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 thousands) |
June 30,2023 |
|
March 31,2023 |
|
$ Change |
|
% Change |
Loans held for investment |
$ |
2,927,411 |
|
|
$ |
2,869,848 |
|
|
$ |
57,563 |
|
|
2.01 |
% |
Non-interest-bearing
deposits |
|
833,707 |
|
|
|
836,673 |
|
|
|
(2,966 |
) |
|
(0.35 |
)% |
Interest-bearing deposits |
|
2,096,032 |
|
|
|
2,083,733 |
|
|
|
12,299 |
|
|
0.59 |
% |
|
|
|
|
|
|
|
|
(in thousands) |
June 30,2023 |
|
June 30,2022 |
|
$ Change |
|
% Change |
Loans held for investment |
$ |
2,927,411 |
|
|
$ |
2,380,511 |
|
|
$ |
546,900 |
|
|
22.97 |
% |
Non-interest-bearing
deposits |
|
833,707 |
|
|
|
1,006,066 |
|
|
|
(172,359 |
) |
|
(17.13 |
)% |
Interest-bearing deposits |
|
2,096,032 |
|
|
|
1,495,245 |
|
|
|
600,787 |
|
|
40.18 |
% |
-
At June 30, 2023, the Company reported total loans held for
investment, total assets, and total deposits of $2.9 billion, $3.4
billion, and $2.9 billion, respectively.
- The ratio of
nonperforming loans to loans held for investment at period end
remained consistent at 0.01% at both June 30, 2023 and
March 31, 2023.
- In June 2023,
the Company announced its expansion into the San Francisco,
California area with the hiring of experienced banking
professionals in the Bay Area and plans to open a loan production
office in the area during the second half of 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
June 30, 2023. The Company's Board of Directors subsequently
declared another cash dividend of $0.20 per share on July 20,
2023.
Summary Results
Three months ended June 30, 2023, as
compared to three months ended March 31, 2023
The Company’s net income was $12.7 million for
the three months ended June 30, 2023 compared to $13.2 million
for the three months ended March 31, 2023. Net interest income
decreased by $1.6 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 was $1.3 million for the three months
ended June 30, 2023 compared to $0.9 million for the three
months ended March 31, 2023. Non-interest income was $2.8
million for the three months ended June 30, 2023 compared to
$1.4 million for the three months ended March 31, 2023,
primarily due to a $1.3 million gain from distributions on
investments in venture-backed funds during the three months ended
June 30, 2023. Non-interest expense was $12.0 million for the
three months ended June 30, 2023 compared to $11.1 million for
the three months ended March 31, 2023.
Three months ended June 30, 2023, as
compared to three months ended June 30, 2022
The Company’s net income was $12.7 million for
the three months ended June 30, 2023 compared to $10.0 million
for the three months ended June 30, 2022. Net interest income
increased by $3.0 million, primarily due to higher average balances
on interest-earning assets more than offsetting higher average
balances on interest-bearing liabilities. Higher yields earned on
earning assets and higher rates paid on interest-bearing
liabilities coincided with the effective Federal Funds rate
increase from 1.58% to 5.08% between June 30, 2022 and
June 30, 2023. The provision for credit losses was $1.3
million for the three months ended June 30, 2023 compared to
$2.3 million for the three months ended June 30, 2022.
Non-interest income was $2.8 million for the three months ended
June 30, 2023 compared to $2.0 million for the three months
ended June 30, 2022, mainly due to a $1.3 million gain from
distributions on investments in venture-backed funds during the
three months ended June 30, 2023. Non-interest expense was
$12.0 million for the three months ended June 30, 2023
compared to $10.2 million for the three months ended June 30,
2022.
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) |
|
June 30,2023 |
|
March 31,2023 |
|
$ Change |
|
% Change |
Selected operating data: |
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
27,578 |
|
|
$ |
29,148 |
|
|
$ |
(1,570 |
) |
|
(5.39 |
)% |
Provision for credit losses |
|
|
1,250 |
|
|
|
900 |
|
|
|
350 |
|
|
38.89 |
% |
Non-interest income |
|
|
2,820 |
|
|
|
1,371 |
|
|
|
1,449 |
|
|
105.69 |
% |
Non-interest expense |
|
|
11,979 |
|
|
|
11,118 |
|
|
|
861 |
|
|
7.74 |
% |
Pre-tax income |
|
|
17,169 |
|
|
|
18,501 |
|
|
|
(1,332 |
) |
|
(7.20 |
)% |
Provision for income taxes |
|
|
4,440 |
|
|
|
5,340 |
|
|
|
(900 |
) |
|
(16.85 |
)% |
Net income |
|
$ |
12,729 |
|
|
$ |
13,161 |
|
|
$ |
(432 |
) |
|
(3.28 |
)% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.74 |
|
|
$ |
0.77 |
|
|
$ |
(0.03 |
) |
|
(3.90 |
)% |
Diluted |
|
$ |
0.74 |
|
|
$ |
0.77 |
|
|
$ |
(0.03 |
) |
|
(3.90 |
)% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
ROAA |
|
|
1.55 |
% |
|
|
1.65 |
% |
|
|
|
|
ROAE |
|
|
19.29 |
% |
|
|
20.94 |
% |
|
|
|
|
Net interest margin |
|
|
3.45 |
% |
|
|
3.75 |
% |
|
|
|
|
Cost of funds |
|
|
2.04 |
% |
|
|
1.53 |
% |
|
|
|
|
Efficiency ratio |
|
|
39.41 |
% |
|
|
36.43 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
(in thousands, except per
share data) |
|
June 30,2023 |
|
June 30,2022 |
|
$ Change |
|
% Change |
Selected operating data: |
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
27,578 |
|
|
$ |
24,529 |
|
|
$ |
3,049 |
|
|
12.43 |
% |
Provision for credit losses |
|
|
1,250 |
|
|
|
2,250 |
|
|
|
(1,000 |
) |
|
(44.44 |
)% |
Non-interest income |
|
|
2,820 |
|
|
|
1,959 |
|
|
|
861 |
|
|
43.95 |
% |
Non-interest expense |
|
|
11,979 |
|
|
|
10,205 |
|
|
|
1,774 |
|
|
17.38 |
% |
Pre-tax income |
|
|
17,169 |
|
|
|
14,033 |
|
|
|
3,136 |
|
|
22.35 |
% |
Provision for income taxes |
|
|
4,440 |
|
|
|
4,080 |
|
|
|
360 |
|
|
8.82 |
% |
Net income |
|
$ |
12,729 |
|
|
$ |
9,953 |
|
|
$ |
2,776 |
|
|
27.89 |
% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.74 |
|
|
$ |
0.58 |
|
|
$ |
0.16 |
|
|
27.59 |
% |
Diluted |
|
$ |
0.74 |
|
|
$ |
0.58 |
|
|
$ |
0.16 |
|
|
27.59 |
% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
ROAA |
|
|
1.55 |
% |
|
|
1.45 |
% |
|
|
|
|
ROAE |
|
|
19.29 |
% |
|
|
17.20 |
% |
|
|
|
|
Net interest margin |
|
|
3.45 |
% |
|
|
3.71 |
% |
|
|
|
|
Cost of funds |
|
|
2.04 |
% |
|
|
0.24 |
% |
|
|
|
|
Efficiency ratio |
|
|
39.41 |
% |
|
|
38.53 |
% |
|
|
|
|
Balance Sheet Summary
(in thousands) |
|
June 30,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Selected financial condition
data: |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
3,402,701 |
|
|
$ |
3,227,159 |
|
|
$ |
175,542 |
|
|
5.44 |
% |
Cash and cash equivalents |
|
|
300,123 |
|
|
|
259,991 |
|
|
|
40,132 |
|
|
15.44 |
% |
Total loans held for investment |
|
|
2,927,411 |
|
|
|
2,791,326 |
|
|
|
136,085 |
|
|
4.88 |
% |
Total investments |
|
|
114,280 |
|
|
|
119,744 |
|
|
|
(5,464 |
) |
|
(4.56 |
)% |
Total liabilities |
|
|
3,133,561 |
|
|
|
2,974,334 |
|
|
|
159,227 |
|
|
5.35 |
% |
Total deposits |
|
|
2,929,739 |
|
|
|
2,782,004 |
|
|
|
147,735 |
|
|
5.31 |
% |
Subordinated notes, net |
|
|
73,677 |
|
|
|
73,606 |
|
|
|
71 |
|
|
0.10 |
% |
Total shareholders’ equity |
|
|
269,140 |
|
|
|
252,825 |
|
|
|
16,315 |
|
|
6.45 |
% |
-
Insured and collateralized deposits were approximately $2.0
billion, representing approximately 67.34% of total deposits as of
June 30, 2023. Net uninsured deposits were approximately $1.0
billion as of June 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 8.96
years as of June 30, 2023.
- Cash and cash
equivalents as of June 30, 2023 were $300.1 million,
representing 10.24% of total deposits at June 30, 2023
compared to 11.91% as of March 31, 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
June 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 $890.6 million as of June 30, 2023.
|
June 30, 2023 |
|
Available |
(in thousands) |
Line of Credit |
|
Borrowings |
|
Federal Home Loan Bank of San Francisco (“FHLB”) advances |
$ |
442,606 |
|
|
$ |
100,000 |
|
|
$ |
342,606 |
|
Federal Reserve discount
window |
|
72,842 |
|
|
|
— |
|
|
|
72,842 |
|
Correspondent bank lines of
credit |
|
175,000 |
|
|
|
— |
|
|
|
175,000 |
|
Cash and cash equivalents |
|
— |
|
|
|
— |
|
|
|
300,123 |
|
Total |
$ |
690,448 |
|
|
$ |
100,000 |
|
|
$ |
890,571 |
|
The increase in total assets from
December 31, 2022 to June 30, 2023 was primarily due to a
$40.1 million increase in cash and cash equivalents and
a $136.1 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 $141.7 million and $25.6 million, respectively,
partially offset by net cash used in investing activities of $127.2
million. The $136.1 million increase in total loans held for
investment between December 31, 2022 and June 30, 2023
was a result of $389.5 million in loan originations, partially
offset by $253.4 million in loan payoffs and paydowns.
The increase in total liabilities from
December 31, 2022 to June 30, 2023 was primarily
attributable to an increase in deposits of $147.7 million,
largely due to increases in money market and time deposits over
$250 thousand of $303.7 million and $48.0 million, respectively,
partially offset by decreases in non-interest-bearing, interest
checking, and savings deposits of $137.5 million, $32.0 million,
and $21.8 million, respectively.
Total shareholders’ equity increased by $16.3
million from $252.8 million at December 31, 2022 to $269.1
million at June 30, 2023. The increase in total shareholders’
equity was primarily a result of net income recognized of $25.9
million and a reduction of $0.5 million to accumulated other
comprehensive loss, partially offset by $6.0 million in cash
distributions paid during the period and a reduction to retained
earnings of $4.5 million, net of tax effect, due to the adoption of
Accounting Standards Update No. 2016-13, Financial Instruments -
Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments (“ASC 326”).
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) |
|
June 30,2023 |
|
March 31,2023 |
|
$ Change |
|
% Change |
Interest and fee income |
|
$ |
42,793 |
|
|
$ |
40,311 |
|
|
$ |
2,482 |
|
|
6.16 |
% |
Interest expense |
|
|
15,215 |
|
|
|
11,163 |
|
|
|
4,052 |
|
|
36.30 |
% |
Net interest income |
|
$ |
27,578 |
|
|
$ |
29,148 |
|
|
$ |
(1,570 |
) |
|
(5.39 |
)% |
Net interest margin |
|
|
3.45 |
% |
|
|
3.75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
June 30,2023 |
|
June 30,2022 |
|
$ Change |
|
% Change |
Interest and fee income |
|
$ |
42,793 |
|
|
$ |
25,999 |
|
|
$ |
16,794 |
|
|
64.59 |
% |
Interest expense |
|
|
15,215 |
|
|
|
1,470 |
|
|
|
13,745 |
|
|
935.03 |
% |
Net interest income |
|
$ |
27,578 |
|
|
$ |
24,529 |
|
|
$ |
3,049 |
|
|
12.43 |
% |
Net interest margin |
|
|
3.45 |
% |
|
|
3.71 |
% |
|
|
|
|
The following table shows the components of net
interest income and net interest margin for the quarterly periods
indicated:
|
|
Three months ended |
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 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 |
|
$ |
179,894 |
|
|
$ |
2,218 |
|
|
4.95 |
% |
|
$ |
200,541 |
|
|
$ |
2,167 |
|
|
4.38 |
% |
|
$ |
294,491 |
|
|
$ |
518 |
|
|
0.71 |
% |
Investment securities |
|
|
116,107 |
|
|
|
646 |
|
|
2.23 |
% |
|
|
119,489 |
|
|
|
650 |
|
|
2.21 |
% |
|
|
132,975 |
|
|
|
602 |
|
|
1.82 |
% |
Loans held for investment and sale |
|
|
2,914,388 |
|
|
|
39,929 |
|
|
5.50 |
% |
|
|
2,836,070 |
|
|
|
37,494 |
|
|
5.36 |
% |
|
|
2,227,215 |
|
|
|
24,879 |
|
|
4.48 |
% |
Total interest-earning assets |
|
|
3,210,389 |
|
|
|
42,793 |
|
|
5.35 |
% |
|
|
3,156,100 |
|
|
|
40,311 |
|
|
5.18 |
% |
|
|
2,654,681 |
|
|
|
25,999 |
|
|
3.93 |
% |
Interest receivable and other assets, net |
|
|
75,416 |
|
|
|
|
|
|
|
69,253 |
|
|
|
|
|
|
|
98,972 |
|
|
|
|
|
Total assets |
|
$ |
3,285,805 |
|
|
|
|
|
|
$ |
3,225,353 |
|
|
|
|
|
|
$ |
2,753,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’
equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
290,404 |
|
|
$ |
825 |
|
|
1.14 |
% |
|
$ |
379,593 |
|
|
$ |
433 |
|
|
0.46 |
% |
|
$ |
255,665 |
|
|
$ |
66 |
|
|
0.10 |
% |
Savings |
|
|
139,522 |
|
|
|
758 |
|
|
2.18 |
% |
|
|
155,233 |
|
|
|
545 |
|
|
1.42 |
% |
|
|
96,867 |
|
|
|
38 |
|
|
0.16 |
% |
Money market |
|
|
1,283,353 |
|
|
|
8,136 |
|
|
2.54 |
% |
|
|
1,087,122 |
|
|
|
5,436 |
|
|
2.03 |
% |
|
|
981,366 |
|
|
|
679 |
|
|
0.28 |
% |
Time |
|
|
370,864 |
|
|
|
4,250 |
|
|
4.60 |
% |
|
|
300,952 |
|
|
|
2,964 |
|
|
3.99 |
% |
|
|
174,991 |
|
|
|
238 |
|
|
0.55 |
% |
Subordinated debt and other borrowings |
|
|
80,192 |
|
|
|
1,246 |
|
|
6.23 |
% |
|
|
125,691 |
|
|
|
1,785 |
|
|
5.76 |
% |
|
|
29,618 |
|
|
|
449 |
|
|
6.07 |
% |
Total interest-bearing liabilities |
|
|
2,164,335 |
|
|
|
15,215 |
|
|
2.82 |
% |
|
|
2,048,591 |
|
|
|
11,163 |
|
|
2.21 |
% |
|
|
1,538,507 |
|
|
|
1,470 |
|
|
0.38 |
% |
Demand accounts |
|
|
828,748 |
|
|
|
|
|
|
|
901,491 |
|
|
|
|
|
|
|
969,053 |
|
|
|
|
|
Interest payable and other liabilities |
|
|
28,034 |
|
|
|
|
|
|
|
20,344 |
|
|
|
|
|
|
|
13,937 |
|
|
|
|
|
Shareholders’ equity |
|
|
264,688 |
|
|
|
|
|
|
|
254,927 |
|
|
|
|
|
|
|
232,156 |
|
|
|
|
|
Total liabilities &
shareholders’ equity |
|
$ |
3,285,805 |
|
|
|
|
|
|
$ |
3,225,353 |
|
|
|
|
|
|
$ |
2,753,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
2.53 |
% |
|
|
|
|
|
2.97 |
% |
|
|
|
|
|
3.55 |
% |
Net interest
income/margin |
|
|
|
$ |
27,578 |
|
|
3.45 |
% |
|
|
|
$ |
29,148 |
|
|
3.75 |
% |
|
|
|
$ |
24,529 |
|
|
3.71 |
% |
Factors affecting interest income and yields
Interest income increased during the three
months ended June 30, 2023, as compared to the three months
ended March 31, 2023, due to the following:
- Rates. The
average yields on interest-earning assets were 5.35% and 5.18% for
the three months ended June 30, 2023 and March 31, 2023,
respectively. The increase in yield period-over-period was
primarily due to increased rates earned on the loan portfolio from
new originations and repricing on variable-rate loans, combined
with increases in yields earned on interest-earning deposits held
at other banks, coinciding with the rise in the effective Federal
Funds rate from 4.83% to 5.08% between March 31, 2023 and
June 30, 2023.
- Volume. Average
interest-earning assets increased by approximately $54.3 million
period-over-period, primarily driven by new loan originations, most
notably in commercial real estate loans, which drove increases in
the average daily balances of loans for the three months ended
June 30, 2023.
Interest income increased during the three
months ended June 30, 2023, as compared to the three months
ended June 30, 2022, due to the following:
- Rates. The
average yields on interest-earning assets were 5.35% and 3.93% for
the three months ended June 30, 2023 and June 30, 2022,
respectively. The increase in yield period-over-period was
primarily due to increased rates earned on the loan portfolio from
new originations and repricing on variable-rate loans, combined
with increases in yields earned on interest-earning deposits with
banks, coinciding with the rise in the effective Federal Funds rate
from 1.58% to 5.08% between June 30, 2022 and June 30,
2023.
- Volume. Average
interest-earning assets increased by approximately $555.7 million
period-over-period, primarily driven by new loan originations which
drove increases in the average daily balances of loans for the
three months ended June 30, 2023, partially offset by a
decrease in interest-earning deposits held at other banks.
Factors affecting interest expense and rates
Interest expense increased during the three
months ended June 30, 2023, as compared to the three months
ended March 31, 2023, due to the following:
- Rates. The
average costs of interest-bearing liabilities were 2.82% and 2.21%
for the three months ended June 30, 2023 and March 31,
2023, respectively. The increase in cost period-over-period was due
to increases in the rates paid on interest-bearing deposit
accounts, with the largest rate increases in interest-bearing
demand accounts, coinciding with the rise in the effective Federal
Funds rate from 4.83% to 5.08% between March 31, 2023 and
June 30, 2023. The average cost of subordinated debt and other
borrowings increased from 5.76% to 6.23% for the three months ended
March 31, 2023 and June 30, 2023, respectively, as the
cost of borrowing from the FHLB increased, coinciding with the
aforementioned rise in the effective Federal Funds rate over the
same period. There was no change in rates paid on the subordinated
debt. Additionally, the cost of funds increased from 1.53% for the
three months ended March 31, 2023 to 2.04% for the three
months ended June 30, 2023.
- Volume.
Average interest-bearing liabilities increased by $115.7 million
period-over-period, primarily driven by increases in average
balances in money market and time accounts of $196.2 million and
$69.9 million, respectively, partially offset by decreases in
average balances in demand accounts of $89.2 million and in other
borrowings of $45.5 million, due to decreased use of FHLB advances
during the three months ended June 30, 2023.
Interest expense increased during the three
months ended June 30, 2023, as compared to the three months
ended June 30, 2022, due to the following:
- Rates. The
average costs of interest-bearing liabilities were 2.82% and 0.38%
for the three months ended June 30, 2023 and June 30,
2022, respectively. The increase in cost period-over-period was
primarily due to increases in the rates paid on interest-bearing
deposit accounts, coinciding with the rise in the effective Federal
Funds rate from 1.58% to 5.08% between June 30, 2022 and
June 30, 2023. The average cost of subordinated debt and other
borrowings increased from 6.07% to 6.23% for the three months ended
June 30, 2022 and June 30, 2023, respectively, as the
weighted average rate on subordinated notes outstanding was higher
for the three months ended June 30, 2023 than for the three
months ended June 30, 2022. Additionally, the cost of funds
increased from 0.24% for the three months ended June 30, 2022
to 2.04% for the three months ended June 30, 2023.
- Volume. Average
interest-bearing liabilities increased by $625.8 million
period-over-period, primarily driven by increases in average
balances in money market and time accounts of $302.0 million and
$195.9 million, respectively, in the three months ended
June 30, 2023 compared to the three months ended June 30,
2022.
Loans by Type
The following table provides loan balances,
excluding deferred loan fees, by type as of June 30, 2023:
(in thousands) |
|
|
Commercial Term Real Estate Non-Owner Occupied |
|
$ |
1,089,850 |
|
Commercial Term
Multifamily |
|
|
944,976 |
|
Commercial Term Real Estate
Owner Occupied |
|
|
467,350 |
|
Commercial Construction Real
Estate |
|
|
100,514 |
|
Commercial Secured |
|
|
89,571 |
|
SBA 7A Secured |
|
|
49,852 |
|
Commercial Term Agricultural
Real Estate |
|
|
51,349 |
|
Others |
|
|
136,359 |
|
|
|
$ |
2,929,821 |
|
Interest-bearing Deposits
The following table provide interest-bearing
deposit balances by type as of June 30, 2023:
(in thousands) |
|
|
Interest-bearing demand |
|
$ |
208,085 |
|
Savings |
|
|
132,797 |
|
Money market |
|
|
1,377,250 |
|
Time |
|
|
377,900 |
|
|
|
$ |
2,096,032 |
|
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 six months ended June 30,
2023.
At June 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 $1.8 million provision
for credit losses recorded during the six months ended
June 30, 2023, partially offset by net charge-offs of $1.5
million, attributable to the commercial secured and the consumer
and other loan classes, during the same period.
The Company’s ratio of nonperforming loans to
loans held for investment remained consistent at 0.01% at
December 31, 2022 and June 30, 2023. The provision for
credit losses recorded during the six months ended June 30,
2023 was primarily related to loan growth, loan type mix, and
updates in the macroeconomic environment. Loans designated as
substandard decreased from $0.4 million to $0.3 million between
December 31, 2022 and June 30, 2023. There were no loans
with doubtful risk grades at June 30, 2023 or
December 31, 2022.
A summary of the allowance for credit losses by
loan class is as follows:
|
|
June 30, 2023 |
|
December 31, 2022 |
(in thousands) |
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
Real estate: |
|
|
|
|
|
|
|
|
Commercial |
|
$ |
27,138 |
|
|
79.87 |
% |
|
$ |
19,216 |
|
|
67.69 |
% |
Commercial land and development |
|
|
181 |
|
|
0.53 |
% |
|
|
54 |
|
|
0.19 |
% |
Commercial construction |
|
|
1,194 |
|
|
3.51 |
% |
|
|
645 |
|
|
2.27 |
% |
Residential construction |
|
|
214 |
|
|
0.63 |
% |
|
|
49 |
|
|
0.17 |
% |
Residential |
|
|
150 |
|
|
0.44 |
% |
|
|
175 |
|
|
0.62 |
% |
Farmland |
|
|
232 |
|
|
0.68 |
% |
|
|
644 |
|
|
2.27 |
% |
Commercial: |
|
|
|
|
|
|
|
|
Secured |
|
|
3,695 |
|
|
10.87 |
% |
|
|
7,098 |
|
|
25.00 |
% |
Unsecured |
|
|
206 |
|
|
0.61 |
% |
|
|
116 |
|
|
0.41 |
% |
Consumer and other |
|
|
463 |
|
|
1.36 |
% |
|
|
347 |
|
|
1.22 |
% |
Unallocated |
|
|
511 |
|
|
1.50 |
% |
|
|
45 |
|
|
0.16 |
% |
Total allowance for credit
losses |
|
$ |
33,984 |
|
|
100.00 |
% |
|
$ |
28,389 |
|
|
100.00 |
% |
The ratio of allowance for credit losses to
loans held for investment was 1.16% at June 30, 2023, as
compared to 1.02% at December 31, 2022.
Non-interest Income
Three months ended June 30, 2023, as
compared to three months ended March 31, 2023
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
June 30,2023 |
|
March 31,2023 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
135 |
|
|
$ |
117 |
|
|
$ |
18 |
|
|
15.38 |
% |
Gain on sale of loans |
|
|
641 |
|
|
|
598 |
|
|
|
43 |
|
|
7.19 |
% |
Loan-related fees |
|
|
389 |
|
|
|
308 |
|
|
|
81 |
|
|
26.30 |
% |
FHLB stock dividends |
|
|
189 |
|
|
|
193 |
|
|
|
(4 |
) |
|
(2.07 |
)% |
Earnings on bank-owned life
insurance |
|
|
126 |
|
|
|
102 |
|
|
|
24 |
|
|
23.53 |
% |
Other income |
|
|
1,340 |
|
|
|
53 |
|
|
|
1,287 |
|
|
2,428.30 |
% |
Total non-interest income |
|
$ |
2,820 |
|
|
$ |
1,371 |
|
|
$ |
1,449 |
|
|
105.69 |
% |
Gain on sale of loans. The increase in gain on
sale of loans resulted primarily from an increase in the effective
yield on loans sold, partially offset by a decline in the volume of
loans sold. During the three months ended June 30, 2023, loans
totaling $10.9 million were sold with an effective yield of 5.89%
compared to the three months ended March 31, 2023, when loans
totaling $12.7 million were sold with an effective yield of
4.72%.
Loan-related fees. The increase in loan-related
fees resulted primarily from the recognition of $0.1 million in
swap referral fees during the three months ended June 30, 2023
compared to no swap fees recognized in the three months ended
March 31, 2023.
Other income. The increase 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 occur
during the three months ended March 31, 2023.
Three months ended June 30, 2023, as
compared to three months ended June 30, 2022
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Three months ended |
|
|
|
(in thousands) |
|
June 30,2023 |
|
June 30,2022 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
135 |
|
|
$ |
130 |
|
|
$ |
5 |
|
|
3.85 |
% |
Gain on sale of loans |
|
|
641 |
|
|
|
831 |
|
|
|
(190 |
) |
|
(22.86 |
)% |
Loan-related fees |
|
|
389 |
|
|
|
757 |
|
|
|
(368 |
) |
|
(48.61 |
)% |
FHLB stock dividends |
|
|
189 |
|
|
|
99 |
|
|
|
90 |
|
|
90.91 |
% |
Earnings on bank-owned life
insurance |
|
|
126 |
|
|
|
101 |
|
|
|
25 |
|
|
24.75 |
% |
Other income |
|
|
1,340 |
|
|
|
41 |
|
|
|
1,299 |
|
|
3,168.29 |
% |
Total non-interest income |
|
$ |
2,820 |
|
|
$ |
1,959 |
|
|
$ |
861 |
|
|
43.95 |
% |
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 June 30, 2023
compared to the three months ended June 30, 2022. During the
three months ended June 30, 2023, approximately $10.9 million
of loans were sold with an effective yield of 5.89%, as compared to
approximately $17.9 million of loans sold with an effective yield
of 4.64% during the three months ended June 30, 2022.
Loan-related fees. The decrease in loan-related
fees was primarily a result of $0.1 million of swap referral fees
recognized during the three months ended June 30, 2023
compared to $0.4 million of swap referral fees recognized during
the three months ended June 30, 2022.
FHLB stock dividends. The increase in FHLB stock
dividends was primarily due to increased yields on dividends
between June 30, 2022 and June 30, 2023, corresponding
with the rise in the effective Federal Funds rate over the same
period.
Other income. The increase 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 occur
during the three months ended June 30, 2022.
Non-interest Expense
Three months ended June 30, 2023, as
compared to three months ended March 31, 2023
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
June 30,2023 |
|
March 31,2023 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
6,421 |
|
|
$ |
6,618 |
|
|
$ |
(197 |
) |
|
(2.98 |
)% |
Occupancy and equipment |
|
|
551 |
|
|
|
523 |
|
|
|
28 |
|
|
5.35 |
% |
Data processing and
software |
|
|
1,013 |
|
|
|
872 |
|
|
|
141 |
|
|
16.17 |
% |
Federal Deposit Insurance
Corporation (“FDIC”) insurance |
|
|
410 |
|
|
|
402 |
|
|
|
8 |
|
|
1.99 |
% |
Professional services |
|
|
586 |
|
|
|
631 |
|
|
|
(45 |
) |
|
(7.13 |
)% |
Advertising and
promotional |
|
|
733 |
|
|
|
418 |
|
|
|
315 |
|
|
75.36 |
% |
Loan-related expenses |
|
|
324 |
|
|
|
255 |
|
|
|
69 |
|
|
27.06 |
% |
Other operating expenses |
|
|
1,941 |
|
|
|
1,399 |
|
|
|
542 |
|
|
38.74 |
% |
Total non-interest expense |
|
$ |
11,979 |
|
|
$ |
11,118 |
|
|
$ |
861 |
|
|
7.74 |
% |
Salaries and employee benefits. The decrease in
salaries and employee benefits was primarily a result of a $0.7
million increase in loan origination costs related to production in
the three months ended June 30, 2023, as compared to the three
months ended March 31, 2023. This decline was partially offset
by the following: (i) a $0.1 million net increase in salaries,
insurance, and benefits as a result of a 2.21% increase in
headcount and (ii) a $0.5 million increase in commissions related
to production in the three months ended June 30, 2023, as
compared to the three months ended March 31, 2023.
Data processing and software. The increase in
software expenses 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.
Advertising and promotional. The increase
related primarily to an overall increase in events attended and
donations made, as more events were attended during the three
months ended June 30, 2023 than the three months ended
March 31, 2023.
Other operating expenses. The increase in other
operating expenses was primarily due to an overall increase in
travel, conference fees, and professional membership fees during
the three months ended June 30, 2023, as compared to the three
months ended March 31, 2023.
Three months ended June 30, 2023, as
compared to three months ended June 30, 2022
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
June 30,2023 |
|
June 30,2022 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
6,421 |
|
|
$ |
5,553 |
|
|
$ |
868 |
|
|
15.63 |
% |
Occupancy and equipment |
|
|
551 |
|
|
|
513 |
|
|
|
38 |
|
|
7.41 |
% |
Data processing and
software |
|
|
1,013 |
|
|
|
739 |
|
|
|
274 |
|
|
37.08 |
% |
FDIC insurance |
|
|
410 |
|
|
|
245 |
|
|
|
165 |
|
|
67.35 |
% |
Professional services |
|
|
586 |
|
|
|
568 |
|
|
|
18 |
|
|
3.17 |
% |
Advertising and
promotional |
|
|
733 |
|
|
|
484 |
|
|
|
249 |
|
|
51.45 |
% |
Loan-related expenses |
|
|
324 |
|
|
|
389 |
|
|
|
(65 |
) |
|
(16.71 |
)% |
Other operating expenses |
|
|
1,941 |
|
|
|
1,714 |
|
|
|
227 |
|
|
13.24 |
% |
Total non-interest expense |
|
$ |
11,979 |
|
|
$ |
10,205 |
|
|
$ |
1,774 |
|
|
17.38 |
% |
Salaries and employee benefits. The increase in
salaries and employee benefits was primarily a result of: (i) a
$0.6 million increase in salaries, insurance, and benefits as a
result of a 7.56% increase in headcount during the three months
ended June 30, 2023, as compared to the three months ended
June 30, 2022 and (ii) a $0.5 million decrease in loan
origination costs due to lower loan production period-over-period.
These increases were partially offset by $0.2 million of lower
commission expenses due to lower loan production during the three
months ended June 30, 2023, as compared to the three months
ended June 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 June 30, 2023 compared to the three
months ended June 30, 2022, due to a $482.8 million increase
in the assessment base period-over-period.
Advertising and promotional. The increase in
advertising and promotional costs was primarily due to a $0.2
million increase in business development expenses incurred relating
to an increased customer base and a 9.52% increase in the number of
Business Development Officers from 21 as of June 30, 2022 to
23 as of June 30, 2023.
Other operating expenses. The increase in other
operating expenses was primarily due to an overall increase in
travel, conference fees, and professional membership fees during
the three months June 30, 2023, as compared to the three
months ended June 30, 2022.
Provision for Income Taxes
Three months ended June 30, 2023, as
compared to three months ended March 31, 2023
Provision for income taxes for the three months
ended June 30, 2023 decreased by $0.9 million, or 16.85%, to
$4.4 million, as compared to $5.3 million for the three months
ended March 31, 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. The
effective tax rate was 25.86% and 28.86% for the three months ended
June 30, 2023 and March 31, 2023, respectively.
Three months ended June 30, 2023, as
compared to three months ended June 30, 2022
Provision for income taxes increased by $0.3
million, or 8.82%, to $4.4 million for the three months ended
June 30, 2023, as compared to $4.1 million for the three
months ended June 30, 2022, primarily driven by an overall
increase in pre-tax income period over period. This increase was
partially offset by a $0.5 million state tax benefit recorded
during the three months ended June 30, 2023 relating to an
overall reduction in the state tax blended rate since the Company's
inception as a C Corporation. The effective tax rate was 25.86% and
29.07% for the three months ended June 30, 2023 and June 30, 2022,
respectively.
Webcast Details
Five Star Bancorp will host a live webcast for
analysts and investors on Tuesday, July 25, 2023 at 1:00 p.m. ET
(10:00 a.m. PT) to discuss its second 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. Five
Star 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 March 31, 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) |
|
June 30,2023 |
|
March 31,2023 |
|
June 30,2022 |
Revenue and Expense
Data |
|
|
|
|
|
|
Interest and fee income |
|
$ |
42,793 |
|
|
$ |
40,311 |
|
|
$ |
25,999 |
|
Interest expense |
|
|
15,215 |
|
|
|
11,163 |
|
|
|
1,470 |
|
Net interest income |
|
|
27,578 |
|
|
|
29,148 |
|
|
|
24,529 |
|
Provision for credit
losses |
|
|
1,250 |
|
|
|
900 |
|
|
|
2,250 |
|
Net interest income after
provision |
|
|
26,328 |
|
|
|
28,248 |
|
|
|
22,279 |
|
Non-interest income: |
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
135 |
|
|
|
117 |
|
|
|
130 |
|
Gain on sale of loans |
|
|
641 |
|
|
|
598 |
|
|
|
831 |
|
Loan-related fees |
|
|
389 |
|
|
|
308 |
|
|
|
757 |
|
FHLB stock dividends |
|
|
189 |
|
|
|
193 |
|
|
|
99 |
|
Earnings on bank-owned life insurance |
|
|
126 |
|
|
|
102 |
|
|
|
101 |
|
Other income |
|
|
1,340 |
|
|
|
53 |
|
|
|
41 |
|
Total non-interest income |
|
|
2,820 |
|
|
|
1,371 |
|
|
|
1,959 |
|
Non-interest expense: |
|
|
|
|
|
|
Salaries and employee benefits |
|
|
6,421 |
|
|
|
6,618 |
|
|
|
5,553 |
|
Occupancy and equipment |
|
|
551 |
|
|
|
523 |
|
|
|
513 |
|
Data processing and software |
|
|
1,013 |
|
|
|
872 |
|
|
|
739 |
|
FDIC insurance |
|
|
410 |
|
|
|
402 |
|
|
|
245 |
|
Professional services |
|
|
586 |
|
|
|
631 |
|
|
|
568 |
|
Advertising and promotional |
|
|
733 |
|
|
|
418 |
|
|
|
484 |
|
Loan-related expenses |
|
|
324 |
|
|
|
255 |
|
|
|
389 |
|
Other operating expenses |
|
|
1,941 |
|
|
|
1,399 |
|
|
|
1,714 |
|
Total non-interest
expense |
|
|
11,979 |
|
|
|
11,118 |
|
|
|
10,205 |
|
Income before provision for
income taxes |
|
|
17,169 |
|
|
|
18,501 |
|
|
|
14,033 |
|
Provision for income taxes |
|
|
4,440 |
|
|
|
5,340 |
|
|
|
4,080 |
|
Net income |
|
$ |
12,729 |
|
|
$ |
13,161 |
|
|
$ |
9,953 |
|
|
|
|
|
|
|
|
Comprehensive
Income |
|
|
|
|
|
|
Net income |
|
$ |
12,729 |
|
|
$ |
13,161 |
|
|
$ |
9,953 |
|
Net unrealized holding gain
(loss) on securities available-for-sale during the period |
|
|
(1,462 |
) |
|
|
2,140 |
|
|
|
(7,849 |
) |
Income tax expense (benefit)
related to other comprehensive income (loss) |
|
|
(432 |
) |
|
|
632 |
|
|
|
(2,320 |
) |
Other comprehensive income
(loss) |
|
|
(1,030 |
) |
|
|
1,508 |
|
|
|
(5,529 |
) |
Total comprehensive
income |
|
$ |
11,699 |
|
|
$ |
14,669 |
|
|
$ |
4,424 |
|
|
|
|
|
|
|
|
Share and Per Share
Data |
|
|
|
|
|
|
Earnings per common
share: |
|
|
|
|
|
|
Basic |
|
$ |
0.74 |
|
|
$ |
0.77 |
|
|
$ |
0.58 |
|
Diluted |
|
$ |
0.74 |
|
|
$ |
0.77 |
|
|
$ |
0.58 |
|
Book value per share |
|
$ |
15.60 |
|
|
$ |
15.10 |
|
|
$ |
13.52 |
|
Tangible book value per
share(1) |
|
$ |
15.60 |
|
|
$ |
15.10 |
|
|
$ |
13.52 |
|
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 |
|
|
|
|
|
|
|
|
Credit
Quality |
|
|
|
|
|
|
Allowance for credit losses to
period end nonperforming loans |
|
|
11,839.25 |
% |
|
|
8,167.68 |
% |
|
|
5,834.88 |
% |
Nonperforming loans to loans
held for investment |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.02 |
% |
Nonperforming assets to total
assets |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.02 |
% |
Nonperforming loans plus
performing loan modifications to loans held for investment |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.02 |
% |
|
|
|
|
|
|
|
Selected Financial
Ratios |
|
|
|
|
|
|
ROAA |
|
|
1.55 |
% |
|
|
1.65 |
% |
|
|
1.45 |
% |
ROAE |
|
|
19.29 |
% |
|
|
20.94 |
% |
|
|
17.20 |
% |
Net interest margin |
|
|
3.45 |
% |
|
|
3.75 |
% |
|
|
3.71 |
% |
Loan to deposit |
|
|
100.21 |
% |
|
|
98.66 |
% |
|
|
95.69 |
% |
(1) See the section entitled “Non-GAAP Reconciliation
(Unaudited)” for a reconciliation of this non-GAAP financial
measure.
(in thousands) |
|
June 30,2023 |
|
March 31,2023 |
|
June 30,2022 |
Balance Sheet
Data |
|
|
|
|
|
|
Cash and due from financial institutions |
|
$ |
28,568 |
|
|
$ |
26,556 |
|
|
$ |
66,423 |
|
Interest-bearing deposits in
banks |
|
|
271,555 |
|
|
|
321,383 |
|
|
|
204,335 |
|
Time deposits in banks |
|
|
7,343 |
|
|
|
9,617 |
|
|
|
10,841 |
|
Securities -
available-for-sale, at fair value |
|
|
110,794 |
|
|
|
115,140 |
|
|
|
122,426 |
|
Securities - held-to-maturity,
at amortized cost |
|
|
3,486 |
|
|
|
3,514 |
|
|
|
4,477 |
|
Loans held for sale |
|
|
8,559 |
|
|
|
11,315 |
|
|
|
12,985 |
|
Loans held for investment |
|
|
2,927,411 |
|
|
|
2,869,848 |
|
|
|
2,380,511 |
|
Allowance for credit losses -
loans |
|
|
(33,984 |
) |
|
|
(34,172 |
) |
|
|
(25,786 |
) |
Loans held for investment, net
of allowance for credit losses |
|
|
2,893,427 |
|
|
|
2,835,676 |
|
|
|
2,354,725 |
|
FHLB stock |
|
|
15,000 |
|
|
|
10,890 |
|
|
|
10,890 |
|
Operating leases, right-of-use
asset |
|
|
5,032 |
|
|
|
5,175 |
|
|
|
4,472 |
|
Premises and equipment,
net |
|
|
1,599 |
|
|
|
1,677 |
|
|
|
1,768 |
|
Bank-owned life insurance |
|
|
16,897 |
|
|
|
16,771 |
|
|
|
14,444 |
|
Interest receivable and other
assets |
|
|
40,441 |
|
|
|
39,594 |
|
|
|
28,285 |
|
Total assets |
|
$ |
3,402,701 |
|
|
$ |
3,397,308 |
|
|
$ |
2,836,071 |
|
|
|
|
|
|
|
|
Non-interest-bearing
deposits |
|
$ |
833,707 |
|
|
$ |
836,673 |
|
|
$ |
1,006,066 |
|
Interest-bearing deposits |
|
|
2,096,032 |
|
|
|
2,083,733 |
|
|
|
1,495,245 |
|
Total deposits |
|
|
2,929,739 |
|
|
|
2,920,406 |
|
|
|
2,501,311 |
|
Subordinated notes, net |
|
|
73,677 |
|
|
|
73,640 |
|
|
|
28,420 |
|
FHLB advances |
|
|
100,000 |
|
|
|
120,000 |
|
|
|
60,000 |
|
Operating lease liability |
|
|
5,275 |
|
|
|
5,433 |
|
|
|
4,739 |
|
Interest payable and other
liabilities |
|
|
24,870 |
|
|
|
17,173 |
|
|
|
8,401 |
|
Total liabilities |
|
|
3,133,561 |
|
|
|
3,136,652 |
|
|
|
2,602,871 |
|
|
|
|
|
|
|
|
Common stock |
|
|
220,021 |
|
|
|
219,785 |
|
|
|
219,023 |
|
Retained earnings |
|
|
62,095 |
|
|
|
52,817 |
|
|
|
26,924 |
|
Accumulated other
comprehensive loss, net |
|
|
(12,976 |
) |
|
|
(11,946 |
) |
|
|
(12,747 |
) |
Total shareholders’ equity |
|
|
269,140 |
|
|
|
260,656 |
|
|
|
233,200 |
|
Total liabilities and shareholders’ equity |
|
$ |
3,402,701 |
|
|
$ |
3,397,308 |
|
|
$ |
2,836,071 |
|
|
|
|
|
|
|
|
Quarterly Average
Balance Data |
|
|
|
|
|
|
Average loans held for
investment and sale |
|
$ |
2,914,388 |
|
|
$ |
2,836,070 |
|
|
$ |
2,227,215 |
|
Average interest-earning
assets |
|
|
3,210,389 |
|
|
|
3,156,100 |
|
|
|
2,654,681 |
|
Average total assets |
|
|
3,285,805 |
|
|
|
3,225,353 |
|
|
|
2,753,653 |
|
Average deposits |
|
|
2,912,891 |
|
|
|
2,824,391 |
|
|
|
2,477,942 |
|
Average total equity |
|
|
264,688 |
|
|
|
254,927 |
|
|
|
232,156 |
|
|
|
|
|
|
|
|
Capital
Ratios |
|
|
|
|
|
|
Total shareholders’ equity to
total assets |
|
|
7.91 |
% |
|
|
7.67 |
% |
|
|
8.22 |
% |
Tangible shareholders’ equity
to tangible assets(1) |
|
|
7.91 |
% |
|
|
7.67 |
% |
|
|
8.22 |
% |
Total capital (to
risk-weighted assets) |
|
|
12.45 |
% |
|
|
12.50 |
% |
|
|
11.77 |
% |
Tier 1 capital (to
risk-weighted assets) |
|
|
9.07 |
% |
|
|
9.02 |
% |
|
|
9.62 |
% |
Common equity Tier 1 capital
(to risk-weighted assets) |
|
|
9.07 |
% |
|
|
9.02 |
% |
|
|
9.62 |
% |
Tier 1 leverage ratio |
|
|
8.67 |
% |
|
|
8.53 |
% |
|
|
8.81 |
% |
(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.
|
|
As of |
|
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
Book value per share |
|
$ |
15.60 |
|
|
$ |
15.10 |
|
|
$ |
13.52 |
|
Tangible book value per
share |
|
$ |
15.60 |
|
|
$ |
15.10 |
|
|
$ |
13.52 |
|
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:
(in thousands) |
|
Three months ended |
Pre-tax, pre-provision
income |
|
June 30, 2023 |
|
March 31, 2023 |
|
June 30, 2022 |
Pre-tax income |
|
$ |
17,169 |
|
|
$ |
18,501 |
|
|
$ |
14,033 |
|
Add: provision for credit
losses |
|
|
1,250 |
|
|
|
900 |
|
|
|
2,250 |
|
Pre-tax, pre-provision
income |
|
$ |
18,419 |
|
|
$ |
19,401 |
|
|
$ |
16,283 |
|
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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