0001275168-23-000132 | 10-Q | XBRL Viewer

Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2023

Fair Value Hierarchy and Fair Value Measurement

Accounting standards require the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The following table summarizes the Company’s assets and liabilities that were required to be recorded at fair value on a recurring basis.


(in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Measurement Categories: Changes in Fair Value Recorded In
September 30, 2023
Assets:
Securities available-for-sale:
U.S. government agencies, mortgage-backed securities, obligations of states and political subdivisions, collateralized mortgage obligations, and corporate bonds	$	104,086	$	—	$	104,086	$	—	OCI
Derivatives – interest rate swap	5		—		5		—		NI
Liabilities:
Derivatives – interest rate swap	5		—		5		—		NI

December 31, 2022
Assets:
Securities available-for-sale:
U.S. government agencies, mortgage-backed securities, obligations of states and political subdivisions, collateralized mortgage obligations, and corporate bonds	$	115,988	$	—	$	115,988	$	—	OCI
Derivatives – interest rate swap	16		—		16		—		NI
Liabilities:
Derivatives – interest rate swap	16		—		16		—		NI

Available-for-sale securities are recorded at fair value on a recurring basis. When available, quoted market prices (Level 1 inputs) are used to determine the fair value of available-for-sale securities. If quoted market prices are not available, management obtains pricing information from a reputable third-party service provider, who may utilize valuation techniques that use current market-based or independently sourced parameters, such as bid/ask prices, dealer-quoted prices, interest rates, benchmark yield curves, prepayment speeds, probability of default, loss severity, and credit spreads (Level 2 inputs). Level 2 securities include U.S. agencies’ or government-sponsored agencies’ debt securities, mortgage-backed securities, government agency-issued bonds, privately issued collateralized mortgage obligations, and corporate bonds. Level 3 securities are based on unobservable inputs that are supported by little or no market activity. In addition, values use discounted cash flow models and may include significant management judgment and estimation. As of September 30, 2023 and December 31, 2022, there were no Level 1 available-for-sale securities and no transfers between Level 1 and Level 2 classifications for assets or liabilities measured at fair value on a recurring basis.

On a recurring basis, derivative financial instruments are recorded at fair value, which is based on the income approach using observable Level 2 market inputs, reflecting market expectations of future interest rates as of the measurement date. Standard valuation techniques are used to calculate the present value of the future expected cash flows assuming an orderly transaction. Valuation adjustments may be made to reflect both the Company’s credit risk and the counterparties’ credit risk in determining the fair value of the derivatives. A similar credit risk adjustment, correlated to the credit standing of the counterparty, is made when collateral posted by the counterparty does not fully cover their liability to the Company.

Certain financial assets may be measured at fair value on a non-recurring basis. These assets are subject to fair value adjustments that result from the application of the lower of cost or fair value accounting or write-downs of individual assets, such as collateral dependent loans and other real estate owned. As of September 30, 2023 and December 31, 2022, the carrying amount of assets measured at fair value on a non-recurring basis was immaterial to the Company.

Disclosures about Fair Value of Financial Instruments

The table below is a summary of fair value estimates for financial instruments as of September 30, 2023 and December 31, 2022. The carrying amounts in the following table are recorded in the consolidated balance sheets under the indicated captions. Further, management has not disclosed the fair value of financial instruments specifically excluded from disclosure requirements, such as BOLI.


	September 30, 2023					December 31, 2022
(in thousands)	Carrying Amounts		Fair Value		Fair Value Hierarchy	Carrying Amounts		Fair Value		Fair Value Hierarchy
Financial assets:
Cash and cash equivalents	$	323,548	$	323,548	Level 1	$	259,991	$	259,991	Level 1
Time deposits in banks	6,971		6,971		Level 1	9,849		9,849		Level 1
Securities available-for-sale	104,086		104,086		Level 2	115,988		115,988		Level 2
Securities held-to-maturity	3,104		2,811		Level 3	3,756		3,432		Level 3
Loans held for sale	9,326		10,286		Level 2	9,416		9,785		Level 2
Loans held for investment, net of allowance for credit losses	2,975,902		2,773,007		Level 3	2,762,937		2,570,176		Level 3
FHLB stock and other investments	21,693		N/A		N/A	16,570		N/A		N/A
Interest rate swap	5		5		Level 2	16		16		Level 2
Financial liabilities:
Interest rate swap	$	5	$	5	Level 2	$	16	$	16	Level 2
FHLB advances	90,000		90,000		Level 2	100,000		100,000		Level 2
Subordinated notes	73,713		72,632		Level 3	73,606		72,273		Level 3

The following methods and assumptions were used by the Company to estimate the fair value of its financial instruments at September 30, 2023 and December 31, 2022:

Cash and cash equivalents and time deposits in banks: The carrying amount is estimated to be fair value due to the liquid nature of the assets and their short-term maturities.

Investment securities: See discussion above for the methods and assumptions used by the Company to estimate the fair value of investment securities. Fair value of held-to-maturity securities is estimated by calculating the net present value of future cash flows based on observable market data, such as interest rates and yield curves (observable at commonly quoted intervals) as provided by an independent third party.

Loans held for sale: For loans held for sale, the fair value is based on what secondary markets are currently offering for portfolios with similar characteristics.

Loans held for investment, net of allowance for credit losses: For variable rate loans that reprice frequently with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, which use interest rates being offered at each reporting date for loans with similar terms to borrowers of comparable creditworthiness without considering widening credit spreads due to market illiquidity, which approximates the exit price notion. The allowance for credit losses is considered to be a reasonable estimate of loan discount for credit quality concerns.

FHLB stock and other investments: Carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks and do not have a readily determinable market value.

Derivatives - interest rate swap: See above for a discussion of the methods and assumptions used by the Company to estimate the fair value of derivatives.

FHLB advances: For FHLB advances, the carrying amount is estimated to be fair value.

Subordinated notes: The fair value is estimated by discounting the future cash flow using the current three-month CME Term SOFR. The Company’s subordinated notes are not registered securities and were issued through private placements, resulting in a Level 3 classification. The notes are recorded at carrying value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Interest Bearing Deposits - Composition of Network Deposits (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Interest Bearing Deposits [Line Items]
Total network deposits	$ 705,525	$ 285,967
CDARS
Interest Bearing Deposits [Line Items]
Total network deposits	15,542	13,248
ICS
Interest Bearing Deposits [Line Items]
Total network deposits	$ 689,983	$ 272,719

Loans and Allowance for Credit Losses - Balance of Each Major Product Type (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Jan. 01, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Past Due [Line Items]
Subtotal	$ 3,012,195			$ 2,793,466
Net deferred loan fees	(2,265)			(2,140)
Allowance for credit losses - loans	(34,028)	$ (33,984)	$ (28,389)	(28,389)	$ (27,838)	$ (25,786)	$ (23,243)
Loans held for investment, net of allowance for credit losses	2,975,902			2,762,937
Commercial
Financing Receivable, Past Due [Line Items]
Subtotal	2,599,616			2,394,674
Allowance for credit losses - loans	(27,901)	(27,553)		(19,216)	(18,309)	(16,621)	(12,869)
Commercial land and development
Financing Receivable, Past Due [Line Items]
Subtotal	15,482			7,477
Allowance for credit losses - loans	(198)	(184)		(54)	(98)	(68)	(50)
Commercial construction
Financing Receivable, Past Due [Line Items]
Subtotal	95,352			88,669
Allowance for credit losses - loans	(1,220)	(1,212)		(645)	(546)	(508)	(371)
Residential construction
Financing Receivable, Past Due [Line Items]
Subtotal	13,922			6,693
Allowance for credit losses - loans	(115)	(217)		(49)	(41)	(51)	(50)
Residential
Financing Receivable, Past Due [Line Items]
Subtotal	25,028			24,230
Allowance for credit losses - loans	(151)	(152)		(175)	(175)	(188)	(192)
Farmland
Financing Receivable, Past Due [Line Items]
Subtotal	51,921			52,478
Allowance for credit losses - loans	(393)	(236)		(644)	(664)	(616)	(645)
Secured
Financing Receivable, Past Due [Line Items]
Subtotal	157,273			165,186
Allowance for credit losses - loans	(3,461)	(3,751)		(7,098)	(6,362)	(6,284)	(6,859)
Unsecured
Financing Receivable, Past Due [Line Items]
Subtotal	23,997			25,431
Allowance for credit losses - loans	(213)	(209)		(116)	(278)	(265)	(207)
Consumer and other
Financing Receivable, Past Due [Line Items]
Subtotal	29,604			28,628
Allowance for credit losses - loans	$ (376)	$ (470)		$ (347)	$ (536)	$ (537)	$ (889)

Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Loans and Allowance for Credit Losses

The Company’s loan portfolio is its largest class of earning assets and typically provides higher yields than other types of earning assets. Associated with the higher yields is an inherent amount of credit risk which the Company attempts to mitigate through strong underwriting practices. The following table presents the balance of each major product type within the Company’s portfolio as of the dates indicated.


(in thousands)	September 30, 2023		December 31, 2022
Real estate:
Commercial	$	2,599,616	$	2,394,674
Commercial land and development	15,482		7,477
Commercial construction	95,352		88,669
Residential construction	13,922		6,693
Residential	25,028		24,230
Farmland	51,921		52,478
Commercial:
Secured	157,273		165,186
Unsecured	23,997		25,431

Consumer and other	29,604		28,628
Subtotal	3,012,195		2,793,466
Net deferred loan fees	(2,265)		(2,140)
Allowance for credit losses	(34,028)		(28,389)
Loans held for investment, net of allowance for credit losses	$	2,975,902	$	2,762,937

Underwriting

Commercial loans: Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, the Company’s management examines current and projected cash flows to determine the ability of the borrower to repay its obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily, on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Real estate loans: Real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected than other loans by conditions in the real estate market or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria.

Construction loans: With respect to construction loans that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent

on the ultimate success of the project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property, or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored using on-site inspections and are generally considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

Residential real estate loans: Residential real estate loans are underwritten based upon the borrower’s income, credit history, and collateral. To monitor and manage residential loan risk, policies and procedures are developed and modified, as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Underwriting standards for home loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage, collection remedies, the number of such loans a borrower can have at one time, and documentation requirements.

Farmland loans: Farmland loans are generally made to producers and processors of crops and livestock. Repayment is primarily from the sale of an agricultural product or service. Farmland loans are secured by real property and are susceptible to changes in market demand for specific commodities. This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions, and changes in business cycles, as well as adverse weather conditions.

Consumer loans: The Company purchased consumer loans underwritten utilizing credit scoring analysis to supplement the underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Underwriting standards for home equity loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage, collection remedies, the number of such loans a borrower can have at one time, and documentation requirements.

Credit Quality Indicators

The Company has established a loan risk rating system to measure and monitor the quality of the loan portfolio. All loans are assigned a risk rating from the inception of the loan until the loan is paid off. The primary loan grades are as follows:

Loans rated pass: These are loans to borrowers with satisfactory financial support, repayment capacity, and credit strength. Borrowers in this category demonstrate fundamentally sound financial positions, repayment capacity, credit history, and management expertise. Loans in this category must have an identifiable and stable source of repayment and meet the Company’s policy regarding debt service coverage ratios. These borrowers are capable of sustaining normal economic, market, or operational setbacks without significant financial impacts and their financial ratios and trends are acceptable. Negative external industry factors are generally not present. The loan may be secured, unsecured, or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain.

Loans rated watch: These are loans which have deficient loan quality and potentially significant issues, but losses do not appear to be imminent, and the issues are expected to be temporary in nature. The significant issues are typically: (i) a history of losses or events that threaten the borrower’s viability; (ii) a property with significant depreciation and/or marketability concerns; or (iii) poor or deteriorating credit, occasional late payments, and/or limited reserves but the loan is generally kept current. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

Loans rated substandard: These are loans which are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged (if any). Loans so classified exhibit a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected.

Loans rated doubtful: These are loans for which the collection or liquidation of the entire debt is highly questionable or improbable. Typically, the possibility of loss is extremely high. The losses on these loans are deferred until all pending factors have been addressed.

The amortized cost basis of the Company’s loans by origination year, where origination is defined as the later of origination or renewal date, and credit quality indicator as of September 30, 2023 was as follows (disclosure not comparative due to adoption of ASC 326 on January 1, 2023 – refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, for further details):


	Amortized Cost Basis by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Converted to Term		Total
Real estate:
Commercial
Pass	$	251,745	$	987,248	$	712,268	$	239,894	$	124,560	$	248,634	$	4,144	$	—	$	2,568,493
Watch	—		2,722		5,691		7,132		5,364		5,614		—		—		26,523
Substandard	—		—		—		—		—		1,920		—		—		1,920
Doubtful	—		—		—		—		—		—		—		—		—
Total	251,745		989,970		717,959		247,026		129,924		256,168		4,144		—		2,596,936
Commercial land and development
Pass	10,376		4,141		—		186		—		752		—		—		15,455
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	10,376		4,141		—		186		—		752		—		—		15,455
Commercial construction
Pass	2,692		33,946		41,889		10,530		—		—		—		—		89,057
Watch	—		—		—		—		—		5,897		—		—		5,897
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	2,692		33,946		41,889		10,530		—		5,897		—		—		94,954
Residential construction
Pass	—		8,162		5,750		—		—		—		—		—		13,912
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	—		8,162		5,750		—		—		—		—		—		13,912
Residential
Pass	3,606		3,998		6,292		2,298		1,187		6,085		1,591		—		25,057
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	3,606		3,998		6,292		2,298		1,187		6,085		1,591		—		25,057
Farmland
Pass	1,887		8,044		12,767		8,015		12,581		8,600		4		—		51,898
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	1,887		8,044		12,767		8,015		12,581		8,600		4		—		51,898
Commercial:
Secured
Pass	20,091		44,970		18,656		13,206		10,668		11,384		37,613		—		156,588
Watch	—		—		37		31		157		896		—		—		1,121
Substandard	—		—		—		—		49		30		—		—		79
Doubtful	—		—		—		—		—		—		—		—		—
Total	20,091		44,970		18,693		13,237		10,874		12,310		37,613		—		157,788


	Amortized Cost Basis by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Converted to Term		Total
Commercial:
Unsecured
Pass	3,081		3,869		5,068		6,157		2,339		20		3,475		—		24,009
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	3,081		3,869		5,068		6,157		2,339		20		3,475		—		24,009
Consumer and other
Pass	7,977		12,585		8,997		5		—		320		—		—		29,884
Watch	—		16		—		—		—		—		—		—		16
Substandard	—		21		—		—		—		—		—		—		21
Doubtful	—		—		—		—		—		—		—		—		—
Total	7,977		12,622		8,997		5		—		320		—		—		29,921
Total
Pass	301,455		1,106,963		811,687		280,291		151,335		275,795		46,827		—		2,974,353
Watch	—		2,738		5,728		7,163		5,521		12,407		—		—		33,557
Substandard	—		21		—		—		49		1,950		—		—		2,020
Doubtful	—		—		—		—		—		—		—		—		—
Total	$	301,455	$	1,109,722	$	817,415	$	287,454	$	156,905	$	290,152	$	46,827	$	—	$	3,009,930

Management regularly reviews the Company’s loans for accuracy of risk grades whenever new information is received. Borrowers are generally required to submit financial information at regular intervals. Typically, commercial borrowers with lines of credit are required to submit financial information with reporting intervals ranging from monthly to annually depending on credit size, risk, and complexity. In addition, investor commercial real estate borrowers with loans exceeding a certain dollar threshold are usually required to submit rent rolls or property income statements annually. Management monitors construction loans monthly and reviews consumer loans based on delinquency. Management also reviews loans graded “watch” or worse, regardless of loan type, no less than quarterly.

The age analysis of past due loans by class as of September 30, 2023 consisted of the following:


(in thousands)	Past Due
	30-59 Days		60-89 Days		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable
Real estate:
Commercial	$	—	$	—	$	—	$	—	$	2,596,936	$	2,596,936
Commercial land and development	—		—		—		—		15,455		15,455
Commercial construction	—		—		—		—		94,954		94,954
Residential construction	—		—		—		—		13,912		13,912
Residential	—		—		—		—		25,057		25,057
Farmland	—		—		—		—		51,898		51,898
Commercial:
Secured	—		—		—		—		157,788		157,788
Unsecured	—		—		—		—		24,009		24,009

Consumer and other	156		—		—		156		29,765		29,921
Total	$	156	$	—	$	—	$	156	$	3,009,774	$	3,009,930

There were no loans greater than 90 days past due and still accruing interest income as of September 30, 2023.

The age analysis of past due loans by class as of December 31, 2022 consisted of the following:


(in thousands)	Past Due						Total Past Due		Current		Total Loans Receivable
	30-59 Days		60-89 Days		Greater Than 90 Days
Real estate:
Commercial	$	—	$	—	$	—	$	—	$	2,392,053	$	2,392,053
Commercial land and development	—		—		—		—		7,447		7,447
Commercial construction	—		—		—		—		88,314		88,314
Residential construction	—		—		—		—		6,693		6,693
Residential	—		175		—		175		24,088		24,263
Farmland	—		—		—		—		52,446		52,446
Commercial:
Secured	—		—		—		—		165,609		165,609
Unsecured	—		—		—		—		25,488		25,488

Consumer and other	194		—		—		194		28,819		29,013
Total	$	194	$	175	$	—	$	369	$	2,790,957	$	2,791,326

There were no loans greater than 90 days past due and still accruing interest income as of December 31, 2022.

No collateral dependent loans were in process of foreclosure at September 30, 2023.

Non-accrual loans, segregated by class, were as follows as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Real estate:
Commercial	$	1,923	$	106
Residential	—		175
Commercial:
Secured	79		123

Total non-accrual loans	$	2,002	$	404

No interest income was recognized on non-accrual loans in the three and nine months ended September 30, 2023 or September 30, 2022. Non-accrual real estate loans did not have an allowance for credit losses as of September 30, 2023. Interest income can be recognized on non-accrual loans in cases where resolution occurs through a sale or full payment is received on the non-accrual loan.

The amount of foregone interest income related to non-accrual loans was $27.1 thousand and $62.3 thousand for the three and nine months ended September 30, 2023, respectively, compared to $6.9 thousand and $32.0 thousand for the three and nine months ended September 30, 2022, respectively.

Allowance for Credit Losses

The following table discloses activity in the allowance for credit losses for the three months ended September 30, 2023.


(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Real estate:
Commercial	$	27,553	$	—	$	—	$	348	$	27,901
Commercial land and development	184		—		—		14		198
Commercial construction	1,212		—		—		8		1,220
Residential construction	217		—		—		(102)		115
Residential	152		—		—		(1)		151
Farmland	236		—		—		157		393
Commercial:
Secured	3,751		(1,245)		219		736		3,461
Unsecured	209		—		—		4		213

Consumer and other	470		(187)		207		(114)		376

Total	$	33,984	$	(1,432)	$	426	$	1,050	$	34,028

The following table discloses activity in the allowance for credit losses for the three months ended September 30, 2022.


(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Real estate:
Commercial	$	16,621	$	—	$	—	$	1,688	$	18,309
Commercial land and development	68		—		—		30		98
Commercial construction	508		—		—		38		546
Residential construction	51		—		—		(10)		41
Residential	188		—		—		(13)		175
Farmland	616		—		—		48		664
Commercial:
Secured	6,284		(346)		68		356		6,362
Unsecured	265		(2)		—		15		278
PPP	—		—		21		(21)		—
Consumer and other	537		(182)		243		(62)		536
Unallocated	648		—		—		181		829
Total	$	25,786	$	(530)	$	332	$	2,250	$	27,838

The following table discloses activity in the allowance for credit losses for the nine months ended September 30, 2023.


(in thousands)	Beginning Balance		Effect of Adoption of ASC 326		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Real estate:
Commercial	$	19,216	$	7,606	$	—	$	—	$	1,079	$	27,901
Commercial land and development	54		74		—		—		70		198
Commercial construction	645		882		—		—		(307)		1,220
Residential construction	49		81		—		—		(15)		115
Residential	175		3		—		—		(27)		151
Farmland	644		(396)		—		—		145		393
Commercial:
Secured	7,098		(3,060)		(2,856)		358		1,921		3,461
Unsecured	116		37		—		—		60		213

Consumer and other	347		80		(709)		714		(56)		376
Unallocated	45		(45)		—		—		—		—
Total	$	28,389	$	5,262	$	(3,565)	$	1,072	$	2,870	$	34,028

The following table discloses activity in the allowance for credit losses for the nine months ended September 30, 2022.


(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Real estate:
Commercial	$	12,869	$	—	$	—	$	5,440	$	18,309
Commercial land and development	50		—		—		48		98
Commercial construction	371		—		—		175		546
Residential construction	50		—		—		(9)		41
Residential	192		—		—		(17)		175
Farmland	645		—		—		19		664
Commercial:
Secured	6,859		(928)		152		279		6,362
Unsecured	207		(2)		—		73		278
PPP	—		(21)		21		—		—
Consumer and other	889		(508)		431		(276)		536
Unallocated	1,111		—		—		(282)		829
Total	$	23,243	$	(1,459)	$	604	$	5,450	$	27,838

Unfunded Loan Commitment Reserves

Unfunded loan commitment reserves are included in “Interest payable and other liabilities” in the unaudited consolidated balance sheets. Provisions for unfunded loan commitments are included in “Provision for credit losses” in the unaudited consolidated statements of income. Prior to adoption of ASC 326, provisions for unfunded loan commitments were included in “Other operating expenses” in the unaudited consolidated statements of income.


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Balance at beginning of period	$	1,547	$	125	$	125	$	102
Effect of adoption of ASC 326	—		—		1,092		—
Provision	—		—		330		23


Balance at end of period	$	1,547	$	125	$	1,547	$	125

Pledged Loans

The Company’s FHLB line of credit is secured under terms of a collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $1.7 billion and $1.6 billion at September 30, 2023 and December 31, 2022, respectively. In addition, the Company pledges eligible tenants in common loans, which totaled $39.3 million and $41.9 million at September 30, 2023 and December 31, 2022, respectively, to secure its borrowing capacity with the Federal Reserve Bank of San Francisco. See Note 6, Long Term Debt and Other Borrowings, for further discussion of these borrowings.

Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

(a) Organization

Five Star Bank (the “Bank”) was chartered on October 26, 1999 and began operations on December 20, 1999. Five Star Bancorp (“Bancorp” or the “Company”) was incorporated on September 16, 2002 and subsequently obtained approval from the Federal Reserve to be a bank holding company in connection with its acquisition of the Bank. The Company became the sole shareholder of the Bank on June 2, 2003 in a statutory merger, pursuant to which each outstanding share of the Bank’s common stock was exchanged for one share of common stock of the Company.

The Company, through the Bank, provides financial services to customers who are predominately small and middle-market businesses, professionals, and individuals residing in the Northern California region. The Company’s primary loan products are commercial real estate loans, land development loans, construction loans, and operating lines of credit, and its primary deposit products are checking accounts, savings accounts, money market accounts, and term certificate accounts. The Bank currently has seven branch offices in Roseville, Natomas, Rancho Cordova, Redding, Elk Grove, Chico, and Yuba City, and one loan production office in Sacramento.

(b) Basis of Financial Statement Presentation and Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as contained within the Financial Accounting Standards Board’s (“FASB”) ASC and the rules and regulations of the SEC, including the instructions to Regulation S-X. These interim unaudited consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments and accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in shareholders’ equity, and cash flows for the interim periods presented. These unaudited consolidated financial statements have been prepared on a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as of and for the year ended December 31, 2022, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report on Form 10-K”), which was filed with the SEC on February 24, 2023.

The unaudited consolidated financial statements include Bancorp and its wholly owned subsidiary, the Bank. All significant intercompany transactions and balances are eliminated in consolidation.

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2023.

The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry.

Certain amounts reported in previous consolidated financial statements have been reclassified to conform to current period presentation. These reclassifications did not affect previously reported amounts of net income, total assets, or total shareholders’ equity.

While the Company’s chief decision-makers monitor the revenue streams of the various products and services, operations are managed, and financial performance is evaluated, on a Company-wide basis. Discrete financial information is not available other than on a Company-wide basis. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

(d) Emerging Growth Company

The Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, and, as such, may take advantage of specified reduced reporting requirements and deferred accounting standards adoption dates, and is relieved of other significant requirements that are otherwise generally applicable to other public companies. The Company will remain an Emerging Growth Company for five years after its IPO date of May 5, 2021, unless one of the following occurs: (i) total annual gross revenues are $1.235 billion or more; (ii) the Company issues more than

$1 billion in non-convertible debt; or (iii) the Company becomes a large accelerated filer with a public float of more than $0.7 billion.

(e) Significant Accounting Policies

The Company’s significant accounting policies are included in Note 1, Basis of Presentation on the 2022 Annual Report on Form 10-K. There have been no changes to these significant accounting policies during the first nine months of 2023 other than adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and all subsequent amendments that modified ASU 2016-13 (collectively, “ASC 326”) as discussed below in this Note, which impacted the following policies:

Allowance for Credit Losses (“ACL”)

The ACL is a valuation account that offsets the amortized cost basis of loans receivable and certain other financial assets, including unfunded loan commitments and held-to-maturity debt securities. Under ASC 326, amortized cost basis is the basis on which the ACL is determined. Amortized cost basis on loans receivable is principal outstanding, net of any purchase premiums and discounts, and net of any deferred loan fees and costs.

Credit losses are charged off when management believes that the collectability of at least some portion of outstanding principal is unlikely. These charge-offs are recorded as a reversal to, thereby reducing, the allowance for credit losses. Subsequent recoveries of previously charged-off amounts, if any, are recorded as a provision to, thereby increasing, the allowance for credit losses. The allowance for credit losses is maintained at a level to absorb expected credit losses over the contractual life, including consideration of prepayments. Determining the adequacy of the allowance is complex and requires judgments that are inherently subjective, as it requires estimates that are susceptible to revision as additional information becomes available. While the Company has determined an allowance for credit losses it considers appropriate, there can be no assurance that the allowance will be sufficient to absorb future losses.

The Company’s process for determining expected lifetime credit losses entails a loan-level, model-based approach and considers a broad range of information, including historical loss experience, current conditions, and reasonable and supportable forecasts. Credit loss is estimated for all loans. Accordingly, the Company has stratified the full loan population into segments sharing similar characteristics to perform the evaluation of the credit loss collectively. The Company can also further stratify loans of similar types, risk attributes, and methods for credit risk monitoring.

The Company has determined pools based primarily on regulatory reporting codes as the loans within each pool share similar risk characteristics and there is sufficient historical peer loss data from the Federal Financial Institutions Examination Council to provide statistically meaningful support in the models developed. The Company further stratified the C&I portfolio into traditional C&I loans and SBA loans, as the loans in these pools have different repayment structures and credit risk characteristics. The Company also stratified C&I loans and consumer loans that do not require reserves, as the Company has third party agreements in place to cover loan losses. The Company has identified the following pools subject to an estimate of credit loss: (1) 1-4 Family Construction; (2) Other Construction; (3) Farmland; (4) Revolving Secured by 1-4 Family; (5) Residential Secured by First Liens; (6) Residential Secured by Junior Liens; (7) Multifamily; (8) CRE Owner Occupied; (9) CRE Non-Owner Occupied; (10) Agriculture; (11) C&I; (12) C&I SBA; (13) Consumer; and (14) Municipal.

The Company has determined, given its limited loss experience, that peer data and other external data to support loss history provides the best basis for its assessment of expected credit losses. The Company believes that the use of peer loss data from 2008 to 2019 presents loss histories that appropriately reflect a full economic cycle, reflects asset-specific risk characteristics at each pool level identified, and includes a historical look-back period that is objective and reflective of future expected credit losses. Loss data from 2020 to 2021 was excluded from the data set to exclude pandemic-related data in the models.

The method for determining the estimate of lifetime credit losses includes, among other things, the following main components: (i) the use of Probability of Default (“PD”) and Loss Given Default (“LGD”) assumptions under a Discounted Cash Flow model; (ii) a multi-scenario macroeconomic forecast; (iii) an initial and reasonable and supportable forecast period of one year for all loan segments; and (iv) a reversion period of one year using a linear transition method to historical loss rates.

Given the inherent limitations of a quantitative-only model, qualitative adjustments are included to factor in data points not captured from a quantitative analysis alone.

Qualitative criteria that can be considered includes, among other things, the following:

•Concentrations – the existence and effect of any concentrations of credit, and changes in the level of such concentrations;

•Volume – changes in the nature and volume of the portfolio and in the terms of the loans;

•Economic – changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;

•Policy – changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

•Quality – changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans; and

•External – the effect of other external factors, such as competition and legal and regulatory requirements on the level of estimated credit losses in the Company’s loan portfolio.

Management reviews current information on a quarterly basis to assess the forecasted future economic impact for purposes of evaluating the adequacy of the ACL. The forecasted direction and magnitude of change with respect to future economic conditions is then assessed against the estimate in the model. Any changes resulting from the quarterly assessment are recorded in “Provision for credit losses” in the unaudited consolidated statements of income.

Accrued Interest

Accrued interest receivable is excluded from amortized cost of all financial instrument types and included in “Interest receivable and other assets” in the unaudited consolidated balance sheets. Accrued interest receivable is not subject to an estimate for credit loss, as the Company has a policy to charge off accrued interest deemed uncollectible in a timely manner. When a loan is placed on non-accrual status, which occurs within 90 days of a borrower becoming delinquent, interest previously accrued but not collected is reversed against current period income.

Individually Assessed Loans

If an individual loan’s characteristics have deteriorated to below a range of the overall pool, the loan would be individually assessed. Individually assessed loans are measured for credit loss based on one of the following methods: (i) present value of future expected cash flows, discounted at the loan’s effective interest rate; (ii) amount by which carrying value of the loan exceeds the loan’s observable market price; or (iii) the fair value of the collateral, less estimated selling costs, if the loan is collateral dependent. The Company applies the practical expedient and defines collateral dependent loans as those where the borrower is experiencing financial difficulty and on which payment is expected to be provided substantially through the operation or sale of the collateral.

Available-for-sale (“AFS”) Debt Securities

Unrealized credit losses are recognized through an allowance for credit losses instead of an adjustment to amortized cost basis, eliminating the other-than-temporary impairment concept. For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of amortized cost basis. If either criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings. For AFS debt securities that do not meet the above conditions, the Company evaluates at the individual security level whether the decrease in fair value has resulted from credit factors or non-credit factors. If assessment determines that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis of the security, then a credit loss would be recognized, limited to the amount by which the fair value is less than the amortized cost basis. All other changes in fair value of an AFS debt security are recognized in other comprehensive income, net of applicable taxes. Changes in the allowance for credit losses, if any, are recognized as a provision for (or reversal of) credit losses. As of September 30, 2023, the Company’s portfolio of AFS debt securities is comprised primarily of debt, mortgage-backed securities, and collateralized mortgage obligations issued by the U.S. government, its agencies, or government-sponsored enterprises, which are either explicitly or implicitly guaranteed by the U.S. government. The remainder of the portfolio is primarily

comprised of obligations of state and political subdivisions, which are generally rated as high grade. The history of minimal credit losses from these issuers indicates that expectation of non-payment of the amortized cost basis is zero. As such, the Company determined that the unrealized loss positions in AFS securities were not due to credit losses, but instead related to changes in interest rates and general market conditions and therefore, no credit loss expense was recognized.

Loan Commitments

Loan commitments not unconditionally cancellable are subject to an estimate of credit loss under the CECL model. The Company’s process for determining the estimate of credit loss on loan commitments is the same as it is on loans. Unfunded loan commitment reserves are included in “Interest payable and other liabilities” in the unaudited consolidated balance sheets.

Held-to-Maturity Debt Securities

The Company’s process for determining the estimate of credit loss on held-to-maturity debt securities is substantially similar to what it is on loans, with segmenting not being applicable. As the amount of held-to-maturity debt securities that the Company carries is limited and given the determination that expected credit loss was immaterial, an immaterial amount was recognized in the ACL upon adoption and no credit loss expense was recorded for the three and nine months ended September 30, 2023.

TDRs and Other Loan Modifications

In accordance with the adoption of ASC 326, which includes ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, accounting guidance for TDRs for creditors has been eliminated. New guidance with respect to recognition, measurement, and disclosures of loans for borrowers experiencing financial difficulties supersedes guidance on TDRs. As of September 30, 2023, the amount of loans modified for borrowers due to experiencing financial difficulties under criteria of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, or term extension was immaterial.

(f) Recently Issued Accounting Standards

The following information reflects recent accounting standards that have been adopted or are pending adoption by the Company. The Company qualifies as an emerging growth company and, as such, has elected to use the extended transition period for complying with new or revised accounting standards and is not subject to the new or revised accounting standards applicable to public companies during the extended transition period. The accounting standards discussed below indicate effective dates for the Company as an emerging growth company using the extended transition period.

Accounting Standards Adopted

On January 1, 2023, the Company adopted ASC 326, which replaces the current “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the Current Expected Credit Loss (“CECL”) model. The CECL model applies to estimated credit losses on loans receivable, held-to-maturity debt securities, unfunded loan commitments, and certain other financial assets measured at amortized cost. Under ASC 326, available-for-sale debt securities are evaluated for impairment if fair value is less than amortized cost, with any estimated credit losses recorded through a credit loss expense and an allowance, rather than a write-down of the investment. Changes in fair value that are not credit-related will continue to be recorded in other comprehensive income. The Company adopted this standard using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance was effective for financial assets measured at amortized cost. For certain new disclosures required under ASC 326, such as credit quality indicators by year of origination, we have not restated comparative financial information before January 1, 2023 to conform under ASC 326. This adoption method is considered a change in accounting principle requiring additional disclosure of the nature and reason for the change, which is solely due to adoption of ASC 326. On January 1, 2023, the Company also adopted ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which had no material impact.

The following table reflects the cumulative-effect adjustments the Company recorded on January 1, 2023 for the adoption of ASC 326.


	January 1, 2023
(in thousands)	Pre-ASC 326 Adoption		Impact of ASC 326 Adoption		Post-ASC 326 Adoption
Assets:
Allowance for Credit Losses	$	(28,389)	$	(5,282)	$	(33,671)
Deferred Tax Asset (Interest receivable and other assets)	12,273		1,883		14,156

Liabilities:
Reserve for Unfunded Commitments (Interest payable and other liabilities)	(125)		(1,092)		(1,217)

Shareholders’ Equity:
Retained Earnings	(46,736)		4,491		(42,245)

Accounting Standards Issued But Not Yet Adopted

For the fiscal year beginning January 1, 2023, there have been no new accounting standards issued but not yet adopted that are expected to be material to the Company. There are also no accounting standards issued before January 1, 2023 yet to be adopted.

Loans and Allowance for Credit Losses - Age Analysis of Past Due Loans by Class (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Total	$ 3,009,930	$ 2,791,326
30-59 Days
Financing Receivable, Past Due [Line Items]
Total	156	194
60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	175
Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Total Past Due
Financing Receivable, Past Due [Line Items]
Total	156	369
Current
Financing Receivable, Past Due [Line Items]
Total	3,009,774	2,790,957
Commercial
Financing Receivable, Past Due [Line Items]
Total	2,596,936	2,392,053
Commercial \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial \| Current
Financing Receivable, Past Due [Line Items]
Total	2,596,936	2,392,053
Commercial land and development
Financing Receivable, Past Due [Line Items]
Total	15,455	7,447
Commercial land and development \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial land and development \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial land and development \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial land and development \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial land and development \| Current
Financing Receivable, Past Due [Line Items]
Total	15,455	7,447
Commercial construction
Financing Receivable, Past Due [Line Items]
Total	94,954	88,314
Commercial construction \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial construction \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial construction \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial construction \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	0	0
Commercial construction \| Current
Financing Receivable, Past Due [Line Items]
Total	94,954	88,314
Residential construction
Financing Receivable, Past Due [Line Items]
Total	13,912	6,693
Residential construction \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Residential construction \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Residential construction \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Residential construction \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	0	0
Residential construction \| Current
Financing Receivable, Past Due [Line Items]
Total	13,912	6,693
Residential
Financing Receivable, Past Due [Line Items]
Total	25,057	24,263
Residential \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Residential \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	175
Residential \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Residential \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	0	175
Residential \| Current
Financing Receivable, Past Due [Line Items]
Total	25,057	24,088
Farmland
Financing Receivable, Past Due [Line Items]
Total	51,898	52,446
Farmland \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Farmland \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Farmland \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Farmland \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	0	0
Farmland \| Current
Financing Receivable, Past Due [Line Items]
Total	51,898	52,446
Secured
Financing Receivable, Past Due [Line Items]
Total	157,788	165,609
Secured \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Secured \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Secured \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Secured \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	0	0
Secured \| Current
Financing Receivable, Past Due [Line Items]
Total	157,788	165,609
Unsecured
Financing Receivable, Past Due [Line Items]
Total	24,009	25,488
Unsecured \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Unsecured \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Unsecured \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Unsecured \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	0	0
Unsecured \| Current
Financing Receivable, Past Due [Line Items]
Total	24,009	25,488
Consumer and other
Financing Receivable, Past Due [Line Items]
Total	29,921	29,013
Consumer and other \| 30-59 Days
Financing Receivable, Past Due [Line Items]
Total	156	194
Consumer and other \| 60-89 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Consumer and other \| Greater Than 90 Days
Financing Receivable, Past Due [Line Items]
Total	0	0
Consumer and other \| Total Past Due
Financing Receivable, Past Due [Line Items]
Total	156	194
Consumer and other \| Current
Financing Receivable, Past Due [Line Items]
Total	$ 29,765	$ 28,819

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Dec. 31, 2021			17,224,848
Beginning balance at Dec. 31, 2021	$ 235,046	$ 68	$ 218,444	$ 17,168	$ 68	$ (566)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	31,519			31,519
Other comprehensive income (loss)	(15,504)					(15,504)
Stock issued under stock award plans, net (in shares)			23,639
Stock issued under stock award plans, net	0
Stock compensation expense	842		$ 842
Stock forfeitures (in shares)			(2,504)
Stock forfeitures	0
Cash dividends paid	(12,713)			(12,713)
Ending balance (in shares) at Sep. 30, 2022			17,245,983
Ending balance at Sep. 30, 2022	239,258		$ 219,286	36,042		(16,070)
Beginning balance (in shares) at Dec. 31, 2021			17,224,848
Beginning balance at Dec. 31, 2021	$ 235,046	68	$ 218,444	17,168	68	(566)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-13 [Member]
Ending balance (in shares) at Dec. 31, 2022			17,241,926
Ending balance at Dec. 31, 2022	$ 252,825	(4,491)	$ 219,543	46,736	(4,491)	(13,454)
Beginning balance (in shares) at Jun. 30, 2022			17,245,983
Beginning balance at Jun. 30, 2022	233,200		$ 219,023	26,924		(12,747)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	11,704			11,704
Other comprehensive income (loss)	(3,323)					(3,323)
Stock compensation expense	263		$ 263
Cash dividends paid	(2,586)			(2,586)
Ending balance (in shares) at Sep. 30, 2022			17,245,983
Ending balance at Sep. 30, 2022	239,258		$ 219,286	36,042		(16,070)
Beginning balance (in shares) at Dec. 31, 2022			17,241,926
Beginning balance at Dec. 31, 2022	252,825	$ (4,491)	$ 219,543	46,736	$ (4,491)	(13,454)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	36,935			36,935
Other comprehensive income (loss)	(2,477)					(2,477)
Stock issued under stock award plans, net (in shares)			16,978
Stock issued under stock award plans, net	0
Stock compensation expense	723		$ 723
Stock forfeitures (in shares)			(1,547)
Stock forfeitures	0
Cash dividends paid	(9,491)			(9,491)
Ending balance (in shares) at Sep. 30, 2023			17,257,357
Ending balance at Sep. 30, 2023	274,024		$ 220,266	69,689		(15,931)
Beginning balance (in shares) at Jun. 30, 2023			17,257,357
Beginning balance at Jun. 30, 2023	269,140		$ 220,021	62,095		(12,976)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	11,045			11,045
Other comprehensive income (loss)	(2,955)					(2,955)
Stock compensation expense	245		$ 245
Cash dividends paid	(3,451)			(3,451)
Ending balance (in shares) at Sep. 30, 2023			17,257,357
Ending balance at Sep. 30, 2023	$ 274,024		$ 220,266	$ 69,689		$ (15,931)

Subsequent Events (Details Narrative) - $ / shares	Oct. 19, 2023	Jul. 20, 2023
Subsequent Event [Line Items]
Common stock declared (in USD per share)		$ 0.20
Subsequent Event
Subsequent Event [Line Items]
Common stock declared (in USD per share)	$ 0.20

Investment Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investment Securities

The Company’s investment securities portfolio includes obligations of states and political subdivisions, securities issued by U.S. federal government agencies, such as the SBA, and securities issued by U.S. GSEs, such as the FNMA, the FHLMC, and the FHLB. The Company also invests in residential and commercial mortgage-backed securities, collateralized mortgage obligations issued or guaranteed by government sponsored entities, and corporate bonds, as reflected in the following tables.

A summary of the amortized cost and fair value related to securities held-to-maturity as of September 30, 2023 and December 31, 2022 is presented below.


(in thousands)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		(Losses)
September 30, 2023
Obligations of states and political subdivisions	$	3,104	$	—	$	(293)	$	2,811
Total held-to-maturity	$	3,104	$	—	$	(293)	$	2,811
December 31, 2022
Obligations of states and political subdivisions	$	3,756	$	—	$	(324)	$	3,432
Total held-to-maturity	$	3,756	$	—	$	(324)	$	3,432

For securities issued by states and political subdivisions, for purposes of evaluating whether to recognize credit loss expense, management considers: (i) issuer and/or guarantor credit ratings; (ii) historical probability of default and loss given default rates for given bond ratings and remaining maturity; (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities; (iv) internal credit review of the financial information; and (v) whether or not such securities have credit enhancements such as guarantees, contain a defeasance clause, or are pre-refunded by the issuers.

The Company adopted ASC 326 on January 1, 2023, which affects accounting of credit loss expense on held-to-maturity and available-for-sale securities. Refer to Note 1, Basis of Presentation and Summary of Significant Accounting Policies, for further detail.

A summary of the amortized cost and fair value related to securities available-for-sale as of September 30, 2023 and December 31, 2022 is presented below.


(in thousands)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		(Losses)
September 30, 2023
U.S. government agencies	$	11,281	$	110	$	(182)	$	11,209
Mortgage-backed securities	68,715		—		(14,252)		54,463
Obligations of states and political subdivisions	44,325		—		(7,974)		36,351
Collateralized mortgage obligations	382		—		(45)		337
Corporate bonds	2,000		—		(274)		1,726
Total available-for-sale	$	126,703	$	110	$	(22,727)	$	104,086
December 31, 2022
U.S. government agencies	$	14,317	$	81	$	(225)	$	14,173
Mortgage-backed securities	73,111		1		(11,841)		61,271
Obligations of states and political subdivisions	45,223		21		(6,818)		38,426
Collateralized mortgage obligations	436		—		(41)		395
Corporate bonds	2,000		—		(277)		1,723
Total available-for-sale	$	135,087	$	103	$	(19,202)	$	115,988

The amortized cost and fair value of investment securities by contractual maturity at September 30, 2023 and December 31, 2022 are shown below. Expected maturities may differ from contractual maturities if the issuers of the securities have the right to call or prepay obligations with or without call or prepayment penalties.


(in thousands)	September 30, 2023								December 31, 2022
	Held-to-Maturity				Available-for-Sale				Held-to-Maturity				Available-for-Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	304	$	275	$	—	$	—	$	417	$	381	$	501	$	501
After one but within five years	935		847		397		355		1,015		927		—		—
After five years through ten years	1,365		1,236		6,424		5,510		1,470		1,343		5,320		4,761
After ten years	500		453		37,504		30,486		854		781		39,402		33,164

Investment securities not due at a single maturity date:
U.S. government agencies	—		—		11,281		11,209		—		—		14,317		14,173
Mortgage-backed securities	—		—		68,715		54,463		—		—		73,111		61,271
Collateralized mortgage obligations	—		—		382		337		—		—		436		395
Corporate bonds	—		—		2,000		1,726		—		—		2,000		1,723
Total	$	3,104	$	2,811	$	126,703	$	104,086	$	3,756	$	3,432	$	135,087	$	115,988

Sales of investment securities and gross gains and losses are shown in the following table:


(in thousands)	For the three months ended				For the nine months ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Available-for-sale:
Sales proceeds	$	—	$	—	$	—	$	1,623
Gross realized gains	—		—		—		5

Pledged investment securities are shown in the following table:


(in thousands)	September 30, 2023		December 31, 2022
Pledged to:
The State of California, securing deposits of public funds and borrowings	$	54,076	$	40,465
The Federal Reserve Discount Window, increasing borrowing capacity	49,128		—
Total pledged investment securities	$	103,204	$	40,465

The following table details the gross unrealized losses and fair values aggregated by investment category and length of time that individual available-for-sale securities have been in a continuous unrealized loss position at September 30, 2023 and December 31, 2022:


	Less than 12 months				12 months or more				Total securities in a loss position
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2023
U.S. government agencies	$	839	$	(19)	$	7,455	$	(163)	$	8,294	$	(182)
Mortgage-backed securities	214		(2)		54,249		(14,250)		54,463		(14,252)
Obligations of states and political subdivisions	1,486		(34)		34,864		(7,940)		36,350		(7,974)
Collateralized mortgage obligations	—		—		337		(45)		337		(45)
Corporate bonds	—		—		1,726		(274)		1,726		(274)
	$	2,539	$	(55)	$	98,631	$	(22,672)	$	101,170	$	(22,727)

December 31, 2022
U.S. government agencies	$	3,090	$	(125)	$	8,392	$	(100)	$	11,482	$	(225)
Mortgage-backed securities	4,360		(470)		56,908		(11,371)		61,268		(11,841)
Obligations of states and political subdivisions	24,707		(4,097)		11,670		(2,721)		36,377		(6,818)
Collateralized mortgage obligations	395		(41)		—		—		395		(41)
Corporate bonds	—		—		1,723		(277)		1,723		(277)
	$	32,552	$	(4,733)	$	78,693	$	(14,469)	$	111,245	$	(19,202)

There were 154 and 152 available-for-sale securities in unrealized loss positions at September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023, the investment portfolio included 148 investment securities that had been in a continuous loss position for twelve months or more and six investment securities that had been in a loss position for less than twelve months.

There was one held-to-maturity security in a continuous unrealized loss position at September 30, 2023, which had been in a continuous loss position for more than twelve months.

Obligations issued or guaranteed by government agencies such as the GNMA and the SBA or GSEs under conservatorship such as the FNMA and the FHLMC, are guaranteed or sponsored by agencies of the U.S. government and have strong credit profiles. The Company therefore expects to receive all contractual interest payments on time and believes the risk of credit losses on these securities is remote.

The Company’s investment in obligations of states and political subdivisions are deemed credit worthy after management’s comprehensive analysis of the issuers’ latest financial information, credit ratings by major credit agencies, and/or credit enhancements.

Non-Marketable Securities Included in Other Assets

FHLB capital stock: As a member of the FHLB, the Company is required to maintain a minimum investment in FHLB capital stock determined by the board of directors of the FHLB. The minimum investment requirements can increase in the event the Company increases its total asset size or borrowings with the FHLB. Shares cannot be purchased or sold except between the FHLB and its members at the $100 per share par value. The Company held $15.0 million and $10.9 million of FHLB stock at September 30, 2023 and December 31, 2022, respectively. The carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks and do not have a readily determinable market value. Based on management’s analysis of the FHLB’s financial condition and certain qualitative factors, management determined that the FHLB stock was not impaired at September 30, 2023 and December 31, 2022. On July 27, 2023, the FHLB announced a cash dividend for the second quarter of 2023 at an annualized dividend rate of 7.75%, which was paid on August 10, 2023. Cash dividends received on FHLB capital stock amounted to $0.3 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively, and $0.7 million and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively, and were recorded as non-interest income on the unaudited consolidated statements of income.

Interest-Bearing Deposits

9 Months Ended

Sep. 30, 2023

Interest-bearing Deposits

Interest-Bearing Deposits

Interest-bearing deposits consisted of the following as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Interest-bearing transaction accounts	$	297,678	$	242,632
Savings accounts	138,029		154,581
Money market accounts	1,335,545		1,073,528
Time accounts, more than $250	330,913		198,159
Other time accounts	96,611		144,355
Total time deposits	427,524		342,514
Total interest-bearing deposits	$	2,198,776	$	1,813,255

Time deposits totaled $427.5 million and $342.5 million as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023, scheduled maturities of time deposits for the next five years were as follows:


(in thousands)
2023	$	218,703
2024	186,345
2025	21,135
2026	1,341
2027	—
Total time deposits	$	427,524

Total deposits include deposits offered through the IntraFi Network (formerly Promontory Interfinancial Network) that are comprised of Certificate of Deposit Account Registry Service® (“CDARS”) balances included in time deposits and Insured Cash Sweep® (“ICS”) balances included in money market and interest checking deposits. Through this network, the Company offers customers access to FDIC-insured deposit products in aggregate amounts exceeding current insurance limits. When funds are deposited through CDARS and ICS on behalf of a customer, the Company has the option of receiving matching deposits through the network’s reciprocal deposit program or placing deposits “one-way,” for which the Company receives no matching deposits. The Company considers the reciprocal deposits to be in-market deposits, as distinguished from traditional out-of-market brokered deposits. There were no one-way deposits at September 30, 2023 and December 31, 2022. The composition of network deposits as of September 30, 2023 and December 31, 2022 was as follows:


(in thousands)	September 30, 2023		December 31, 2022
CDARS	$	15,542	$	13,248
ICS	689,983		272,719
Total network deposits	$	705,525	$	285,967

Interest expense recognized on interest-bearing deposits for periods ended September 30, 2023 and 2022 consisted of the following:


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Interest-bearing transaction accounts	$	972	$	115	$	2,230	$	251
Savings accounts	880		65		2,182		128
Money market accounts	9,536		1,779		23,108		2,825
Time accounts, $250 or more	3,865		789		8,462		1,074
Other time accounts	1,133		69		3,751		105
Total interest expense on interest-bearing deposits	$	16,386	$	2,817	$	39,733	$	4,383

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for credit losses, available for sale	$ 0	$ 0
Amortized Cost	126,703,000	135,087,000
Allowance for credit losses, held to maturity	20,000	0
Securities held-to-maturity	$ 2,811,000	$ 3,432,000
Preferred stock (in USD per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common Stock (in USD per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	17,257,357	17,241,926
Common stock, shares outstanding (in shares)	17,257,357	17,241,926

Investment Securities - Amortized Cost and Fair Value of Securities Held-to-maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Amortized Cost	$ 3,104	$ 3,756
Gross unrealized gains	0	0
Gross unrealized losses	(293)	(324)
Fair Value	2,811	3,432
Obligations of states and political subdivisions
Marketable Securities [Line Items]
Amortized Cost	3,104	3,756
Gross unrealized gains	0	0
Gross unrealized losses	(293)	(324)
Fair Value	$ 2,811	$ 3,432

Investment Securities - Sales of Investment Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract]
Sales proceeds	$ 0	$ 0	$ 0	$ 1,623
Gross realized gains	$ 0	$ 0	$ 0	$ 5

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Stockholders' Equity [Abstract]
Cash dividends paid (in USD per share)	$ 0.20	$ 0.15	$ 0.55	$ 0.90

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Substantially all of these commitments are at variable interest rates, based on an index, and have fixed expiration dates.

Off-balance sheet risk to loan loss exists up to the face amount of these instruments, although material losses are not anticipated. The Company uses the same credit policies in making commitments to originate loans and lines of credit as it

does for on-balance sheet instruments, including obtaining collateral at exercise of the commitment. The contractual amounts of unfunded loan commitments and standby letters of credit not reflected in the unaudited consolidated balance sheets were as follows:


(in thousands)	September 30, 2023		December 31, 2022
Commercial lines of credit	$	173,603	$	147,021
Undisbursed construction loans	98,901		80,726
Undisbursed commercial real estate loans	94,537		79,121
Agricultural lines of credit	24,839		10,399
Undisbursed residential real estate loans	6,377		8,945
Undisbursed agricultural real estate loans	1,200		1,068
Other	2,477		1,868
Total commitments and standby letters of credit	$	401,934	$	329,148

The Company records an allowance for credit losses on unfunded loan commitments at the consolidated balance sheet date based on estimates of the probability that these commitments will be drawn upon according to historical utilization experience of the different types of commitments and historical loss rates determined for pooled funded loans. The allowance for credit losses on unfunded commitments totaled $1.5 million as of September 30, 2023 and $0.1 million as of December 31, 2022, which is recorded in “Interest payable and other liabilities” in the unaudited consolidated balance sheets.

Concentrations of credit risk: The Company grants real estate mortgage, real estate construction, commercial, and consumer loans to customers primarily in Northern California. Although the Company has a diversified loan portfolio, a substantial portion is secured by commercial and residential real estate.

In management’s judgment, a concentration of loans exists in real estate related loans, which represented approximately 92.71% of the Company’s loan portfolio at September 30, 2023 and 91.84% of the Company’s loan portfolio at December 31, 2022. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, or a decline in real estate values in the Company’s primary market areas in particular, could have an adverse impact on the collectability of these loans. Personal and business incomes represent the primary source of repayment for the majority of these loans.

Deposit concentrations: At September 30, 2023, the Company had 86 deposit relationships that exceeded $5.0 million each, totaling $1.9 billion, or approximately 61.64% of total deposits. The Company’s largest single deposit relationship at September 30, 2023 totaled $250.0 million, or approximately 8.24% of total deposits. Management maintains the Company’s liquidity position and lines of credit with correspondent banks to mitigate the risk of large withdrawals by this group of large depositors.

Contingencies: The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to such actions will not materially affect the consolidated financial position or results of operations of the Company.

Correspondent banking agreements: The Company maintains funds on deposit with other FDIC-insured financial institutions under correspondent banking agreements. Uninsured deposits through these agreements totaled $22.1 million and $16.2 million at September 30, 2023 and December 31, 2022, respectively.

Litigation Matters

The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to such actions will not materially affect the consolidated financial position or results of operations of the Company.

Investment Securities - Amortized Cost and Fair Value of Securities Available-for-sale (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Amortized Cost	$ 126,703	$ 135,087
Gross unrealized gains	110	103
Gross unrealized losses	(22,727)	(19,202)
Securities available-for-sale	104,086	115,988
U.S. government agencies
Marketable Securities [Line Items]
Amortized Cost	11,281	14,317
Gross unrealized gains	110	81
Gross unrealized losses	(182)	(225)
Securities available-for-sale	11,209	14,173
Mortgage-backed securities
Marketable Securities [Line Items]
Amortized Cost	68,715	73,111
Gross unrealized gains	0	1
Gross unrealized losses	(14,252)	(11,841)
Securities available-for-sale	54,463	61,271
Obligations of states and political subdivisions
Marketable Securities [Line Items]
Amortized Cost	44,325	45,223
Gross unrealized gains	0	21
Gross unrealized losses	(7,974)	(6,818)
Securities available-for-sale	36,351	38,426
Collateralized mortgage obligations
Marketable Securities [Line Items]
Amortized Cost	382	436
Gross unrealized gains	0	0
Gross unrealized losses	(45)	(41)
Securities available-for-sale	337	395
Corporate bonds
Marketable Securities [Line Items]
Amortized Cost	2,000	2,000
Gross unrealized gains	0	0
Gross unrealized losses	(274)	(277)
Securities available-for-sale	$ 1,726	$ 1,723

Investment Securities - Pledged Investment Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Securities available-for-sale	$ 104,086	$ 115,988
Federal Funds Purchased
Marketable Securities [Line Items]
Securities available-for-sale	49,128	0
Deposits and Federal Funds Purchased
Marketable Securities [Line Items]
Securities available-for-sale	103,204	40,465
CALIFORNIA \| Deposits
Marketable Securities [Line Items]
Securities available-for-sale	$ 54,076	$ 40,465

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Nov. 03, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-40379
Entity Registrant Name	FIVE STAR BANCORP
Entity Incorporation, State or Country Code	CA
Entity Tax Identification Number	75-3100966
Entity Address, Address Line One	3100 Zinfandel Drive
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Rancho Cordova
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95670
City Area Code	(916)
Local Phone Number	626-5000
Title of 12(b) Security	Common stock, no par value per share
Trading Symbol	FSBC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		17,257,023
Entity Central Index Key	0001275168
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

Interest-Bearing Deposits (Tables)

9 Months Ended

Sep. 30, 2023

Interest-bearing Deposits

Schedule of Interest-Bearing Deposits.

Interest-bearing deposits consisted of the following as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Interest-bearing transaction accounts	$	297,678	$	242,632
Savings accounts	138,029		154,581
Money market accounts	1,335,545		1,073,528
Time accounts, more than $250	330,913		198,159
Other time accounts	96,611		144,355
Total time deposits	427,524		342,514
Total interest-bearing deposits	$	2,198,776	$	1,813,255

Time Deposit Maturities

As of September 30, 2023, scheduled maturities of time deposits for the next five years were as follows:


(in thousands)
2023	$	218,703
2024	186,345
2025	21,135
2026	1,341
2027	—
Total time deposits	$	427,524

Schedule of Composition of Network Deposits

The composition of network deposits as of September 30, 2023 and December 31, 2022 was as follows:


(in thousands)	September 30, 2023		December 31, 2022
CDARS	$	15,542	$	13,248
ICS	689,983		272,719
Total network deposits	$	705,525	$	285,967

Interest Expense Recognized on Interest-Bearing Deposits

Interest expense recognized on interest-bearing deposits for periods ended September 30, 2023 and 2022 consisted of the following:


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Interest-bearing transaction accounts	$	972	$	115	$	2,230	$	251
Savings accounts	880		65		2,182		128
Money market accounts	9,536		1,779		23,108		2,825
Time accounts, $250 or more	3,865		789		8,462		1,074
Other time accounts	1,133		69		3,751		105
Total interest expense on interest-bearing deposits	$	16,386	$	2,817	$	39,733	$	4,383

Loans and Allowance for Credit Losses - Credit Quality Indicators Related to the Company’s Loans by Class (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
2023	$ 301,455
2022	1,109,722
2021	817,415
2020	287,454
2019	156,905
Prior	290,152
Revolving Loans	46,827
Revolving Converted to Term	0
Total	3,009,930	$ 2,791,326
Pass
Financing Receivable, Past Due [Line Items]
2023	301,455
2022	1,106,963
2021	811,687
2020	280,291
2019	151,335
Prior	275,795
Revolving Loans	46,827
Revolving Converted to Term	0
Total	2,974,353
Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	2,738
2021	5,728
2020	7,163
2019	5,521
Prior	12,407
Revolving Loans	0
Revolving Converted to Term	0
Total	33,557
Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	21
2021	0
2020	0
2019	49
Prior	1,950
Revolving Loans	0
Revolving Converted to Term	0
Total	2,020
Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real Estate, Commercial
Financing Receivable, Past Due [Line Items]
2023	251,745
2022	989,970
2021	717,959
2020	247,026
2019	129,924
Prior	256,168
Revolving Loans	4,144
Revolving Converted to Term	0
Total	2,596,936	2,392,053
Real Estate, Commercial \| Pass
Financing Receivable, Past Due [Line Items]
2023	251,745
2022	987,248
2021	712,268
2020	239,894
2019	124,560
Prior	248,634
Revolving Loans	4,144
Revolving Converted to Term	0
Total	2,568,493
Real Estate, Commercial \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	2,722
2021	5,691
2020	7,132
2019	5,364
Prior	5,614
Revolving Loans	0
Revolving Converted to Term	0
Total	26,523
Real Estate, Commercial \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	1,920
Revolving Loans	0
Revolving Converted to Term	0
Total	1,920
Real Estate, Commercial \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate , Commercial land and development
Financing Receivable, Past Due [Line Items]
2023	10,376
2022	4,141
2021	0
2020	186
2019	0
Prior	752
Revolving Loans	0
Revolving Converted to Term	0
Total	15,455	7,447
Real estate , Commercial land and development \| Pass
Financing Receivable, Past Due [Line Items]
2023	10,376
2022	4,141
2021	0
2020	186
2019	0
Prior	752
Revolving Loans	0
Revolving Converted to Term	0
Total	15,455
Real estate , Commercial land and development \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate , Commercial land and development \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate , Commercial land and development \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, Commercial construction
Financing Receivable, Past Due [Line Items]
2023	2,692
2022	33,946
2021	41,889
2020	10,530
2019	0
Prior	5,897
Revolving Loans	0
Revolving Converted to Term	0
Total	94,954	88,314
Real estate, Commercial construction \| Pass
Financing Receivable, Past Due [Line Items]
2023	2,692
2022	33,946
2021	41,889
2020	10,530
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	89,057
Real estate, Commercial construction \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	5,897
Revolving Loans	0
Revolving Converted to Term	0
Total	5,897
Real estate, Commercial construction \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, Commercial construction \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, Residential construction
Financing Receivable, Past Due [Line Items]
2023	0
2022	8,162
2021	5,750
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	13,912	6,693
Real estate, Residential construction \| Pass
Financing Receivable, Past Due [Line Items]
2023	0
2022	8,162
2021	5,750
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	13,912
Real estate, Residential construction \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, Residential construction \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, Residential construction \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, Residential
Financing Receivable, Past Due [Line Items]
2023	3,606
2022	3,998
2021	6,292
2020	2,298
2019	1,187
Prior	6,085
Revolving Loans	1,591
Revolving Converted to Term	0
Total	25,057	24,263
Real estate, Residential \| Pass
Financing Receivable, Past Due [Line Items]
2023	3,606
2022	3,998
2021	6,292
2020	2,298
2019	1,187
Prior	6,085
Revolving Loans	1,591
Revolving Converted to Term	0
Total	25,057
Real estate, Residential \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, Residential \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, Residential \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, farmland
Financing Receivable, Past Due [Line Items]
2023	1,887
2022	8,044
2021	12,767
2020	8,015
2019	12,581
Prior	8,600
Revolving Loans	4
Revolving Converted to Term	0
Total	51,898	52,446
Real estate, farmland \| Pass
Financing Receivable, Past Due [Line Items]
2023	1,887
2022	8,044
2021	12,767
2020	8,015
2019	12,581
Prior	8,600
Revolving Loans	4
Revolving Converted to Term	0
Total	51,898
Real estate, farmland \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, farmland \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Real estate, farmland \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Commercial, Secured
Financing Receivable, Past Due [Line Items]
2023	20,091
2022	44,970
2021	18,693
2020	13,237
2019	10,874
Prior	12,310
Revolving Loans	37,613
Revolving Converted to Term	0
Total	157,788	165,609
Commercial, Secured \| Pass
Financing Receivable, Past Due [Line Items]
2023	20,091
2022	44,970
2021	18,656
2020	13,206
2019	10,668
Prior	11,384
Revolving Loans	37,613
Revolving Converted to Term	0
Total	156,588
Commercial, Secured \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	37
2020	31
2019	157
Prior	896
Revolving Loans	0
Revolving Converted to Term	0
Total	1,121
Commercial, Secured \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	49
Prior	30
Revolving Loans	0
Revolving Converted to Term	0
Total	79
Commercial, Secured \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Commercial, Unsecured
Financing Receivable, Past Due [Line Items]
2023	3,081
2022	3,869
2021	5,068
2020	6,157
2019	2,339
Prior	20
Revolving Loans	3,475
Revolving Converted to Term	0
Total	24,009	25,488
Commercial, Unsecured \| Pass
Financing Receivable, Past Due [Line Items]
2023	3,081
2022	3,869
2021	5,068
2020	6,157
2019	2,339
Prior	20
Revolving Loans	3,475
Revolving Converted to Term	0
Total	24,009
Commercial, Unsecured \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Commercial, Unsecured \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Commercial, Unsecured \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	0
Consumer and other
Financing Receivable, Past Due [Line Items]
2023	7,977
2022	12,622
2021	8,997
2020	5
2019	0
Prior	320
Revolving Loans	0
Revolving Converted to Term	0
Total	29,921	$ 29,013
Consumer and other \| Pass
Financing Receivable, Past Due [Line Items]
2023	7,977
2022	12,585
2021	8,997
2020	5
2019	0
Prior	320
Revolving Loans	0
Revolving Converted to Term	0
Total	29,884
Consumer and other \| Watch
Financing Receivable, Past Due [Line Items]
2023	0
2022	16
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	16
Consumer and other \| Substandard
Financing Receivable, Past Due [Line Items]
2023	0
2022	21
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	21
Consumer and other \| Doubtful
Financing Receivable, Past Due [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving Loans	0
Revolving Converted to Term	0
Total	$ 0

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn October 19, 2023, the Board of Directors of the Company authorized a cash dividend of $0.20 per common share, payable on November 13, 2023 to shareholders of record as of November 6, 2023.

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Cumulative Effect Adjustment for Adoption of ASC 326

The following table reflects the cumulative-effect adjustments the Company recorded on January 1, 2023 for the adoption of ASC 326.


	January 1, 2023
(in thousands)	Pre-ASC 326 Adoption		Impact of ASC 326 Adoption		Post-ASC 326 Adoption
Assets:
Allowance for Credit Losses	$	(28,389)	$	(5,282)	$	(33,671)
Deferred Tax Asset (Interest receivable and other assets)	12,273		1,883		14,156

Liabilities:
Reserve for Unfunded Commitments (Interest payable and other liabilities)	(125)		(1,092)		(1,217)

Shareholders’ Equity:
Retained Earnings	(46,736)		4,491		(42,245)

Investment Securities - Amortized Cost and Fair Value of Investment Debt Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Amortized Cost
Within one year	$ 304	$ 417
After one but within five years	935	1,015
After five years through ten years	1,365	1,470
After ten years	500	854
Fair Value
Within one year	275	381
After one but within five years	847	927
After five years through ten years	1,236	1,343
After ten years	453	781
Amortized Cost
Within one year	0	501
After one but within five years	397	0
After five years through ten years	6,424	5,320
After ten years	37,504	39,402
Fair Value
Within one year	0	501
After one but within five years	355	0
After five years through ten years	5,510	4,761
After ten years	30,486	33,164
Securities held-to-maturity, at amortized cost	3,104	3,756
Securities held-to-maturity	2,811	3,432
Amortized Cost	126,703	135,087
Securities available-for-sale	104,086	115,988
U.S. government agencies
Fair Value
Securities held-to-maturity, at amortized cost	0	0
Securities held-to-maturity	0	0
Amortized Cost	11,281	14,317
Securities available-for-sale	11,209	14,173
Mortgage-backed securities
Fair Value
Securities held-to-maturity, at amortized cost	0	0
Securities held-to-maturity	0	0
Amortized Cost	68,715	73,111
Securities available-for-sale	54,463	61,271
Collateralized mortgage obligations
Fair Value
Securities held-to-maturity, at amortized cost	0	0
Securities held-to-maturity	0	0
Amortized Cost	382	436
Securities available-for-sale	337	395
Corporate bonds
Fair Value
Securities held-to-maturity, at amortized cost	0	0
Securities held-to-maturity	0	0
Amortized Cost	2,000	2,000
Securities available-for-sale	$ 1,726	$ 1,723

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Other Commitments

The contractual amounts of unfunded loan commitments and standby letters of credit not reflected in the unaudited consolidated balance sheets were as follows:


(in thousands)	September 30, 2023		December 31, 2022
Commercial lines of credit	$	173,603	$	147,021
Undisbursed construction loans	98,901		80,726
Undisbursed commercial real estate loans	94,537		79,121
Agricultural lines of credit	24,839		10,399
Undisbursed residential real estate loans	6,377		8,945
Undisbursed agricultural real estate loans	1,200		1,068
Other	2,477		1,868
Total commitments and standby letters of credit	$	401,934	$	329,148

Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details)	9 Months Ended
	Sep. 30, 2023 office segment	Jun. 02, 2003 shares
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Bank common stock exchanged for company common stock (in shares) \| shares		1
Number of branch offices	7
Number of loan production offices	1
Number of reportable segments \| segment	1

Shareholders’ Equity

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

(a) EPS

Basic EPS is net income divided by the weighted average number of common shares outstanding during the period less average unvested restricted stock awards (“RSAs”). Diluted EPS includes the dilutive effect of additional potential common shares related to unvested RSAs using the treasury stock method. The Company has two forms of outstanding common stock: common stock and unvested RSAs. Holders of unvested RSAs receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings, and therefore the RSAs are considered participating securities. However, under the two-class method, the difference in EPS is not significant for these participating securities.


	Three months ended				Nine months ended
(in thousands, except share count and earnings per common share)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net income	$	11,045	$	11,704	$	36,935	$	31,519

Basic weighted average common shares outstanding	17,175,034		17,140,435		17,163,609		17,123,016
Add: Dilutive effects of assumed vesting of restricted stock	19,791		28,012		22,626		37,794
Total dilutive weighted average common shares outstanding	17,194,825		17,168,447		17,186,235		17,160,810
Earnings per common share:
Basic EPS	$	0.64	$	0.68	$	2.15	$	1.84
Diluted EPS	0.64		0.68		2.15		1.84

The Company did not have any anti-dilutive shares at September 30, 2023 or September 30, 2022.

(b) Dividends

On July 20, 2023, the board of directors declared a $0.20 per common share dividend, totaling $3.5 million.

The Company’s stock-based compensation consists of RSAs granted under its historical stock-based incentive arrangement (the “Historical Incentive Plan”) and RSAs issued under the Five Star Bancorp 2021 Equity Incentive Plan (the “Equity Incentive Plan”). The Historical Incentive Plan consisted of RSAs for certain executive officers of the Company. The

arrangement provided that these executive officers would receive shares of restricted common stock of the Company that vested over three years, with the number of shares granted based upon achieving certain performance objectives. These objectives included, but were not limited to, net income adjusted for the provision for credit losses, deposit growth, efficiency ratio, net interest margin, and asset quality. Compensation expense for RSAs granted under the Historical Incentive Plan is recognized over the service period, which is equal to the vesting period of the shares based on the fair value of the shares at issue date.

In connection with its IPO in May 2021, the Company granted RSAs under the Equity Incentive Plan to certain employees, officers, executives, and non-employee directors. Shares granted to non-employee directors vested immediately upon grant, while shares granted to certain employees, officers, and executives vest ratably over three, five, or seven years (as defined in the respective agreements). Since the completion of the IPO, the Company has granted RSAs under the Equity Incentive Plan to executives and directors, which vest annually over three years and over one year, respectively. All RSAs were granted at the fair value of common stock at the time of the award. The RSAs are considered fixed awards, as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the service period.

Non-cash stock compensation expense recognized for the three months ended September 30, 2023 and 2022 was $0.2 million and $0.3 million, respectively. Non-cash stock compensation expense recognized for the nine months ended September 30, 2023 and 2022 was $0.7 million and $0.8 million, respectively.

At September 30, 2023 and 2022, there were 82,324 and 104,348 unvested restricted shares, respectively. As of September 30, 2023, there was approximately $1.4 million of unrecognized compensation expense related to the 82,324 unvested restricted shares. The holders of unvested RSAs are entitled to dividends at the same per-share ratio as holders of common stock. Tax benefits for dividends paid on unvested RSAs are recorded as tax benefits in the consolidated statements of income with a corresponding decrease to current taxes payable. Such tax benefits are expected to be recognized over the weighted average term remaining on the unvested restricted shares of 2.67 years as of September 30, 2023. The impact of tax benefits for dividends paid on unvested restricted stock on the Company’s unaudited consolidated statements of income for the three and nine months ended September 30, 2023 and 2022 was immaterial.

The following table summarizes activity related to restricted shares for the periods indicated:


	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Beginning of the period balance	82,324	$	21.75	107,824	$	20.88	96,826	$	20.34	127,751	$	19.95
Shares granted	—	—		—	—		16,978	28.52		23,639	28.29
Shares vested	—	—		(3,476)	28.50		(29,933)	20.78		(44,538)	22.65
Shares forfeited	—	—		—	—		(1,547)	26.95		(2,504)	22.50
End of the period balance	82,324	$	21.75	104,348	$	20.62	82,324	$	21.75	104,348	$	20.62

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 505
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481004/946-505-50-6

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 16
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-16

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net income	$ 36,935	$ 31,519
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	3,200	5,450
Depreciation and amortization	1,227	1,226
Amortization of deferred loan fees and costs	125	338
Amortization of premiums and discounts on securities	886	962
Amortization of subordinated debt issuance costs	107	96
Stock compensation expense	723	842
Earnings on BOLI	(355)	(293)
Deferred tax provision	79	13
Loans originated for sale	(39,915)	(44,993)
Gain on sale of loans	(1,635)	(2,297)
Proceeds from sale of loans	32,224	36,275
Net gain on sale of securities available-for-sale	0	(5)
Decrease in operating lease liability	(714)	(729)
Cost method of investment-related gain	(1,274)	0
Net changes in:
Interest receivable and other assets	(5,523)	(3,240)
Interest payable and other liabilities	14,457	2,342
Net cash provided by operating activities	40,547	27,506
Cash flows from investing activities:
Proceeds from sale of securities available-for-sale	0	1,623
Maturities, prepayments, and calls of securities available-for-sale	8,134	13,052
Purchases of securities available-for-sale	0	(1,641)
Net change in time deposits in banks	2,878	4,248
Loan originations, net of repayments	(212,137)	(639,040)
Purchase of premises and equipment	(470)	(406)
Purchase of FHLB stock	(4,110)	(4,223)
Purchase of BOLI	(2,000)	(3,054)
Net cash used in investing activities	(207,705)	(629,441)
Cash flows from financing activities:
Net change in deposits	250,206	328,442
FHLB advances (payments)	(10,000)
FHLB advances (payments)		105,000
Cash dividends paid	(9,491)	(12,713)
Proceeds from subordinated note issuance	0	75,000
Subordinated note issuance costs	0	(1,454)
Net cash provided by financing activities	230,715	494,275
Net change in cash and cash equivalents	63,557	(107,660)
Cash and cash equivalents at beginning of period	259,991	425,329
Cash and cash equivalents at end of period	323,548	317,669
Supplemental disclosure of cash flow information:
Interest paid	43,817	3,057
Income taxes paid	1,480	5,200
Supplemental disclosure of noncash items:
Transfer from loans held for sale to loans held for investment	9,416	10,671
Unrealized loss on securities	(3,516)	(22,005)
Operating lease liabilities recorded in conjunction with adoption of ASC 842	0	5,221
ROUA recorded in conjunction with adoption of ASC 842	1,513	4,974
ROUA acquired	(1,534)	0
Cumulative effect of adoption of ASC 842 and 326 on retained earnings	69,689
Cumulative Effect, Period of Adoption, Adjustment \| Accounting Standards Update 2018-01
Supplemental disclosure of noncash items:
Cumulative effect of adoption of ASC 842 and 326 on retained earnings		$ 68
Cumulative Effect, Period of Adoption, Adjustment \| Accounting Standards Update 2019-11
Supplemental disclosure of noncash items:
Cumulative effect of adoption of ASC 842 and 326 on retained earnings	$ (4,491)

Shareholders’ Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 20, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock declared (in USD per share)	$ 0.20
Dividends payable	$ 3,500
Stock compensation expense		$ 200	$ 300	$ 723	$ 842
Unvested restricted shares (in shares)		82,324	104,348	82,324	104,348
Unrecognized compensation expense				$ 1,400
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining term on the unvested restricted shares (in years)				2 years 8 months 1 day
Employee \| Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, payment award, vesting period (in years)				5 years
Employee \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, payment award, vesting period (in years)				3 years
Employee \| Maximum \| Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, payment award, vesting period (in years)				7 years
Executives and Directors \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, payment award, vesting period (in years)				1 year
Executives and Directors \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, payment award, vesting period (in years)				3 years

Loans and Allowance for Credit Losses - Unfunded Loan Commitment Reserve (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 33,984	$ 25,786	$ 28,389	$ 23,243
Provision	1,050	2,250	2,870	5,450
Ending Balance	34,028	27,838	34,028	27,838
Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			5,262
Unfunded Loan Commitment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	1,547	125	125	102
Provision	0	0	330	23
Ending Balance	1,547	125	1,547	125
Unfunded Loan Commitment \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 0	$ 0	$ 1,092	$ 0

- Definition

Amount of allowance for credit loss on financing receivable. Excludes allowance for financing receivable covered under loss sharing agreement.

+ References + Details

Loans and Allowance for Credit Losses - Narrative (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) loan	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) loan	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Financing Receivable, Past Due [Line Items]
Number of collateral dependent loans in process of foreclosure \| loan	0		0
Interest income related to non-accrual loans	$ 27,100	$ 6,900	$ 62,300	$ 32,000
Pledged loans	1,700,000,000		1,700,000,000		$ 1,600,000,000
Federal Reserve Bank of San Francisco
Financing Receivable, Past Due [Line Items]
FRB pledged loans	$ 39,300,000		$ 39,300,000		$ 41,900,000

Interest Bearing Deposits - Interest Expense Recognized on Interest-bearing Deposits (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest-bearing Deposits
Interest-bearing transaction accounts	$ 972	$ 115	$ 2,230	$ 251
Savings accounts	880	65	2,182	128
Money market accounts	9,536	1,779	23,108	2,825
Time deposits minimum			250
Time accounts, $250 or more	3,865	789	8,462	1,074
Other time accounts	1,133	69	3,751	105
Total interest expense on interest-bearing deposits	$ 16,386	$ 2,817	$ 39,733	$ 4,383

Long Term Debt and Other Borrowings (Details)	Aug. 17, 2022 USD ($)	Sep. 30, 2023 USD ($) federal_fund	Dec. 31, 2022 USD ($) federal_fund
Debt Instrument [Line Items]
Subordinated debt, net		$ 73,713,000	$ 73,606,000
Number of unsecured federal funds \| federal_fund		5	7
FHLB Agreement
Debt Instrument [Line Items]
Line of credit		$ 90,000,000	$ 100,000,000
Subordinated Debt
Debt Instrument [Line Items]
Debt issuance costs		1,500,000
Amortization, debt issuance costs		$ 200,000
Subordinated Debt \| Fixed-to-floating Rate Subordinated Notes Issued August 2022
Debt Instrument [Line Items]
Subordinated debt, net	$ 75,000,000
Interest rate (in percent)	6.00%
Floating interest rate (in percent)		8.70%
Subordinated Debt \| Fixed-to-floating Rate Subordinated Notes Issued August 2022 \| Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate	3.29%
Subordinated Debt \| Entity controlled by existing and former board members and their affiliates
Debt Instrument [Line Items]
Face amount	$ 19,300,000
Letter of Credit \| FHLB Agreement
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 1,100,000,000	1,000,000,000
Letters of credit amount		671,500,000	686,500,000
Line of Credit
Debt Instrument [Line Items]
Line of credit		0	0
Line of Credit \| Secure State of California Deposits
Debt Instrument [Line Items]
Letters of credit amount		261,500,000	206,500,000
Line of Credit \| Secure Local Agency Deposit
Debt Instrument [Line Items]
Letters of credit amount		410,000,000	480,000,000
Line of Credit \| Federal Reserve Discount Window
Debt Instrument [Line Items]
Maximum borrowing capacity		69,000,000	21,900,000
Line of credit outstanding		0	0
Line of Credit \| FHLB Agreement
Debt Instrument [Line Items]
Remaining borrowing capacity		292,100,000	216,300,000
Line of Credit \| Five Unsecured Federal Funds Line Of Credit
Debt Instrument [Line Items]
Line of credit		$ 175,000,000	$ 190,000,000

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
ASSETS
Cash and due from financial institutions	$ 26,744	$ 32,561
Interest-bearing deposits in banks	296,804	227,430
Cash and cash equivalents	323,548	259,991
Time deposits in banks	6,971	9,849
Securities available-for-sale, at fair value, net of allowance for credit losses of $0 at September 30, 2023 and December 31, 2022 (amortized cost of $126,703 and $135,087 at September 30, 2023 and December 31, 2022, respectively)	104,086	115,988
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $20 at September 30, 2023 and $0 at December 31, 2022 (fair value of $2,811 and $3,432 at September 30, 2023 and December 31, 2022, respectively)	3,104	3,756
Loans held for sale	9,326	9,416
Loans held for investment	3,009,930	2,791,326
Allowance for credit losses - loans	(34,028)	(28,389)
Loans held for investment, net of allowance for credit losses	2,975,902	2,762,937
FHLB stock	15,000	10,890
Operating leases, right-of-use asset, net	4,799	3,981
Premises and equipment, net	1,564	1,605
Bank-owned life insurance	17,023	14,669
Interest receivable and other assets	43,717	34,077
Total assets	3,505,040	3,227,159
Deposits:
Non-interest-bearing	833,434	968,749
Interest-bearing	2,198,776	1,813,255
Total deposits	3,032,210	2,782,004
FHLB advances	90,000	100,000
Subordinated debt, net	73,713	73,606
Operating lease liability	5,043	4,243
Interest payable and other liabilities	30,050	14,481
Total liabilities	3,231,016	2,974,334
Commitments and contingencies (Note 8)
Shareholders’ equity
Preferred stock, no par value; 10,000,000 shares authorized; zero issued and outstanding at September 30, 2023 and December 31, 2022	0	0
Common stock, no par value; 100,000,000 shares authorized; 17,257,357 shares issued and outstanding at September 30, 2023; 17,241,926 shares issued and outstanding at December 31, 2022	220,266	219,543
Retained earnings	69,689	46,736
Accumulated other comprehensive loss, net	(15,931)	(13,454)
Total shareholders’ equity	274,024	252,825
Total liabilities and shareholders’ equity	$ 3,505,040	$ 3,227,159

Loans and Allowance for Credit Losses - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 33,984	$ 25,786	$ 28,389	$ 23,243
Charge-offs	(1,432)	(530)	(3,565)	(1,459)
Recoveries	426	332	1,072	604
Provision (Benefit)	1,050	2,250	2,870	5,450
Ending Balance	34,028	27,838	34,028	27,838
Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			5,262
Commercial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	27,553	16,621	19,216	12,869
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Benefit)	348	1,688	1,079	5,440
Ending Balance	27,901	18,309	27,901	18,309
Commercial \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			7,606
Commercial land and development
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	184	68	54	50
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Benefit)	14	30	70	48
Ending Balance	198	98	198	98
Commercial land and development \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			74
Commercial construction
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	1,212	508	645	371
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Benefit)	8	38	(307)	175
Ending Balance	1,220	546	1,220	546
Commercial construction \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			882
Residential construction
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	217	51	49	50
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Benefit)	(102)	(10)	(15)	(9)
Ending Balance	115	41	115	41
Residential construction \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			81
Residential
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	152	188	175	192
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Benefit)	(1)	(13)	(27)	(17)
Ending Balance	151	175	151	175
Residential \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			3
Farmland
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	236	616	644	645
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Benefit)	157	48	145	19
Ending Balance	393	664	393	664
Farmland \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			(396)
Secured
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	3,751	6,284	7,098	6,859
Charge-offs	(1,245)	(346)	(2,856)	(928)
Recoveries	219	68	358	152
Provision (Benefit)	736	356	1,921	279
Ending Balance	3,461	6,362	3,461	6,362
Secured \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			(3,060)
Unsecured
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	209	265	116	207
Charge-offs	0	(2)	0	(2)
Recoveries	0	0	0	0
Provision (Benefit)	4	15	60	73
Ending Balance	213	278	213	278
Unsecured \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			37
Paycheck Protection Program (“PPP”)
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		0		0
Charge-offs		0		(21)
Recoveries		21		21
Provision (Benefit)		(21)		0
Ending Balance		0		0
Consumer and other
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	470	537	347	889
Charge-offs	(187)	(182)	(709)	(508)
Recoveries	207	243	714	431
Provision (Benefit)	(114)	(62)	(56)	(276)
Ending Balance	376	536	376	536
Consumer and other \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			80
Unallocated
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance		648	45	1,111
Charge-offs		0	0	0
Recoveries		0	0	0
Provision (Benefit)		181	0	(282)
Ending Balance	$ 0	$ 829	0	$ 829
Unallocated \| Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance			$ (45)

Investment Securities (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Summary of Debt Securities Held-to-maturity

A summary of the amortized cost and fair value related to securities held-to-maturity as of September 30, 2023 and December 31, 2022 is presented below.


(in thousands)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		(Losses)
September 30, 2023
Obligations of states and political subdivisions	$	3,104	$	—	$	(293)	$	2,811
Total held-to-maturity	$	3,104	$	—	$	(293)	$	2,811
December 31, 2022
Obligations of states and political subdivisions	$	3,756	$	—	$	(324)	$	3,432
Total held-to-maturity	$	3,756	$	—	$	(324)	$	3,432

Summary of Debt Securities Available-for-sale

A summary of the amortized cost and fair value related to securities available-for-sale as of September 30, 2023 and December 31, 2022 is presented below.


(in thousands)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		(Losses)
September 30, 2023
U.S. government agencies	$	11,281	$	110	$	(182)	$	11,209
Mortgage-backed securities	68,715		—		(14,252)		54,463
Obligations of states and political subdivisions	44,325		—		(7,974)		36,351
Collateralized mortgage obligations	382		—		(45)		337
Corporate bonds	2,000		—		(274)		1,726
Total available-for-sale	$	126,703	$	110	$	(22,727)	$	104,086
December 31, 2022
U.S. government agencies	$	14,317	$	81	$	(225)	$	14,173
Mortgage-backed securities	73,111		1		(11,841)		61,271
Obligations of states and political subdivisions	45,223		21		(6,818)		38,426
Collateralized mortgage obligations	436		—		(41)		395
Corporate bonds	2,000		—		(277)		1,723
Total available-for-sale	$	135,087	$	103	$	(19,202)	$	115,988

Summary of Investment Debt Securities by Contractual Maturity


(in thousands)	September 30, 2023								December 31, 2022
	Held-to-Maturity				Available-for-Sale				Held-to-Maturity				Available-for-Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	304	$	275	$	—	$	—	$	417	$	381	$	501	$	501
After one but within five years	935		847		397		355		1,015		927		—		—
After five years through ten years	1,365		1,236		6,424		5,510		1,470		1,343		5,320		4,761
After ten years	500		453		37,504		30,486		854		781		39,402		33,164

Investment securities not due at a single maturity date:
U.S. government agencies	—		—		11,281		11,209		—		—		14,317		14,173
Mortgage-backed securities	—		—		68,715		54,463		—		—		73,111		61,271
Collateralized mortgage obligations	—		—		382		337		—		—		436		395
Corporate bonds	—		—		2,000		1,726		—		—		2,000		1,723
Total	$	3,104	$	2,811	$	126,703	$	104,086	$	3,756	$	3,432	$	135,087	$	115,988

Schedule of Realized Gain (Loss)

Sales of investment securities and gross gains and losses are shown in the following table:


(in thousands)	For the three months ended				For the nine months ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Available-for-sale:
Sales proceeds	$	—	$	—	$	—	$	1,623
Gross realized gains	—		—		—		5

Schedule of Pledged Investment Securities

Pledged investment securities are shown in the following table:


(in thousands)	September 30, 2023		December 31, 2022
Pledged to:
The State of California, securing deposits of public funds and borrowings	$	54,076	$	40,465
The Federal Reserve Discount Window, increasing borrowing capacity	49,128		—
Total pledged investment securities	$	103,204	$	40,465

Schedule of Unrealized Losses and Fair Value of Available-for-sale Securities


	Less than 12 months				12 months or more				Total securities in a loss position
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2023
U.S. government agencies	$	839	$	(19)	$	7,455	$	(163)	$	8,294	$	(182)
Mortgage-backed securities	214		(2)		54,249		(14,250)		54,463		(14,252)
Obligations of states and political subdivisions	1,486		(34)		34,864		(7,940)		36,350		(7,974)
Collateralized mortgage obligations	—		—		337		(45)		337		(45)
Corporate bonds	—		—		1,726		(274)		1,726		(274)
	$	2,539	$	(55)	$	98,631	$	(22,672)	$	101,170	$	(22,727)

December 31, 2022
U.S. government agencies	$	3,090	$	(125)	$	8,392	$	(100)	$	11,482	$	(225)
Mortgage-backed securities	4,360		(470)		56,908		(11,371)		61,268		(11,841)
Obligations of states and political subdivisions	24,707		(4,097)		11,670		(2,721)		36,377		(6,818)
Collateralized mortgage obligations	395		(41)		—		—		395		(41)
Corporate bonds	—		—		1,723		(277)		1,723		(277)
	$	32,552	$	(4,733)	$	78,693	$	(14,469)	$	111,245	$	(19,202)

- Definition

Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

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+ Details

- Definition

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+ Details

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Net income	$ 11,045	$ 11,704	$ 36,935	$ 31,519
Unrealized (losses) on securities:
Net unrealized holding (losses) on securities available-for-sale during the period	(4,195)	(4,718)	(3,516)	(22,005)
Reclassification adjustment for net realized (losses) included in net income	0	0	0	(5)
Income tax (benefit) related to items of other comprehensive income	(1,240)	(1,395)	(1,039)	(6,506)
Other comprehensive (loss)	(2,955)	(3,323)	(2,477)	(15,504)
Total comprehensive income	$ 8,090	$ 8,381	$ 34,458	$ 16,015

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Summary of Fair Value of Assets and Liabilities Measured on Recurring Basis

The following table summarizes the Company’s assets and liabilities that were required to be recorded at fair value on a recurring basis.


(in thousands)	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Measurement Categories: Changes in Fair Value Recorded In
September 30, 2023
Assets:
Securities available-for-sale:
U.S. government agencies, mortgage-backed securities, obligations of states and political subdivisions, collateralized mortgage obligations, and corporate bonds	$	104,086	$	—	$	104,086	$	—	OCI
Derivatives – interest rate swap	5		—		5		—		NI
Liabilities:
Derivatives – interest rate swap	5		—		5		—		NI

December 31, 2022
Assets:
Securities available-for-sale:
U.S. government agencies, mortgage-backed securities, obligations of states and political subdivisions, collateralized mortgage obligations, and corporate bonds	$	115,988	$	—	$	115,988	$	—	OCI
Derivatives – interest rate swap	16		—		16		—		NI
Liabilities:
Derivatives – interest rate swap	16		—		16		—		NI

Summary of Fair Value Estimates for Financial Instruments by Balance Sheet Grouping


	September 30, 2023					December 31, 2022
(in thousands)	Carrying Amounts		Fair Value		Fair Value Hierarchy	Carrying Amounts		Fair Value		Fair Value Hierarchy
Financial assets:
Cash and cash equivalents	$	323,548	$	323,548	Level 1	$	259,991	$	259,991	Level 1
Time deposits in banks	6,971		6,971		Level 1	9,849		9,849		Level 1
Securities available-for-sale	104,086		104,086		Level 2	115,988		115,988		Level 2
Securities held-to-maturity	3,104		2,811		Level 3	3,756		3,432		Level 3
Loans held for sale	9,326		10,286		Level 2	9,416		9,785		Level 2
Loans held for investment, net of allowance for credit losses	2,975,902		2,773,007		Level 3	2,762,937		2,570,176		Level 3
FHLB stock and other investments	21,693		N/A		N/A	16,570		N/A		N/A
Interest rate swap	5		5		Level 2	16		16		Level 2
Financial liabilities:
Interest rate swap	$	5	$	5	Level 2	$	16	$	16	Level 2
FHLB advances	90,000		90,000		Level 2	100,000		100,000		Level 2
Subordinated notes	73,713		72,632		Level 3	73,606		72,273		Level 3

Shareholders' Equity - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Equity [Abstract]
Net income	$ 11,045	$ 11,704	$ 36,935	$ 31,519
Basic weighted average common shares outstanding (in shares)	17,175,034	17,140,435	17,163,609	17,123,016
Add: Dilutive effects of assumed vesting of restricted stock (in shares)	19,791	28,012	22,626	37,794
Total dilutive common shares outstanding (in shares)	17,194,825	17,168,447	17,186,235	17,160,810
Earnings per common share:
Basic EPS (in USD per share)	$ 0.64	$ 0.68	$ 2.15	$ 1.84
Diluted EPS (in USD per share)	$ 0.64	$ 0.68	$ 2.15	$ 1.84

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

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-Topic 250
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-Name Accounting Standards Codification
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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

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-Topic 250
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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

The following table presents the balance of each major product type within the Company’s portfolio as of the dates indicated.


(in thousands)	September 30, 2023		December 31, 2022
Real estate:
Commercial	$	2,599,616	$	2,394,674
Commercial land and development	15,482		7,477
Commercial construction	95,352		88,669
Residential construction	13,922		6,693
Residential	25,028		24,230
Farmland	51,921		52,478
Commercial:
Secured	157,273		165,186
Unsecured	23,997		25,431

Consumer and other	29,604		28,628
Subtotal	3,012,195		2,793,466
Net deferred loan fees	(2,265)		(2,140)
Allowance for credit losses	(34,028)		(28,389)
Loans held for investment, net of allowance for credit losses	$	2,975,902	$	2,762,937

Summary of Credit Quality Indicators


	Amortized Cost Basis by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Converted to Term		Total
Real estate:
Commercial
Pass	$	251,745	$	987,248	$	712,268	$	239,894	$	124,560	$	248,634	$	4,144	$	—	$	2,568,493
Watch	—		2,722		5,691		7,132		5,364		5,614		—		—		26,523
Substandard	—		—		—		—		—		1,920		—		—		1,920
Doubtful	—		—		—		—		—		—		—		—		—
Total	251,745		989,970		717,959		247,026		129,924		256,168		4,144		—		2,596,936
Commercial land and development
Pass	10,376		4,141		—		186		—		752		—		—		15,455
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	10,376		4,141		—		186		—		752		—		—		15,455
Commercial construction
Pass	2,692		33,946		41,889		10,530		—		—		—		—		89,057
Watch	—		—		—		—		—		5,897		—		—		5,897
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	2,692		33,946		41,889		10,530		—		5,897		—		—		94,954
Residential construction
Pass	—		8,162		5,750		—		—		—		—		—		13,912
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	—		8,162		5,750		—		—		—		—		—		13,912
Residential
Pass	3,606		3,998		6,292		2,298		1,187		6,085		1,591		—		25,057
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	3,606		3,998		6,292		2,298		1,187		6,085		1,591		—		25,057
Farmland
Pass	1,887		8,044		12,767		8,015		12,581		8,600		4		—		51,898
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	1,887		8,044		12,767		8,015		12,581		8,600		4		—		51,898
Commercial:
Secured
Pass	20,091		44,970		18,656		13,206		10,668		11,384		37,613		—		156,588
Watch	—		—		37		31		157		896		—		—		1,121
Substandard	—		—		—		—		49		30		—		—		79
Doubtful	—		—		—		—		—		—		—		—		—
Total	20,091		44,970		18,693		13,237		10,874		12,310		37,613		—		157,788


	Amortized Cost Basis by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Converted to Term		Total
Commercial:
Unsecured
Pass	3,081		3,869		5,068		6,157		2,339		20		3,475		—		24,009
Watch	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total	3,081		3,869		5,068		6,157		2,339		20		3,475		—		24,009
Consumer and other
Pass	7,977		12,585		8,997		5		—		320		—		—		29,884
Watch	—		16		—		—		—		—		—		—		16
Substandard	—		21		—		—		—		—		—		—		21
Doubtful	—		—		—		—		—		—		—		—		—
Total	7,977		12,622		8,997		5		—		320		—		—		29,921
Total
Pass	301,455		1,106,963		811,687		280,291		151,335		275,795		46,827		—		2,974,353
Watch	—		2,738		5,728		7,163		5,521		12,407		—		—		33,557
Substandard	—		21		—		—		49		1,950		—		—		2,020
Doubtful	—		—		—		—		—		—		—		—		—
Total	$	301,455	$	1,109,722	$	817,415	$	287,454	$	156,905	$	290,152	$	46,827	$	—	$	3,009,930

Summary of Age Analysis of Past Due Loans

The age analysis of past due loans by class as of September 30, 2023 consisted of the following:


(in thousands)	Past Due
	30-59 Days		60-89 Days		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable
Real estate:
Commercial	$	—	$	—	$	—	$	—	$	2,596,936	$	2,596,936
Commercial land and development	—		—		—		—		15,455		15,455
Commercial construction	—		—		—		—		94,954		94,954
Residential construction	—		—		—		—		13,912		13,912
Residential	—		—		—		—		25,057		25,057
Farmland	—		—		—		—		51,898		51,898
Commercial:
Secured	—		—		—		—		157,788		157,788
Unsecured	—		—		—		—		24,009		24,009

Consumer and other	156		—		—		156		29,765		29,921
Total	$	156	$	—	$	—	$	156	$	3,009,774	$	3,009,930

The age analysis of past due loans by class as of December 31, 2022 consisted of the following:


(in thousands)	Past Due						Total Past Due		Current		Total Loans Receivable
	30-59 Days		60-89 Days		Greater Than 90 Days
Real estate:
Commercial	$	—	$	—	$	—	$	—	$	2,392,053	$	2,392,053
Commercial land and development	—		—		—		—		7,447		7,447
Commercial construction	—		—		—		—		88,314		88,314
Residential construction	—		—		—		—		6,693		6,693
Residential	—		175		—		175		24,088		24,263
Farmland	—		—		—		—		52,446		52,446
Commercial:
Secured	—		—		—		—		165,609		165,609
Unsecured	—		—		—		—		25,488		25,488

Consumer and other	194		—		—		194		28,819		29,013
Total	$	194	$	175	$	—	$	369	$	2,790,957	$	2,791,326

Schedule of Non-accrual Loans

Non-accrual loans, segregated by class, were as follows as of September 30, 2023 and December 31, 2022:


(in thousands)	September 30, 2023		December 31, 2022
Real estate:
Commercial	$	1,923	$	106
Residential	—		175
Commercial:
Secured	79		123

Total non-accrual loans	$	2,002	$	404

Disclosure of Activity in the Allowance For Loan Losses

The following table discloses activity in the allowance for credit losses for the three months ended September 30, 2023.


(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Real estate:
Commercial	$	27,553	$	—	$	—	$	348	$	27,901
Commercial land and development	184		—		—		14		198
Commercial construction	1,212		—		—		8		1,220
Residential construction	217		—		—		(102)		115
Residential	152		—		—		(1)		151
Farmland	236		—		—		157		393
Commercial:
Secured	3,751		(1,245)		219		736		3,461
Unsecured	209		—		—		4		213

Consumer and other	470		(187)		207		(114)		376

Total	$	33,984	$	(1,432)	$	426	$	1,050	$	34,028

The following table discloses activity in the allowance for credit losses for the three months ended September 30, 2022.


(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Real estate:
Commercial	$	16,621	$	—	$	—	$	1,688	$	18,309
Commercial land and development	68		—		—		30		98
Commercial construction	508		—		—		38		546
Residential construction	51		—		—		(10)		41
Residential	188		—		—		(13)		175
Farmland	616		—		—		48		664
Commercial:
Secured	6,284		(346)		68		356		6,362
Unsecured	265		(2)		—		15		278
PPP	—		—		21		(21)		—
Consumer and other	537		(182)		243		(62)		536
Unallocated	648		—		—		181		829
Total	$	25,786	$	(530)	$	332	$	2,250	$	27,838

The following table discloses activity in the allowance for credit losses for the nine months ended September 30, 2023.


(in thousands)	Beginning Balance		Effect of Adoption of ASC 326		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Real estate:
Commercial	$	19,216	$	7,606	$	—	$	—	$	1,079	$	27,901
Commercial land and development	54		74		—		—		70		198
Commercial construction	645		882		—		—		(307)		1,220
Residential construction	49		81		—		—		(15)		115
Residential	175		3		—		—		(27)		151
Farmland	644		(396)		—		—		145		393
Commercial:
Secured	7,098		(3,060)		(2,856)		358		1,921		3,461
Unsecured	116		37		—		—		60		213

Consumer and other	347		80		(709)		714		(56)		376
Unallocated	45		(45)		—		—		—		—
Total	$	28,389	$	5,262	$	(3,565)	$	1,072	$	2,870	$	34,028

The following table discloses activity in the allowance for credit losses for the nine months ended September 30, 2022.


(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (Benefit)		Ending Balance
Real estate:
Commercial	$	12,869	$	—	$	—	$	5,440	$	18,309
Commercial land and development	50		—		—		48		98
Commercial construction	371		—		—		175		546
Residential construction	50		—		—		(9)		41
Residential	192		—		—		(17)		175
Farmland	645		—		—		19		664
Commercial:
Secured	6,859		(928)		152		279		6,362
Unsecured	207		(2)		—		73		278
PPP	—		(21)		21		—		—
Consumer and other	889		(508)		431		(276)		536
Unallocated	1,111		—		—		(282)		829
Total	$	23,243	$	(1,459)	$	604	$	5,450	$	27,838

Prior to adoption of ASC 326, provisions for unfunded loan commitments were included in “Other operating expenses” in the unaudited consolidated statements of income.


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Balance at beginning of period	$	1,547	$	125	$	125	$	102
Effect of adoption of ASC 326	—		—		1,092		—
Provision	—		—		330		23


Balance at end of period	$	1,547	$	125	$	1,547	$	125

Fair Value of Assets and Liabilities - Fair Value Estimates for Financial Instruments by Balance Sheet Grouping (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financial assets:
Securities available-for-sale	$ 104,086	$ 115,988
Securities held-to-maturity	2,811	3,432
Carrying Amounts
Financial assets:
Cash and cash equivalents	323,548	259,991
Time deposits in banks	6,971	9,849
Securities available-for-sale	104,086	115,988
Securities held-to-maturity	3,104	3,756
Loans held for sale	9,326	9,416
Loans held for investment, net of allowance for credit losses	2,975,902	2,762,937
FHLB stock and other investments	21,693	16,570
Interest rate swap	5	16
Financial liabilities:
Interest rate swap	5	16
FHLB advances	90,000	100,000
Subordinated notes	73,713	73,606
Fair Value \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and cash equivalents	323,548	259,991
Time deposits in banks	6,971	9,849
Fair Value \| Significant Other Observable Inputs (Level 2)
Financial assets:
Securities available-for-sale	104,086	115,988
Loans held for sale	10,286	9,785
Interest rate swap	5	16
Financial liabilities:
Interest rate swap	5	16
FHLB advances	90,000	100,000
Fair Value \| Significant Unobservable Inputs (Level 3)
Financial assets:
Securities held-to-maturity	2,811	3,432
Loans held for investment, net of allowance for credit losses	2,773,007	2,570,176
Financial liabilities:
Subordinated notes	$ 72,632	$ 72,273

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	Organization Five Star Bank (the “Bank”) was chartered on October 26, 1999 and began operations on December 20, 1999. Five Star Bancorp (“Bancorp” or the “Company”) was incorporated on September 16, 2002 and subsequently obtained approval from the Federal Reserve to be a bank holding company in connection with its acquisition of the Bank. The Company became the sole shareholder of the Bank on June 2, 2003 in a statutory merger, pursuant to which each outstanding share of the Bank’s common stock was exchanged for one share of common stock of the Company. The Company, through the Bank, provides financial services to customers who are predominately small and middle-market businesses, professionals, and individuals residing in the Northern California region. The Company’s primary loan products are commercial real estate loans, land development loans, construction loans, and operating lines of credit, and its primary deposit products are checking accounts, savings accounts, money market accounts, and term certificate accounts. The Bank currently has seven branch offices in Roseville, Natomas, Rancho Cordova, Redding, Elk Grove, Chico, and Yuba City, and one loan production office in Sacramento.
Basis of Financial Statement Presentation and Consolidation and Emerging Growth Company	Basis of Financial Statement Presentation and Consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as contained within the Financial Accounting Standards Board’s (“FASB”) ASC and the rules and regulations of the SEC, including the instructions to Regulation S-X. These interim unaudited consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments and accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in shareholders’ equity, and cash flows for the interim periods presented. These unaudited consolidated financial statements have been prepared on a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as of and for the year ended December 31, 2022, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report on Form 10-K”), which was filed with the SEC on February 24, 2023. The unaudited consolidated financial statements include Bancorp and its wholly owned subsidiary, the Bank. All significant intercompany transactions and balances are eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2023. The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry. Emerging Growth CompanyThe Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, and, as such, may take advantage of specified reduced reporting requirements and deferred accounting standards adoption dates, and is relieved of other significant requirements that are otherwise generally applicable to other public companies. The Company will remain an Emerging Growth Company for five years after its IPO date of May 5, 2021, unless one of the following occurs: (i) total annual gross revenues are $1.235 billion or more; (ii) the Company issues more than $1 billion in non-convertible debt; or (iii) the Company becomes a large accelerated filer with a public float of more than $0.7 billion.
Reclassifications	Certain amounts reported in previous consolidated financial statements have been reclassified to conform to current period presentation. These reclassifications did not affect previously reported amounts of net income, total assets, or total shareholders’ equity.
Segments	SegmentsWhile the Company’s chief decision-makers monitor the revenue streams of the various products and services, operations are managed, and financial performance is evaluated, on a Company-wide basis. Discrete financial information is not available other than on a Company-wide basis. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.
Allowance for Credit Losses (“ACL”), Individually Assessed Loans and TDRs and Other Loan Modifications	Allowance for Credit Losses (“ACL”) The ACL is a valuation account that offsets the amortized cost basis of loans receivable and certain other financial assets, including unfunded loan commitments and held-to-maturity debt securities. Under ASC 326, amortized cost basis is the basis on which the ACL is determined. Amortized cost basis on loans receivable is principal outstanding, net of any purchase premiums and discounts, and net of any deferred loan fees and costs. Credit losses are charged off when management believes that the collectability of at least some portion of outstanding principal is unlikely. These charge-offs are recorded as a reversal to, thereby reducing, the allowance for credit losses. Subsequent recoveries of previously charged-off amounts, if any, are recorded as a provision to, thereby increasing, the allowance for credit losses. The allowance for credit losses is maintained at a level to absorb expected credit losses over the contractual life, including consideration of prepayments. Determining the adequacy of the allowance is complex and requires judgments that are inherently subjective, as it requires estimates that are susceptible to revision as additional information becomes available. While the Company has determined an allowance for credit losses it considers appropriate, there can be no assurance that the allowance will be sufficient to absorb future losses. The Company’s process for determining expected lifetime credit losses entails a loan-level, model-based approach and considers a broad range of information, including historical loss experience, current conditions, and reasonable and supportable forecasts. Credit loss is estimated for all loans. Accordingly, the Company has stratified the full loan population into segments sharing similar characteristics to perform the evaluation of the credit loss collectively. The Company can also further stratify loans of similar types, risk attributes, and methods for credit risk monitoring. The Company has determined pools based primarily on regulatory reporting codes as the loans within each pool share similar risk characteristics and there is sufficient historical peer loss data from the Federal Financial Institutions Examination Council to provide statistically meaningful support in the models developed. The Company further stratified the C&I portfolio into traditional C&I loans and SBA loans, as the loans in these pools have different repayment structures and credit risk characteristics. The Company also stratified C&I loans and consumer loans that do not require reserves, as the Company has third party agreements in place to cover loan losses. The Company has identified the following pools subject to an estimate of credit loss: (1) 1-4 Family Construction; (2) Other Construction; (3) Farmland; (4) Revolving Secured by 1-4 Family; (5) Residential Secured by First Liens; (6) Residential Secured by Junior Liens; (7) Multifamily; (8) CRE Owner Occupied; (9) CRE Non-Owner Occupied; (10) Agriculture; (11) C&I; (12) C&I SBA; (13) Consumer; and (14) Municipal. The Company has determined, given its limited loss experience, that peer data and other external data to support loss history provides the best basis for its assessment of expected credit losses. The Company believes that the use of peer loss data from 2008 to 2019 presents loss histories that appropriately reflect a full economic cycle, reflects asset-specific risk characteristics at each pool level identified, and includes a historical look-back period that is objective and reflective of future expected credit losses. Loss data from 2020 to 2021 was excluded from the data set to exclude pandemic-related data in the models. The method for determining the estimate of lifetime credit losses includes, among other things, the following main components: (i) the use of Probability of Default (“PD”) and Loss Given Default (“LGD”) assumptions under a Discounted Cash Flow model; (ii) a multi-scenario macroeconomic forecast; (iii) an initial and reasonable and supportable forecast period of one year for all loan segments; and (iv) a reversion period of one year using a linear transition method to historical loss rates. Given the inherent limitations of a quantitative-only model, qualitative adjustments are included to factor in data points not captured from a quantitative analysis alone. Qualitative criteria that can be considered includes, among other things, the following: •Concentrations – the existence and effect of any concentrations of credit, and changes in the level of such concentrations; •Volume – changes in the nature and volume of the portfolio and in the terms of the loans; •Economic – changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments; •Policy – changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses; •Quality – changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans; and •External – the effect of other external factors, such as competition and legal and regulatory requirements on the level of estimated credit losses in the Company’s loan portfolio. Management reviews current information on a quarterly basis to assess the forecasted future economic impact for purposes of evaluating the adequacy of the ACL. The forecasted direction and magnitude of change with respect to future economic conditions is then assessed against the estimate in the model. Any changes resulting from the quarterly assessment are recorded in “Provision for credit losses” in the unaudited consolidated statements of income. Individually Assessed Loans If an individual loan’s characteristics have deteriorated to below a range of the overall pool, the loan would be individually assessed. Individually assessed loans are measured for credit loss based on one of the following methods: (i) present value of future expected cash flows, discounted at the loan’s effective interest rate; (ii) amount by which carrying value of the loan exceeds the loan’s observable market price; or (iii) the fair value of the collateral, less estimated selling costs, if the loan is collateral dependent. The Company applies the practical expedient and defines collateral dependent loans as those where the borrower is experiencing financial difficulty and on which payment is expected to be provided substantially through the operation or sale of the collateral. TDRs and Other Loan Modifications In accordance with the adoption of ASC 326, which includes ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, accounting guidance for TDRs for creditors has been eliminated. New guidance with respect to recognition, measurement, and disclosures of loans for borrowers experiencing financial difficulties supersedes guidance on TDRs. As of September 30, 2023, the amount of loans modified for borrowers due to experiencing financial difficulties under criteria of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, or term extension was immaterial.
Accrued Interest	Accrued Interest Accrued interest receivable is excluded from amortized cost of all financial instrument types and included in “Interest receivable and other assets” in the unaudited consolidated balance sheets. Accrued interest receivable is not subject to an estimate for credit loss, as the Company has a policy to charge off accrued interest deemed uncollectible in a timely manner. When a loan is placed on non-accrual status, which occurs within 90 days of a borrower becoming delinquent, interest previously accrued but not collected is reversed against current period income.
Available-for-sale (AFS) and Held-to-Maturity Debt Securities	Available-for-sale (“AFS”) Debt Securities Unrealized credit losses are recognized through an allowance for credit losses instead of an adjustment to amortized cost basis, eliminating the other-than-temporary impairment concept. For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of amortized cost basis. If either criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings. For AFS debt securities that do not meet the above conditions, the Company evaluates at the individual security level whether the decrease in fair value has resulted from credit factors or non-credit factors. If assessment determines that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis of the security, then a credit loss would be recognized, limited to the amount by which the fair value is less than the amortized cost basis. All other changes in fair value of an AFS debt security are recognized in other comprehensive income, net of applicable taxes. Changes in the allowance for credit losses, if any, are recognized as a provision for (or reversal of) credit losses. As of September 30, 2023, the Company’s portfolio of AFS debt securities is comprised primarily of debt, mortgage-backed securities, and collateralized mortgage obligations issued by the U.S. government, its agencies, or government-sponsored enterprises, which are either explicitly or implicitly guaranteed by the U.S. government. The remainder of the portfolio is primarily comprised of obligations of state and political subdivisions, which are generally rated as high grade. The history of minimal credit losses from these issuers indicates that expectation of non-payment of the amortized cost basis is zero. As such, the Company determined that the unrealized loss positions in AFS securities were not due to credit losses, but instead related to changes in interest rates and general market conditions and therefore, no credit loss expense was recognized. Held-to-Maturity Debt Securities The Company’s process for determining the estimate of credit loss on held-to-maturity debt securities is substantially similar to what it is on loans, with segmenting not being applicable. As the amount of held-to-maturity debt securities that the Company carries is limited and given the determination that expected credit loss was immaterial, an immaterial amount was recognized in the ACL upon adoption and no credit loss expense was recorded for the three and nine months ended September 30, 2023.
Loan Commitments	Loan Commitments Loan commitments not unconditionally cancellable are subject to an estimate of credit loss under the CECL model. The Company’s process for determining the estimate of credit loss on loan commitments is the same as it is on loans. Unfunded loan commitment reserves are included in “Interest payable and other liabilities” in the unaudited consolidated balance sheets.
Recently Issued Accounting Standards, Accounting Standards Adopted, and Accounting Standards Issued But Not Yet Adopted	Recently Issued Accounting Standards The following information reflects recent accounting standards that have been adopted or are pending adoption by the Company. The Company qualifies as an emerging growth company and, as such, has elected to use the extended transition period for complying with new or revised accounting standards and is not subject to the new or revised accounting standards applicable to public companies during the extended transition period. The accounting standards discussed below indicate effective dates for the Company as an emerging growth company using the extended transition period. Accounting Standards Adopted On January 1, 2023, the Company adopted ASC 326, which replaces the current “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the Current Expected Credit Loss (“CECL”) model. The CECL model applies to estimated credit losses on loans receivable, held-to-maturity debt securities, unfunded loan commitments, and certain other financial assets measured at amortized cost. Under ASC 326, available-for-sale debt securities are evaluated for impairment if fair value is less than amortized cost, with any estimated credit losses recorded through a credit loss expense and an allowance, rather than a write-down of the investment. Changes in fair value that are not credit-related will continue to be recorded in other comprehensive income. The Company adopted this standard using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance was effective for financial assets measured at amortized cost. For certain new disclosures required under ASC 326, such as credit quality indicators by year of origination, we have not restated comparative financial information before January 1, 2023 to conform under ASC 326. This adoption method is considered a change in accounting principle requiring additional disclosure of the nature and reason for the change, which is solely due to adoption of ASC 326. On January 1, 2023, the Company also adopted ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which had no material impact. Accounting Standards Issued But Not Yet Adopted For the fiscal year beginning January 1, 2023, there have been no new accounting standards issued but not yet adopted that are expected to be material to the Company. There are also no accounting standards issued before January 1, 2023 yet to be adopted.
EPS	EPSBasic EPS is net income divided by the weighted average number of common shares outstanding during the period less average unvested restricted stock awards (“RSAs”). Diluted EPS includes the dilutive effect of additional potential common shares related to unvested RSAs using the treasury stock method. The Company has two forms of outstanding common stock: common stock and unvested RSAs. Holders of unvested RSAs receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings, and therefore the RSAs are considered participating securities. However, under the two-class method, the difference in EPS is not significant for these participating securities.

Label	Element	Value
Accounting Standards Update [Extensible Enumeration]	us-gaap_AccountingStandardsUpdateExtensibleList	Accounting Standards Update 2016-02 [Member]

- Definition

Indicates amendment to accounting standards.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Basis of Presentation and Summary of Significant Accounting Policies - ASC 326 Adoption (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Jan. 01, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
ASSETS
Allowance for Credit Losses	$ (34,028)	$ (33,984)	$ (28,389)	$ (28,389)	$ (27,838)	$ (25,786)	$ (23,243)
Deferred Tax Asset (Interest receivable and other assets)			12,273
Liabilities:
Allowance for Credit Losses	(34,028)	(33,984)	(28,389)	(28,389)	(27,838)	(25,786)	(23,243)
Shareholders’ Equity:
Retained earnings	69,689		(46,736)	46,736
Unfunded Loan Commitment
ASSETS
Allowance for Credit Losses	(1,547)	(1,547)	(125)	(125)	(125)	(125)	(102)
Liabilities:
Allowance for Credit Losses	$ (1,547)	(1,547)	(125)	(125)	$ (125)	(125)	(102)
Cumulative Effect, Period of Adoption, Adjustment
ASSETS
Allowance for Credit Losses			(5,282)	(5,262)
Deferred Tax Asset (Interest receivable and other assets)			1,883
Liabilities:
Allowance for Credit Losses			(5,282)	(5,262)
Shareholders’ Equity:
Retained earnings			4,491
Cumulative Effect, Period of Adoption, Adjustment \| Unfunded Loan Commitment
ASSETS
Allowance for Credit Losses		0	(1,092)	(1,092)		0	0
Liabilities:
Allowance for Credit Losses		$ 0	(1,092)	$ (1,092)		$ 0	$ 0
Cumulative Effect, Period of Adoption, Adjusted Balance
ASSETS
Allowance for Credit Losses			(33,671)
Deferred Tax Asset (Interest receivable and other assets)			14,156
Liabilities:
Allowance for Credit Losses			(33,671)
Shareholders’ Equity:
Retained earnings			(42,245)
Cumulative Effect, Period of Adoption, Adjusted Balance \| Unfunded Loan Commitment
ASSETS
Allowance for Credit Losses			(1,217)
Liabilities:
Allowance for Credit Losses			$ (1,217)

- Definition

Amount of allowance for credit loss on financing receivable. Excludes allowance for financing receivable covered under loss sharing agreement.

+ References + Details

- Definition

Amount of accumulated undistributed earnings (deficit).

+ References + Details

Interest-Bearing Deposits - Narrative (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Interest-bearing Deposits
Interest-bearing domestic deposit, time deposits	$ 427,524,000	$ 342,500,000
One-way deposits	$ 0	$ 0

Fair Value of Assets and Liabilities - Fair Value of Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 104,086	$ 115,988
Assets: \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	104,086	115,988
Assets: \| Fair Value, Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
Assets: \| Fair Value, Recurring \| Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	104,086	115,988
Assets: \| Fair Value, Recurring \| Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	0	0
Assets: \| Derivatives – interest rate swap \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives – interest rate swap	5	16
Assets: \| Derivatives – interest rate swap \| Fair Value, Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives – interest rate swap	0	0
Assets: \| Derivatives – interest rate swap \| Fair Value, Recurring \| Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives – interest rate swap	5	16
Assets: \| Derivatives – interest rate swap \| Fair Value, Recurring \| Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives – interest rate swap	0	0
Liabilities: \| Derivatives – interest rate swap \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives – interest rate swap	5	16
Liabilities: \| Derivatives – interest rate swap \| Fair Value, Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives – interest rate swap	0	0
Liabilities: \| Derivatives – interest rate swap \| Fair Value, Recurring \| Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives – interest rate swap	5	16
Liabilities: \| Derivatives – interest rate swap \| Fair Value, Recurring \| Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives – interest rate swap	$ 0	$ 0

Commitments and Contingencies - Unfunded Loan Commitments and Standby Letters of Credit (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total commitments and standby letters of credit	$ 401,934	$ 329,148
Commercial lines of credit
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total commitments and standby letters of credit	173,603	147,021
Undisbursed construction loans
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total commitments and standby letters of credit	98,901	80,726
Undisbursed commercial real estate loans
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total commitments and standby letters of credit	94,537	79,121
Agricultural lines of credit
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total commitments and standby letters of credit	24,839	10,399
Undisbursed residential real estate loans
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total commitments and standby letters of credit	6,377	8,945
Undisbursed agricultural real estate loans
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total commitments and standby letters of credit	1,200	1,068
Other
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total commitments and standby letters of credit	$ 2,477	$ 1,868

Investment Securities - Narrative (Details) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) security	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) security $ / shares	Sep. 30, 2022 USD ($)	Jul. 27, 2023	Dec. 31, 2022 USD ($) security
Marketable Securities [Line Items]
Number of securities in unrealized loss positions	154		154			152
Number of investment securities in a continuous loss position for twelve months or more	148		148
Investment securities in a loss position for less than twelve months	6		6
Held-to-maturity securities in a continuous loss position for twelve months or less	1		1
FHLB stock price (in USD per share) \| $ / shares			$ 100
FHLB Stock \| $	$ 15,000		$ 15,000			$ 10,890
Investment interest rate					7.75%
FHLB stock dividends \| $	274	$ 152	656	$ 353
Investment in Federal Home Loan Bank Stock
Marketable Securities [Line Items]
FHLB stock dividends \| $	$ 300	$ 200	$ 700	$ 400

Commitments and Contingencies - Narrative (Details) $ in Thousands	Sep. 30, 2023 USD ($) deposit_relationship	Jun. 30, 2023 USD ($)	Jan. 01, 2023 USD ($)	Dec. 31, 2022 USD ($)	Sep. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Other Commitments [Line Items]
Allowance for credit loss	$ 34,028	$ 33,984	$ 28,389	$ 28,389	$ 27,838	$ 25,786	$ 23,243
Real estate related loans (in percent)	92.71%			91.84%
Number of deposits \| deposit_relationship	86
Deposits over five million, total	$ 5,000
Deposits over five million, amount	$ 1,900,000
Percentage of deposits over five million deposits (in percent)	61.64%
Largest single deposit	$ 250,000
Percentage of largest single deposit to total deposits (in percent)	8.24%
Uninsured amount	$ 22,100			$ 16,200
Unfunded Loan Commitment
Other Commitments [Line Items]
Allowance for credit loss	$ 1,547	$ 1,547	$ 125	$ 125	$ 125	$ 125	$ 102

Interest Bearing Deposits - Interest-Bearing Deposits (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Interest-bearing Deposits
Interest-bearing transaction accounts	$ 297,678	$ 242,632
Savings accounts	138,029	154,581
Money market accounts	1,335,545	1,073,528
Time accounts, more than $250	330,913	198,159
Other time accounts	96,611	144,355
Time deposits in banks	427,524	342,514
Total interest-bearing deposits	2,198,776	$ 1,813,255
Time deposits minimum	$ 250

Shareholders’ Equity (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Schedule of Earnings Per Share


	Three months ended				Nine months ended
(in thousands, except share count and earnings per common share)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net income	$	11,045	$	11,704	$	36,935	$	31,519

Basic weighted average common shares outstanding	17,175,034		17,140,435		17,163,609		17,123,016
Add: Dilutive effects of assumed vesting of restricted stock	19,791		28,012		22,626		37,794
Total dilutive weighted average common shares outstanding	17,194,825		17,168,447		17,186,235		17,160,810
Earnings per common share:
Basic EPS	$	0.64	$	0.68	$	2.15	$	1.84
Diluted EPS	0.64		0.68		2.15		1.84

Nonvested Restricted Stock Shares

The following table summarizes activity related to restricted shares for the periods indicated:


	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Beginning of the period balance	82,324	$	21.75	107,824	$	20.88	96,826	$	20.34	127,751	$	19.95
Shares granted	—	—		—	—		16,978	28.52		23,639	28.29
Shares vested	—	—		(3,476)	28.50		(29,933)	20.78		(44,538)	22.65
Shares forfeited	—	—		—	—		(1,547)	26.95		(2,504)	22.50
End of the period balance	82,324	$	21.75	104,348	$	20.62	82,324	$	21.75	104,348	$	20.62

Interest Bearing Deposits - Maturities of Time Deposits (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Interest-bearing Deposits
2023	$ 218,703
2024	186,345
2025	21,135
2026	1,341
2027	0
Total time deposits	$ 427,524	$ 342,500

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest and fee income:
Loans, including fees	$ 41,861	$ 29,886	$ 119,284	$ 76,877
Taxable securities	472	439	1,401	1,252
Nontaxable securities	181	176	548	532
Interest-bearing deposits in other banks	2,584	1,145	6,969	1,855
Total interest and fee income	45,098	31,646	128,202	80,516
Interest expense:
Deposits	16,386	2,817	39,733	4,383
FHLB advances	75	47	783	52
Subordinated debt	1,161	1,259	3,484	2,146
Total interest expense	17,622	4,123	44,000	6,581
Net interest income	27,476	27,523	84,202	73,935
Provision for credit losses	1,050	2,250	3,200	5,450
Net interest income after provision for credit losses	26,426	25,273	81,002	68,485
Non-interest income:
Service charges on deposit accounts	158	132	410	370
Net gain on sale of securities available-for-sale	0	0	0	5
Gain on sale of loans	396	548	1,635	2,297
Loan-related fees	355	447	1,052	1,800
FHLB stock dividends	274	152	656	353
Earnings on BOLI	127	102	355	293
Other	74	52	1,467	438
Total non-interest income	1,384	1,433	5,575	5,556
Non-interest expense:
Salaries and employee benefits	6,876	5,645	19,915	16,873
Occupancy and equipment	561	515	1,635	1,548
Data processing and software	1,020	797	2,905	2,252
FDIC insurance	375	195	1,187	605
Professional services	700	792	1,917	1,914
Advertising and promotional	535	512	1,686	1,340
Loan-related expenses	345	262	924	929
Other operating expenses	1,603	1,454	4,943	4,491
Total non-interest expense	12,015	10,172	35,112	29,952
Income before provision for income taxes	15,795	16,534	51,465	44,089
Provision for income taxes	4,750	4,830	14,530	12,570
Net income	$ 11,045	$ 11,704	$ 36,935	$ 31,519
Basic earnings per common share (in USD per share)	$ 0.64	$ 0.68	$ 2.15	$ 1.84
Diluted earnings per common share (in USD per share)	$ 0.64	$ 0.68	$ 2.15	$ 1.84

Loans and Allowance for Credit Losses - Non-accrual Loans Segregated by Class (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Total non-accrual loans	$ 2,002	$ 404
Commercial
Financing Receivable, Past Due [Line Items]
Total non-accrual loans	1,923	106
Residential
Financing Receivable, Past Due [Line Items]
Total non-accrual loans	0	175
Secured
Financing Receivable, Past Due [Line Items]
Total non-accrual loans	$ 79	$ 123

Long Term Debt and Other Borrowings	9 Months Ended
Long Term Debt and Other Borrowings	Sep. 30, 2023
Debt Disclosure [Abstract]
Long Term Debt and Other Borrowings	Long Term Debt and Other Borrowings Subordinated notes: On August 17, 2022, the Company completed a private placement of $75.0 million of fixed-to-floating rate subordinated notes to certain qualified investors, of which $19.3 million was purchased by existing or former members of the board of directors and their affiliates. The notes will be used for capital management and general corporate purposes, including, without limitation, the redemption of existing subordinated notes. The subordinated notes have a maturity date of September 1, 2032 and bear interest, payable semi-annually, at the rate of 6.00% per annum until September 1, 2027. On that date, the interest rate will be adjusted to float at a rate equal to the three-month Term SOFR plus 329.0 basis points (8.70% as of September 30, 2023) until maturity. The notes include a right of prepayment, on or after August 17, 2027 or, in certain limited circumstances, before that date. The indebtedness evidenced by the subordinated notes, including principal and interest, is unsecured and subordinate and junior in right to payment to general and secured creditors and depositors of the Company. The subordinated notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. Eligible amounts will be phased out by 20% per year beginning five years before the maturity date of the notes. Debt issuance costs incurred in conjunction with the notes were $1.5 million, of which $0.2 million has been amortized as of September 30, 2023. The Company reflects debt issuance costs as a direct deduction from the face of the note. The debt issuance costs are amortized into interest expense through the maturity period. At September 30, 2023 and December 31, 2022, the Company’s subordinated debt outstanding was $73.7 million and $73.6 million, respectively. Other borrowings: The Company entered into an agreement with the FHLB which granted the FHLB a blanket lien on all loans receivable (except for construction and agricultural loans) as collateral for a borrowing line. Based on the dollar volume of qualifying loan collateral, the Company had a total financing availability of $1.1 billion at September 30, 2023 and $1.0 billion at December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had $90.0 million and $100.0 million of outstanding borrowings, respectively. As of September 30, 2023 and December 31, 2022, the Company had letters of credit (“LCs”) issued on its behalf totaling $671.5 million and $686.5 million, respectively, as discussed below. At September 30, 2023 and December 31, 2022, LCs totaling $261.5 million and $206.5 million, respectively, were pledged to secure State of California deposits, and LCs totaling $410.0 million and $480.0 million, respectively, were pledged to secure local agency deposits. The LCs issued reduced the Company’s available borrowing capacity to $292.1 million and $216.3 million as of September 30, 2023 and December 31, 2022, respectively. At September 30, 2023, the Company had five unsecured federal funds lines of credit with its correspondent banks totaling $175.0 million. At December 31, 2022, the Company had seven unsecured federal funds lines of credit with its correspondent banks totaling $190.0 million. There were no amounts outstanding at September 30, 2023 and December 31, 2022. At September 30, 2023 and December 31, 2022, the Company had the ability to borrow from the Federal Reserve Discount Window. At September 30, 2023 and December 31, 2022, the borrowing capacity under this arrangement was $69.0 million and $21.9 million, respectively. There were no amounts outstanding at September 30, 2023 and December 31, 2022. The borrowing line is secured by liens on the Company’s construction and agricultural loan portfolios and certain available-for-sale securities.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Investment Securities - Available-for-sale Securities in a Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Less than twelve continuous months, fair value	$ 2,539	$ 32,552
Less than twelve continuous months, unrealized loss	(55)	(4,733)
Twelve continuous months or longer, fair value	98,631	78,693
Twelve continuous months or longer, unrealized loss	(22,672)	(14,469)
Total securities in a loss position, fair value	101,170	111,245
Total securities in a loss position, unrealized loss	(22,727)	(19,202)
U.S. government agencies
Marketable Securities [Line Items]
Less than twelve continuous months, fair value	839	3,090
Less than twelve continuous months, unrealized loss	(19)	(125)
Twelve continuous months or longer, fair value	7,455	8,392
Twelve continuous months or longer, unrealized loss	(163)	(100)
Total securities in a loss position, fair value	8,294	11,482
Total securities in a loss position, unrealized loss	(182)	(225)
Mortgage-backed securities
Marketable Securities [Line Items]
Less than twelve continuous months, fair value	214	4,360
Less than twelve continuous months, unrealized loss	(2)	(470)
Twelve continuous months or longer, fair value	54,249	56,908
Twelve continuous months or longer, unrealized loss	(14,250)	(11,371)
Total securities in a loss position, fair value	54,463	61,268
Total securities in a loss position, unrealized loss	(14,252)	(11,841)
Obligations of states and political subdivisions
Marketable Securities [Line Items]
Less than twelve continuous months, fair value	1,486	24,707
Less than twelve continuous months, unrealized loss	(34)	(4,097)
Twelve continuous months or longer, fair value	34,864	11,670
Twelve continuous months or longer, unrealized loss	(7,940)	(2,721)
Total securities in a loss position, fair value	36,350	36,377
Total securities in a loss position, unrealized loss	(7,974)	(6,818)
Collateralized mortgage obligations
Marketable Securities [Line Items]
Less than twelve continuous months, fair value	0	395
Less than twelve continuous months, unrealized loss	0	(41)
Twelve continuous months or longer, fair value	337	0
Twelve continuous months or longer, unrealized loss	(45)	0
Total securities in a loss position, fair value	337	395
Total securities in a loss position, unrealized loss	(45)	(41)
Corporate bonds
Marketable Securities [Line Items]
Less than twelve continuous months, fair value	0	0
Less than twelve continuous months, unrealized loss	0	0
Twelve continuous months or longer, fair value	1,726	1,723
Twelve continuous months or longer, unrealized loss	(274)	(277)
Total securities in a loss position, fair value	1,726	1,723
Total securities in a loss position, unrealized loss	$ (274)	$ (277)

Shareholders' Equity - Summary of Unvested Shares Activity (Details) - Restricted Stock - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Shares
Beginning of the period balance (in shares)	82,324	107,824	96,826	127,751
Shares granted (in shares)	0	0	16,978	23,639
Shares vested (in shares)	0	(3,476)	(29,933)	(44,538)
Shares forfeited (in shares)	0	0	(1,547)	(2,504)
End of the period balance (in shares)	82,324	104,348	82,324	104,348
Weighted Average Grant Date Fair Value
Beginning of the period balance (in USD per share)	$ 21.75	$ 20.88	$ 20.34	$ 19.95
Shares granted (in USD per share)	0	0	28.52	28.29
Shares vested (in USD per share)	0	28.50	20.78	22.65
Shares forfeited (in USD per share)	0	0	26.95	22.50
End of the period balance (in USD per share)	$ 21.75	$ 20.62	$ 21.75	$ 20.62