Five Star Bancorp

What they do

The Company operates through Five Star Bank, providing commercial and consumer banking products from nine branch offices, with a full-service branch opened in Walnut Creek in September 2025. It serves real estate, agricultural, faith-based, and small to medium-sized enterprises. Its primary loan products are commercial real estate, land development, construction, and operating lines of credit, while primary deposit products are checking, savings, money market, and term certificate accounts.

Revenue drivers

• Commercial real estate loans — Commercial real estate loans were $3.3 billion, or 81.08% of total loans before deferred fees, at December 31, 2025; these are viewed primarily as cash-flow loans and secondarily as real-estate-secured.
• Commercial and SBA loans — The Company offers commercial loans, SBA loans to customers nationwide, and operating lines of credit to small and medium-sized businesses and professionals.
• Deposit funding — Primary funding is customer deposits: at June 30, 2026, total deposits were $4.8 billion, with non-wholesale deposits of $4.5 billion and wholesale deposits of $250.0 million.
• Net interest income — Management states net interest income is the most significant contributor to net income, driven by average balances and yields on interest-earning assets and costs of interest-bearing liabilities.

Recent performance

Second quarter 2026 net income was $19.4 million versus $18.6 million in the first quarter of 2026 and $14.5 million in the second quarter of 2025. Diluted EPS was $0.91, up from $0.87 sequentially and $0.68 year-over-year, and ROAA was 1.49% versus 1.37% a year earlier. Net interest margin was 3.63%, up 10 basis points year-over-year but down 7 basis points from 3.70% in the first quarter of 2026. Total loans held for investment increased $306.3 million, or 7%, and total deposits increased $330.0 million, or 7%, during the quarter. For the first six months of 2026, net income was $38.0 million versus $27.6 million a year earlier.

Strategy

Management continued expansion into the San Francisco Bay Area, opening a full-service Walnut Creek branch in September 2025 and hiring three business development officers, three loan officers, and four additional staff during 2025. The Company describes growth as organic and reported business development officers rising from 43 at March 31, 2026 to 45 at June 30, 2026. It paid a cash dividend of $0.25 per share in the second quarter of 2026. Management emphasizes disciplined expense management, with an efficiency ratio of 40.91% for the second quarter of 2026, and a purpose-driven, integrity-centered banking mission.

Risks

• Geographic concentration — Business is concentrated in California, specifically Northern California, exposing results to downturns in that region's real estate sector and economy.
• Rising interest rate sensitivity — Changes in market rates affect loan and deposit pricing, net interest income, and borrowers' ability to repay; net interest margin contracted 7 basis points sequentially in the second quarter of 2026.
• Rapid balance-sheet growth — Loans and deposits each grew about 7% in the second quarter of 2026, and management noted rapid expansion modestly diluted the overall yield on earning assets.
• Commercial real estate concentration — Commercial real estate loans were 81.08% of total loans before deferred fees at December 31, 2025, and repayment generally depends on successful operation of the underlying property.

Outlook

Management pointed to continued momentum in what it calls its organic growth story, citing second quarter 2026 loan and deposit expansion and year-over-year margin improvement. CEO James E. Beckwith highlighted the Walnut Creek branch, business development officer additions, and external recognition including being named a Best Place to Work by the San Francisco Business Times. The Company continues to operate as an emerging growth company electing the extended transition period for new accounting standards.