Five Star Bancorp (FSBC) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Five Star Bancorp is a California-based bank holding company operating through its subsidiary, Five Star Bank. The company focuses on commercial real estate, construction, and consumer lending primarily in Northern California. As of the reporting date, the company qualified as an Emerging Growth Company and an Accelerated Filer.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | YTD 2026 (6 Months) | Balance Sheet (June 30, 2026) |
|---|---|---|---|
| Net Income | $19.4 million | $38.0 million | — |
| Earnings Per Share (Diluted) | $0.91 | $1.78 | — |
| Net Interest Income | $46.1 million | $89.5 million | — |
| Net Interest Margin | 3.63% | 3.66% | — |
| Total Assets | — | — | $5.38 billion |
| Total Loans (Gross) | — | — | $4.52 billion |
| Total Deposits | — | — | $4.80 billion |
| Shareholders' Equity | — | — | $473.8 million |
| Cash & Equivalents | — | — | $685.1 million |
| Efficiency Ratio | 40.91% | 39.77% | — |
| Return on Average Assets (ROAA) | 1.49% | 1.52% | — |
| Return on Average Equity (ROAE) | 16.67% | 16.70% | — |
Material Changes vs. Prior Period
- Profitability Growth: Net income increased 33.7% year-over-year for the quarter ($19.4M vs. $14.5M) and 37.7% year-over-year for the six-month period ($38.0M vs. $27.6M).
- Balance Sheet Expansion: Total assets grew 13.1% to $5.38 billion from $4.75 billion at year-end 2025. Total loans increased 10.9% to $4.52 billion, driven by $1.0 billion in originations.
- Deposit Growth: Total deposits rose 14.2% to $4.80 billion. Non-interest-bearing deposits increased by $89.9 million, while wholesale deposits decreased by $215.0 million.
- Asset Quality: Non-accrual loans increased to $13.4 million (0.30% of total loans) from $3.1 million (0.08%) at year-end 2025. This increase was primarily due to a single $11.4 million Community Reinvestment Act loan placed on non-accrual status. Net charge-offs decreased to $1.05 million for the quarter compared to $1.46 million in the prior year quarter.
- Expense Management: Non-interest expense increased 24.7% year-over-year for the quarter, largely due to a 13.3% increase in headcount and higher commissions, though the efficiency ratio improved to 40.91%.
Guidance, Outlook, and Risks
- Capital Raise: In July 2026 (subsequent to the period end), the company completed a public offering of 3,133,750 shares at $44.00 per share, raising approximately $129.9 million in net proceeds.
- Dividends: The board declared a quarterly cash dividend of $0.25 per share, payable in August 2026.
- Expansion: A tenth branch is scheduled to open in Lodi, California, in July 2026.
- Regulatory Capital: The company remains "well-capitalized" under regulatory standards. Total risk-based capital ratio was 12.50% and Tier 1 leverage ratio was 9.21% as of June 30, 2026.
- Risks: Key risks include concentration in Northern California real estate (85% of loan portfolio), interest rate sensitivity, and the impact of potential economic downturns on commercial borrowers. The company noted that a significant portion of its commercial real estate portfolio is secured by manufactured home communities and RV parks.
Investor Verification Checklist
- Non-Accrual Concentration: Verify the status and collateral coverage of the specific $11.4 million Community Reinvestment Act loan that drove the increase in non-accruals.
- Deposit Stability: Review the composition of the $3.1 billion in large deposit relationships (>$5M), noting that the largest single relationship represents 7.09% of total deposits.
- Commercial Real Estate Exposure: Assess the loan-to-value (LTV) ratios and occupancy rates for the manufactured home community and RV park sectors, which comprise over 42% of the commercial real estate portfolio.
- Capital Utilization: Monitor the deployment of the $129.9 million raised in the July 2026 public offering and its impact on future ROE.
- Expense Trajectory: Track the efficiency ratio as the company continues to invest in headcount and technology, ensuring expense growth remains aligned with revenue growth.