SEC Filing | Five Star Bancorp

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fsbc-20230724

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 24, 2023

https://cdn.kscope.io/40413a40145c301830210c82951eedaf-fsblogo.jpg

FIVE STAR BANCORP

(Exact Name of Registrant as Specified in Charter)

California

001-40379

75-3100966

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

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

(Address of Principal Executive Offices, and Zip Code)

(916) 626-5000

Registrant’s Telephone Number, Including Area Code

Not Applicable

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

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


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


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


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


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

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


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

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

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

Item 2.02 Results of Operations and Financial Condition

On July 24, 2023, Five Star Bancorp (the “Company”) issued a press release announcing its results of operations and financial condition for the quarter ended June 30, 2023. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

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

Item 7.01 Regulation FD Disclosure

The Company is conducting an earnings call on July 25, 2023 at 10:00 am PT/1:00 pm ET to discuss its second quarter 2023 financial results. A copy of the investor presentation to be used during the earnings call is attached to this Current Report on Form 8-K as Exhibit 99.2 and is incorporated herein by reference.

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

Item 9.01 Financial Statements and Exhibits

(d) Exhibits


Number									Description
99.1									Press Release dated July 24, 2023
99.2									Second Quarter 2023 Investor Presentation, dated July 25, 2023
104									Cover Page Interactive Data File (embedded within the Inline XBRL)

SIGNATURE

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




	FIVE STAR BANCORP

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

Date: July 24, 2023

Document


PRESS RELEASE			FOR IMMEDIATE RELEASE

Five Star Bancorp Announces Second Quarter 2023 Results

RANCHO CORDOVA, Calif. July 24, 2023 (GLOBE NEWSWIRE) – Five Star Bancorp (Nasdaq: FSBC) (the “Company” or “Five Star”), the holding company for Five Star Bank (the “Bank”), today reported net income of $12.7 million for the three months ended June 30, 2023, as compared to $13.2 million for the three months ended March 31, 2023 and $10.0 million for the three months ended June 30, 2022.

Second Quarter Highlights

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


	Three months ended
(in thousands, except per share and share data)	June 30, 2023			March 31, 2023			June 30, 2022
Return on average assets (“ROAA”)	1.55		%	1.65		%	1.45		%
Return on average equity (“ROAE”)	19.29		%	20.94		%	17.20		%
Pre-tax income	$	17,169		$	18,501		$	14,033
Pre-tax, pre-provision income(1)	18,419			19,401			16,283
Net income	12,729			13,161			9,953
Basic earnings per common share	$	0.74		$	0.77		$	0.58
Diluted earnings per common share	0.74			0.77			0.58
Weighted average basic common shares outstanding	17,165,344			17,150,174			17,125,715
Weighted average diluted common shares outstanding	17,168,995			17,194,884			17,149,449
Shares outstanding at end of period	17,257,357			17,258,904			17,245,983

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

James E. Beckwith, President and Chief Executive Officer, commented on the financial results:

“In response to disruption in the banking industry and to meet market demand while building upon the Bank’s organic growth strategy, we were pleased to announce our expansion into the San Francisco Bay Area with the hiring of a commercial banking team in the 2nd Quarter of 2023. This expansion demonstrates our ability to seize opportunities and our confidence in the Bay Area’s talent pipeline as well as our belief in the strength of the region’s diverse and competitive business environment. We look forward to championing new and existing clients in this market and to enhancing and strengthening community partnerships.

This Quarter, we were also pleased to have been awarded the 2022 Raymond James Community Bankers Cup, which speaks to the Bank’s superior performance and stability. The award recognizes the top 10% of community banks in the nation based on various profitability, operational efficiency, and balance sheet metrics (banks considered included all exchange-traded domestic banks, excluding mutual holding companies and potential acquisition targets with assets between $500 million and $10 billion as of December 31, 2022). This recognition comes after Five Star earned the #1 ranking on the S&P Global Market Intelligence annual rankings of 2022’s best-performing community banks in the nation with assets between $3 billion and $10 billion. In the 2nd Quarter, it was also announced Five Star appeared on American Banker’s annual ranking of the 20 top-performing community banks in the nation (ranking #12) with assets between $2 billion and $10 billion based on their three-year return on average equity.”

•Cash and cash equivalents were $300.1 million, representing 10.24% of total deposits at June 30, 2023, compared to 11.91% as of March 31, 2023.

•Total deposits increased by $9.3 million, or 0.32%, in the three months ended June 30, 2023. Non-brokered deposits increased by $25.0 million, or 0.89%, in the three months ended June 30, 2023.

•Consistent, disciplined management of expenses contributed to our efficiency ratio of approximately 39.41% for the three months ended June 30, 2023.

•A gain of $1.3 million was recorded for distributions from venture-backed fund investments during the three months ended June 30, 2023.

•Net interest margin for the three months ended June 30, 2023 was 3.45%, as the effective Federal Funds rate increased to 5.08% as of June 30, 2023 from 4.83% as of March 31, 2023 and 1.58% as of June 30, 2022. Net interest margin was 3.75% for the three months ended March 31, 2023 and 3.71% for the three months ended June 30, 2022.

•Other comprehensive loss was $1.0 million during the three months ended June 30, 2023. Unrealized losses, net of tax effect, on available-for-sale securities were $13.0 million as of June 30, 2023. Total held-to-maturity and available-for-sale securities represented 0.10% and 3.33% of total interest-earning assets, respectively, as of June 30, 2023.

•The Company's common equity Tier 1 capital ratio was 9.07% and 9.02% as of June 30, 2023 and March 31, 2023, respectively. The Bank continues to meet all requirements to be considered “well-capitalized” under applicable regulatory guidelines.

•Loan and deposit growth in the three months ended June 30, 2023 was as follows:


(in thousands)	June 30, 2023		March 31, 2023		$ Change		% Change
Loans held for investment	$	2,927,411	$	2,869,848	$	57,563	2.01	%
Non-interest-bearing deposits	833,707		836,673		(2,966)		(0.35)	%
Interest-bearing deposits	2,096,032		2,083,733		12,299		0.59	%

(in thousands)	June 30, 2023		June 30, 2022		$ Change		% Change
Loans held for investment	$	2,927,411	$	2,380,511	$	546,900	22.97	%


Non-interest-bearing deposits	833,707		1,006,066		(172,359)		(17.13)	%
Interest-bearing deposits	2,096,032		1,495,245		600,787		40.18	%

•At June 30, 2023, the Company reported total loans held for investment, total assets, and total deposits of $2.9 billion, $3.4 billion, and $2.9 billion, respectively.

•The ratio of nonperforming loans to loans held for investment at period end remained consistent at 0.01% at both June 30, 2023 and March 31, 2023.

•In June 2023, the Company announced its expansion into the San Francisco, California area with the hiring of experienced banking professionals in the Bay Area and plans to open a loan production office in the area during the second half of 2023.

•The Company’s Board of Directors declared, and the Company subsequently paid, a cash dividend of $0.20 per share during the three months ended June 30, 2023. The Company's Board of Directors subsequently declared another cash dividend of $0.20 per share on July 20, 2023.

Summary Results

Three months ended June 30, 2023, as compared to three months ended March 31, 2023

The Company’s net income was $12.7 million for the three months ended June 30, 2023 compared to $13.2 million for the three months ended March 31, 2023. Net interest income decreased by $1.6 million as increases in interest expense more than offset increases in interest income, with increases in rates paid on interest-bearing liabilities as the leading driver. The provision for credit losses was $1.3 million for the three months ended June 30, 2023 compared to $0.9 million for the three months ended March 31, 2023. Non-interest income was $2.8 million for the three months ended June 30, 2023 compared to $1.4 million for the three months ended March 31, 2023, primarily due to a $1.3 million gain from distributions on investments in venture-backed funds during the three months ended June 30, 2023. Non-interest expense was $12.0 million for the three months ended June 30, 2023 compared to $11.1 million for the three months ended March 31, 2023.

Three months ended June 30, 2023, as compared to three months ended June 30, 2022

The Company’s net income was $12.7 million for the three months ended June 30, 2023 compared to $10.0 million for the three months ended June 30, 2022. Net interest income increased by $3.0 million, primarily due to higher average balances on interest-earning assets more than offsetting higher average balances on interest-bearing liabilities. Higher yields earned on earning assets and higher rates paid on interest-bearing liabilities coincided with the effective Federal Funds rate increase from 1.58% to 5.08% between June 30, 2022 and June 30, 2023. The provision for credit losses was $1.3 million for the three months ended June 30, 2023 compared to $2.3 million for the three months ended June 30, 2022. Non-interest income was $2.8 million for the three months ended June 30, 2023 compared to $2.0 million for the three months ended June 30, 2022, mainly due to a $1.3 million gain from distributions on investments in venture-backed funds during the three months ended June 30, 2023. Non-interest expense was $12.0 million for the three months ended June 30, 2023 compared to $10.2 million for the three months ended June 30, 2022.

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


	Three months ended
(in thousands, except per share data)	June 30, 2023			March 31, 2023			$ Change		% Change
Selected operating data:
Net interest income	$	27,578		$	29,148		$	(1,570)	(5.39)	%
Provision for credit losses	1,250			900			350		38.89	%
Non-interest income	2,820			1,371			1,449		105.69	%
Non-interest expense	11,979			11,118			861		7.74	%
Pre-tax income	17,169			18,501			(1,332)		(7.20)	%
Provision for income taxes	4,440			5,340			(900)		(16.85)	%
Net income	$	12,729		$	13,161		$	(432)	(3.28)	%
Earnings per common share:
Basic	$	0.74		$	0.77		$	(0.03)	(3.90)	%
Diluted	$	0.74		$	0.77		$	(0.03)	(3.90)	%
Performance and other financial ratios:
ROAA	1.55		%	1.65		%
ROAE	19.29		%	20.94		%
Net interest margin	3.45		%	3.75		%
Cost of funds	2.04		%	1.53		%
Efficiency ratio	39.41		%	36.43		%



	Three months ended
(in thousands, except per share data)	June 30, 2023			June 30, 2022			$ Change		% Change
Selected operating data:
Net interest income	$	27,578		$	24,529		$	3,049	12.43	%
Provision for credit losses	1,250			2,250			(1,000)		(44.44)	%
Non-interest income	2,820			1,959			861		43.95	%
Non-interest expense	11,979			10,205			1,774		17.38	%
Pre-tax income	17,169			14,033			3,136		22.35	%
Provision for income taxes	4,440			4,080			360		8.82	%
Net income	$	12,729		$	9,953		$	2,776	27.89	%
Earnings per common share:
Basic	$	0.74		$	0.58		$	0.16	27.59	%
Diluted	$	0.74		$	0.58		$	0.16	27.59	%
Performance and other financial ratios:
ROAA	1.55		%	1.45		%
ROAE	19.29		%	17.20		%
Net interest margin	3.45		%	3.71		%
Cost of funds	2.04		%	0.24		%
Efficiency ratio	39.41		%	38.53		%

Balance Sheet Summary


(in thousands)	June 30, 2023		December 31, 2022		$ Change		% Change
Selected financial condition data:
Total assets	$	3,402,701	$	3,227,159	$	175,542	5.44	%
Cash and cash equivalents	300,123		259,991		40,132		15.44	%
Total loans held for investment	2,927,411		2,791,326		136,085		4.88	%
Total investments	114,280		119,744		(5,464)		(4.56)	%
Total liabilities	3,133,561		2,974,334		159,227		5.35	%
Total deposits	2,929,739		2,782,004		147,735		5.31	%
Subordinated notes, net	73,677		73,606		71		0.10	%
Total shareholders’ equity	269,140		252,825		16,315		6.45	%

•Insured and collateralized deposits were approximately $2.0 billion, representing approximately 67.34% of total deposits as of June 30, 2023. Net uninsured deposits were approximately $1.0 billion as of June 30, 2023.

•Commercial and consumer deposit accounts constituted approximately 75% of total deposits. Deposit relationships of at least $5 million represented approximately 62% of total deposits and had an average age of approximately 8.96 years as of June 30, 2023.

•Cash and cash equivalents as of June 30, 2023 were $300.1 million, representing 10.24% of total deposits at June 30, 2023 compared to 11.91% as of March 31, 2023.

•In the first quarter of 2023, the Federal Reserve created the Bank Term Funding Program to provide depository institutions with additional funding, which allows any federally insured deposit institution to pledge its investment portfolio at par as collateral value. As of June 30, 2023, the Bank had neither used nor established borrowing capacity with the Bank Term Funding Program.

•Total liquidity (consisting of cash and cash equivalents and unused and immediately available borrowing capacity as set forth below) was approximately $890.6 million as of June 30, 2023.


	June 30, 2023				Available
(in thousands)	Line of Credit		Borrowings
Federal Home Loan Bank of San Francisco (“FHLB”) advances	$	442,606	$	100,000	$	342,606
Federal Reserve discount window	72,842		—		72,842
Correspondent bank lines of credit	175,000		—		175,000

Cash and cash equivalents	—		—		300,123
Total	$	690,448	$	100,000	$	890,571

The increase in total assets from December 31, 2022 to June 30, 2023 was primarily due to a $40.1 million increase in cash and cash equivalents and a $136.1 million increase in total loans held for investment. The increase in cash and cash equivalents primarily resulted from net cash provided from financing and operating activities of $141.7 million and $25.6 million, respectively, partially offset by net cash used in investing activities of $127.2 million. The $136.1 million increase in total loans held for investment between December 31, 2022 and June 30, 2023 was a result of $389.5 million in loan originations, partially offset by $253.4 million in loan payoffs and paydowns.

The increase in total liabilities from December 31, 2022 to June 30, 2023 was primarily attributable to an increase in deposits of $147.7 million, largely due to increases in money market and time deposits over $250 thousand of $303.7 million and $48.0 million, respectively, partially offset by decreases in non-interest-bearing, interest checking, and savings deposits of $137.5 million, $32.0 million, and $21.8 million, respectively.

Total shareholders’ equity increased by $16.3 million from $252.8 million at December 31, 2022 to $269.1 million at June 30, 2023. The increase in total shareholders’ equity was primarily a result of net income recognized of $25.9 million and a reduction of $0.5 million to accumulated other comprehensive loss, partially offset by $6.0 million in cash distributions paid during the period and a reduction to retained earnings of $4.5 million, net of tax effect, due to the adoption of Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”).

Net Interest Income and Net Interest Margin

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


	Three months ended
(in thousands)	June 30, 2023			March 31, 2023			$ Change		% Change
Interest and fee income	$	42,793		$	40,311		$	2,482	6.16	%
Interest expense	15,215			11,163			4,052		36.30	%
Net interest income	$	27,578		$	29,148		$	(1,570)	(5.39)	%
Net interest margin	3.45		%	3.75		%

	Three months ended
(in thousands)	June 30, 2023			June 30, 2022			$ Change		% Change
Interest and fee income	$	42,793		$	25,999		$	16,794	64.59	%
Interest expense	15,215			1,470			13,745		935.03	%
Net interest income	$	27,578		$	24,529		$	3,049	12.43	%
Net interest margin	3.45		%	3.71		%

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


	Three months ended
	June 30, 2023						March 31, 2023						June 30, 2022
(in thousands)	Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Assets
Interest-earning deposits with banks	$	179,894	$	2,218	4.95	%	$	200,541	$	2,167	4.38	%	$	294,491	$	518	0.71	%
Investment securities	116,107		646		2.23	%	119,489		650		2.21	%	132,975		602		1.82	%
Loans held for investment and sale	2,914,388		39,929		5.50	%	2,836,070		37,494		5.36	%	2,227,215		24,879		4.48	%
Total interest-earning assets	3,210,389		42,793		5.35	%	3,156,100		40,311		5.18	%	2,654,681		25,999		3.93	%
Interest receivable and other assets, net	75,416						69,253						98,972
Total assets	$	3,285,805					$	3,225,353					$	2,753,653

Liabilities and shareholders’ equity
Interest-bearing demand	$	290,404	$	825	1.14	%	$	379,593	$	433	0.46	%	$	255,665	$	66	0.10	%
Savings	139,522		758		2.18	%	155,233		545		1.42	%	96,867		38		0.16	%
Money market	1,283,353		8,136		2.54	%	1,087,122		5,436		2.03	%	981,366		679		0.28	%
Time	370,864		4,250		4.60	%	300,952		2,964		3.99	%	174,991		238		0.55	%
Subordinated debt and other borrowings	80,192		1,246		6.23	%	125,691		1,785		5.76	%	29,618		449		6.07	%
Total interest-bearing liabilities	2,164,335		15,215		2.82	%	2,048,591		11,163		2.21	%	1,538,507		1,470		0.38	%
Demand accounts	828,748						901,491						969,053
Interest payable and other liabilities	28,034						20,344						13,937
Shareholders’ equity	264,688						254,927						232,156
Total liabilities & shareholders’ equity	$	3,285,805					$	3,225,353					$	2,753,653

Net interest spread					2.53	%					2.97	%					3.55	%
Net interest income/margin			$	27,578	3.45	%			$	29,148	3.75	%			$	24,529	3.71	%

Factors affecting interest income and yields

Interest income increased during the three months ended June 30, 2023, as compared to the three months ended March 31, 2023, due to the following:

•Rates. The average yields on interest-earning assets were 5.35% and 5.18% for the three months ended June 30, 2023 and March 31, 2023, respectively. The increase in yield period-over-period was primarily due to increased rates earned on the loan portfolio from new originations and repricing on variable-rate loans, combined with increases in yields earned on interest-earning deposits held at other banks, coinciding with the rise in the effective Federal Funds rate from 4.83% to 5.08% between March 31, 2023 and June 30, 2023.

•Volume. Average interest-earning assets increased by approximately $54.3 million period-over-period, primarily driven by new loan originations, most notably in commercial real estate loans, which drove increases in the average daily balances of loans for the three months ended June 30, 2023.

Interest income increased during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, due to the following:

•Rates. The average yields on interest-earning assets were 5.35% and 3.93% for the three months ended June 30, 2023 and June 30, 2022, respectively. The increase in yield period-over-period was primarily due to increased rates earned on the loan portfolio from new originations and repricing on variable-rate loans, combined with increases in yields earned on interest-earning deposits with banks, coinciding with the rise in the effective Federal Funds rate from 1.58% to 5.08% between June 30, 2022 and June 30, 2023.

•Volume. Average interest-earning assets increased by approximately $555.7 million period-over-period, primarily driven by new loan originations which drove increases in the average daily balances of loans for the three months ended June 30, 2023, partially offset by a decrease in interest-earning deposits held at other banks.

Factors affecting interest expense and rates

Interest expense increased during the three months ended June 30, 2023, as compared to the three months ended March 31, 2023, due to the following:

•Rates. The average costs of interest-bearing liabilities were 2.82% and 2.21% for the three months ended June 30, 2023 and March 31, 2023, respectively. The increase in cost period-over-period was due to increases in the rates paid on interest-bearing deposit accounts, with the largest rate increases in interest-bearing demand accounts, coinciding with the rise in the effective Federal Funds rate from 4.83% to 5.08% between March 31, 2023 and June 30, 2023. The average cost of subordinated debt and other borrowings increased from 5.76% to 6.23% for the three months ended March 31, 2023 and June 30, 2023, respectively, as the cost of borrowing from the FHLB increased, coinciding with the aforementioned rise in the effective Federal Funds rate over the same period. There was no change in rates paid on the subordinated debt. Additionally, the cost of funds increased from 1.53% for the three months ended March 31, 2023 to 2.04% for the three months ended June 30, 2023.

•Volume. Average interest-bearing liabilities increased by $115.7 million period-over-period, primarily driven by increases in average balances in money market and time accounts of $196.2 million and $69.9 million, respectively, partially offset by decreases in average balances in demand accounts of $89.2 million and in other borrowings of $45.5 million, due to decreased use of FHLB advances during the three months ended June 30, 2023.

Interest expense increased during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, due to the following:

•Rates. The average costs of interest-bearing liabilities were 2.82% and 0.38% for the three months ended June 30, 2023 and June 30, 2022, respectively. The increase in cost period-over-period was primarily due to increases in the rates paid on interest-bearing deposit accounts, coinciding with the rise in the effective Federal Funds rate from 1.58% to 5.08% between June 30, 2022 and June 30, 2023. The average cost of subordinated debt and other borrowings increased from 6.07% to 6.23% for the three months ended June 30, 2022 and June 30, 2023, respectively, as the weighted average rate on subordinated notes outstanding was higher for the three months ended June 30, 2023 than for the three months ended June 30, 2022. Additionally, the cost of funds increased from 0.24% for the three months ended June 30, 2022 to 2.04% for the three months ended June 30, 2023.

•Volume. Average interest-bearing liabilities increased by $625.8 million period-over-period, primarily driven by increases in average balances in money market and time accounts of $302.0 million and $195.9 million, respectively, in the three months ended June 30, 2023 compared to the three months ended June 30, 2022.

Loans by Type

The following table provides loan balances, excluding deferred loan fees, by type as of June 30, 2023:


(in thousands)
Commercial Term Real Estate Non-Owner Occupied	$	1,089,850
Commercial Term Multifamily	944,976
Commercial Term Real Estate Owner Occupied	467,350
Commercial Construction Real Estate	100,514
Commercial Secured	89,571
SBA 7A Secured	49,852
Commercial Term Agricultural Real Estate	51,349
Others	136,359
	$	2,929,821

Interest-bearing Deposits

The following table provide interest-bearing deposit balances by type as of June 30, 2023:


(in thousands)
Interest-bearing demand	$	208,085
Savings	132,797
Money market	1,377,250
Time	377,900
	$	2,096,032

Asset Quality

Allowance for Credit Losses - Loans

Beginning January 1, 2023, the Company adopted ASC 326, which replaced the former “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the Current Expected Credit Loss (“CECL”) model. Utilizing CECL may have an impact on our allowance for credit losses going forward and result in a lack of comparability between 2022 and 2023 quarterly periods. Refer to information below on the provision for credit losses recorded during the six months ended June 30, 2023.

At June 30, 2023, the Company’s allowance for credit losses was $34.0 million, as compared to $28.4 million at December 31, 2022. The $5.6 million increase in the allowance is due to a $5.3 million adjustment recorded in connection with the adoption of CECL and a $1.8 million provision for credit losses recorded during the six months ended June 30, 2023, partially offset by net charge-offs of $1.5 million, attributable to the commercial secured and the consumer and other loan classes, during the same period.

The Company’s ratio of nonperforming loans to loans held for investment remained consistent at 0.01% at December 31, 2022 and June 30, 2023. The provision for credit losses recorded during the six months ended June 30, 2023 was primarily related to loan growth, loan type mix, and updates in the macroeconomic environment. Loans designated as substandard decreased from $0.4 million to $0.3 million between December 31, 2022 and June 30, 2023. There were no loans with doubtful risk grades at June 30, 2023 or December 31, 2022.

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


	June 30, 2023				December 31, 2022
(in thousands)	Amount		% of Total		Amount		% of Total
Real estate:
Commercial	$	27,138	79.87	%	$	19,216	67.69	%
Commercial land and development	181		0.53	%	54		0.19	%
Commercial construction	1,194		3.51	%	645		2.27	%
Residential construction	214		0.63	%	49		0.17	%
Residential	150		0.44	%	175		0.62	%
Farmland	232		0.68	%	644		2.27	%
Commercial:
Secured	3,695		10.87	%	7,098		25.00	%
Unsecured	206		0.61	%	116		0.41	%
Consumer and other	463		1.36	%	347		1.22	%
Unallocated	511		1.50	%	45		0.16	%
Total allowance for credit losses	$	33,984	100.00	%	$	28,389	100.00	%

The ratio of allowance for credit losses to loans held for investment was 1.16% at June 30, 2023, as compared to 1.02% at December 31, 2022.

Non-interest Income

Three months ended June 30, 2023, as compared to three months ended March 31, 2023

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


	Three months ended
(in thousands)	June 30, 2023		March 31, 2023		$ Change		% Change
Service charges on deposit accounts	$	135	$	117	$	18	15.38	%

Gain on sale of loans	641		598		43		7.19	%
Loan-related fees	389		308		81		26.30	%
FHLB stock dividends	189		193		(4)		(2.07)	%
Earnings on bank-owned life insurance	126		102		24		23.53	%
Other income	1,340		53		1,287		2,428.30	%
Total non-interest income	$	2,820	$	1,371	$	1,449	105.69	%

Gain on sale of loans. The increase in gain on sale of loans resulted primarily from an increase in the effective yield on loans sold, partially offset by a decline in the volume of loans sold. During the three months ended June 30, 2023, loans totaling $10.9 million were sold with an effective yield of 5.89% compared to the three months ended March 31, 2023, when loans totaling $12.7 million were sold with an effective yield of 4.72%.

Loan-related fees. The increase in loan-related fees resulted primarily from the recognition of $0.1 million in swap referral fees during the three months ended June 30, 2023 compared to no swap fees recognized in the three months ended March 31, 2023.

Other income. The increase in other income resulted primarily from a $1.3 million gain recorded for distributions received from venture-backed fund investments during the three months ended June 30, 2023, which did not occur during the three months ended March 31, 2023.

Three months ended June 30, 2023, as compared to three months ended June 30, 2022

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


	Three months ended
(in thousands)	June 30, 2023		June 30, 2022		$ Change		% Change
Service charges on deposit accounts	$	135	$	130	$	5	3.85	%

Gain on sale of loans	641		831		(190)		(22.86)	%
Loan-related fees	389		757		(368)		(48.61)	%
FHLB stock dividends	189		99		90		90.91	%
Earnings on bank-owned life insurance	126		101		25		24.75	%
Other income	1,340		41		1,299		3,168.29	%
Total non-interest income	$	2,820	$	1,959	$	861	43.95	%

Gain on sale of loans. The decrease in gain on sale of loans related primarily to an overall decline in the volume of loans sold during the three months ended June 30, 2023 compared to the three months ended June 30, 2022. During the three months ended June 30, 2023, approximately $10.9 million of loans were sold with an effective yield of 5.89%, as compared to approximately $17.9 million of loans sold with an effective yield of 4.64% during the three months ended June 30, 2022.

Loan-related fees. The decrease in loan-related fees was primarily a result of $0.1 million of swap referral fees recognized during the three months ended June 30, 2023 compared to $0.4 million of swap referral fees recognized during the three months ended June 30, 2022.

FHLB stock dividends. The increase in FHLB stock dividends was primarily due to increased yields on dividends between June 30, 2022 and June 30, 2023, corresponding with the rise in the effective Federal Funds rate over the same period.

Other income. The increase in other income resulted primarily from a $1.3 million gain recorded for distributions received from venture-backed fund investments during the three months ended June 30, 2023 which did not occur during the three months ended June 30, 2022.

Non-interest Expense

Three months ended June 30, 2023, as compared to three months ended March 31, 2023

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


	Three months ended
(in thousands)	June 30, 2023		March 31, 2023		$ Change		% Change
Salaries and employee benefits	$	6,421	$	6,618	$	(197)	(2.98)	%
Occupancy and equipment	551		523		28		5.35	%
Data processing and software	1,013		872		141		16.17	%
Federal Deposit Insurance Corporation (“FDIC”) insurance	410		402		8		1.99	%
Professional services	586		631		(45)		(7.13)	%
Advertising and promotional	733		418		315		75.36	%
Loan-related expenses	324		255		69		27.06	%
Other operating expenses	1,941		1,399		542		38.74	%
Total non-interest expense	$	11,979	$	11,118	$	861	7.74	%

Salaries and employee benefits. The decrease in salaries and employee benefits was primarily a result of a $0.7 million increase in loan origination costs related to production in the three months ended June 30, 2023, as compared to the three months ended March 31, 2023. This decline was partially offset by the following: (i) a $0.1 million net increase in salaries, insurance, and benefits as a result of a 2.21% increase in headcount and (ii) a $0.5 million

increase in commissions related to production in the three months ended June 30, 2023, as compared to the three months ended March 31, 2023.

Data processing and software. The increase in software expenses 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.

Advertising and promotional. The increase related primarily to an overall increase in events attended and donations made, as more events were attended during the three months ended June 30, 2023 than the three months ended March 31, 2023.

Other operating expenses. The increase in other operating expenses was primarily due to an overall increase in travel, conference fees, and professional membership fees during the three months ended June 30, 2023, as compared to the three months ended March 31, 2023.

Three months ended June 30, 2023, as compared to three months ended June 30, 2022

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


	Three months ended
(in thousands)	June 30, 2023		June 30, 2022		$ Change		% Change
Salaries and employee benefits	$	6,421	$	5,553	$	868	15.63	%
Occupancy and equipment	551		513		38		7.41	%
Data processing and software	1,013		739		274		37.08	%
FDIC insurance	410		245		165		67.35	%
Professional services	586		568		18		3.17	%
Advertising and promotional	733		484		249		51.45	%
Loan-related expenses	324		389		(65)		(16.71)	%
Other operating expenses	1,941		1,714		227		13.24	%
Total non-interest expense	$	11,979	$	10,205	$	1,774	17.38	%

Salaries and employee benefits. The increase in salaries and employee benefits was primarily a result of: (i) a $0.6 million increase in salaries, insurance, and benefits as a result of a 7.56% increase in headcount during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022 and (ii) a $0.5 million decrease in loan origination costs due to lower loan production period-over-period. These increases were partially offset by $0.2 million of lower commission expenses due to lower loan production during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

Data processing and software. The increase in data processing and software 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.

FDIC insurance. The increase related primarily to a final rule adopted by the FDIC to increase initial base deposit insurance assessment rates for insured depository institutions by two basis points, beginning with the first quarterly assessment period of 2023. FDIC insurance also increased for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, due to a $482.8 million increase in the assessment base period-over-period.

Advertising and promotional. The increase in advertising and promotional costs was primarily due to a $0.2 million increase in business development expenses incurred relating to an increased customer base and a 9.52% increase in the number of Business Development Officers from 21 as of June 30, 2022 to 23 as of June 30, 2023.

Other operating expenses. The increase in other operating expenses was primarily due to an overall increase in travel, conference fees, and professional membership fees during the three months June 30, 2023, as compared to the three months ended June 30, 2022.

Provision for Income Taxes

Three months ended June 30, 2023, as compared to three months ended March 31, 2023

Provision for income taxes for the three months ended June 30, 2023 decreased by $0.9 million, or 16.85%, to $4.4 million, as compared to $5.3 million for the three months ended March 31, 2023. During the three months ended June 30, 2023, the Company recorded a $0.5 million state tax benefit relating to an overall reduction in the state tax blended rate for the Company since its inception as a C Corporation. The effective tax rate was 25.86% and 28.86% for the three months ended June 30, 2023 and March 31, 2023, respectively.

Three months ended June 30, 2023, as compared to three months ended June 30, 2022

Provision for income taxes increased by $0.3 million, or 8.82%, to $4.4 million for the three months ended June 30, 2023, as compared to $4.1 million for the three months ended June 30, 2022, primarily driven by an overall increase in pre-tax income period over period. This increase was partially offset by a $0.5 million state tax benefit recorded during the three months ended June 30, 2023 relating to an overall reduction in the state tax blended rate since the Company's inception as a C Corporation. The effective tax rate was 25.86% and 29.07% for the three months ended June 30, 2023 and June 30, 2022, respectively.

Webcast Details

Five Star Bancorp will host a live webcast for analysts and investors on Tuesday, July 25, 2023 at 1:00 p.m. ET (10:00 a.m. PT) to discuss its second quarter financial results. To view the live webcast, visit the “News & Events” section of the Company’s website under “Events” at https://investors.fivestarbank.com/news-events/events. The webcast will be archived on the Company’s website for a period of 90 days.

About Five Star Bancorp

Five Star is a bank holding company headquartered in Rancho Cordova, California. Five Star operates through its wholly owned banking subsidiary, Five Star Bank. Five Star Bank has seven branches and one loan production office in Northern California.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of the Company’s beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. The Company cautions that the forward-looking statements are based largely on the Company’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company’s control. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company’s control) and are subject to risks and uncertainties, which change over time, and other factors, which could cause actual results to differ materially from those currently anticipated. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. If one or more of the factors affecting the Company’s forward-looking information and statements proves incorrect, then the Company’s actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this press release. Therefore, the Company cautions you not to place undue reliance on the Company’s forward-looking information and statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, in each case under the section entitled “Risk Factors,” and other documents filed by the Company with the Securities and Exchange Commission from time to time.

The Company disclaims any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law.

Condensed Financial Data (Unaudited)


	Three months ended
(in thousands, except per share and share data)	June 30, 2023		March 31, 2023		June 30, 2022
Revenue and Expense Data
Interest and fee income	$	42,793	$	40,311	$	25,999
Interest expense	15,215		11,163		1,470
Net interest income	27,578		29,148		24,529
Provision for credit losses	1,250		900		2,250
Net interest income after provision	26,328		28,248		22,279
Non-interest income:
Service charges on deposit accounts	135		117		130

Gain on sale of loans	641		598		831
Loan-related fees	389		308		757
FHLB stock dividends	189		193		99
Earnings on bank-owned life insurance	126		102		101
Other income	1,340		53		41
Total non-interest income	2,820		1,371		1,959
Non-interest expense:
Salaries and employee benefits	6,421		6,618		5,553
Occupancy and equipment	551		523		513
Data processing and software	1,013		872		739
FDIC insurance	410		402		245
Professional services	586		631		568
Advertising and promotional	733		418		484
Loan-related expenses	324		255		389
Other operating expenses	1,941		1,399		1,714
Total non-interest expense	11,979		11,118		10,205
Income before provision for income taxes	17,169		18,501		14,033
Provision for income taxes	4,440		5,340		4,080
Net income	$	12,729	$	13,161	$	9,953

Comprehensive Income
Net income	$	12,729	$	13,161	$	9,953
Net unrealized holding gain (loss) on securities available-for-sale during the period	(1,462)		2,140		(7,849)

Income tax expense (benefit) related to other comprehensive income (loss)	(432)		632		(2,320)
Other comprehensive income (loss)	(1,030)		1,508		(5,529)
Total comprehensive income	$	11,699	$	14,669	$	4,424


	Three months ended
(in thousands, except per share and share data)	June 30, 2023			March 31, 2023			June 30, 2022
Share and Per Share Data
Earnings per common share:
Basic	$	0.74		$	0.77		$	0.58
Diluted	$	0.74		$	0.77		$	0.58
Book value per share	$	15.60		$	15.10		$	13.52
Tangible book value per share(1)	$	15.60		$	15.10		$	13.52
Weighted average basic common shares outstanding	17,165,344			17,150,174			17,125,715
Weighted average diluted common shares outstanding	17,168,995			17,194,884			17,149,449
Shares outstanding at end of period	17,257,357			17,258,904			17,245,983

Credit Quality
Allowance for credit losses to period end nonperforming loans	11,839.25		%	8,167.68		%	5,834.88		%
Nonperforming loans to loans held for investment	0.01		%	0.01		%	0.02		%
Nonperforming assets to total assets	0.01		%	0.01		%	0.02		%
Nonperforming loans plus performing loan modifications to loans held for investment	0.01		%	0.01		%	0.02		%


Selected Financial Ratios
ROAA	1.55		%	1.65		%	1.45		%
ROAE	19.29		%	20.94		%	17.20		%
Net interest margin	3.45		%	3.75		%	3.71		%
Loan to deposit	100.21		%	98.66		%	95.69		%

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


(in thousands)	June 30, 2023			March 31, 2023			June 30, 2022
Balance Sheet Data
Cash and due from financial institutions	$	28,568		$	26,556		$	66,423
Interest-bearing deposits in banks	271,555			321,383			204,335
Time deposits in banks	7,343			9,617			10,841
Securities - available-for-sale, at fair value	110,794			115,140			122,426
Securities - held-to-maturity, at amortized cost	3,486			3,514			4,477
Loans held for sale	8,559			11,315			12,985
Loans held for investment	2,927,411			2,869,848			2,380,511
Allowance for credit losses - loans	(33,984)			(34,172)			(25,786)
Loans held for investment, net of allowance for credit losses	2,893,427			2,835,676			2,354,725
FHLB stock	15,000			10,890			10,890
Operating leases, right-of-use asset	5,032			5,175			4,472
Premises and equipment, net	1,599			1,677			1,768
Bank-owned life insurance	16,897			16,771			14,444
Interest receivable and other assets	40,441			39,594			28,285
Total assets	$	3,402,701		$	3,397,308		$	2,836,071

Non-interest-bearing deposits	$	833,707		$	836,673		$	1,006,066
Interest-bearing deposits	2,096,032			2,083,733			1,495,245
Total deposits	2,929,739			2,920,406			2,501,311
Subordinated notes, net	73,677			73,640			28,420
FHLB advances	100,000			120,000			60,000
Operating lease liability	5,275			5,433			4,739
Interest payable and other liabilities	24,870			17,173			8,401
Total liabilities	3,133,561			3,136,652			2,602,871

Common stock	220,021			219,785			219,023
Retained earnings	62,095			52,817			26,924
Accumulated other comprehensive loss, net	(12,976)			(11,946)			(12,747)
Total shareholders’ equity	269,140			260,656			233,200
Total liabilities and shareholders’ equity	$	3,402,701		$	3,397,308		$	2,836,071

Quarterly Average Balance Data
Average loans held for investment and sale	$	2,914,388		$	2,836,070		$	2,227,215
Average interest-earning assets	3,210,389			3,156,100			2,654,681
Average total assets	3,285,805			3,225,353			2,753,653
Average deposits	2,912,891			2,824,391			2,477,942
Average total equity	264,688			254,927			232,156

Capital Ratios
Total shareholders’ equity to total assets	7.91		%	7.67		%	8.22		%
Tangible shareholders’ equity to tangible assets(1)	7.91		%	7.67		%	8.22		%
Total capital (to risk-weighted assets)	12.45		%	12.50		%	11.77		%
Tier 1 capital (to risk-weighted assets)	9.07		%	9.02		%	9.62		%
Common equity Tier 1 capital (to risk-weighted assets)	9.07		%	9.02		%	9.62		%
Tier 1 leverage ratio	8.67		%	8.53		%	8.81		%

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

Non-GAAP Reconciliation (Unaudited)

The Company uses financial information in its analysis of the Company’s performance that is not in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company’s financial condition, results of operations, and cash flows computed in accordance with GAAP. However, the Company acknowledges that its non-GAAP financial measures have a number of limitations. As such, investors should not view these disclosures as a substitute for results determined in accordance with GAAP. Additionally, these non-GAAP measures are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses, but may calculate them differently. Investors should understand how the Company and other companies each calculate their non-GAAP financial measures when making comparisons.

Tangible shareholders’ equity to tangible assets is defined as total equity less goodwill and other intangible assets, divided by total assets less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholders’ equity to total assets. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible shareholders’ equity to tangible assets is the same as total shareholders’ equity to total assets at the end of each of the periods indicated.

Tangible book value per share is defined as total shareholders’ equity less goodwill and other intangible assets, divided by the outstanding number of common shares at the end of the period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible book value per share is the same as book value per share at the end of each of the periods indicated.


	As of
	June 30, 2023		March 31, 2023		June 30, 2022
Book value per share	$	15.60	$	15.10	$	13.52
Tangible book value per share	$	15.60	$	15.10	$	13.52

Pre-tax, pre-provision income is defined as pre-tax income plus provision for credit losses. The most directly comparable GAAP financial measure is pre-tax income.

The following reconciliation table provides a more detailed analysis of this non-GAAP financial measure:


(in thousands)	Three months ended
Pre-tax, pre-provision income	June 30, 2023		March 31, 2023		June 30, 2022
Pre-tax income	$	17,169	$	18,501	$	14,033
Add: provision for credit losses	1,250		900		2,250
Pre-tax, pre-provision income	$	18,419	$	19,401	$	16,283

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

Shelley R. Wetton, Chief Marketing Officer
Five Star Bancorp
(916) 284-7827
swetton@fivestarbank.com

invpres2q2023

Investor Presentation Second Quarter 2023

Safe Harbor Statement and Disclaimer Forward-Looking Statements In this presentation, “we,” “our,” “us,” “Five Star" or “the Company” refers to Five Star Bancorp, a California corporation, and our consolidated subsidiaries, including Five Star Bank, a California state- chartered bank, unless the context indicates that we refer only to the parent company, Five Star Bancorp. This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of the Company’s beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan” or words or phases of similar meaning. The Company cautions that the forward-looking statements are based largely on the Company’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company’s control. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company’s control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. If one or more of the factors affecting the Company’s forward-looking information and statements proves incorrect, then the Company’s actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this press release. Therefore, the Company cautions you not to place undue reliance on the Company’s forward-looking information and statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and Form 10-Q for the quarter ended March 31, 2023, in each case under the section entitled “Risk Factors,” and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company disclaims any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law. Industry Information This presentation includes statistical and other industry and market data that we obtained from government reports and other third-party sources. Our internal data, estimates, and forecasts are based on information obtained from government reports, trade, and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. Although we believe that this information (including the industry publications and third-party research, surveys, and studies) is accurate and reliable, we have not independently verified such information. In addition, estimates, forecasts, and assumptions are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. Finally, forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this presentation. Unaudited Financial Data Numbers contained in this presentation for the quarter ended June 30, 2023 and for other quarterly periods are unaudited. Additionally, all figures presented as year-to-date, except for periods that represent a full fiscal year ended December 31, represent unaudited results. As a result, subsequent information may cause a change in certain accounting estimates and other financial information, including the Company’s allowance for credit losses, fair values, and income taxes. Non-GAAP Financial Measures The Company uses financial information in its analysis of the Company’s performance that is not in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company’s financial condition, results of operations, and cash flows computed in accordance with GAAP. However, the Company acknowledges that its non-GAAP financial measures have a number of limitations. See the appendix to this presentation for a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures. Second Quarter 2023 Investor Presentation | 2

Agenda Second Quarter 2023 Investor Presentation | 3 •Company Overview •Financial Highlights •Loans and Credit Quality •Deposit and Capital Overview •Financial Results

Company Overview Second Quarter 2023 Investor Presentation | 4

Company Overview Nasdaq: Headquarters: Asset Size: Loans Held for Investment: Deposits: Bank Branches: Second Quarter 2023 Investor Presentation | 5 FSBC Rancho Cordova, California $3.4 billion $2.9 billion $2.9 billion 7 Note: Balances are as of June 30, 2023. Five Star is a community business bank that was founded to serve the commercial real estate industry. Today, the markets we serve have expanded to meet customer demand and now include manufactured housing and storage, faith-based, government, nonprofits, and more.

Executive Team Second Quarter 2023 Investor Presentation | 6 James Beckwith President and Chief Executive Officer Five Star since 2003 John Dalton Senior Vice President and Chief Credit Officer Five Star since 2011 Mike Lee Senior Vice President and Chief Regulatory Officer Five Star since 2005 Michael Rizzo Senior Vice President and Chief Banking Officer Five Star since 2005 Brett Wait Senior Vice President and Chief Information Officer Five Star since 2011 Lydia Ramirez Senior Vice President and Chief Operations and Chief DE&I Officer Five Star since 2017 Heather Luck Senior Vice President and Chief Financial Officer Five Star since 2018 Shelley Wetton Senior Vice President and Chief Marketing Officer Five Star since 2015

Financial Highlights Second Quarter 2023 Investor Presentation | 7

$565 $604 $811 $840 $973 $1,272 $1,480 $1,954 $2,557 $3,227 $3,403 $1,806 $2,535 $148 $22 Total Assets Excluding PPP Loans PPP Loans 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q2 2023 Consistent and Organic Asset Growth Second Quarter 2023 Investor Presentation | 8 Note: Dollars are in millions. Balances are end of period. References to PPP are the Paycheck Protection Program. 1. CAGR is based upon balances as of June 30, 2023. 2. A reconciliation of this non-GAAP measure is set forth in the appendix. (2) CAGR (1) 5 years 10 years Total Assets 24.44 % 20.81 %

Financial Highlights Second Quarter 2023 Investor Presentation | 9 (dollars in thousands) For the three months ended 6/30/2023 3/31/2023 6/30/2022 Profitability Net income $ 12,729 $ 13,161 $ 9,953 Return on average assets ("ROAA") 1.55 % 1.65 % 1.45 % Return on average equity ("ROAE") 19.29 % 20.94 % 17.20 % Earnings per share (basic and diluted) $ 0.74 $ 0.77 $ 0.58 Net Interest Margin Net interest margin 3.45 % 3.75 % 3.71 % Average loan yield 5.50 % 5.36 % 4.48 % Average cost of interest-bearing deposits 2.69 % 1.98 % 0.27 % Average cost of total deposits 1.92 % 1.35 % 0.17 % Total cost of funds 2.04 % 1.53 % 0.24 % 6/30/2023 12/31/2022 Deposits and Securities Non-interest-bearing deposits $ 833,707 $ 971,246 Interest-bearing deposits 2,096,032 1,810,758 Total deposits 2,929,739 2,782,004 Total securities to interest-earning assets 3.43 % 3.79 % Asset Quality Nonperforming loans to loans held for investment 0.01 % 0.01 % Allowance for credit losses to loans held for investment 1.16 % 1.02 % Note: Yields are based on average balance and annualized quarterly interest income. Costs are based on average balance and annualized quarterly interest expense.

Financial Highlights - June 30, 2023 Second Quarter 2023 Investor Presentation | 10 Growth • Continued balance sheet growth with $57.6 million of growth in loans held for investment and $9.3 million in deposit growth since March 31, 2023. Funding • Non-interest-bearing deposits comprised 28.46% of total deposits, as compared to 28.65% of total deposits as of March 31, 2023. • Deposits comprised 93.50% of total liabilities, as compared to 93.11% of total liabilities as of March 31, 2023. Liquidity • Insured and collateralized deposits were approximately $2.0 billion, representing 67.34% of total deposits, compared to 64.53% as of March 31, 2023. • Cash and cash equivalents were $300.1 million, representing 10.24% of total deposits, compared to 11.91% as of March 31, 2023. Capital • All capital ratios were above well-capitalized regulatory thresholds. • On April 21, 2023 and July 21, 2023, the Company announced cash dividends of $0.20 per share for the three months ended March 31, 2023 and June 30, 2023, respectively.

Top Performer Versus Peer Group - March 31, 2023 Five Star Bank Peer Group Percentile ROAA 1.80% 1.18% 89% ROAE 17.96% 12.94% 79% Non-interest Expense to Average Assets 1.31% 2.25% 6% Efficiency Ratio 33.07% 57.16% 5% ROAA and ROAE in the 89th and 79th percentile, respectively, means the Bank outperformed 89% and 79%, respectively, of peer banks on those measures. Non-interest expense to average assets in the sixth percentile means only 6% of peer banks have lower non-interest expense relative to their average assets. Efficiency ratio in the fifth percentile means only 5% of peer banks have lower expenses relative to their revenues. Source: Uniform Bank Performance Report (UBPR) as of March 31, 2023; data retrieved May 4, 2023. Note: Peer group is all insured commercial banks (207) having assets between $3 billion and $10 billion for the quarter ended March 31, 2023. Second Quarter 2023 Investor Presentation | 11

Loans and Credit Quality Second Quarter 2023 Investor Presentation | 12

To ta l L oa ns (M ill io ns ) $960 $1,180 $1,355 $1,912 $2,079 $2,381 $2,583 $2,791 $2,870 $2,927 $148 $22 $2 5.28% 5.45% 4.96% 4.82% 4.53% 4.48% 4.75% 5.12% 5.36% 5.50% Non-PPP Loans PPP Loans Average Loan Yield Average Loan Yield Excluding PPP Loans 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Consistent Loan Growth Second Quarter 2023 Investor Presentation | 13 Note: Loan balances are end of period loans held for investment. Yields are based on average balance and annualized quarterly interest income. 1. CAGR is based upon balances as of June 30, 2023. 2. A reconciliation of this non-GAAP measure is set forth in the appendix. (2) CAGR (1) 5 years Total Loans 28.11 %

Loan Portfolio Composition Second Quarter 2023 Investor Presentation | 14 Commercial real estate 85.7% Commercial land and development 0.5% Commercial construction 3.4% Residential construction 0.5% Residential 0.8% Farmland 1.8% Secured 5.4% Unsecured 0.8% PPP 0.0% Consumer and other 1.1% Types of collateral securing commercial real estate ("CRE") loans Loan Balance ($000s) # of Loans % of CRE Manufactured home community $ 746,665 350 29.72 % RV Park 318,464 102 12.67 % Retail 267,518 85 10.65 % Multifamily 203,035 92 8.08 % Industrial 174,518 128 6.95 % Faith-based 170,987 95 6.80 % Mini storage 158,539 43 6.31 % Office 133,563 89 5.32 % All other types (1) 339,452 156 13.50 % Total $ 2,512,741 1,140 100.00 % Note: Balances are net book value as of period end, before allowance for credit losses, before deferred loan fees, and exclude loans held for sale. 1. Types of collateral in “all other types” are those that individually make up less than 5% CRE concentration.

$747M $318M $268M $203M $175M $171M $159M $134M $339M $1,300M $549M $500M $411M $417M $443M $323M $290M $703M 62.68% 62.80% 57.47% 54.31% 51.77% 47.54% 56.52% 53.09% 58.02% Loan Balance Collateral Value Weighted Average Loan-to-Value Manufactured home community RV Park Retail Multifamily Industrial Faith-based Mini storage Office All other types $0M $250M $500M $750M $1,000M $1,250M $1,500M CRE Collateral Values Second Quarter 2023 Investor Presentation | 15 (1) Note: Balances are net book value as of period end, before allowance for credit losses, before deferred loan fees, and exclude loans held for sale. 1. Types of collateral in “all other types” are those that individually make up less than 5% CRE concentration.

Loan Portfolio Diversification We focus primarily on commercial lending, with an emphasis on commercial real estate. We offer a variety of loans to small and medium-sized businesses, professionals, and individuals, including commercial real estate, commercial land and construction, and farmland loans. To a lesser extent, we also offer residential real estate, construction real estate, and consumer loans. Second Quarter 2023 Investor Presentation | 16Note: Balances are net book value as of period end, before allowance for credit losses, before deferred loan fees, and exclude loans held for sale. Loans by Type Loans by Purpose Real Estate Loans by Geography CML Term CRE NOO, 37.2% CML Term Multifamily, 32.3% CML Term CRE OO, 16.0% CML Const CRE, 3.4% CML Secured, 3.1% SBA 7A Secured, 1.7% CML Term Ag RE, 1.8% Others, 4.5% CA, 58.0% TX, 6.3% AZ, 4.2% NV, 3.7% NC, 2.9% FL, 2.5% OR, 2.5% CO, 1.6% GA, 1.4% WI, 1.3% TN, 1.2% MI, 1.2% WA, 1.1% ID, 1.0% Other, 11.1% CRE Manufactured Home, 25.5% CRE Other, 14.1% CRE RV Park, 10.9% CRE Retail, 9.1% CRE Multifamily, 7.0% CRE Industrial, 6.0% CRE Faith Based, 5.8% CRE Mini Storage, 5.4% CRE Office, 4.6% Commercial Construction, 3.9% Commercial Other, 3.5% Commercial SBA 7A, 1.7% Commercial Term Loan, 1.3% Others, 1.2%

Loan Rollforward Second Quarter 2023 Investor Presentation | 17Note: Dollars are in millions. Beginning and ending balances are as of period end, before allowance for credit losses, including deferred loan fees, and exclude loans held for sale. Q4 2022 Q1 2023 Q2 2023 Beginning Balance $ 2,583 $ 2,791 $ 2,870 Originations 295 135 254 Payoffs and Paydowns (87) (56) (197) Ending Balance $ 2,791 $ 2,870 $ 2,927

Asset Quality Our primary objective is to maintain a high level of asset quality in our loan portfolio. In order to maintain our strong asset quality, we: – Place emphasis on our commercial portfolio, where we reevaluate risk assessments as a result of reviewing commercial property operating statements and borrower financials – Monitor payment performance, delinquencies, and tax and property insurance compliance – Design our practices to facilitate the early detection and remediation of problems within our loan portfolio – Employ the use of an outside, independent consulting firm to evaluate our underwriting and risk assessment process Second Quarter 2023 Investor Presentation | 18 Nonperforming Loan Trend Allowance for Credit Losses and Net Charge-off Trend Note: References to loans HFI are loans held for investment, which are the equivalent of total loans outstanding at each period end. References to average loans HFI are average loans held for investment during the period. $2.1M $0.8M $0.5M $0.6M $0.4M $0.4M $0.3M 0.22% 0.07% 0.03% 0.03% 0.01% 0.01% Nonperforming Loans Nonperforming Loans to Loans HFI 2018 2019 2020 2021 2022 Q1 2023 Q2 2023 1.21% 1.26% 1.48% 1.20% 1.02% 1.19% 1.16% 0.23% 0.21% 0.12% 0.04% 0.07% 0.01% 0.04% Allowance for Credit Losses to Loans HFI Net Charge-offs to Average Loans HFI 2018 2019 2020 2021 2022 Q1 2023 Q2 2023 0.01%

Allocation of Allowance for Credit Losses Second Quarter 2023 Investor Presentation | 19 (dollars in thousands) December 31, 2022 March 31, 2022 June 30, 2023 Allowance for Credit Losses Amount % of Total Amount % of Total Amount % of Total Real estate: Commercial $ 19,216 67.69 % $ 26,846 78.56 % $ 27,138 79.87 % Commercial land & development 54 0.19 % 224 0.66 % 181 0.53 % Commercial construction 645 2.27 % 1,423 4.16 % 1,194 3.51 % Residential construction 49 0.17 % 173 0.51 % 214 0.63 % Residential 175 0.62 % 179 0.52 % 150 0.44 % Farmland 644 2.27 % 217 0.64 % 232 0.68 % Total real estate loans 20,783 73.21 % 29,062 85.05 % 29,109 85.66 % Commercial: Secured 7,098 25.00 % 4,215 12.33 % 3,695 10.87 % Unsecured 116 0.41 % 150 0.44 % 206 0.61 % Total commercial loans 7,214 25.41 % 4,365 12.77 % 3,901 11.48 % Consumer and other 347 1.22 % 400 1.17 % 463 1.36 % Unallocated 45 0.16 % 345 1.01 % 511 1.50 % Total allowance for credit losses $ 28,389 100.00 % $ 34,172 100.00 % $ 33,984 100.00 %

Risk Grade Migration Second Quarter 2023 Investor Presentation | 20 Classified Loans (Loans Rated Substandard or Doubtful) (dollars in thousands) 2021 2022 Q1 2023 Q2 2023 Real estate: Commercial $ 9,256 $ 106 $ 102 $ — Commercial land & development — — — — Commercial construction — — — — Residential construction — — — — Residential 178 175 175 175 Farmland — — — — Commercial: Secured 1,180 123 118 112 Unsecured — — — — Consumer and other — 26 23 22 Total $ 10,614 $ 430 $ 418 $ 309 % o f L oa n Po rt fo lio O ut st an di ng , b y Ri sk G ra de 99.00% 99.20% 99.15% 99.17% 0.45% 0.78% 0.84% 0.82% 0.55% 0.02% 0.01% 0.01% Pass Watch Substandard Doubtful 2021 2022 Q1 2023 Q2 2023 Note: Loan portfolio outstanding is the total balance of loans outstanding at period end, before deferred loan fees, before allowance for credit losses, and exclude loans held for sale.

Deposit and Capital Overview Second Quarter 2023 Investor Presentation | 21

Government, 25.08% Other, 15.15% Commercial Real Estate and Construction, 12.94% Small to Medium Sized Business, 10.64% Practices and Professional Services, 10.23% MHC, 7.29% Nonprofit, 6.98% Healthcare, 6.35% Faith Based, 2.20% Venture Banking, 1.89%Agriculture and Ag-Tech, 0.77% SBA and Wholesale Partners, 0.48% Deposit Composition 8.96 Years Average Age of Relationships > $5 million Note: Balances are end of period and include time and wholesale deposits. 1. Types of accounts in “Other” are individuals, trusts, estates, and market verticals that individually make up less than 0.4% of all deposits. 2. Local Agency Depositors includes State of California. $265,000 Average Deposit Account Balance Relationships > $5 million, 61.78% Relationships ≤ $5 million, 38.22% Total Deposits by Relationship Size Local Agency BreakoutTotal Deposits by Market Vertical Local Agency Depositors, 24.91% All Other Depositors, 75.09% Second Quarter 2023 Investor Presentation | 22 (2) (1)

Diversified Funding Second Quarter 2023 Investor Presentation | 23 Total Deposits(1) = $2.9 billion 93.5% of Total Liabilities Liability Mix 1. Balance as of June 30, 2023. 2. Loan balance in loan to deposit ratio is total loans held for investment and sale at period end. Loan(2) to Deposit Ratio Non-Interest-Bearing Deposits to Total Deposits 83.2% 90.5% 84.5% 85.1% 100.7% 98.7% 100.2% 2018 2019 2020 2021 2022 Q1 2023 Q2 2023 29.0% 29.6% 39.3% 39.5% 34.9% 28.6% 28.5% 2018 2019 2020 2021 2022 Q1 2023 Q2 2023 Money Market, 44.0% Non-Interest-Bearing Demand, 26.6% Time Deposits, 12.1% Interest-Bearing Demand, 6.6% Borrowings & Subordinated Debt, 5.5% Savings, 4.2% Other Liabilities, 1.0%

$1.2B $1.3B $1.8B $2.3B $2.8B $2.9B $2.9B $600M $708M $889M $1,001M $1,228M $1,437M $1,510M$337M $389M $701M $902M $971M $837M $834M $124M $119M $146M $279M $240M $274M $208M $100M $97M $48M $104M $343M $373M $378M Money Market & Savings Non-Interest-Bearing Demand Interest-Bearing Demand Time Deposits 2018 2019 2020 2021 2022 Q1 2023 Q2 2023 Strong Deposit Growth Second Quarter 2023 Investor Presentation | 24 Note: Balances are end of period. Cost of total deposits is based on total average balance of interest-bearing and non-interest-bearing deposits and annualized quarterly deposit interest expense. 1. CAGR is based upon balances as of June 30, 2023. Cost of Total Deposits 0.55% 0.81% 0.44% 0.11% 0.43% 1.35% 1.92% CAGR (1) 5 years Total Deposits 22.83 %

Capital Ratios Second Quarter 2023 Investor Presentation | 25 Tier 1 Leverage Ratio Tier 1 Capital to RWA Total Capital to RWA Common Equity Tier 1 to RWA Note: References to RWA are risk-weighted assets. 6.81% 7.51% 6.58% 9.47% 8.60% 8.67% 2018 2019 2020 2021 2022 Q2 2023 7.48% 8.21% 8.98% 11.44% 8.99% 9.07% 2018 2019 2020 2021 2022 Q2 2023 7.48% 8.21% 8.98% 11.44% 8.99% 9.07% 2018 2019 2020 2021 2022 Q2 2023 10.79% 11.52% 12.18% 13.98% 12.46% 12.45% 2018 2019 2020 2021 2022 Q2 2023

Financial Results Second Quarter 2023 Investor Presentation | 26

Earnings Track Record Second Quarter 2023 Investor Presentation | 27 $14.5M $16.3M $18.8M $20.0M $19.4M $18.4M $13.5M $14.0M $16.5M $18.8M $18.5M $17.2M Pre-tax, pre-provision income Pre-tax income Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 $0.0M $2.5M $5.0M $7.5M $10.0M $12.5M $15.0M $17.5M $20.0M $22.5M 1. A reconciliation of this non-GAAP measure is set forth in the appendix. (1)

Operating Metrics Second Quarter 2023 Investor Presentation | 28 Efficiency RatioNet Interest Margin 3.93% 3.98% 3.68% 3.64% 3.75% 3.59% 2018 2019 2020 2021 2022 2023 YTD 42.27% 38.63% 37.92% 42.46% 36.90% 37.92% 2018 2019 2020 2021 2022 2023 YTD Note: All 2023 figures are through June 30, 2023. Total Income Before Taxes $23.4M $30.4M $37.3M $47.1M $62.9M $35.7M 2018 2019 2020 2021 2022 2023 YTD

Non-interest Income and Expense Comparison Second Quarter 2023 Investor Presentation | 29 (dollars in thousands) For the three months ended 6/30/2023 3/31/2023 6/30/2022 Non-interest Income Service charges on deposit accounts $ 135 $ 117 $ 130 Gain on sale of loans 641 598 831 Loan-related fees 389 308 757 FHLB stock dividends 189 193 99 Earnings on bank-owned life insurance 126 102 101 Other income 1,340 53 41 Total non-interest income $ 2,820 $ 1,371 $ 1,959 Non-interest Expense Salaries and employee benefits $ 6,421 $ 6,618 $ 5,553 Occupancy and equipment 551 523 513 Data processing and software 1,013 872 739 Federal Deposit Insurance Corporation insurance 410 402 245 Professional services 586 631 568 Advertising and promotional 733 418 484 Loan-related expenses 324 255 389 Other operating expenses 1,941 1,399 1,714 Total non-interest expense $ 11,979 $ 11,118 $ 10,205

Shareholder Returns Second Quarter 2023 Investor Presentation | 30 ROAA ROAE EPS (basic and diluted) Value per Share (book and tangible book(1)) Note: All 2023 figures are through June 30, 2023. 1. A reconciliation of this non-GAAP measure is set forth in the appendix. 1.99% 2.15% 1.95% 1.86% 1.57% 1.60% 2018 2019 2020 2021 2022 2023 YTD 29.28% 31.40% 31.16% 22.49% 18.80% 20.09% 2018 2019 2020 2021 2022 2023 YTD $3.08 $3.40 $3.57 $2.83 $2.61 $1.51 2018 2019 2020 2021 2022 2023 YTD $10.88 $11.25 $12.16 $13.65 $14.66 $15.60 2018 2019 2020 2021 2022 2023

Five Star Bank proudly supports women in business and those serving our region’s most vulnerable. Our customers advocate for communities, drive collaboration, and foster responsive, community-based programs that promote healthy relationships while supporting survivors of sexual assault, domestic violence, and human trafficking. Our clients are change- agents who inspire, motivate, and uplift those who need us most. Ashlie Bryant, Co-Founder and CEO, 3Strands Global Foundation Beth Hassett, CEO and Executive Director, WEAVE Staci Anderson, President and CEO, PRO Youth and Families Five Star Bank customer Capital College & Career Academy ("CCCA") provides real-world learning opportunities, ensuring students graduate with the skills and certifications needed to become change-makers in their communities. Together, we can make a difference in the lives of the next generation of leaders in the Sacramento region. Anamanu Fotofili, Student, CCCA Kevin Dobson, Founder and Executive Director, CCCA Dylan Newman, Student, CCCA Five Star Bank supports our customer, Street Soccer USA ("SSUSA") and their mission to fight poverty and strengthen communities through soccer. SSUSA serves youth and special needs populations including families experiencing homelessness, adults recovering from addiction/ substance abuse, and mental health diagnoses. SSUSA is the official partner of the Homeless World Cup and Street Child World Cup. We share their mission to fight poverty and strengthen others as they encourage positive changes in their players' lives. Sienna Jackson, Homeless World Cup 2023 Sacramento, California – Team USA Lisa Wrightsman, Managing Director, SSUSA and Homeless World Cup 2010 Rio De Janeiro, Brazil – Team USA Angela Draws, Homeless World Cup 2014 Santiago, Chile – Team USA We strive to become the top business bank in all markets we serve through exceptional service, deep connectivity, and customer empathy. We are dedicated to serving real estate, agricultural, faith-based, and small to medium-sized enterprises. We aim to consistently deliver value that meets or exceeds the expectations of our shareholders, customers, employees, business partners, and community.

Appendix: Non-GAAP Reconciliation (Unaudited) The Company uses financial information in its analysis of the Company's performance that is not in conformity with GAAP. The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations, and cash flows computed in accordance with GAAP. However, the Company acknowledges that its non-GAAP financial measures have a number of limitations. As such, investors should not view these disclosures as a substitute for results determined in accordance with GAAP. Additionally, these non-GAAP measures are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses but may calculate them differently. Investors should understand how the Company and other companies each calculate their non- GAAP financial measures when making comparisons. Average loan yield, excluding PPP loans, is defined as the daily average loan yield, excluding PPP loans, and includes both performing and nonperforming loans. The most directly comparable GAAP financial measure is average loan yield. Total assets, excluding PPP loans, is defined as total assets less PPP loans. The most directly comparable GAAP financial measure is total assets. Pre-tax, pre-provision income is defined as net income plus provision for income taxes and provision for credit losses. The most directly comparable GAAP financial measure is pre-tax net income. Tangible book value per share is defined as total shareholders’ equity less goodwill and other intangible assets, divided by the outstanding number of common shares at the end of the period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible book value per share is the same as book value per share at the end of each of the periods indicated. Second Quarter 2023 Investor Presentation | 32 (dollars in thousands) For the year ended For the three months ended Average loan yield, excluding PPP loans 12/31/2020 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 Interest and fee income on loans $ 71,405 $ 78,894 $ 22,112 $ 24,879 $ 29,886 $ 34,918 $ 37,494 $ 39,929 Less: interest and fee income on PPP loans 6,535 7,417 610 25 — — — — Interest and fee income on loans, excluding PPP loans 64,870 71,477 21,502 24,854 29,886 34,918 37,494 39,929 Annualized interest and fee income on loans, excluding PPP loans (numerator) 64,870 71,477 87,200 99,689 118,569 138,533 152,059 160,155 Average loans held for investment and sale 1,439,380 1,637,280 1,977,509 2,227,215 2,494,468 2,703,865 2,836,070 2,914,388 Less: average PPP loans 165,414 116,652 8,886 427 — — — — Average loans held for investment and sale, excluding PPP loans (denominator) 1,273,966 1,520,628 1,968,623 2,226,788 2,494,468 2,703,865 2,836,070 2,914,388 Average loan yield, excluding PPP loans 5.09 % 4.70 % 4.43 % 4.48 % 4.75 % 5.12 % 5.36 % 5.50 %

Appendix: Non-GAAP Reconciliation (Unaudited) Second Quarter 2023 Investor Presentation | 33 (dollars in millions) Total assets, excluding PPP loans 12/31/2020 12/31/2021 12/31/2022 3/31/2023 6/30/2023 Total assets $ 1,954 $ 2,557 $ 3,227 $ 3,397 $ 3,403 Less: PPP loans 148 22 — — — Total assets, excluding PPP loans $ 1,806 $ 2,535 $ 3,227 $ 3,397 $ 3,403 (dollars in millions) Three months ended Pre-tax, pre-provision income 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 Net income $ 9,862 $ 9,953 $ 11,704 $ 13,282 $ 13,161 $ 12,729 Add: provision for income taxes 3,660 4,080 4,830 5,487 5,340 4,440 Add: provision for credit losses 950 2,250 2,250 1,250 900 1,250 Pre-tax, pre-provision income $ 14,472 $ 16,283 $ 18,784 $ 20,019 $ 19,401 $ 18,419