Five Star Bancorp — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net income increased to $21.9 million for the three months ended September 30, 2026, compared to $19.4 million in the second quarter of 2026 and $16.3 million in the third quarter of 2025.
• Basic and diluted earnings per share reached $0.92, an increase of $0.01 from the second quarter of 2026 and $0.15 from the third quarter of 2025.
• Net interest income rose $4.8 million (10.51%) to $50.9 million from the second quarter of 2026, and increased $11.6 million (29.42%) to $50.9 million from the third quarter of 2025.
• Net interest margin expanded six basis points to 3.69% in the third quarter of 2026, compared to 3.63% in the second quarter and 3.56% in the prior year quarter.
• Non-interest income decreased $0.2 million (9.51%) to $1.7 million from the second quarter of 2026, and decreased $0.3 million (13.84%) to $1.7 million from the third quarter of 2025.
• Non-interest expense increased $1.0 million (4.97%) to $20.6 million from the second quarter of 2026, and increased $4.0 million (24.19%) from the third quarter of 2025.
• The efficiency ratio improved to 39.13% in the third quarter of 2026, down from 40.91% in the second quarter and 40.13% in the prior year quarter.
• Return on average assets (ROAA) was 1.55% for the third quarter of 2026, compared to 1.49% in the second quarter and 1.44% in the prior year quarter.
• Return on average equity (ROAE) was 15.04% for the third quarter of 2026, compared to 16.67% in the second quarter and 15.35% in the prior year quarter.
• Total assets grew to $5.56 billion as of September 30, 2026, an increase of $182.6 million (3.40%) from June 30, 2026, and $804.8 million (16.92%) from December 31, 2025.
• Total loans held for investment increased $184.5 million (4.08%) to $4.70 billion as of September 30, 2026, compared to June 30, 2026, and grew $817.0 million (21.02%) compared to September 30, 2025.
• Total deposits increased $25.1 million (0.52%) to $4.82 billion as of September 30, 2026, driven by a $75.1 million increase in non-wholesale deposits, partially offset by a $50.0 million decrease in wholesale deposits.
• The allowance for credit losses increased to $49.4 million as of September 30, 2026, from $44.4 million at December 31, 2025.
• The ratio of nonperforming loans to loans held for investment decreased to 0.28% at September 30, 2026, from 0.30% at June 30, 2026.
• Common equity Tier 1 capital ratio was 12.52% as of September 30, 2026, up from 9.97% at June 30, 2026.
• Total liquidity was approximately $2.5 billion as of September 30, 2026, compared to $2.3 billion at June 30, 2026.

Guidance and Future Outlook:

• No specific forward-looking financial guidance or quantitative targets for future periods were provided in the press release.
• Management expressed confidence in the company's ability to create lasting value, citing strong credit quality, conservative underwriting, and operating discipline.
• The company highlighted its position to continue organic balance sheet growth following the capital raise.

Business Segments and Product Lines:

• The company expanded its California presence with the opening of a new branch in Lodi and a new administrative office in Calabasas.
• Four key hires were made in Palo Alto to support the high-tech, high-touch relationship-based banking model.
• The number of Business Development Officers increased from 45 at June 30, 2026, to 50 at September 30, 2026.
• Loan originations and advances totaled $1.6 billion during the nine months ended September 30, 2026.
• The loan portfolio included $230.7 million in purchased loans within the consumer section.
• Brokered deposits decreased from $216.4 million in the prior year quarter to zero in the third quarter of 2026.
• Non-wholesale deposits constituted 95.85% of total deposits as of September 30, 2026.
• Insured and collateralized deposits represented 68.08% of total deposits as of September 30, 2026.

Market and Competitive Landscape:

• Net interest margin growth was supported by balance sheet expansion and lower deposit funding costs following three Federal Reserve rate cuts that began in September 2025.
• The effective federal funds rate declined 21 basis points to 3.88% as of September 30, 2026, from 4.09% as of September 30, 2025.
• The company noted a decline in earnings related to investments in venture-backed funds, impacting non-interest income.
• The company maintains a "well-capitalized" status under applicable regulatory guidelines.

Risks and Challenges:

• Nonperforming loans increased to $13.3 million as of September 30, 2026, from $3.1 million at December 31, 2025, primarily due to one Community Reinvestment Act-related credit downgraded to non-accrual status.
• Non-interest income was negatively impacted by a decline in earnings from venture-backed funds and lower loan referral income.
• Non-interest expense increased due to higher salaries and employee benefits resulting from increased headcount, as well as increased recruiter fees.
• Unrealized losses on available-for-sale securities increased to $12.4 million as of September 30, 2026, from $9.4 million at June 30, 2026.
• The company faces risks associated with interest rate changes, loan growth, and the performance of its investment portfolio, as detailed in the "Forward-Looking Statements" section.

Management Commentary and Tone:

• James E. Beckwith, President and Chief Executive Officer, described the third quarter results as "steadfast."
• Management emphasized the strength of the team, authentic service, technology, and prudent portfolio management.
• The tone reflected confidence in the company's capital base and capacity for future organic growth.
• Management thanked employees for maintaining the bank as a safe and trusted partner.

Other Key Points:

• The company completed an underwritten public offering of 3,133,750 shares of common stock, raising approximately $130.0 million in net proceeds.
• The Board of Directors declared a cash dividend of $0.25 per share for the third quarter of 2026, an increase of $0.05 from the 2025 dividend.
• An additional cash dividend of $0.25 per share was declared on October 15, 2026, with payment expected on November 9, 2026.
• The company hosted a live webcast for analysts and investors on October 27, 2026.
• The bank operates ten branches in California.