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CLOSED · 04:25 ET
Market ClerkRecap
Sat Oct 31 · markets closed3 signals on Oct 30129 insider buys this week · $10BCIRO short report next: Nov 14The week ahead

FSBC

FIVE STAR BANCORP
NASDAQ · FINANCIALS · STATE COMMERCIAL BANKS
44.92
−0.84 −1.84%
USD · close Oct 30
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Work order
76
PASS · shorts 76
Insiders, 90 days
0
no open-market filings in 90 days
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no disclosures naming it
Big money
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nobody we score has called it yet
MKT CAP $1.1BP/E 13.3DIV YIELD 2.00%FCF YIELD 7.30%REV TTM —NET INCOME $72M +38.8%NET CASH —52W 32.87 – 49.68SEC XBRL · TTM TO Invalid Date

How FSBC rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025
Text kept
44%
of sentences unchanged
Added
449
new sentences
Dropped
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sentences removed
Length
+1,773
words, now 40,982

New in FY2025

  • Set forth below is a comparison of the results of operations and changes in financial condition for the fiscal years ended December 31, 2025 and December 31, 2024.
  • For a discussion of our financial results for the fiscal year ended December 31, 2023, see the section entitled “Part II, Item 7.
  • Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024.
  • We provide a broad range of banking products and services to small and medium-sized businesses, professionals, and individuals primarily in Northern California through nine branch offices.
  • We refer to our mission as “purpose-driven and integrity-centered banking.” At December 31, 2025, we had total assets of $4.8 billion, total loans held for investment of $4.1 billion, and total deposits of $4.2 billion.
  • During 2024 and 2025, the Federal Reserve decreased the federal funds rate three times each year.
  • As of December 31, 2025, the target range for the federal funds rate had been decreased to 3.50% to 3.75%, and the FOMC projects one additional decrease in 2026, as part of a strategy to return inflation to normalized levels while keeping unemployment low.
  • Based on our sensitivity analysis, a steepened yield curve could have a slight negative impact on our net interest income over the next year.
  • Additionally, a continued flat yield curve would be expected to maintain our net interest income over the next year.
  • Factors Affecting Comparability of Financial Results Allowance for Credit Losses ( “ ACL ” ) On January 1, 2023, the Company adopted ASC 326, which replaced the former “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model.
  • However, we may early adopt certain accounting standards, as the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies to the extent early adoption is permitted.
  • ACL The ACL represents the estimated probable credit losses in our loan and investment portfolios and is estimated as of December 31, 2025 using CECL.
  • Reserves for credit losses identified on a pooled basis are then adjusted for qualitative factors to reflect current conditions.
  • The most significant components of qualitative factors used to estimate the allowance for credit losses are adjustments relating to prevailing economic conditions, concentrations within the loan portfolio, and external factors.
  • These qualitative factors are subject to significant judgment and carry a higher degree of uncertainty.
  • This estimate is subject to significant judgment and could potentially add $3.2 million based on existing loan balances to the allowance for credit losses while using severely adverse economic conditions in the estimate.
  • This estimate is subject to significant judgment and could potentially add $12.0 million based on existing loan balances to the allowance for credit losses while using a severely adverse market outlook for the specifically identified concentrations.
  • This estimate is subject to significant judgment and could potentially add $9.5 million based on existing loan balances to the allowance for credit losses while using severely adverse external factors in the estimate.
  • Other qualitative factors within the ACL relate to items which carry a lower degree of judgment using internally generated data.
  • These factors include, but are not limited to, policy exception rates, volume of loan growth, and results of internal and external audits.
  • In leveraging our core competencies, we intend to: • continue our organic growth in our market through our “purpose-driven and integrity-centered” approach to banking; • continue to focus on and expand our operations in our unique lines of business throughout our geographic service areas; • build upon the strength of our brand to deepen and broaden client relationships and grow our deposit base; • attract additional banking professionals with track records of driving revenue growth; • maintain our disciplined credit underwriting and robust risk management; • enhance our disciplined cost management culture; • leverage our technology platforms to improve our efficiency; and • further engage in the economic development of our communities and market areas.
  • Highlights of the financial results are presented in the following tables: Table 1: Highlights of Financial Results (dollars in thousands) December 31, 2025 December 31, 2024 Selected financial condition data: Total assets $ 4,754,861 $ 4,053,278 Total loans held for investment 4,074,929 3,532,686 Total deposits 4,201,084 3,557,994 Total subordinated notes, net 74,041 73,895 Total shareholders’ equity 445,832 396,624 Asset quality ratios: Allowance for credit losses to total loans held for investment 1.09 % 1.07 % Allowance for credit losses to nonperforming loans 14.34x 21.02x Nonperforming loans to total loans held for investment 0.08 % 0.05 % Capital ratios: Total capital (to risk-weighted assets) 13.33 % 13.99 % Tier 1 capital (to risk-weighted assets) 10.58 % 11.02 % Common equity Tier 1 capital (to risk-weighted assets) 10.58 % 11.02 % Tier 1 leverage 9.70 % 10.05 % Total shareholders’ equity to total assets 9.38 % 9.79 % Tangible shareholders’ equity to tangible assets 1 9.38 % 9.79 % Table 2: Highlights of Financial Results (continued) (dollars in thousands, except share and per share data) For the year ended December 31, 2025 December 31, 2024 Selected operating data: Net interest income $ 151,905 $ 119,711 Provision for credit losses 9,700 6,950 Non-interest income 6,535 6,453 Non-interest expense 65,008 54,493 Net income 61,606 45,671 Per common share data: Earnings per common share: Basic $ 2.90 $ 2.26 Diluted $ 2.90 $ 2.26 Book value per share $ 20.87 $ 18.60 Tangible book value per share 2 $ 20.87 $ 18.60 Shares outstanding data: Weighted average basic common shares outstanding 21,224,788 20,154,385 Weighted average diluted common shares outstanding 21,273,552 20,205,440 Shares outstanding at end of period 21,367,387 21,319,083 Performance and other financial ratios: ROAA 1.41 % 1.23 % ROAE 14.74 % 12.72 % Net interest margin 3.55 % 3.32 % Cost of funds 2.47 % 2.64 % Efficiency ratio 41.03 % 43.19 % Average equity to average assets 9.55 % 9.71 % Cash dividend payout ratio on common stock 3 27.59 % 35.45 % 1 Tangible shareholders’ equity to tangible assets is considered a non-GAAP financial measure.
  • RESULTS OF OPERATIONS The following discussion of our results of operations compares the year ended December 31, 2025 to the year ended December 31, 2024.
  • Net interest income increased by $32.2 million, or 26.89%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, while our net interest margin increased 23 basis points during the same period.
  • The increase in net interest income was primarily due to an increase in interest income driven by higher average balances and yields on loans, partially offset by an increase in interest expense due to higher average balances of deposits.
  • Table 3: Average Balances, Interest, and Yield/Rate (dollars in thousands) For the year ended December 31, 2025 For the year ended December 31, 2024 Average Balance Interest Income/Expense Average Yield/Rate Average Balance Interest Income/Expense Average Yield/Rate Assets Interest-earning deposits in banks 1 $ 407,884 $ 17,421 4.27 % $ 218,156 $ 11,080 5.08 % Investment securities 1,2 98,242 2,298 2.34 % 106,289 2,530 2.38 % Loans held for investment and sale 1, 3 3,767,199 229,214 6.08 % 3,283,874 193,341 5.89 % Total interest-earning assets 1 4,273,325 248,933 5.83 % 3,608,319 206,951 5.74 % Interest receivable and other assets, net 4 105,775 90,061 Total assets $ 4,379,100 $ 3,698,380 Liabilities and shareholders’ equity Interest-bearing transaction accounts 1 $ 306,983 $ 4,529 1.48 % $ 298,137 $ 4,716 1.58 % Savings accounts 1 130,079 3,363 2.59 % 124,208 3,584 2.89 % Money market accounts 1 1,767,137 56,323 3.19 % 1,533,405 53,750 3.51 % Time accounts 1 661,321 28,167 4.26 % 412,007 20,348 4.94 % Subordinated notes and other borrowings 1 73,974 4,646 6.28 % 77,335 4,842 6.26 % Total interest-bearing liabilities 2,939,494 97,028 3.30 % 2,445,092 87,240 3.57 % Demand accounts 988,447 858,789 Interest payable and other liabilities 33,090 35,331 Shareholders’ equity 418,069 359,168 Total liabilities and shareholders’ equity $ 4,379,100 $ 3,698,380 Net interest spread 5 2.53 % 2.17 % Net interest income/margin 6 $ 151,905 3.55 % $ 119,711 3.32 % 1 Interest income/expense is divided by the actual number of days in the period multiplied by the actual number of days in the year to correspond to stated interest rate terms, where applicable. 2 Yields on available-for-sale securities are calculated based on fair value.
  • Table 4: Interest Income and Expense Change Analysis (dollars in thousands) For the year ended December 31, 2025 compared to the year ended December 31, 2024 Variance due to Volume Yield/Rate Total Interest-earning deposits with banks $ 8,103 $ (1,762) $ 6,341 Investment securities (188) (44) (232) Loans held for investment and sale 29,408 6,465 35,873 Total interest-earning assets 37,323 4,659 41,982 Interest-bearing transaction accounts 131 (318) (187) Savings accounts 152 (373) (221) Money market accounts 7,451 (4,878) 2,573 Time accounts 10,619 (2,800) 7,819 Subordinated notes and other borrowings (212) 16 (196) Total interest-bearing liabilities 18,141 (8,353) 9,788 Changes in net interest income/margin $ 19,182 $ 13,012 $ 32,194 Net interest income during the year ended December 31, 2025 increased $32.2 million, or 26.89%, to $151.9 million, as compared to $119.7 million during the year ended December 31, 2024.
  • Net interest margin totaled 3.55% for the year ended December 31, 2025, an increase of 23 basis points compared to the prior year.
  • The increase in net interest income is primarily attributable to an additional $35.9 million in loan interest income due to a $483.3 million, or 14.72% increase in the average balance of loans and a 19 basis point improvement in the average yield on loans as compared to the prior year.
  • The increase in interest income was partially offset by an additional $10.0 million in deposit interest expense due to a $627.4 million, or 19.45% increase in the average balance of deposits during the year.
  • The average cost of deposits was 2.40% for the year ended December 31, 2025, a decrease of 16 basis points compared to the prior year which helped to moderate the increase in interest expense related to deposits.
  • We recorded a $9.7 million provision for credit losses in the year ended December 31, 2025 compared to a $7.0 million provision for credit losses for the year ended December 31, 2024.
  • The provision for credit losses increased $2.8 million, or 39.57%, primarily due to increases in loan growth and an overall increase in loss rates related to the annual CECL model refresh during the three months ended December 31, 2025, as compared to the prior year.
  • Non-interest income consists of service charges on deposit accounts, gain on sale of loans, loan-related fees, FHLB stock dividends, earnings on BOLI, and other income.
  • Table 5: Non-interest Income (dollars in thousands) For the year ended $ Change % Change December 31, 2025 December 31, 2024 Service charges on deposit accounts $ 755 $ 721 $ 34 4.72 % Gain on sale of loans 244 1,274 (1,030) (80.85) % Loan-related fees 2,156 1,605 551 34.33 % FHLB stock dividends 1,317 1,320 (3) (0.23) % Earnings on BOLI 824 644 180 27.95 % Other income 1,239 889 350 39.37 % Total non-interest income $ 6,535 $ 6,453 $ 82 1.27 % Gain on sale of loans.
  • The decrease related primarily 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 second half of the year ended December 31, 2025.
  • During the year ended December 31, 2025, approximately $3.3 million of loans were sold with an effective yield of 7.41%, as compared to approximately $18.3 million of loans sold with an effective yield of 6.96% during the year ended December 31, 2024.
  • The increase was primarily a result of a $0.5 million increase in fees from swap referrals and a $0.2 million increase in income from credit card activity, partially offset by a $0.1 million decrease in fees from SBA 7(a) loans.
  • The increase was primarily due to additional policies purchased between December 31, 2024 and December 31, 2025.
  • The increase related primarily to an overall improvement in earnings related to equity investments in venture-backed funds during the year ended December 31, 2025 compared to the year ended December 31, 2024.

and 409 more.

Gone since FY2024

  • Set forth below is a comparison of the results of operations and changes in financial condition for the fiscal years ended December 31, 2024 and December 31, 2023.
  • For a discussion of our financial results for the fiscal year ended December 31, 2022, see the section entitled “Part II, Item 7.
  • Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
  • We provide a broad range of banking products and services to small and medium-sized businesses, professionals, and individuals primarily in Northern California through eight branch offices.
  • We refer to our mission as “purpose-driven and integrity-centered banking.” At December 31, 2024, we had total assets of $4.1 billion, total loans held for investment of $3.5 billion, and total deposits of $3.6 billion.
  • During 2024, the Federal Reserve decreased the federal funds rate three times.
  • As of December 31, 2024, the target range for the federal funds rate had been decreased to 4.25% to 4.50%, and the FOMC signaled that current economic data and the interest rate environment are more balanced, projecting two decreases in 2025, as part of a strategy to return inflation to normalized levels.
  • Based on our liability sensitivity, a steepened yield curve could have a beneficial impact on our net interest income.
  • Additionally, a continued flat yield curve would be expected to maintain our net interest income.
  • Factors Affecting Comparability of Financial Results S Corporation Status Beginning at our inception, we elected to be taxed for U.S. federal income tax purposes as an S Corporation.
  • In conjunction with our IPO, we filed consents from the requisite amount of our shareholders to revoke our S Corporation election with the IRS, resulting in the commencement of our taxation as a C Corporation for U.S. federal and California state income tax purposes in the second quarter of fiscal year 2021.
  • Prior to such revocation, our earnings were not subject to and we did not pay U.S. federal income tax, and we were not required to make any provision or recognize any liability for U.S. federal income tax in our consolidated financial statements.
  • While we were not subject to and did not pay U.S. federal income tax, we were subject to and paid California S Corporation income tax at a current rate of 3.50%.
  • Upon the termination of our status as an S Corporation, we commenced paying U.S. federal income tax and a higher California state income tax on our taxable earnings for each year (including the short year beginning on the date our status as an S Corporation terminated), and our consolidated financial statements reflect a provision for U.S. federal income tax and a higher California state income tax from that date forward.
  • As a result of this change, the net income and EPS data presented in our historical financial statements for periods prior to the termination of our S Corporation status and the other related financial information set forth in this filing, which (unless otherwise specified) do not include any provision for U.S. federal income tax or the higher California state income tax rate, will not be comparable with our net income and EPS in periods after we commenced being taxed as a C Corporation.
  • As a C Corporation, our net income is calculated by including a provision for U.S. federal income tax and a higher state income tax rate at a combined statutory rate of 29.11%.
  • The termination of our status as an S Corporation may also affect our financial condition and cash flows.
  • Historically, we made quarterly cash distributions to our shareholders in amounts estimated by us to be sufficient for them to pay estimated individual U.S. federal and California state income tax liabilities resulting from our taxable income that was “passed through” to them.
  • However, these distributions were not consistent, as sometimes the distributions were less than or in excess of the shareholders’ estimated U.S. federal and California state income tax liabilities resulting from their ownership of our stock.
  • In addition, these estimates were based on individual income tax rates, which may differ from the rates imposed on the income of C Corporations.
  • As a C Corporation, no income is “passed through” to any shareholders, but, as noted above, we commenced paying U.S. federal income tax and a higher California state income tax.
  • However, in the event of an adjustment to our reported taxable income for periods prior to the termination of our S Corporation status, it is possible that our pre-IPO shareholders would be liable for additional income taxes for those prior periods.
  • Pursuant to the Tax Sharing Agreement we entered into with such shareholders, upon our filing any tax return (amended or otherwise), in the event of any restatement of our taxable income or pursuant to a determination by, or a settlement with, a taxing authority, for any period during which we were an S Corporation, depending on the nature of the adjustment, we may be required to make a payment to such shareholders, who accepted distribution of the estimated balance of our federal AAA of $31.9 million under the Tax Sharing Agreement, in an amount equal to such shareholders’ incremental tax liability (including interest and penalties).
  • In addition, the Tax Sharing Agreement provides that we will indemnify such shareholders with respect to unpaid income tax liabilities (including interest and penalties) to the extent that such unpaid income tax liabilities are attributable to an adjustment to our taxable income for any period after our S Corporation status terminated.
  • The amounts that we have historically distributed to our shareholders may not be indicative of the amount of U.S. federal and California state income tax that we will be required to pay going forward.
  • Depending on our effective tax rate and our future dividend rate, our future cash flows and financial condition could be positively or adversely affected compared to our historical cash flows and financial condition.
  • Furthermore, deferred tax assets and liabilities were recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of our existing assets and liabilities and their respective tax bases.
  • Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
  • The effect on deferred tax assets and liabilities of the change in tax rates resulting from becoming a C Corporation was recognized in net income in the year ended December 31, 2021.
  • Allowance for Credit Losses ( “ ACL ” ) On January 1, 2023, the Company adopted ASC 326, which replaced the former “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model.
  • ACL The ACL represents the estimated probable credit losses in our loan and investment portfolios and is estimated as of December 31, 2024 using CECL.
  • Reserves for credit losses identified on a pooled basis are then adjusted for qualitative and other environmental factors to reflect current conditions.
  • The most significant components of qualitative and environmental factors used to estimate the allowance for credit losses are adjustments relating to prevailing economic conditions, concentrations within the loan portfolio, and external factors.
  • This estimate is subject to significant judgment and could potentially add $2.4 million based on existing loan balances, if not more, to the allowance for credit losses while using severely adverse economic conditions in the estimate.
  • This estimate is subject to significant judgment and could potentially add $9.4 million based on existing loan balances, if not more, to the allowance for credit losses while using a severely adverse market outlook for the specifically identified concentrations.
  • This estimate is subject to significant judgment and could potentially add $6.9 million based on existing loan balances, if not more, to the allowance for credit losses while using severely adverse external factors in the estimate.
  • During the twelve months ended December 31, 2024, we refined our methodology of measuring the ACL on three pools of loans: Multifamily, C&I SBA, and CRE Non-Owner Occupied loans.
  • Within the Multifamily pool, Manufactured Home Community (“MHC”) loans were segregated from traditional Multifamily as we identified a data source to provide sufficient historical peer loss data specific to MHC loans.
  • This segregation now adjusts for differences in the risk characteristics and performance of MHCs compared to traditional Multifamily properties.
  • Losses are estimated using a discounted cash flow analysis using individual probability of default and loss given default rates on a loan-by-loan basis.

and 361 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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