Five Star Bancorp (Nasdaq: FSBC) (the “Company” or “Five
Star”), the holding company for Five Star Bank (the “Bank”), today
reported net income of $13.2 million for the three months ended
March 31, 2023, as compared to $13.3 million for the three
months ended December 31, 2022 and $9.9 million for the three
months ended March 31, 2022.
Financial Highlights
Performance highlights and other developments
for the Company for the periods noted below included the
following:
- Pre-tax income,
pre-tax, pre-provision income, net income, and earnings per share
were as follows for the periods indicated:
|
Three months ended |
(dollars in thousands,
except share and per share data) |
March 31,2023 |
|
December 31,2022 |
|
March 31,2022 |
Return on average assets (“ROAA”) |
|
1.65 |
% |
|
|
1.70 |
% |
|
|
1.53 |
% |
Return on average equity
(“ROAE”) |
|
20.94 |
% |
|
|
21.50 |
% |
|
|
17.07 |
% |
Pre-tax income |
$ |
18,501 |
|
|
$ |
18,769 |
|
|
$ |
13,522 |
|
Pre-tax, pre-provision
income(1) |
$ |
19,401 |
|
|
$ |
20,019 |
|
|
$ |
14,472 |
|
Net income |
$ |
13,161 |
|
|
$ |
13,282 |
|
|
$ |
9,862 |
|
Basic earnings per common
share |
$ |
0.77 |
|
|
$ |
0.77 |
|
|
$ |
0.58 |
|
Diluted earnings per common
share |
$ |
0.77 |
|
|
$ |
0.77 |
|
|
$ |
0.58 |
|
Weighted average basic common
shares outstanding |
|
17,150,174 |
|
|
|
17,143,920 |
|
|
|
17,102,508 |
|
Weighted average diluted
common shares outstanding |
|
17,194,884 |
|
|
|
17,179,863 |
|
|
|
17,164,519 |
|
Shares outstanding at end of
period |
|
17,258,904 |
|
|
|
17,241,926 |
|
|
|
17,246,199 |
|
(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:
“Disruption in the market historically leads to
opportunities at Five Star Bank and recent events in the banking
industry are no exception. In the first quarter of 2023, we
experienced record deposit growth with the onboarding of new
customers and the opening of new accounts. We attribute this growth
to seizing opportunities, the strength of our brand, and our
differentiated customer experience, which have earned us the trust
of our customers, community, and employees. We will continue to
expand our verticals to meet this demand in the markets we serve
and will focus on disciplined business practices to endure any
market condition.
This quarter, we declared an increased dividend
of $0.20 per share, which exemplifies our focus on shareholder
value. We are also pleased to have 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.”
- Total deposits
increased by 4.97%, or $138.4 million, in the three months ended
March 31, 2023. Total deposits increased by $21.9 million
during the month of March 2023.
- Cash and cash
equivalents as of March 31, 2023 were $347.9 million,
representing 11.91% of total deposits at March 31, 2023,
compared to 9.35% as of December 31, 2022.
- Adoption of
Accounting Standards Update No. 2016-13, Financial Instruments –
Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments and all subsequent amendments that modified
ASU 2016-13 (collectively, “ASC 326”) on January 1, 2023. ASC 326
replaced the former “incurred loss” model for recognizing credit
losses with an “expected loss” model. The impact of the adoption
included an increase to the allowance for credit losses of
approximately $5.3 million, as well as an increase to the reserve
for unfunded commitments of approximately $1.1 million. The impact
of the adoption also included a decrease in retained earnings, net
of tax effect, of approximately $4.5 million. For purposes of
regulatory capital calculations, an election was made to phase-in
the day one impact of adopting ASC 326 on retained earnings over
three years. For the three months ended March 31, 2023, the
provision for credit losses was $0.9 million.
- Net interest
margin of 3.75% for the three months ended March 31, 2023 was
consistent with expectations, as the effective federal funds rate
increased to 4.83% as of March 31, 2023.
- Other
comprehensive income improved by $1.5 million during the three
months ended March 31, 2023 as unrealized losses, net of tax
effect, declined on available-for-sale debt securities from $13.4
million to $11.9 million as of December 31, 2022 and
March 31, 2023, respectively. Total held-to-maturity and
available-for-sale securities as of March 31, 2023 represented
0.11% and 3.46% of total interest-earning assets,
respectively.
- Consistent,
disciplined management of expenses contributed to our efficiency
ratio of approximately 36.43% for the three months ended
March 31, 2023.
- Common equity
Tier 1 capital ratio was 9.02% and 8.99% as of March 31, 2023
and December 31, 2022, 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 March 31, 2023 was as
follows:
(dollars in
thousands) |
March 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Loans held for investment |
$ |
2,869,848 |
|
|
$ |
2,791,326 |
|
|
$ |
78,522 |
|
|
2.81 |
% |
Non-interest-bearing
deposits |
|
836,673 |
|
|
|
971,246 |
|
|
|
(134,573 |
) |
|
(13.86 |
)% |
Interest-bearing deposits |
|
2,083,733 |
|
|
|
1,810,758 |
|
|
|
272,975 |
|
|
15.08 |
% |
|
|
|
|
|
|
|
|
(dollars in
thousands) |
March 31,2023 |
|
March 31,2022 |
|
$ Change |
|
% Change |
Loans held for investment |
$ |
2,869,848 |
|
|
$ |
2,080,158 |
|
|
$ |
789,690 |
|
|
37.96 |
% |
Non-interest-bearing
deposits |
|
836,673 |
|
|
|
941,285 |
|
|
|
(104,612 |
) |
|
(11.11 |
)% |
Interest-bearing deposits |
|
2,083,733 |
|
|
|
1,561,807 |
|
|
|
521,926 |
|
|
33.42 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
At March 31, 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, as compared to $2.8
billion, $3.2 billion, and $2.8 billion, respectively, at
December 31, 2022.
- The ratio of
nonperforming loans to loans held for investment, or total loans at
period end, remained consistent at 0.01% at December 31, 2022
compared to 0.01% at March 31, 2023.
- The Company’s
Board of Directors declared, and the Company subsequently paid, a
cash dividend of $0.15 per share during the three months ended
March 31, 2023. The Company's Board of Directors declared a
cash dividend of $0.20 per share on April 20, 2023, representing an
increase of 33.33% over the most recent cash dividend
declared.
- For the three
months ended March 31, 2023, net interest margin was 3.75%, as
compared to 3.83% for the three months ended December 31, 2022
and 3.60% for the three months ended March 31, 2022.
Summary Results
Three months ended March 31, 2023, as
compared to three months ended December 31, 2022
The Company’s net income for the three months
ended March 31, 2023 compared to the three months ended
December 31, 2022 remained relatively consistent, due to a
decrease in non-interest income attributable to lower loan
production and a corresponding increase in non-interest expense,
partially offset by a lower provision for credit loss due to lower
loan growth. Non-interest expense grew due to an increase in
salaries and benefits, partially offset by a decrease in other
operating expenses.
Three months ended March 31, 2023, as
compared to three months ended March 31, 2022
The increase in the Company’s net income for the
three months ended March 31, 2023 compared to the three months
ended March 31, 2022 was primarily due to an increase in net
interest income of $7.3 million, driven by loan growth and
increased yields. The overall increase in net interest income was
partially offset by a decrease in non-interest income and higher
non-interest expenses due to growth at the Bank.
The following is a summary of the components of
the Company’s operating results and performance ratios for the
periods indicated:
|
|
Three months ended |
|
|
|
|
(dollars in thousands,
except per share data) |
|
March 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Selected operating data: |
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
29,148 |
|
|
$ |
29,135 |
|
|
$ |
13 |
|
|
0.04 |
% |
Provision for credit losses |
|
|
900 |
|
|
|
1,250 |
|
|
|
(350 |
) |
|
(28.00 |
)% |
Non-interest income |
|
|
1,371 |
|
|
|
1,601 |
|
|
|
(230 |
) |
|
(14.37 |
)% |
Non-interest expense |
|
|
11,118 |
|
|
|
10,717 |
|
|
|
401 |
|
|
3.74 |
% |
Pre-tax income |
|
|
18,501 |
|
|
|
18,769 |
|
|
|
(268 |
) |
|
(1.43 |
)% |
Provision for income taxes |
|
|
5,340 |
|
|
|
5,487 |
|
|
|
(147 |
) |
|
(2.68 |
)% |
Net income |
|
$ |
13,161 |
|
|
$ |
13,282 |
|
|
$ |
(121 |
) |
|
(0.91 |
)% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.77 |
|
|
$ |
0.77 |
|
|
$ |
— |
|
|
— |
% |
Diluted |
|
$ |
0.77 |
|
|
$ |
0.77 |
|
|
$ |
— |
|
|
— |
% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
ROAA |
|
|
1.65 |
% |
|
|
1.70 |
% |
|
|
|
|
ROAE |
|
|
20.94 |
% |
|
|
21.50 |
% |
|
|
|
|
Net interest margin |
|
|
3.75 |
% |
|
|
3.83 |
% |
|
|
|
|
Cost of funds |
|
|
1.53 |
% |
|
|
1.16 |
% |
|
|
|
|
Efficiency ratio |
|
|
36.43 |
% |
|
|
34.87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
(dollars in thousands,
except per share data) |
|
March 31,2023 |
|
March 31,2022 |
|
$ Change |
|
% Change |
Selected operating data: |
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
29,148 |
|
|
$ |
21,883 |
|
|
$ |
7,265 |
|
|
33.20 |
% |
Provision for credit losses |
|
|
900 |
|
|
|
950 |
|
|
|
(50 |
) |
|
(5.26 |
)% |
Non-interest income |
|
|
1,371 |
|
|
|
2,164 |
|
|
|
(793 |
) |
|
(36.65 |
)% |
Non-interest expense |
|
|
11,118 |
|
|
|
9,575 |
|
|
|
1,543 |
|
|
16.11 |
% |
Pre-tax income |
|
|
18,501 |
|
|
|
13,522 |
|
|
|
4,979 |
|
|
36.82 |
% |
Provision for income taxes |
|
|
5,340 |
|
|
|
3,660 |
|
|
|
1,680 |
|
|
45.90 |
% |
Net income |
|
$ |
13,161 |
|
|
$ |
9,862 |
|
|
$ |
3,299 |
|
|
33.45 |
% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.77 |
|
|
$ |
0.58 |
|
|
$ |
0.19 |
|
|
32.76 |
% |
Diluted |
|
$ |
0.77 |
|
|
$ |
0.58 |
|
|
$ |
0.19 |
|
|
32.76 |
% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
ROAA |
|
|
1.65 |
% |
|
|
1.53 |
% |
|
|
|
|
ROAE |
|
|
20.94 |
% |
|
|
17.07 |
% |
|
|
|
|
Net interest margin |
|
|
3.75 |
% |
|
|
3.60 |
% |
|
|
|
|
Cost of funds |
|
|
1.53 |
% |
|
|
0.17 |
% |
|
|
|
|
Efficiency ratio |
|
|
36.43 |
% |
|
|
39.82 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Summary
(dollars in
thousands) |
|
March 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Selected financial condition
data: |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
3,397,308 |
|
|
$ |
3,227,159 |
|
|
$ |
170,149 |
|
|
5.27 |
% |
Cash and cash equivalents |
|
|
347,939 |
|
|
|
259,991 |
|
|
|
87,948 |
|
|
33.83 |
% |
Total loans held for investment |
|
|
2,869,848 |
|
|
|
2,791,326 |
|
|
|
78,522 |
|
|
2.81 |
% |
Total investments |
|
|
118,654 |
|
|
|
119,744 |
|
|
|
(1,090 |
) |
|
(0.91 |
)% |
Total liabilities |
|
|
3,136,652 |
|
|
|
2,974,334 |
|
|
|
162,318 |
|
|
5.46 |
% |
Total deposits |
|
|
2,920,406 |
|
|
|
2,782,004 |
|
|
|
138,402 |
|
|
4.97 |
% |
Subordinated notes, net |
|
|
73,640 |
|
|
|
73,606 |
|
|
|
34 |
|
|
0.05 |
% |
Total shareholders’ equity |
|
|
260,656 |
|
|
|
252,825 |
|
|
|
7,831 |
|
|
3.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Insured and collateralized deposits were approximately $1.9
billion, representing approximately 64.53% of total deposits as of
March 31, 2023.
- Commercial and consumer deposit
accounts constituted approximately 75% of total deposits. Deposit
relationships of at least $5 million represented approximately 64%
of total deposits and had an average age of approximately 9.8 years
as of March 31, 2023.
- Cash and cash
equivalents as of March 31, 2023 were $347.9 million,
representing 11.91% of total deposits at March 31, 2023,
compared to 9.35% as of December 31, 2022.
- The Federal Reserve
created the Bank Term Funding Program in response to recent events,
which allows any federally insured deposit institution to pledge
its investment portfolio at par as collateral value. At March 31,
2023, there had been no need for the Bank’s use of the
facility.
- Total liquidity
(consisting of cash and cash equivalents and unused and available
borrowing capacity as set forth below) was approximately $892.7
million as of March 31, 2023.
|
March 31, 2023 |
|
Available |
(dollars in
thousands) |
Line of Credit |
|
Borrowings |
|
Federal Home Loan Bank of San Francisco (“FHLB”) advances |
$ |
398,145 |
|
|
$ |
120,000 |
|
|
$ |
278,145 |
|
Federal Reserve discount
window |
|
76,665 |
|
|
|
— |
|
|
|
76,665 |
|
Correspondent bank lines of
credit |
|
190,000 |
|
|
|
— |
|
|
|
190,000 |
|
Cash and cash equivalents |
|
— |
|
|
|
— |
|
|
|
347,939 |
|
Total |
$ |
664,810 |
|
|
$ |
120,000 |
|
|
$ |
892,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The increase in total assets from
December 31, 2022 to March 31, 2023 was primarily due to
an $87.9 million increase in cash and cash equivalents and
a $78.5 million increase in total loans held for
investment. The increase in cash and cash equivalents primarily
resulted from net cash provided from financing activities of $155.8
million, partially offset by net cash used in investing activities
of $68.6 million. The $78.5 million increase in total loans held
for investment between December 31, 2022 and March 31,
2023 was a result of $135.0 million in loan originations, partially
offset by $56.5 million in loan payoffs and paydowns.
The increase in total liabilities from
December 31, 2022 to March 31, 2023 was primarily
attributable to an increase in FHLB advances of $20.0 million and
an increase in deposits of $138.4 million, largely due to
increases in money market, interest checking, and time deposits
over $250 thousand of $220.8 million, $33.6 million, and $30.9
million, respectively, partially offset by decreases in
non-interest-bearing and savings of $134.6 million and $11.5
million, respectively.
Total shareholders’ equity increased by $7.8
million from $252.8 million at December 31, 2022 to $260.7
million at March 31, 2023. The increase in total shareholders’
equity was primarily a result of net income recognized of $13.2
million and $1.5 million in other comprehensive income, partially
offset by $2.6 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 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 |
|
|
|
|
(dollars in
thousands) |
|
March 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Interest and fee income |
|
$ |
40,311 |
|
|
$ |
37,402 |
|
|
$ |
2,909 |
|
|
7.78 |
% |
Interest expense |
|
|
11,163 |
|
|
|
8,267 |
|
|
|
2,896 |
|
|
35.03 |
% |
Net interest income |
|
$ |
29,148 |
|
|
$ |
29,135 |
|
|
$ |
13 |
|
|
0.04 |
% |
Net interest margin |
|
|
3.75 |
% |
|
|
3.83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
(dollars in
thousands) |
|
March 31,2023 |
|
March 31,2022 |
|
$ Change |
|
% Change |
Interest and fee income |
|
$ |
40,311 |
|
|
$ |
22,871 |
|
|
$ |
17,440 |
|
|
76.25 |
% |
Interest expense |
|
|
11,163 |
|
|
|
988 |
|
|
|
10,175 |
|
|
1,029.86 |
% |
Net interest income |
|
$ |
29,148 |
|
|
$ |
21,883 |
|
|
$ |
7,265 |
|
|
33.20 |
% |
Net interest margin |
|
|
3.75 |
% |
|
|
3.60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the components of net
interest income and net interest margin for the quarterly periods
indicated:
|
|
Three months ended |
|
|
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
(dollars in
thousands) |
|
AverageBalance |
|
InterestIncome/Expense |
|
Yield/ Rate |
|
AverageBalance |
|
InterestIncome/Expense |
|
Yield/ Rate |
|
AverageBalance |
|
InterestIncome/Expense |
|
Yield/ Rate |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning deposits with banks |
|
$ |
200,541 |
|
|
$ |
2,167 |
|
|
4.38 |
% |
|
$ |
200,395 |
|
|
$ |
1,841 |
|
|
3.64 |
% |
|
$ |
339,737 |
|
|
$ |
192 |
|
|
0.23 |
% |
Investment securities |
|
|
119,489 |
|
|
|
650 |
|
|
2.21 |
% |
|
|
117,364 |
|
|
|
643 |
|
|
2.17 |
% |
|
|
148,736 |
|
|
|
567 |
|
|
1.54 |
% |
Loans held for investment and sale |
|
|
2,836,070 |
|
|
|
37,494 |
|
|
5.36 |
% |
|
|
2,703,865 |
|
|
|
34,918 |
|
|
5.12 |
% |
|
|
1,977,509 |
|
|
|
22,112 |
|
|
4.53 |
% |
Total interest-earning assets |
|
|
3,156,100 |
|
|
|
40,311 |
|
|
5.18 |
% |
|
|
3,021,624 |
|
|
|
37,402 |
|
|
4.91 |
% |
|
|
2,465,982 |
|
|
|
22,871 |
|
|
3.76 |
% |
Interest receivable and other assets, net |
|
|
69,253 |
|
|
|
|
|
|
|
73,664 |
|
|
|
|
|
|
|
150,116 |
|
|
|
|
|
Total assets |
|
$ |
3,225,353 |
|
|
|
|
|
|
$ |
3,095,288 |
|
|
|
|
|
|
$ |
2,616,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’
equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing transaction accounts |
|
$ |
379,593 |
|
|
$ |
433 |
|
|
0.46 |
% |
|
$ |
223,473 |
|
|
$ |
174 |
|
|
0.31 |
% |
|
$ |
276,690 |
|
|
$ |
70 |
|
|
0.10 |
% |
Savings accounts |
|
|
155,233 |
|
|
|
545 |
|
|
1.42 |
% |
|
|
136,753 |
|
|
|
247 |
|
|
0.72 |
% |
|
|
90,815 |
|
|
|
25 |
|
|
0.11 |
% |
Money market accounts |
|
|
1,087,122 |
|
|
|
5,436 |
|
|
2.03 |
% |
|
|
1,060,597 |
|
|
|
3,652 |
|
|
1.37 |
% |
|
|
920,767 |
|
|
|
367 |
|
|
0.16 |
% |
Time accounts |
|
|
300,952 |
|
|
|
2,964 |
|
|
3.99 |
% |
|
|
299,771 |
|
|
|
2,467 |
|
|
3.26 |
% |
|
|
128,183 |
|
|
|
83 |
|
|
0.26 |
% |
Subordinated debt and other borrowings |
|
|
125,691 |
|
|
|
1,785 |
|
|
5.76 |
% |
|
|
114,858 |
|
|
|
1,727 |
|
|
5.96 |
% |
|
|
28,393 |
|
|
|
443 |
|
|
6.33 |
% |
Total interest-bearing liabilities |
|
|
2,048,591 |
|
|
|
11,163 |
|
|
2.21 |
% |
|
|
1,835,452 |
|
|
|
8,267 |
|
|
1.79 |
% |
|
|
1,444,848 |
|
|
|
988 |
|
|
0.28 |
% |
Demand accounts |
|
|
901,491 |
|
|
|
|
|
|
|
997,815 |
|
|
|
|
|
|
|
922,128 |
|
|
|
|
|
Interest payable and other liabilities |
|
|
20,344 |
|
|
|
|
|
|
|
17,002 |
|
|
|
|
|
|
|
14,800 |
|
|
|
|
|
Shareholders’ equity |
|
|
254,927 |
|
|
|
|
|
|
|
245,019 |
|
|
|
|
|
|
|
234,322 |
|
|
|
|
|
Total liabilities &
shareholders’ equity |
|
$ |
3,225,353 |
|
|
|
|
|
|
$ |
3,095,288 |
|
|
|
|
|
|
$ |
2,616,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
2.97 |
% |
|
|
|
|
|
3.12 |
% |
|
|
|
|
|
3.48 |
% |
Net interest
income/margin |
|
|
|
$ |
29,148 |
|
|
3.75 |
% |
|
|
|
$ |
29,135 |
|
|
3.83 |
% |
|
|
|
$ |
21,883 |
|
|
3.60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Factors affecting interest income and yields
Interest income increased during the three
months ended March 31, 2023, as compared to the three months
ended December 31, 2022, due to the following:
- Rates. The
average yields on interest-earning assets were 5.18% and 4.91% for
the three months ended March 31, 2023 and December 31,
2022, respectively. The increase in yields period-over-period was
primarily due to increased rates earned on loans held for
investment and sale originated in the current environment of rising
rates, and increases in yields earned on interest-earning deposits
with banks.
- Volume. Average
interest-earning assets increased by approximately $134.5 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 March 31, 2023.
Interest income increased during the three
months ended March 31, 2023, as compared to the three months
ended March 31, 2022, due to the following:
- Rates. The
average yields on interest-earning assets were 5.18% and 3.76% for
the three months ended March 31, 2023 and March 31, 2022,
respectively. The increase in yields period-over-period was
primarily due to increased rates earned on loans held for
investment and sale originated in the current environment of rising
rates, and increases in yields earned on interest-earning deposits
with banks.
- Volume. Average
interest-earning assets increased by approximately $690.1 million
period-over-period, driven by new loan originations which drove
increases in the average daily balances of loans for the three
months ended March 31, 2023.
Factors affecting interest expense and rates
Interest expense increased during the three
months ended March 31, 2023, as compared to the three months
ended December 31, 2022, due to the following:
- Rates. The
average costs of interest-bearing liabilities were 2.21% and 1.79%
for the three months ended March 31, 2023 and
December 31, 2022, respectively. The increase in cost
period-over-period was due to increases in the rates paid on
interest-bearing deposit accounts, with the most significant rate
increases in time and savings accounts. The average cost of
subordinated debt and other borrowings decreased from 5.96% to
5.76% for the three months ended December 31, 2022 and
March 31, 2023, respectively, due to a lower rate on
subordinated debt outstanding in the three months ended
March 31, 2023 as subordinated debt expense in the three
months ended December 31, 2022 consisted of debt redeemed in
December 2022 at higher rates, partially offset by an increase in
rates on FHLB advances during the same time period. Additionally,
the cost of funds increased from 1.16% for the quarter ended
December 31, 2022, to 1.53% for the quarter ended
March 31, 2023.
- Volume. Average
interest-bearing liabilities increased by $213.1 million
period-over-period, primarily driven by increases in average
balances for interest-bearing deposit accounts, with the most
substantial average balance increase in interest-bearing
transaction accounts. Average subordinated debt and other
borrowings increased by $10.8 million period-over-period, due to an
increase in the average balance of FHLB advances that was partly
offset by a decrease in the average balance of subordinated
debt.
Interest expense increased during the three
months ended March 31, 2023, as compared to the three months
ended March 31, 2022, due to the following:
- Rates. The
average costs of interest-bearing liabilities were 2.21% and 0.28%
for the three months ended March 31, 2023 and March 31,
2022, respectively. The increase in cost period-over-period was due
to increases in the rates paid on interest-bearing deposit
accounts, with the most significant increases in time and money
market accounts. The average cost of subordinated debt and other
borrowings decreased from 6.33% to 5.76% for the three months ended
March 31, 2022 and March 31, 2023, respectively, due to a
reduction of interest expenses as a percentage of the average
balance during the three months ended March 31, 2023.
Additionally, the cost of funds increased from 0.17% for the
quarter ended March 31, 2022 to 1.53% for the quarter ended
March 31, 2023.
- Volume. Average
interest-bearing liabilities increased by $603.7 million
period-over-period, primarily driven by increases in average
balances for interest-bearing deposit accounts, with the most
substantial average balance increases in time accounts. Average
subordinated debt and other borrowings increased by $97.3 million
period-over-period, consisting of FHLB advances which did not occur
during the three months ended March 31, 2022, combined with an
increase in the average balance of subordinated debt.
Asset Quality
Allowance for Credit Losses
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 resulted in a lack of comparability between 2022 and 2023
quarterly periods. Refer to information below on the provision for
credit losses recorded during the three months ended March 31,
2023.
At March 31, 2023, the Company’s allowance
for credit losses was $34.2 million, as compared to $28.4 million
at December 31, 2022. The $5.8 million increase in the
allowance is due to a $5.3 million adjustment recorded in
connection with the adoption of CECL and a $0.9 million provision
for credit losses recorded during the three months ended
March 31, 2023, partially offset by net charge-offs of $0.4
million 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 March 31, 2023. Loans designated as
substandard remained largely unchanged at $0.4 million at both
December 31, 2022 and March 31, 2023. The provision for
credit losses recorded during the three months ended March 31,
2023 was primarily related to loan growth. There were no loans with
doubtful risk grades at March 31, 2023 or December 31,
2022.
A summary of the allowance for credit losses by
loan class is as follows:
|
|
March 31, 2023 |
|
December 31, 2022 |
(dollars in
thousands) |
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
Real estate: |
|
|
|
|
|
|
|
|
Commercial |
|
$ |
26,846 |
|
|
78.56 |
% |
|
$ |
19,216 |
|
|
67.69 |
% |
Commercial land and development |
|
|
224 |
|
|
0.66 |
% |
|
|
54 |
|
|
0.19 |
% |
Commercial construction |
|
|
1,423 |
|
|
4.16 |
% |
|
|
645 |
|
|
2.27 |
% |
Residential construction |
|
|
173 |
|
|
0.51 |
% |
|
|
49 |
|
|
0.17 |
% |
Residential |
|
|
179 |
|
|
0.52 |
% |
|
|
175 |
|
|
0.62 |
% |
Farmland |
|
|
217 |
|
|
0.64 |
% |
|
|
644 |
|
|
2.27 |
% |
Commercial: |
|
|
|
|
|
|
|
|
Secured |
|
|
4,215 |
|
|
12.33 |
% |
|
|
7,098 |
|
|
25.00 |
% |
Unsecured |
|
|
150 |
|
|
0.44 |
% |
|
|
116 |
|
|
0.41 |
% |
Consumer and other |
|
|
400 |
|
|
1.17 |
% |
|
|
347 |
|
|
1.22 |
% |
Unallocated |
|
|
345 |
|
|
1.01 |
% |
|
|
45 |
|
|
0.16 |
% |
Total allowance for credit
losses |
|
$ |
34,172 |
|
|
100.00 |
% |
|
$ |
28,389 |
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The ratio of allowance for credit losses to
loans held for investment, or total loans at period end, was 1.19%
at March 31, 2023, as compared to 1.02% at December 31,
2022.
Non-interest Income
Three months ended March 31, 2023, as
compared to three months ended December 31, 2022
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Three months ended |
|
|
|
|
(dollars in
thousands) |
|
March 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
117 |
|
|
$ |
97 |
|
|
$ |
20 |
|
|
20.62 |
% |
Gain on sale of loans |
|
|
598 |
|
|
|
637 |
|
|
|
(39 |
) |
|
(6.12 |
)% |
Loan-related fees |
|
|
308 |
|
|
|
407 |
|
|
|
(99 |
) |
|
(24.32 |
)% |
FHLB stock dividends |
|
|
193 |
|
|
|
193 |
|
|
|
— |
|
|
— |
% |
Earnings on bank-owned life
insurance |
|
|
102 |
|
|
|
119 |
|
|
|
(17 |
) |
|
(14.29 |
)% |
Other income |
|
|
53 |
|
|
|
148 |
|
|
|
(95 |
) |
|
(64.19 |
)% |
Total non-interest income |
|
$ |
1,371 |
|
|
$ |
1,601 |
|
|
$ |
(230 |
) |
|
(14.37 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of loans. The decrease in gain on
sale of loans resulted primarily from a decline in the volume of
loans sold. During the three months ended March 31, 2023,
loans totaling $12.7 million were sold with an effective yield of
4.72% compared to the three months ended December 31, 2022,
when loans totaling $14.5 million were sold with an effective yield
of 4.40%.
Loan-related fees. The decrease in loan-related
fees resulted primarily from a decline of approximately $0.1
million of fee income earned on SBA 7(a) loans during the three
months ended March 31, 2023 compared to the three months ended
December 31, 2022.
Other income. The decrease in other income resulted primarily
from a $0.1 million gain recorded on a distribution received on an
investment in a venture-backed fund during the three months ended
December 31, 2022, which did not recur during the three months
ended March 31, 2023.
Three months ended March 31, 2023, as
compared to three months ended March 31, 2022
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Three months ended |
|
|
|
(dollars in
thousands) |
|
March 31,2023 |
|
March 31,2022 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
117 |
|
|
$ |
108 |
|
|
$ |
9 |
|
|
8.33 |
% |
Net gain on sale of
securities |
|
|
— |
|
|
|
5 |
|
|
|
(5 |
) |
|
(100.00 |
)% |
Gain on sale of loans |
|
|
598 |
|
|
|
918 |
|
|
|
(320 |
) |
|
(34.86 |
)% |
Loan-related fees |
|
|
308 |
|
|
|
596 |
|
|
|
(288 |
) |
|
(48.32 |
)% |
FHLB stock dividends |
|
|
193 |
|
|
|
102 |
|
|
|
91 |
|
|
89.22 |
% |
Earnings on bank-owned life
insurance |
|
|
102 |
|
|
|
90 |
|
|
|
12 |
|
|
13.33 |
% |
Other income |
|
|
53 |
|
|
|
345 |
|
|
|
(292 |
) |
|
(84.64 |
)% |
Total non-interest income |
|
$ |
1,371 |
|
|
$ |
2,164 |
|
|
$ |
(793 |
) |
|
(36.65 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of loans. The decrease in gain on
sale of loans related primarily to an overall decline in the
effective yields on loans sold during the three months ended
March 31, 2023 compared to the three months ended
March 31, 2022. During the three months ended March 31,
2023, approximately $12.7 million of loans were sold with an
effective yield of 4.72%, as compared to approximately $11.7
million of loans sold with an effective yield of 7.84% during the
three months ended March 31, 2022.
Loan-related fees. The decrease in loan-related
fees was primarily a result of $0.3 million of swap referral fees
recognized during the three months ended March 31, 2022 which
did not recur in the three months ended March 31, 2023.
Other income. The decrease in other income resulted primarily
from a $0.3 million gain recorded on a distribution received on an
investment in a venture-backed fund during the three months ended
March 31, 2022 which did not recur during the three months
ended March 31, 2023.
Non-interest Expense
Three months ended March 31, 2023, as
compared to three months ended December 31, 2022
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Three months ended |
|
|
|
|
(dollars in
thousands) |
|
March 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
6,618 |
|
|
$ |
5,698 |
|
|
$ |
920 |
|
|
16.15 |
% |
Occupancy and equipment |
|
|
523 |
|
|
|
511 |
|
|
|
12 |
|
|
2.35 |
% |
Data processing and
software |
|
|
872 |
|
|
|
839 |
|
|
|
33 |
|
|
3.93 |
% |
Federal Deposit Insurance
Corporation (“FDIC”) insurance |
|
|
402 |
|
|
|
245 |
|
|
|
157 |
|
|
64.08 |
% |
Professional services |
|
|
631 |
|
|
|
553 |
|
|
|
78 |
|
|
14.10 |
% |
Advertising and
promotional |
|
|
418 |
|
|
|
568 |
|
|
|
(150 |
) |
|
(26.41 |
)% |
Loan-related expenses |
|
|
255 |
|
|
|
358 |
|
|
|
(103 |
) |
|
(28.77 |
)% |
Other operating expenses |
|
|
1,399 |
|
|
|
1,945 |
|
|
|
(546 |
) |
|
(28.07 |
)% |
Total non-interest expense |
|
$ |
11,118 |
|
|
$ |
10,717 |
|
|
$ |
401 |
|
|
3.74 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 1.69% increase in headcount and recognition of employer
taxes and 401(k) contributions recorded for bonuses and commissions
paid during the three months ended March 31, 2023, as compared
to the three months ended December 31, 2022; (ii) a $0.7
million decrease in loan origination costs due to lower loan
production; and (iii) a $0.2 million increase in estimated bonus
expense based on increased headcount and salaries. These increases
were partially offset by $0.6 million of lower commission expenses
due to lower loan production during the three months ended
March 31, 2023, as compared to the three months ended
December 31, 2022.
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.
Advertising and promotional. The decrease
related primarily to an overall decline in events attended and
donations made, as more events were scheduled during the three
months ended December 31, 2022 than the three months ended
March 31, 2023.
Loan-related expenses. Loan-related expenses
decreased primarily as a result of a net overall decrease in loan
expenses incurred to support loan production during the three
months ended March 31, 2023, as compared to the three months
ended December 31, 2022, including decreased expenses for
insurance and taxes, environmental reports, and inspections.
Other operating expenses. The decrease in other
operating expenses was primarily due to $0.3 million of
subordinated debt issuance costs recognized during the three months
ended December 31, 2022 in connection with the redemption of
subordinated notes in December 2022, combined with a $0.2 million
decrease in travel, conference fees, and professional membership
fees during the three months ended March 31, 2023, as compared
to the three months ended December 31, 2022.
Three months ended March 31, 2023, as
compared to three months ended March 31, 2022
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Three months ended |
|
|
|
|
(dollars in
thousands) |
|
March 31,2023 |
|
March 31,2022 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
6,618 |
|
|
$ |
5,675 |
|
|
$ |
943 |
|
|
16.62 |
% |
Occupancy and equipment |
|
|
523 |
|
|
|
520 |
|
|
|
3 |
|
|
0.58 |
% |
Data processing and
software |
|
|
872 |
|
|
|
716 |
|
|
|
156 |
|
|
21.79 |
% |
FDIC insurance |
|
|
402 |
|
|
|
165 |
|
|
|
237 |
|
|
143.64 |
% |
Professional services |
|
|
631 |
|
|
|
554 |
|
|
|
77 |
|
|
13.90 |
% |
Advertising and
promotional |
|
|
418 |
|
|
|
344 |
|
|
|
74 |
|
|
21.51 |
% |
Loan-related expenses |
|
|
255 |
|
|
|
278 |
|
|
|
(23 |
) |
|
(8.27 |
)% |
Other operating expenses |
|
|
1,399 |
|
|
|
1,323 |
|
|
|
76 |
|
|
5.74 |
% |
Total non-interest expense |
|
$ |
11,118 |
|
|
$ |
9,575 |
|
|
$ |
1,543 |
|
|
16.11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits. The increase in
salaries and employee benefits was primarily a result of: (i) a
$0.7 million increase in salaries, insurance, and benefits as a
result of a 7.10% increase in headcount and recognition of employer
taxes and 401(k) contributions recorded for bonuses and commissions
paid during the three months ended March 31, 2023, as compared
to the three months ended March 31, 2022; (ii) a $0.7 million
decrease in loan origination costs due to lower loan production;
and (iii) a $0.3 million increase in estimated bonus expense based
on increased headcount and salaries. These increases were partially
offset by $0.7 million of lower commission expenses due to lower
loan production during the three months ended March 31, 2023,
as compared to the three months ended March 31, 2022.
Data processing and software. Data processing
and software increased, 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) 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 March 31, 2023 compared to the
three months ended March 31, 2022 due to a $539.7 million
increase in the assessment base period-over-period.
Provision for Income Taxes
Three months ended March 31, 2023, as
compared to three months ended December 31, 2022
Provision for income taxes for the quarter ended
March 31, 2023 decreased by $0.2 million, or 2.68%, to $5.3
million, as compared to $5.5 million for the quarter ended
December 31, 2022, which was primarily due to the decrease in
pre-tax income recognized during the three months ended
March 31, 2023.
Three months ended March 31, 2023, as
compared to three months ended March 31, 2022
Provision for income taxes increased by $1.6
million, or 45.90%, to $5.3 million for the three months ended
March 31, 2023, as compared to $3.7 million for the three
months ended March 31, 2022. This increase was primarily due
to an increase in pre-tax income for the three months ended
March 31, 2023, as compared to the three months ended
March 31, 2022. Additionally, the provision for income taxes
for the three months ended March 31, 2022 included a provision
to tax return true-up of approximately $0.3 million relating to the
2021 tax return filed in 2022, which did not recur during the three
months ended March 31, 2023.
Webcast Details
Five Star Bancorp will host a live webcast for
analysts and investors on Tuesday, April 25, 2023 at 1:00 p.m. ET
(10:00 a.m. PT) to discuss its first 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 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 |
(dollars in thousands,
except share and per share data) |
|
March 31,2023 |
|
December 31,2022 |
|
March 31,2022 |
Revenue and Expense
Data |
|
|
|
|
|
|
Interest and fee income |
|
$ |
40,311 |
|
|
$ |
37,402 |
|
|
$ |
22,871 |
|
Interest expense |
|
|
11,163 |
|
|
|
8,267 |
|
|
|
988 |
|
Net interest income |
|
|
29,148 |
|
|
|
29,135 |
|
|
|
21,883 |
|
Provision for credit
losses |
|
|
900 |
|
|
|
1,250 |
|
|
|
950 |
|
Net interest income after
provision |
|
|
28,248 |
|
|
|
27,885 |
|
|
|
20,933 |
|
Non-interest income: |
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
117 |
|
|
|
97 |
|
|
|
108 |
|
Gain on sale of securities |
|
|
— |
|
|
|
— |
|
|
|
5 |
|
Gain on sale of loans |
|
|
598 |
|
|
|
637 |
|
|
|
918 |
|
Loan-related fees |
|
|
308 |
|
|
|
407 |
|
|
|
596 |
|
FHLB stock dividends |
|
|
193 |
|
|
|
193 |
|
|
|
102 |
|
Earnings on bank-owned life insurance |
|
|
102 |
|
|
|
119 |
|
|
|
90 |
|
Other income |
|
|
53 |
|
|
|
148 |
|
|
|
345 |
|
Total non-interest income |
|
|
1,371 |
|
|
|
1,601 |
|
|
|
2,164 |
|
Non-interest expense: |
|
|
|
|
|
|
Salaries and employee benefits |
|
|
6,618 |
|
|
|
5,698 |
|
|
|
5,675 |
|
Occupancy and equipment |
|
|
523 |
|
|
|
511 |
|
|
|
520 |
|
Data processing and software |
|
|
872 |
|
|
|
839 |
|
|
|
716 |
|
FDIC insurance |
|
|
402 |
|
|
|
245 |
|
|
|
165 |
|
Professional services |
|
|
631 |
|
|
|
553 |
|
|
|
554 |
|
Advertising and promotional |
|
|
418 |
|
|
|
568 |
|
|
|
344 |
|
Loan-related expenses |
|
|
255 |
|
|
|
358 |
|
|
|
278 |
|
Other operating expenses |
|
|
1,399 |
|
|
|
1,945 |
|
|
|
1,323 |
|
Total non-interest
expense |
|
|
11,118 |
|
|
|
10,717 |
|
|
|
9,575 |
|
Income before provision for
income taxes |
|
|
18,501 |
|
|
|
18,769 |
|
|
|
13,522 |
|
Provision for income taxes |
|
|
5,340 |
|
|
|
5,487 |
|
|
|
3,660 |
|
Net income |
|
$ |
13,161 |
|
|
$ |
13,282 |
|
|
$ |
9,862 |
|
|
|
|
|
|
|
|
Comprehensive
Income |
|
|
|
|
|
|
Net income |
|
$ |
13,161 |
|
|
$ |
13,282 |
|
|
$ |
9,862 |
|
Net unrealized holding loss
(gain) on securities available-for-sale during the period |
|
|
2,140 |
|
|
|
3,714 |
|
|
|
(9,438 |
) |
Reclassification adjustment
for net realized gains included in net income |
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
Income tax benefit (expense)
related to other comprehensive (income) loss |
|
|
632 |
|
|
|
1,098 |
|
|
|
(2,791 |
) |
Other comprehensive income
(loss) |
|
|
1,508 |
|
|
|
2,616 |
|
|
|
(6,652 |
) |
Total comprehensive
income |
|
$ |
14,669 |
|
|
$ |
15,898 |
|
|
$ |
3,210 |
|
|
|
|
|
|
|
|
Share and Per Share
Data |
|
|
|
|
|
|
Earnings per common
share: |
|
|
|
|
|
|
Basic |
|
$ |
0.77 |
|
|
$ |
0.77 |
|
|
$ |
0.58 |
|
Diluted |
|
$ |
0.77 |
|
|
$ |
0.77 |
|
|
$ |
0.58 |
|
Book value per share |
|
$ |
15.10 |
|
|
$ |
14.66 |
|
|
$ |
13.40 |
|
Tangible book value per
share(1) |
|
$ |
15.10 |
|
|
$ |
14.66 |
|
|
$ |
13.40 |
|
Weighted average basic common
shares outstanding |
|
|
17,150,174 |
|
|
|
17,143,920 |
|
|
|
17,102,508 |
|
Weighted average diluted
common shares outstanding |
|
|
17,194,884 |
|
|
|
17,179,863 |
|
|
|
17,164,519 |
|
Shares outstanding at end of
period |
|
|
17,258,904 |
|
|
|
17,241,926 |
|
|
|
17,246,199 |
|
|
|
|
|
|
|
|
Credit
Quality |
|
|
|
|
|
|
Allowance for credit losses to
period end nonperforming loans |
|
|
8,167.68 |
% |
|
|
7,027.38 |
% |
|
|
1,799.99 |
% |
Nonperforming loans to loans
held for investment |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.06 |
% |
Nonperforming assets to total
assets |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.05 |
% |
Nonperforming loans plus
performing problem loan modifications to loans held for
investment |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.06 |
% |
|
|
|
|
|
|
|
Selected Financial
Ratios |
|
|
|
|
|
|
ROAA |
|
|
1.65 |
% |
|
|
1.70 |
% |
|
|
1.53 |
% |
ROAE |
|
|
20.94 |
% |
|
|
21.50 |
% |
|
|
17.07 |
% |
Net interest margin |
|
|
3.75 |
% |
|
|
3.83 |
% |
|
|
3.60 |
% |
Loan to deposit |
|
|
98.66 |
% |
|
|
100.67 |
% |
|
|
83.52 |
% |
(1) See the section entitled “Non-GAAP Reconciliation
(Unaudited)” for a reconciliation of this non-GAAP financial
measure.
(dollars in
thousands) |
|
March 31,2023 |
|
December 31,2022 |
|
March 31,2022 |
Balance Sheet
Data |
|
|
|
|
|
|
Cash and due from financial institutions |
|
$ |
26,556 |
|
|
$ |
32,561 |
|
|
$ |
66,747 |
|
Interest-bearing deposits in
banks |
|
|
321,383 |
|
|
|
227,430 |
|
|
|
438,217 |
|
Time deposits in banks |
|
|
9,617 |
|
|
|
9,849 |
|
|
|
14,464 |
|
Securities -
available-for-sale, at fair value |
|
|
115,140 |
|
|
|
115,988 |
|
|
|
134,813 |
|
Securities - held-to-maturity,
at amortized cost |
|
|
3,514 |
|
|
|
3,756 |
|
|
|
4,486 |
|
Loans held for sale |
|
|
11,315 |
|
|
|
9,416 |
|
|
|
10,386 |
|
Loans held for investment |
|
|
2,869,848 |
|
|
|
2,791,326 |
|
|
|
2,080,158 |
|
Allowance for credit losses -
loans |
|
|
(34,172 |
) |
|
|
(28,389 |
) |
|
|
(23,904 |
) |
Loans held for investment, net
of allowance for credit losses |
|
|
2,835,676 |
|
|
|
2,762,937 |
|
|
|
2,056,254 |
|
FHLB stock |
|
|
10,890 |
|
|
|
10,890 |
|
|
|
6,667 |
|
Operating leases, right-of-use
asset |
|
|
5,175 |
|
|
|
3,981 |
|
|
|
4,718 |
|
Premises and equipment,
net |
|
|
1,677 |
|
|
|
1,605 |
|
|
|
1,836 |
|
Bank-owned life insurance |
|
|
16,771 |
|
|
|
14,669 |
|
|
|
14,343 |
|
Interest receivable and other
assets |
|
|
39,594 |
|
|
|
34,077 |
|
|
|
25,318 |
|
Total assets |
|
$ |
3,397,308 |
|
|
$ |
3,227,159 |
|
|
$ |
2,778,249 |
|
|
|
|
|
|
|
|
Non-interest-bearing
deposits |
|
$ |
836,673 |
|
|
$ |
971,246 |
|
|
$ |
941,285 |
|
Interest-bearing deposits |
|
|
2,083,733 |
|
|
|
1,810,758 |
|
|
|
1,561,807 |
|
Total deposits |
|
|
2,920,406 |
|
|
|
2,782,004 |
|
|
|
2,503,092 |
|
Subordinated notes, net |
|
|
73,640 |
|
|
|
73,606 |
|
|
|
28,403 |
|
FHLB advances |
|
|
120,000 |
|
|
|
100,000 |
|
|
|
— |
|
Operating lease liability |
|
|
5,433 |
|
|
|
4,243 |
|
|
|
4,987 |
|
Interest payable and other
liabilities |
|
|
17,173 |
|
|
|
14,481 |
|
|
|
10,706 |
|
Total liabilities |
|
|
3,136,652 |
|
|
|
2,974,334 |
|
|
|
2,547,188 |
|
|
|
|
|
|
|
|
Common stock |
|
|
219,785 |
|
|
|
219,543 |
|
|
|
218,721 |
|
Retained earnings |
|
|
52,817 |
|
|
|
46,736 |
|
|
|
19,558 |
|
Accumulated other
comprehensive loss, net |
|
|
(11,946 |
) |
|
|
(13,454 |
) |
|
|
(7,218 |
) |
Total shareholders’ equity |
|
|
260,656 |
|
|
|
252,825 |
|
|
|
231,061 |
|
Total liabilities and shareholders’ equity |
|
$ |
3,397,308 |
|
|
$ |
3,227,159 |
|
|
$ |
2,778,249 |
|
|
|
|
|
|
|
|
Quarterly Average
Balance Data |
|
|
|
|
|
|
Average loans held for
investment and sale |
|
$ |
2,836,070 |
|
|
$ |
2,703,865 |
|
|
$ |
1,977,509 |
|
Average interest-earning
assets |
|
|
3,156,100 |
|
|
|
3,021,624 |
|
|
|
2,465,982 |
|
Average total assets |
|
|
3,225,353 |
|
|
|
3,095,288 |
|
|
|
2,616,098 |
|
Average deposits |
|
|
2,824,391 |
|
|
|
2,718,409 |
|
|
|
2,338,583 |
|
Average total equity |
|
|
254,927 |
|
|
|
245,019 |
|
|
|
234,322 |
|
|
|
|
|
|
|
|
Capital
Ratios |
|
|
|
|
|
|
Total shareholders’ equity to
total assets |
|
|
7.67 |
% |
|
|
7.83 |
% |
|
|
8.32 |
% |
Tangible shareholders’ equity
to tangible assets(1) |
|
|
7.67 |
% |
|
|
7.83 |
% |
|
|
8.32 |
% |
Total capital (to
risk-weighted assets) |
|
|
12.61 |
% |
|
|
12.46 |
% |
|
|
13.07 |
% |
Tier 1 capital (to
risk-weighted assets) |
|
|
9.02 |
% |
|
|
8.99 |
% |
|
|
10.70 |
% |
Common equity Tier 1 capital
(to risk-weighted assets) |
|
|
9.02 |
% |
|
|
8.99 |
% |
|
|
10.70 |
% |
Tier 1 leverage ratio |
|
|
8.54 |
% |
|
|
8.60 |
% |
|
|
9.02 |
% |
(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 table provides a
more detailed analysis of this non-GAAP financial measure:
Pre-tax, pre-provision
income(dollars in thousands) |
|
March 31,2023 |
|
December 31,2022 |
|
March 31,2022 |
Pre-tax income |
|
$ |
18,501 |
|
|
$ |
18,769 |
|
|
$ |
13,522 |
|
Add: provision for credit
losses |
|
|
900 |
|
|
|
1,250 |
|
|
|
950 |
|
Pre-tax, pre-provision
income |
|
$ |
19,401 |
|
|
$ |
20,019 |
|
|
$ |
14,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
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