FIVE STAR BANCORP
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
FSBC$44.11+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001275168-25-000106
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001628280-25-038796
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 219 previous paragraphs and 248 current paragraphs.
157 unchanged; 59 reworded; 17 added; 2 removed; 1 previous and 15 current paragraphs rearranged.
Tables are not compared: 26 previous and 31 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
•Net Interest Margin. Net interest margin was 3.53% and 3.49%, respectively, for the three and six months ended June 30, 2025, and 3.39% and 3.27%, respectively, for the three and six months ended June 30, 2024. The increase in net interest margin for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 is primarily due to loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth. The increase in net interest margin for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 is primarily due to loan growth and an improvement in the average yield on loans, partially offset by an increase in interest expense driven by deposit growth.
Current report
•Efficiency Ratio. Efficiency ratio was 41.03% for the three months ended June 30, 2025, down from 44.07% for the corresponding period of 2024, mainly due to a $7.4 million, or 25.52%, increase in net interest income during the same period. Additionally, efficiency ratio was 41.77% for the six months ended June 30, 2025, down from 44.27% for the corresponding period of 2024, mainly due to a $14.7 million, or 26.25%, increase in net interest income during the same period.
Current report
Net interest income increased by $14.7 million, or 26.25%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, and our net interest margin increased 22 basis points when compared to the same period in 2024. The increase is primarily attributable 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. Additional detail relating to net interest margin in each period is provided below.
Current report
Net interest income during the six months ended June 30, 2025 increased to $70.5 million compared to $55.8 million during the six months ended June 30, 2024. Net interest margin totaled 3.49% for the six months ended June 30, 2025, compared to 3.27% for the same period of the prior year. Interest income increased by $21.1 million compared to the same period of the prior year. The average yield on loans increased 28 basis points compared to the same period of the prior year due to an increase in average balances of $490.0 million, or 15.61%, and increased interest rates on new and repriced loans. The increase in interest income was partially offset by an additional $6.5 million in interest expense compared to the same period of the prior year. The increase in interest expense was primarily due to an increase in the average balance of interest-bearing deposits of $478.7 million, or 21.29%, compared to the same period of the prior year. The cost of interest-bearing deposits decreased 10 basis points. In addition, the average balance of non-interest-bearing deposits increased by $104.2 million, or 12.56%, compared to the same period of the prior year.
Current report
We recorded a $2.5 million provision for credit losses in the second quarter of 2025, compared to a $2.0 million provision for credit losses for the same period of 2024. The increase in the provision for credit losses in the second quarter of 2025 is mainly due to an increase in net charge-offs.
Current report
Loan-related fees. The increase related primarily to individually immaterial increases in credit card-related fees, swap fees, rate lock fees, late fees, and loan referral income.
Current report
Other income. The increase resulted primarily from a $0.5 million improvement in earnings related to investments in venture-backed funds, partially offset by a decrease in income received on equity investments in venture-backed funds from a gain of $0.3 million for the six months ended June 30, 2024 to a loss of $0.1 million for the six months ended June 30, 2025.
Current report
Advertising and promotional. The increase related primarily to additional expenses incurred to support the expansion of the Bank’s business development teams, including a $0.1 million increase in expenses related to sponsored events and partnerships and a $0.1 million increase related to business development expenses.
Current report
Loan-related expenses. The increase related primarily to a $0.1 million increase in expenses related to inspections to support the increase in loan originations and annual loan reviews.
Current report
FDIC insurance. The increase was primarily due to a $0.7 million increase in the assessment base period-over-period.
Current report
Advertising and promotional. The increase was primarily due to a $0.2 million increase in expenses related to business development and a $0.1 million increase in expenses related to sponsored events and partnerships.
Current report
Loan-related expenses. The increase was primarily related to a $0.1 million increase in loan legal fees, as well as individually immaterial increases in inspection expenses, UCC fees, referral fees, and letter of credit fees.
Current report
Other operating expenses. The increase was primarily due to a $0.1 million increase in travel expense, a $0.1 million increase in expenses related to conferences, training, and professional association membership, and a $0.1 million increase in operational expenses, which include expenses related to program administration and armored car services.
Current report
On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also made certain changes to the deductibility of the cost of meals and charitable contributions that are effective for tax years beginning after December 31, 2025. These changes were not reflected in the income tax provision for the period ended June 30, 2025, as enactment occurred after the balance sheet date. The Company is currently evaluating the impact on future periods.
Current report
The provision for income taxes was $10.9 million for the six months ended June 30, 2025, as compared to $8.7 million for the six months ended June 30, 2024. The increase was primarily due to an overall increase in pre-tax income period-over-period. This increase was partially offset by a net $0.2 million reduction to the provision recorded during the six months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which requires a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasuring of the deferred tax assets and liabilities as of June 30, 2025. No such adjustment was recorded during the six months ended June 30, 2024. The effective tax rates for the six months ended June 30, 2025 and 2024 were 28.24% and 28.89%, respectively.
Current report
On October 22, 2024, the CFPB released a final rule to implement Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Under the final rule, financial institutions are required, upon request, to make available to a consumer or third party authorized by the consumer certain information Five Star has concerning a consumer financial product or service covered by the rule, such as a credit card or a deposit account. Industry organizations challenged the final rule in court. On May 30, 2025, the CFPB filed a motion for summary judgment in the litigation, stating that it had concluded that the final rule exceeds the agency’s statutory authority and is arbitrary and capricious. The CFPB requested that the court vacate the final rule. On July 29, 2025, the CFPB filed a motion to stay the proceedings, announcing its plans to issue an advanced notice of proposed rulemaking that will serve as the starting point of an accelerated rulemaking process for a new final rule. The same day, the court granted the CFPB’s motion to stay and denied the CFPB’s summary judgment motion without prejudice.
Current report
On July 18, 2025, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, or the “GENIUS Act,” into law, establishing a federal licensing and supervisory framework for payment stablecoins and their issuers. The GENIUS Act may accelerate and increase the competition that non-traditional financial institutions pose to banks’ payment services, but may also create opportunities for banks to hold stablecoin reserve assets, custody stablecoins, or issue stablecoins. Several key provisions of the GENIUS Act require federal regulatory agencies to adopt implementing regulations, and the Act will take effect the earlier of 18 months after its enactment or 120 days after the agencies issue final implementing regulations.
Removed paragraphs (2)
Previous report
•Net Interest Margin. Net interest margin was 3.45% for the three months ended March 31, 2025, and 3.14% for the three months ended March 31, 2024. The increase in net interest margin for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to a higher balance of loans with higher yields, partially offset by an increase in interest expense due to larger average deposit balances.
Previous report
•Efficiency Ratio. Efficiency ratio was 42.58% for the three months ended March 31, 2025, down from 44.50% for the corresponding period of 2024, mainly due to a $9.5 million, or 20.08%, increase in interest and fee income during the same period.
Reworded paragraphs (59)
Previous wording
The foregoing factors could cause results or performance to materially differ from those expressed in our forward-looking statements, should not be considered exhaustive, and should be read together with other cautionary statements that are included in this report and those discussed in the section entitled “Risk Factors” of our 2024 Annual Report on Form 10-K and other filings we may make with the SEC, copies of which are available from us at no charge. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We disclaim 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.
Current wording
The foregoing factors could cause results or performance to materially differ from those expressed in our forward-looking statements, should not be considered exhaustive, and should be read together with other cautionary statements that are included in this report and those discussed in the section entitled “Risk Factors” of our 2024 Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, and other filings we may make with the SEC, copies of which are available from us at no charge. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We disclaim 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.
Previous wording
Headquartered in the greater Sacramento metropolitan area of California, Five Star Bancorp is a bank holding company that operates through its wholly owned subsidiary, Five Star Bank, a California state-chartered non-member bank. 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. Our mission is to 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 refer to our mission as “purpose-driven and integrity-centered banking.” At March 31, 2025, we had total assets of $4.2 billion, total loans held for investment of $3.6 billion, and total deposits of $3.7 billion.
Current wording
Headquartered in the greater Sacramento metropolitan area of California, Five Star Bancorp is a bank holding company that operates through its wholly owned subsidiary, Five Star Bank, a California state-chartered non-member bank. 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. Our mission is to 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 refer to our mission as “purpose-driven and integrity-centered banking.” At June 30, 2025, we had total assets of $4.4 billion, total loans held for investment of $3.8 billion, and total deposits of $3.9 billion.
Previous wording
A significant amount of the ACL is measured on a collective (pool) basis by loan and investment security type when similar risk characteristics exist. Pools are determined based primarily on regulatory reporting codes as the loans and investment securities within each pool share similar risk characteristics and there is sufficient historical peer loss data from the FFIEC to provide statistically meaningful support in the models developed. 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 the 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. The prevailing economic conditions factor is estimated based on a range of potential economic conditions and is applied at both the portfolio and individual concentration level based on various factors. The concentrations within the loan portfolio factor is estimated based on concentrations at the loan pool level. The external factor is estimated based on current external factors, such as environmental factors, which could impact the loan portfolio.
Current wording
A significant amount of the ACL is measured on a collective (pool) basis by loan and investment security type when similar risk characteristics exist. Pools are determined based primarily on regulatory reporting codes as the loans and investment securities within each pool share similar risk characteristics and there is sufficient historical peer loss data from the FFIEC to provide statistically meaningful support in the models developed. 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 the 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. The prevailing economic conditions factor is estimated based on a range of potential economic conditions and is applied at both the portfolio and individual concentration level based on various factors. The factor concerning concentrations within the loan portfolio is estimated based on concentrations at the loan pool level. The external factor is estimated based on current external factors, such as environmental factors, which could impact the loan portfolio.
Previous wording
Net income for the three months ended March 31, 2025 totaled $13.1 million, as compared to net income of $10.6 million for the three months ended March 31, 2024.
Current wording
Net income for the three and six months ended June 30, 2025 totaled $14.5 million and $27.6 million, respectively, as compared to net income of $10.8 million and $21.4 million for the three and six months ended June 30, 2024, respectively.
Previous wording
•Deposits. Total deposits increased by $178.4 million, or 5.01%, from $3.6 billion at December 31, 2024 to $3.7 billion at March 31, 2025. Non-wholesale deposits increased by $48.4 million in the first three months of 2025 to $3.0 billion. Wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits, increased by $130.0 million in the first three months of 2025 to $689.9 million. Non-interest-bearing deposits increased by $11.0 million in the first three months of 2025 to $933.7 million, and represented 24.99% of total deposits at March 31, 2025, as compared to 25.93% of total deposits at December 31, 2024. Our loan to deposit ratio was 97.01% at March 31, 2025, as compared to 99.38% at December 31, 2024.
Current wording
•Deposits. Total deposits increased by $336.6 million, or 9.46%, from $3.6 billion at December 31, 2024 to $3.9 billion at June 30, 2025. Non-wholesale deposits increased by $240.0 million in the first six months of 2025 to $3.2 billion at June 30, 2025. Wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits, increased by $96.6 million in the first six months of 2025 to $656.6 million. Non-interest-bearing deposits increased by $81.4 million in the first six months of 2025 to $1.0 billion, and represented 25.78% of total deposits at June 30, 2025, as compared to 25.93% of total deposits at December 31, 2024. Our loan to deposit ratio was 96.50% at June 30, 2025, as compared to 99.38% at December 31, 2024.
Previous wording
•Assets. Total assets were $4.2 billion at March 31, 2025, representing a $191.8 million, or 4.73%, increase compared to $4.1 billion at December 31, 2024.
Current wording
•Assets. Total assets were $4.4 billion at June 30, 2025, representing a $360.2 million, or 8.89%, increase compared to $4.1 billion at December 31, 2024.
Previous wording
•Loans. Total loans held for investment were $3.6 billion at March 31, 2025, as compared to $3.5 billion at December 31, 2024, an increase of $89.1 million, or 2.52%. The increase was a result of $259.3 million in loan originations and advances, partially offset by $65.6 million and $104.6 million in loan payoffs and paydowns, respectively. The $89.1 million increase in total loans held for investment included $19.8 million in purchases of loans within the consumer concentration of the loan portfolio.
Current wording
•Loans. Total loans held for investment were $3.8 billion at June 30, 2025, as compared to $3.5 billion at December 31, 2024, an increase of $225.3 million, or 6.38%. The increase was a result of $578.8 million in loan originations and advances, partially offset by $130.3 million and $223.1 million in loan payoffs and paydowns, respectively. The $225.3 million increase in total loans held for investment included $43.9 million in purchases of loans within the consumer concentration of the loan portfolio.
Previous wording
•Credit Quality. Credit quality remains strong, with non-accrual loans representing $1.8 million, or 0.05% of total loans held for investment, at both March 31, 2025 and December 31, 2024. The ratio of the allowance for credit losses to total loans held for investment was 1.08% at March 31, 2025 and 1.07% at December 31, 2024.
Current wording
•Credit Quality. Credit quality remains strong, with non-accrual loans representing $2.3 million, or 0.06% of total loans held for investment at June 30, 2025, as compared to $1.8 million, or 0.05% of total loans held for investment at December 31, 2024. The ratio of the allowance for credit losses to total loans held for investment was 1.07% at June 30, 2025 and December 31, 2024.
Previous wording
•Capital Ratios. All capital ratios were above well-capitalized regulatory thresholds as of March 31, 2025. The total risk-based capital ratio for the Company was 13.97% at March 31, 2025, as compared to 13.99% at December 31, 2024. The Tier 1 leverage ratio was 10.17% at March 31, 2025, as compared to 10.05% at December 31, 2024. For additional information about the regulatory capital requirements applicable to the Company and the Bank, see the section entitled “—Financial Condition Summary—Capital Adequacy” below.
Current wording
•Capital Ratios. All capital ratios were above well-capitalized regulatory thresholds as of June 30, 2025. The total risk-based capital ratio for the Company was 13.73% at June 30, 2025, as compared to 13.99% at December 31, 2024. The Tier 1 leverage ratio was 10.03% at June 30, 2025, as compared to 10.05% at December 31, 2024. For additional information about the regulatory capital requirements applicable to the Company and the Bank, see the section entitled “—Financial Condition Summary—Capital Adequacy” below.
Previous wording
The following discussion of our results of operations compares the three months ended March 31, 2025 to the three months ended March 31, 2024. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2025.
Current wording
The following discussion of our results of operations compares the three and six months ended June 30, 2025 to the three and six months ended June 30, 2024. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2025.
Previous wording
Net interest income increased by $7.2 million, or 27.05%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, and our net interest margin increased 31 basis points during the same period. The increase was primarily due to an increase in interest income driven by a higher balance of loans with higher yields, partially offset by an increase in interest expense due to larger average deposit balances. Additional detail relating to net interest margin in each period is provided below.
Current wording
Net interest income increased by $7.4 million, or 25.52%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, and our net interest margin increased 14 basis points during the same period. The increase is primarily attributable 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. Additional detail relating to net interest margin in each period is provided below.
Previous wording
Net interest income during the three months ended March 31, 2025 increased by $7.2 million, or 27.05%, to $34.0 million compared to $26.7 million during the three months ended March 31, 2024. Net interest margin totaled 3.45% for the three months ended March 31, 2025, an increase of 31 basis points compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $9.1 million in loan interest income due to a $485.7 million, or 15.76%, increase in the average balance of loans and a 31 basis point improvement in the average yield on loans during the three months ended March 31, 2025 compared to the same quarter of the prior year. The increase in interest income was partially offset by a $2.4 million increase in deposit interest expense compared to the same quarter of the prior year. The increase in deposit interest expense is primarily attributable to a $478.9 million, or 15.42%, increase in the average balance of deposits and a five basis point increase in the average cost of deposits during the three months ended March 31, 2025 compared to the same quarter of the prior year.
Current wording
Net interest income during the three months ended June 30, 2025 increased to $36.5 million compared to $29.1 million during the three months ended June 30, 2024. Net interest margin totaled 3.53% for the three months ended June 30, 2025, compared to 3.39% in the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $11.6 million in interest income, mainly due to a $493.7 million, or 15.44%, increase in the average balance of loans and a 26 basis point improvement in the average yield on loans during the three months ended June 30, 2025 compared to the same quarter of the prior year. The increase in interest income was partially offset by an additional $4.2 million in interest expense compared to the same quarter of the prior year. The increase in interest expense is mainly attributable to a $686.1 million, or 22.50%, increase in the average balance of deposits at an average rate of one basis point lower during the three months ended June 30, 2025 compared to the same quarter of the prior year.
Previous wording
The provision for credit losses is based on management’s assessment of the adequacy of our allowance for credit losses. Factors impacting the provision include inherent risk characteristics in our loan portfolio, the level of nonperforming loans and net charge-offs, both current and historic, local economic and credit conditions, the direction of the change in collateral values, and the funding probability on unfunded lending commitments. The provision for credit losses is charged against earnings in order to maintain our allowance for credit losses, which reflects management’s best estimate of forecasted life of loan losses in our loan portfolio at the balance sheet date.
Current wording
The provision for credit losses is based on management’s assessment of the adequacy of our allowance for credit losses. Factors impacting the provision include inherent risk characteristics in our loan portfolio, the level of nonperforming loans and net charge-offs, both current and historic, local economic and credit conditions, the direction of the change in collateral values, and the funding probability on unfunded lending commitments. The provision for credit losses is charged against earnings in order to maintain our allowance for credit losses, which reflects management’s best estimate of expected life of loan losses in our loan portfolio at the balance sheet date.
Previous wording
We recorded a $1.9 million provision for credit losses in the first quarter of 2025, compared to a $0.9 million provision for credit losses for the same period of 2024. The provision recorded during the three months ended March 31, 2025 reflects loan growth and adjustments to expectations for credit losses based on economic trends and forecasts at the time.
Current wording
We recorded a $4.4 million provision for credit losses in the first six months of 2025, as compared to a $2.9 million provision for credit losses for the same period of 2024. The increase in the provision for credit losses recorded during the first six months of 2025 is mainly due to increases in loan growth and net charge-offs.
Previous wording
Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold. During the three months ended March 31, 2025, approximately $1.7 million of loans were sold with an effective yield of 7.24%, as compared to approximately $5.2 million of loans sold with an effective yield of 7.08% during the three months ended March 31, 2024.
Current wording
Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold. During the three months ended June 30, 2025, approximately $1.6 million of loans were sold with an effective yield of 7.60%, as compared to approximately $6.8 million of loans sold with an effective yield of 6.60% during the three months ended June 30, 2024.
Previous wording
Other income. The decrease related primarily to $0.3 million of income received on equity investments in venture-backed funds during the three months ended March 31, 2024, which did not reoccur during the three months ended March 31, 2025.
Current wording
Other income. The increase related primarily to an overall improvement in earnings related to investments in venture-backed funds during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.
Previous wording
Over the past several years, we have invested significant resources in personnel, technology, and infrastructure. As we execute initiatives based on growth, we expect non-interest expense to grow. Non-interest expense has increased throughout the periods presented below; however, we expect our efficiency ratio will improve going forward due, in part, to our past investment in infrastructure.
Current wording
Over the past several years, we have continued to invest significant resources in personnel, technology, and infrastructure. As we execute initiatives based on growth, we expect non-interest expense to continue to grow. Non-interest expense has increased throughout the periods presented below; however, we expect our efficiency ratio will continue to improve going forward due, in part, to our past investment in infrastructure.
Previous wording
Salaries and employee benefits. The increase related primarily to: (i) a $1.6 million increase in salaries, benefits, and bonus expense, mainly related to a 13.19% increase in headcount between March 31, 2024 and March 31, 2025; and (ii) a $0.1 million increase in commissions paid. This increase was partially offset by a $0.2 million increase in loan origination costs due to a greater number of loan originations, net of purchased consumer loans, period-over-period.
Current wording
Salaries and employee benefits. The increase related primarily to: (i) a $1.2 million increase in salaries, benefits, and bonus expense, mainly related to a 16.58% increase in headcount between June 30, 2024 and June 30, 2025; and (ii) a $0.1 million increase in commissions paid. This increase was partially offset by a $0.2 million increase in deferred loan origination costs due to a greater number of loan originations, net of purchased consumer loans, period-over-period.
Previous wording
Other operating expenses. The increase was primarily due to individually immaterial increases in expenses related to operations, including administrative and operational expenses such as travel, subscriptions, and professional association memberships.
Current wording
Other operating expenses. The increase was primarily due to a $0.1 million increase in travel expense and a $0.1 million increase in expenses related to conferences, trainings, and professional association memberships.
Previous wording
Professional services. The increase was primarily due to $0.1 million in fees paid for compensation consulting services and $0.1 million in consulting services relating to operations in San Francisco, neither of which occurred in the three months ended March 31, 2024.
Current wording
Professional services. The increase was primarily due to: (i) $0.1 million in fees paid for compensation consulting services that did not occur during the first six months of 2024; (ii) a $0.1 million increase in expenses related to business development consulting services; and (iii) a $0.1 million increase in recruiter fees.
Previous wording
The provision for income taxes was $5.3 million for the three months ended March 31, 2025, a $1.0 million increase from the three months ended March 31, 2024. This increase was primarily driven by an increase in taxable income. The effective tax rates were 28.71% and 28.94% for the three months ended March 31, 2025 and March 31, 2024, respectively.
Current wording
The provision for income taxes was $5.6 million for the three months ended June 30, 2025, a $1.2 million increase from the three months ended June 30, 2024. This increase was primarily driven by an increase in taxable income. This increase was partially offset by a net $0.2 million reduction to the provision recorded during the three months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which requires a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasuring of the deferred tax assets and liabilities as of June 30, 2025. No such adjustment was recorded during the three months ended June 30, 2024. The effective tax rates were 27.82% and 28.84% for the three months ended June 30, 2025 and June 30, 2024, respectively.
Previous wording
At March 31, 2025, total assets were $4.2 billion, an increase of $191.8 million from $4.1 billion at December 31, 2024, primarily due to a $100.2 million increase in cash and cash equivalents and an $89.1 million increase in total loans held for investment. The $89.1 million increase in total loans held for investment between December 31, 2024 and March 31, 2025 was a result of $259.3 million in loan originations and advances, partially offset by $65.6 million and $104.6 million in loan payoffs and paydowns, respectively. The $89.1 million increase in total loans held for investment included $19.8 million in purchases of loans within the consumer concentration of the loan portfolio.
Current wording
At June 30, 2025, total assets were $4.4 billion, an increase of $360.2 million from $4.1 billion at December 31, 2024. The increase was primarily comprised of a $225.3 million increase in total loans held for investment and a $131.5 million increase in cash and cash equivalents. The $225.3 million increase in total loans held for investment between December 31,
Previous wording
Total cash and cash equivalents were $452.6 million at March 31, 2025, an increase of $100.2 million from $352.3 million at December 31, 2024. The increase in cash and cash equivalents was primarily due to net cash inflows related to financing and operating activities of $174.1 million and $15.5 million, respectively, partially offset by net cash outflows related to investing activities of $89.3 million.
Current wording
Total cash and cash equivalents were $483.8 million at June 30, 2025, an increase of $131.5 million from $352.3 million at December 31, 2024. The increase in cash and cash equivalents primarily resulted from net cash inflows related to financing and operating activities of $328.1 million and $33.3 million, respectively, partially offset by net cash outflows related to investing activities of $229.9 million.
Previous wording
Our total securities available-for-sale and held-to-maturity amounted to $99.7 million at March 31, 2025 and $100.9 million at December 31, 2024, representing a decrease of $1.2 million during the same period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $2.0 million and an unrealized gain on securities of $1.0 million, with the remainder of the change due to amortization of premiums. For the three months ended March 31, 2025, other comprehensive gain was $0.7 million, primarily due to rate changes and other market conditions on securities during that period.
Current wording
Our total securities available-for-sale and held-to-maturity amounted to $97.6 million at June 30, 2025 and $100.9 million at December 31, 2024, representing a decrease of $3.3 million during the same period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $4.1 million, partially offset by an unrealized gain on securities of $1.2 million, with the remainder of the change due to amortization of premiums. For the six months ended June 30, 2025, other comprehensive gain was $0.4 million, primarily due to rate changes and other market conditions on securities during that period.
Previous wording
Our loan portfolio is our largest class of interest-earning assets and typically provides higher yields than other types of interest-earning assets. Associated with the higher yields is an inherent amount of credit risk, which we attempt to mitigate with strong underwriting standards. As of March 31, 2025 and December 31, 2024, our total loans amounted to $3.6 billion and $3.5 billion, respectively. Table 10 presents the balance and associated percentage of each major product type within our portfolio as of the dates indicated.
Current wording
Our loan portfolio is our largest class of interest-earning assets and typically provides higher yields than other types of interest-earning assets. Associated with the higher yields is an inherent amount of credit risk, which we attempt to mitigate with strong underwriting standards. As of June 30, 2025 and December 31, 2024, our total loans amounted to $3.8 billion and $3.5 billion, respectively. Table 14 presents the balance and associated percentage of each major product type within our portfolio as of the dates indicated.
Previous wording
Over the past several years, we have experienced significant growth in our loan portfolio, although the relative composition of the portfolio has not changed materially. Our primary focus remains commercial real estate lending (including commercial, commercial land and development, and commercial construction), which constitutes 84.33% of loans held for investment at March 31, 2025. Commercial secured lending represents 4.70% of loans held for investment at March 31, 2025. We sell the guaranteed portion of all SBA 7(a) loans in the secondary market and will continue to do so as long as market conditions continue to be favorable.
Current wording
Over the past several years, we have experienced significant growth in our loan portfolio, although the relative composition of the portfolio has not changed materially. Our primary focus remains commercial real estate lending (including commercial, commercial land and development, and commercial construction), which constitutes 84.57% of loans held for investment at June 30, 2025. Commercial secured lending represents 4.62% of loans held for investment at June 30, 2025. We sell the guaranteed portion of all SBA 7(a) loans in the secondary market and will continue to do so as long as market conditions continue to be favorable.
Previous wording
We recognize that our commercial real estate loan concentration is significant within our balance sheet. Commercial real estate loan balances as a percentage of risk-based capital were 576.23% and 571.91% as of March 31, 2025 and December 31, 2024, respectively. We have established internal concentration limits in the loan portfolio for commercial real estate loans by sector (e.g., manufactured home communities, self-storage, hospitality, etc.). All loan sectors were within our established limits as of March 31, 2025. Additionally, our loans are geographically concentrated with borrowers and collateralized properties primarily in California.
Current wording
We recognize that our commercial real estate loan concentration is significant within our balance sheet. Commercial real estate loan balances as a percentage of risk-based capital were 586.26% and 571.91% as of June 30, 2025 and December 31, 2024, respectively. We have established internal concentration limits in the loan portfolio for commercial real estate loans by sector (e.g., manufactured home communities, self-storage, hospitality, etc.). All loan sectors were within our established limits as of June 30, 2025. Additionally, our loans are geographically concentrated with borrowers and collateralized properties primarily in California.
Previous wording
During the three months ended March 31, 2025, the Company sold five SBA 7(a) loans with government-guaranteed portions totaling approximately $1.7 million. The Company received gross proceeds of $1.8 million on the loans sold during the three months ended March 31, 2025, resulting in the recognition of net gains on sale of $0.1 million during the period.
Current wording
During the three and six months ended June 30, 2025, the Company sold five and ten SBA 7(a) loans, respectively, with government-guaranteed portions totaling approximately $1.6 million and $3.3 million, respectively. The Company received gross proceeds of $1.7 million and $3.5 million on the loans sold during the three and six months ended June 30, 2025, respectively, resulting in the recognition of net gains on sale of $0.1 million and $0.2 million, respectively, during the periods.
Previous wording
The ratio of nonperforming loans to loans held for investment was 0.05% at March 31, 2025, which is unchanged from December 31, 2024.
Current wording
The ratio of nonperforming loans to loans held for investment was 0.06% at June 30, 2025, increasing from 0.05% at December 31, 2024.
Previous wording
Loans designated as watch and substandard, which are not considered adversely classified, decreased to $115.7 million at March 31, 2025 from $126.0 million at December 31, 2024. There were no loans with doubtful risk grades at March 31, 2025 or December 31, 2024.
Current wording
Loans designated as watch and substandard, which are not considered adversely classified, decreased to $110.7 million at June 30, 2025 from $126.0 million at December 31, 2024. There were no loans with doubtful risk grades at June 30, 2025 or December 31, 2024.
Previous wording
At March 31, 2025, the Company’s allowance for credit losses was $39.2 million, as compared to $37.8 million at December 31, 2024. The $1.4 million increase in the allowance is due to a $2.2 million provision for credit losses recorded during the three months ended March 31, 2025, partially offset by net charge-offs mainly attributable to commercial and industrial loans of $0.7 million, during the same period.
Current wording
At June 30, 2025, the Company’s allowance for credit losses was $40.2 million, as compared to $37.8 million at December 31, 2024. The $2.4 million increase in the allowance is due to a $4.6 million provision for credit losses recorded during the six months ended June 30, 2025, partially offset by net charge-offs of $2.2 million, primarily attributable to commercial and industrial loans, during the same period.
Previous wording
The ratio of the allowance for credit losses to total loans held for investment was 1.08% at March 31, 2025, as compared to 1.07% at December 31, 2024.
Current wording
The ratio of the allowance for credit losses to total loans held for investment was 1.07% at June 30, 2025 and December 31, 2024.
Previous wording
The ratio of the allowance for credit losses to loans held for investment decreased from 1.12% as of March 31, 2024 to 1.08% as of March 31, 2025. Net charge-offs as a percent of average loans held for investment decreased from 0.03% to 0.02% for the three months ended March 31, 2024 and March 31, 2025, respectively.
Current wording
The ratio of the allowance for credit losses to loans held for investment decreased from 1.08% as of June 30, 2024 to 1.07% as of June 30, 2025. Net charge-offs as a percent of average loans held for investment remained at 0.04% for the three months ended June 30, 2024 and June 30, 2025, respectively. Net charge-offs as a percent of average loans held for investment remained at 0.06% for the six months ended June 30, 2024 and June 30, 2025, respectively.
Previous wording
During the first three months of 2025, total liabilities increased by $182.0 million from $3.7 billion as of December 31, 2024 to $3.8 billion as of March 31, 2025. This increase was primarily due to an increase in total deposits of $178.4 million, comprised of an increase of $167.3 million in interest-bearing deposits and an increase of $11.0 million in non-interest-bearing deposits. The increase in interest-bearing deposits was largely due to increases in time and money market deposits of $131.2 million and $52.2 million, respectively.
Current wording
During the first six months of 2025, total liabilities increased by $340.1 million from $3.7 billion as of December 31, 2024 to $4.0 billion as of June 30, 2025. This increase was primarily due to an increase in interest-bearing deposits of $255.2 million. The increase in interest-bearing deposits was largely due to increases in money market and time deposits of $179.4 million and $101.9 million, respectively.
Previous wording
Representing 97.34% of our total liabilities as of March 31, 2025, deposits are our primary source of funding for our business operations.
Current wording
Representing 97.45% of our total liabilities as of June 30, 2025, deposits are our primary source of funding for our business operations.
Previous wording
Total deposits increased by $178.4 million, or 5.01%, to $3.7 billion at March 31, 2025 from $3.6 billion at December 31, 2024. The increase was attributable to growth in both non-wholesale and wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits. Non-interest-bearing deposits increased by $11.0 million from December 31, 2024 to $933.7 million at March 31, 2025, representing 24.99% of total deposits at that date, as compared to 25.93% of total deposits at December 31, 2024. Our loan to deposit ratio was 97.01% at March 31, 2025, as compared to 99.38% at December 31, 2024. We intend to continue to operate our business with close monitoring of the loan to deposit ratio.
Current wording
Total deposits increased by $336.6 million, or 9.46%, to $3.9 billion at June 30, 2025 from $3.6 billion at December 31, 2024. The increase was due to increases in both non-wholesale and wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits. Non-interest-bearing deposits increased by $81.4 million from December 31, 2024 to $1.0 billion at June 30, 2025, representing 25.78% of total deposits at that date, as compared to 25.93% of total deposits at December 31, 2024. Our loan to deposit ratio was 96.50% at June 30, 2025, as compared to 99.38% at December 31, 2024. We intend to continue to operate our business with close monitoring of the loan to deposit ratio.
Previous wording
Uninsured and uncollateralized deposits totaled approximately $1.2 billion at March 31, 2025 and December 31, 2024.
Current wording
Uninsured and uncollateralized deposits totaled approximately $1.3 billion and $1.2 billion at June 30, 2025 and December 31, 2024, respectively.
Previous wording
As of March 31, 2025, our 42 largest deposit relationships, each accounting for more than $10.0 million, totaled $1.8 billion, or 49.31% of our total deposits. The average age on deposit relationships of more than $5.0 million was approximately 8.80 years as of March 31, 2025. As of December 31, 2024, our 49 largest deposit relationships, each accounting for more than $10.0 million, totaled $1.8 billion, or 50.35% of our total deposits.
Current wording
As of June 30, 2025, our 48 largest deposit relationships, each accounting for more than $10.0 million, totaled $1.9 billion, or 49.78% of our total deposits. The average age on deposit relationships of more than $5.0 million was approximately 8.34 years as of June 30, 2025. As of December 31, 2024, our 49 largest deposit relationships, each accounting for more than $10.0 million, totaled $1.8 billion, or 50.35% of our total deposits.
Previous wording
Our largest single deposit relationship at March 31, 2025 related to brokered deposits. The balance for this customer was $400.0 million, or approximately 10.71% of total deposits as of that date. At December 31, 2024, our largest single deposit relationship related to brokered deposits and had a balance of $300.0 million, or 8.43% of total deposits as of that date. As our demand deposits fluctuate, we have purchased brokered deposits as needed to supplement liquidity. We do not consider brokered deposits as core deposits, but as another deposit funding source for our loan growth.
Current wording
Our largest single deposit relationship at June 30, 2025 related to brokered deposits. The balance for this customer was $366.4 million, or approximately 9.41% of total deposits as of that date. At December 31, 2024, our largest single deposit relationship related to brokered deposits and had a balance of $300.0 million, or 8.43% of total deposits as of that date. As our demand deposits fluctuate, we have purchased brokered deposits as needed to supplement liquidity. We do not consider brokered deposits as core deposits, but as another deposit funding source for our loan growth.
Previous wording
Shareholders’ equity totaled $406.5 million at March 31, 2025 and $396.6 million at December 31, 2024. The increase in shareholders’ equity was primarily a result of net income recognized of $13.1 million and a $0.7 million increase in accumulated other comprehensive income, partially offset by $4.3 million in cash dividends paid during the three months ended March 31, 2025.
Current wording
Shareholders’ equity totaled $416.7 million at June 30, 2025 and $396.6 million at December 31, 2024. The increase was primarily a result of net income recognized of $27.6 million and a $0.4 million increase in accumulated other comprehensive income, partially offset by $8.5 million in cash dividends paid during the six months ended June 30, 2025.
Showing the first 40 of 59 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
Average balance sheet, interest, and yield/rate analysis. Table 5 presents average balance sheet information, interest income, interest expense, and the corresponding average yield earned or rate paid for each period reported. The average balances are daily averages and include both performing and nonperforming loans.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
2 Yields on available-for-sale securities are calculated based on fair value. Investment security interest is earned monthly on a 30/360 day basis. Yields are not calculated on a tax-equivalent basis.
Current report — wording carried from elsewhere
3 Non-accrual loans are included in total loan balances. No adjustment has been made for these loans in the yield calculations. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs. Allowance for credit losses is not included in total loan balances.
Current report — wording carried from elsewhere
4 Allowance for credit losses is included in interest receivable and other assets, net.
Current report — wording carried from elsewhere
5 Net interest spread represents the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.
Current report — wording carried from elsewhere
6 Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets, then annualized based on the number of days in the given period.
Current report — wording carried from elsewhere
Analysis of changes in interest income and expenses. Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average yields/rates. Table 6 shows the effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the current period’s average yield/rate. The effect of rate changes is calculated by multiplying the change in average yield/rate by the previous period’s volume. Changes not solely attributable to volume or yields/rates have been allocated in proportion to the respective volume and yield/rate components.
Current report — wording carried from elsewhere
Table 8 details the components of non-interest income for the periods indicated.
Current report — wording carried from elsewhere
Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold period-over-period. During the six months ended June 30, 2025, approximately $3.3 million of loans were sold with an effective yield of 7.41%, as compared to approximately $12.0 million of loans sold with an effective yield of 6.81% during the six months ended June 30, 2024.
Current report — wording carried from elsewhere
Professional services. The increase was primarily due to a $0.1 million increase in fees paid for compensation and business development consulting services.
Current report — wording carried from elsewhere
Table 10 details the components of non-interest expense for the periods indicated.
Current report — wording carried from elsewhere
Salaries and employee benefits. The increase was primarily a result of: (i) a $2.8 million increase in salaries, benefits, and bonus expense, mainly related to a 16.58% increase in headcount between June 30, 2024 and June 30, 2025; and (ii) a $0.2 million increase in commission expense. This increase was partially offset by a $0.3 million increase in deferred loan origination costs due to greater loan originations, net of purchased consumer loans, period-over-period.
Current report — wording carried from elsewhere
Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; and (iii) an increased number of licenses required for new users on our loan origination and documentation system.
Current report — wording carried from elsewhere
2024 and June 30, 2025 was a result of $578.8 million in loan originations and advances, partially offset by $130.3 million and $223.1 million in loan payoffs and paydowns, respectively. The $225.3 million increase in total loans held for investment included $43.9 million in purchases of loans within the consumer concentration of the loan portfolio.
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Previous report — wording carried elsewhere
$389.5 million. We expect to fund these commitments to the extent utilized primarily through the repayment of existing loans, deposit growth, and liquid assets.