Five Star Bancorp (Nasdaq: FSBC) (the “Company” or “Five
Star”), the holding company for Five Star Bank (the “Bank”), today
reported net income of $11.0 million for the three months ended
September 30, 2023, as compared to $12.7 million for the three
months ended June 30, 2023 and $11.7 million for the three
months ended September 30, 2022.
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 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
Return on average assets (“ROAA”) |
|
1.30 |
% |
|
|
1.55 |
% |
|
|
1.60 |
% |
Return on average equity
(“ROAE”) |
|
16.09 |
% |
|
|
19.29 |
% |
|
|
19.35 |
% |
Pre-tax income |
$ |
15,795 |
|
|
$ |
17,169 |
|
|
$ |
16,534 |
|
Pre-tax, pre-provision
income(1) |
|
16,845 |
|
|
|
18,419 |
|
|
|
18,784 |
|
Net income |
|
11,045 |
|
|
|
12,729 |
|
|
|
11,704 |
|
Basic earnings per common
share |
$ |
0.64 |
|
|
$ |
0.74 |
|
|
$ |
0.68 |
|
Diluted earnings per common
share |
|
0.64 |
|
|
|
0.74 |
|
|
|
0.68 |
|
Weighted average basic common
shares outstanding |
|
17,175,034 |
|
|
|
17,165,344 |
|
|
|
17,140,435 |
|
Weighted average diluted
common shares outstanding |
|
17,194,825 |
|
|
|
17,168,995 |
|
|
|
17,168,447 |
|
Shares outstanding at end of
period |
|
17,257,357 |
|
|
|
17,257,357 |
|
|
|
17,245,983 |
|
(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:
“Despite ongoing headwinds in the market, we
maintained momentum as we continued to onboard new customers and
enhance existing relationships. Pressures on deposit pricing exist,
yet Five Star Bank’s total loans and deposits increased in the 3rd
Quarter of 2023. We remain focused on the future and our long-term
strategy. As such, we expanded our presence in the San Francisco
Bay Area with the onboarding of a new team of seasoned
professionals, and we declared another cash dividend to
shareholders, exemplifying our commitment to shareholder value.
This Quarter, we were pleased to be listed among
Piper Sandler’s Sm-All Stars for 2023 which recognizes
outperformance in several metrics including growth, profitability,
asset quality, and capital. We were also among the Sacramento
Business Journal’s Best Places to Work. We believe these successes
serve as the strongest testimony to our people, technology,
operating efficiencies, conservative underwriting practices,
exceptional credit quality, and prudent approach to portfolio
management. While uncertainty exists relative to recessionary
concerns and a turbulent geopolitical climate, we will 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.”
- The
Company's reliance on brokered deposits and short-term FHLB
borrowings decreased by $45.0 million, or 21.43%, during the three
months ended September 30, 2023.
- The
Company's new San Francisco Bay Area team increased to nine
employees who generated $28.9 million of deposits during the third
quarter ended September 30, 2023.
- Cash and cash
equivalents were $323.5 million, representing 10.67% of total
deposits at September 30, 2023, compared to 10.24% at
June 30, 2023.
- Total deposits
increased by $102.5 million, or 3.50%, during the three months
ended September 30, 2023. Non-brokered deposits increased by
$137.5 million, or 4.87%, over the same period.
- Consistent,
disciplined management of expenses contributed to our efficiency
ratio of 41.63% for the three months ended September 30,
2023.
- Net interest
margin was 3.31% for the three months ended September 30,
2023, 3.45% for the three months ended June 30, 2023, and
3.86% for the three months ended September 30, 2022. The
effective Federal Funds rate increased to 5.33% as of
September 30, 2023, from 5.08% as of June 30, 2023 and
3.08% as of September 30, 2022.
- Other
comprehensive loss was $3.0 million during the three months ended
September 30, 2023. Unrealized losses, net of tax effect, on
available-for-sale securities were $15.9 million as of
September 30, 2023. Total held-to-maturity and
available-for-sale securities represented 0.09% and 3.03% of total
interest-earning assets, respectively, as of September 30,
2023.
- The Company's
common equity Tier 1 capital ratio was 9.07% and 9.05% as of
September 30, 2023 and June 30, 2023, respectively. The
Bank continues to meet all requirements to be considered
“well-capitalized” under applicable regulatory guidelines.
- Loan and deposit
growth in the three months ended September 30, 2023 was as
follows:
(in thousands) |
September 30,2023 |
|
June 30,2023 |
|
$ Change |
|
% Change |
Loans held for investment |
$ |
3,009,930 |
|
|
$ |
2,927,411 |
|
|
$ |
82,519 |
|
|
2.82 |
% |
Non-interest-bearing deposits |
|
833,434 |
|
|
|
832,641 |
|
|
|
793 |
|
|
0.10 |
% |
Interest-bearing deposits |
|
2,198,776 |
|
|
|
2,097,098 |
|
|
|
101,678 |
|
|
4.85 |
% |
|
|
|
|
|
|
|
|
(in thousands) |
September 30,2023 |
|
September 30,2022 |
|
$ Change |
|
% Change |
Loans held for investment |
$ |
3,009,930 |
|
|
$ |
2,582,978 |
|
|
$ |
426,952 |
|
|
16.53 |
% |
Non-interest-bearing deposits |
|
833,434 |
|
|
|
1,019,063 |
|
|
|
(185,629 |
) |
|
(18.22 |
)% |
Interest-bearing deposits |
|
2,198,776 |
|
|
|
1,595,269 |
|
|
|
603,507 |
|
|
37.83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
The ratio of nonperforming loans to loans held for investment at
period end increased to 0.07% at September 30, 2023, from
0.01% at June 30, 2023.
- 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, 2023. The Company's Board of Directors
subsequently declared another cash dividend of $0.20 per share on
October 19, 2023.
Summary Results
Three months ended September 30, 2023, as
compared to three months ended June 30, 2023
The Company’s net income was $11.0 million for
the three months ended September 30, 2023, compared to $12.7
million for the three months ended June 30, 2023. Net interest
income decreased by $0.1 million as increases in interest expense
more than offset increases in interest income, with increases in
rates paid on interest-bearing liabilities as the leading driver.
The provision for credit losses decreased by $0.2 million as loan
originations in the three months ended September 30, 2023 were
less than those for the three months ended June 30, 2023.
Non-interest income decreased by $1.4 million, primarily due to a
$1.3 million gain from distributions on investments in
venture-backed funds during the three months ended June 30,
2023 that did not recur during the three months ended
September 30, 2023. Non-interest expense increased by $36.0
thousand as the increase in salaries and employee benefits more
than offset decreases in advertising, promotional, and other
operating expenses.
Three months ended September 30, 2023, as
compared to three months ended September 30, 2022
The Company’s net income was $11.0 million for
the three months ended September 30, 2023, compared to $11.7
million for the three months ended September 30, 2022. Net
interest income decreased by $47.0 thousand as increases in
interest expense more than offset increases in interest income,
with increases in rates paid on interest-bearing liabilities as the
leading driver. The provision for credit losses decreased by $1.2
million as loan originations in the three months ended
September 30, 2023 were less than those for the three months
ended September 30, 2022. Non-interest income decreased by
$49.0 thousand, primarily due to a decrease in gain on sale of
loans recognized during the three months ended September 30,
2023, as compared to the three months ended September 30,
2022. Non-interest expense increased by $1.8 million with an
increase in salaries and employee benefits as the leading driver.
The Company had 15 more full-time employees at September 30,
2023 than at September 30, 2022, nine of whom support the
Company's recent expansion into the San Francisco Bay Area.
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 30,2023 |
|
June 30,2023 |
|
$ Change |
|
% Change |
|
Selected operating data: |
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
27,476 |
|
|
$ |
27,578 |
|
|
$ |
(102 |
) |
|
(0.37 |
)% |
Provision for credit losses |
|
|
1,050 |
|
|
|
1,250 |
|
|
|
(200 |
) |
|
(16.00 |
)% |
Non-interest income |
|
|
1,384 |
|
|
|
2,820 |
|
|
|
(1,436 |
) |
|
(50.92 |
)% |
Non-interest expense |
|
|
12,015 |
|
|
|
11,979 |
|
|
|
36 |
|
|
0.30 |
% |
Pre-tax income |
|
|
15,795 |
|
|
|
17,169 |
|
|
|
(1,374 |
) |
|
(8.00 |
)% |
Provision for income taxes |
|
|
4,750 |
|
|
|
4,440 |
|
|
|
310 |
|
|
6.98 |
% |
Net income |
|
$ |
11,045 |
|
|
$ |
12,729 |
|
|
$ |
(1,684 |
) |
|
(13.23 |
)% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.64 |
|
|
$ |
0.74 |
|
|
$ |
(0.10 |
) |
|
(13.51 |
)% |
Diluted |
|
|
0.64 |
|
|
|
0.74 |
|
|
|
(0.10 |
) |
|
(13.51 |
)% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
|
ROAA |
|
|
1.30 |
% |
|
|
1.55 |
% |
|
|
|
|
|
ROAE |
|
|
16.09 |
% |
|
|
19.29 |
% |
|
|
|
|
|
Net interest margin |
|
|
3.31 |
% |
|
|
3.45 |
% |
|
|
|
|
|
Cost of funds |
|
|
2.28 |
% |
|
|
2.04 |
% |
|
|
|
|
|
Efficiency ratio |
|
|
41.63 |
% |
|
|
39.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
(in thousands, except per
share data) |
|
September 30,2023 |
|
September 30,2022 |
|
$ Change |
|
% Change |
|
Selected operating data: |
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
27,476 |
|
|
$ |
27,523 |
|
|
$ |
(47 |
) |
|
(0.17 |
)% |
Provision for credit losses |
|
|
1,050 |
|
|
|
2,250 |
|
|
|
(1,200 |
) |
|
(53.33 |
)% |
Non-interest income |
|
|
1,384 |
|
|
|
1,433 |
|
|
|
(49 |
) |
|
(3.42 |
)% |
Non-interest expense |
|
|
12,015 |
|
|
|
10,172 |
|
|
|
1,843 |
|
|
18.12 |
% |
Pre-tax income |
|
|
15,795 |
|
|
|
16,534 |
|
|
|
(739 |
) |
|
(4.47 |
)% |
Provision for income taxes |
|
|
4,750 |
|
|
|
4,830 |
|
|
|
(80 |
) |
|
(1.66 |
)% |
Net income |
|
$ |
11,045 |
|
|
$ |
11,704 |
|
|
$ |
(659 |
) |
|
(5.63 |
)% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.64 |
|
|
$ |
0.68 |
|
|
$ |
(0.04 |
) |
|
(5.88 |
)% |
Diluted |
|
|
0.64 |
|
|
|
0.68 |
|
|
|
(0.04 |
) |
|
(5.88 |
)% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
|
ROAA |
|
|
1.30 |
% |
|
|
1.60 |
% |
|
|
|
|
|
ROAE |
|
|
16.09 |
% |
|
|
19.35 |
% |
|
|
|
|
|
Net interest margin |
|
|
3.31 |
% |
|
|
3.86 |
% |
|
|
|
|
|
Cost of funds |
|
|
2.28 |
% |
|
|
0.62 |
% |
|
|
|
|
|
Efficiency ratio |
|
|
41.63 |
% |
|
|
35.13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Summary
(in thousands) |
|
September 30,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Selected financial condition
data: |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
3,505,040 |
|
|
$ |
3,227,159 |
|
|
$ |
277,881 |
|
|
8.61 |
% |
Cash and cash equivalents |
|
|
323,548 |
|
|
|
259,991 |
|
|
|
63,557 |
|
|
24.45 |
% |
Total loans held for investment |
|
|
3,009,930 |
|
|
|
2,791,326 |
|
|
|
218,604 |
|
|
7.83 |
% |
Total investments |
|
|
107,190 |
|
|
|
119,744 |
|
|
|
(12,554 |
) |
|
(10.48 |
)% |
Total liabilities |
|
|
3,231,016 |
|
|
|
2,974,334 |
|
|
|
256,682 |
|
|
8.63 |
% |
Total deposits |
|
|
3,032,210 |
|
|
|
2,782,004 |
|
|
|
250,206 |
|
|
8.99 |
% |
Subordinated notes, net |
|
|
73,713 |
|
|
|
73,606 |
|
|
|
107 |
|
|
0.15 |
% |
Total shareholders’ equity |
|
|
274,024 |
|
|
|
252,825 |
|
|
|
21,199 |
|
|
8.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Insured and collateralized deposits were approximately $2.0
billion, representing approximately 66.33% of total deposits as of
September 30, 2023. Net uninsured deposits were approximately
$1.0 billion as of September 30, 2023.
- Commercial and
consumer deposit accounts constituted approximately 75% of total
deposits. Deposit relationships of at least $5 million represented
approximately 62% of total deposits and had an average age of
approximately 8.68 years as of September 30, 2023.
- Cash and cash
equivalents as of September 30, 2023 were $323.5 million,
representing 10.67% of total deposits at September 30, 2023,
compared to 10.24% as of June 30, 2023.
- In the first
quarter of 2023, the Federal Reserve created the Bank Term Funding
Program to provide depository institutions with additional funding,
which allows any federally insured deposit institution to pledge
its investment portfolio at par as collateral value. As of
September 30, 2023, the Bank had neither used nor established
borrowing capacity with the Bank Term Funding Program.
- Total liquidity
(consisting of cash and cash equivalents and unused and immediately
available borrowing capacity as set forth below) was approximately
$859.7 million as of September 30, 2023.
|
September 30, 2023 |
|
Available |
(in thousands) |
Line of Credit |
|
Letters of Credit Issued |
|
Borrowings |
|
FHLB advances |
$ |
1,053,625 |
|
|
$ |
671,500 |
|
|
$ |
90,000 |
|
|
$ |
292,125 |
|
Federal Reserve Discount
Window |
|
69,012 |
|
|
|
— |
|
|
|
— |
|
|
|
69,012 |
|
Correspondent bank lines of
credit |
|
175,000 |
|
|
|
— |
|
|
|
— |
|
|
|
175,000 |
|
Cash and cash equivalents |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
323,548 |
|
Total |
$ |
1,297,637 |
|
|
$ |
671,500 |
|
|
$ |
90,000 |
|
|
$ |
859,685 |
|
|
The increase in total assets from
December 31, 2022 to September 30, 2023 was primarily due
to a $63.6 million increase in cash and cash equivalents and
a $218.6 million increase in total loans held for
investment. The increase in cash and cash equivalents primarily
resulted from net cash provided from financing and operating
activities of $230.7 million and $40.5 million, respectively,
partially offset by net cash used in investing activities of $207.7
million. The $218.6 million increase in total loans held for
investment between December 31, 2022 and September 30,
2023 was a result of $524.0 million in loan originations, partially
offset by $305.4 million in loan payoffs and paydowns.
The increase in total liabilities from
December 31, 2022 to September 30, 2023 was primarily
attributable to an increase in deposits of $250.2 million,
largely due to increases in money market, time deposits over $250
thousand, and interest-bearing demand deposits of $262.0 million,
$132.8 million, and $55.0 million, respectively, partially offset
by decreases in non-interest-bearing, other time deposits, and
savings deposits of $135.3 million, $47.7 million, and $16.6
million, respectively.
The increase in total shareholders’ equity from
December 31, 2022 to September 30, 2023 was primarily a
result of net income recognized of $36.9 million, partially offset
by $9.5 million in cash distributions paid during the period, a
reduction to retained earnings of $4.5 million, net of tax effect,
due to the adoption of Accounting Standards Update 2016-13,
Financial Instruments - Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments (“ASC 326”), and an increase
of $2.5 million in accumulated other comprehensive loss.
Net Interest Income and Net Interest
Margin
The following is a summary of the components of
net interest income for the periods indicated:
|
Three months ended |
|
|
|
|
(in thousands) |
September 30,2023 |
|
June 30,2023 |
|
$ Change |
|
% Change |
Interest and fee income |
$ |
45,098 |
|
|
$ |
42,793 |
|
|
$ |
2,305 |
|
|
5.39 |
% |
Interest expense |
|
17,622 |
|
|
|
15,215 |
|
|
|
2,407 |
|
|
15.82 |
% |
Net interest income |
$ |
27,476 |
|
|
$ |
27,578 |
|
|
$ |
(102 |
) |
|
(0.37 |
)% |
Net interest margin |
|
3.31 |
% |
|
|
3.45 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
(in thousands) |
September 30,2023 |
|
September 30,2022 |
|
$ Change |
|
% Change |
Interest and fee income |
$ |
45,098 |
|
|
$ |
31,646 |
|
|
$ |
13,452 |
|
|
42.51 |
% |
Interest expense |
|
17,622 |
|
|
|
4,123 |
|
|
|
13,499 |
|
|
327.41 |
% |
Net interest income |
$ |
27,476 |
|
|
$ |
27,523 |
|
|
$ |
(47 |
) |
|
(0.17 |
)% |
Net interest margin |
|
3.31 |
% |
|
|
3.86 |
% |
|
|
|
|
|
The following table shows the components of net
interest income and net interest margin for the quarterly periods
indicated:
|
|
Three months ended |
|
|
September 30, 2023 |
|
June 30, 2023 |
|
September 30, 2022 |
(in thousands) |
|
AverageBalance |
|
Interest Income/Expense |
|
Yield/ Rate |
|
AverageBalance |
|
Interest Income/Expense |
|
Yield/ Rate |
|
AverageBalance |
|
Interest Income/Expense |
|
Yield/ Rate |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning deposits with banks |
|
$ |
198,751 |
|
|
$ |
2,584 |
|
|
5.16 |
% |
|
$ |
179,894 |
|
|
$ |
2,218 |
|
|
4.95 |
% |
|
$ |
210,179 |
|
|
$ |
1,145 |
|
|
2.16 |
% |
Investment securities |
|
|
112,154 |
|
|
|
653 |
|
|
2.31 |
% |
|
|
116,107 |
|
|
|
646 |
|
|
2.23 |
% |
|
|
126,733 |
|
|
|
615 |
|
|
1.93 |
% |
Loans held for investment and sale |
|
|
2,982,140 |
|
|
|
41,861 |
|
|
5.57 |
% |
|
|
2,914,388 |
|
|
|
39,929 |
|
|
5.50 |
% |
|
|
2,494,468 |
|
|
|
29,886 |
|
|
4.75 |
% |
Total interest-earning assets |
|
|
3,293,045 |
|
|
|
45,098 |
|
|
5.43 |
% |
|
|
3,210,389 |
|
|
|
42,793 |
|
|
5.35 |
% |
|
|
2,831,380 |
|
|
|
31,646 |
|
|
4.43 |
% |
Interest receivable and other assets, net |
|
|
77,757 |
|
|
|
|
|
|
|
75,416 |
|
|
|
|
|
|
|
78,112 |
|
|
|
|
|
Total assets |
|
$ |
3,370,802 |
|
|
|
|
|
|
$ |
3,285,805 |
|
|
|
|
|
|
$ |
2,909,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’
equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
296,230 |
|
|
$ |
972 |
|
|
1.30 |
% |
|
$ |
290,404 |
|
|
$ |
825 |
|
|
1.14 |
% |
|
$ |
213,926 |
|
|
$ |
115 |
|
|
0.21 |
% |
Savings |
|
|
134,920 |
|
|
|
880 |
|
|
2.59 |
% |
|
|
139,522 |
|
|
|
758 |
|
|
2.18 |
% |
|
|
103,142 |
|
|
|
65 |
|
|
0.25 |
% |
Money market |
|
|
1,328,290 |
|
|
|
9,536 |
|
|
2.85 |
% |
|
|
1,283,353 |
|
|
|
8,136 |
|
|
2.54 |
% |
|
|
1,015,698 |
|
|
|
1,780 |
|
|
0.69 |
% |
Time |
|
|
399,514 |
|
|
|
4,998 |
|
|
4.96 |
% |
|
|
370,864 |
|
|
|
4,250 |
|
|
4.60 |
% |
|
|
208,678 |
|
|
|
857 |
|
|
1.63 |
% |
Subordinated debt and other borrowings |
|
|
79,085 |
|
|
|
1,236 |
|
|
6.20 |
% |
|
|
80,192 |
|
|
|
1,246 |
|
|
6.23 |
% |
|
|
72,195 |
|
|
|
1,306 |
|
|
7.18 |
% |
Total interest-bearing liabilities |
|
|
2,238,039 |
|
|
|
17,622 |
|
|
3.12 |
% |
|
|
2,164,335 |
|
|
|
15,215 |
|
|
2.82 |
% |
|
|
1,613,639 |
|
|
|
4,123 |
|
|
1.01 |
% |
Demand accounts |
|
|
825,254 |
|
|
|
|
|
|
|
828,748 |
|
|
|
|
|
|
|
1,041,222 |
|
|
|
|
|
Interest payable and other liabilities |
|
|
35,123 |
|
|
|
|
|
|
|
28,034 |
|
|
|
|
|
|
|
14,687 |
|
|
|
|
|
Shareholders’ equity |
|
|
272,386 |
|
|
|
|
|
|
|
264,688 |
|
|
|
|
|
|
|
239,944 |
|
|
|
|
|
Total liabilities &
shareholders’ equity |
|
$ |
3,370,802 |
|
|
|
|
|
|
$ |
3,285,805 |
|
|
|
|
|
|
$ |
2,909,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
2.31 |
% |
|
|
|
|
|
2.53 |
% |
|
|
|
|
|
3.42 |
% |
Net interest
income/margin |
|
|
|
$ |
27,476 |
|
|
3.31 |
% |
|
|
|
$ |
27,578 |
|
|
3.45 |
% |
|
|
|
$ |
27,523 |
|
|
3.86 |
% |
|
Net interest income during the three months
ended September 30, 2023 decreased $0.1 million as compared to
the three months ended June 30, 2023. In addition, net
interest margin decreased 14 basis points compared to the prior
quarter. The decrease in net interest income is primarily
attributable to an additional $2.4 million in deposit interest
expense due to increases in interest rates as compared to the prior
quarter. The cost of interest-bearing deposits increased 32 basis
points as compared to the prior quarter, while average balances
increased 3.59%. In addition, the average balance of
non-interest-bearing deposits decreased by $3.5 million
quarter-over-quarter. The increase to interest expense was
partially offset by an increase in total interest income of $2.3
million. Average loan yields increased 7 basis points as compared
to the prior quarter, while average balances increased 2.32%.
As compared to the three months ended
September 30, 2022, net interest income decreased $47.0
thousand and net interest margin decreased 55 basis points. The
decrease in net interest income is primarily attributable to an
additional $13.6 million in deposit interest expense due to
increases in interest rates and average balances as compared to the
same quarter of the prior year. The cost of interest-bearing
deposits increased 228 basis points as compared to the same quarter
of the prior year, while average balances increased 40.06%. In
addition, the average balance of non-interest-bearing deposits
decreased by $216.0 million as compared to the same quarter of the
prior year. The increase in deposit interest expense was partially
offset by an increase in total interest income of $13.5 million, as
compared to the same quarter of the prior year. Average loan yields
increased 82 basis points as compared to the same quarter of the
prior year, while average balances increased 19.55%.
Loans by Type
The following table provides loan balances,
excluding deferred loan fees, by type as of September 30,
2023:
(in thousands) |
|
|
Commercial Term Real Estate Non-Owner Occupied |
|
$ |
1,115,896 |
Commercial Term
Multifamily |
|
|
991,360 |
Commercial Term Real Estate
Owner Occupied |
|
|
482,629 |
Commercial Construction Real
Estate |
|
|
95,352 |
Commercial Secured |
|
|
88,589 |
SBA 7A Secured |
|
|
49,177 |
Commercial Term Agricultural
Real Estate |
|
|
51,921 |
Others |
|
|
137,271 |
Total loans, excluding deferred loan fees |
|
$ |
3,012,195 |
|
Interest-bearing Deposits
The following table provide interest-bearing
deposit balances by type as of September 30, 2023:
(in thousands) |
|
|
Interest-bearing demand accounts |
|
$ |
297,678 |
Money market accounts |
|
|
1,335,545 |
Savings accounts |
|
|
138,029 |
Time accounts |
|
|
427,524 |
Total interest-bearing deposits |
|
$ |
2,198,776 |
|
Asset Quality
Allowance for Credit Losses - Loans
Beginning January 1, 2023, the Company adopted
ASC 326, which replaced the former “incurred loss” model for
recognizing credit losses with an “expected loss” model referred to
as the Current Expected Credit Loss (“CECL”) model. Utilizing CECL
may have an impact on our allowance for credit losses going forward
and result in a lack of comparability between 2022 and 2023
quarterly periods. Refer to information below on the provision for
credit losses recorded during the nine months ended
September 30, 2023.
At September 30, 2023, the Company’s
allowance for credit losses was $34.0 million, as compared to $28.4
million at December 31, 2022. The $5.6 million increase in the
allowance is due to a $5.3 million adjustment recorded in
connection with the adoption of CECL and a $2.9 million provision
for credit losses recorded during the nine months ended
September 30, 2023, partially offset by net charge-offs of
$2.5 million, mainly attributable to commercial and industrial
loans, during the same period.
The Company’s ratio of nonperforming loans to
loans held for investment increased from 0.01% at December 31,
2022 to 0.07% at September 30, 2023. The provision for credit
losses recorded during the nine months ended September 30,
2023 was primarily related to loan growth, loan type mix, and
updates in the macroeconomic environment. Loans designated as
substandard increased from $0.4 million to $2.0 million between
December 31, 2022 and September 30, 2023. There were no
loans with doubtful risk grades at September 30, 2023 or
December 31, 2022.
A summary of the allowance for credit losses by
loan class is as follows:
|
|
September 30, 2023 |
|
December 31, 2022 |
(in thousands) |
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
Real estate: |
|
|
|
|
|
|
|
|
Commercial |
|
$ |
27,901 |
|
|
82.00 |
% |
|
$ |
19,216 |
|
|
67.69 |
% |
Commercial land and development |
|
|
198 |
|
|
0.58 |
% |
|
|
54 |
|
|
0.19 |
% |
Commercial construction |
|
|
1,220 |
|
|
3.59 |
% |
|
|
645 |
|
|
2.27 |
% |
Residential construction |
|
|
115 |
|
|
0.34 |
% |
|
|
49 |
|
|
0.17 |
% |
Residential |
|
|
151 |
|
|
0.44 |
% |
|
|
175 |
|
|
0.62 |
% |
Farmland |
|
|
393 |
|
|
1.15 |
% |
|
|
644 |
|
|
2.27 |
% |
|
|
|
29,978 |
|
|
88.10 |
% |
|
|
20,783 |
|
|
73.21 |
% |
Commercial: |
|
|
|
|
|
|
|
|
Secured |
|
|
3,461 |
|
|
10.17 |
% |
|
|
7,098 |
|
|
25.00 |
% |
Unsecured |
|
|
213 |
|
|
0.63 |
% |
|
|
116 |
|
|
0.41 |
% |
|
|
|
3,674 |
|
|
10.80 |
% |
|
|
7,214 |
|
|
25.41 |
% |
Consumer and other |
|
|
376 |
|
|
1.10 |
% |
|
|
347 |
|
|
1.22 |
% |
Unallocated |
|
|
— |
|
|
— |
% |
|
|
45 |
|
|
0.16 |
% |
Total allowance for credit
losses |
|
$ |
34,028 |
|
|
100.00 |
% |
|
$ |
28,389 |
|
|
100.00 |
% |
|
The ratio of allowance for credit losses to
loans held for investment was 1.13% at September 30, 2023, as
compared to 1.02% at December 31, 2022.
Non-interest Income
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
September 30,2023 |
|
June 30,2023 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
158 |
|
|
$ |
135 |
|
|
$ |
23 |
|
|
17.04 |
% |
Gain on sale of loans |
|
|
396 |
|
|
|
641 |
|
|
|
(245 |
) |
|
(38.22 |
)% |
Loan-related fees |
|
|
355 |
|
|
|
389 |
|
|
|
(34 |
) |
|
(8.74 |
)% |
FHLB stock dividends |
|
|
274 |
|
|
|
189 |
|
|
|
85 |
|
|
44.97 |
% |
Earnings on bank-owned life
insurance |
|
|
127 |
|
|
|
126 |
|
|
|
1 |
|
|
0.79 |
% |
Other income |
|
|
74 |
|
|
|
1,340 |
|
|
|
(1,266 |
) |
|
(94.48 |
)% |
Total non-interest income |
|
$ |
1,384 |
|
|
$ |
2,820 |
|
|
$ |
(1,436 |
) |
|
(50.92 |
)% |
|
Gain on sale of loans. The decrease in gain on
sale of loans primarily resulted from an overall decline in the
volume of loans sold during the three months ended
September 30, 2023, compared to the three months ended
June 30, 2023. During the three months ended
September 30, 2023, approximately $7.0 million of loans were
sold with an effective yield of 5.63%, as compared to approximately
$10.9 million of loans sold with an effective yield of 5.89% during
the three months ended June 30, 2023.
FHLB stock dividends. The increase in FHLB stock
dividends was primarily due to increased yields from dividends
received of 7.75% for the three months ended September 30,
2023, as compared to 7.00% for the three months ended June 30,
2023.
Other income. The decrease in other income
resulted primarily from a $1.3 million gain recorded for
distributions received from venture-backed fund investments during
the three months ended June 30, 2023, which did not recur
during the three months ended September 30, 2023.
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Three months ended |
|
|
|
(in thousands) |
|
September 30,2023 |
|
September 30,2022 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
158 |
|
|
$ |
132 |
|
|
$ |
26 |
|
|
19.70 |
% |
Gain on sale of loans |
|
|
396 |
|
|
|
548 |
|
|
|
(152 |
) |
|
(27.74 |
)% |
Loan-related fees |
|
|
355 |
|
|
|
447 |
|
|
|
(92 |
) |
|
(20.58 |
)% |
FHLB stock dividends |
|
|
274 |
|
|
|
152 |
|
|
|
122 |
|
|
80.26 |
% |
Earnings on bank-owned life
insurance |
|
|
127 |
|
|
|
102 |
|
|
|
25 |
|
|
24.51 |
% |
Other income |
|
|
74 |
|
|
|
52 |
|
|
|
22 |
|
|
42.31 |
% |
Total non-interest income |
|
$ |
1,384 |
|
|
$ |
1,433 |
|
|
$ |
(49 |
) |
|
(3.42 |
)% |
|
Gain on sale of loans. The decrease in gain on
sale of loans related primarily to an overall decline in the volume
of loans sold during the three months ended September 30,
2023, as compared to the three months ended September 30,
2022. During the three months ended September 30, 2023,
approximately $7.0 million of loans were sold with an effective
yield of 5.63%, as compared to approximately $10.5 million of loans
sold with an effective yield of 5.20% during the three months ended
September 30, 2022.
FHLB stock dividends. The increase in FHLB stock
dividends was primarily due to increased yields from dividends
received of 7.75% for the three months ended September 30,
2023, as compared to 6.00% for the three months ended
September 30, 2022.
Non-interest Expense
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
September 30,2023 |
|
June 30,2023 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
6,876 |
|
|
$ |
6,421 |
|
|
$ |
455 |
|
|
7.09 |
% |
Occupancy and equipment |
|
|
561 |
|
|
|
551 |
|
|
|
10 |
|
|
1.81 |
% |
Data processing and
software |
|
|
1,020 |
|
|
|
1,013 |
|
|
|
7 |
|
|
0.69 |
% |
Federal Deposit Insurance
Corporation (“FDIC”) insurance |
|
|
375 |
|
|
|
410 |
|
|
|
(35 |
) |
|
(8.54 |
)% |
Professional services |
|
|
700 |
|
|
|
586 |
|
|
|
114 |
|
|
19.45 |
% |
Advertising and
promotional |
|
|
535 |
|
|
|
733 |
|
|
|
(198 |
) |
|
(27.01 |
)% |
Loan-related expenses |
|
|
345 |
|
|
|
324 |
|
|
|
21 |
|
|
6.48 |
% |
Other operating expenses |
|
|
1,603 |
|
|
|
1,941 |
|
|
|
(338 |
) |
|
(17.41 |
)% |
Total non-interest expense |
|
$ |
12,015 |
|
|
$ |
11,979 |
|
|
$ |
36 |
|
|
0.30 |
% |
|
Salaries and employee benefits. The increase in
salaries and employee benefits was primarily a result of: (i) a
$0.6 million decline in loan origination costs related to lower
production and (ii) a $0.2 million increase in salaries and
benefits for new employees hired to support expansion into the San
Francisco Bay Area. These increases were partially offset by a $0.3
million reduction in commissions related to lower loan production
during the three months ended September 30, 2023, as compared
to the three months ended June 30, 2023.
Professional services. The increase was related
primarily to expenses incurred of $0.1 million for surveillance
rating services performed for the Company's outstanding
subordinated notes during the three months ended September 30,
2023.
Advertising and promotional. The decrease
related primarily to an overall decline in sponsorships and
donations made, as fewer events were sponsored and attended during
the three months ended September 30, 2023, as compared to the
three months ended June 30, 2023.
Other operating expenses. The decrease in other
operating expenses was primarily due to an overall decline in
travel, conference fees, and professional membership fees during
the three months ended September 30, 2023, as compared to the
three months ended June 30, 2023.
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
September 30,2023 |
|
September 30,2022 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
6,876 |
|
|
$ |
5,645 |
|
|
$ |
1,231 |
|
|
21.81 |
% |
Occupancy and equipment |
|
|
561 |
|
|
|
515 |
|
|
|
46 |
|
|
8.93 |
% |
Data processing and
software |
|
|
1,020 |
|
|
|
797 |
|
|
|
223 |
|
|
27.98 |
% |
FDIC insurance |
|
|
375 |
|
|
|
195 |
|
|
|
180 |
|
|
92.31 |
% |
Professional services |
|
|
700 |
|
|
|
792 |
|
|
|
(92 |
) |
|
(11.62 |
)% |
Advertising and
promotional |
|
|
535 |
|
|
|
512 |
|
|
|
23 |
|
|
4.49 |
% |
Loan-related expenses |
|
|
345 |
|
|
|
262 |
|
|
|
83 |
|
|
31.68 |
% |
Other operating expenses |
|
|
1,603 |
|
|
|
1,454 |
|
|
|
149 |
|
|
10.25 |
% |
Total non-interest expense |
|
$ |
12,015 |
|
|
$ |
10,172 |
|
|
$ |
1,843 |
|
|
18.12 |
% |
|
Salaries and employee benefits. The increase in
salaries and employee benefits was primarily a result of: (i) a
$0.8 million increase in salaries, insurance, and benefits as a
result of a 8.72% increase in headcount during the three months
ended September 30, 2023, as compared to the three months
ended September 30, 2022 and (ii) a $0.8 million decrease in
loan origination costs due to lower loan production
period-over-period. These increases were partially offset by $0.4
million of lower commission expenses due to lower loan production
during the three months ended September 30, 2023, as compared
to the three months ended September 30, 2022.
Data processing and software. The increase in
data processing and software was primarily due to: (i) increased
usage of our digital banking platform; (ii) higher transaction
volumes related to the increased number of loan and deposit
accounts; and (iii) an increased number of licenses required for
new users on our loan origination and documentation system.
FDIC insurance. The increase related primarily
to a final rule adopted by the FDIC to increase initial base
deposit insurance assessment rates for insured depository
institutions by two basis points, beginning with the first
quarterly assessment period of 2023. FDIC insurance also increased
for the three months ended September 30, 2023 compared to the
three months ended September 30, 2022, due to a $320.8 million
increase in the assessment base period-over-period.
Other operating expenses. The increase in other
operating expenses was primarily due to a $0.1 million increase in
IntraFi Network fees resulting from an overall increase in balances
carried in the network. The remainder of the increase related to an
overall increase in travel, conference fees, and professional
membership fees during the three months September 30, 2023, as
compared to the three months ended September 30, 2022.
Provision for Income Taxes
Three months ended September 30, 2023, as
compared to three months ended June 30, 2023
Provision for income taxes increased by $0.4
million, or 6.98%, to $4.8 million for the three months ended
September 30, 2023 from $4.4 million for the three months
ended June 30, 2023. During the three months ended
June 30, 2023, the Company recorded a $0.5 million state tax
benefit relating to an overall reduction in the state tax blended
rate for the Company since its inception as a C Corporation, which
did not recur during the three months ended September 30,
2023. This increase was partially offset by lower pre-tax income
quarter-over-quarter and a $0.2 million adjustment to the provision
recorded during the three months ended September 30, 2023 to
true-up the year to date provision's effective tax rate. The
effective tax rate was 30.07% and 25.86% for the three months ended
September 30, 2023 and June 30, 2023, respectively.
Three months ended September 30, 2023, as
compared to three months ended September 30, 2022
Provision for income taxes decreased by $0.1
million, or 1.66%, for the three months ended September 30,
2023 compared to the three months ended September 30, 2022,
primarily driven by an overall decrease in pre-tax income and a
lower state tax rate period-over-period. These declines were
partially offset by a $0.2 million adjustment to the provision
recorded during the three months ended September 30, 2023 to
true-up the year to date provision's effective tax rate. The
effective tax rate was 30.07% and 29.21% for the three months ended
September 30, 2023 and September 30, 2022,
respectively.
Webcast Details
Five Star Bancorp will host a live webcast for
analysts and investors on Tuesday, October 31, 2023 at 1:00 p.m. ET
(10:00 a.m. 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 seven branches and one loan production office 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, 2022 and Quarterly Report on Form 10-Q for the
quarter ended June 30, 2023, 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 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
Revenue and Expense
Data |
|
|
|
|
|
|
Interest and fee income |
|
$ |
45,098 |
|
|
$ |
42,793 |
|
|
$ |
31,646 |
|
Interest expense |
|
|
17,622 |
|
|
|
15,215 |
|
|
|
4,123 |
|
Net interest income |
|
|
27,476 |
|
|
|
27,578 |
|
|
|
27,523 |
|
Provision for credit
losses |
|
|
1,050 |
|
|
|
1,250 |
|
|
|
2,250 |
|
Net interest income after
provision |
|
|
26,426 |
|
|
|
26,328 |
|
|
|
25,273 |
|
Non-interest income: |
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
158 |
|
|
|
135 |
|
|
|
132 |
|
Gain on sale of loans |
|
|
396 |
|
|
|
641 |
|
|
|
548 |
|
Loan-related fees |
|
|
355 |
|
|
|
389 |
|
|
|
447 |
|
FHLB stock dividends |
|
|
274 |
|
|
|
189 |
|
|
|
152 |
|
Earnings on bank-owned life insurance |
|
|
127 |
|
|
|
126 |
|
|
|
102 |
|
Other income |
|
|
74 |
|
|
|
1,340 |
|
|
|
52 |
|
Total non-interest income |
|
|
1,384 |
|
|
|
2,820 |
|
|
|
1,433 |
|
Non-interest expense: |
|
|
|
|
|
|
Salaries and employee benefits |
|
|
6,876 |
|
|
|
6,421 |
|
|
|
5,645 |
|
Occupancy and equipment |
|
|
561 |
|
|
|
551 |
|
|
|
515 |
|
Data processing and software |
|
|
1,020 |
|
|
|
1,013 |
|
|
|
797 |
|
FDIC insurance |
|
|
375 |
|
|
|
410 |
|
|
|
195 |
|
Professional services |
|
|
700 |
|
|
|
586 |
|
|
|
792 |
|
Advertising and promotional |
|
|
535 |
|
|
|
733 |
|
|
|
512 |
|
Loan-related expenses |
|
|
345 |
|
|
|
324 |
|
|
|
262 |
|
Other operating expenses |
|
|
1,603 |
|
|
|
1,941 |
|
|
|
1,454 |
|
Total non-interest
expense |
|
|
12,015 |
|
|
|
11,979 |
|
|
|
10,172 |
|
Income before provision for
income taxes |
|
|
15,795 |
|
|
|
17,169 |
|
|
|
16,534 |
|
Provision for income taxes |
|
|
4,750 |
|
|
|
4,440 |
|
|
|
4,830 |
|
Net income |
|
$ |
11,045 |
|
|
$ |
12,729 |
|
|
$ |
11,704 |
|
|
|
|
|
|
|
|
Comprehensive
Income |
|
|
|
|
|
|
Net income |
|
$ |
11,045 |
|
|
$ |
12,729 |
|
|
$ |
11,704 |
|
Net unrealized holding loss on
securities available-for-sale during the period |
|
|
(4,195 |
) |
|
|
(1,462 |
) |
|
|
(4,718 |
) |
Income tax benefit related to
other comprehensive loss |
|
|
(1,240 |
) |
|
|
(432 |
) |
|
|
(1,395 |
) |
Other comprehensive loss |
|
|
(2,955 |
) |
|
|
(1,030 |
) |
|
|
(3,323 |
) |
Total comprehensive
income |
|
$ |
8,090 |
|
|
$ |
11,699 |
|
|
$ |
8,381 |
|
|
|
|
|
|
|
|
Share and Per Share
Data |
|
|
|
|
|
|
Earnings per common
share: |
|
|
|
|
|
|
Basic |
|
$ |
0.64 |
|
|
$ |
0.74 |
|
|
$ |
0.68 |
|
Diluted |
|
|
0.64 |
|
|
|
0.74 |
|
|
|
0.68 |
|
Book value per share |
|
|
15.88 |
|
|
|
15.60 |
|
|
|
13.87 |
|
Tangible book value per
share(1) |
|
|
15.88 |
|
|
|
15.60 |
|
|
|
13.87 |
|
Weighted average basic common
shares outstanding |
|
|
17,175,034 |
|
|
|
17,165,344 |
|
|
|
17,140,435 |
|
Weighted average diluted
common shares outstanding |
|
|
17,194,825 |
|
|
|
17,168,995 |
|
|
|
17,168,447 |
|
Shares outstanding at end of
period |
|
|
17,257,357 |
|
|
|
17,257,357 |
|
|
|
17,245,983 |
|
|
|
|
|
|
|
|
Credit
Quality |
|
|
|
|
|
|
Allowance for credit losses to
period end nonperforming loans |
|
|
1,699.35 |
% |
|
|
11,839.25 |
% |
|
|
6,483.87 |
% |
Nonperforming loans to loans
held for investment |
|
|
0.07 |
% |
|
|
0.01 |
% |
|
|
0.02 |
% |
Nonperforming assets to total
assets |
|
|
0.06 |
% |
|
|
0.01 |
% |
|
|
0.01 |
% |
Nonperforming loans plus
performing loan modifications to loans held for investment |
|
|
0.07 |
% |
|
|
0.01 |
% |
|
|
0.02 |
% |
|
|
|
|
|
|
|
Selected Financial
Ratios |
|
|
|
|
|
|
ROAA |
|
|
1.30 |
% |
|
|
1.55 |
% |
|
|
1.60 |
% |
ROAE |
|
|
16.09 |
% |
|
|
19.29 |
% |
|
|
19.35 |
% |
Net interest margin |
|
|
3.31 |
% |
|
|
3.45 |
% |
|
|
3.86 |
% |
Loan to deposit |
|
|
99.57 |
% |
|
|
100.21 |
% |
|
|
99.22 |
% |
(1) See the section entitled “Non-GAAP Reconciliation
(Unaudited)” for a reconciliation of this non-GAAP financial
measure.
(in thousands) |
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
Balance Sheet
Data |
|
|
|
|
|
|
Cash and due from financial institutions |
|
$ |
26,744 |
|
|
$ |
28,568 |
|
|
$ |
33,280 |
|
Interest-bearing deposits in
banks |
|
|
296,804 |
|
|
|
271,555 |
|
|
|
284,389 |
|
Time deposits in banks |
|
|
6,971 |
|
|
|
7,343 |
|
|
|
10,216 |
|
Securities -
available-for-sale, at fair value |
|
|
104,086 |
|
|
|
110,794 |
|
|
|
114,041 |
|
Securities - held-to-maturity,
at amortized cost |
|
|
3,104 |
|
|
|
3,486 |
|
|
|
3,764 |
|
Loans held for sale |
|
|
9,326 |
|
|
|
8,559 |
|
|
|
11,015 |
|
Loans held for investment |
|
|
3,009,930 |
|
|
|
2,927,411 |
|
|
|
2,582,978 |
|
Allowance for credit losses -
loans |
|
|
(34,028 |
) |
|
|
(33,984 |
) |
|
|
(27,838 |
) |
Loans held for investment, net
of allowance for credit losses |
|
|
2,975,902 |
|
|
|
2,893,427 |
|
|
|
2,555,140 |
|
FHLB stock |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
10,890 |
|
Operating leases, right-of-use
asset |
|
|
4,799 |
|
|
|
5,032 |
|
|
|
4,227 |
|
Premises and equipment,
net |
|
|
1,564 |
|
|
|
1,599 |
|
|
|
1,694 |
|
Bank-owned life insurance |
|
|
17,023 |
|
|
|
16,897 |
|
|
|
14,550 |
|
Interest receivable and other
assets |
|
|
43,717 |
|
|
|
40,441 |
|
|
|
31,364 |
|
Total assets |
|
$ |
3,505,040 |
|
|
$ |
3,402,701 |
|
|
$ |
3,074,570 |
|
|
|
|
|
|
|
|
Non-interest-bearing
deposits |
|
$ |
833,434 |
|
|
$ |
832,641 |
|
|
$ |
1,019,063 |
|
Interest-bearing deposits |
|
|
2,198,776 |
|
|
|
2,097,098 |
|
|
|
1,595,269 |
|
Total deposits |
|
|
3,032,210 |
|
|
|
2,929,739 |
|
|
|
2,614,332 |
|
Subordinated notes, net |
|
|
73,713 |
|
|
|
73,677 |
|
|
|
102,028 |
|
FHLB advances |
|
|
90,000 |
|
|
|
100,000 |
|
|
|
105,000 |
|
Operating lease liability |
|
|
5,043 |
|
|
|
5,275 |
|
|
|
4,492 |
|
Interest payable and other
liabilities |
|
|
30,050 |
|
|
|
24,870 |
|
|
|
9,460 |
|
Total liabilities |
|
|
3,231,016 |
|
|
|
3,133,561 |
|
|
|
2,835,312 |
|
|
|
|
|
|
|
|
Common stock |
|
|
220,266 |
|
|
|
220,021 |
|
|
|
219,286 |
|
Retained earnings |
|
|
69,689 |
|
|
|
62,095 |
|
|
|
36,042 |
|
Accumulated other
comprehensive loss, net |
|
|
(15,931 |
) |
|
|
(12,976 |
) |
|
|
(16,070 |
) |
Total shareholders’ equity |
|
|
274,024 |
|
|
|
269,140 |
|
|
|
239,258 |
|
Total liabilities and shareholders’ equity |
|
$ |
3,505,040 |
|
|
$ |
3,402,701 |
|
|
$ |
3,074,570 |
|
|
|
|
|
|
|
|
Quarterly Average
Balance Data |
|
|
|
|
|
|
Average loans held for
investment and sale |
|
$ |
2,982,140 |
|
|
$ |
2,914,388 |
|
|
$ |
2,494,468 |
|
Average interest-earning
assets |
|
|
3,293,045 |
|
|
|
3,210,389 |
|
|
|
2,831,380 |
|
Average total assets |
|
|
3,370,802 |
|
|
|
3,285,805 |
|
|
|
2,909,492 |
|
Average deposits |
|
|
2,984,208 |
|
|
|
2,912,891 |
|
|
|
2,582,666 |
|
Average total equity |
|
|
272,386 |
|
|
|
264,688 |
|
|
|
239,944 |
|
|
|
|
|
|
|
|
Capital
Ratios |
|
|
|
|
|
|
Total shareholders’ equity to
total assets |
|
|
7.82 |
% |
|
|
7.91 |
% |
|
|
7.78 |
% |
Tangible shareholders’ equity
to tangible assets(1) |
|
|
7.82 |
% |
|
|
7.91 |
% |
|
|
7.78 |
% |
Total capital (to
risk-weighted assets) |
|
|
12.37 |
% |
|
|
12.43 |
% |
|
|
13.94 |
% |
Tier 1 capital (to
risk-weighted assets) |
|
|
9.07 |
% |
|
|
9.05 |
% |
|
|
9.21 |
% |
Common equity Tier 1 capital
(to risk-weighted assets) |
|
|
9.07 |
% |
|
|
9.05 |
% |
|
|
9.21 |
% |
Tier 1 leverage ratio |
|
|
8.58 |
% |
|
|
8.66 |
% |
|
|
8.66 |
% |
(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 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
Pre-tax, pre-provision
income |
|
|
|
|
|
|
Pre-tax income |
|
$ |
15,795 |
|
|
$ |
17,169 |
|
|
$ |
16,534 |
|
Add: provision for credit
losses |
|
|
1,050 |
|
|
|
1,250 |
|
|
|
2,250 |
|
Pre-tax, pre-provision income |
|
$ |
16,845 |
|
|
$ |
18,419 |
|
|
$ |
18,784 |
|
Media Contact:Heather C. Luck, Chief Financial
OfficerFive Star Bancorp(916) 626-5008hluck@fivestarbank.com
Shelley R. Wetton, Chief Marketing OfficerFive Star Bancorp(916)
284-7827swetton@fivestarbank.com
Five Star Bancorp (NASDAQ:FSBC)
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