FSBC Five Star Bancorp

Five Star Bancorp (Nasdaq: FSBC) (“Five Star” or the “Company”), a holding company that operates through its wholly owned banking subsidiary, Five Star Bank (the “Bank”), today reported net income of $13.3 million for the three months ended December 31, 2024, as compared to $10.9 million for the three months ended September 30, 2024 and $10.8 million for the three months ended December 31, 2023. Net income for the year ended December 31, 2024 was $45.7 million, as compared to $47.7 million for the year ended December 31, 2023.

Financial and Other Highlights

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

	Three months ended
(in thousands, except per share and share data)	December 31, 2024				September 30, 2024				December 31, 2023
Return on average assets (“ROAA”)		1.31	%			1.18	%			1.26	%
Return on average equity (“ROAE”)		13.48	%			11.31	%			15.45	%
Pre-tax income	$	19,367			$	15,241			$	15,151
Pre-tax, pre-provision income(1)	$	20,667			$	17,991			$	15,951
Net income	$	13,317			$	10,941			$	10,799
Basic earnings per common share	$	0.63			$	0.52			$	0.63
Diluted earnings per common share	$	0.63			$	0.52			$	0.63
Weighted average basic common shares outstanding		21,182,143				21,182,143				17,175,445
Weighted average diluted common shares outstanding		21,235,318				21,232,758				17,193,114
Shares outstanding at end of period		21,319,083				21,319,583				17,256,989

	Year ended
(in thousands, except per share and share data)	December 31, 2024				December 31, 2023
ROAA		1.23	%			1.44	%
ROAE		12.72	%			17.85	%
Pre-tax income	$	64,721			$	66,616
Pre-tax, pre-provision income(1)	$	71,671			$	70,616
Net income	$	45,671			$	47,734
Basic earnings per common share	$	2.26			$	2.78
Diluted earnings per common share	$	2.26			$	2.78
Weighted average basic common shares outstanding		20,154,385				17,166,592
Weighted average diluted common shares outstanding		20,205,440				17,187,969
Shares outstanding at end of period		21,319,083				17,256,989

(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:

“While we focus on the future and maintaining a position of distinction and respect in the markets we serve, we proudly look back at 2024 as another outstanding year of achievement. We experienced consistent, strong financial performance with year-over-year growth in loans and deposits, a consistent shareholder dividend, and stable net interest margin. We also continued our successful execution of our San Francisco market expansion and now have 27 employees in the San Francisco Bay Area who contributed $229.5 million in deposits from June 5, 2023 to December 31, 2024. We have managed expenses and executed on conservative underwriting practices, which are foundational to our success.

Five Star Bank consistently executes on client and community-focused initiatives, and in 2024, we received a Super Premier rating from Findley Reports, an IDC Superior rating, and a Bauer Financial rating of 5 stars (out of five). We were also awarded the prestigious 2023 Raymond James Community Bankers Cup, were among S&P Global Market Intelligence’s 2023 Top 20 Best-Performing Community banks in the nation (with assets between $3 billion and $10 billion), and were ranked fifth on the 2024 Bank Director Magazine (RankingBanking) Best U.S. Banks with assets less than $5 billion. We also received the Greater Sacramento Economic Council’s Sustainability Award recognizing a company that has supported industry growth in the Greater Sacramento region.

In 2024, our senior leadership was recognized by the Sacramento Business Journal with a C-Suite Award, a Women Who Mean Business honor, a 40 Under 40 recognition, and placement on the Power 100 list. Our senior leadership was also recognized on the San Francisco Business Times’ Newsmaker 100 list, as part of the Independent Community Bankers of America’s 40 Under 40: Emerging Community Bank Leaders, among the Association of Latino Professionals for America’s 50 Most Powerful Latinas, and with a National Association of Women Business Owners’ Sacramento Valley Outstanding Women Leaders’ Executive Woman award.

Being recognized as community leaders ensures Five Star Bank remains top of mind in the markets we serve as we continue to build-out our market presence. I am humbled and proud of our team’s accomplishments and look forward to the future.”

Financial highlights included the following:

• The San Francisco Bay Area team, which increased from 24 to 27 employees during the three months ended December 31, 2024, generated deposit balances totaling $229.5 million at December 31, 2024, an increase of $40.4 million from September 30, 2024.
• Cash and cash equivalents were $352.3 million, representing 9.90% of total deposits at December 31, 2024, as compared to 7.38% at September 30, 2024.
• Total deposits increased by $158.0 million, or 4.65%, during the three months ended December 31, 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 December 31, 2024, non-wholesale deposits increased by $8.0 million, or 0.27%, and wholesale deposits increased by $150.0 million, or 36.59%.
• Consistent, disciplined management of expenses contributed to our efficiency ratio of 41.21% for the three months ended December 31, 2024, as compared to 43.37% for the three months ended September 30, 2024.
• For the three months ended December 31, 2024, net interest margin was 3.36%, as compared to 3.37% for the three months ended September 30, 2024 and 3.19% for the three months ended December 31, 2023. For the year ended December 31, 2024, net interest margin was 3.32%, as compared to 3.42% for the year ended December 31, 2023. The effective Federal Funds rate fell to 4.33% as of December 31, 2024 from 4.83% as of September 30, 2024 and 5.33% as of December 31, 2023.
• Other comprehensive loss was $2.6 million during the three months ended December 31, 2024. Unrealized losses, net of tax effect, on available-for-sale securities were $12.4 million as of December 31, 2024. Total carrying value of held-to-maturity and available-for-sale securities represented 0.07% and 2.48% of total interest-earning assets, respectively, as of December 31, 2024.
• The Company’s common equity Tier 1 capital ratio was 11.02% and 10.93% as of December 31, 2024 and September 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 December 31, 2024 was as follows:

(in thousands)	December 31, 2024			September 30, 2024			$ Change			% Change
Loans held for investment	$	3,532,686		$	3,460,565		$	72,121		2.08	%
Non-interest-bearing deposits		922,629			906,939			15,690		1.73	%
Interest-bearing deposits		2,635,365			2,493,040			142,325		5.71	%
(in thousands)	December 31, 2024			December 31, 2023			$ Change			% Change
Loans held for investment	$	3,532,686		$	3,081,719		$	450,967		14.63	%
Non-interest-bearing deposits		922,629			831,101			91,528		11.01	%
Interest-bearing deposits		2,635,365			2,195,795			439,570		20.02	%

• The ratio of nonperforming loans to loans held for investment at period end decreased from 0.06% at December 31, 2023 to 0.05% at December 31, 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 December 31, 2024. The Company’s Board of Directors subsequently declared another cash dividend of $0.20 per share on January 16, 2025, which the Company expects to pay on February 10, 2025 to shareholders of record as of February 3, 2025.

Summary Results

Three months ended December 31, 2024, as compared to three months ended September 30, 2024

The Company’s net income was $13.3 million for the three months ended December 31, 2024, as compared to $10.9 million for the three months ended September 30, 2024. Net interest income increased by $3.1 million, primarily due to an increase in interest income driven by a larger average balance of interest-earning assets, partially offset by an increase in interest expense due to a larger average balance of deposits, as compared to September 30, 2024. The provision for credit losses decreased by $1.5 million, reflecting adjustments to expectations for credit losses based on economic trends and forecasts in the three months ended December 31, 2024 compared to the three months ended September 30, 2024. Non-interest income increased by $0.3 million, primarily due to income received on equity investments in venture-backed funds during the three months ended December 31, 2024, combined with a loss from equity investments in venture-backed funds during the three months ended September 30, 2024. Non-interest expense increased by $0.7 million, primarily due to: (i) increased salaries and employee benefits mainly resulting from increased loan production driving higher commissions expense period-over-period; and (ii) increased advertising and promotional expenses due to a larger number of events sponsored and attended period-over-period.

Three months ended December 31, 2024, as compared to three months ended December 31, 2023

The Company’s net income was $13.3 million for the three months ended December 31, 2024, as compared to $10.8 million for the three months ended December 31, 2023. Net interest income increased by $6.8 million, primarily due to an increase in interest income driven by higher average balances and yields on loans, partially offset by an increase in interest expense due to higher average balances and rates on deposits. The provision for credit losses increased by $0.5 million, reflecting adjustments to expectations for credit losses based on economic trends and forecasts in the three months ended December 31, 2024 compared to the three months ended December 31, 2023. Non-interest income decreased by $0.3 million, primarily due to lower swap referral and rate lock fees during the three months ended December 31, 2024 compared to the same quarter of the prior year. 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.

Year ended December 31, 2024, as compared to year ended December 31, 2023

The Company’s net income was $45.7 million for the year ended December 31, 2024, as compared to $47.7 million for the year ended December 31, 2023. Net interest income increased by $8.8 million, primarily due to an increase in interest income driven by higher average balances and yields on loans, partially offset by an increase in interest expense due to higher average balances and rates on deposits. The provision for credit losses increased by $3.0 million, or 73.75%, as loan originations in the year ended December 31, 2024 were almost double those for the year ended December 31, 2023. Non-interest income decreased by $1.1 million, primarily due to lower income received on equity investments in venture-backed funds during the year ended December 31, 2024 than during the year ended December 31, 2023. Non-interest expense increased by $6.7 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)		December 31, 2024				September 30, 2024				$ Change				% Change
Selected operating data:
Net interest income		$	33,489			$	30,386			$	3,103			10.21	%
Provision for credit losses			1,300				2,750				(1,450	)		(52.73)	%
Non-interest income			1,666				1,381				285			20.64	%
Non-interest expense			14,488				13,776				712			5.17	%
Pre-tax income			19,367				15,241				4,126			27.07	%
Provision for income taxes			6,050				4,300				1,750			40.70	%
Net income		$	13,317			$	10,941			$	2,376			21.72	%
Earnings per common share:
Basic		$	0.63			$	0.52			$	0.11			21.15	%
Diluted		$	0.63			$	0.52			$	0.11			21.15	%
Performance and other financial ratios:
ROAA			1.31	%			1.18	%
ROAE			13.48	%			11.31	%
Net interest margin			3.36	%			3.37	%
Cost of funds			2.65	%			2.72	%
Efficiency ratio			41.21	%			43.37	%

		Three months ended
(in thousands, except per share data)		December 31, 2024				December 31, 2023				$ Change				% Change
Selected operating data:
Net interest income		$	33,489			$	26,678			$	6,811			25.53	%
Provision for credit losses			1,300				800				500			62.50	%
Non-interest income			1,666				1,936				(270	)		(13.95)	%
Non-interest expense			14,488				12,663				1,825			14.41	%
Pre-tax income			19,367				15,151				4,216			27.83	%
Provision for income taxes			6,050				4,352				1,698			39.02	%
Net income		$	13,317			$	10,799			$	2,518			23.32	%
Earnings per common share:
Basic		$	0.63			$	0.63			$	—			—	%
Diluted		$	0.63			$	0.63			$	—			—	%
Performance and other financial ratios:
ROAA			1.31	%			1.26	%
ROAE			13.48	%			15.45	%
Net interest margin			3.36	%			3.19	%
Cost of funds			2.65	%			2.50	%
Efficiency ratio			41.21	%			44.25	%
		Year ended
(in thousands, except per share data)		December 31, 2024				December 31, 2023				$ Change				% Change
Selected operating data:
Net interest income		$	119,711			$	110,880			$	8,831			7.96	%
Provision for credit losses			6,950				4,000				2,950			73.75	%
Non-interest income			6,453				7,511				(1,058	)		(14.09)	%
Non-interest expense			54,493				47,775				6,718			14.06	%
Pre-tax income			64,721				66,616				(1,895	)		(2.84)	%
Provision for income taxes			19,050				18,882				168			0.89	%
Net income		$	45,671			$	47,734			$	(2,063	)		(4.32)	%
Earnings per common share:
Basic		$	2.26			$	2.78			$	(0.52	)		(18.71)	%
Diluted		$	2.26			$	2.78			$	(0.52	)		(18.71)	%
Performance and other financial ratios:
ROAA			1.23	%			1.44	%
ROAE			12.72	%			17.85	%
Net interest margin			3.32	%			3.42	%
Cost of funds			2.64	%			2.10	%
Efficiency ratio			43.19	%			40.35	%

Balance Sheet Summary

(in thousands)		December 31, 2024			December 31, 2023			$ Change				% Change
Selected financial condition data:
Total assets		$	4,053,278		$	3,593,125		$	460,153			12.81	%
Cash and cash equivalents			352,343			321,576			30,767			9.57	%
Total loans held for investment			3,532,686			3,081,719			450,967			14.63	%
Total investments			100,914			111,160			(10,246	)		(9.22)	%
Total liabilities			3,656,654			3,307,351			349,303			10.56	%
Total deposits			3,557,994			3,026,896			531,098			17.55	%
Subordinated notes, net			73,895			73,749			146			0.20	%
Total shareholders’ equity			396,624			285,774			110,850			38.79	%

• Insured and collateralized deposits were approximately $2.4 billion, representing 66.92% of total deposits as of December 31, 2024. Net uninsured and uncollateralized deposits were approximately $1.2 billion as of December 31, 2024.
• Commercial and consumer deposit accounts constituted 77.00% of total deposits. Deposit relationships of greater than $5 million represented 61.13% of total deposits and had an average age of approximately 9.28 years as of December 31, 2024.
• Cash and cash equivalents as of December 31, 2024 were $352.3 million, representing 9.90% of total deposits at December 31, 2024, as compared to 10.62% as of December 31, 2023.
• Total liquidity (consisting of cash and cash equivalents and unused and immediately available borrowing capacity as set forth below) was approximately $1.9 billion as of December 31, 2024.

		December 31, 2024
(in thousands)		Line of Credit			Letters of Credit Issued			Borrowings			Available
Federal Home Loan Bank of San Francisco (“FHLB”) advances		$	1,212,209		$	701,500		$	—		$	510,709
Federal Reserve Discount Window			862,136			—			—			862,136
Correspondent bank lines of credit			175,000			—			—			175,000
Cash and cash equivalents			—			—			—			352,343
Total		$	2,249,345		$	701,500		$	—		$	1,900,188

The increase in total assets from December 31, 2023 to December 31, 2024 was primarily due to a $451.0 million increase in total loans held for investment and a $30.8 million increase in cash and cash equivalents, partially offset by a $10.2 million decrease in investments. The $451.0 million increase in total loans held for investment between December 31, 2023 and December 31, 2024 was the result of $1.1 billion in loan originations, partially offset by $263.0 million and $423.0 million in loan payoffs and paydowns, respectively. The $451.0 million increase in total loans held for investment included $281.4 million in purchased loans within the consumer concentration of the loan portfolio. The $30.8 million increase in cash and cash equivalents primarily resulted from net cash inflows related to financing and operating activities of $425.7 million and $52.3 million, respectively, partially offset by net cash outflows related to investing activities of $447.3 million.

The increase in total liabilities from December 31, 2023 to December 31, 2024 was primarily attributable to an increase in deposits of $531.1 million, partially offset by a decrease in other borrowings of $170.0 million. The $531.1 million increase in deposits was largely due to increases in money market, time, and non-interest-bearing demand deposits of $242.9 million, $203.6 million, and $91.5 million, respectively, partially offset by decreases in interest-bearing demand and savings deposits of $5.1 million and $1.8 million, respectively.

The increase in total shareholders’ equity from December 31, 2023 to December 31, 2024 was primarily a result of $80.9 million of additional common stock issued during the year and net income recognized of $45.7 million, partially offset by $16.2 million in cash dividends paid during the period.

Net Interest Income and Net Interest Margin

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

		Three months ended
(in thousands)		December 31, 2024				September 30, 2024				$ Change			% Change
Interest and fee income		$	57,745			$	52,667			$	5,078		9.64	%
Interest expense			24,256				22,281				1,975		8.86	%
Net interest income		$	33,489			$	30,386			$	3,103		10.21	%
Net interest margin			3.36	%			3.37	%
		Three months ended
(in thousands)		December 31, 2024				December 31, 2023				$ Change			% Change
Interest and fee income		$	57,745			$	46,180			$	11,565		25.04	%
Interest expense			24,256				19,502				4,754		24.38	%
Net interest income		$	33,489			$	26,678			$	6,811		25.53	%
Net interest margin			3.36	%			3.19	%
		Year ended
(in thousands)		December 31, 2024				December 31, 2023				$ Change			% Change
Interest and fee income		$	206,951			$	174,382			$	32,569		18.68	%
Interest expense			87,240				63,502				23,738		37.38	%
Net interest income		$	119,711			$	110,880			$	8,831		7.96	%
Net interest margin			3.32	%			3.42	%

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

		Three months ended
		December 31, 2024									September 30, 2024									December 31, 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		$	363,828		$	4,335		4.74	%		$	126,266		$	1,657		5.22	%		$	157,775		$	2,100		5.28	%
Investment securities			103,930			607		2.33	%			106,256			620		2.32	%			106,483			651		2.43	%
Loans held for investment and sale			3,498,109			52,803		6.01	%			3,354,050			50,390		5.98	%			3,055,042			43,429		5.64	%
Total interest-earning assets			3,965,867			57,745		5.79	%			3,586,572			52,667		5.84	%			3,319,300			46,180		5.52	%
Interest receivable and other assets, net			91,736									91,965									80,360
Total assets		$	4,057,603								$	3,678,537								$	3,399,660
Liabilities and shareholders’ equity
Interest-bearing transaction accounts		$	298,518		$	1,249		1.66	%		$	302,188		$	1,237		1.63	%		$	291,967		$	1,091		1.48	%
Savings accounts			127,298			887		2.77	%			124,851			979		3.12	%			130,915			891		2.70	%
Money market accounts			1,596,116			13,520		3.37	%			1,578,244			14,688		3.70	%			1,347,111			10,824		3.19	%
Time accounts			617,596			7,438		4.79	%			326,640			4,172		5.08	%			417,434			5,322		5.06	%
Subordinated notes and other borrowings			73,872			1,162		6.25	%			76,988			1,205		6.23	%			88,401			1,374		6.16	%
Total interest-bearing liabilities			2,713,400			24,256		3.56	%			2,408,911			22,281		3.68	%			2,275,828			19,502		3.40	%
Demand accounts			921,881									852,872									821,651
Interest payable and other liabilities			29,234									32,062									24,886
Shareholders’ equity			393,088									384,692									277,295
Total liabilities & shareholders’ equity		$	4,057,603								$	3,678,537								$	3,399,660
Net interest spread								2.23	%								2.16	%								2.12	%
Net interest income/margin					$	33,489		3.36	%					$	30,386		3.37	%					$	26,678		3.19	%

Net interest income during the three months ended December 31, 2024 increased $3.1 million, or 10.21%, to $33.5 million compared to $30.4 million during the three months ended September 30, 2024. Net interest margin totaled 3.36% for the three months ended December 31, 2024, a decrease of one basis point compared to the prior quarter. The increase in net interest income is primarily attributable to an additional $5.1 million in interest income due to a $379.3 million, or 10.58%, increase in the average balance of interest-earning assets during the three months ended December 31, 2024 compared to the prior quarter. The increase in interest income was partially offset by a $2.0 million increase in deposit interest expense due to a $376.6 million, or 11.83%, increase in the average balance of deposits during the three months ended December 31, 2024 compared to the prior quarter.

As compared to the three months ended December 31, 2023, net interest income increased $6.8 million, or 25.53%, to $33.5 million compared to $26.7 million. Net interest margin totaled 3.36% for the three months ended December 31, 2024, an increase of 17 basis points compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $9.4 million in loan interest income due to a $443.1 million, or 14.50%, increase in the average balance of loans and a 37 basis point improvement in the average yield on loans during the three months ended December 31, 2024 compared to the same quarter of the prior year. The increase in interest income was partially offset by a $5.0 million increase in deposit interest expense due to a $552.3 million, or 18.36%, increase in the average balance of deposits and a 19 basis point increase in the average cost of deposits during the three months ended December 31, 2024 compared to the same quarter of the prior year.

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

		Year ended
		December 31, 2024									December 31, 2023
(in thousands)		Average Balance			Interest Income/Expense			Yield/Rate			Average Balance			Interest Income/Expense			Yield/Rate
Assets
Interest-earning deposits in banks		$	218,156		$	11,080		5.08	%		$	184,103		$	9,069		4.93	%
Investment securities			106,289			2,530		2.38	%			113,515			2,600		2.29	%
Loans held for investment and sale			3,283,874			193,341		5.89	%			2,947,603			162,713		5.52	%
Total interest-earning assets			3,608,319			206,951		5.74	%			3,245,221			174,382		5.37	%
Interest receivable and other assets, net			90,061									75,741
Total assets		$	3,698,380								$	3,320,962
Liabilities and shareholders’ equity
Interest-bearing transaction accounts		$	298,137		$	4,716		1.58	%		$	312,944		$	3,321		1.06	%
Savings accounts			124,208			3,584		2.89	%			140,060			3,073		2.19	%
Money market accounts			1,533,405			53,750		3.51	%			1,263,539			33,932		2.69	%
Time accounts			412,007			20,348		4.94	%			372,557			17,535		4.71	%
Subordinated notes and other borrowings			77,335			4,842		6.26	%			93,279			5,641		6.05	%
Total interest-bearing liabilities			2,445,092			87,240		3.57	%			2,182,379			63,502		2.91	%
Demand accounts			858,789									844,057
Interest payable and other liabilities			35,331									27,127
Shareholders’ equity			359,168									267,399
Total liabilities & shareholders’ equity		$	3,698,380								$	3,320,962
Net interest spread								2.17	%								2.46	%
Net interest income/margin					$	119,711		3.32	%					$	110,880		3.42	%

Net interest income during the year ended December 31, 2024 increased $8.8 million, or 7.96%, to $119.7 million compared to $110.9 million during the year ended December 31, 2023. Net interest margin totaled 3.32% for the year ended December 31, 2024, a decrease of 10 basis points compared to the prior year. The increase in net interest income is primarily attributable to an additional $30.6 million in loan interest income due to a $336.3 million, or 11.41%, increase in the average balance of loans and a 37 basis point improvement in the average yield on loans as compared to the prior year. The increase in interest income was partially offset by an additional $24.5 million in deposit interest expense due to a $293.4 million, or 10.00%, increase in the average balance of deposits and a 58 basis point increase in the average cost of deposits compared to the prior year.

Loans by Type

The following table provides loan balances, excluding deferred loan fees, by type as of December 31, 2024:

(in thousands)
Real estate:
Commercial		$	2,857,173
Commercial land and development			3,849
Commercial construction			111,318
Residential construction			4,561
Residential			32,774
Farmland			47,241
Commercial:
Secured			170,548
Unsecured			27,558
Consumer and other			279,584
Net deferred loan fees			(1,920	)
Total loans held for investment		$	3,532,686

Interest-bearing Deposits

The following table provides interest-bearing deposit balances by type as of December 31, 2024:

(in thousands)
Interest-bearing demand accounts		$	315,217
Money market accounts			1,525,293
Savings accounts			124,702
Time accounts			670,153
Total interest-bearing deposits		$	2,635,365

Asset Quality

Allowance for Credit Losses

At December 31, 2024, the Company’s allowance for credit losses was $37.8 million, as compared to $34.4 million at December 31, 2023. The $3.4 million increase in the allowance is due to a $7.5 million provision for credit losses recorded during the twelve months ended December 31, 2024, partially offset by net charge-offs of $4.1 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 December 31, 2024. Loans designated as watch increased from $39.6 million to $123.4 million between December 31, 2023 and December 31, 2024. Loans designated as substandard increased from $2.0 million to $2.6 million between December 31, 2023 and December 31, 2024. There were no loans with doubtful risk grades at December 31, 2024 or December 31, 2023.

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

		December 31, 2024						December 31, 2023
(in thousands)		Amount			% of Total			Amount			% of Total
Real estate:
Commercial		$	25,864		68.44	%		$	29,015		84.27	%
Commercial land and development			78		0.21	%			178		0.52	%
Commercial construction			2,268		6.00	%			718		2.08	%
Residential construction			64		0.17	%			89		0.26	%
Residential			270		0.71	%			151		0.44	%
Farmland			607		1.61	%			399		1.16	%
			29,151		77.14	%			30,550		88.73	%
Commercial:
Secured			5,866		15.52	%			3,314		9.62	%
Unsecured			278		0.74	%			189		0.55	%
			6,144		16.26	%			3,503		10.17	%
Consumer and other			2,496		6.60	%			378		1.10	%
Total allowance for credit losses		$	37,791		100.00	%		$	34,431		100.00	%

The ratio of allowance for credit losses to loans held for investment was 1.07% at December 31, 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)		December 31, 2024			September 30, 2024			$ Change				% Change
Service charges on deposit accounts		$	179		$	165		$	14			8.48	%
Gain on sale of loans			150			306			(156	)		(50.98)	%
Loan-related fees			400			406			(6	)		(1.48)	%
FHLB stock dividends			332			327			5			1.53	%
Earnings on bank-owned life insurance			182			162			20			12.35	%
Other income			423			15			408			2,720.00	%
Total non-interest income		$	1,666		$	1,381		$	285			20.64	%

Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold during the three months ended December 31, 2024 compared to the three months ended September 30, 2024. During the three months ended December 31, 2024, approximately $2.0 million of loans were sold with an effective yield of 7.60%, as compared to approximately $4.4 million of loans sold with an effective yield of 7.03% during the three months ended September 30, 2024.

Other income. The increase resulted primarily from $0.3 million of income received on equity investments in venture-backed funds during the three months ended December 31, 2024, combined with a $0.1 million loss from equity investments in venture-backed funds during the three months ended September 30, 2024.

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

		Three months ended
(in thousands)		December 31, 2024			December 31, 2023				$ Change				% Change
Service charges on deposit accounts		$	179		$	165			$	14			8.48	%
Net gain (loss) on sale of securities			—			(167	)			167			(100.00)	%
Gain on sale of loans			150			317				(167	)		(52.68)	%
Loan-related fees			400			667				(267	)		(40.03)	%
FHLB stock dividends			332			314				18			5.73	%
Earnings on bank-owned life insurance			182			155				27			17.42	%
Other income			423			485				(62	)		(12.78)	%
Total non-interest income		$	1,666		$	1,936			$	(270	)		(13.95)	%

Net gain (loss) on sale of securities. The decrease in the net loss on sale of securities related to the sale of two municipal securities with a par value of approximately $0.8 million for a loss of approximately $0.2 million during the three months ended December 31, 2023, with no sales occurring during the three months ended December 31, 2024.

Gain on sale of loans. The decrease resulted from an overall decline in the volume of loans sold during the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. During the three months ended December 31, 2024, approximately $2.0 million of loans were sold with an effective yield of 7.60%, as compared to approximately $5.9 million of loans sold with an effective yield of 5.41% during the three months ended December 31, 2023.

Loan-related fees. The decrease resulted from the recognition of $0.2 million lower rate lock fees and $0.1 million lower swap referral fees during the three months ended December 31, 2024 than the three months ended December 31, 2023.

Non-interest income for the periods indicated:

		Year ended
(in thousands)		December 31, 2024			December 31, 2023				$ Change				% Change
Service charges on deposit accounts		$	721		$	575			$	146			25.39	%
Net gain (loss) on sale of securities			—			(167	)			167			(100.00)	%
Gain on sale of loans			1,274			1,952				(678	)		(34.73)	%
Loan-related fees			1,605			1,719				(114	)		(6.63)	%
FHLB stock dividends			1,320			970				350			36.08	%
Earnings on bank-owned life insurance			644			510				134			26.27	%
Other income			889			1,952				(1,063	)		(54.46)	%
Total non-interest income		$	6,453		$	7,511			$	(1,058	)		(14.09)	%

Service charges on deposit accounts. The increase resulted primarily from a $0.2 million increase in wire transfer fees recognized, partially offset by a small decrease in other fees recognized during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Net gain (loss) on sale of securities. The decrease in the net loss on sale of securities resulted from the sale of two municipal securities with a par value of approximately $0.8 million for a loss of approximately $0.2 million during the year ended December 31, 2023, with no sales occurring during the year ended December 31, 2024.

Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold during the year ended December 31, 2024 compared to the year ended December 31, 2023. During the year ended December 31, 2024, approximately $18.3 million of loans were sold with an effective yield of 6.96%, as compared to approximately $36.5 million of loans sold with an effective yield of 5.35% during the year ended December 31, 2023.

Loan-related fees. The decrease was primarily a result of a $0.2 million net decrease in income earned from the credit card program, partially offset by a small increase in loan fee income earned on various loan types and services.

FHLB stock dividends. The increase primarily relates to a 50 basis point increase in the annualized dividend rate earned year-over-year, while the average shares outstanding remained consistent.

Earnings on bank-owned life insurance. The increase was primarily due to additional policies purchased between December 31, 2024 and December 31, 2023.

Other income. The decrease resulted primarily from $0.5 million in income received on equity investments in venture-backed funds during the year ended December 31, 2024, as compared to $1.7 million in income received on equity investments in venture-back funds during the year ended December 31, 2023.

Non-interest Expense

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

		Three months ended
(in thousands)		December 31, 2024			September 30, 2024			$ Change				% Change
Salaries and employee benefits		$	8,360		$	7,969		$	391			4.91	%
Occupancy and equipment			649			626			23			3.67	%
Data processing and software			1,369			1,327			42			3.17	%
Federal Deposit Insurance Corporation (“FDIC”) insurance			440			405			35			8.64	%
Professional services			774			830			(56	)		(6.75)	%
Advertising and promotional			752			584			168			28.77	%
Loan-related expenses			321			292			29			9.93	%
Other operating expenses			1,823			1,743			80			4.59	%
Total non-interest expense		$	14,488		$	13,776		$	712			5.17	%

Salaries and employee benefits. The increase was primarily a result of: (i) a $0.1 million increase in salaries, benefits, and bonus expense; and (ii) a $0.5 million increase in commissions expense due to higher loan production, net of purchased consumer loans. These increases were partially offset by a $0.2 million increase in loan origination costs due to higher loan production, net of purchased consumer loans, period-over-period.

Advertising and promotional. The increase was primarily due to the timing of events sponsored and attended during the three months ended December 31, 2024 compared to the three months ended September 30, 2024.

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

		Three months ended
(in thousands)		December 31, 2024			December 31, 2023			$ Change			% Change
Salaries and employee benefits		$	8,360		$	7,182		$	1,178		16.40	%
Occupancy and equipment			649			583			66		11.32	%
Data processing and software			1,369			1,110			259		23.33	%
FDIC insurance			440			370			70		18.92	%
Professional services			774			658			116		17.63	%
Advertising and promotional			752			717			35		4.88	%
Loan-related expenses			321			268			53		19.78	%
Other operating expenses			1,823			1,775			48		2.70	%
Total non-interest expense		$	14,488		$	12,663		$	1,825		14.41	%

Salaries and employee benefits. The increase was primarily a result of: (i) a $1.0 million increase in salaries, benefits, and bonus expense, of which approximately $0.8 million related to employees hired to support expansion into the San Francisco Bay Area; and (ii) a $0.7 million increase in commissions expense due to higher loan production, net of purchased consumer loans. These increases were partially offset by a $0.5 million increase in loan origination costs due to higher loan production, 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 increased audit and examination fees for services provided for the three months ended December 31, 2024 compared to the three months ended December 31, 2023.

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

		Year ended
(in thousands)		December 31, 2024			December 31, 2023			$ Change			% Change
Salaries and employee benefits		$	31,709		$	27,097		$	4,612		17.02	%
Occupancy and equipment			2,547			2,218			329		14.83	%
Data processing and software			5,088			4,015			1,073		26.72	%
FDIC insurance			1,635			1,557			78		5.01	%
Professional services			3,078			2,575			503		19.53	%
Advertising and promotional			2,411			2,403			8		0.33	%
Loan-related expenses			1,207			1,192			15		1.26	%
Other operating expenses			6,818			6,718			100		1.49	%
Total non-interest expense		$	54,493		$	47,775		$	6,718		14.06	%

Salaries and employee benefits. The increase was the result of: (i) a $3.5 million increase in salaries, benefits, and bonus, of which approximately $3.3 million related to employees hired to support expansion into the San Francisco Bay Area; and (ii) a $1.4 million increase in commissions paid, primarily to employees in the San Francisco Bay Area. The increase was partially offset by a $0.3 million increase in loan origination costs due to higher loan production, net of purchased consumer loans, period-over-period.

Occupancy and equipment. The increase related to rent expense for the San Francisco branch office and a new office lease to support back office staff during the year ended December 31, 2024, which did not exist for the full year ended December 31, 2023.

Data processing and software. The increase related 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 due to an increase in audit, IT support, and other consulting fees for services provided for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Other operating expenses. The increase is primarily related to a $0.2 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network, partially offset by a $0.1 million decrease in conference and training expenses.

Provision for Income Taxes

Three months ended December 31, 2024, as compared to the three months ended September 30, 2024

Provision for income taxes for the quarter ended December 31, 2024 increased by $1.8 million, or 40.70%, to $6.1 million, as compared to $4.3 million for the quarter ended September 30, 2024, which was primarily due to: (i) the increase in taxable income recognized during the three months ended December 31, 2024; and (ii) a $0.6 million provision to return true-up recorded during the three months ended December 31, 2024 related primarily to the timing of recognition of low income housing tax credits, which did not occur during the three months ended September 30, 2024. The effective tax rate was 31.24% and 28.21% for the three months ended December 31, 2024 and September 30, 2024, respectively.

Three months ended December 31, 2024, as compared to the three months ended December 31, 2023

Provision for income taxes increased by $1.7 million, or 39.02%, to $6.1 million for the three months ended December 31, 2024, as compared to $4.4 million for the three months ended December 31, 2023. This increase is due to: (i) the increase in taxable income for the three months ended December 31, 2024 compared to the three months ended December 31, 2023; and (ii) a $0.6 million provision to return true-up recorded during the three months ended December 31, 2024 related primarily to the timing of recognition of low income housing tax credits, which did not occur during the three months ended December 31, 2023. The effective tax rate was 31.24% and 28.72% for the three months ended December 31, 2024 and December 31, 2023, respectively.

Year ended December 31, 2024, as compared to the year ended December 31, 2023

Provision for income taxes increased by $0.2 million, or 0.89%, to $19.1 million for the year ended December 31, 2024, as compared to $18.9 million for the year ended December 31, 2023. This increase is due to a $0.6 million provision to return true-up recorded during the year ended December 31, 2024, partially offset by a decline in taxable income year-over-year. The effective tax rate was 29.43% and 28.34% for the years ended December 31, 2024 and December 31, 2023, respectively.

Webcast Details

Five Star Bancorp will host a live webcast for analysts and investors on Tuesday, January 28, 2025, at 1:00 pm ET (10:00 am PT), to discuss its fourth quarter and annual 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, June 30, 2024, and September 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)		December 31, 2024				September 30, 2024				December 31, 2023
Revenue and Expense Data
Interest and fee income		$	57,745			$	52,667			$	46,180
Interest expense			24,256				22,281				19,502
Net interest income			33,489				30,386				26,678
Provision for credit losses			1,300				2,750				800
Net interest income after provision			32,189				27,636				25,878
Non-interest income:
Service charges on deposit accounts			179				165				165
Net gain (loss) on sale of securities			—				—				(167	)
Gain on sale of loans			150				306				317
Loan-related fees			400				406				667
FHLB stock dividends			332				327				314
Earnings on bank-owned life insurance			182				162				155
Other income			423				15				485
Total non-interest income			1,666				1,381				1,936
Non-interest expense:
Salaries and employee benefits			8,360				7,969				7,182
Occupancy and equipment			649				626				583
Data processing and software			1,369				1,327				1,110
FDIC insurance			440				405				370
Professional services			774				830				658
Advertising and promotional			752				584				717
Loan-related expenses			321				292				268
Other operating expenses			1,823				1,743				1,775
Total non-interest expense			14,488				13,776				12,663
Income before provision for income taxes			19,367				15,241				15,151
Provision for income taxes			6,050				4,300				4,352
Net income		$	13,317			$	10,941			$	10,799
Comprehensive Income
Net income		$	13,317			$	10,941			$	10,799
Net unrealized holding (loss) gain on securities available-for-sale during the period			(3,747	)			3,549				5,744
Reclassification for net loss on sale of securities included in net income			—				—				167
Less: Income tax (benefit) expense related to other comprehensive (loss) income			(1,108	)			1,049				1,747
Other comprehensive (loss) income			(2,639	)			2,500				4,164
Total comprehensive income		$	10,678			$	13,441			$	14,963
Share and Per Share Data
Earnings per common share:
Basic		$	0.63			$	0.52			$	0.63
Diluted		$	0.63			$	0.52			$	0.63
Book value per share		$	18.60			$	18.29			$	16.56
Tangible book value per share(1)		$	18.60			$	18.29			$	16.56
Weighted average basic common shares outstanding			21,182,143				21,182,143				17,175,445
Weighted average diluted common shares outstanding			21,235,318				21,232,758				17,193,114
Shares outstanding at end of period			21,319,083				21,319,583				17,256,989
Credit Quality
Allowance for credit losses to period end nonperforming loans			2,101.78	%			2,041.44	%			1,752.70	%
Nonperforming loans to loans held for investment			0.05	%			0.05	%			0.06	%
Nonperforming assets to total assets			0.05	%			0.05	%			0.05	%
Nonperforming loans plus performing loan modifications to loans held for investment			0.05	%			0.05	%			0.06	%
Selected Financial Ratios
ROAA			1.31	%			1.18	%			1.26	%
ROAE			13.48	%			11.31	%			15.45	%
Net interest margin			3.36	%			3.37	%			3.19	%
Loan to deposit			99.38	%			101.87	%			102.19	%

(1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.

		Year ended
(in thousands, except per share and share data)		December 31, 2024				December 31, 2023
Revenue and Expense Data
Interest and fee income		$	206,951			$	174,382
Interest expense			87,240				63,502
Net interest income			119,711				110,880
Provision for credit losses			6,950				4,000
Net interest income after provision			112,761				106,880
Non-interest income:
Service charges on deposit accounts			721				575
Net gain (loss) on sale of securities			—				(167	)
Gain on sale of loans			1,274				1,952
Loan-related fees			1,605				1,719
FHLB stock dividends			1,320				970
Earnings on bank-owned life insurance			644				510
Other income			889				1,952
Total non-interest income			6,453				7,511
Non-interest expense:
Salaries and employee benefits			31,709				27,097
Occupancy and equipment			2,547				2,218
Data processing and software			5,088				4,015
FDIC insurance			1,635				1,557
Professional services			3,078				2,575
Advertising and promotional			2,411				2,403
Loan-related expenses			1,207				1,192
Other operating expenses			6,818				6,718
Total non-interest expense			54,493				47,775
Income before provision for income taxes			64,721				66,616
Provision for income taxes			19,050				18,882
Net income		$	45,671			$	47,734
Comprehensive Income
Net income		$	45,671			$	47,734
Net unrealized holding (loss) gain on securities available-for-sale during the period			(858	)			2,228
Reclassification for net loss on sale of securities included in net income			—				167
Less: Income tax (benefit) expense related to other comprehensive (loss) income			(254	)			708
Other comprehensive (loss) income			(604	)			1,687
Total comprehensive income		$	45,067			$	49,421
Share and Per Share Data
Earnings per common share:
Basic		$	2.26			$	2.78
Diluted		$	2.26			$	2.78
Book value per share		$	18.60			$	16.56
Tangible book value per share(1)		$	18.60			$	16.56
Weighted average basic common shares outstanding			20,154,385				17,166,592
Weighted average diluted common shares outstanding			20,205,440				17,187,969
Shares outstanding at end of period			21,319,083				17,256,989
Credit Quality
Allowance for credit losses to period end nonperforming loans			2,101.78	%			1,752.70	%
Nonperforming loans to loans held for investment			0.05	%			0.06	%
Nonperforming assets to total assets			0.05	%			0.05	%
Nonperforming loans plus performing loan modifications to loans held for investment			0.05	%			0.06	%
Selected Financial Ratios
ROAA			1.23	%			1.44	%
ROAE			12.72	%			17.85	%
Net interest margin			3.32	%			3.42	%
Loan to deposit			99.38	%			102.19	%

(1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.

(in thousands)		December 31, 2024				September 30, 2024				December 31, 2023
Balance Sheet Data
Cash and due from financial institutions		$	33,882			$	44,531			$	26,986
Interest-bearing deposits in banks			318,461				206,321				294,590
Time deposits in banks			4,121				4,118				5,858
Securities - available-for-sale, at fair value			98,194				104,238				108,083
Securities - held-to-maturity, at amortized cost			2,720				2,720				3,077
Loans held for sale			3,247				2,910				11,464
Loans held for investment			3,532,686				3,460,565				3,081,719
Allowance for credit losses			(37,791	)			(37,583	)			(34,431	)
Loans held for investment, net of allowance for credit losses			3,494,895				3,422,982				3,047,288
FHLB stock			15,000				15,000				15,000
Operating leases, right-of-use asset			6,245				6,590				5,284
Premises and equipment, net			1,584				1,657				1,623
Bank-owned life insurance			19,375				19,192				17,180
Interest receivable and other assets			55,554				56,745				56,692
Total assets		$	4,053,278			$	3,887,004			$	3,593,125
Non-interest-bearing deposits		$	922,629			$	906,939			$	831,101
Interest-bearing deposits			2,635,365				2,493,040				2,195,795
Total deposits			3,557,994				3,399,979				3,026,896
Subordinated notes, net			73,895				73,859				73,749
Other borrowings			—				—				170,000
Operating lease liability			6,857				7,101				5,603
Interest payable and other liabilities			17,908				16,135				31,103
Total liabilities			3,656,654				3,497,074				3,307,351
Common stock			302,531				302,251				220,505
Retained earnings			106,464				97,411				77,036
Accumulated other comprehensive loss, net of taxes			(12,371	)			(9,732	)			(11,767	)
Total shareholders’ equity			396,624				389,930				285,774
Total liabilities and shareholders’ equity		$	4,053,278			$	3,887,004			$	3,593,125
Quarterly Average Balance Data
Average loans held for investment and sale		$	3,498,109			$	3,354,050			$	3,055,042
Average interest-earning assets			3,965,867				3,586,572				3,319,300
Average total assets			4,057,603				3,678,537				3,399,660
Average deposits			3,561,409				3,184,795				3,009,078
Average total equity			393,088				384,692				277,295
Capital Ratios
Total shareholders’ equity to total assets			9.79	%			10.03	%			7.95	%
Tangible shareholders’ equity to tangible assets(1)			9.79	%			10.03	%			7.95	%
Total capital (to risk-weighted assets)			13.99	%			13.94	%			12.30	%
Tier 1 capital (to risk-weighted assets)			11.02	%			10.93	%			9.07	%
Common equity Tier 1 capital (to risk-weighted assets)			11.02	%			10.93	%			9.07	%
Tier 1 leverage ratio			10.05	%			10.83	%			8.73	%

(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 tables provide a more detailed analysis of this non-GAAP financial measure:

		Three months ended
(in thousands)		December 31, 2024			September 30, 2024			December 31, 2023
Pre-tax, pre-provision income
Pre-tax income		$	19,367		$	15,241		$	15,151
Add: provision for credit losses			1,300			2,750			800
Pre-tax, pre-provision income		$	20,667		$	17,991		$	15,951

		Year ended
(in thousands)		December 31, 2024			December 31, 2023
Pre-tax, pre-provision income
Pre-tax income		$	64,721		$	66,616
Add: provision for credit losses			6,950			4,000
Pre-tax, pre-provision income		$	71,671		$	70,616

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

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