Third Quarter 2026
Filed Oct 27, 2026Five Star Bancorp Announces Third Quarter 2026 Results
GAAP net income increased to $ 21,909 from $ 19,399 in the prior quarter and $ 16,344 in the prior-year quarter, supported by 10.51% sequential and 29.42% year-over-year net interest income growth, while net interest margin expanded to 3.69%. Loan growth, the public equity offering, and improved capital ratios strengthened capacity for growth, although non-interest income declined and operating expenses increased.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net interest income, three months ended September 30, 2026GAAP | $50.93M | 10.51 % | 29.42 % |
| Interest and fee income, three months ended September 30, 2026GAAP | $79.17M | 9.47 % | 22.10 % |
| Interest expense, three months ended September 30, 2026GAAP | 28,248 | 7.64 % | 10.79 % |
| Provision for credit losses, three months ended September 30, 2026GAAP | 2,500 | 11.11 % | — % |
| Net interest income after provision, three months ended September 30, 2026GAAP | 48,426 | – | – |
| Total non-interest income, three months ended September 30, 2026GAAP | $1.69M | (9.51) % | (13.84) % |
| Service charges on deposit accounts, three months ended September 30, 2026GAAP | $148K | 21.31 % | (20.00) % |
| Loan-related fees, three months ended September 30, 2026GAAP | 472 | (30.49) % | (30.89) % |
| FHLB stock dividends, three months ended September 30, 2026GAAP | 424 | 121.99 % | 28.88 % |
| Earnings on bank-owned life insurance, three months ended September 30, 2026GAAP | 270 | 1.89 % | 29.19 % |
| Other income, three months ended September 30, 2026GAAP | 380 | (38.21) % | (32.14) % |
| Total non-interest expense, three months ended September 30, 2026GAAP | $20.59M | 4.97 % | 24.19 % |
| Salaries and employee benefits, three months ended September 30, 2026GAAP | $12.34M | 8.03 % | 26.99 % |
| Occupancy and equipment, three months ended September 30, 2026GAAP | 935 | 7.10 % | 33.57 % |
| Data processing and software, three months ended September 30, 2026GAAP | 1,742 | 1.93 % | 11.74 % |
| FDIC insurance, three months ended September 30, 2026GAAP | 670 | 14.53 % | 34.00 % |
| Professional services, three months ended September 30, 2026GAAP | 1,330 | 39.71 % | 42.70 % |
| Advertising and promotional, three months ended September 30, 2026GAAP | 798 | (16.79) % | (0.62) % |
| Loan-related expenses, three months ended September 30, 2026GAAP | 319 | 4.93 % | 0.63 % |
| Other operating expenses, three months ended September 30, 2026GAAP | 2,459 | (12.58) % | 19.78 % |
| Pre-tax income, three months ended September 30, 2026GAAP | $29.53M | 13.19 % | 32.81 % |
| Pre-tax, pre-provision income, three months ended September 30, 2026non-GAAP | $32.03M | – | – |
| Provision for income taxes, three months ended September 30, 2026GAAP | 7,620 | 13.90 % | 29.37 % |
| Effective tax rate, three months ended September 30, 2026GAAP | 25.81% | – | – |
| Net income, three months ended September 30, 2026GAAP | $21.91M | 12.94 % | 34.05 % |
| Basic earnings per common share, three months ended September 30, 2026GAAP | $ 0.92 | 1.10 % | 19.48 % |
| Diluted earnings per common share, three months ended September 30, 2026GAAP | $ 0.92 | 1.10 % | 19.48 % |
| ROAA, three months ended September 30, 2026other | 1.55 % | – | – |
| ROAE, three months ended September 30, 2026other | 15.04 % | – | – |
| Net interest margin, three months ended September 30, 2026other | 3.69 % | six basis points | 13 basis points |
| Total cost of funds, three months ended September 30, 2026other | 2.25 % | – | – |
| Efficiency ratio, three months ended September 30, 2026other | 39.13 % | – | – |
| Total assets, September 30, 2026GAAP | $5.56B | 3.40 % | – |
| Cash and cash equivalents, September 30, 2026GAAP | 679,482 | (0.82) % | – |
| Total loans held for investment, September 30, 2026GAAP | $4.70B | 4.08 % | 21.02 % |
| Total deposits, September 30, 2026GAAP | 4,824,528 | 0.52 % | – |
| Non-interest-bearing deposits, September 30, 2026GAAP | 1,210,488 | 3.07 % | 14.30 % |
| Interest-bearing deposits, September 30, 2026GAAP | 3,614,040 | (0.30) % | 18.71 % |
| Total shareholders’ equity, September 30, 2026GAAP | 617,211 | 30.28 % | – |
| Allowance for credit losses, September 30, 2026GAAP | $49.39M | – | – |
| Nonperforming loans to loans held for investment, September 30, 2026other | 0.28 % | – | – |
| Common equity Tier 1 capital ratio, September 30, 2026other | 12.52 % | – | – |
| Total capital ratio, September 30, 2026other | 15.00 % | – | – |
| Tier 1 leverage ratio, September 30, 2026other | 11.21 % | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- The Company’s Board of Directors declared, and the Company subsequently paid, a cash dividend of $0.25 per share during the three months ended September 30, 2026.
- The Company’s Board of Directors declared an additional cash dividend of $0.25 per share on October 15, 2026, which the Company expects to pay on November 9, 2026 to shareholders of record as of November 2, 2026.
- The Company completed an underwritten public offering of 3,133,750 shares of common stock during the three months ended September 30, 2026, with net proceeds of approximately $130.0 million after deducting underwriting discounts and commissions of approximately $7.3 million, and offering expenses of approximately $0.6 million.
What drove it
- Net interest income increased primarily because higher-yielding loan growth and an increase in the yield on interest-earning assets more than offset higher deposit funding costs.
- Total loans held for investment increased $184.5 million, or 4%, while non-wholesale deposits increased $75.1 million and wholesale deposits decreased $50.0 million during the three months ended September 30, 2026.
- The Company opened a new branch in Lodi, a new Calabasas administrative office, and made four key hires in Palo Alto.
- The number of Business Development Officers increased from 45 at June 30, 2026 to 50 at September 30, 2026.
- The FHLB stock dividend increased primarily because of a $0.2 million special cash dividend from the FHLB.
Concerns
- Total non-interest income decreased $ 178, or (9.51) %, sequentially, led by lower loan-related fees and lower other income associated with venture-backed fund investments.
- Total non-interest expense increased $ 975, or 4.97 %, sequentially, primarily due to higher salaries and employee benefits and higher recruiter fees.
- Nonperforming loans increased from $3.1 million at December 31, 2025 to $13.3 million at September 30, 2026, with one Community Reinvestment Act-related credit carrying a balance of $11.4 million as of September 30, 2026.
- Other comprehensive loss was $3.0 million during the quarter, and unrealized losses, net of tax effect, on available-for-sale securities were $12.4 million at September 30, 2026.
- ROAE was 15.04 % in the third quarter, compared with 16.67 % in the second quarter.
What to watch
- Whether loan growth continues after total loans held for investment increased $184.5 million, or 4.08 %, during the quarter.
- Deposit mix and funding costs following a $50.0 million decrease in wholesale deposits and a 3-basis-point increase in the average cost of deposits sequentially.
- Expense growth from headcount, strategic hiring, new locations, digital banking usage, and expanded lending analytics.
- Credit performance of the Community Reinvestment Act-related credit that was placed on non-accrual status during the three months ended June 30, 2026.
- Deployment of approximately $130.0 million of net proceeds from the underwritten public offering.
Balance sheet and cash flow
- Cash and cash equivalents were $679.5 million, representing 14.08% of total deposits at September 30, 2026, as compared to 14.27% at June 30, 2026.
- Total liquidity was approximately $2.5 billion as of September 30, 2026, as compared to $2.3 billion at June 30, 2026.
- Borrowings available under FHLB advances were $ 552,154, under the Federal Reserve Discount Window were $ 1,110,142, and under correspondent bank lines of credit were $ 185,000 as of September 30, 2026.
- Subordinated notes, net were 74,150 at September 30, 2026, as compared to 74,114 at June 30, 2026.
- Other comprehensive loss was $3.0 million during the three months ended September 30, 2026, compared with other comprehensive income of $0.7 million in the prior quarter.
- Unrealized losses, net of tax effect, on available-for-sale securities were $12.4 million as of September 30, 2026, as compared to $9.4 million as of June 30, 2026.
Analysis
Five Star delivered a stronger third quarter, with GAAP net income of $ 21,909, up from $ 19,399 in the preceding quarter and $ 16,344 a year earlier. Basic and diluted earnings per common share were both $ 0.92, compared with $ 0.91 in the prior quarter and $ 0.77 in the prior-year quarter. The reported improvement was led by net interest income of $ 50,926, which increased 10.51 % sequentially and 29.42 % year over year.
Balance-sheet expansion remained the central earnings driver. Total loans held for investment reached $ 4,704,215, an increase of $ 184,534, or 4.08 %, from June 30, 2026 and $ 816,956, or 21.02 %, from September 30, 2025. Management attributed net interest income growth to higher-yielding loan growth and a higher yield on interest-earning assets. Net interest margin expanded to 3.69 % from 3.63 % in the prior quarter and 3.56 % a year earlier, even as total cost of funds increased to 2.25 % from 2.23 % sequentially.
Deposit growth was modest at $ 25,145, or 0.52 %, sequentially, but mix improved as non-interest-bearing deposits increased $ 36,082 and wholesale deposits decreased $50.0 million. The loan-to-deposit ratio was 97.51 % at September 30, 2026, compared with 94.17 % at June 30, 2026. Liquidity included cash and cash equivalents of 679,482 and total liquidity of approximately $2.5 billion. The public offering generated approximately $130.0 million in net proceeds, lifting total shareholders’ equity to 617,211 and common equity Tier 1 capital to 12.52 % from 9.97 % in the prior quarter.
Operating leverage improved in the quarter despite continued organizational investment. Total non-interest expense rose 4.97 % sequentially, principally on salaries and employee benefits and professional services, while the efficiency ratio improved to 39.13 % from 40.91 %. Non-interest income declined 9.51 % sequentially as lower loan-related fees and reduced earnings from venture-backed fund investments outweighed a special FHLB stock dividend. Credit measures were mixed: the nonperforming-loan ratio improved to 0.28 % from 0.30 % sequentially, but nonperforming loans were $13.3 million at September 30, 2026 versus $3.1 million at December 31, 2025.
Capital allocation combined the public equity issuance with dividends. The Company paid a cash dividend of $0.25 per share during the quarter and declared another $0.25 per share dividend on October 15, 2026, expected to be paid on November 9, 2026. The release did not provide financial guidance, so the next focus is the sustainability of loan growth, deposit mix and funding costs, expense growth linked to expansion and hiring, and credit performance of the identified non-accrual credit.
Management, verbatim
In the third quarter of 2026, Five Star raised approximately $130.0 million in net proceeds through an underwritten public offering of 3,133,750 shares of common stock, expanding our capacity for organic growth and strategic investment.
James E. Beckwith, President and Chief Executive Officer
The third quarter of 2026 delivered steadfast results: net income rose to $21.9 million from $19.4 million in the second quarter of 2026, and net interest income increased $4.8 million, or 11%, to $50.9 million compared to the same period.
James E. Beckwith, President and Chief Executive Officer
Our technology, operating discipline, conservative underwriting, strong credit quality, and prudent portfolio management position us to create lasting value for customers, employees, communities, and shareholders.
James E. Beckwith, President and Chief Executive Officer
Not in the filing
stated, not guessed- Total revenue: not reported as a line item in this banking earnings release.
- Gross margin: not reported.
- Operating income: not reported as a line item.
- Operating cash flow: not reported.
- Free cash flow: not reported.
- Share repurchases: not reported.
- Forward financial guidance: not provided.
- Previous-release outlook: not provided, so no comparison to prior guidance is available.
- Segment revenue: not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.