average deposit balances at higher rates, as compared to the three months ended September 30, 2024. The provision for credit losses increased by $1.7 million, relating to loan growth and net charge-offs of $0.8 million in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. Non-interest income was unchanged from the three months ended September 30, 2023. Non-interest expense increased by $1.8 million, with an increase in salaries and employee benefits related to the Company’s expansion into the San Francisco Bay Area as the leading driver.

The following is a summary of the components of the Company’s operating results and performance ratios for the periods indicated:

 Three months ended    
(in thousands, except per share data)September 30,
2024		 June 30,
2024		 $ Change % Change
Selected operating data:       
Net interest income$30,386  $29,092  $1,294   4.45%
Provision for credit losses 2,750   2,000   750   37.50%
Non-interest income 1,381   1,573   (192)  (12.21)%
Non-interest expense 13,776   13,513   263   1.95%
Pre-tax income 15,241   15,152   89   0.59%
Provision for income taxes 4,300   4,370   (70)  (1.60)%
Net income$10,941  $10,782  $159   1.47%
Earnings per common share:       
Basic$0.52  $0.51  $0.01   1.96%
Diluted 0.52   0.51   0.01   1.96%
Performance and other financial ratios:       
ROAA 1.18%  1.23%    
ROAE 11.31%  11.72%    
Net interest margin 3.37%  3.39%    
Cost of funds 2.72%  2.56%    
Efficiency ratio 43.37%  44.07%    
        
 Three months ended    
(in thousands, except per share data)September 30,
2024		 September 30,
2023		 $ Change % Change
Selected operating data:       
Net interest income$30,386  $27,476  $2,910   10.59%
Provision for credit losses 2,750   1,050   1,700   161.90%
Non-interest income 1,381   1,384   (3)  (0.22)%
Non-interest expense 13,776   12,015   1,761   14.66%
Pre-tax income 15,241   15,795   (554)  (3.51)%
Provision for income taxes 4,300   4,750   (450)  (9.47)%
Net income$10,941  $11,045  $(104)  (0.94)%
Earnings per common share:       
Basic$0.52  $0.64  $(0.12)  (18.75)%
Diluted 0.52   0.64   (0.12)  (18.75)%
Performance and other financial ratios:       
ROAA 1.18%  1.30%    
ROAE 11.31%  16.09%    
Net interest margin 3.37%  3.31%    
Cost of funds 2.72%  2.28%    
Efficiency ratio 43.37%  41.63%    
            

Balance Sheet Summary

(in thousands)September 30,
2024		 December 31,
2023		 $ Change % Change
Selected financial condition data:       
Total assets$3,887,004  $3,593,125  $293,879   8.18%
Cash and cash equivalents 250,852   321,576   (70,724)  (21.99)%
Total loans held for investment 3,460,565   3,081,719   378,846   12.29%
Total investments 106,958   111,160   (4,202)  (3.78)%
Total liabilities 3,497,074   3,307,351   189,723   5.74%
Total deposits 3,399,979   3,026,896   373,083   12.33%
Subordinated notes, net 73,859   73,749   110   0.15%
Total shareholders’ equity 389,930   285,774   104,156   36.45%
                
  • Insured and collateralized deposits were approximately $2.2 billion, representing 63.90% of total deposits as of September 30, 2024. Net uninsured and uncollateralized deposits were approximately $1.2 billion as of September 30, 2024.
  • Commercial and consumer deposit accounts constituted 73.14% of total deposits. Deposit relationships of at least $5 million represented 60.58% of total deposits and had an average age of approximately 8.89 years as of September 30, 2024.
  • Cash and cash equivalents as of September 30, 2024 were $250.9 million, representing 7.38% of total deposits at September 30, 2024, as compared to 6.04% as of June 30, 2024.
  • Total liquidity (consisting of cash and cash equivalents and unused and immediately available borrowing capacity as set forth below) was approximately $1.8 billion as of September 30, 2024.
 September 30, 2024
(in thousands)Line of Credit Letters of
Credit Issued		 Borrowings Available
FHLB advances$1,123,388  $567,500  $—  $555,888 
Federal Reserve Discount Window 858,251   —   —   858,251 
Correspondent bank lines of credit 175,000   —   —   175,000 
Cash and cash equivalents —   —   —   250,852 
Total$2,156,639  $567,500  $—  $1,839,991 
                

The increase in total assets from December 31, 2023 to September 30, 2024 was primarily due to a $378.8 million increase in total loans held for investment, partially offset by a $70.7 million decrease in cash and cash equivalents. The $378.8 million increase in total loans held for investment between December 31, 2023 and September 30, 2024 was a result of $873.7 million in loan originations and advances, partially offset by $190.6 million and $304.2 million in loan payoffs and paydowns, respectively. The $378.8 million increase in total loans held for investment included $254.7 million in purchases of loans within the consumer concentration of the loan portfolio. The $70.7 million decrease in cash and cash equivalents primarily resulted from net cash outflows related to investing activities of $376.5 million, partially offset by net cash inflows related to financing and operating activities of $272.0 million and $33.8 million, respectively.

The increase in total liabilities from December 31, 2023 to September 30, 2024 was primarily due to an increase in interest-bearing deposits of $297.2 million, partially offset by a decrease in other borrowings of $170.0 million. The increase in interest-bearing deposits was largely due to increases in money market and time deposits of $264.1 million and $24.4 million, respectively.

The increase in total shareholders’ equity from December 31, 2023 to September 30, 2024 was primarily a result of $80.9 million of additional common stock outstanding and net income recognized of $32.4 million, partially offset by $12.0 million in cash distributions paid during the period.

Net Interest Income and Net Interest Margin

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

 Three months ended    
(in thousands)September 30,
2024		 June 30,
2024		 $ Change % Change
Interest and fee income$52,667  $48,998  $3,669   7.49%
Interest expense 22,281   19,906   2,375   11.93%
Net interest income$30,386  $29,092  $1,294   4.45%
Net interest margin 3.37%  3.39%    
        
 Three months ended    
(in thousands)September 30,
2024		 September 30,
2023		 $ Change % Change
Interest and fee income$52,667  $45,098  $7,569   16.78%
Interest expense 22,281   17,622   4,659   26.44%
Net interest income$30,386  $27,476  $2,910   10.59%
Net interest margin 3.37%  3.31%    
            

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

 Three months ended
 September 30, 2024 June 30, 2024 September 30, 2023
(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$126,266  $1,657   5.22% $148,936  $1,986   5.36% $198,751  $2,584   5.16%
Investment securities 106,256   620   2.32%  105,819   650   2.47%  112,154   653   2.31%
Loans held for investment and sale 3,354,050   50,390   5.98%  3,197,921   46,362   5.83%  2,982,140   41,861   5.57%
Total interest-earning assets 3,586,572   52,667   5.84%  3,452,676   48,998   5.71%  3,293,045   45,098   5.43%
Interest receivable and other assets, net 91,965       84,554       77,757     
Total assets$3,678,537      $3,537,230      $3,370,802     
                  
Liabilities and shareholders’ equity                 
Interest-bearing transaction accounts$302,188  $1,237   1.63% $291,470  $1,104   1.52% $296,230  $972   1.30%
Savings accounts 124,851   979   3.12%  120,080   856   2.87%  134,920   880   2.59%
Money market accounts 1,578,244   14,688   3.70%  1,547,814   13,388   3.48%  1,328,290   9,536   2.85%
Time accounts 326,640   4,172   5.08%  272,887   3,369   4.96%  399,514   4,998   4.96%
Subordinated notes and other borrowings 76,988   1,205   6.23%  75,747   1,189   6.31%  79,085   1,236   6.20%
Total interest-bearing liabilities 2,408,911   22,281   3.68%  2,307,998   19,906   3.47%  2,238,039   17,622   3.12%
Demand accounts 852,872       817,668       825,254     
Interest payable and other liabilities 32,062       41,429       35,123     
Shareholders’ equity 384,692       370,135       272,386     
Total liabilities & shareholders’ equity$3,678,537      $3,537,230      $3,370,802     
                  
Net interest spread     2.16%      2.24%      2.31%
Net interest income/margin  $30,386   3.37%   $29,092   3.39%   $27,476   3.31%
                              

Net interest income during the three months ended September 30, 2024 increased $1.3 million, while net interest margin decreased two basis points compared to the three months ended June 30, 2024. Interest income increased by $3.7 million compared to the prior quarter, primarily due to higher yields on new and repriced loans. Average loan yields increased 15 basis points compared to the prior quarter and average balances increased 4.88% during the same period. The increase in interest income compared to the prior quarter was partially offset by a $2.4 million increase in interest expense, primarily due to larger average deposit balances at higher rates. Average cost of total deposits increased 16 basis points compared to the prior quarter and average balances increased 4.42% during the same period.

As compared to the three months ended September 30, 2023, net interest income increased $2.9 million and net interest margin increased six basis points. Interest income increased by $7.6 million compared to the same quarter of the prior year, primarily due to higher yields on new and repriced loans. Average loan yields increased 41 basis points compared to the same quarter of the prior year and average balances increased 12.47% during the same period. The increase in interest income was partially offset by an additional $4.7 million in interest expense compared to the same quarter of the prior year. Average cost of total deposits increased 45 basis points compared to the same quarter of the prior year and average balances increased 6.72% during the same period.

Loans by Type

The following table provides loan balances, excluding deferred loan fees, by type as of September 30, 2024:

(in thousands) 
Real estate: 
Commercial$2,812,600 
Commercial land and development 4,709 
Commercial construction 92,841 
Residential construction 3,452 
Residential 33,415 
Farmland 47,907 
Commercial: 
Secured 171,855 
Unsecured 25,011 
Consumer and other 270,760 
Net deferred loan fees (1,985)
Total loans held for investment$3,460,565 
    

Interest-bearing Deposits

The following table provides interest-bearing deposit balances by type as of September 30, 2024:

(in thousands) 
Interest-bearing transaction accounts$324,028 
Money market accounts 1,546,443 
Savings accounts 131,561 
Time accounts 491,008 
Total interest-bearing deposits$2,493,040 
    

Asset Quality

Allowance for Credit Losses

At September 30, 2024, the Company’s allowance for credit losses was $37.6 million, as compared to $34.4 million at December 31, 2023. The $3.2 million increase in the allowance is due to a $6.0 million provision for credit losses recorded during the nine months ended September 30, 2024, partially offset by net charge-offs of $2.8 million, mainly attributable to commercial and industrial loans, during the same period.

The Company’s ratio of nonperforming loans to loans held for investment decreased from 0.06% at December 31, 2023 to 0.05% at September 30, 2024. Loans designated as watch increased from $39.6 million to $90.9 million between December 31, 2023 and September 30, 2024. Loans designated as substandard decreased from $2.0 million to $1.9 million between December 31, 2023 and September 30, 2024. There were no loans with doubtful risk grades at September 30, 2024 or December 31, 2023.

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

 September 30, 2024 December 31, 2023
(in thousands)Amount % of Total Amount % of Total
Real estate:       
Commercial$26,217   69.74% $29,015   84.27%
Commercial land and development 89   0.24%  178   0.52%
Commercial construction 1,756   4.67%  718   2.08%
Residential construction 47   0.13%  89   0.26%
Residential 284   0.76%  151   0.44%
Farmland 581   1.55%  399   1.16%
  28,974   77.09%  30,550   88.73%
Commercial:       
Secured 6,049   16.10%  3,314   9.62%
Unsecured 251   0.67%  189   0.55%
  6,300   16.77%  3,503   10.17%
Consumer and other 2,309   6.14%  378   1.10%
Total allowance for credit losses$37,583   100.00% $34,431   100.00%
                

The ratio of allowance for credit losses to loans held for investment was 1.09% at September 30, 2024, as compared to 1.12% at December 31, 2023.

Non-interest Income

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

 Three months ended    
(in thousands)September 30,
2024		 June 30,
2024		 $ Change % Change
Service charges on deposit accounts$165  $189  $(24)  (12.70)%
Gain on sale of loans 306   449   (143)  (31.85)%
Loan-related fees 406   370   36   9.73%
FHLB stock dividends 327   329   (2)  (0.61)%
Earnings on bank-owned life insurance 162   158   4   2.53%
Other income 15   78   (63)  (80.77)%
Total non-interest income$1,381  $1,573  $(192)  (12.21)%
              

Gain on sale of loans. The decrease resulted from a decline in the volume of loans sold, partially offset by an increase in the effective yield of loans sold. During the three months ended September 30, 2024, approximately $4.4 million of loans were sold with an effective yield of 7.03%, as compared to approximately $6.8 million of loans sold with an effective yield of 6.60% during the three months ended June 30, 2024.

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

 Three months ended   
(in thousands)September 30,
2024		 September 30,
2023		 $ Change % Change
Service charges on deposit accounts$165  $158  $7   4.43%
Gain on sale of loans 306   396   (90)  (22.73)%
Loan-related fees 406   355   51   14.37%
FHLB stock dividends 327   274   53   19.34%
Earnings on bank-owned life insurance 162   127   35   27.56%
Other income 15   74   (59)  (79.73)%
Total non-interest income$1,381  $1,384  $(3)  (0.22)%
              

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 September 30, 2024, approximately $4.4 million of loans were sold with an effective yield of 7.03%, as compared to approximately $7.0 million of loans sold with an effective yield of 5.63% during the three months ended September 30, 2023.

Non-interest Expense

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

 Three months ended    
(in thousands)September 30,
2024		 June 30,
2024		 $ Change % Change
Salaries and employee benefits$7,969  $7,803  $166   2.13%
Occupancy and equipment 626   646   (20)  (3.10)%
Data processing and software 1,327   1,235   92   7.45%
Federal Deposit Insurance Corporation (“FDIC”) insurance 405   390   15   3.85%
Professional services 830   767   63   8.21%
Advertising and promotional 584   615   (31)  (5.04)%
Loan-related expenses 292   297   (5)  (1.68)%
Other operating expenses 1,743   1,760   (17)  (0.97)%
Total non-interest expense$13,776  $13,513  $263   1.95%
                

Salaries and employee benefits. The increase related primarily to: (i) a $0.4 million decrease in loan origination costs due to fewer loan originations, net of purchased consumer loans; and (ii) a $0.2 million increase in salaries, benefits, and bonus expense related to a 4.28% increase in headcount during the quarter. These increases were partially offset by a $0.4 million decrease in commissions expense due to fewer loan originations, net of purchased consumer loans, period-over-period.

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

 Three months ended    
(in thousands)September 30,
2024		 September 30,
2023		 $ Change % Change
Salaries and employee benefits$7,969  $6,876  $1,093   15.90%
Occupancy and equipment 626   561   65   11.59%
Data processing and software 1,327   1,020   307   30.10%
FDIC insurance 405   375   30   8.00%
Professional services 830   700   130   18.57%
Advertising and promotional 584   535   49   9.16%
Loan-related expenses 292   345   (53)  (15.36)%
Other operating expenses 1,743   1,603   140   8.73%
Total non-interest expense$13,776  $12,015  $1,761   14.66%
                

Salaries and employee benefits. The increase related primarily to: (i) a $1.0 million increase in salaries, benefits, and bonus expense, mainly for employees hired since September 2023 to support expansion into the San Francisco Bay Area; and (ii) a $0.2 million increase in commissions paid, primarily to new employees in the San Francisco Bay Area. This was partially offset by a $0.1 million increase in loan origination costs due to a higher number of loan originations, net of purchased consumer loans, period-over-period.

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

Professional services. The increase was primarily due to a $0.1 million increase in fees for 2024 audits and examinations.

Other operating expenses. The increase was primarily due to $0.1 million in operational losses on deposit accounts.

Provision for Income Taxes

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

Provision for income taxes decreased slightly to $4.3 million for the three months ended September 30, 2024 from $4.4 million for the three months ended June 30, 2024, primarily driven by a slight decline in the effective tax rate. The effective tax rates were 28.21% and 28.84% for the three months ended September 30, 2024 and June 30, 2024, respectively.

Three months ended September 30, 2024, as compared to three months ended September 30, 2023

Provision for income taxes decreased by $0.5 million, or 9.47%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This decline was primarily driven by an overall decrease in pre-tax income combined with a $0.2 million adjustment to the provision during the three months ended September 30, 2023 to true-up the year-to-date effective tax rate which did not occur during the three months ended September 30, 2024. The effective tax rates for the three months ended September 30, 2024 and September 30, 2023, were 28.21% and 30.07% respectively.

Webcast Details

Five Star Bancorp will host a live webcast for analysts and investors on Tuesday, October 29, 2024 at 1:00 pm ET (10:00 am PT) to discuss its third quarter financial results. To view the live webcast, visit the “News & Events” section of the Company’s website under “Events” at https://investors.fivestarbank.com/news-events/events. The webcast will be archived on the Company’s website for a period of 90 days.

About Five Star Bancorp

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

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of the Company’s beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. The Company cautions that the forward-looking statements are based largely on the Company’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company’s control. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company’s control) and are subject to risks and uncertainties, which change over time, and other factors, which could cause actual results to differ materially from those currently anticipated. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. If one or more of the factors affecting the Company’s forward-looking information and statements proves incorrect, then the Company’s actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this press release. Therefore, the Company cautions you not to place undue reliance on the Company’s forward-looking information and statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Reports on Form 10-Q for the three months ended March 31, 2024 and June 30, 2024, 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)September 30,
2024		 June 30,
2024		 September 30,
2023
Revenue and Expense Data        
Interest and fee income$52,667  $48,998  $45,098 
Interest expense22,281  19,906  17,622 
Net interest income30,386  29,092  27,476 
Provision for credit losses2,750  2,000  1,050 
Net interest income after provision27,636  27,092  26,426 
Non-interest income:        
Service charges on deposit accounts165  189  158 
Gain on sale of loans306  449  396 
Loan-related fees406  370  355 
FHLB stock dividends327  329  274 
Earnings on bank-owned life insurance162  158  127 
Other income15  78  74 
Total non-interest income1,381  1,573  1,384 
Non-interest expense:        
Salaries and employee benefits7,969  7,803  6,876 
Occupancy and equipment626  646  561 
Data processing and software1,327  1,235  1,020 
FDIC insurance405  390  375 
Professional services830  767  700 
Advertising and promotional584  615  535 
Loan-related expenses292  297  345 
Other operating expenses1,743  1,760  1,603 
Total non-interest expense13,776  13,513  12,015 
Income before provision for income taxes15,241  15,152  15,795 
Provision for income taxes4,300  4,370  4,750 
Net income$10,941  $10,782  $11,045 
         
Comprehensive Income        
Net income$10,941  $10,782  $11,045 
Net unrealized holding gain (loss) on securities available-for-sale during the period3,549  295  (4,195)
Less: Income tax expense (benefit) related to other comprehensive income (loss)1,049  87  (1,240)
Other comprehensive income (loss)2,500  208  (2,955)
Total comprehensive income$13,441  $10,990  $8,090 
         
Share and Per Share Data        
Earnings per common share:        
Basic$0.52  $0.51  $0.64 
Diluted0.52  0.51  0.64 
Book value per share18.29  17.85  15.88 
Tangible book value per share(1)18.29  17.85  15.88 
Weighted average basic common shares outstanding21,182,143  21,039,798  17,175,034 
Weighted average diluted common shares outstanding21,232,758  21,058,085  17,194,825 
Shares outstanding at end of period21,319,583  21,319,583  17,257,357 
         
Credit Quality        
Allowance for credit losses to period end nonperforming loans2,041.44% 1,882.30% 1,699.35%
Nonperforming loans to loans held for investment0.05% 0.06% 0.07%
Nonperforming assets to total assets0.05% 0.05% 0.06%
Nonperforming loans plus performing loan modifications to loans held for investment0.05% 0.06% 0.07%
         
Selected Financial Ratios        
ROAA1.18% 1.23% 1.30%
ROAE11.31% 11.72% 16.09%
Net interest margin3.37% 3.39% 3.31%
Loan to deposit101.87% 103.87% 99.57%
         
(1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.
         


(in thousands)September 30,
2024		 June 30,
2024		 September 30,
2023
Balance Sheet Data     
Cash and due from financial institutions$44,531  $28,572  $26,744 
Interest-bearing deposits in banks 206,321   161,787   296,804 
Time deposits in banks 4,118   4,097   6,971 
Securities - available-for-sale, at fair value 104,238   103,204   104,086 
Securities - held-to-maturity, at amortized cost 2,720   2,973   3,104 
Loans held for sale 2,910   5,322   9,326 
Loans held for investment 3,460,565   3,266,291   3,009,930 
Allowance for credit losses (37,583)  (35,406)  (34,028)
Loans held for investment, net of allowance for credit losses 3,422,982   3,230,885   2,975,902 
FHLB stock 15,000   15,000   15,000 
Operating leases, right-of-use asset 6,590   6,630   4,799 
Premises and equipment, net 1,657   1,610   1,564 
Bank-owned life insurance 19,192   19,030   17,023 
Interest receivable and other assets 56,745   55,107   43,717 
Total assets$3,887,004  $3,634,217  $3,505,040 
      
Non-interest-bearing deposits$906,939  $825,733  $833,434 
Interest-bearing deposits 2,493,040   2,323,898   2,198,776 
Total deposits 3,399,979   3,149,631   3,032,210 
Subordinated notes, net 73,859   73,822   73,713 
Other borrowings —   —   90,000 
Operating lease liability 7,101   7,077   5,043 
Interest payable and other liabilities 16,135   23,217   30,050 
Total liabilities 3,497,074   3,253,747   3,231,016 
      
Common stock 302,251   301,968   220,266 
Retained earnings 97,411   90,734   69,689 
Accumulated other comprehensive loss, net of taxes (9,732)  (12,232)  (15,931)
Total shareholders’ equity 389,930   380,470   274,024 
Total liabilities and shareholders’ equity$3,887,004  $3,634,217  $3,505,040 
      
Quarterly Average Balance Data     
Average loans held for investment and sale$3,354,050  $3,197,921  $2,982,140 
Average interest-earning assets 3,586,572   3,452,676   3,293,045 
Average total assets 3,678,537   3,537,230   3,370,802 
Average deposits 3,184,795   3,049,919   2,984,208 
Average total equity 384,692   370,135   272,386 
      
Capital Ratios     
Total shareholders’ equity to total assets 10.03%  10.47%  7.82%
Tangible shareholders’ equity to tangible assets(1) 10.03%  10.47%  7.82%
Total capital (to risk-weighted assets) 13.94%  14.38%  12.37%
Tier 1 capital (to risk-weighted assets) 10.93%  11.27%  9.07%
Common equity Tier 1 capital (to risk-weighted assets) 10.93%  11.27%  9.07%
Tier 1 leverage ratio 10.83%  11.05%  8.58%
            
(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. 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. 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.

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

 Three months ended
(in thousands)September 30,
2024		 June 30,
2024		 September 30,
2023
Pre-tax, pre-provision income     
Pre-tax income$15,241  $15,152  $15,795 
Add: provision for credit losses 2,750   2,000   1,050 
Pre-tax, pre-provision income$17,991  $17,152  $16,845 
            

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

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


FAQ

What was Five Star Bancorp's (FSBC) net income in Q3 2024?

Five Star Bancorp reported net income of $10.9 million for Q3 2024.

How much did FSBC's total deposits grow in Q3 2024?

Total deposits increased by $250.3 million, or 7.95%, during Q3 2024.

What was FSBC's efficiency ratio in Q3 2024?

The efficiency ratio was 43.37% in Q3 2024, improving from 44.07% in Q2 2024.

What dividend did FSBC declare for Q3 2024?

Five Star Bancorp declared a cash dividend of $0.20 per share for Q3 2024.

Stock FSBC logo
Five Star Bancorp

NASDAQ:FSBC

FSBC Rankings

#2899 Ranked by Market Cap
#1190 Ranked by Dividends

FSBC Latest News

Oct 18, 2024
Five Star Bancorp Declares Third Quarter Cash Dividend
Oct 15, 2024
Five Star Bancorp Announces Third Quarter 2024 Earnings Release Date and Webcast
Sep 3, 2024
Five Star Bancorp opens San Francisco office, bringing personalized, concierge banking services to the San Francisco Bay Area
Jul 24, 2024
Five Star Bancorp Announces Second Quarter 2024 Results
Jul 19, 2024
Five Star Bancorp Declares Second Quarter Cash Dividend

FSBC Stock Data

632.77M
21.32M
26.6%
55.69%
1.11%
Banks - Regional
State Commercial Banks
Link
United States of America
RANCHO CORDOVA