Five Star Bancorp (Nasdaq: FSBC) (the “Company” or “Five
Star”), the holding company for Five Star Bank, today reported net
income of $10.8 million for the three months ended
December 31, 2023, as compared to $11.0 million for the three
months ended September 30, 2023 and $13.3 million for the
three months ended December 31, 2022. Net income for the year
ended December 31, 2023 was $47.7 million, as compared to
$44.8 million for the year ended December 31, 2022.
Financial Highlights
Performance highlights and other developments
for the Company for the periods noted below included the
following:
|
Three months ended |
(in thousands, except per
share and share data) |
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
Return on average assets (“ROAA”) |
|
1.26 |
% |
|
|
1.30 |
% |
|
|
1.70 |
% |
Return on average equity
(“ROAE”) |
|
15.45 |
% |
|
|
16.09 |
% |
|
|
21.50 |
% |
Pre-tax income |
$ |
15,151 |
|
|
$ |
15,795 |
|
|
$ |
18,769 |
|
Pre-tax, pre-provision
income(1) |
$ |
15,951 |
|
|
$ |
16,845 |
|
|
$ |
20,019 |
|
Net income |
$ |
10,799 |
|
|
$ |
11,045 |
|
|
$ |
13,282 |
|
Basic earnings per common
share |
$ |
0.63 |
|
|
$ |
0.64 |
|
|
$ |
0.77 |
|
Diluted earnings per common
share |
$ |
0.63 |
|
|
$ |
0.64 |
|
|
$ |
0.77 |
|
Weighted average basic common
shares outstanding |
|
17,175,445 |
|
|
|
17,175,034 |
|
|
|
17,143,920 |
|
Weighted average diluted
common shares outstanding |
|
17,193,114 |
|
|
|
17,194,825 |
|
|
|
17,179,863 |
|
Shares outstanding at end of
period |
|
17,256,989 |
|
|
|
17,257,357 |
|
|
|
17,241,926 |
|
|
Year ended |
(in thousands, except per
share and share data) |
December 31,2023 |
|
December 31,2022 |
Return on average assets (“ROAA”) |
|
1.44 |
% |
|
|
1.57 |
% |
Return on average equity
(“ROAE”) |
|
17.85 |
% |
|
|
18.80 |
% |
Pre-tax income |
$ |
66,616 |
|
|
$ |
62,858 |
|
Pre-tax, pre-provision
income(1) |
$ |
70,616 |
|
|
$ |
69,558 |
|
Net income |
$ |
47,734 |
|
|
$ |
44,801 |
|
Basic earnings per common
share |
$ |
2.78 |
|
|
$ |
2.61 |
|
Diluted earnings per common
share |
$ |
2.78 |
|
|
$ |
2.61 |
|
Weighted average basic common
shares outstanding |
|
17,166,592 |
|
|
|
17,128,282 |
|
Weighted average diluted
common shares outstanding |
|
17,187,969 |
|
|
|
17,165,610 |
|
Shares outstanding at end of
period |
|
17,256,989 |
|
|
|
17,241,926 |
|
(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:
“Five Star Bank is known for turning market
disruption into opportunity and 2023 was no exception. While many
faced significant headwinds in Q1 due to big bank failures, we
seized the opportunity to execute on our organic growth strategy by
expanding into the San Francisco Bay Area. This expansion included
the onboarding of eight seasoned and highly respected business
development officers and two relationship managers who contributed
$73.8 million of deposit growth in 2023 from clients who wanted to
work with a bank they could trust. The past year demonstrated the
importance of being prepared for any market condition and we are
pleased with our immediate response to serving new clients in the
Bay Area while also ensuring the safety and soundness of our
business.
Margin pressures remained in Q4, yet slowed
compared to prior quarters. We expect positive news from the
Federal Reserve in 2024 to result in an end to the rising rate
environment and signal potential rate cuts. As we look to 2024, we
anticipate a benefit from these rate cuts as we have a slightly
liability sensitive balance sheet. In the meantime, we will
continue to grow organically by focusing on deposit growth in our
core geographical markets, including the Sacramento Capital Region,
North State, and San Francisco Bay Area. We will also manage
expenses and execute on conservative underwriting practices which
are foundational to our success.
In 2023, we received a Super Premier Performer
rating from Findley Reports, an IDC Superior Rating, and a Bauer
Financial Superior rating (5 stars out of 5). We were also awarded
the prestigious 2022 Raymond James Community Bankers Cup, and were
among the 2023 Piper Sandler Sm-All Stars. In 2023, we were
recognized as the 2022 S&P Global Market Intelligence #1
Best-Performing Community Bank in the nation (banks with assets
between $3 billion and $10 billion). We were also listed in
Independent Banker’s Top Commercial Banks in 2023 (banks with more
than $1 billion in assets) and ranked #6 in the nation. We were
listed among American Banker’s Top-Performing Banks in 2023 (banks
with $2 billion to $10 billion in assets) and ranked #12 in the
nation. In 2023, our executives and senior leaders were awarded a
Sacramento Business Journal C-Suite Award, a Sacramento Bee Latino
Changemakers Award, a Commercial Real Estate Women Award, and a
Comstock’s Magazine Women in Leadership Award. Being recognized as
community leaders ensures Five Star Bank remains top-of-mind in the
markets we serve as we continue to build-out our verticals. In
closing, we are well-positioned to continue to withstand an array
of economic conditions as we enter 2024. I am humbled and proud of
our team’s accomplishments as we look to the future.”
- The Company’s
new San Francisco Bay Area team increased to 10 employees who
generated deposit balances totaling $73.8 million at
December 31, 2023, an increase of $44.8 million from
September 30, 2023.
- Cash and cash
equivalents were $321.6 million, representing 10.62% of total
deposits at December 31, 2023, compared to 10.67% at
September 30, 2023.
- Total deposits
decreased by $5.3 million, or 0.18%, during the three months ended
December 31, 2023. Non-brokered deposits decreased by $30.4
million, or 1.03%, over the same period.
- Consistent,
disciplined management of expenses contributed to our efficiency
ratio of 44.25% for the three months ended December 31,
2023.
- For the three
months ended December 31, 2023, net interest margin was 3.19%,
as compared to 3.31% for the three months ended September 30,
2023 and 3.83% for the three months ended December 31, 2022.
For the year ended December 31, 2023, net interest margin was
3.42%, as compared to 3.75% for the year ended December 31,
2022. The effective Federal Funds rate remained at 5.33% as of
December 31, 2023, and September 30, 2023 and increased
from 4.33% as of December 31, 2022.
- Other
comprehensive income was $4.2 million during the three months ended
December 31, 2023. Unrealized losses, net of tax effect, on
available-for-sale securities were $11.8 million as of
December 31, 2023. Total held-to-maturity and
available-for-sale securities represented 0.09% and 3.08% of total
interest-earning assets, respectively, as of December 31,
2023.
- The Company’s
common equity Tier 1 capital ratio was 9.07% as of both
December 31, 2023 and September 30, 2023. The Bank
continues to meet all requirements to be considered
“well-capitalized” under applicable regulatory guidelines.
- Loan and deposit
growth was as follows at the dates indicated:
|
(in thousands) |
December 31,2023 |
|
September 30,2023 |
|
$ Change |
|
% Change |
|
Loans held for investment |
$ |
3,081,719 |
|
|
$ |
3,009,930 |
|
|
$ |
71,789 |
|
|
2.39 |
% |
|
Non-interest-bearing
deposits |
|
831,101 |
|
|
|
833,434 |
|
|
|
(2,333 |
) |
|
(0.28 |
)% |
|
Interest-bearing deposits |
|
2,195,795 |
|
|
|
2,198,776 |
|
|
|
(2,981 |
) |
|
(0.14 |
)% |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
|
Loans held for investment |
$ |
3,081,719 |
|
|
$ |
2,791,326 |
|
|
$ |
290,393 |
|
|
10.40 |
% |
|
Non-interest-bearing
deposits |
|
831,101 |
|
|
|
971,246 |
|
|
|
(140,145 |
) |
|
(14.43 |
)% |
|
Interest-bearing deposits |
|
2,195,795 |
|
|
|
1,810,758 |
|
|
|
385,037 |
|
|
21.26 |
% |
-
The ratio of nonperforming loans to loans held for investment at
period end increased from 0.01% at December 31, 2022 to 0.06%
at December 31, 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
December 31, 2023. The Company’s Board of Directors declared
another cash dividend of $0.20 per share on January 18, 2024,
which the Company expects to pay on February 12, 2024 to
shareholders of record as of February 5, 2024.
Summary Results
Three months ended December 31, 2023, as
compared to three months ended September 30, 2023
The Company’s net income was $10.8 million for
the three months ended December 31, 2023, compared to $11.0
million for the three months ended September 30, 2023. Net
interest income decreased by $0.8 million as increases in interest
expense exceeded increases in interest income. The provision for
credit losses decreased by $0.3 million as expectations for credit
losses improved based on positive economic trends in the three
months ended December 31, 2023, compared to the three months
ended September 30, 2023. Non-interest income increased by
$0.6 million, primarily due to gains from distributions on
investments in venture-backed funds and the recognition of swap
referral and rate lock fees during the three months ended
December 31, 2023 that did not occur during the three months
ended September 30, 2023. Non-interest expense increased by
$0.6 million, primarily due to increased salaries, employee
benefits, advertising, promotional, and other operating expenses
related to the Company’s expansion into the San Francisco Bay
Area.
Three months ended December 31, 2023, as
compared to three months ended December 31, 2022
The Company’s net income was $10.8 million for
the three months ended December 31, 2023, compared to $13.3
million for the three months ended December 31, 2022. Net
interest income decreased by $2.5 million as increases in interest
expense exceeded increases in interest income. The provision for
credit losses decreased by $0.5 million as loan originations in the
three months ended December 31, 2023 were approximately half
of those in the three months ended December 31, 2022.
Non-interest income increased by $0.3 million, primarily due to
greater gains from distributions on investments in venture-backed
funds quarter-over-quarter and the recognition of swap referral and
rate lock fees during three months ended December 31, 2023
that did not occur during the three months ended December 31,
2022. Non-interest expense increased by $1.9 million with an
increase in salaries and employee benefits related to the Company’s
expansion into the San Francisco Bay Area as the leading
driver.
Year ended December 31, 2023, as compared
to year ended December 31, 2022
The Company’s net income was $47.7 million for
the year ended December 31, 2023, compared to $44.8 million
for the year ended December 31, 2022. Net interest income
increased by $7.8 million as increases in interest income exceeded
increases in interest expense, with increases in the average
balance of interest-earning assets as the leading driver. The
provision for credit losses decreased by $2.7 million as loan
originations in the year ended December 31, 2023 were
approximately half of those for the year ended December 31,
2022. Non-interest income increased by $0.4 million, primarily due
to greater gains from distributions on investments in
venture-backed funds during the year ended December 31, 2023
than during the year ended December 31, 2022. Non-interest
expense increased by $7.1 million with an increase in salaries and
employee benefits related to the Company’s expansion into the San
Francisco Bay Area as the leading driver.
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) |
|
December 31,2023 |
|
September 30,2023 |
|
$ Change |
|
% Change |
Selected operating data: |
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
26,678 |
|
|
$ |
27,476 |
|
|
$ |
(798 |
) |
|
(2.90 |
)% |
Provision for credit losses |
|
|
800 |
|
|
|
1,050 |
|
|
|
(250 |
) |
|
(23.81 |
)% |
Non-interest income |
|
|
1,936 |
|
|
|
1,384 |
|
|
|
552 |
|
|
39.88 |
% |
Non-interest expense |
|
|
12,663 |
|
|
|
12,015 |
|
|
|
648 |
|
|
5.39 |
% |
Pre-tax income |
|
|
15,151 |
|
|
|
15,795 |
|
|
|
(644 |
) |
|
(4.08 |
)% |
Provision for income taxes |
|
|
4,352 |
|
|
|
4,750 |
|
|
|
(398 |
) |
|
(8.38 |
)% |
Net income |
|
$ |
10,799 |
|
|
$ |
11,045 |
|
|
$ |
(246 |
) |
|
(2.23 |
)% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.63 |
|
|
$ |
0.64 |
|
|
$ |
(0.01 |
) |
|
(1.56 |
)% |
Diluted |
|
$ |
0.63 |
|
|
$ |
0.64 |
|
|
$ |
(0.01 |
) |
|
(1.56 |
)% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
ROAA |
|
|
1.26 |
% |
|
|
1.30 |
% |
|
|
|
|
ROAE |
|
|
15.45 |
% |
|
|
16.09 |
% |
|
|
|
|
Net interest margin |
|
|
3.19 |
% |
|
|
3.31 |
% |
|
|
|
|
Cost of funds |
|
|
2.50 |
% |
|
|
2.28 |
% |
|
|
|
|
Efficiency ratio |
|
|
44.25 |
% |
|
|
41.63 |
% |
|
|
|
|
|
|
Three months ended |
|
|
|
|
(in thousands, except per
share data) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Selected operating data: |
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
26,678 |
|
|
$ |
29,135 |
|
|
$ |
(2,457 |
) |
|
(8.43 |
)% |
Provision for credit losses |
|
|
800 |
|
|
|
1,250 |
|
|
|
(450 |
) |
|
(36.00 |
)% |
Non-interest income |
|
|
1,936 |
|
|
|
1,601 |
|
|
|
335 |
|
|
20.92 |
% |
Non-interest expense |
|
|
12,663 |
|
|
|
10,717 |
|
|
|
1,946 |
|
|
18.16 |
% |
Pre-tax income |
|
|
15,151 |
|
|
|
18,769 |
|
|
|
(3,618 |
) |
|
(19.28 |
)% |
Provision for income taxes |
|
|
4,352 |
|
|
|
5,487 |
|
|
|
(1,135 |
) |
|
(20.69 |
)% |
Net income |
|
$ |
10,799 |
|
|
$ |
13,282 |
|
|
$ |
(2,483 |
) |
|
(18.69 |
)% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.63 |
|
|
$ |
0.77 |
|
|
$ |
(0.14 |
) |
|
(18.18 |
)% |
Diluted |
|
$ |
0.63 |
|
|
$ |
0.77 |
|
|
$ |
(0.14 |
) |
|
(18.18 |
)% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
ROAA |
|
|
1.26 |
% |
|
|
1.70 |
% |
|
|
|
|
ROAE |
|
|
15.45 |
% |
|
|
21.50 |
% |
|
|
|
|
Net interest margin |
|
|
3.19 |
% |
|
|
3.83 |
% |
|
|
|
|
Cost of funds |
|
|
2.50 |
% |
|
|
1.16 |
% |
|
|
|
|
Efficiency ratio |
|
|
44.25 |
% |
|
|
34.87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
|
(in thousands, except per
share data) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Selected operating data: |
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
110,880 |
|
|
$ |
103,070 |
|
|
$ |
7,810 |
|
|
7.58 |
% |
Provision for credit losses |
|
|
4,000 |
|
|
|
6,700 |
|
|
|
(2,700 |
) |
|
(40.30 |
)% |
Non-interest income |
|
|
7,511 |
|
|
|
7,157 |
|
|
|
354 |
|
|
4.95 |
% |
Non-interest expense |
|
|
47,775 |
|
|
|
40,669 |
|
|
|
7,106 |
|
|
17.47 |
% |
Pre-tax income |
|
|
66,616 |
|
|
|
62,858 |
|
|
|
3,758 |
|
|
5.98 |
% |
Provision for income taxes |
|
|
18,882 |
|
|
|
18,057 |
|
|
|
825 |
|
|
4.57 |
% |
Net income |
|
$ |
47,734 |
|
|
$ |
44,801 |
|
|
$ |
2,933 |
|
|
6.55 |
% |
Earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.78 |
|
|
$ |
2.61 |
|
|
$ |
0.17 |
|
|
6.51 |
% |
Diluted |
|
$ |
2.78 |
|
|
$ |
2.61 |
|
|
$ |
0.17 |
|
|
6.51 |
% |
Performance and other
financial ratios: |
|
|
|
|
|
|
|
|
ROAA |
|
|
1.44 |
% |
|
|
1.57 |
% |
|
|
|
|
ROAE |
|
|
17.85 |
% |
|
|
18.80 |
% |
|
|
|
|
Net interest margin |
|
|
3.42 |
% |
|
|
3.75 |
% |
|
|
|
|
Cost of funds |
|
|
2.10 |
% |
|
|
0.57 |
% |
|
|
|
|
Efficiency ratio |
|
|
40.35 |
% |
|
|
36.90 |
% |
|
|
|
|
Balance Sheet Summary
(in thousands) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Selected financial condition
data: |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
3,593,125 |
|
|
$ |
3,227,159 |
|
|
$ |
365,966 |
|
|
11.34 |
% |
Cash and cash equivalents |
|
|
321,576 |
|
|
|
259,991 |
|
|
|
61,585 |
|
|
23.69 |
% |
Total loans held for investment |
|
|
3,081,719 |
|
|
|
2,791,326 |
|
|
|
290,393 |
|
|
10.40 |
% |
Total investments |
|
|
111,160 |
|
|
|
119,744 |
|
|
|
(8,584 |
) |
|
(7.17 |
)% |
Total liabilities |
|
|
3,307,351 |
|
|
|
2,974,334 |
|
|
|
333,017 |
|
|
11.20 |
% |
Total deposits |
|
|
3,026,896 |
|
|
|
2,782,004 |
|
|
|
244,892 |
|
|
8.80 |
% |
Subordinated notes, net |
|
|
73,749 |
|
|
|
73,606 |
|
|
|
143 |
|
|
0.19 |
% |
Total shareholders’ equity |
|
|
285,774 |
|
|
|
252,825 |
|
|
|
32,949 |
|
|
13.03 |
% |
-
Insured and collateralized deposits were approximately $2.0
billion, representing approximately 66.79% of total deposits as of
December 31, 2023. Net uninsured and uncollateralized deposits
were approximately $1.0 billion as of December 31, 2023.
- Commercial and
consumer deposit accounts constituted approximately 73% of total
deposits. Deposit relationships of at least $5 million represented
approximately 62% of total deposits and had an average age of
approximately 8.78 years as of December 31, 2023.
- Cash and cash
equivalents as of December 31, 2023 were $321.6 million,
representing 10.62% of total deposits at December 31, 2023,
compared to 9.35% as of December 31, 2022.
- 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
December 31, 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
$1.4 billion as of December 31, 2023.
|
|
|
December 31, 2023 |
|
|
|
|
|
(in thousands) |
|
Line of Credit |
|
Letters ofCredit Issued |
|
Borrowings |
|
Available |
|
Federal Home Loan Bank of San Francisco (“FHLB”) advances |
|
$ |
996,712 |
|
|
$ |
681,500 |
|
|
$ |
170,000 |
|
|
$ |
145,212 |
|
|
Federal Reserve Discount
Window |
|
|
770,572 |
|
|
|
— |
|
|
|
— |
|
|
|
770,572 |
|
|
Correspondent bank lines of
credit |
|
|
175,000 |
|
|
|
— |
|
|
|
— |
|
|
|
175,000 |
|
|
Cash and cash equivalents |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
321,576 |
|
|
Total |
|
$ |
1,942,284 |
|
|
$ |
681,500 |
|
|
$ |
170,000 |
|
|
$ |
1,412,360 |
|
The increase in total assets from
December 31, 2022 to December 31, 2023 was primarily due
to a $290.4 million increase in total loans held for
investment and a $61.6 million increase in cash and cash
equivalents, partially offset by a $8.6 million decrease in
investments. The $290.4 million increase in total loans held for
investment between December 31, 2022 and December 31,
2023 was the result of $668.2 million in loan originations,
partially offset by $377.8 million in loan payoffs and
paydowns.
The increase in total liabilities from
December 31, 2022 to December 31, 2023 was primarily
attributable to an increase in deposits of $244.9 million and
an increase in FHLB advances of $70.0 million. The $244.9 million
increase in deposits was largely due to increases in money market,
time deposits over $250 thousand, and interest-bearing demand
deposits of $208.8 million, $146.5 million, and $80.2 million,
respectively, partially offset by decreases in non-interest-bearing
demand, savings, and other time deposits of $140.1 million, $28.1
million, and $22.5 million, respectively.
The increase in total shareholders’ equity from
December 31, 2022 to December 31, 2023 was primarily a
result of net income recognized of $47.7 million and an increase of
$1.7 million in accumulated other comprehensive income, partially
offset by $12.9 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
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) |
|
December 31,2023 |
|
September 30,2023 |
|
$ Change |
|
% Change |
Interest and fee income |
|
$ |
46,180 |
|
|
$ |
45,098 |
|
|
$ |
1,082 |
|
|
2.40 |
% |
Interest expense |
|
|
19,502 |
|
|
|
17,622 |
|
|
|
1,880 |
|
|
10.67 |
% |
Net interest income |
|
$ |
26,678 |
|
|
$ |
27,476 |
|
|
$ |
(798 |
) |
|
(2.90 |
)% |
Net interest margin |
|
|
3.19 |
% |
|
|
3.31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Interest and fee income |
|
$ |
46,180 |
|
|
$ |
37,402 |
|
|
$ |
8,778 |
|
|
23.47 |
% |
Interest expense |
|
|
19,502 |
|
|
|
8,267 |
|
|
|
11,235 |
|
|
135.90 |
% |
Net interest income |
|
$ |
26,678 |
|
|
$ |
29,135 |
|
|
$ |
(2,457 |
) |
|
(8.43 |
)% |
Net interest margin |
|
|
3.19 |
% |
|
|
3.83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
|
(in thousands) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Interest and fee income |
|
$ |
174,382 |
|
|
$ |
117,918 |
|
|
$ |
56,464 |
|
|
47.88 |
% |
Interest expense |
|
|
63,502 |
|
|
|
14,848 |
|
|
|
48,654 |
|
|
327.68 |
% |
Net interest income |
|
$ |
110,880 |
|
|
$ |
103,070 |
|
|
$ |
7,810 |
|
|
7.58 |
% |
Net interest margin |
|
|
3.42 |
% |
|
|
3.75 |
% |
|
|
|
|
The following table shows the components of net
interest income and net interest margin for the quarterly periods
indicated:
|
|
Three months ended |
|
|
December 31, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
(in thousands) |
|
AverageBalance |
|
InterestIncome/Expense |
|
Yield/Rate |
|
AverageBalance |
|
InterestIncome/Expense |
|
Yield/Rate |
|
AverageBalance |
|
InterestIncome/Expense |
|
Yield/Rate |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning deposits with banks |
|
$ |
157,775 |
|
$ |
2,100 |
|
5.28 |
% |
|
$ |
198,751 |
|
$ |
2,584 |
|
5.16 |
% |
|
$ |
200,395 |
|
$ |
1,841 |
|
3.64 |
% |
Investment securities |
|
|
106,483 |
|
|
651 |
|
2.43 |
% |
|
|
112,154 |
|
|
653 |
|
2.31 |
% |
|
|
117,364 |
|
|
643 |
|
2.17 |
% |
Loans held for investment and sale |
|
|
3,055,042 |
|
|
43,429 |
|
5.64 |
% |
|
|
2,982,140 |
|
|
41,861 |
|
5.57 |
% |
|
|
2,703,865 |
|
|
34,918 |
|
5.12 |
% |
Total interest-earning assets |
|
|
3,319,300 |
|
|
46,180 |
|
5.52 |
% |
|
|
3,293,045 |
|
|
45,098 |
|
5.43 |
% |
|
|
3,021,624 |
|
|
37,402 |
|
4.91 |
% |
Interest receivable and other assets, net |
|
|
80,360 |
|
|
|
|
|
|
77,757 |
|
|
|
|
|
|
73,664 |
|
|
|
|
Total assets |
|
$ |
3,399,660 |
|
|
|
|
|
$ |
3,370,802 |
|
|
|
|
|
$ |
3,095,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
291,967 |
|
$ |
1,091 |
|
1.48 |
% |
|
$ |
296,230 |
|
$ |
972 |
|
1.30 |
% |
|
$ |
223,473 |
|
$ |
174 |
|
0.31 |
% |
Savings |
|
|
130,915 |
|
|
891 |
|
2.70 |
% |
|
|
134,920 |
|
|
880 |
|
2.59 |
% |
|
|
136,753 |
|
|
247 |
|
0.72 |
% |
Money market |
|
|
1,347,111 |
|
|
10,824 |
|
3.19 |
% |
|
|
1,328,290 |
|
|
9,536 |
|
2.85 |
% |
|
|
1,060,597 |
|
|
3,652 |
|
1.37 |
% |
Time |
|
|
417,434 |
|
|
5,322 |
|
5.06 |
% |
|
|
399,514 |
|
|
4,998 |
|
4.96 |
% |
|
|
299,771 |
|
|
2,467 |
|
3.26 |
% |
Subordinated debt and other borrowings |
|
|
88,401 |
|
|
1,374 |
|
6.16 |
% |
|
|
79,085 |
|
|
1,236 |
|
6.20 |
% |
|
|
114,858 |
|
|
1,727 |
|
5.96 |
% |
Total interest-bearing liabilities |
|
|
2,275,828 |
|
|
19,502 |
|
3.40 |
% |
|
|
2,238,039 |
|
|
17,622 |
|
3.12 |
% |
|
|
1,835,452 |
|
|
8,267 |
|
1.79 |
% |
Demand accounts |
|
|
821,651 |
|
|
|
|
|
|
825,254 |
|
|
|
|
|
|
997,815 |
|
|
|
|
Interest payable and other liabilities |
|
|
24,886 |
|
|
|
|
|
|
35,123 |
|
|
|
|
|
|
17,002 |
|
|
|
|
Shareholders’ equity |
|
|
277,295 |
|
|
|
|
|
|
272,386 |
|
|
|
|
|
|
245,019 |
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
3,399,660 |
|
|
|
|
|
$ |
3,370,802 |
|
|
|
|
|
$ |
3,095,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
2.12 |
% |
|
|
|
|
|
2.31 |
% |
|
|
|
|
|
3.12 |
% |
Net interest income/margin |
|
|
|
$ |
26,678 |
|
3.19 |
% |
|
|
|
$ |
27,476 |
|
3.31 |
% |
|
|
|
$ |
29,135 |
|
3.83 |
% |
Net interest income during the three months
ended December 31, 2023 decreased $0.8 million as compared to
the three months ended September 30, 2023. In addition, net
interest margin decreased 12 basis points compared to the prior
quarter. The decrease in net interest income is primarily
attributable to an additional $1.7 million in deposit interest
expense due to increases in interest rates as compared to the prior
quarter. The cost of interest-bearing deposits increased 28 basis
points as compared to the prior quarter, while average balances
increased 1.32%. In addition, the average balance of
non-interest-bearing deposits decreased by $3.6 million
quarter-over-quarter. The increase to interest expense was
partially offset by an increase in total interest income of $1.1
million. Average loan yields increased 7 basis points as compared
to the prior quarter, while average balances increased 2.44%.
As compared to the three months ended
December 31, 2022, net interest income decreased $2.5 million
and net interest margin decreased 64 basis points. The decrease in
net interest income is primarily attributable to an additional
$11.6 million in deposit interest expense due to increases in
interest rates and average balances as compared to the same quarter
of the prior year. The cost of interest-bearing deposits increased
178 basis points as compared to the same quarter of the prior year,
while average balances increased 27.13%. In addition, the average
balance of non-interest-bearing deposits decreased by $176.2
million as compared to the same quarter of the prior year. The
increase in interest expense was partially offset by an increase in
total interest income of $8.8 million, as compared to the same
quarter of the prior year. Average loan yields increased 52 basis
points as compared to the same quarter of the prior year, while
average balances increased 12.99%.
The following table shows the components of net
interest income and net interest margin for the annual periods
indicated:
|
|
Year ended |
|
|
December 31, 2023 |
|
December 31, 2022 |
(in thousands) |
|
AverageBalance |
|
InterestIncome/Expense |
|
Yield/Rate |
|
AverageBalance |
|
InterestIncome/Expense |
|
Yield/Rate |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning deposits with banks |
|
$ |
184,103 |
|
$ |
9,069 |
|
4.93 |
% |
|
$ |
260,679 |
|
$ |
3,696 |
|
1.42 |
% |
Investment securities |
|
|
113,515 |
|
|
2,600 |
|
2.29 |
% |
|
|
131,353 |
|
|
2,427 |
|
1.85 |
% |
Loans held for investment and sale |
|
|
2,947,603 |
|
|
162,713 |
|
5.52 |
% |
|
|
2,353,148 |
|
|
111,795 |
|
4.75 |
% |
Total interest-earning assets |
|
|
3,245,221 |
|
|
174,382 |
|
5.37 |
% |
|
|
2,745,180 |
|
|
117,918 |
|
4.30 |
% |
Interest receivable and other assets, net |
|
|
75,741 |
|
|
|
|
|
|
99,946 |
|
|
|
|
Total assets |
|
$ |
3,320,962 |
|
|
|
|
|
$ |
2,845,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand |
|
$ |
312,944 |
|
$ |
3,321 |
|
1.06 |
% |
|
$ |
242,221 |
|
$ |
425 |
|
0.18 |
% |
Savings |
|
|
140,060 |
|
|
3,073 |
|
2.19 |
% |
|
|
107,010 |
|
|
376 |
|
0.35 |
% |
Money market |
|
|
1,263,539 |
|
|
33,932 |
|
2.69 |
% |
|
|
995,048 |
|
|
6,476 |
|
0.65 |
% |
Time |
|
|
372,557 |
|
|
17,535 |
|
4.71 |
% |
|
|
203,392 |
|
|
3,646 |
|
1.79 |
% |
Subordinated debt and other borrowings |
|
|
93,279 |
|
|
5,641 |
|
6.05 |
% |
|
|
61,533 |
|
|
3,925 |
|
6.38 |
% |
Total interest-bearing liabilities |
|
|
2,182,379 |
|
|
63,502 |
|
2.91 |
% |
|
|
1,609,204 |
|
|
14,848 |
|
0.92 |
% |
Demand accounts |
|
|
844,057 |
|
|
|
|
|
|
982,915 |
|
|
|
|
Interest payable and other liabilities |
|
|
27,127 |
|
|
|
|
|
|
14,709 |
|
|
|
|
Shareholders’ equity |
|
|
267,399 |
|
|
|
|
|
|
238,298 |
|
|
|
|
Total liabilities and shareholders’ equity |
|
$ |
3,320,962 |
|
|
|
|
|
$ |
2,845,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
2.46 |
% |
|
|
|
|
|
3.38 |
% |
Net interest income/margin |
|
|
|
$ |
110,880 |
|
3.42 |
% |
|
|
|
$ |
103,070 |
|
3.75 |
% |
Net interest income during the year ended
December 31, 2023 increased $7.8 million as compared to the
year ended December 31, 2022. Net interest margin decreased 33
basis points compared to the prior year. The increase in net
interest income is primarily attributable to an additional $50.9
million in interest income on loans due to increases in interest
rates and average balances as compared to the prior year. The
average yield on loans increased 77 basis points as compared to the
prior year, while average balances increased 25.26%. The increase
to interest income was partially offset by an increase in total
interest expense of $48.7 million. The increase in total interest
expense is primarily attributable to an additional $46.9 million in
deposit interest expense due to increases in interest rates and
average balances as compared to the prior year. The cost of
interest-bearing deposits increased 206 basis points as compared to
the prior year, while average balances increased 34.98%. In
addition, the average balance of non-interest-bearing deposits
decreased by $138.9 million year-over-year.
Loans by Type
The following table provides loan balances,
excluding deferred loan fees, by type as of December 31,
2023:
(in thousands) |
|
|
Commercial Term Real Estate Non-Owner Occupied |
|
$ |
1,161,502 |
Commercial Term
Multifamily |
|
|
1,018,372 |
Commercial Term Real Estate
Owner Occupied |
|
|
495,480 |
Commercial Secured |
|
|
87,549 |
Commercial Construction Real
Estate |
|
|
62,863 |
Commercial Term Agricultural
Real Estate |
|
|
51,669 |
SBA 7A Secured |
|
|
48,289 |
Others |
|
|
158,252 |
Total loans, excluding deferred loan fees |
|
$ |
3,083,976 |
Interest-bearing Deposits
The following table provides interest-bearing
deposit balances by type as of December 31, 2023:
(in thousands) |
|
|
Interest-bearing demand accounts |
|
$ |
320,356 |
Money market accounts |
|
|
1,282,369 |
Savings accounts |
|
|
126,498 |
Time accounts |
|
|
466,572 |
Total interest-bearing deposits |
|
$ |
2,195,795 |
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 and annual periods. Refer to information below on the
provision for credit losses recorded during the year ended
December 31, 2023.
At December 31, 2023, the Company’s
allowance for credit losses was $34.4 million, as compared to $28.4
million at December 31, 2022. The $6.0 million increase in the
allowance is due to a $5.3 million adjustment recorded in
connection with the adoption of CECL and a $4.0 million provision
for credit losses recorded during the twelve months ended
December 31, 2023, partially offset by net charge-offs of $3.3
million, mainly attributable to commercial and industrial loans,
during the same period.
The Company’s ratio of nonperforming loans to
loans held for investment increased from 0.01% at December 31,
2022 to 0.06% at December 31, 2023. The provision for credit
losses recorded during the year ended December 31, 2023 was
primarily related to loan growth, loan type mix, and changes in the
macroeconomic environment. Loans designated as substandard
increased from $0.4 million to $2.0 million between
December 31, 2022 and December 31, 2023. There were no
loans with doubtful risk grades at December 31, 2023 or December
31, 2022.
A summary of the allowance for credit losses by
loan class is as follows:
|
|
December 31, 2023 |
|
December 31, 2022 |
(in thousands) |
|
Amount |
|
% of Total |
|
Amount |
|
% of Total |
Real estate: |
|
|
|
|
|
|
|
|
Commercial |
|
$ |
29,015 |
|
|
84.27 |
% |
|
$ |
19,216 |
|
|
67.69 |
% |
Commercial land and development |
|
|
178 |
|
|
0.52 |
% |
|
|
54 |
|
|
0.19 |
% |
Commercial construction |
|
|
718 |
|
|
2.08 |
% |
|
|
645 |
|
|
2.27 |
% |
Residential construction |
|
|
89 |
|
|
0.26 |
% |
|
|
49 |
|
|
0.17 |
% |
Residential |
|
|
151 |
|
|
0.44 |
% |
|
|
175 |
|
|
0.62 |
% |
Farmland |
|
|
399 |
|
|
1.16 |
% |
|
|
644 |
|
|
2.27 |
% |
|
|
|
30,550 |
|
|
88.73 |
% |
|
|
20,783 |
|
|
73.21 |
% |
Commercial: |
|
|
|
|
|
|
|
|
Secured |
|
|
3,314 |
|
|
9.62 |
% |
|
|
7,098 |
|
|
25.00 |
% |
Unsecured |
|
|
189 |
|
|
0.55 |
% |
|
|
116 |
|
|
0.41 |
% |
|
|
|
3,503 |
|
|
10.17 |
% |
|
|
7,214 |
|
|
25.41 |
% |
Consumer and other |
|
|
378 |
|
|
1.10 |
% |
|
|
347 |
|
|
1.22 |
% |
Unallocated |
|
|
— |
|
|
— |
% |
|
|
45 |
|
|
0.16 |
% |
Total allowance for credit
losses |
|
$ |
34,431 |
|
|
100.00 |
% |
|
$ |
28,389 |
|
|
100.00 |
% |
The ratio of allowance for credit losses to
loans held for investment was 1.12% at December 31, 2023, as
compared to 1.02% at December 31, 2022.
Non-interest Income
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
December 31,2023 |
|
September 30,2023 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
165 |
|
|
$ |
158 |
|
|
$ |
7 |
|
|
4.43 |
% |
Net gain (loss) on sale of
securities |
|
|
(167 |
) |
|
|
— |
|
|
|
(167 |
) |
|
— |
% |
Gain on sale of loans |
|
|
317 |
|
|
|
396 |
|
|
|
(79 |
) |
|
(19.95 |
)% |
Loan-related fees |
|
|
667 |
|
|
|
355 |
|
|
|
312 |
|
|
87.89 |
% |
FHLB stock dividends |
|
|
314 |
|
|
|
274 |
|
|
|
40 |
|
|
14.60 |
% |
Earnings on bank-owned life
insurance |
|
|
155 |
|
|
|
127 |
|
|
|
28 |
|
|
22.05 |
% |
Other income |
|
|
485 |
|
|
|
74 |
|
|
|
411 |
|
|
555.41 |
% |
Total non-interest income |
|
$ |
1,936 |
|
|
$ |
1,384 |
|
|
$ |
552 |
|
|
39.88 |
% |
Net gain (loss) on sale of securities. The
increase in the net loss on sale of securities related to the sale
of two municipal securities with a par value of approximately
$0.8 million for a loss of approximately $0.2 million
during the three months ended December 31, 2023, with no sales
occurring during the three months ended September 30,
2023.
Gain on sale of loans. The decrease related
primarily to an overall decline in the volume of loans sold during
the three months ended December 31, 2023 compared to the three
months ended September 30, 2023. During the three months ended
December 31, 2023, approximately $5.9 million of loans were
sold with an effective yield of 5.41%, as compared to approximately
$7.0 million of loans sold with an effective yield of 5.63%
during the three months ended September 30, 2023.
Loan-related fees. The increase resulted
primarily in the recognition of $0.1 million of swap referral
fees and $0.2 million of rate lock fees during the three
months ended December 31, 2023, which did not occur during the
three months ended September 30, 2023.
Other income. The increase resulted primarily
from a $0.4 million gain recorded on distributions received on
investments in venture-backed funds during the three months ended
December 31, 2023, which did not occur during the three months
ended September 30, 2023.
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Three months ended |
|
|
|
(in thousands) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
165 |
|
|
$ |
97 |
|
|
$ |
68 |
|
|
70.10 |
% |
Net gain (loss) on sale of
securities |
|
|
(167 |
) |
|
|
— |
|
|
|
(167 |
) |
|
— |
% |
Gain on sale of loans |
|
|
317 |
|
|
|
637 |
|
|
|
(320 |
) |
|
(50.24 |
)% |
Loan-related fees |
|
|
667 |
|
|
|
407 |
|
|
|
260 |
|
|
63.88 |
% |
FHLB stock dividends |
|
|
314 |
|
|
|
193 |
|
|
|
121 |
|
|
62.69 |
% |
Earnings on bank-owned life
insurance |
|
|
155 |
|
|
|
119 |
|
|
|
36 |
|
|
30.25 |
% |
Other income |
|
|
485 |
|
|
|
148 |
|
|
|
337 |
|
|
227.70 |
% |
Total non-interest income |
|
$ |
1,936 |
|
|
$ |
1,601 |
|
|
$ |
335 |
|
|
20.92 |
% |
Net gain (loss) on sale of securities. The
increase in the net loss on sale of securities related to the sale
of two municipal securities with a par value of approximately
$0.8 million for a loss of approximately $0.2 million
during the three months ended December 31, 2023, with no sales
occurring during the three months ended December 31, 2022.
Gain on sale of loans. The decrease resulted
from an overall decline in the volume of loans sold during the
three months ended December 31, 2023 as compared to the three
months ended December 31, 2022. During the three months ended
December 31, 2023, approximately $5.9 million of loans
were sold with an effective yield of 5.41%, as compared to
approximately $14.5 million of loans sold with an effective
yield of 4.40% during the three months ended December 31,
2022.
Loan-related fees. The increase resulted from
the recognition of $0.1 million of swap referral fees and
$0.2 million of rate lock fees during the three months ended
December 31, 2023, which did not occur during the three months
ended December 31, 2022.
FHLB stock dividends. The increase was primarily
due to an increase in yield from dividends received from 7.00% to
8.25% for the three months ended December 31, 2022 and
December 31, 2023, respectively, combined with an increase in
the average number of shares outstanding of approximately 41,000
when comparing the the three months ended December 31, 2023 to
the three months ended December 31, 2022 due to FHLB stock
purchases completed in 2023.
Other income. The increase resulted primarily
from a $0.4 million gain recorded on distributions received on
investments in venture-backed funds during the three months ended
December 31, 2023, compared to a $0.1 million gain recorded
during the three months ended December 31, 2022.
The following table presents the key components
of non-interest income for the periods indicated:
|
|
Year ended |
|
|
|
(in thousands) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Service charges on deposit accounts |
|
$ |
575 |
|
|
$ |
467 |
|
|
$ |
108 |
|
|
23.13 |
% |
Net gain (loss) on sale of
securities |
|
|
(167 |
) |
|
|
5 |
|
|
|
(172 |
) |
|
(3,440.00 |
)% |
Gain on sale of loans |
|
|
1,952 |
|
|
|
2,934 |
|
|
|
(982 |
) |
|
(33.47 |
)% |
Loan-related fees |
|
|
1,719 |
|
|
|
2,207 |
|
|
|
(488 |
) |
|
(22.11 |
)% |
FHLB stock dividends |
|
|
970 |
|
|
|
546 |
|
|
|
424 |
|
|
77.66 |
% |
Earnings on bank-owned life
insurance |
|
|
510 |
|
|
|
412 |
|
|
|
98 |
|
|
23.79 |
% |
Other income |
|
|
1,952 |
|
|
|
586 |
|
|
|
1,366 |
|
|
233.11 |
% |
Total non-interest income |
|
$ |
7,511 |
|
|
$ |
7,157 |
|
|
$ |
354 |
|
|
4.95 |
% |
Service charges on deposit accounts. The
increase related to individually immaterial increases in fees
earned for services and products to support deposit accounts
including, but not limited to, service charges, wire transfer fees,
check order fees, and debit card income.
Net gain (loss) on sale of securities. The
increase in the net loss on sale of securities resulted from the
sale of two municipal securities with a par value of approximately
$0.8 million for a loss of approximately $0.2 million
during the year ended December 31, 2023 compared to the sale
of approximately $1.6 million of municipal securities, resulting in
a gain of $5.0 thousand during the year ended December 31,
2022.
Gain on sale of loans. The decrease related
primarily to an overall decline in the volume of loans sold during
the year ended December 31, 2023 compared to the year ended
December 31, 2022. During the year ended December 31,
2023, approximately $36.5 million of loans were sold with an
effective yield of 5.35%, as compared to approximately $50.8
million of loans sold with an effective yield of 5.78% during the
year ended December 31, 2022.
Loan-related fees. The decrease was primarily a
result of: (i) a decrease of $0.6 million in swap referral
fees and (ii) a decrease of $0.2 million in loan fee income
earned on various loan types and services. These decreases were
partially offset by: (i) a $0.2 million increase in rate lock
fees earned and (ii) a $0.1 million increase in income earned
from the credit card program recognized during the year ended
December 31, 2023 compared to the year ended December 31,
2022.
FHLB stock dividends. The increase primarily
relates to an increase in the number of FHLB Class B shares held
for the year ended December 31, 2023 compared to the year
ended December 31, 2022 combined with an overall increase in
the annualized dividend rates earned year-over-year.
Other income. The increase resulted primarily
from a $1.7 million gain recorded on distributions received on
investments in venture-backed funds during the year ended
December 31, 2023, as compared to a $0.4 million gain
recognized during the year ended December 31, 2022.
Non-interest Expense
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
December 31,2023 |
|
September 30,2023 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
7,182 |
|
|
$ |
6,876 |
|
|
$ |
306 |
|
|
4.45 |
% |
Occupancy and equipment |
|
|
583 |
|
|
|
561 |
|
|
|
22 |
|
|
3.92 |
% |
Data processing and software |
|
|
1,110 |
|
|
|
1,020 |
|
|
|
90 |
|
|
8.82 |
% |
Federal Deposit Insurance Corporation (“FDIC”) insurance |
|
|
370 |
|
|
|
375 |
|
|
|
(5 |
) |
|
(1.33 |
)% |
Professional services |
|
|
658 |
|
|
|
700 |
|
|
|
(42 |
) |
|
(6.00 |
)% |
Advertising and promotional |
|
|
717 |
|
|
|
535 |
|
|
|
182 |
|
|
34.02 |
% |
Loan-related expenses |
|
|
268 |
|
|
|
345 |
|
|
|
(77 |
) |
|
(22.32 |
)% |
Other operating expenses |
|
|
1,775 |
|
|
|
1,603 |
|
|
|
172 |
|
|
10.73 |
% |
Total non-interest expense |
|
$ |
12,663 |
|
|
$ |
12,015 |
|
|
$ |
648 |
|
|
5.39 |
% |
Salaries and employee benefits. The increase was
primarily a result of: (i) a $0.3 million increase in
salaries, insurance, and benefits, which primarily related to four
new employees hired in September 2023 and one new employee hired in
December 2023 to support expansion into the San Francisco Bay Area
and (ii) a $0.2 million decline in loan origination costs
related to lower production. These increases were partially offset
by a $0.2 million reduction in the 2023 bonus accrual related
to 2023 financial performance which was trued-up during the three
months ended December 31, 2023, as compared to the three
months ended September 30, 2023.
Advertising and promotional. The increase was
primarily due to the timing of events sponsored and attended during
the three months ended December 31, 2023 compared to the three
months ended September 30, 2023.
Other operating expenses. The increase was
primarily due to increased expenses incurred for travel and fees
paid for attendance of professional events, conferences, and other
business-related events during the three months ended
December 31, 2023, as compared to the three months ended
September 30, 2023.
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Three months ended |
|
|
|
|
(in thousands) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
7,182 |
|
|
$ |
5,698 |
|
|
$ |
1,484 |
|
|
26.04 |
% |
Occupancy and equipment |
|
|
583 |
|
|
|
511 |
|
|
|
72 |
|
|
14.09 |
% |
Data processing and
software |
|
|
1,110 |
|
|
|
839 |
|
|
|
271 |
|
|
32.30 |
% |
FDIC insurance |
|
|
370 |
|
|
|
245 |
|
|
|
125 |
|
|
51.02 |
% |
Professional services |
|
|
658 |
|
|
|
553 |
|
|
|
105 |
|
|
18.99 |
% |
Advertising and
promotional |
|
|
717 |
|
|
|
568 |
|
|
|
149 |
|
|
26.23 |
% |
Loan-related expenses |
|
|
268 |
|
|
|
358 |
|
|
|
(90 |
) |
|
(25.14 |
)% |
Other operating expenses |
|
|
1,775 |
|
|
|
1,945 |
|
|
|
(170 |
) |
|
(8.74 |
)% |
Total non-interest expense |
|
$ |
12,663 |
|
|
$ |
10,717 |
|
|
$ |
1,946 |
|
|
18.16 |
% |
Salaries and employee benefits. The increase was
primarily a result of: (i) a $1.1 million increase in
salaries, insurance, and benefits, of which approximately $0.7
million related to 10 new employees hired to support expansion into
the San Francisco Bay Area, and (ii) a $0.8 million decrease
in the allocation of loan origination costs resulting from lower
loan production. These increases were partially offset by a
$0.4 million decline in commissions expense due to lower
production during the three months ended December 31, 2023
compared to the three months ended December 31, 2022.
Data processing and software. The increase 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 December 31, 2023 compared to the
three months ended December 31, 2022 due to a
$266.4 million increase in the assessment base
period-over-period.
Professional services. The increase was
primarily due to increased audit, IT support, and other consulting
fees for services provided for the three months ended
December 31, 2023 compared to the three months ended
December 31, 2022.
Advertising and promotional. The increase was
primarily due to increases in business development, marketing, and
sponsorship expenses incurred during the three months ended
December 31, 2023 compared to the three months ended
December 31, 2022 related to an increase in the number of
Business Development Officers from December 31, 2022 to
December 31, 2023.
Other operating expenses. The decrease was
primarily due to $0.3 million of subordinated debt issuance
costs recognized as an other expense upon redemption of the
subordinated notes in December 2022, which did not reoccur during
the three months ended December 31, 2023. This was partially
offset by an increase of $0.1 million for IntraFi Network fees
resulting from an overall increase in balances carried in the
network.
The following table presents the key components
of non-interest expense for the periods indicated:
|
|
Year ended |
|
|
|
|
(in thousands) |
|
December 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
Salaries and employee benefits |
|
$ |
27,097 |
|
|
$ |
22,571 |
|
|
$ |
4,526 |
|
|
20.05 |
% |
Occupancy and equipment |
|
|
2,218 |
|
|
|
2,059 |
|
|
|
159 |
|
|
7.72 |
% |
Data processing and
software |
|
|
4,015 |
|
|
|
3,091 |
|
|
|
924 |
|
|
29.89 |
% |
FDIC insurance |
|
|
1,557 |
|
|
|
850 |
|
|
|
707 |
|
|
83.18 |
% |
Professional services |
|
|
2,575 |
|
|
|
2,467 |
|
|
|
108 |
|
|
4.38 |
% |
Advertising and
promotional |
|
|
2,403 |
|
|
|
1,908 |
|
|
|
495 |
|
|
25.94 |
% |
Loan-related expenses |
|
|
1,192 |
|
|
|
1,287 |
|
|
|
(95 |
) |
|
(7.38 |
)% |
Other operating expenses |
|
|
6,718 |
|
|
|
6,436 |
|
|
|
282 |
|
|
4.38 |
% |
Total non-interest expense |
|
$ |
47,775 |
|
|
$ |
40,669 |
|
|
$ |
7,106 |
|
|
17.47 |
% |
Salaries and employee benefits. The increase was
the result of: (i) a $3.2 million increase in salaries,
insurance, and benefits, of which approximately $1.2 million
related to 10 new employees hired to support expansion into the San
Francisco Bay Area and the remainder of the increase related to
increased pay rates and promotions for existing employees; (ii) a
$2.7 million decrease in loan origination costs due to lower
production; and (iii) a $0.3 million increase in bonus expense
due to an increase in the base salaries and number of employees
eligible for bonuses in 2023. The increase was partially offset by
a $1.8 million decline in commissions expense due to lower
production during the year ended December 31, 2023, as
compared to the year ended December 31, 2022.
Occupancy and equipment. The increase was the
result of a $0.1 million increase in rent expense related to
temporary office space to support the San Francisco Bay Area during
the second half of 2023 and a new office lease to support back
office staff beginning during the fourth quarter of 2023.
Data processing and software. The increase
related 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 year ended December 31, 2023 compared to the year
ended December 31, 2022 due to a $266.4 million increase
in the assessment base period-over-period.
Professional services. The increase was due to a
$0.5 million increase in audit, IT support, and other
consulting fees for services provided for the year ended
December 31, 2023 compared to the year ended December 31,
2022. This was partially offset by a decline of $0.3 million
relating to: (i) $0.2 million of lower legal fees incurred
relating to the subordinated debt offering and redemption completed
in 2022, which did not reoccur in 2023 and (ii) $0.1 million
of lower recruiting fees incurred for the year ended
December 31, 2023 compared to the year ended December 31,
2022.
Advertising and promotional. The increase was
primarily due to an increased customer base and an increase in the
number of Business Development Officers as of December 31,
2023 compared to December 31, 2022.
Other operating expenses. The increase is
primarily related to: (i) a $0.3 million increase in IntraFi
Network fees resulting from an overall increase in balances carried
in the network; (ii) a $0.1 million increase in bank charges
due to increased activity; (iii) a $0.1 million increase in
insurance expenses; and (iv) a $0.1 million net increase in
travel, conferences, memberships, and subscription expenses
incurred. These increases were partially offset by $0.3 million of
subordinated debt issuance costs recognized as an other expense
upon redemption of the subordinated notes in December 2022, which
did not reoccur during the year ended December 31, 2023.
Provision for Income Taxes
Three months ended December 31, 2023, as
compared to the three months ended September 30, 2023
Provision for income taxes for the quarter ended
December 31, 2023 decreased by $0.4 million, or 8.38%, to $4.4
million, as compared to $4.8 million for the quarter ended
September 30, 2023, which was primarily due to: (i) the
decrease in taxable income recognized during the three months ended
December 31, 2023 and (ii) a $0.2 million adjustment to the
provision recorded during the three months ended September 30,
2023 to true-up the year-to-date effective tax rate, which did not
reoccur during the three months ended December 31, 2023. The
effective tax rate was 28.72% and 30.07% for the three months ended
December 31, 2023 and September 30, 2023,
respectively.
Three months ended December 31, 2023, as
compared to the three months ended December 31, 2022
Provision for income taxes decreased by $1.1
million, or 20.69%, to $4.4 million for the three months ended
December 31, 2023, as compared to $5.5 million for the three
months ended December 31, 2022. This decrease is due to the
decrease in taxable income for the three months ended
December 31, 2023 compared to the three months ended
December 31, 2022. The effective tax rate was 28.72% and
29.23% for the three months ended December 31, 2023 and
December 31, 2022, respectively. The lower effective tax rate
period-over-period related to multi-state tax return filings for
the Company since its inception as a C Corporation. The returns
were filed during the second quarter of 2023 and reduced the
Company’s blended state tax rate.
Year ended December 31, 2023, as compared to the year ended
December 31, 2022
Provision for income taxes increased by $0.8
million, or 4.57%, to $18.9 million for the year ended
December 31, 2023, as compared to $18.1 million for the year
ended December 31, 2022. This increase is due to an increase
in taxable income, partially offset by a decline in the effective
tax rate for each period, from 28.73% to 28.34% for the years ended
December 31, 2022 and December 31, 2023, respectively.
The lower effective tax rate period-over-period related to
multi-state tax return filings for the Company since its inception
as a C Corporation. The returns were filed during the second
quarter of 2023 and reduced the Company’s blended state tax
rate.
Webcast Details
Five Star Bancorp will host a live webcast for
analysts and investors on Tuesday, January 30, 2024, at 1:00 p.m.
ET (10:00 a.m. PT), to discuss its fourth quarter and annual
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. The
Bank has seven branches 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 September 30, 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) |
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
Revenue and Expense
Data |
|
|
|
|
|
|
Interest and fee income |
|
$ |
46,180 |
|
|
$ |
45,098 |
|
|
$ |
37,402 |
|
Interest expense |
|
|
19,502 |
|
|
|
17,622 |
|
|
|
8,267 |
|
Net interest income |
|
|
26,678 |
|
|
|
27,476 |
|
|
|
29,135 |
|
Provision for credit
losses |
|
|
800 |
|
|
|
1,050 |
|
|
|
1,250 |
|
Net interest income after
provision |
|
|
25,878 |
|
|
|
26,426 |
|
|
|
27,885 |
|
Non-interest income: |
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
165 |
|
|
|
158 |
|
|
|
97 |
|
Net gain (loss) on sale of securities |
|
|
(167 |
) |
|
|
— |
|
|
|
— |
|
Gain on sale of loans |
|
|
317 |
|
|
|
396 |
|
|
|
637 |
|
Loan-related fees |
|
|
667 |
|
|
|
355 |
|
|
|
407 |
|
FHLB stock dividends |
|
|
314 |
|
|
|
274 |
|
|
|
193 |
|
Earnings on bank-owned life insurance |
|
|
155 |
|
|
|
127 |
|
|
|
119 |
|
Other income |
|
|
485 |
|
|
|
74 |
|
|
|
148 |
|
Total non-interest income |
|
|
1,936 |
|
|
|
1,384 |
|
|
|
1,601 |
|
Non-interest expense: |
|
|
|
|
|
|
Salaries and employee benefits |
|
|
7,182 |
|
|
|
6,876 |
|
|
|
5,698 |
|
Occupancy and equipment |
|
|
583 |
|
|
|
561 |
|
|
|
511 |
|
Data processing and software |
|
|
1,110 |
|
|
|
1,020 |
|
|
|
839 |
|
FDIC insurance |
|
|
370 |
|
|
|
375 |
|
|
|
245 |
|
Professional services |
|
|
658 |
|
|
|
700 |
|
|
|
553 |
|
Advertising and promotional |
|
|
717 |
|
|
|
535 |
|
|
|
568 |
|
Loan-related expenses |
|
|
268 |
|
|
|
345 |
|
|
|
358 |
|
Other operating expenses |
|
|
1,775 |
|
|
|
1,603 |
|
|
|
1,945 |
|
Total non-interest
expense |
|
|
12,663 |
|
|
|
12,015 |
|
|
|
10,717 |
|
Income before provision for
income taxes |
|
|
15,151 |
|
|
|
15,795 |
|
|
|
18,769 |
|
Provision for income taxes |
|
|
4,352 |
|
|
|
4,750 |
|
|
|
5,487 |
|
Net income |
|
$ |
10,799 |
|
|
$ |
11,045 |
|
|
$ |
13,282 |
|
|
|
|
|
|
|
|
Comprehensive
Income |
|
|
|
|
|
|
Net income |
|
$ |
10,799 |
|
|
$ |
11,045 |
|
|
$ |
13,282 |
|
Net unrealized holding gain
(loss) on securities available-for-sale during the period |
|
|
5,744 |
|
|
|
(4,195 |
) |
|
|
3,714 |
|
Reclassification for net
(gain) loss on sale of securities included in net income |
|
|
167 |
|
|
|
— |
|
|
|
— |
|
Less: Income tax expense
(benefit) related to other comprehensive income (loss) |
|
|
1,747 |
|
|
|
(1,240 |
) |
|
|
1,098 |
|
Other comprehensive income
(loss) |
|
|
4,164 |
|
|
|
(2,955 |
) |
|
|
2,616 |
|
Total comprehensive
income |
|
$ |
14,963 |
|
|
$ |
8,090 |
|
|
$ |
15,898 |
|
|
|
|
|
|
|
|
Share and Per Share
Data |
|
|
|
|
|
|
Earnings per common
share: |
|
|
|
|
|
|
Basic |
|
$ |
0.63 |
|
|
$ |
0.64 |
|
|
$ |
0.77 |
|
Diluted |
|
$ |
0.63 |
|
|
$ |
0.64 |
|
|
$ |
0.77 |
|
Book value per share |
|
$ |
16.56 |
|
|
$ |
15.88 |
|
|
$ |
14.66 |
|
Tangible book value per
share(1) |
|
$ |
16.56 |
|
|
$ |
15.88 |
|
|
$ |
14.66 |
|
Weighted average basic common
shares outstanding |
|
|
17,175,445 |
|
|
|
17,175,034 |
|
|
|
17,143,920 |
|
Weighted average diluted
common shares outstanding |
|
|
17,193,114 |
|
|
|
17,194,825 |
|
|
|
17,179,863 |
|
Shares outstanding at end of
period |
|
|
17,256,989 |
|
|
|
17,257,357 |
|
|
|
17,241,926 |
|
|
|
|
|
|
|
|
Credit
Quality |
|
|
|
|
|
|
Allowance for credit losses to
period end nonperforming loans |
|
|
1,752.70 |
% |
|
|
1,699.35 |
% |
|
|
7,026.98 |
% |
Nonperforming loans to loans
held for investment |
|
|
0.06 |
% |
|
|
0.07 |
% |
|
|
0.01 |
% |
Nonperforming assets to total
assets |
|
|
0.05 |
% |
|
|
0.06 |
% |
|
|
0.01 |
% |
Nonperforming loans plus
performing loan modifications to loans held for investment |
|
|
0.06 |
% |
|
|
0.07 |
% |
|
|
0.01 |
% |
|
|
|
|
|
|
|
Selected Financial
Ratios |
|
|
|
|
|
|
ROAA |
|
|
1.26 |
% |
|
|
1.30 |
% |
|
|
1.70 |
% |
ROAE |
|
|
15.45 |
% |
|
|
16.09 |
% |
|
|
21.50 |
% |
Net interest margin |
|
|
3.19 |
% |
|
|
3.31 |
% |
|
|
3.83 |
% |
Loan to deposit |
|
|
102.19 |
% |
|
|
99.57 |
% |
|
|
100.67 |
% |
(1) See the section entitled “Non-GAAP Reconciliation
(Unaudited)” for a reconciliation of this non-GAAP financial
measure.
|
|
Year ended |
(in thousands, except per
share and share data) |
|
December 31,2023 |
|
December 31,2022 |
Revenue and Expense
Data |
|
|
|
|
Interest and fee income |
|
$ |
174,382 |
|
|
$ |
117,918 |
|
Interest expense |
|
|
63,502 |
|
|
|
14,848 |
|
Net interest income |
|
|
110,880 |
|
|
|
103,070 |
|
Provision for credit
losses |
|
|
4,000 |
|
|
|
6,700 |
|
Net interest income after
provision |
|
|
106,880 |
|
|
|
96,370 |
|
Non-interest income: |
|
|
|
|
Service charges on deposit accounts |
|
|
575 |
|
|
|
467 |
|
Net gain (loss) on sale of securities |
|
|
(167 |
) |
|
|
5 |
|
Gain on sale of loans |
|
|
1,952 |
|
|
|
2,934 |
|
Loan-related fees |
|
|
1,719 |
|
|
|
2,207 |
|
FHLB stock dividends |
|
|
970 |
|
|
|
546 |
|
Earnings on bank-owned life insurance |
|
|
510 |
|
|
|
412 |
|
Other income |
|
|
1,952 |
|
|
|
586 |
|
Total non-interest income |
|
|
7,511 |
|
|
|
7,157 |
|
Non-interest expense: |
|
|
|
|
Salaries and employee benefits |
|
|
27,097 |
|
|
|
22,571 |
|
Occupancy and equipment |
|
|
2,218 |
|
|
|
2,059 |
|
Data processing and software |
|
|
4,015 |
|
|
|
3,091 |
|
FDIC insurance |
|
|
1,557 |
|
|
|
850 |
|
Professional services |
|
|
2,575 |
|
|
|
2,467 |
|
Advertising and promotional |
|
|
2,403 |
|
|
|
1,908 |
|
Loan-related expenses |
|
|
1,192 |
|
|
|
1,287 |
|
Other operating expenses |
|
|
6,718 |
|
|
|
6,436 |
|
Total non-interest
expense |
|
|
47,775 |
|
|
|
40,669 |
|
Income before provision for
income taxes |
|
|
66,616 |
|
|
|
62,858 |
|
Provision for income taxes |
|
|
18,882 |
|
|
|
18,057 |
|
Net income |
|
$ |
47,734 |
|
|
$ |
44,801 |
|
|
|
|
|
|
Comprehensive
Income |
|
|
|
|
Net income |
|
$ |
47,734 |
|
|
$ |
44,801 |
|
Net unrealized holding gain
(loss) on securities available-for-sale during the period |
|
|
2,228 |
|
|
|
(18,291 |
) |
Reclassification for net
(gain) loss on sale of securities included in net income |
|
|
167 |
|
|
|
(5 |
) |
Less: Income tax expense
(benefit) related to other comprehensive income (loss) |
|
|
708 |
|
|
|
(5,408 |
) |
Other comprehensive income
(loss) |
|
|
1,687 |
|
|
|
(12,888 |
) |
Total comprehensive
income |
|
$ |
49,421 |
|
|
$ |
31,913 |
|
|
|
|
|
|
Share and Per Share
Data |
|
|
|
|
Earnings per common
share: |
|
|
|
|
Basic |
|
$ |
2.78 |
|
|
$ |
2.61 |
|
Diluted |
|
$ |
2.78 |
|
|
$ |
2.61 |
|
Book value per share |
|
$ |
16.56 |
|
|
$ |
14.66 |
|
Tangible book value per
share(1) |
|
$ |
16.56 |
|
|
$ |
14.66 |
|
Weighted average basic common
shares outstanding |
|
|
17,166,592 |
|
|
|
17,128,282 |
|
Weighted average diluted
common shares outstanding |
|
|
17,187,969 |
|
|
|
17,165,610 |
|
Shares outstanding at end of
period |
|
|
17,256,989 |
|
|
|
17,241,926 |
|
|
|
|
|
|
Credit
Quality |
|
|
|
|
Allowance for credit losses to
period end nonperforming loans |
|
|
1,752.70 |
% |
|
|
7,026.98 |
% |
Nonperforming loans to loans
held for investment |
|
|
0.06 |
% |
|
|
0.01 |
% |
Nonperforming assets to total
assets |
|
|
0.05 |
% |
|
|
0.01 |
% |
Nonperforming loans plus
performing loan modifications to loans held for investment |
|
|
0.06 |
% |
|
|
0.01 |
% |
|
|
|
|
|
Selected Financial
Ratios |
|
|
|
|
ROAA |
|
|
1.44 |
% |
|
|
1.57 |
% |
ROAE |
|
|
17.85 |
% |
|
|
18.80 |
% |
Net interest margin |
|
|
3.42 |
% |
|
|
3.75 |
% |
Loan to deposit |
|
|
102.19 |
% |
|
|
100.67 |
% |
(1) See the section entitled “Non-GAAP Reconciliation
(Unaudited)” for a reconciliation of this non-GAAP financial
measure.
(in thousands) |
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
Balance Sheet Data |
|
|
|
|
|
|
Cash and due from financial institutions |
|
$ |
26,986 |
|
|
$ |
26,744 |
|
|
$ |
32,561 |
|
Interest-bearing deposits in banks |
|
|
294,590 |
|
|
|
296,804 |
|
|
|
227,430 |
|
Time deposits in banks |
|
|
5,858 |
|
|
|
6,971 |
|
|
|
9,849 |
|
Securities - available-for-sale, at fair value |
|
|
108,083 |
|
|
|
104,086 |
|
|
|
115,988 |
|
Securities - held-to-maturity, at amortized cost |
|
|
3,077 |
|
|
|
3,104 |
|
|
|
3,756 |
|
Loans held for sale |
|
|
11,464 |
|
|
|
9,326 |
|
|
|
9,416 |
|
Loans held for investment |
|
|
3,081,719 |
|
|
|
3,009,930 |
|
|
|
2,791,326 |
|
Allowance for credit losses - loans |
|
|
(34,431 |
) |
|
|
(34,028 |
) |
|
|
(28,389 |
) |
Loans held for investment, net of allowance for credit losses |
|
|
3,047,288 |
|
|
|
2,975,902 |
|
|
|
2,762,937 |
|
FHLB stock |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
10,890 |
|
Operating leases, right-of-use asset |
|
|
5,284 |
|
|
|
4,799 |
|
|
|
3,981 |
|
Premises and equipment, net |
|
|
1,623 |
|
|
|
1,564 |
|
|
|
1,605 |
|
Bank-owned life insurance |
|
|
17,180 |
|
|
|
17,023 |
|
|
|
14,669 |
|
Interest receivable and other assets |
|
|
56,692 |
|
|
|
43,717 |
|
|
|
34,077 |
|
Total assets |
|
$ |
3,593,125 |
|
|
$ |
3,505,040 |
|
|
$ |
3,227,159 |
|
|
|
|
|
|
|
|
Non-interest-bearing deposits |
|
$ |
831,101 |
|
|
$ |
833,434 |
|
|
$ |
971,246 |
|
Interest-bearing deposits |
|
|
2,195,795 |
|
|
|
2,198,776 |
|
|
|
1,810,758 |
|
Total deposits |
|
|
3,026,896 |
|
|
|
3,032,210 |
|
|
|
2,782,004 |
|
Subordinated notes, net |
|
|
73,749 |
|
|
|
73,713 |
|
|
|
73,606 |
|
FHLB advances |
|
|
170,000 |
|
|
|
90,000 |
|
|
|
100,000 |
|
Operating lease liability |
|
|
5,603 |
|
|
|
5,043 |
|
|
|
4,243 |
|
Interest payable and other liabilities |
|
|
31,103 |
|
|
|
30,050 |
|
|
|
14,481 |
|
Total liabilities |
|
|
3,307,351 |
|
|
|
3,231,016 |
|
|
|
2,974,334 |
|
|
|
|
|
|
|
|
Common stock |
|
|
220,505 |
|
|
|
220,266 |
|
|
|
219,543 |
|
Retained earnings |
|
|
77,036 |
|
|
|
69,689 |
|
|
|
46,736 |
|
Accumulated other comprehensive loss, net |
|
|
(11,767 |
) |
|
|
(15,931 |
) |
|
|
(13,454 |
) |
Total shareholders’ equity |
|
|
285,774 |
|
|
|
274,024 |
|
|
|
252,825 |
|
Total liabilities and shareholders’ equity |
|
$ |
3,593,125 |
|
|
$ |
3,505,040 |
|
|
$ |
3,227,159 |
|
|
|
|
|
|
|
|
Quarterly Average Balance Data |
|
|
|
|
|
|
Average loans held for investment and sale |
|
$ |
3,055,042 |
|
|
$ |
2,982,140 |
|
|
$ |
2,703,865 |
|
Average interest-earning assets |
|
|
3,319,300 |
|
|
|
3,293,045 |
|
|
|
3,021,624 |
|
Average total assets |
|
|
3,399,660 |
|
|
|
3,370,802 |
|
|
|
3,095,288 |
|
Average deposits |
|
|
3,009,078 |
|
|
|
2,984,208 |
|
|
|
2,718,409 |
|
Average total equity |
|
|
277,295 |
|
|
|
272,386 |
|
|
|
245,019 |
|
|
|
|
|
|
|
|
Capital Ratios |
|
|
|
|
|
|
Total shareholders’ equity to total assets |
|
|
7.95 |
% |
|
|
7.82 |
% |
|
|
7.83 |
% |
Tangible shareholders’ equity to tangible assets(1) |
|
|
7.95 |
% |
|
|
7.82 |
% |
|
|
7.83 |
% |
Total capital (to risk-weighted assets) |
|
|
12.30 |
% |
|
|
12.37 |
% |
|
|
12.46 |
% |
Tier 1 capital (to risk-weighted assets) |
|
|
9.07 |
% |
|
|
9.07 |
% |
|
|
8.99 |
% |
Common equity Tier 1 capital (to risk-weighted assets) |
|
|
9.07 |
% |
|
|
9.07 |
% |
|
|
8.99 |
% |
Tier 1 leverage ratio |
|
|
8.73 |
% |
|
|
8.58 |
% |
|
|
8.60 |
% |
(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 tables provide a
more detailed analysis of this non-GAAP financial measure:
|
|
Three months ended |
(in thousands) |
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
Pre-tax, pre-provision
income |
|
|
|
|
|
|
Pre-tax income |
|
$ |
15,151 |
|
|
$ |
15,795 |
|
|
$ |
18,769 |
|
Add: provision for credit
losses |
|
|
800 |
|
|
|
1,050 |
|
|
|
1,250 |
|
Pre-tax, pre-provision income |
|
$ |
15,951 |
|
|
$ |
16,845 |
|
|
$ |
20,019 |
|
|
|
Year ended |
(in thousands) |
|
December 31,2023 |
|
December 31,2022 |
Pre-tax, pre-provision
income |
|
|
|
|
Pre-tax income |
|
$ |
66,616 |
|
|
$ |
62,858 |
|
Add: provision for credit
losses |
|
|
4,000 |
|
|
|
6,700 |
|
Pre-tax, pre-provision income |
|
$ |
70,616 |
|
|
$ |
69,558 |
|
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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