SEC Filing | Five Star Bancorp

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fsbc-20230130

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 30, 2023

FIVE STAR BANCORP

(Exact Name of Registrant as Specified in Charter)

California

001-40379

75-3100966

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

3100 Zinfandel Drive, Suite 100, Rancho Cordova, California, 95670

(Address of Principal Executive Offices, and Zip Code)

(916) 626-5000

Registrant’s Telephone Number, Including Area Code

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


			☐			Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


			☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


			☐			Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


			☐			Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value per share	FSBC	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On January 30, 2023, Five Star Bancorp (the “Company”) issued a press release announcing its results of operations and financial condition for the quarter and year ended December 31, 2022. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

This information (including Exhibit 99.1) is being furnished under Item 2.02 hereof and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure

The Company is conducting an earnings call on January 31, 2023 at 10:00am PT/1:00pm ET to discuss its fourth quarter and year end 2022 financial results. A copy of the investor presentation to be used during the earnings call is attached to this Current Report on Form 8-K as Exhibit 99.2 and is incorporated herein by reference.

This information (including Exhibit 99.2) is being furnished under Item 7.01 hereof and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits


Number									Description
99.1									Press Release dated January 30 , 202 3
99.2									Fourth Quarter and Year End 2022 Investor Presentation, dated January 31 , 202 3
104									Cover Page Interactive Data File (embedded within the Inline XBRL)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




	FIVE STAR BANCORP

	By:	/s/ Heather Luck
		Name: Heather Luck
		Title: Senior Vice President and Chief Financial Officer

Date: January 30, 2023

Document


PRESS RELEASE			FOR IMMEDIATE RELEASE

Five Star Bancorp Announces Quarterly and Annual Results

RANCHO CORDOVA, Calif. January 30, 2023 (GLOBE NEWSWIRE) – Five Star Bancorp (Nasdaq: FSBC) (the “Company” or “Five Star”), the holding company for Five Star Bank, today reported net income of $13.3 million for the three months ended December 31, 2022, as compared to $11.7 million for the three months ended September 30, 2022 and $11.3 million for the three months ended December 31, 2021. Net income for the year ended December 31, 2022 was $44.8 million, as compared to $42.4 million for the year ended December 31, 2021.

Financial Highlights

Performance highlights and other developments for the Company for the periods noted below included the following:

•Pre-tax net income, pre-tax, pre-provision net 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)	December 31, 2022		September 30, 2022		December 31, 2021
Pre-tax net income	$	18,769	$	16,534	$	12,630
Pre-tax, pre-provision net income(1)	$	20,019	$	18,784	$	14,130
Net income	$	13,282	$	11,704	$	11,309
Basic earnings per common share	$	0.77	$	0.68	$	0.66
Diluted earnings per common share	$	0.77	$	0.68	$	0.66
Weighted average basic common shares outstanding	17,143,920		17,140,435		17,096,230
Weighted average diluted common shares outstanding	17,179,863		17,168,447		17,139,693
Shares outstanding at end of period	17,241,926		17,245,983		17,224,848


	Year ended
(dollars in thousands, except share and per share data)	December 31, 2022		December 31, 2021
Pre-tax net income	$	62,858	$	47,148
Pre-tax, pre-provision net income(1)	$	69,558	$	48,848
Net income	$	44,801	$	42,441
Basic earnings per common share	$	2.61	$	2.83
Diluted earnings per common share	$	2.61	$	2.83
Weighted average basic common shares outstanding	17,128,282		14,972,637
Weighted average diluted common shares outstanding	17,165,610		14,995,213
Shares outstanding at end of period	17,241,926		17,224,848

(1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.

•Loan and deposit growth was as follows at the dates indicated:


(dollars in thousands)	December 31, 2022		September 30, 2022		$ Change		% Change
Loans held for investment	$	2,791,326	$	2,582,978	$	208,348	8.07	%
Non-interest-bearing deposits	971,246		1,020,625		(49,379)		(4.84)	%
Interest-bearing deposits	1,810,758		1,593,707		217,051		13.62	%

(dollars in thousands)	December 31, 2022		December 31, 2021		$ Change		% Change
Loans held for investment	$	2,791,326	$	1,934,460	$	856,866	44.29	%
Loans held for investment, excluding Paycheck Protection Program ("PPP") loans(1)	2,791,326		1,912,336		878,990		45.96	%
PPP loans	—		22,124		(22,124)		(100.00)	%
Non-interest-bearing deposits	971,246		902,118		69,128		7.66	%
Interest-bearing deposits	1,810,758		1,383,772		426,986		30.86	%

(1) Loans held for investment, excluding PPP loans, is a non-GAAP measure. For reconciliation to the closest GAAP measure, loans held for investment, see table above.

•At December 31, 2022, the Company reported total loans held for investment, total assets, and total deposits of $2.8 billion, $3.2 billion, and $2.8 billion, respectively, as compared to $1.9 billion, $2.6 billion, and $2.3 billion, respectively, at December 31, 2021.

•The ratio of nonperforming loans to loans held for investment, or total loans at period end, decreased from 0.03% at December 31, 2021 to 0.01% at December 31, 2022.

•On December 15, 2022, the Company exercised its right of prepayment and redeemed subordinated notes with an aggregate principal amount of $28.8 million.

•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 December 31, 2022.

•For the three months ended December 31, 2022, net interest margin was 3.83%, as compared to 3.86% for the three months ended September 30, 2022 and 3.67% for the three months ended December 31, 2021. For the year ended December 31, 2022, net interest margin was 3.75%, as compared to 3.64% for the year ended December 31, 2021.

•For the three months ended December 31, 2022, the Company's return on average assets (“ROAA”) was 1.70% and return on average equity (“ROAE”) was 21.50%, as compared to ROAA and ROAE of 1.60% and 19.35%, respectively, for the three months ended September 30, 2022, and 1.82% and 19.15%, respectively, for the three months ended December 31, 2021. For the year ended December 31, 2022, the Company's ROAA and ROAE were 1.57% and 18.80%, respectively, as compared to ROAA and ROAE of 1.86% and 22.49%, respectively, for the year ended December 31, 2021.

“While we focus on the future and maintaining a position of distinction and respect in the markets we serve, we proudly look back at 2022 as another outstanding year of consistent, sustainable financial performance. The bank achieved year-over-year growth in loans, a consistent shareholder dividend, and stable net interest margin. We managed expenses and executed on conservative underwriting practices, which continue to be foundational to our success,” said Five Star Bank President and Chief Executive Officer, James Beckwith.

“Five Star Bank consistently executes on client and community-focused initiatives, and in 2022, we received a Super Premier rating from Findley Reports, an IDC rating of three hundred out of three hundred, and a Bauer rating of ‘5’ stars. We were also awarded the prestigious 2021 Raymond James Community Bankers Cup, ranking in the top 10% of community banks in the nation. In 2022, our executives were awarded by the Sacramento Business Journal a C-Suite Award, a Women Who Mean Business honor, and a 40 Under 40 recognition. 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. We are well-positioned to withstand an array of economic conditions as we enter 2023. I am humbled and proud of our team’s accomplishments and look forward to the future,” Beckwith concluded.

Summary Results

Three months ended December 31, 2022, as compared to three months ended September 30, 2022

The increase in the Company's net income from the three months ended September 30, 2022 to the three months ended December 31, 2022 was primarily due to a $1.6 million increase in net interest income driven by an increase in average loan balances and higher yields earned on interest-earning assets during the period, along with $0.2 million of growth in other income. The increase in average assets was largely the result of an increase in average loans held for investment and sale funded by increases in average interest-bearing deposits, subordinated debt and other borrowings, combined with an increase in average equity related to earnings during the period.

Three months ended December 31, 2022, as compared to three months ended December 31, 2021

The increase in the Company's net income from the three months ended December 31, 2021 to the three months ended December 31, 2022 was primarily due to an increase in net interest income of $7.8 million, driven by loan growth. This increase was partially offset by an increase in the provision for income taxes of $4.2 million and an increase in non-interest expense of $1.7 million due to operational growth. The increase in average assets was largely the result of an increase in average loans held for investment and sale funded by increases in average interest-bearing deposits, demand accounts, subordinated debt and other borrowings. The increase in average equity was primarily due to earnings growth, partially offset by an increase in accumulated other comprehensive loss period-over-period.

Year ended December 31, 2022, as compared to year ended December 31, 2021

The increase in the Company's net income from the year ended December 31, 2021 to the year ended December 31, 2022 was primarily due to an increase in net interest income of $25.5 million, driven by loan growth. This increase was partially offset by: (i) a $13.4 million increase in the provision for income taxes due to an increase in tax rates caused by the Company's transition from an S Corporation to a C Corporation during 2021; (ii) a $5.0 million increase in the provision for loan losses, largely due to loan growth; and (iii) a $4.6 million increase in non-interest expense due to operational growth. The increase in average assets was largely a result of an increase in average loans held for investment and sale, which was funded by an increase in average interest-bearing deposits, demand accounts, subordinated debt and other borrowings. The increase in average equity was primarily due to earnings growth, partially offset by an increase in accumulated other comprehensive loss year-over-year.

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)	December 31, 2022			September 30, 2022			$ Change		% Change
Selected operating data:
Net interest income	$	29,135		$	27,523		$	1,612	5.86	%
Provision for loan losses	1,250			2,250			(1,000)		(44.44)	%
Non-interest income	1,601			1,433			168		11.72	%
Non-interest expense	10,717			10,172			545		5.36	%
Pre-tax net income	18,769			16,534			2,235		13.52	%
Provision for income taxes	5,487			4,830			657		13.60	%
Net income	$	13,282		$	11,704		$	1,578	13.48	%
Earnings per common share:
Basic	$	0.77		$	0.68		$	0.09	13.24	%
Diluted	$	0.77		$	0.68		$	0.09	13.24	%
Performance and other financial ratios:
ROAA	1.70		%	1.60		%
ROAE	21.50		%	19.35		%
Net interest margin	3.83		%	3.86		%
Cost of funds	1.16		%	0.62		%
Efficiency ratio	34.87		%	35.13		%


	Three months ended
(dollars in thousands, except per share data)	December 31, 2022			December 31, 2021			$ Change		% Change
Selected operating data:
Net interest income	$	29,135		$	21,358		$	7,777	36.41	%
Provision for loan losses	1,250			1,500			(250)		(16.67)	%
Non-interest income	1,601			1,790			(189)		(10.56)	%
Non-interest expense	10,717			9,018			1,699		18.84	%
Pre-tax net income	18,769			12,630			6,139		48.61	%
Provision for income taxes	5,487			1,321			4,166		315.37	%
Net income	$	13,282		$	11,309		$	1,973	17.45	%
Earnings per common share:
Basic	$	0.77		$	0.66		$	0.11	16.67	%
Diluted	$	0.77		$	0.66		$	0.11	16.67	%
Performance and other financial ratios:
ROAA	1.70		%	1.82		%
ROAE	21.50		%	19.15		%
Net interest margin	3.83		%	3.67		%
Cost of funds	1.16		%	0.16		%
Efficiency ratio	34.87		%	38.96		%

	Year ended
(dollars in thousands, except per share data)	December 31, 2022			December 31, 2021			$ Change		% Change
Selected operating data:
Net interest income	$	103,070		$	77,611		$	25,459	32.80	%
Provision for loan losses	6,700			1,700			5,000		294.12	%
Non-interest income	7,157			7,280			(123)		(1.69)	%
Non-interest expense	40,669			36,043			4,626		12.83	%
Pre-tax net income	62,858			47,148			15,710		33.32	%
Provision for income taxes	18,057			4,707			13,350		283.62	%
Net income	$	44,801		$	42,441		$	2,360	5.56	%
Earnings per common share:
Basic	$	2.61		$	2.83		$	(0.22)	(7.77)	%
Diluted	$	2.61		$	2.83		$	(0.22)	(7.77)	%
Performance and other financial ratios:
ROAA	1.57		%	1.86		%
ROAE	18.80		%	22.49		%
Net interest margin	3.75		%	3.64		%
Cost of funds	0.57		%	0.19		%
Efficiency ratio	36.90		%	42.46		%

Balance Sheet Summary


(dollars in thousands)	December 31, 2022		December 31, 2021		$ Change		% Change
Selected financial condition data:
Total assets	$	3,227,159	$	2,556,761	$	670,398	26.22	%
Cash and cash equivalents	259,991		425,329		(165,338)		(38.87)	%
Total loans held for investment	2,791,326		1,934,460		856,866		44.29	%
Total investments	119,744		153,753		(34,009)		(22.12)	%
Total liabilities	2,974,334		2,321,715		652,619		28.11	%
Total deposits	2,782,004		2,285,890		496,114		21.70	%
Subordinated notes, net	73,606		28,386		45,220		159.30	%
Total shareholders’ equity	252,825		235,046		17,779		7.56	%

The increase in total assets from December 31, 2021 to December 31, 2022 was primarily due to a $856.9 million increase in total loans held for investment, partially offset by a $165.3 million decrease in cash and cash equivalents and a $34.0 million decrease in investments. The $856.9 million increase in total loans held for investment between December 31, 2021 and December 31, 2022 was a result of $1.4 billion in non-PPP loan originations, partially offset by $22.1 million in PPP loan forgiveness and payoffs received, and $491.7 million in non-PPP loan payoffs and paydowns.

The increase in total liabilities from December 31, 2021 to December 31, 2022 was primarily attributable to an increase in Federal Home Loan Bank of San Francisco ("FHLB") advances of $100.0 million, an increase in subordinated notes, net, of $45.2 million, and an increase in deposits of $496.1 million, largely due to increases in time deposits over $250 thousand, money market deposits, and non-interest-bearing deposits of $120.3 million, $161.0 million, and $69.1 million, respectively.

Total shareholders’ equity increased by $17.8 million from $235.0 million at December 31, 2021 to $252.8 million at December 31, 2022. The increase in total shareholders' equity from December 31, 2021 to December 31, 2022 was primarily a result of net income recognized of $44.8 million, partially offset by a net decline of $12.9 million in other comprehensive income and $15.3 million in cash distributions paid during the period.

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)	December 31, 2022			September 30, 2022			$ Change		% Change
Interest and fee income	$	37,402		$	31,646		$	5,756	18.19	%
Interest expense	8,267			4,123			4,144		100.51	%
Net interest income	$	29,135		$	27,523		$	1,612	5.86	%
Net interest margin	3.83		%	3.86		%

	Three months ended
(dollars in thousands)	December 31, 2022			December 31, 2021			$ Change		% Change
Interest and fee income	$	37,402		$	22,253		$	15,149	68.08	%
Interest expense	8,267			895			7,372		823.69	%
Net interest income	$	29,135		$	21,358		$	7,777	36.41	%
Net interest margin	3.83		%	3.67		%

	Year ended
(dollars in thousands)	December 31, 2022			December 31, 2021			$ Change		% Change
Interest and fee income	$	117,918		$	81,583		$	36,335	44.54	%
Interest expense	14,848			3,972			10,876		273.82	%
Net interest income	$	103,070		$	77,611		$	25,459	32.80	%
Net interest margin	3.75		%	3.64		%

The following table shows the components of net interest income and net interest margin for the quarterly periods indicated:


	Three months ended
	December 31, 2022						September 30, 2022						December 31, 2021
(dollars in thousands)	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning deposits with banks	$	200,395	$	1,841	3.64	%	$	210,179	$	1,145	2.16	%	$	330,825	$	143	0.17	%
Investment securities	117,364		643		2.17	%	126,733		615		1.93	%	160,315		541		1.34	%
Loans held for investment and sale	2,703,865		34,918		5.12	%	2,494,468		29,886		4.75	%	1,815,627		21,569		4.71	%
Total interest-earning assets	3,021,624		37,402		4.91	%	2,831,380		31,646		4.43	%	2,306,767		22,253		3.83	%
Interest receivable and other assets, net	73,664						78,112						159,123
Total assets	$	3,095,288					$	2,909,492					$	2,465,890

Liabilities and shareholders’ equity
Interest-bearing transaction accounts	$	223,473	$	174	0.31	%	$	213,926	$	115	0.21	%	$	165,709	$	42	0.10	%
Savings accounts	136,753		247		0.72	%	103,142		65		0.25	%	84,290		21		0.10	%
Money market accounts	1,060,597		3,652		1.37	%	1,015,698		1,780		0.69	%	957,030		351		0.15	%
Time accounts	299,771		2,467		3.26	%	208,678		857		1.63	%	75,332		38		0.20	%
Subordinated debt and other borrowings	114,858		1,727		5.96	%	72,195		1,306		7.18	%	28,376		443		6.20	%
Total interest-bearing liabilities	1,835,452		8,267		1.79	%	1,613,639		4,123		1.01	%	1,310,737		895		0.27	%
Demand accounts	997,815						1,041,222						914,821
Interest payable and other liabilities	17,002						14,687						5,988
Shareholders’ equity	245,019						239,944						234,344
Total liabilities & shareholders’ equity	$	3,095,288					$	2,909,492					$	2,465,890

Net interest spread					3.12	%					3.42	%					3.56	%
Net interest income/margin			$	29,135	3.83	%			$	27,523	3.86	%			$	21,358	3.67	%

Factors affecting interest income and yields

Interest income increased during the three months ended December 31, 2022, as compared to the three months ended September 30, 2022, due to the following:

•Rates. The average yields on interest-earning assets were 4.91% and 4.43% for the three months ended December 31, 2022 and September 30, 2022, respectively. The increase in yields period-over-period was primarily due to increases in yields earned on interest-earning deposits with banks, and increased yields earned on loans held for investment and sale originated in the current environment of rising interest rates.

•Volume. Average interest-earning assets increased by approximately $190.2 million period-over-period, driven by new loan originations during the three months ended December 31, 2022 which resulted in increases in the average daily balance of loans and contributed to the increase in interest income.

Interest income increased during the three months ended December 31, 2022, as compared to the three months ended December 31, 2021, due to the following:

•Rates. The average yields on interest-earning assets were 4.91% and 3.83% for the three months ended December 31, 2022 and December 31, 2021, respectively. The increase in yields period-over-period was primarily due to increases in yields earned on interest-earning deposits with banks and loans held for sale. Yields on the commercial real estate portfolio increased by 0.52% to 4.93% from 4.41% for the three months ended December 31, 2022 and December 31, 2021, respectively, due to increased rates on commercial real estate loans originated in the current rising rate environment.

•Volume. Average interest-earning assets increased by approximately $714.9 million period-over-period, primarily driven by new loan originations during the three months ended December 31, 2022 which resulted in increases in the average daily balance of loans and contributed to the increase in interest income.

Factors affecting interest expense and rates

Interest expense increased during the three months ended December 31, 2022, as compared to the three months ended September 30, 2022, due to the following:

•Rates. The average costs of interest-bearing liabilities were 1.79% and 1.01% for the three months ended December 31, 2022 and September 30, 2022, respectively. The increase in cost period-over-period was primarily due to increases in the rates paid on interest-bearing deposit accounts, with the most significant increases in rates paid on time and money market accounts. Rates on FHLB advances during the three months ended December 31, 2022 increased as compared to the three months ended September 30, 2022, but were offset by the rate paid on subordinated debt period-over-period. Additionally, the cost of funds increased from 0.62% for the quarter ended September 30, 2022 to 1.16% for the quarter ended December 31, 2022.

•Volume. Average interest-bearing liabilities increased by $221.8 million period-over-period, primarily driven by increases in average balances for time accounts and other borrowings, partially offset by the redemption of subordinated notes with an aggregate principal amount of $28.8 million.

Interest expense increased during the three months ended December 31, 2022, as compared to the three months ended December 31, 2021, due to the following:

•Rates. The average costs of interest-bearing liabilities were 1.79% and 0.27% for the three months ended December 31, 2022 and December 31, 2021, respectively. The increase in cost period-over-period was primarily due to increases in the rates paid on interest-bearing deposit accounts, with the most significant increases in rates paid on time and money market accounts. The rate paid on subordinated debt remained relatively consistent period-over-period, while FHLB advances had an average rate of 3.93% for the three months ended December 31, 2022, as compared to no FHLB advances for the three months ended December 31, 2021. Additionally, the cost of funds increased from 0.16% for the quarter ended December 31, 2021 to 1.16% for the quarter ended December 31, 2022.

•Volume. Average interest-bearing liabilities increased by $524.7 million period-over-period, primarily driven by increases in average balances for all types of interest-bearing deposit accounts, with the most substantial increases in time, money market, and interest-bearing transaction accounts period-over-period. Additionally, the issuance of $75.0 million of subordinated notes on August 17, 2022, combined with utilization of FHLB advances in the three months ended December 31, 2022, but not in the three months ended December 31, 2021, contributed to the increase in average interest-bearing liabilities period-over-period.

The following table shows the components of net interest income and net interest margin for the annual periods indicated:


	Year ended
	December 31, 2022						December 31, 2021
(dollars in thousands)	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning deposits with banks	$	260,679	$	3,696	1.42	%	$	346,522	$	547	0.16	%
Investment securities	131,353		2,427		1.85	%	147,519		2,142		1.45	%
Loans held for investment and sale	2,353,148		111,795		4.75	%	1,637,280		78,894		4.82	%
Total interest-earning assets	2,745,180		117,918		4.30	%	2,131,321		81,583		3.83	%
Interest receivable and other assets, net	99,946						148,830
Total assets	$	2,845,126					$	2,280,151

Liabilities and shareholders’ equity
Interest-bearing transaction accounts	$	242,221	$	425	0.18	%	$	155,163	$	155	0.10	%
Savings accounts	107,010		376		0.35	%	74,402		74		0.10	%
Money market accounts	995,048		6,476		0.65	%	935,445		1,798		0.19	%
Time accounts	203,392		3,646		1.79	%	53,222		172		0.32	%
Subordinated debt and other borrowings	61,533		3,925		6.38	%	28,350		1,773		6.25	%
Total interest-bearing liabilities	1,609,204		14,848		0.92	%	1,246,582		3,972		0.32	%
Demand accounts	982,915						835,834
Interest payable and other liabilities	14,709						8,984
Shareholders’ equity	238,298						188,751
Total liabilities & shareholders’ equity	$	2,845,126					$	2,280,151

Net interest spread					3.38	%					3.51	%
Net interest income/margin			$	103,070	3.75	%			$	77,611	3.64	%

Factors affecting interest income and yields

Interest income increased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, due to the following:

•Rates. The average yields on interest-earning assets were 4.30% and 3.83% for the years ended December 31, 2022 and December 31, 2021, respectively. The increase in yields period-over-period was primarily due to increases in yields earned on loans held for sale and interest-earning deposits with banks.

•Volume. Average interest-earning assets increased by approximately $613.9 million period-over-period, driven by new loan originations, which drove increases in the average daily balance of loans for the year ended December 31, 2022 and contributed to the increase in interest income.

Factors affecting interest expense and rates

Interest expense increased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, due to the following:

•Rates. The average costs of interest-bearing liabilities were 0.92% and 0.32% for the years ended December 31, 2022 and December 31, 2021, respectively. The increase in cost period-over-period was primarily due to increases in the rates paid on interest-bearing deposit accounts, with the most significant increases in rates paid on time and money market accounts, combined with an increase of 300 basis points on the rates paid on FHLB advances during the year ended December 31, 2022 as compared to the prior year. The rate paid on the new subordinated debt issuance remained relatively consistent with prior issuances. Additionally, the cost of funds increased from 0.19% for the year ended December 31, 2021 to 0.57% for the year ended December 31, 2022.

•Volume. Average interest-bearing liabilities increased by $362.6 million period-over-period, primarily driven by increases in average balances for all types of interest-bearing deposit accounts, with the most substantial increases in time, interest-bearing transaction, and money market accounts period-over-period. Additionally, the issuance of $75.0 million of subordinated notes due September 1, 2032 on August 17, 2022 contributed to the increase in average interest-bearing liabilities period-over-period.

Asset Quality

SBA PPP

All PPP loans had been forgiven or paid off by the borrower as of December 31, 2022.

Allowance for Loan Losses

At December 31, 2022, the Company’s allowance for loan losses was $28.4 million, as compared to $23.2 million at December 31, 2021. The $5.2 million increase is due to a $6.7 million provision for loan losses recorded during the twelve months ended December 31, 2022, offset by net charge-offs of $1.6 million during the same period. At December 31, 2022, the Company’s ratio of nonperforming loans to loans held for investment decreased from 0.03% at December 31, 2021 to 0.01%, primarily due to a decrease in the Company’s nonperforming commercial secured loans. Loans designated as substandard decreased to $0.4 million at December 31, 2022, from $10.6 million at December 31, 2021. This resulted in a net reduction of $0.2 million in reserves related to classified loans, offset by an increase in the provision for loan losses related to loan growth that occurred during 2022. There were no loans with doubtful risk grades at December 31, 2022 or December 31, 2021.

A summary of the allowance for loan losses by loan class is as follows:


	December 31, 2022				December 31, 2021
(dollars in thousands)	Amount		% of Total		Amount		% of Total
Real estate:
Commercial	$	19,216	67.69	%	$	12,869	55.37	%
Commercial land and development	54		0.19	%	50		0.22	%
Commercial construction	645		2.27	%	371		1.60	%
Residential construction	49		0.17	%	50		0.22	%
Residential	175		0.62	%	192		0.83	%
Farmland	644		2.27	%	645		2.78	%
Commercial:
Secured	6,975		24.57	%	6,687		28.77	%
Unsecured	116		0.41	%	207		0.89	%
Consumer and other	347		1.22	%	889		3.82	%
Unallocated	45		0.16	%	1,111		4.78	%
	28,266		99.57	%	23,071		99.28	%
Individually evaluated for impairment:
Commercial secured	123		0.43	%	172		0.72	%

Total allowance for loan losses	$	28,389	100.00	%	$	23,243	100.00	%

The ratio of allowance for loan losses to loans held for investment, or total loans at period end, was 1.02% at December 31, 2022, as compared to 1.20% at December 31, 2021. Excluding PPP loans, the ratios of the allowance for loan losses to loans held for investment were 1.02% and 1.22% at December 31, 2022 and December 31, 2021, respectively. The decline in the ratio of allowance for loan losses to loans held for investment period-over-period is primarily due to a decline in classified loans and improvement in the historical loss factors for the SBA portfolio during 2022. The ratio of the allowance for loan losses to loans held for investment, excluding PPP loans, is considered a non-GAAP financial measure. See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

Beginning January 1, 2023, the Company will adopt Accounting Standards Update 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the current “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 loan losses going forward and may result in a lack of comparability between 2022 and 2023 quarterly periods.

Non-interest Income

Three months ended December 31, 2022, as compared to the three months ended September 30, 2022

The following table presents the key components of non-interest income for the periods indicated:


	Three months ended
(dollars in thousands)	December 31, 2022		September 30, 2022		$ Change		% Change
Service charges on deposit accounts	$	97	$	132	$	(35)	(26.52)	%

Gain on sale of loans	637		548		89		16.24	%
Loan-related fees	407		447		(40)		(8.95)	%
FHLB stock dividends	193		152		41		26.97	%
Earnings on bank-owned life insurance ("BOLI")	119		102		17		16.67	%
Other income	148		52		96		184.62	%
Total non-interest income	$	1,601	$	1,433	$	168	11.72	%

Gain on sale of loans. The increase in gain on sale of loans resulted primarily from an increase in the volume of loans sold. During the three months ended December 31, 2022, loans totaling $14.5 million were sold with an effective yield of 4.40% compared to the three months ended September 30, 2022, when loans totaling $10.5 million were sold with an effective yield of 5.20%.

Other income. The increase in other income resulted primarily from a $0.1 million gain recorded on a distribution received on an investment in a venture-backed fund, which did not occur during the three months ended September 30, 2022.

Three months ended December 31, 2022, as compared to the three months ended December 31, 2021

The following table presents the key components of non-interest income for the periods indicated:


	Three months ended
(dollars in thousands)	December 31, 2022		December 31, 2021		$ Change		% Change
Service charges on deposit accounts	$	97	$	116	$	(19)	(16.38)	%
Net gain on sale of securities	—		15		(15)		(100.00)	%
Gain on sale of loans	637		1,072		(435)		(40.58)	%
Loan-related fees	407		391		16		4.09	%
FHLB stock dividends	193		102		91		89.22	%
Earnings on BOLI	119		57		62		108.77	%
Other income	148		37		111		300.00	%
Total non-interest income	$	1,601	$	1,790	$	(189)	(10.56)	%

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 due to uncertainty surrounding the timing of rising interest rates during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. During the three months ended December 31, 2022, approximately $14.5 million of loans were sold with an effective yield of 4.40%, as compared to approximately $9.7 million of loans sold with an effective yield of 9.38% during the three months ended December 31, 2021. Additionally, a $1.8 million consumer loan portfolio was sold for a net gain of approximately $0.2 million during the three months ended December 31, 2021, which did not occur during the three months ended December 31, 2022.

Other income. The increase in other income resulted primarily from a $0.1 million gain recorded on a distribution received on an investment in a venture-backed fund in the three months ended December 31, 2022, which did not occur during the three months ended December 31, 2021.

Year ended December 31, 2022, as compared to the year ended December 31, 2021

The following table presents the key components of non-interest income for the periods indicated:


	Year ended
(dollars in thousands)	December 31, 2022		December 31, 2021		$ Change		% Change
Service charges on deposit accounts	$	467	$	424	$	43	10.14	%
Net gain on sale of securities	5		724		(719)		(99.31)	%
Gain on sale of loans	2,934		4,082		(1,148)		(28.12)	%
Loan-related fees	2,207		1,306		901		68.99	%
FHLB stock dividends	546		372		174		46.77	%
Earnings on BOLI	412		237		175		73.84	%
Other income	586		135		451		334.07	%
Total non-interest income	$	7,157	$	7,280	$	(123)	(1.69)	%

Net gain on sale of securities. The decrease in net gain on sale of securities resulted primarily from the sale of approximately $47.1 million of municipal securities, U.S. government agency securities, and U.S. Treasuries during the year ended December 31, 2021, resulting in a $0.7 million gain, compared to the sale of approximately $1.5 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 in gain on sale of loans related primarily to an overall decline in the effective yields on loans sold due to uncertainty of the timing and magnitude of rising interest rates during the year ended December 31, 2022 compared to the year ended December 31, 2021. During the year ended December 31, 2022, approximately $50.8 million of loans were sold with an effective yield of 5.78%, as compared to approximately $41.4 million of loans sold with an effective yield of 9.46% during the year ended December 31, 2021. Additionally, a $1.8 million consumer loan portfolio was sold for a net gain of approximately $0.2 million during the year ended December 31, 2021, which did not occur during the year ended December 31, 2022.

Loan-related fees. The increase in loan-related fees was primarily a result of: (i) an increase of $0.6 million in swap referral fees; (ii) an increase of $0.2 million in program fees earned for loans originated and serviced by a third party; and (iii) a $0.2 million increase in fee income recognized in the year ended December 31, 2022 compared to the year ended December 31, 2021. These increases were partially offset by a decline of $0.1 million in loan referral income recognized during the year ended December 31, 2022 compared to the year ended December 31, 2021.

FHLB stock dividends. The increase in FHLB stock dividends primarily relates to an increase in FHLB Class B shares held for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Earnings on BOLI. The increase in earnings on BOLI related primarily due to an additional BOLI policy purchased during the year ended December 31, 2022. Earnings on this policy were only recognized during the year ended December 31, 2022, and did not occur during the year ended December 31, 2021.

Other income. The increase in other income resulted primarily from a $0.4 million gain recorded on two distributions received on investments in two venture-backed funds during the year ended December 31, 2022, which did not occur during the year ended December 31, 2021.

Non-interest Expense

Three months ended December 31, 2022, as compared to the three months ended September 30, 2022

The following table presents the key components of non-interest expense for the periods indicated:


	Three months ended
(dollars in thousands)	December 31, 2022		September 30, 2022		$ Change		% Change
Salaries and employee benefits	$	5,698	$	5,645	$	53	0.94	%
Occupancy and equipment	511		515		(4)		(0.78)	%
Data processing and software	839		797		42		5.27	%
Federal Deposit Insurance Corporation (“FDIC”) insurance	245		195		50		25.64	%
Professional services	553		792		(239)		(30.18)	%
Advertising and promotional	568		512		56		10.94	%
Loan-related expenses	358		262		96		36.64	%
Other operating expenses	1,945		1,454		491		33.77	%
Total non-interest expense	$	10,717	$	10,172	$	545	5.36	%

Professional services. Professional services decreased, primarily as a result of $0.2 million of legal expenses incurred to support corporate organizational matters during the three months ended September 30, 2022, which did not recur in the three months ended December 31, 2022.

Other operating expenses. The increase in other operating expenses was primarily due to a $0.3 million increase related to previously unamortized subordinated debt issuance costs recognized within other operating expenses upon redemption of the subordinated notes in December 2022. The remainder of the increase related to 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, 2022, as compared to the three months ended September 30, 2022.

Three months ended December 31, 2022, as compared to the three months ended December 31, 2021

The following table presents the key components of non-interest expense for the periods indicated:


	Three months ended
(dollars in thousands)	December 31, 2022		December 31, 2021		$ Change		% Change
Salaries and employee benefits	$	5,698	$	5,209	$	489	9.39	%
Occupancy and equipment	511		544		(33)		(6.07)	%
Data processing and software	839		656		183		27.90	%
FDIC insurance	245		160		85		53.13	%
Professional services	553		444		109		24.55	%
Advertising and promotional	568		499		69		13.83	%
Loan-related expenses	358		136		222		163.24	%
Other operating expenses	1,945		1,370		575		41.97	%
Total non-interest expense	$	10,717	$	9,018	$	1,699	18.84	%

Salaries and employee benefits. The increase in salaries and employee benefits was primarily a result of: (i) a $0.3 million increase in salaries, insurance, and benefits as a result of a 9.20% increase in headcount; (ii) a $0.6 million decrease in loan origination costs due to lower production; and (iii) a $0.1 million increase in bonus expense recognized during the three months ended December 31, 2022, as compared to the three months ended December 31, 2021. These increases were partially offset by a $0.6 million decline in commissions expense due to lower production during the three months ended December 31, 2022 compared to the three months ended December 31, 2021.

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.

Professional services. Professional services increased, primarily due to increased audit and legal fees for services provided for the three months ended December 31, 2022 compared to the three months ended December 31, 2021.

Loan-related expenses. Loan-related expenses increased, primarily as a result of an overall increase in expenses incurred for insurance and taxes, loan legal fees, environmental reports, UCC fees, and inspections to support loan production in the three months ended December 31, 2022 compared to the three months ended December 31, 2021.

Other operating expenses. The increase in other operating expenses was primarily due to a $0.3 million increase related to previously unamortized subordinated debt issuance costs recognized as an other expense upon redemption of the subordinated notes in December 2022. The remainder of the increase related to: (i) $0.1 million of increased bank charges incurred related to correspondent bank and letter of credit fees incurred to support operations; (ii) $0.1 million of increased insurance expenses; and (iii) an overall increase in 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, 2022, as compared to the three months ended December 31, 2021.

Year ended December 31, 2022, as compared to the year ended December 31, 2021

The following table presents the key components of non-interest expense for the periods indicated:


	Year ended
(dollars in thousands)	December 31, 2022		December 31, 2021		$ Change		% Change
Salaries and employee benefits	$	22,571	$	19,825	$	2,746	13.85	%
Occupancy and equipment	2,059		1,938		121		6.24	%
Data processing and software	3,091		2,494		597		23.94	%
FDIC insurance	850		700		150		21.43	%
Professional services	2,467		3,792		(1,325)		(34.94)	%
Advertising and promotional	1,908		1,300		608		46.77	%
Loan-related expenses	1,287		1,045		242		23.16	%
Other operating expenses	6,436		4,949		1,487		30.05	%
Total non-interest expense	$	40,669	$	36,043	$	4,626	12.83	%

Salaries and employee benefits. The increase in salaries and employee benefits was primarily a result of a $3.6 million increase in salaries, insurance, and benefits as a result of a 9.20% increase in headcount and a $0.2 million increase in commissions expense related to increased production during the year ended December 31, 2022, as compared to the year ended December 31, 2021. The increase was partially offset by an increase in loan origination costs of $1.0 million due to increased production during the year ended December 31, 2022, as compared to the year ended December 31, 2021.

Occupancy and equipment. The increase in occupancy and equipment was primarily the result of an overall increase in depreciation recognized for furniture, fixtures, and equipment that was purchased to support the 9.20% increase in headcount described above, combined with an overall increase in occupancy expenses period-over-period.

Data processing and software. The increase in data processing and software expenditures related primarily 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 in FDIC insurance related primarily to an increase in the FDIC assessment base and asset growth for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Professional services. Professional services decreased, primarily as a result of expenses recognized during the year ended December 31, 2021 related to the increased audit, consulting, and legal costs incurred to support corporate

organizational matters leading up to the Company's initial public offering in May 2021, which did not recur during the year ended December 31, 2022.

Advertising and promotional. The increase in advertising and promotional costs was primarily related to increases in business development, marketing, and sponsorship expenses due to more in-person participation in events held during the year ended December 31, 2022, as compared to the year ended December 31, 2021.

Loan-related expenses. The increase in loan-related expenses related primarily to: (i) $0.1 million of increased UCC filing fees to support consumer loans originated; and (ii) an overall increase in expenses incurred for insurance and taxes, loan legal fees, environmental reports, and inspections to support loan production for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Other operating expenses. The increase in other operating expenses includes a $0.3 million increase related to previously unamortized subordinated debt issuance costs recognized as an other expense upon redemption of the subordinated notes in December 2022. The remainder of the increase related to: (i) $0.7 million for expenses incurred for travel and fees paid for attendance of professional events, conferences, and other business-related events; (ii) $0.3 million of increased bank charges incurred related to correspondent bank and letter of credit fees incurred to support operations; and (iii) $0.2 million of increased insurance expenses during the year ended December 31, 2022, as compared to the year ended December 31, 2021. The remainder of the change related to an overall increase in expenses to support the growth in customers period-over-period.

Provision for Income Taxes

Three months ended December 31, 2022, as compared to the three months ended September 30, 2022

Provision for income taxes for the quarter ended December 31, 2022 increased by $0.7 million, or 13.60%, to $5.5 million, as compared to $4.8 million for the quarter ended September 30, 2022, which was primarily due to the increase in taxable income recognized during the three months ended December 31, 2022.

Three months ended December 31, 2022, as compared to the three months ended December 31, 2021

Provision for income taxes increased by $4.2 million, or 315.37%, to $5.5 million for the three months ended December 31, 2022, as compared to $1.3 million for the three months ended December 31, 2021. This increase is due to an increase in taxable income, combined with an increase in the effective tax rate for each period, from 10.46% to 29.23% during the three months ended December 31, 2021 and December 31, 2022, respectively. The lower effective tax rate during the three months ended December 31, 2021 was driven by the Company's termination of its Subchapter S Corporation status as of May 5, 2021 and using a blended statutory rate of 20.77% during the three months ended December 31, 2021. The 20.77% tax rate was calculated using the statutory California tax rate of 3.50% and the federal and state statutory rate, net of federal benefit, of 29.56% based on the number of days the Company was each type of corporation during 2021.

Year ended December 31, 2022, as compared to year ended December 31, 2021

Provision for income taxes increased by $13.4 million, or 283.62%, to $18.1 million for the year ended December 31, 2022, as compared to $4.7 million for the year ended December 31, 2021. This increase is due to an increase in taxable income, combined with an increase in the effective tax rate for each period, from 9.98% to 28.73% during the years ended December 31, 2021 and December 31, 2022, respectively. The lower tax rate used during the year ended December 31, 2021 was the result of the Company's termination of its Subchapter S Corporation status as of May 5, 2021.

Webcast Details

Five Star Bancorp will host a webcast on Tuesday, January 31, 2023, at 1:00 p.m. ET (10:00 a.m. PT), to discuss its fourth quarter and annual 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 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, 2021 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)	December 31, 2022		September 30, 2022		December 31, 2021
Revenue and Expense Data
Interest and fee income	$	37,402	$	31,646	$	22,253
Interest expense	8,267		4,123		895
Net interest income	29,135		27,523		21,358
Provision for loan losses	1,250		2,250		1,500
Net interest income after provision	27,885		25,273		19,858
Non-interest income:
Service charges on deposit accounts	97		132		116
Gain on sale of securities	—		—		15
Gain on sale of loans	637		548		1,072
Loan-related fees	407		447		391
FHLB stock dividends	193		152		102
Earnings on BOLI	119		102		57
Other income	148		52		37
Total non-interest income	1,601		1,433		1,790
Non-interest expense:
Salaries and employee benefits	5,698		5,645		5,209
Occupancy and equipment	511		515		544
Data processing and software	839		797		656
FDIC insurance	245		195		160
Professional services	553		792		444
Advertising and promotional	568		512		499
Loan-related expenses	358		262		136
Other operating expenses	1,945		1,454		1,370
Total non-interest expense	10,717		10,172		9,018
Total income before taxes	18,769		16,534		12,630
Provision for income taxes	5,487		4,830		1,321
Net income	$	13,282	$	11,704	$	11,309

Comprehensive Income
Net income	$	13,282	$	11,704	$	11,309
Net unrealized holding loss on securities available-for-sale during the period	3,714		(4,718)		(762)
Reclassification adjustment for net realized gains included in net income	—		—		(15)
Income tax benefit related to other comprehensive loss	1,098		(1,395)		(231)
Other comprehensive loss	2,616		(3,323)		(546)
Total comprehensive income	$	15,898	$	8,381	$	10,763


Share and Per Share Data
Earnings per common share:
Basic	$	0.77		$	0.68		$	0.66
Diluted	$	0.77		$	0.68		$	0.66
Book value per share	$	14.66		$	13.87		$	13.65
Tangible book value per share(1)	$	14.66		$	13.87		$	13.65
Weighted average basic common shares outstanding	17,143,920			17,140,435			17,096,230
Weighted average diluted common shares outstanding	17,179,863			17,168,447			17,139,693
Shares outstanding at end of period	17,241,926			17,245,983			17,224,848

Credit Quality
Allowance for loan losses to period end nonperforming loans	7,027.38		%	6,483.87		%	3,954.30		%
Nonperforming loans to loans held for investment	0.01		%	0.02		%	0.03		%
Nonperforming assets to total assets	0.01		%	0.01		%	0.02		%
Nonperforming loans plus performing TDRs to loans held for investment	0.01		%	0.02		%	0.03		%
COVID-19 deferments to loans held for investment	—		%	—		%	0.63		%

Selected Financial Ratios
ROAA	1.70		%	1.60		%	1.82		%
ROAE	21.50		%	19.35		%	19.15		%
Net interest margin	3.83		%	3.86		%	3.67		%
Loan to deposit	100.67		%	99.22		%	85.09		%

(1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.


	Year ended
(dollars in thousands, except share and per share data)	December 31, 2022		December 31, 2021
Revenue and Expense Data
Interest and fee income	$	117,918	$	81,583
Interest expense	14,848		3,972
Net interest income	103,070		77,611
Provision for loan losses	6,700		1,700
Net interest income after provision	96,370		75,911
Non-interest income:
Service charges on deposit accounts	467		424
Gain on sale of securities	5		724
Gain on sale of loans	2,934		4,082
Loan-related fees	2,207		1,306
FHLB stock dividends	546		372
Earnings on BOLI	412		237
Other income	586		135
Total non-interest income	7,157		7,280
Non-interest expense:
Salaries and employee benefits	22,571		19,825
Occupancy and equipment	2,059		1,938
Data processing and software	3,091		2,494
FDIC insurance	850		700
Professional services	2,467		3,792
Advertising and promotional	1,908		1,300
Loan-related expenses	1,287		1,045
Other operating expenses	6,436		4,949
Total non-interest expense	40,669		36,043
Total income before taxes	62,858		47,148
Provision for income taxes	18,057		4,707
Net income	$	44,801	$	42,441

Comprehensive Income
Net income	$	44,801	$	42,441
Net unrealized holding loss on securities available-for-sale during the period	(18,291)		(1,475)
Reclassification adjustment for net realized gains included in net income	(5)		(724)
Income tax benefit related to other comprehensive loss	(5,408)		(288)
Other comprehensive loss	(12,888)		(1,911)
Total comprehensive income	$	31,913	$	40,530

Share and Per Share Data
Earnings per common share:
Basic	$	2.61	$	2.83
Diluted	$	2.61	$	2.83
Book value per share	$	14.66	$	13.65
Tangible book value per share(1)	$	14.66	$	13.65
Weighted average basic common shares outstanding	17,128,282		14,972,637
Weighted average diluted common shares outstanding	17,165,610		14,995,213
Shares outstanding at end of period	17,241,926		17,224,848


Credit Quality
Allowance for loan losses to period end nonperforming loans	7,027.38	%	3,954.30	%
Nonperforming loans to loans held for investment	0.01	%	0.03	%
Nonperforming assets to total assets	0.01	%	0.02	%
Nonperforming loans plus performing TDRs to loans held for investment	0.01	%	0.03	%
COVID-19 deferments to loans held for investment	—	%	0.63	%

Selected Financial Ratios
ROAA	1.57	%	1.86	%
ROAE	18.80	%	22.49	%
Net interest margin	3.75	%	3.64	%
Loan to deposit	100.67	%	85.09	%

(1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure.


(dollars in thousands)	December 31, 2022			September 30, 2022			December 31, 2021
Balance Sheet Data
Cash and due from banks	$	32,561		$	33,280		$	136,074
Interest-bearing deposits in banks	227,430			284,389			289,255
Time deposits in banks	9,849			10,216			14,464
Securities - available-for-sale, at fair value	115,988			114,041			148,807
Securities - held-to-maturity, at amortized cost	3,756			3,764			4,946
Loans held for sale	9,416			11,015			10,671
Loans held for investment	2,791,326			2,582,978			1,934,460
Allowance for loan losses	(28,389)			(27,838)			(23,243)
Loans held for investment, net of allowance for loan losses	2,762,937			2,555,140			1,911,217
FHLB stock	10,890			10,890			6,723
Operating leases, right-of-use asset	3,981			4,227			—
Premises and equipment, net	1,605			1,694			1,773
BOLI	14,669			14,550			11,203
Interest receivable and other assets	34,077			31,364			21,628
Total assets	$	3,227,159		$	3,074,570		$	2,556,761

Non-interest-bearing deposits	$	971,246		$	1,020,625		$	902,118
Interest-bearing deposits	1,810,758			1,593,707			1,383,772
Total deposits	2,782,004			2,614,332			2,285,890
Subordinated notes, net	73,606			102,028			28,386
FHLB advances	100,000			105,000			—
Operating lease liability	4,243			4,492			—
Interest payable and other liabilities	14,481			9,460			7,439
Total liabilities	2,974,334			2,835,312			2,321,715

Common stock	219,543			219,286			218,444
Retained earnings	46,736			36,042			17,168
Accumulated other comprehensive loss, net	(13,454)			(16,070)			(566)
Total shareholders’ equity	$	252,825		$	239,258		$	235,046
Total liabilities and shareholders' equity	$	3,227,159		$	3,074,570		$	2,556,761

Quarterly Average Balance Sheet Data
Average loans held for investment and sale	$	2,703,865		$	2,494,468		$	1,815,627
Average interest-earning assets	$	3,021,624		$	2,831,380		$	2,306,767
Average total assets	$	3,095,288		$	2,909,492		$	2,465,890
Average deposits	$	2,718,409		$	2,582,666		$	2,197,182
Average total equity	$	245,019		$	239,944		$	234,344

Capital Ratio Data
Total shareholders’ equity to total assets	7.83		%	7.78		%	9.19		%
Tangible shareholders’ equity to tangible assets(1)	7.83		%	7.78		%	9.19		%
Total capital (to risk-weighted assets)	12.46		%	13.94		%	13.98		%
Tier 1 capital (to risk-weighted assets)	8.99		%	9.21		%	11.44		%
Common equity Tier 1 capital (to risk-weighted assets)	8.99		%	9.21		%	11.44		%
Tier 1 leverage ratio	8.60		%	8.66		%	9.47		%

(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 net income is defined as net income plus provision for income taxes and provision for loan losses. The most directly comparable GAAP measure is pre-tax net income.

Allowance for loan losses to total loans held for investment, excluding PPP loans, is defined as allowance for loan losses, divided by total loans held for investment less PPP loans. The most directly comparable GAAP financial measure is allowance for loan losses to total loans held for investment.

The following reconciliation tables provide a more detailed analysis of these non-GAAP financial measures.


	Three months ended
Pre-tax, pre-provision net income (dollars in thousands)	December 31, 2022		September 30, 2022		December 31, 2021
Net income	$	13,282	$	11,704	$	11,309
Add: provision for income taxes	5,487		4,830		1,321
Add: provision for loan losses	1,250		2,250		1,500
Pre-tax, pre-provision net income	$	20,019	$	18,784	$	14,130


	Year ended
Pre-tax, pre-provision net income (dollars in thousands)	December 31, 2022		December 31, 2021
Net income	$	44,801	$	42,441
Add: provision for income taxes	18,057		4,707
Add: provision for loan losses	6,700		1,700
Pre-tax, pre-provision net income	$	69,558	$	48,848


Total loans held for investment, excluding PPP loans (dollars in thousands)	December 31, 2022		December 31, 2021
Total loans held for investment	$	2,791,326	$	1,934,460
Less: PPP loans	—		22,124
Total loans held for investment, excluding PPP loans	$	2,791,326	$	1,912,336


Allowance for loan losses to total loans held for investment, excluding PPP loans (dollars in thousands)	December 31, 2022			December 31, 2021
Allowance for loan losses (numerator)	$	28,389		$	23,243
Total loans held for investment	$	2,791,326		$	1,934,460
Less: PPP loans	—			22,124
Total loans held for investment, excluding PPP loans (denominator)	$	2,791,326		$	1,912,336
Allowance for loan losses to total loans held for investment, excluding PPP loans	1.02		%	1.22		%

Media Contact:
Heather Luck, CFO
Five Star Bancorp
(916) 626-5008
hluck@fivestarbank.com

Shelley Wetton, CMO
Five Star Bancorp
(916) 284-7827
swetton@fivestarbank.com

invpresq42022

Investor Presentation Fourth Quarter and Year End 2022

Safe Harbor Statement and Disclaimer Forward-Looking Statements In this presentation, “we,” “our,” “us,” “Five Star" or “the Company” refers to Five Star Bancorp, a California corporation, and our consolidated subsidiaries, including Five Star Bank, a California state- chartered bank, unless the context indicates that we refer only to the parent company, Five Star Bancorp. This presentation 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, 2021 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. Industry Information This presentation includes statistical and other industry and market data that we obtained from government reports and other third-party sources. Our internal data, estimates, and forecasts are based on information obtained from government reports, trade, and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. Although we believe that this information (including the industry publications and third-party research, surveys, and studies) is accurate and reliable, we have not independently verified such information. In addition, estimates, forecasts, and assumptions are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. Finally, forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this presentation. Unaudited Financial Data Numbers contained in this presentation for the quarter ended December 31, 2022 and for other quarterly periods are unaudited. Additionally, numbers contained in this presentation for the full fiscal year ended December 31, 2022 are unaudited. As a result, subsequent information may cause a change in certain accounting estimates and other financial information, including the Company’s allowance for loan losses, fair values, and income taxes. Non-GAAP Financial Measures 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. See the appendix to this presentation for a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures. Fourth Quarter 2022 Investor Presentation | 2

Agenda Fourth Quarter 2022 Investor Presentation | 3 •Company Overview •Financial Highlights •Loans and Credit Quality •Deposit and Capital Overview •Financial Results

Company Overview Fourth Quarter 2022 Investor Presentation | 4

Company Overview Nasdaq: Headquarters: Asset Size: Loans Held for Investment: Deposits: Bank Branches: Fourth Quarter 2022 Investor Presentation | 5 FSBC Rancho Cordova, California $3.2 billion $2.8 billion $2.8 billion 7 Note: Balances are as of December 31, 2022. Five Star is a community business bank that was founded to serve the commercial real estate industry. Today, the markets we serve have expanded to meet customer demand and now include manufactured housing and storage, faith-based, government, nonprofits, and more.

Executive Team Fourth Quarter 2022 Investor Presentation | 6 James Beckwith President and Chief Executive Officer Five Star since 2003 John Dalton Senior Vice President and Chief Credit Officer Five Star since 2011 Mike Lee Senior Vice President and Chief Regulatory Officer Five Star since 2005 Michael Rizzo Senior Vice President and Chief Banking Officer Five Star since 2005 Brett Wait Senior Vice President and Chief Information Officer Five Star since 2011 Lydia Ramirez Senior Vice President and Chief Operations and Chief DE&I Officer Five Star since 2017 Heather Luck Senior Vice President and Chief Financial Officer Five Star since 2018 Shelley Wetton Senior Vice President and Chief Marketing Officer Five Star since 2015

Financial Highlights Fourth Quarter 2022 Investor Presentation | 7

$547 $565 $604 $811 $840 $973 $1,272 $1,480 $1,954 $2,557 $2,778 $2,836 $3,075 $3,227 $1,806 $2,535 $2,776 $148 $22 $2 Total Assets Excluding PPP Loans PPP Loans 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Consistent and Organic Asset Growth Fourth Quarter 2022 Investor Presentation | 8 Note: Dollars are in millions. Balances are end of period. References to PPP are the Paycheck Protection Program. 1. CAGR is based upon balances as of December 31, 2022. 2. A reconciliation of this non-GAAP measure is set forth in the appendix. (2) CAGR (1) 5 years 10 years Total Assets 27.10 % 19.42 %

Financial Highlights Fourth Quarter 2022 Investor Presentation | 9 (dollars in millions except per share data) For the three months ended For the year ended 12/31/2022 9/30/2022 12/31/2021 12/31/2022 12/31/2021 Profitability Net income $ 13.3 $ 11.7 $ 11.3 $ 44.8 $ 42.4 Return on average assets ("ROAA") 1.70 % 1.60 % 1.82 % 1.57 % 1.86 % Return on average equity ("ROAE") 21.50 % 19.35 % 19.15 % 18.80 % 22.49 % Earnings per share (basic and diluted) $ 0.77 $ 0.68 $ 0.66 $ 2.61 $ 2.83 Net Interest Margin Net interest margin 3.83 % 3.86 % 3.67 % 3.75 % 3.64 % Average loan yield 5.12 % 4.75 % 4.71 % 4.75 % 4.82 % Average loan yield, excluding PPP loans(1) 5.12 % 4.75 % 4.56 % 4.73 % 4.70 % PPP income $ — $ — $ 1.1 $ 0.6 $ 6.2 PPP loans forgiven, paid off, and charged off $ — $ — $ 39.7 $ 22.1 $ 236.5 Total cost of funds 1.16 % 0.62 % 0.16 % 0.57 % 0.19 % 12/31/2022 12/31/2021 Asset Quality Nonperforming loans to loans held for investment 0.01 % 0.03 % Allowance for loan losses to loans held for investment 1.02 % 1.20 % # of PPP loans outstanding — 60 Balance of PPP loans outstanding $ — $ 22.1 # of loans in a COVID-19 deferment period — 6 Balance of loans in a COVID-19 deferment period $ — $ 12.2 Note: Yields are based on average balance and annualized quarterly interest income. 1. A reconciliation of this non-GAAP measure is set forth in the appendix.

Financial Highlights - December 31, 2022 Fourth Quarter 2022 Investor Presentation | 10 Growth • Continued balance sheet growth with $856.9 million of growth in loans held for investment and $496.1 million in deposit growth since December 31, 2021. Funding • Non-interest-bearing deposits comprised 34.91% of total deposits, compared to 39.04% as of September 30, 2022 and 39.46% as of December 31, 2021. • Deposits comprised 93.53% of total liabilities, as compared to 92.21% of total liabilities as of September 30, 2022 and 98.46% of total liabilities as of December 31, 2021. Capital • All capital ratios were above well-capitalized regulatory thresholds. • On October 21, 2022 and January 20, 2023, the Company announced cash dividends of $0.15 per share for the three months ended September 30, 2022 and December 31, 2022, respectively.

Loans and Credit Quality Fourth Quarter 2022 Investor Presentation | 11

$148 $22 4.93% 5.28% 5.45% 4.96% 4.71% 5.12%Non-PPP Loans PPP Loans Average Loan Yield Average Loan Yield Excluding PPP Loans Consistent Loan Growth To ta l L oa ns (M ill io ns ) $183 $121 $61 $22 $2 4.95% 4.73% 4.90% 4.71% 4.53% 4.48% 4.75% 5.12% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Fourth Quarter 2022 Investor Presentation | 12 Note: Loan balances are end of period loans held for investment. Yields are based on average balance and annualized quarterly interest income. 1. CAGR is based upon balances as of December 31, 2022. 2. A reconciliation of this non-GAAP measure is set forth in the appendix. (2) Quarterly Trend To ta l L oa ns (M ill io ns ) $148 $22 4.93% 5.28% 5.45% 4.96% 4.82% 4.75% 2017 2018 2019 2020 2021 2022 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Annual Trend CAGR (1) 5 years Total Loans 29.31 %

Loan Portfolio Composition Fourth Quarter 2022 Investor Presentation | 13 Commercial real estate 85.7% Commercial land and development 0.3% Commercial construction 3.2% Residential construction 0.2% Residential 0.9% Farmland 1.9% Secured 5.9% Unsecured 0.9% PPP 0.0% Consumer and other 1.0% Types of collateral securing commercial real estate ("CRE") loans Loan Balance ($000s) # of Loans % of CRE Manufactured home community $ 673,891 315 28.14 % RV Park $ 292,886 86 12.23 % Retail $ 264,599 80 11.05 % Multifamily $ 202,203 90 8.44 % Industrial $ 166,403 120 6.95 % Mini storage $ 158,650 41 6.63 % Faith-based $ 146,740 85 6.13 % Office $ 145,899 92 6.09 % All other types (1) $ 343,402 153 14.34 % Total $ 2,394,673 1,062 100.00 % Note: Balances are net book value as of period end, before allowance for loan losses and deferred loan fees, and exclude loans held for sale. 1. Types of collateral in “all other types” are those that individually make up less than 5% CRE concentration.

$674M $293M $265M $202M $166M $159M $147M $146M $343M $1,175M $506M $490M $460M $366M $290M $383M $310M $705M Loan Balance Collateral Value Manufactured home community RV Park Retail Multifamily Industrial Mini storage Faith-based Office All other types $0M $200M $400M $600M $800M $1,000M $1,200M $1,400M CRE Collateral Values Fourth Quarter 2022 Investor Presentation | 14 (1) Note: Balances are net book value as of period end, before allowance for loan losses and deferred loan fees, and exclude loans held for sale. 1. Types of collateral in “all other types” are those that individually make up less than 5% CRE concentration.

Loan Portfolio Diversification We focus primarily on commercial lending, with an emphasis on commercial real estate. We offer a variety of loans to small and medium-sized businesses, professionals, and individuals, including commercial real estate, commercial land and construction, and farmland loans. To a lesser extent, we also offer residential real estate, construction real estate, and consumer loans. Fourth Quarter 2022 Investor Presentation | 15Note: Balances are net book value as of period end, before allowance for loan losses and deferred loan fees, and exclude loans held for sale. Loans by Type Loans by Purpose Real Estate Loans by Geography CML Term CRE NOO, 38.3% CML Term Multifamily, 31.2% CML Term CRE OO, 15.8% CML Secured, 3.4% CML Const CRE, 3.2% CML Term Ag RE, 1.9% SBA 7A Secured, 1.7% Others, 4.5% CA, 60.9% TX, 5.9% AZ, 4.1% NV, 3.0% OR, 2.6% NC, 2.6% FL, 2.3% CO, 1.7% MO, 1.5% WI, 1.4% GA, 1.3% ID, 1.1% WA, 1.0% Other, 10.6% CRE Manufactured Home, 24.1% CRE RV Park, 10.5% CRE Other, 10.0% CRE Retail, 9.5% CRE Multifamily, 7.3% CRE Industrial, 6.0% CRE Mini Storage, 5.7% CRE Faith Based, 5.3% CRE Office, 5.2% Commercial Other, 5.1% Commercial Construction, 3.4% CRE Mixed Use, 3.1% CRE Agricultural, 1.9% Commercial SBA 7A, 1.7% Other, 1.2%

Loan Rollforward Fourth Quarter 2022 Investor Presentation | 16Note: Dollars are in millions. Beginning and ending balances are as of period end, before allowance for loan losses, including deferred loan fees, and excluding loans held for sale. Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Beginning Balance $ 1,707 $ 1,936 $ 2,081 $ 2,381 $ 2,583 Originations 462 313 440 321 295 Non-PPP Payoffs and Paydowns (194) (147) (138) (119) (87) PPP Forgiveness and Repayments (39) (21) (2) — — Ending Balance $ 1,936 $ 2,081 $ 2,381 $ 2,583 $ 2,791

Asset Quality Our primary objective is to maintain a high level of asset quality in our loan portfolio. In order to maintain our strong asset quality, we: – Place emphasis on our commercial portfolio, where we reevaluate risk assessments as a result of reviewing commercial property operating statements and borrower financials – Monitor payment performance, delinquencies, and tax and property insurance compliance – Design our practices to facilitate the early detection and remediation of problems within our loan portfolio – Employ the use of an outside, independent consulting firm to evaluate our underwriting and risk assessment process Fourth Quarter 2022 Investor Presentation | 17 Nonperforming Loan Trend Allowance for Loan Losses and Net Charge-off Trend Note: References to average loans HFI are average loans held for investment during the period. $3.1M $2.1M $0.8M $0.5M $0.6M $1.3M $0.4M $0.4M $0.4M 0.41% 0.22% 0.07% 0.03% 0.03% 0.06% 0.02% 0.02% 0.01% Nonperforming Loans Nonperforming Loans to Loans HFI 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 1.25% 1.21% 1.26% 1.48% 1.20% 1.02% 0.03% 0.23% 0.21% 0.12% 0.04% 0.07% Allowance for Loan Losses to Loans HFI Net Charge-offs to Average Loans HFI 2017 2018 2019 2020 2021 2022

Allocation of Allowance for Loan Losses Fourth Quarter 2022 Investor Presentation | 18 (dollars in thousands) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Allowance for Loan Losses Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total Real estate: Commercial $ 12,869 55.37 % $ 13,868 58.01 % $ 16,621 64.46 % $ 18,309 65.76 % $ 19,216 67.69 % Commercial land & development 50 0.22 % 66 0.28 % 68 0.26 % 98 0.35 % 54 0.19 % Commercial construction 371 1.60 % 430 1.80 % 508 1.97 % 546 1.96 % 645 2.27 % Residential construction 50 0.22 % 40 0.17 % 51 0.20 % 41 0.15 % 49 0.17 % Residential 192 0.83 % 208 0.87 % 188 0.73 % 175 0.63 % 175 0.62 % Farmland 645 2.78 % 611 2.56 % 616 2.39 % 664 2.39 % 644 2.27 % Total real estate loans 14,177 61.02 % 15,223 63.69 % 18,052 70.01 % 19,833 71.24 % 20,783 73.21 % Commercial: Secured 6,687 28.77 % 6,400 26.77 % 6,132 23.78 % 6,217 22.33 % 6,975 24.57 % Unsecured 207 0.89 % 246 1.03 % 265 1.03 % 278 1.00 % 116 0.41 % Total commercial loans 6,894 29.66 % 6,646 27.80 % 6,397 24.81 % 6,495 23.33 % 7,091 24.98 % Consumer and other 889 3.82 % 1,088 4.55 % 537 2.08 % 536 1.93 % 347 1.22 % Unallocated 1,111 4.78 % 308 1.29 % 648 2.51 % 829 2.98 % 45 0.16 % Individually evaluated for impairment Commercial secured 172 0.72 % 639 2.67 % 152 0.59 % 145 0.52 % 123 0.43 % Total allowance for loan losses $ 23,243 100.00 % $ 23,904 100.00 % $ 25,786 100.00 % $ 27,838 100.00 % $ 28,389 100.00 %

Risk Grade Migration Fourth Quarter 2022 Investor Presentation | 19 Classified Loans (Loans Rated Substandard or Doubtful) (dollars in thousands) 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Real estate: Commercial $ 9,256 $ 901 $ 888 $ 110 $ 106 Commercial land & development — — — — — Commercial construction — — — — — Residential construction — — — — — Residential 178 177 176 175 175 Farmland — — — — — Commercial: Secured 1,180 1,920 152 144 123 Unsecured — — — — — Paycheck Protection Program (PPP) — — — — — Consumer and other — 12 27 27 26 Total $ 10,614 $ 3,010 $ 1,243 $ 456 $ 430 % o f L oa n Po rt fo lio O ut st an di ng , b y Ri sk G ra de 99.00% 99.19% 99.03% 99.13% 99.20% 0.45% 0.67% 0.92% 0.85% 0.78%0.55% 0.14% 0.05% 0.02% 0.02% Pass Watch Substandard Doubtful 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Note: Loan portfolio outstanding is the total balance of loans outstanding at period end, before deferred loan fees, before allowance for loan losses, and excluding loans held for sale.

Deposit and Capital Overview Fourth Quarter 2022 Investor Presentation | 20

Diversified Funding Fourth Quarter 2022 Investor Presentation | 21 Total Deposits(1) = $2.8 billion 93.5% of Total Liabilities Liability Mix 1. Balance as of December 31, 2022. 2. Loan balance in loan to deposit ratio is total loans held for investment and sale at period end. Loan(2) to Deposit Ratio Non-Interest-Bearing Deposits to Total Deposits 89.7% 83.2% 90.5% 84.5% 85.1% 83.5% 95.7% 99.2% 100.7% 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 30.5% 29.0% 29.6% 39.3% 39.5% 37.6% 40.2% 39.0% 34.9% 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Money Market & Savings, 41.3% Non-Interest-Bearing Demand, 32.7% Interest-Bearing Demand, 8.1% Time Deposits, 11.5% Borrowings & Subordinated Debt, 5.8% Other Liabilities, 0.6%

$1.2B $1.3B $1.8B $2.3B $2.5B $2.5B $2.6B $2.8B $600M $708M $889M $1,001M $1,012M $1,070M $1,131M $1,228M $337M $389M $701M $902M $941M $1,006M $1,021M $971M $124M $119M $146M $279M $371M $221M $227M $240M $100M $97M $48M $104M $179M $204M $236M $343M Money Market & Savings Non-Interest-Bearing Demand Interest-Bearing Demand Time Deposits 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Strong Deposit Growth Fourth Quarter 2022 Investor Presentation | 22 Note: Balances are end of period. Cost of total deposits is based on total average balance of interest-bearing and non- interest-bearing deposits and annualized quarterly deposit interest expense. 1. CAGR is based upon balances as of December 31, 2022. Cost of Total Deposits 0.55% 0.81% 0.44% 0.11% 0.09% 0.17% 0.43% 0.95% CAGR (1) 4 years Total Deposits 24.42 %

Capital Ratios Fourth Quarter 2022 Investor Presentation | 23 Tier 1 Leverage Ratio Tier 1 Capital to RWA Total Capital to RWA Common Equity Tier 1 to RWA Note: References to RWA are risk-weighted assets. 8.26% 6.81% 7.51% 6.58% 9.47% 8.60% 2017 2018 2019 2020 2021 2022 9.32% 7.48% 8.21% 8.98% 11.44% 8.99% 2017 2018 2019 2020 2021 2022 9.32% 7.48% 8.21% 8.98% 11.44% 8.99% 2017 2018 2019 2020 2021 2022 13.23% 10.79% 11.52% 12.18% 13.98% 12.46% 2017 2018 2019 2020 2021 2022

Financial Results Fourth Quarter 2022 Investor Presentation | 24

Earnings Track Record Fourth Quarter 2022 Investor Presentation | 25 $10.9M $10.6M $13.3M $14.1M $14.5M $16.3M $18.8M $20.0M Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 $0.0M $2.5M $5.0M $7.5M $10.0M $12.5M $15.0M $17.5M $20.0M $22.5M 1. A reconciliation of this non-GAAP measure is set forth in the appendix. $46.3M $48.8M $69.6M $37.3M $47.1M $62.9M Pre-tax, pre-provision net income Pre-tax net income 2020 2021 2022 $0.0M $10.0M $20.0M $30.0M $40.0M $50.0M $60.0M $70.0M $80.0M (1) Quarterly Trend of Pre-Tax, Pre-Provision Net Income (1) Annual Trend

Operating Metrics Fourth Quarter 2022 Investor Presentation | 26 Efficiency RatioNet Interest Margin 3.99% 3.93% 3.98% 3.68% 3.64% 3.75% 2017 2018 2019 2020 2021 2022 37.94% 42.27% 38.63% 37.92% 42.46% 36.90% 2017 2018 2019 2020 2021 2022 Note: All 2022 figures are through December 31, 2022. Total Income Before Taxes $22.1M $23.4M $30.4M $37.3M $47.1M $62.9M 2017 2018 2019 2020 2021 2022

Non-interest Income and Expense Comparison Fourth Quarter 2022 Investor Presentation | 27 (dollars in thousands) For the three months ended For the year ended 12/31/2022 9/30/2022 12/31/2021 12/31/2022 12/31/2021 Non-interest Income Service charges on deposit accounts $ 97 $ 132 $ 116 $ 467 $ 424 Net gain on sale of securities — — 15 5 724 Gain on sale of loans 637 548 1,072 2,934 4,082 Loan-related fees 407 447 391 2,207 1,306 FHLB stock dividends 193 152 102 546 372 Earnings on bank-owned life insurance 119 102 57 412 237 Other income 148 52 37 586 135 Total non-interest income $ 1,601 $ 1,433 $ 1,790 $ 7,157 $ 7,280 Non-interest Expense Salaries and employee benefits $ 5,698 $ 5,645 $ 5,209 $ 22,571 $ 19,825 Occupancy and equipment 511 515 544 2,059 1,938 Data processing and software 839 797 656 3,091 2,494 Federal Deposit Insurance Corporation insurance 245 195 160 850 700 Professional services 553 792 444 2,467 3,792 Advertising and promotional 568 512 499 1,908 1,300 Loan-related expenses 358 262 136 1,287 1,045 Other operating expenses 1,945 1,454 1,370 6,436 4,949 Total non-interest expense $ 10,717 $ 10,172 $ 9,018 $ 40,669 $ 36,043

Shareholder Returns Fourth Quarter 2022 Investor Presentation | 28 ROAA ROAE EPS (basic and diluted) Value per Share (book and tangible book(1)) Note: All 2022 figures are through December 31, 2022. 1. See Appendix for more information on this non-GAAP measure. 2.34% 1.99% 2.15% 1.95% 1.86% 1.57% 2017 2018 2019 2020 2021 2022 27.80% 29.28% 31.40% 31.16% 22.49% 18.80% 2017 2018 2019 2020 2021 2022 $2.92 $3.08 $3.40 $3.57 $2.83 $2.61 2017 2018 2019 2020 2021 2022 $10.93 $10.88 $11.25 $12.16 $13.65 $14.66 2017 2018 2019 2020 2021 2022

We strive to become the top business bank in all markets we serve through exceptional service, deep connectivity, and customer empathy. We are dedicated to serving real estate, agricultural, faith-based, and small to medium-sized enterprises. We aim to consistently deliver value that meets or exceeds the expectations of our shareholders, customers, employees, business partners, and community. “We are grateful to work with community partners like Five Star Bank who advocate for the strength and resilience of our region’s most vulnerable children and adults.” Doug Bergman, President and CEO, UCP of Sacramento and Northern California Pictured with Harold Ashe, UCP of Sacramento and Northern California Foundation Board of Trustees “Roebbelen Contracting has been improving lives in our community for over 60 years, not just in our work as a general contractor, but in the meaningful ways we give back. We are pleased to have a banking partner in Five Star Bank who shares our values and is an integral part of our community. We both offer the resources, sophistication and reach of a large national firm while maintaining the agility, spirit and fire of a small company. We look forward to serving our customers and community for many years to come.” Ken Wenham, President and CEO, Roebbelen Contracting Pictured with James Beckwith, President and CEO, Five Star Bank Five Star Bank is proud to partner with Sacramento Municipal Utility District (SMUD), a leader in clean energy and zero carbon innovation. Together, Five Star Bank and SMUD support customers across the Sacramento region in choosing clean energy solutions that reduce their carbon footprint at home, at work and on the road. We will continue to do our part to lead the way in protecting our environment, improving public health, and powering the Capital Region forward with innovative clean energy solutions. Pictured Left to Right: Brandy Bolden, Chief Customer Officer, SMUD; Paul Lau, CEO and General Manager, SMUD; Lora Anguay, Chief Zero Carbon Officer, SMUD

Appendix: Non-GAAP Reconciliation (Unaudited) The Company uses financial information in its analysis of the Company's performance that is not in conformity with 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. Average loan yield, excluding PPP loans, is defined as the daily average loan yield, excluding PPP loans, and includes both performing and nonperforming loans. The most directly comparable GAAP financial measure is average loan yield. Total assets, excluding PPP loans, is defined as total assets less PPP loans. The most directly comparable GAAP financial measure is total assets. Pre-tax, pre-provision net income is defined as net income plus provision for income taxes and provision for loan losses. The most directly comparable GAAP financial measure is pre-tax net income. 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. Fourth Quarter 2022 Investor Presentation | 30 (dollars in thousands) For the three months ended For the year ended Average loan yield, excluding PPP loans 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 12/31/2020 12/31/2021 12/31/2022 Interest and fee income on loans $ 18,613 $ 18,626 $ 20,085 $ 21,569 $ 22,112 $ 24,879 $ 29,886 $ 34,918 $ 71,405 $ 78,894 $ 111,795 Less: interest and fee income on PPP loans 2,400 1,771 2,054 1,192 610 25 — — 6,535 7,417 635 Interest and fee income on loans, excluding PPP loans 16,213 16,855 18,031 20,377 21,502 24,854 29,886 34,918 64,870 71,477 111,160 Annualized interest and fee income on loans, excluding PPP loans (numerator) 65,753 67,605 71,536 80,844 87,200 99,689 118,569 138,533 64,870 71,477 111,160 Average loans held for investment and sale 1,526,130 1,578,438 1,625,995 1,815,627 1,977,509 2,227,215 2,494,468 2,703,865 1,439,380 1,637,280 2,353,148 Less: average PPP loans 176,384 158,568 89,436 44,101 8,886 427 — — 165,414 116,652 2,297 Average loans held for investment and sale, excluding PPP loans (denominator) 1,349,746 1,419,870 1,536,559 1,771,526 1,968,623 2,226,788 2,494,468 2,703,865 1,273,966 1,520,628 2,350,851 Average loan yield, excluding PPP loans 4.87 % 4.76 % 4.66 % 4.56 % 4.43 % 4.48 % 4.75 % 5.12 % 5.09 % 4.70 % 4.73 %

Appendix: Non-GAAP Reconciliation (Unaudited) Fourth Quarter 2022 Investor Presentation | 31 (dollars in millions) Total assets, excluding PPP loans 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Total assets $ 2,557 $ 2,778 $ 2,836 $ 3,075 $ 3,227 Less: PPP loans 22 2 — — — Total assets, excluding PPP loans $ 2,535 $ 2,776 $ 2,836 $ 3,075 $ 3,227 (dollars in millions) Three months ended Pre-tax, pre-provision net income 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Net income $ 10,278 $ 9,828 $ 11,026 $ 11,309 $ 9,862 $ 9,953 $ 11,704 $ 13,282 Add: provision for income taxes 382 734 2,270 1,321 3,660 4,080 4,830 5,487 Add: provision for loan losses 200 — — 1,500 950 2,250 2,250 1,250 Pre-tax, pre-provision net income $ 10,860 $ 10,562 $ 13,296 $ 14,130 $ 14,472 $ 16,283 $ 18,784 $ 20,019 (dollars in millions) Year ended Pre-tax, pre-provision net income 12/31/2020 12/31/2021 12/31/2022 Net income $ 35,928 $ 42,441 $ 44,801 Add: provision for income taxes 1,327 4,707 18,057 Add: provision for loan losses 9,000 1,700 6,700 Pre-tax, pre-provision net income $ 46,255 $ 48,848 $ 69,558