Five Star Bancorp Announces 2nd Quarter 2023 Results.

RANCHO CORDOVA, Calif: Five Star Bancorp (Nasdaq: FSBC) (the "Company" or "Five Star"), the holding company for Five Star Bank (the "Bank"), today reported net income of $12.7 million for the three months ended June 30, 2023, as compared to $13.2 million for the three months ended March 31, 2023 and $10.0 million for the three months ended June 30, 2022.

Second 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)

June 30,

2023

March 31,

2023

June 30,

2022

Return on average assets ("ROAA")

1.55

%

1.65

%

1.45

%

Return on average equity ("ROAE")

19.29

%

20.94

%

17.20

%

Pre-tax income

$

17,169

$

18,501

$

14,033

Pre-tax, pre-provision income(1)

18,419

19,401

16,283

Net income

12,729

13,161

9,953

Basic earnings per common share

$

0.74

$

0.77

$

0.58

Diluted earnings per common share

0.74

0.77

0.58

Weighted average basic common shares outstanding

17,165,344

17,150,174

17,125,715

Weighted average diluted common shares outstanding

17,168,995

17,194,884

17,149,449

Shares outstanding at end of period

17,257,357

17,258,904

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:

"In response to disruption in the banking industry and to meet market demand while building upon the Bank's organic growth strategy, we were pleased to announce our expansion into the San Francisco Bay Area with the hiring of a commercial banking team in the 2nd Quarter of 2023. This expansion demonstrates our ability to seize opportunities and our confidence in the Bay Area's talent pipeline as well as our belief in the strength of the region's diverse and competitive business environment. We look forward to championing new and existing clients in this market and to enhancing and strengthening community partnerships.

This Quarter, we were also pleased to have been awarded the 2022 Raymond James Community Bankers Cup, which speaks to the Bank's superior performance and stability. The award recognizes the top 10% of community banks in the nation based on various profitability, operational efficiency, and balance sheet metrics (banks considered included all exchange-traded domestic banks, excluding mutual holding companies and potential acquisition targets with assets between $500 million and $10 billion as of December 31, 2022). This recognition comes after Five Star earned the #1 ranking on the S&P Global Market Intelligence annual rankings of 2022's best-performing community banks in the nation with assets between $3 billion and $10 billion. In the 2nd Quarter, it was also announced Five Star appeared on American Banker's annual ranking of the 20 top-performing community banks in the nation (ranking #12) with assets between $2 billion and $10 billion based on their three-year return on average equity."

Cash and cash equivalents were $300.1 million, representing 10.24% of total deposits at June 30, 2023, compared to 11.91% as of March 31, 2023.

Total deposits increased by $9.3 million, or 0.32%, in the three months ended June 30, 2023. Non-brokered deposits increased by $25.0 million, or 0.89%, in the three months ended June 30, 2023.

Consistent, disciplined management of expenses contributed to our efficiency ratio of approximately 39.41% for the three months ended June 30, 2023.

A gain of $1.3 million was recorded for distributions from venture-backed fund investments during the three months ended June 30, 2023.

Net interest margin for the three months ended June 30, 2023 was 3.45%, as the effective federal funds rate increased to 5.08% as of June 30, 2023 from 4.83% as of March 31, 2023 and 1.58% as of June 30, 2022. Net interest margin was 3.75% for the three months ended March 31, 2023 and 3.71% for the three months ended June 30, 2022.

Other comprehensive loss was $1.0 million during the three months ended June 30, 2023. Unrealized losses, net of tax effect, on available-for-sale securities were $13.0 million as of June 30, 2023. Total held-to-maturity and available-for-sale securities represented 0.10% and 3.33% of total interest-earning assets, respectively, as of June 30, 2023.

The Company's common equity Tier 1 capital ratio was 9.07% and 9.02% as of June 30, 2023 and March 31, 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 June 30, 2023 was as follows:

(in...