Five Star Bancorp Announces First Quarter 2026 Results (Form 8-K)

Five Star Bancorp Announces First Quarter 2026 Results

RANCHO CORDOVA, CA April 27, 2026 (GLOBE NEWSWIRE) - Five Star Bancorp (Nasdaq: FSBC) ("Five Star" or the "Company"), a holding company that operates through its wholly owned banking subsidiary, Five Star Bank (the "Bank"), today reported net income of $18.6 million for the three months ended March 31, 2026, as compared to $17.6 million for the three months ended December 31, 2025 and $13.1 million for the three months ended March 31, 2025.

First Quarter Highlights

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

			Three months ended
(in thousands, except per share and share data)			March 31, 2026						December 31, 2025						March 31, 2025
Return on average assets ("ROAA")			1.55		%				1.50		%				1.30		%
Return on average equity ("ROAE")			16.73		%				15.97		%				13.28		%
Pre-tax income			$	25,031					$	23,008					$	18,391
Pre-tax, pre-provision income(1)			$	27,706					$	25,808					$	20,291
Net income			$	18,621					$	17,643					$	13,111
Basic earnings per common share			$	0.87					$	0.83					$	0.62
Diluted earnings per common share			$	0.87					$	0.83					$	0.62
Weighted average basic common shares outstanding			21,253,085						21,231,563						21,209,881
Weighted average diluted common shares outstanding			21,313,078						21,289,056						21,253,588
Shares outstanding at end of period			21,376,153						21,367,387						21,329,235

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

James E. Beckwith, President and Chief Executive Officer, commented:

"The strength of Five Star Bank's first quarter 2026 financial results is emblematic of seized market opportunities fueled by the continued demand for our differentiated customer experience. In the first quarter of 2026, we successfully executed on our strategic plan and declared a cash dividend of $0.25 per share to shareholders (an increase of $0.05 per share from dividends declared in each quarter of 2025). Earnings per share increased to $0.87 per share, up $0.04 from the fourth quarter of 2025 and $0.25 from the first quarter of 2025. Net income increased to $18.6 million, up from $17.6 million for the fourth quarter of 2025, while total cost of funds decreased 10 basis points to 2.20% during the first quarter of 2026, and net interest margin increased by four basis points to 3.70%. We are pleased that over the first quarter, total loans held for investment increased by $138.5 million, or 3% (14% when annualized) while total deposits increased by $268.3 million, or 6% (26% when annualized). As we execute on the expansion of industry verticals and our presence in new geographies to meet customer demand, we expect the ongoing acceleration of our growth to benefit our customers, employees, and shareholders."

Financial highlights as of and during the three months ended March 31, 2026 included the following:

•Total deposits increased by $268.3 million, or 6.39%, during the three months ended March 31, 2026, with increases in non-wholesale deposits exceeding decreases in wholesale deposits. The Company defines wholesale deposits as brokered deposits and California Time Deposit Program deposits. During the three months ended March 31, 2026, non-wholesale deposits increased by $350.2 million, or 9.37%, and wholesale deposits decreased by $81.9 million, or 17.62%.

1

•The number of Business Development Officers increased from 42 at December 31, 2025 to 43 at March 31, 2026.

•Cash and cash equivalents were $644.4 million, representing 14.42% of total deposits at March 31, 2026, as compared to 12.06% at December 31, 2025.

•Consistent, disciplined management of expenses contributed to our efficiency ratio of 38.57% for the three months ended March 31, 2026, as compared to 40.62% for the three months ended December 31, 2025 and 42.58% for the three months ended March 31, 2025.

•For the three months ended March 31, 2026, net interest margin was 3.70%, as compared to 3.66% for the three months ended December 31, 2025 and 3.45% for the three months ended March 31, 2025. The improvement in net interest margin from the three months ended March 31, 2025 occurred during a period of declining effective federal funds rates. Specifically, the effective federal funds rate was 4.33% as of March 31, 2025 and declined over the subsequent quarters to 3.64% by December 31, 2025. The effective federal funds rate remained constant at 3.64% through March 31, 2026.

•Other comprehensive loss was $1.0 million during the three months ended March 31, 2026. Unrealized losses, net of tax effect, on available-for-sale securities were $10.1 million as of March 31, 2026. Total carrying value of held-to-maturity and available-for-sale securities represented 0.04% and 1.87% of total interest-earning assets, respectively, as of March 31, 2026.

•The Company's common equity Tier 1 capital ratio was 10.45% and 10.58% as of March 31, 2026 and December 31, 2025, respectively. The Bank continues to meet all requirements to be considered "well-capitalized" under applicable regulatory guidelines.

•Loan and deposit growth in the three and twelve months ended March 31, 2026 was as follows:

(in thousands)			March 31, 2026						December 31, 2025						$ Change						% Change
Loans held for investment			$	4,213,393					$	4,074,929					$	138,464					3.40		%
Non-interest-bearing deposits			1,232,696						1,084,537						148,159						13.66		%
Interest-bearing deposits			3,236,657						3,116,547						120,110						3.85		%
(in thousands)			March 31, 2026						March 31, 2025						$ Change						% Change
Loans held for investment			$	4,213,393					$	3,621,819					$	591,574					16.33		%
Non-interest-bearing deposits			1,232,696						933,652						299,044						32.03		%
Interest-bearing deposits			3,236,657						2,802,702						433,955						15.48		%

•The ratio of nonperforming loans to loans held for investment at period end decreased from 0.08% at December 31, 2025 to 0.07% at March 31, 2026.

•The Company's Board of Directors declared, and the Company subsequently paid, a cash dividend of $0.25 per share during the three months ended March 31, 2026. The Company's Board of Directors declared an additional cash dividend of $0.25 per share on April 16, 2026, which the Company expects to pay on May 11, 2026 to shareholders of record as of May 4, 2026.

2

Summary Results

Three months ended March 31, 2026, as compared to three months ended December 31, 2025

The Company's net income was $18.6 million for the three months ended March 31, 2026, as compared to $17.6 million for the three months ended December 31, 2025. Net interest income increased by $1.4 million during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025, primarily due to an increase in interest income driven by loan growth, augmented by a decrease in interest expense driven by a decline in the average cost of deposits. The provision for credit losses decreased by $0.1 million during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025, primarily due to a slight improvement in estimated loss rates. Non-interest income increased by $0.2 million, primarily due to an increase in fees from swap referrals and a special FHLB stock dividend, partially offset by an overall decline in earnings related to investments in venture-backed funds during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. Non-interest expense decreased by $0.3 million during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025, primarily due to the release of a loss contingency on a U.S. Small Business Administration ("SBA") loan that did not occur during the three months ended December 31, 2025, partially offset by increased salaries and employee benefits due to increased headcount during the three months ended March 31, 2026.

Three months ended March 31, 2026, as compared to three months ended March 31, 2025

The Company's net income was $18.6 million for the three months ended March 31, 2026, as compared to $13.1 million for the three months ended March 31, 2025. Net interest income increased by $9.5 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to an increase in interest income driven by loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth. The provision for credit losses increased by $0.8 million, reflecting increases in loan growth and an overall increase in loss rates in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Non-interest income increased by $0.3 million, primarily due to an increase in fees from swap referrals and a special FHLB stock dividend, partially offset by an overall decline in earnings related to investments in venture-backed funds during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. Non-interest expense increased by $2.3 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to increased salaries and employee benefits due to increased headcount.

The following is a summary of the components of the Company's operating results and performance ratios for the periods indicated:

						Three months ended
(in thousands, except per share data)						March 31, 2026						December 31, 2025						$ Change						% Change
Selected operating data:
Net interest income						$	43,457					$	42,065					$	1,392					3.31		%
Provision for credit losses						2,675						2,800						(125)						(4.46)		%
Non-interest income						1,643						1,400						243						17.36		%
Non-interest expense						17,394						17,657						(263)						(1.49)		%
Pre-tax income						25,031						23,008						2,023						8.79		%
Provision for income taxes						6,410						5,365						1,045						19.48		%
Net income						$	18,621					$	17,643					$	978					5.54		%
Earnings per common share:
Basic						$	0.87					$	0.83					$	0.04					4.82		%
Diluted						$	0.87					$	0.83					$	0.04					4.82		%
Performance and other financial ratios:
ROAA						1.55		%				1.50		%
ROAE						16.73		%				15.97		%
Net interest margin						3.70		%				3.66		%
Total cost of funds(1)						2.20		%				2.30		%
Efficiency ratio						38.57		%				40.62		%

3

						Three months ended
(in thousands, except per share data)						March 31, 2026						March 31, 2025						$ Change						% Change
Selected operating data:
Net interest income						$	43,457					$	33,977					$	9,480					27.90		%
Provision for credit losses						2,675						1,900						775						40.79		%
Non-interest income						1,643						1,359						284						20.90		%
Non-interest expense						17,394						15,045						2,349						15.61		%
Pre-tax income						25,031						18,391						6,640						36.10		%
Provision for income taxes						6,410						5,280						1,130						21.40		%
Net income						$	18,621					$	13,111					$	5,510					42.03		%
Earnings per common share:
Basic						$	0.87					$	0.62					$	0.25					40.32		%
Diluted						$	0.87					$	0.62					$	0.25					40.32		%
Performance and other financial ratios:
ROAA						1.55		%				1.30		%
ROAE						16.73		%				13.28		%
Net interest margin						3.70		%				3.45		%
Total cost of funds(1)						2.20		%				2.56		%
Efficiency ratio						38.57		%				42.58		%

(1) Total cost of funds reflects the average cost of all funding sources, including both interest-bearing and non-interest-bearing deposits and borrowings.

Balance Sheet Summary

(in thousands)						March 31, 2026						December 31, 2025						$ Change						% Change
Selected financial condition data:
Total assets						$	5,031,751					$	4,754,861					$	276,890					5.82		%
Cash and cash equivalents						644,359						506,851						137,508						27.13		%
Total loans held for investment						4,213,393						4,074,929						138,464						3.40		%
Total investments						93,850						96,889						(3,039)						(3.14)		%
Total liabilities						4,573,232						4,309,029						264,203						6.13		%
Total deposits						4,469,353						4,201,084						268,269						6.39		%
Subordinated notes, net						74,077						74,041						36						0.05		%
Total shareholders' equity						458,519						445,832						12,687						2.85		%

•Insured and collateralized deposits were approximately $2.9 billion, representing 65.55% of total deposits as of March 31, 2026, as compared to 66.20% as of December 31, 2025. Net uninsured and uncollateralized deposits were approximately $1.5 billion as of March 31, 2026, increasing from $1.4 billion at December 31, 2025.

•Non-wholesale deposit accounts constituted 91.43% of total deposits as of March 31, 2026, as compared to 88.93% at December 31, 2025. Deposit relationships of greater than $5 million represented 60.67% of total deposits as of March 31, 2026, as compared to 60.90% as of December 31, 2025, and had an average age of approximately 7.98 years as of March 31, 2026, as compared to 7.67 years as of December 31, 2025.

•Total deposits as of March 31, 2026 were $4.5 billion, an increase of $268.3 million, or 6.39%, from December 31, 2025, comprised of increases in both interest-bearing and non-interest-bearing deposits.

4

•Cash and cash equivalents as of March 31, 2026 were $644.4 million, representing 14.42% of total deposits at March 31, 2026, as compared to 12.06% as of December 31, 2025.

•Total liquidity (consisting of cash and cash equivalents as well as unused and immediately available borrowing capacity as set forth below) was approximately $2.2 billion as of March 31, 2026, as compared to $2.3 billion at December 31, 2025.

						March 31, 2026
(in thousands)						Line of Credit						Letters of Credit Issued						Borrowings						Available
Federal Home Loan Bank of San Francisco ("FHLB") advances						$	1,425,706					$	1,112,500					$	-					$	313,206
Federal Reserve Discount Window						1,016,633						-						-						1,016,633
Correspondent bank lines of credit						185,000						-						-						185,000
Cash and cash equivalents						-						-						-						644,359
Total						$	2,627,339					$	1,112,500					$	-					$	2,159,198

The increase in total assets from December 31, 2025 to March 31, 2026 was primarily comprised of a $138.5 million increase in total loans held for investment and a $137.5 million increase in cash and cash equivalents. The $138.5 million increase in total loans held for investment between December 31, 2025 and March 31, 2026 was a result of $389.0 million in loan originations and advances, partially offset by $67.9 million and $182.6 million in loan payoffs and paydowns, respectively. The $137.5 million increase in cash and cash equivalents primarily resulted from the net increase in cash inflows from growth in total deposits of $268.3 million and cash outflows from growth in total loans held for investment of $138.5 million.

The increase in total liabilities from December 31, 2025 to March 31, 2026 was primarily due to an increase in deposits of $268.3 million. The increase in deposits was largely due to increases in money market and non-interest-bearing deposits of $212.6 million and $148.2 million, respectively, partially offset by a $100.3 million decrease in time deposits, mainly attributed to an $81.9 million decline in wholesale deposits.

The increase in total shareholders' equity from December 31, 2025 to March 31, 2026 was primarily a result of $18.6 million recognized as net income, partially offset by $5.3 million in cash dividends paid during the period and a $1.0 million increase in accumulated other comprehensive loss.

Net Interest Income and Net Interest Margin

The following is a summary of the components of net interest income for the periods indicated:

						Three months ended
(in thousands)						March 31, 2026						December 31, 2025						$ Change						% Change
Interest and fee income						$	67,347					$	66,421					$	926					1.39		%
Interest expense						23,890						24,356						(466)						(1.91)		%
Net interest income						$	43,457					$	42,065					$	1,392					3.31		%
Net interest margin						3.70		%				3.66		%
						Three months ended
(in thousands)						March 31, 2026						March 31, 2025						$ Change						% Change
Interest and fee income						$	67,347					$	57,087					$	10,260					17.97		%
Interest expense						23,890						23,110						780						3.38		%
Net interest income						$	43,457					$	33,977					$	9,480					27.90		%
Net interest margin						3.70		%				3.45		%

5

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

						Three months ended
						March 31, 2026																		December 31, 2025																		March 31, 2025
(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 in banks						$	512,308					$	4,687					3.71		%				$	487,339					$	4,850					3.95		%				$	328,571					$	3,575					4.41		%
Investment securities						96,787						544						2.28		%				97,848						561						2.27		%				100,474						581						2.34		%
Loans held for investment and sale						4,150,446						62,116						6.07		%				3,972,184						61,010						6.09		%				3,567,992						52,931						6.02		%
Total interest-earning assets						4,759,541						67,347						5.74		%				4,557,371						66,421						5.78		%				3,997,037						57,087						5.79		%
Interest receivable and other assets, net						118,967																		117,496																		93,543
Total assets						$	4,878,508																	$	4,674,867																	$	4,090,580
Liabilities and shareholders' equity
Interest-bearing transaction accounts						$	343,663					$	1,133					1.34		%				$	339,774					$	1,180					1.38		%				$	303,822					$	1,112					1.48		%
Savings accounts						138,125						830						2.44		%				143,818						895						2.47		%				123,599						772						2.53		%
Money market accounts						2,185,347						15,851						2.94		%				1,999,734						15,271						3.03		%				1,540,879						12,435						3.27		%
Time accounts						531,031						4,915						3.75		%				574,718						5,848						4.04		%				706,528						7,629						4.38		%
Subordinated notes and other borrowings						74,072						1,161						6.36		%				74,036						1,162						6.22		%				73,908						1,162						6.37		%
Total interest-bearing liabilities						3,272,238						23,890						2.96		%				3,132,080						24,356						3.09		%				2,748,736						23,110						3.41		%
Demand accounts						1,122,062																		1,067,215																		910,954
Interest payable and other liabilities						32,739																		37,287																		30,389
Shareholders' equity						451,469																		438,285																		400,501
Total liabilities & shareholders' equity						$	4,878,508																	$	4,674,867																	$	4,090,580
Net interest spread																		2.78		%																2.69		%																2.38		%
Net interest income/margin												$	43,457					3.70		%										$	42,065					3.66		%										$	33,977					3.45		%

6

Net interest income during the three months ended March 31, 2026 increased by $1.4 million, or 3.31%, to $43.5 million, as compared to $42.1 million during the three months ended December 31, 2025. Net interest margin totaled 3.70% for the three months ended March 31, 2026, an increase of four basis points compared to the prior quarter. The increase in net interest income is primarily attributable to an additional $0.9 million in interest income, mainly due to a $178.3 million, or 4.49%, increase in the average balance of loans during the three months ended March 31, 2026 compared to the prior quarter. The increase in interest income was augmented by a $0.5 million decrease in interest expense due to a 10 basis point decrease in the average cost of deposits during the three months ended March 31, 2026 compared to the prior quarter. The average balance of deposits increased by $195.0 million, or 4.73%, during the three months ended March 31, 2026, but the decrease in the cost associated with deposits led to a net reduction in total interest expense. In addition, the average balance of non-interest bearing deposits increased by $54.8 million, or 5.14%, compared to the prior quarter.

As compared to the three months ended March 31, 2025, net interest income during the three months ended March 31, 2026 increased by $9.5 million, or 27.90%, to $43.5 million from $34.0 million. Net interest margin totaled 3.70% for the three months ended March 31, 2026, an increase of 25 basis points compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $10.3 million in interest income, mainly due to a $582.5 million, or 16.32%, increase in the average balance of loans and a five basis point improvement in the average yield on loans during the three months ended March 31, 2026, as compared to the same quarter of the prior year. The increase in interest income was partially offset by a $0.8 million increase in interest expense due to a $734.4 million, or 20.48%, increase in the average balance of deposits during the three months ended March 31, 2026. The average cost of deposits during the three months ended March 31, 2026 was 2.13%, a decrease of 35 basis points compared to the same quarter of the prior year, which helped to moderate the increase in interest expense related to deposits. In addition, the average balance of non-interest-bearing deposits increased by $211.1 million, or 23.17%, compared to the same period of the prior year.

Loans by Type

The following table provides loan balances, excluding deferred loan fees, by type as of the dates shown:

(in thousands)						March 31, 2026						December 31, 2025
Real estate:
Commercial						$	3,421,902					$	3,305,713
Commercial land and development						2,519						1,352
Commercial construction						108,179						96,760
Residential construction						17,808						8,389
Residential						43,195						37,566
Farmland						61,090						59,606
Commercial:
Secured						243,140						251,736
Unsecured						41,971						40,422
Consumer and other						275,891						275,475
Net deferred loan fees						(2,302)						(2,090)
Total loans held for investment						$	4,213,393					$	4,074,929

Interest-bearing Deposits

The following table provides interest-bearing deposit balances by type as of the dates shown:

(in thousands)						March 31, 2026						December 31, 2025
Interest-bearing transaction accounts						$	349,138					$	344,200
Savings accounts						141,961						139,169
Money market accounts						2,291,215						2,078,567
Time accounts						454,343						554,611
Total interest-bearing deposits						$	3,236,657					$	3,116,547

7

Asset Quality

Allowance for Credit Losses

At March 31, 2026, the Company's allowance for credit losses was $46.4 million, as compared to $44.4 million at December 31, 2025. The $2.0 million increase in the allowance is due to a $2.6 million provision for credit losses recorded during the three months ended March 31, 2026, partially offset by net charge-offs of $0.6 million, primarily attributable to commercial and industrial loans, during the same period.

The Company's ratio of nonperforming loans to loans held for investment decreased to 0.07% at March 31, 2026 from 0.08% at December 31, 2025. Loans designated as watch increased from $101.9 million to $143.5 million between December 31, 2025 and March 31, 2026. Loans designated as substandard increased from $22.3 million to $23.4 million between December 31, 2025 and March 31, 2026. There were no loans with doubtful risk grades at March 31, 2026 or December 31, 2025.

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

						March 31, 2026												December 31, 2025
(in thousands)						Amount						% of Total						Amount						% of Total
Real estate:
Commercial						$	26,919					57.96		%				$	25,219					56.77		%
Commercial land and development						93						0.20		%				56						0.13		%
Commercial construction						3,982						8.57		%				4,050						9.12		%
Residential construction						492						1.06		%				213						0.48		%
Residential						421						0.91		%				362						0.82		%
Farmland						495						1.07		%				467						1.05		%
						32,402						69.77		%				30,367						68.37		%
Commercial:
Secured						11,191						24.10		%				11,204						25.23		%
Unsecured						487						1.05		%				482						1.09		%
						11,678						25.15		%				11,686						26.32		%
Consumer and other						2,359						5.08		%				2,356						5.31		%
Total allowance for credit losses						$	46,439					100.00		%				$	44,409					100.00		%

The ratio of allowance for credit losses to loans held for investment was 1.10% at March 31, 2026, as compared to 1.09% at December 31, 2025.

Non-interest Income

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

						Three months ended
(in thousands)						March 31, 2026						December 31, 2025						$ Change						% Change
Service charges on deposit accounts						$	135					$	159					$	(24)					(15.09)		%
Loan-related fees						1,265						557						708						127.11		%
FHLB stock dividends						762						332						430						129.52		%
Earnings on bank-owned life insurance						225						234						(9)						(3.85)		%
Other income						(744)						118						(862)						(730.51)		%
Total non-interest income						$	1,643					$	1,400					$	243					17.36		%

Loan-related fees. The increase resulted primarily from an increase of $0.7 million in fees from swap referrals during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025.

8

FHLB stock dividends. The increase related primarily to a $0.4 million special cash dividend from the FHLB during the three months ended March 31, 2026 that did not occur during the three months ended December 31, 2025.

Other income. The decrease related primarily to an overall decline in earnings related to investments in venture-backed funds during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025.

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

						Three months ended
(in thousands)						March 31, 2026						March 31, 2025						$ Change						% Change
Service charges on deposit accounts						$	135					$	215					$	(80)					(37.21)		%
Gain on sale of loans						-						125						(125)						(100.00)		%
Loan-related fees						1,265						448						817						182.37		%
FHLB stock dividends						762						331						431						130.21		%
Earnings on bank-owned life insurance						225						161						64						39.75		%
Other income						(744)						79						(823)						(1,041.77)		%
Total non-interest income						$	1,643					$	1,359					$	284					20.90		%

Gain on sale of loans. The decrease related to an overall decline in the volume of loans sold due to a strategic, intentional reduction in originations of loans held for sale. During the three months ended March 31, 2026, no loans were sold, as compared to approximately $1.7 million of loans sold with an effective yield of 7.24% during the three months ended March 31, 2025.

Loan-related fees. The increase resulted primarily from an increase of $0.8 million in fees from swap referrals during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

FHLB stock dividends. The increase related primarily to a $0.4 million special cash dividend from the FHLB during the three months ended March 31, 2026 that did not occur during the three months ended March 31, 2025.

Other income. The decrease related primarily to an overall decline in earnings related to investments in venture-backed funds during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Non-interest Expense

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

						Three months ended
(in thousands)						March 31, 2026						December 31, 2025						$ Change						% Change
Salaries and employee benefits						$	11,430					$	10,125					$	1,305					12.89		%
Occupancy and equipment						829						788						41						5.20		%
Data processing and software						1,551						1,597						(46)						(2.88)		%
Federal Deposit Insurance Corporation ("FDIC") insurance						545						525						20						3.81		%
Professional services						926						960						(34)						(3.54)		%
Advertising and promotional						744						988						(244)						(24.70)		%
Loan-related expenses						247						364						(117)						(32.14)		%
Other operating expenses						1,122						2,310						(1,188)						(51.43)		%
Total non-interest expense						$	17,394					$	17,657					$	(263)					(1.49)		%

Salaries and employee benefits. The increase related primarily to: (i) a $1.3 million increase in salaries, benefits, and bonus expense, mainly related to a 3.86% increase in headcount between December 31, 2025 and March 31, 2026; and (ii) a $0.4 million decrease in deferred loan origination costs due to lower loan originations period-over-period. This increase was partially offset by a $0.4 million decrease in commissions paid.

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Advertising and promotional. The decrease related primarily to a $0.1 million decrease in donations and a $0.1 million decrease in expenses related to sponsored events and partnerships.

Loan-related expenses. The decrease related primarily to lower loan originations period-over-period.

Other operating expenses. The decrease related primarily to the release of a $1.0 million loss contingency on an SBA loan during the three months ended March 31, 2026. No such release occurred during the three months ended December 31, 2025.

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

						Three months ended
(in thousands)						March 31, 2026						March 31, 2025						$ Change						% Change
Salaries and employee benefits						$	11,430					$	9,134					$	2,296					25.14		%
Occupancy and equipment						829						637						192						30.14		%
Data processing and software						1,551						1,457						94						6.45		%
FDIC insurance						545						455						90						19.78		%
Professional services						926						913						13						1.42		%
Advertising and promotional						744						522						222						42.53		%
Loan-related expenses						247						319						(72)						(22.57)		%
Other operating expenses						1,122						1,608						(486)						(30.22)		%
Total non-interest expense						$	17,394					$	15,045					$	2,349					15.61		%

Salaries and employee benefits. The increase related primarily to: (i) a $2.3 million increase in salaries, benefits, and bonus expense, mainly related to a 17.48% increase in headcount between March 31, 2025 and March 31, 2026; and (ii) a $0.5 million increase in commissions paid. This increase was partially offset by a $0.6 million increase in deferred loan origination costs due to higher loan originations period-over-period.

Occupancy and equipment. The increase was primarily due to expenses for the Walnut Creek branch office and Newport Beach non-depository office during the three months ended March 31, 2026, which did not exist for the three months ended March 31, 2025.

Advertising and promotional. The increase related primarily to additional expenses incurred to support the expansion of the Bank's business development teams, including $0.1 million related to business development expenses and $0.1 million related to donation, sponsorship, and advertising expenses.

Other operating expenses. The decrease related primarily to the release of a $1.0 million loss contingency on an SBA loan during the three months ended March 31, 2026. No such release occurred during the three months ended March 31, 2025. This was partially offset by individually immaterial increases in expenses related to operations, including administration, courier service, and travel.

Provision for Income Taxes

Three months ended March 31, 2026, as compared to three months ended December 31, 2025

Provision for income taxes increased by $1.0 million, or 19.48%, for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025, which was primarily due to: (i) an increase in taxable income recognized; and (ii) a $0.7 million net reduction in transferable tax credits recognized during the three months ended March 31, 2026. The effective tax rates were 25.61% and 23.32% for the three months ended March 31, 2026 and December 31, 2025, respectively.

Three months ended March 31, 2026, as compared to three months ended March 31, 2025

Provision for income taxes increased by $1.1 million, or 21.40%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This increase was primarily driven by an increase in taxable income, partially offset by a $0.2 million benefit recorded during the three months ended March 31, 2026 related to the purchase of transferable tax credits that did not occur during the three months ended March 31, 2025. The effective tax rates were 25.61% and 28.71% for the three months ended March 31, 2026 and March 31, 2025, respectively.

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Webcast Details

Five Star Bancorp will host a live webcast for analysts and investors on Tuesday, April 28, 2026 at 1:00 PM ET (10:00 AM PT) to discuss its first quarter financial results. To view the live webcast, visit the "News & Events" section of the Company's website under "Events" at https://investors.fivestarbank.com/news-events/events. The webcast will be archived on the Company's website for a period of 90 days.

About Five Star Bancorp

Five Star is a bank holding company headquartered in Rancho Cordova, California. Five Star operates through its wholly owned banking subsidiary, Five Star Bank. The Bank has nine branches in Northern California.