FIVE STAR BANCORP
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
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, 2026 · Filed Aug 6, 2026
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 2026-03-31; filed 2026-05-07.
0001628280-26-032282
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001628280-26-054141
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 214 previous paragraphs and 245 current paragraphs.
149 unchanged; 65 reworded; 16 added; 0 removed; 0 previous and 15 current paragraphs rearranged.
Tables are not compared: 25 previous and 30 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 (16)
Current report
•Net Interest Margin. Net interest margin was 3.63% and 3.66%, respectively, for the three and six months ended June 30, 2026, and 3.53% and 3.49%, respectively, for the three and six months ended June 30, 2025. The increase in net interest margin for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 is driven by balance sheet growth and a favorable shift in funding mix, which more than offset pressure from declining federal funds rates over the periods.
Current report
As compared to the six months ended June 30, 2025, net interest income during the six months ended June 30, 2026 increased by $19.0 million, or 27.02%, to $89.5 million from $70.5 million. Net interest margin totaled 3.66% for the six months ended June 30, 2026, an increase of 17 basis points compared to the same period of the prior year. The improvement was driven by balance sheet growth and a favorable shift in funding mix, which more than offset pressure from declining federal funds rates over the same period. The increase in net interest income is primarily attributable to a $22.0 million increase in interest income, mainly due to a $609.7 million, or 16.80%, increase in the average balance of loans and a $249.9 million, or 72.36%, increase in the average balance of interest-earning deposits in banks. This increase in interest income was partially offset by a $3.0 million increase in interest expense, stemming from a $615.9 million, or 22.58%, increase in the average balance of interest-bearing deposits during the six months ended June 30, 2026, moderated by a 44 basis point decrease in the cost of interest-bearing deposits compared to the same period of the prior year. Further supporting the decreasing average cost of funds, the average balance of non-interest-bearing deposits increased by $209.0 million, or 22.38%, compared to the same period of the prior year.
Current report
FHLB stock dividends. The decrease related primarily to the FHLB’s transition to a tier-based dividend structure, which lowered the Bank’s effective dividend rate received.
Current report
Service charges on deposit accounts. The decrease related primarily to a $0.2 million decrease in service charges assessed on analyzed deposit accounts.
Current report
Loan-related fees. The increase related primarily to a $0.9 million increase in fees from swap referrals and a $0.1 million increase in loan referral income.
Current report
Earnings on BOLI. The increase related primarily to an increase in BOLI balances between June 30, 2025 and June 30, 2026 due to the addition of a new policy.
Current report
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
FDIC insurance. The increase was primarily due to a $916.2 million increase in the assessment base period-over-period.
Current report
Loan-related expenses. The decrease related primarily to lower inspection and legal expenses. Although loan originations were higher period-over-period, a greater mix of purchased loans and large credit relationships reduced per-unit inspection costs, and inspection activity was delayed relative to the prior period.
Current report
Other operating expenses. The increase related primarily to: (i) a $0.3 million increase in employee-related expenses such as travel and professional association memberships; (ii) a $0.2 million increase in bank charges; (iii) a $0.1 million increase in operational losses; (iv) a $0.1 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network; and (v) a $0.1 million increase in armored car and courier services.
Current report
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
FDIC insurance. The increase was primarily due to a $916.2 million increase in the assessment base period-over-period.
Current report
Loan-related expenses. The decrease was primarily related to a $0.1 million decrease in loan legal fees, combined with individually immaterial decreases in other expenses including credit report costs, inspection costs, and environmental report costs.
Current report
The provision for income taxes was $13.1 million for the six months ended June 30, 2026, as compared to $10.9 million for the six months ended June 30, 2025. The increase was primarily due to an overall increase in taxable income period-over-period. This increase was partially offset by a $0.5 million benefit recorded during the six months ended June 30, 2026 related to the purchase of transferable tax credits that did not occur during the six months ended June 30, 2025, as well as 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 required 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 remeasurement of the deferred tax assets and liabilities as of June 30, 2025. No such adjustment was recorded during the six months ended June 30, 2026. The effective tax rates for the six months ended June 30, 2026 and 2025 were 25.63% and 28.24%, respectively.
Current report
On June 25, 2026, the FDIC issued a proposal to revise deposit insurance assessment thresholds, rate schedules, and adjustments. Among other changes, the proposal would reduce initial base assessment rate schedules applicable to small institutions, including the Bank, by two basis points. The Company is continuing to evaluate the proposal and its potential impact on the Bank.
Current report
On July 11, 2026, the 21st Century ROAD to Housing Act (the “Housing Act”) became law. The Housing Act is generally designed to incentivize new home construction, including through changes to certain banking laws to which the Bank is subject. Among other changes, Sections 901 and 902 of the Housing Act expanded the types of custodial deposits and amounts of reciprocal deposits, respectively, that may be excluded from treatment as brokered deposits. In addition, Section 903 of the Housing Act increased from $3 billion to $6 billion the maximum asset size for certain well-rated insured depository institutions to qualify for less frequent safety-and-soundness examinations by their primary federal regulator, allowing eligible institutions to be examined every 18 months instead of every 12 months. The Company is continuing to evaluate the Housing Act and its potential impacts on us.
Reworded paragraphs (65)
Previous wording
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of our beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to:
Current wording
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of our beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phrases of similar meaning. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to:
Previous wording
•our ability to implement, maintain, and improve effective risk management framework, disclosure controls and procedures, and internal controls over financial reporting;
Current wording
•our ability to implement, maintain, and improve an effective risk management framework, disclosure controls and procedures, and internal controls over financial reporting;
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 2025 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 2025 Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the three months ended March 31, 2026, 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 nine 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, 2026, we had total assets of $5.0 billion, total loans held for investment of $4.2 billion, and total deposits of $4.5 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 California through nine branch offices, with a tenth branch opening in Lodi in July 2026. 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, 2026, we had total assets of $5.4 billion, total loans held for investment of $4.5 billion, and total deposits of $4.8 billion.
Previous wording
Net income for the three months ended March 31, 2026 totaled $18.6 million, as compared to net income of $13.1 million for the three months ended March 31, 2025.
Current wording
Net income for the three and six months ended June 30, 2026 totaled $19.4 million and $38.0 million, respectively, as compared to net income of $14.5 million and $27.6 million for the three and six months ended June 30, 2025, respectively.
Previous wording
•Deposits. Total deposits increased by $268.3 million, or 6.39%, from $4.2 billion at December 31, 2025 to $4.5 billion at March 31, 2026. Non-wholesale deposits increased by $350.2 million in the first three months of 2026 to $4.1 billion at March 31, 2026. Wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits, decreased by $81.9 million in the first three months of 2026 to $383.1 million. Non-interest-bearing deposits increased by $148.2 million in the first three months of 2026 to $1.2 billion, and represented 27.58% of total deposits at March 31, 2026, as compared to 25.82% of total deposits at December 31, 2025. Our loan to deposit ratio was 94.27% at March 31, 2026, as compared to 97.00% at December 31, 2025.
Current wording
•Deposits. Total deposits increased by $598.3 million, or 14.24%, from $4.2 billion at December 31, 2025 to $4.8 billion at June 30, 2026. Non-wholesale deposits increased by $813.3 million in the first six months of 2026 to $4.5 billion at June 30, 2026. Wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits, decreased by $215.0 million in the first six months of 2026 to $250.0 million. Non-interest-bearing deposits increased by $89.9 million in the first six months of 2026 to $1.2 billion, and represented 24.47% of total deposits at June 30, 2026, as compared to 25.82% of total deposits at December 31, 2025. Our loan to deposit ratio was 94.17% at June 30, 2026, as compared to 97.00% at December 31, 2025.
Previous wording
•Assets. Total assets were $5.0 billion at March 31, 2026, representing a $276.9 million, or 5.82%, increase compared to $4.8 billion at December 31, 2025.
Current wording
•Assets. Total assets were $5.4 billion at June 30, 2026, representing a $622.2 million, or 13.09%, increase compared to $4.8 billion at December 31, 2025.
Previous wording
•Loans. Total loans held for investment were $4.2 billion at March 31, 2026, as compared to $4.1 billion at December 31, 2025, an increase of $138.5 million, or 3.40%. The increase 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.
Current wording
•Loans. Total loans held for investment were $4.5 billion at June 30, 2026, as compared to $4.1 billion at December 31, 2025, an increase of $444.8 million, or 10.91%. The increase was a result of $1.0 billion in loan originations and advances, partially offset by $162.1 million and $421.9 million in loan payoffs and paydowns, respectively.
Previous wording
•Credit Quality. Credit quality remains strong, with non-accrual loans representing $2.8 million, or 0.07% of total loans held for investment at March 31, 2026, as compared to $3.1 million, or 0.08% of total loans held for investment at December 31, 2025. The ratio of the allowance for credit losses to total loans held for investment was 1.10% at March 31, 2026 and 1.09% at December 31, 2025.
Current wording
•Credit Quality. Credit quality remains strong, with non-accrual loans representing $13.4 million, or 0.30% of total loans held for investment at June 30, 2026, as compared to $3.1 million, or 0.08% of total loans held for investment at December 31, 2025. This increase was due to a $10.3 million, or 331.20% increase in nonperforming loans due to one Community Reinvestment Act loan that was placed on non-accrual status during the period. The balance of the loan is $11.4 million as of June 30, 2026, and it was originally downgraded to substandard in 2025. This was partially offset by improvements across the remainder of the nonperforming loan portfolio. The ratio of the allowance for credit losses to total loans held for investment was 1.05% at June 30, 2026 and 1.09% at December 31, 2025.
Previous wording
•Efficiency Ratio. Efficiency ratio was 38.57% for the three months ended March 31, 2026, down from 42.58% for the corresponding period of 2025, mainly due to a $9.5 million, or 27.90%, increase in net interest income during the same period.
Current wording
•Efficiency Ratio. Efficiency ratio was 40.91% for the three months ended June 30, 2026, down from 41.03% for the corresponding period of 2025, mainly due to a $9.6 million, or 26.20%, increase in net interest income during the same period, partially offset by a $3.9 million, or 24.74%, increase in non-interest expense. Additionally, efficiency ratio was 39.77% for the six months ended June 30, 2026, down from 41.77% for the corresponding period of 2025, mainly due to a $19.0 million, or 27.02%, increase in net interest income.
Previous wording
•Capital Ratios. All capital ratios were above well-capitalized regulatory thresholds as of March 31, 2026. The total risk-based capital ratio for the Company was 13.17% at March 31, 2026, as compared to 13.33% at December 31, 2025. The Tier 1 leverage ratio was 9.56% at March 31, 2026, as compared to 9.70% at December 31, 2025. 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, 2026. The total risk-based capital ratio for the Company was 12.50% at June 30, 2026, as compared to 13.33% at December 31, 2025. The Tier 1 leverage ratio was 9.21% at June 30, 2026, as compared to 9.70% at December 31, 2025. 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, 2026 to the three months ended March 31, 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026.
Current wording
The following discussion of our results of operations compares the three and six months ended June 30, 2026 to the three and six months ended June 30, 2025. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026.
Previous wording
•Net Interest Margin. Net interest margin was 3.70% for the three months ended March 31, 2026, and 3.45% for the three months ended March 31, 2025. The increase in net interest margin for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 is primarily due to an increase in interest income related 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 wording
Net interest income increased by $9.6 million, or 26.20%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, and our net interest margin increased by 10 basis points during the same period. The increase in net interest income is primarily due to an increase in interest income driven by loan growth and higher interest-earning deposits in banks, partially offset by an increase in interest expense driven by deposit growth, though moderated by a decrease in the average cost of deposits. Additional detail relating to net interest margin in each period is provided below.
Previous wording
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.
Current wording
As compared to the three months ended June 30, 2025, net interest income during the three months ended June 30, 2026 increased by $9.6 million, or 26.20%, to $46.1 million from $36.5 million. Net interest margin totaled 3.63% for the three months ended June 30, 2026, an increase of 10 basis points compared to the same quarter of the prior year. The improvement was driven by balance sheet growth and a favorable shift in funding mix, which more than offset pressure from declining federal funds rates over the same period. The increase in net interest income is primarily attributable to an $11.7 million increase in interest income, mainly due to a $636.7 million, or 17.25%, increase in the average balance of loans and a $315.3 million, or 87.13%, increase in the average balance of interest-earning deposits in banks (deposits placed with other financial institutions to earn interest). This increase in interest income was partially offset by a $2.2 million increase in interest expense, stemming from a $914.3 million, or 24.47%, increase in the average balance of deposits during the three months ended June 30, 2026, moderated by a 30 basis point decrease in average cost of deposits compared to the same quarter of the prior year. Further supporting the decreasing average cost of deposits, the average balance of non-interest-bearing deposits increased by $207.0 million, or 21.62%, compared to the same period of the prior year.
Previous wording
Net interest income increased by $9.5 million, or 27.90%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, and our net interest margin increased by 25 basis points during the same period. The increase in net interest income 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 wording
Net interest income increased by $19.0 million, or 27.02%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, and our net interest margin increased by 17 basis points when compared to the same period in 2025. The increase in net interest income is primarily attributable to an increase in interest income driven by loan growth, 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
We recorded a $2.7 million provision for credit losses in the first quarter of 2026, compared to a $1.9 million provision for credit losses for the same period of 2025. The increase in the provision for credit losses in the first quarter of 2026 is mainly due to 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.
Current wording
We recorded a $2.3 million provision for credit losses in the second quarter of 2026, compared to a $2.5 million provision for credit losses for the same period of 2025. The decrease in the provision for credit losses in the second quarter of 2026 is mainly due to lower net charge-offs in the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Previous wording
Gain on sale of loans. The decrease related to an overall decline in the volume of SBA loans sold due to a strategic, intentional reduction in originations of loans held for sale. During the three months ended March 31, 2026, no SBA loans were sold, as compared to approximately $1.7 million of SBA loans sold with an effective yield of 7.24% during the three months ended March 31, 2025.
Current wording
Gain on sale of loans. The decrease related to an overall decline in the volume of SBA loans sold due to a strategic, intentional reduction in originations of loans held for sale. During the three months ended June 30, 2026, no SBA loans were sold, as compared to approximately $1.6 million of loans sold with an effective yield of 7.60% during the three months ended June 30, 2025.
Previous wording
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.
Current wording
Loan-related fees. The increase resulted primarily from an increase of $0.1 million in loan referral income, combined with an increase of $0.1 million in fees from swap referrals during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.
Previous wording
Other income. The decrease related primarily to an overall loss 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.
Current wording
Other. The increase related primarily to an overall improvement in earnings related to investments in venture-backed funds during the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Previous wording
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.
Current wording
FHLB stock dividends. The increase related primarily to a $0.4 million special cash dividend from the FHLB during the six months ended June 30, 2026, partially offset by a decrease in dividends related to the FHLB’s transition to a tier-based dividend structure, which lowered the Bank’s effective dividend rate received.
Previous wording
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 production period-over-period.
Current wording
Salaries and employee benefits. The increase related primarily to: (i) a $2.8 million increase in salaries, benefits, and bonus expense, mainly related to a 13.30% increase in headcount between June 30, 2025 and June 30, 2026; and (ii) a $0.7 million increase in commissions primarily due to higher loan originations period-over-period. This increase was partially offset by a $0.9 million increase in deferred loan origination costs due to higher loan originations period-over-period.
Previous wording
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.
Current wording
Advertising and promotional. The increase was primarily due to additional expenses incurred to support the expansion of the Bank’s business development teams, including $0.2 million related to business development expenses and $0.1 million related to advertising and marketing expenses.
Previous wording
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.
Current wording
Other operating expenses. The increase was primarily due to: (i) a $0.5 million increase in employee-related expenses such as travel; (ii) a $0.3 million increase in administrative charges, including bank charges; (iii) a $0.2 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network; (iv) a $0.2 million increase in armored car and courier services; and (v) a $0.1 million increase in operational losses, partially offset by the release of a $1.0 million loss contingency on an SBA loan during the six months ended June 30, 2026. No such release occurred during the six months ended June 30, 2025.
Previous wording
The provision for income taxes was $6.4 million for the three months ended March 31, 2026, a $1.1 million increase from 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.
Current wording
The provision for income taxes was $6.7 million for the three months ended June 30, 2026, a $1.1 million increase from the three months ended June 30, 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 June 30, 2026 related to the purchase of transferable tax credits that did not occur during the three months ended June 30, 2025. The effective tax rates were 25.64% and 27.82% for the three months ended June 30, 2026 and June 30, 2025, respectively.
Previous wording
At March 31, 2026, total assets were $5.0 billion, an increase of $276.9 million from $4.8 billion at December 31, 2025. The increase 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.
Current wording
At June 30, 2026, total assets were $5.4 billion, an increase of $622.2 million from $4.8 billion at December 31, 2025. The increase was primarily comprised of a $444.8 million increase in total loans held for investment and a $178.2 million increase in cash and cash equivalents. The $444.8 million increase in total loans held for investment between December 31, 2025 and June 30, 2026 was a result of $1.0 billion in loan originations and advances, partially offset by $162.1 million and $421.9 million in loan payoffs and paydowns, respectively. The $444.8 million increase in total loans held for investment included $145.0 million in purchased loans within the consumer section of the loan portfolio.
Previous wording
Total cash and cash equivalents were $644.4 million at March 31, 2026, an increase of $137.5 million from $506.9 million at December 31, 2025. The increase in cash and cash equivalents was primarily due to 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.
Current wording
Total cash and cash equivalents were $685.1 million at June 30, 2026, an increase of $178.2 million from $506.9 million at December 31, 2025. The increase in cash and cash equivalents was primarily due to the net increase in cash inflows from growth in total deposits of $598.3 million and cash outflows from growth in total loans held for investment of $444.8 million.
Previous wording
Our total securities available-for-sale and held-to-maturity amounted to $93.9 million at March 31, 2026 and $96.9 million at December 31, 2025, representing a decrease of $3.0 million during the same period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $1.7 million, and an unrealized loss on securities of $1.2 million, with the remainder of the change due to amortization of premiums. For the three months ended March 31, 2026, other comprehensive loss was $1.0 million, primarily due to market conditions on securities during that period.
Current wording
Our total securities available-for-sale and held-to-maturity amounted to $92.7 million at June 30, 2026 and $96.9 million at December 31, 2025, representing a decrease of $4.2 million during the same period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $3.6 million, and an unrealized loss on securities of $0.2 million, with the remainder of the change due to amortization of premiums. For the six months ended June 30, 2026, other comprehensive loss was $0.3 million, primarily due to 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, 2026 and December 31, 2025, our total loans amounted to $4.2 billion and $4.1 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, 2026 and December 31, 2025, our total loans amounted to $4.5 billion and $4.1 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 83.80% of loans held for investment at March 31, 2026. Commercial secured lending represents 5.77% of loans held for investment at March 31, 2026. 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 82.36% of loans held for investment at June 30, 2026. Commercial secured lending represents 5.72% of loans held for investment at June 30, 2026. 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 599.40% and 594.17% as of March 31, 2026 and December 31, 2025, 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, 2026. 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 615.22% and 594.17% as of June 30, 2026 and December 31, 2025, 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, 2026. Additionally, our loans are geographically concentrated with borrowers and collateralized properties primarily in California.
Previous wording
During the three months ended March 31, 2026, the Company did not sell any SBA 7(a) loans.
Current wording
During the six months ended June 30, 2026, the Company did not sell any SBA 7(a) loans.
Previous wording
The ratio of nonperforming loans to loans held for investment was 0.07% at March 31, 2026, as compared to 0.08% at December 31, 2025.
Current wording
The ratio of nonperforming loans to loans held for investment was 0.30% at June 30, 2026, as compared to 0.08% at December 31, 2025.
Previous wording
The ratio of the allowance for credit losses to period end nonperforming loans increased from 1,434.40% as of December 31, 2025 to 1,649.11% as of March 31, 2026. This increase was due to a $2.0 million, or 4.57%, increase in the allowance for credit losses, while nonperforming loans decreased by $0.3 million, or 9.04%, due to the payoff of one nonperforming loan and the sale of another.
Current wording
The ratio of the allowance for credit losses to period end nonperforming loans decreased from 1,434.40% as of December 31, 2025 to 354.57% as of June 30, 2026. This decrease was due to a $10.3 million, or 331.20%, increase in nonperforming loans due to one Community Reinvestment Act loan that was placed on non-accrual status during the period. The balance of the loan is $11.4 million as of June 30, 2026, and it was originally downgraded to substandard in 2025. This was partially offset by improvements across the remainder of the nonperforming loan portfolio.
Previous wording
Loans designated as “watch” are internal bank designations and are not considered adversely classified. However, loans designated as “substandard” or “doubtful” are considered adversely classified. Table 14 shows loans by credit quality risk rating as of the periods indicated.
Current wording
Loans designated as “watch” or “special mention” are internal bank designations and are not considered adversely classified. However, loans designated as “substandard” or “doubtful” are considered adversely classified. Table 18 shows loans by credit quality risk rating as of the periods indicated.
Previous wording
Loans designated as watch and substandard increased to $166.8 million at March 31, 2026 from $124.2 million at December 31, 2025. There were no loans with doubtful risk grades at March 31, 2026 or December 31, 2025.
Current wording
Loans designated as watch, special mention, and substandard increased to $219.8 million at June 30, 2026 from $161.8 million at December 31, 2025. There were no loans with doubtful risk grades at June 30, 2026 or December 31, 2025.
Previous wording
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.
Current wording
At June 30, 2026, the Company’s allowance for credit losses was $47.3 million, as compared to $44.4 million at December 31, 2025. The $2.9 million increase in the allowance is due to a $4.6 million provision for credit losses (excluding a $0.4 million provision for unfunded commitments) recorded during the six months ended June 30, 2026, partially offset by net charge-offs of $1.6 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 1.10% at March 31, 2026, an increase from 1.09% at December 31, 2025.
Current wording
The ratio of the allowance for credit losses to total loans held for investment was 1.05% at June 30, 2026, a decline from 1.09% at December 31, 2025.
Previous wording
The ratio of the allowance for credit losses to loans held for investment increased from 1.08% as of March 31, 2025 to 1.10% as of March 31, 2026. Net charge-offs as a percent of average loans held for investment decreased from 0.02% for the three months ended March 31, 2025 to 0.01% for the three months ended March 31, 2026.
Current wording
The ratio of the allowance for credit losses to loans held for investment decreased from 1.07% as of June 30, 2025 to 1.05% as of June 30, 2026. Net charge-offs as a percent of average loans held for investment decreased from 0.04% for the three months ended June 30, 2025 to 0.02% for the three months ended June 30, 2026. Net charge-offs as a percent of average loans held for investment decreased from 0.06% for the six months ended June 30, 2025 to 0.04% for the six months ended June 30, 2026.
Previous wording
During the first three months of 2026, total liabilities increased by $264.2 million from $4.3 billion as of December 31, 2025 to $4.6 billion as of March 31, 2026. This increase 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.
Current wording
During the first six months of 2026, total liabilities increased by $594.3 million from $4.3 billion as of December 31, 2025 to $4.9 billion as of June 30, 2026. This increase was primarily due to an increase in deposits of $598.3 million. The increase in deposits was largely due to increases in money market, interest-bearing transaction, and non-interest-bearing deposits of $590.7 million, $156.1 million, and $89.9 million, respectively, partially offset by a $246.6 million decrease in time deposits, mainly attributed to a $215.0 million decline in wholesale deposits.
Previous wording
Representing 97.73% of our total liabilities as of March 31, 2026, deposits are our primary source of funding for our business operations.
Current wording
Representing 97.88% of our total liabilities as of June 30, 2026, deposits are our primary source of funding for our business operations.
Showing the first 40 of 65 pairs. Open the source sections for the rest.
Rearranged current paragraphs (15)
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
We recorded a $4.9 million provision for credit losses in the first six months of 2026, as compared to a $4.4 million provision for credit losses for the same period of 2025. The increase in the provision for credit losses recorded during the first six months of 2026 is mainly due to increases in loan growth and an overall increase in loss rates, partially offset by lower charge-offs.
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 SBA loans sold due to a strategic, intentional reduction in originations of loans held for sale. During the six months ended June 30, 2026, no SBA loans were sold, as compared to approximately $3.3 million of SBA loans sold with an effective yield of 7.41% during the six months ended June 30, 2025.
Current report — wording carried from elsewhere
Other. The decrease related primarily to an overall loss in earnings related to equity investments in venture-backed funds during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
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 $5.1 million increase in salaries, benefits, and bonus expense, mainly related to a 13.30% increase in headcount between June 30, 2025 and June 30, 2026; and (ii) a $1.2 million increase in commissions primarily due to higher loan originations period-over-period. This increase was partially offset by a $1.5 million increase in deferred loan origination costs due to greater loan originations period-over-period.
Current report — wording carried from elsewhere
Occupancy and equipment. The increase was primarily due to expenses for the Walnut Creek branch office and Newport Beach non-depository office during the six months ended June 30, 2026, which did not exist for the six months ended June 30, 2025. The increase was also related to an increase in expense for the San Francisco branch office due to an expansion project.