Slide 1: Investor Presentation Second Quarter 2023
Investor Presentation Second Quarter 2023
Slide 2: Safe Harbor Statement and Disclaimer
Safe Harbor Statement and Disclaimer Forward-Looking Statements In this presentation, “we,” “our,” “us,” “Five Star" or “the Company” refers to Five Star Bancorp, a California corporation, and our consolidated subsidiaries, including Five Star Bank, a California state- chartered bank, unless the con
Slide 3: Agenda
Agenda Second Quarter 2023 Investor Presentation | 3 •Company Overview •Financial Highlights •Loans and Credit Quality •Deposit and Capital Overview •Financial Results
Slide 4: Company Overview
Company Overview Second Quarter 2023 Investor Presentation | 4
Slide 5: Company Overview
Company Overview Nasdaq: Headquarters: Asset Size: Loans Held for Investment: Deposits: Bank Branches: Second Quarter 2023 Investor Presentation | 5 FSBC Rancho Cordova, California $3.4 billion $2.9 billion $2.9 billion 7 Note: Balances are as of June 30, 2023. Five Star is a community business bank
Slide 6: Executive Team
Executive Team Second Quarter 2023 Investor Presentation | 6 James Beckwith President and Chief Executive Officer Five Star since 2003 John Dalton Senior Vice President and Chief Credit Officer Five Star since 2011 Mike Lee Senior Vice President and Chief Regulatory Officer Five Star since 2005 Mich
Slide 7: Financial Highlights
Financial Highlights Second Quarter 2023 Investor Presentation | 7
Slide 8: Consistent and Organic Asset Growth
$565 $604 $811 $840 $973 $1,272 $1,480 $1,954 $2,557 $3,227 $3,403 $1,806 $2,535 $148 $22 Total Assets Excluding PPP Loans PPP Loans 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q2 2023 Consistent and Organic Asset Growth Second Quarter 2023 Investor Presentation | 8 Note: Dollars are in millio
Slide 9: Financial Highlights
Financial Highlights Second Quarter 2023 Investor Presentation | 9 (dollars in thousands) For the three months ended 6/30/2023 3/31/2023 6/30/2022 Profitability Net income $ 12,729 $ 13,161 $ 9,953 Return on average assets ("ROAA") 1.55 % 1.65 % 1.45 % Return on average equity ("ROAE") 19.29 % 20.94
Slide 10: Financial Highlights - June 30, 2023
Financial Highlights - June 30, 2023 Second Quarter 2023 Investor Presentation | 10 Growth • Continued balance sheet growth with $57.6 million of growth in loans held for investment and $9.3 million in deposit growth since March 31, 2023. Funding • Non-interest-bearing deposits comprised 28.46% of t
Slide 11: Top Performer Versus Peer Group - March 31, 2023
Top Performer Versus Peer Group - March 31, 2023 Five Star Bank Peer Group Percentile ROAA 1.80% 1.18% 89% ROAE 17.96% 12.94% 79% Non-interest Expense to Average Assets 1.31% 2.25% 6% Efficiency Ratio 33.07% 57.16% 5% ROAA and ROAE in the 89th and 79th percentile, respectively, means the Bank outper
Slide 12: Loans and Credit Quality
Loans and Credit Quality Second Quarter 2023 Investor Presentation | 12
Slide 13: Consistent Loan Growth
To ta l L oa ns (M ill io ns ) $960 $1,180 $1,355 $1,912 $2,079 $2,381 $2,583 $2,791 $2,870 $2,927 $148 $22 $2 5.28% 5.45% 4.96% 4.82% 4.53% 4.48% 4.75% 5.12% 5.36% 5.50% Non-PPP Loans PPP Loans Average Loan Yield Average Loan Yield Excluding PPP Loans 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4
Slide 14: Loan Portfolio Composition
Loan Portfolio Composition Second Quarter 2023 Investor Presentation | 14 Commercial real estate 85.7% Commercial land and development 0.5% Commercial construction 3.4% Residential construction 0.5% Residential 0.8% Farmland 1.8% Secured 5.4% Unsecured 0.8% PPP 0.0% Consumer and other 1.1% Types of
Slide 15: CRE Collateral Values
$747M $318M $268M $203M $175M $171M $159M $134M $339M $1,300M $549M $500M $411M $417M $443M $323M $290M $703M 62.68% 62.80% 57.47% 54.31% 51.77% 47.54% 56.52% 53.09% 58.02% Loan Balance Collateral Value Weighted Average Loan-to-Value Manufactured home community RV Park Retail Multifamily Industrial
Slide 16: Loan Portfolio Diversification
Loan Portfolio Diversification We focus primarily on commercial lending, with an emphasis on commercial real estate. We offer a variety of loans to small and medium-sized businesses, professionals, and individuals, including commercial real estate, commercial land and construction, and farmland loan
Slide 17: Loan Rollforward
Loan Rollforward Second Quarter 2023 Investor Presentation | 17Note: Dollars are in millions. Beginning and ending balances are as of period end, before allowance for credit losses, including deferred loan fees, and exclude loans held for sale. Q4 2022 Q1 2023 Q2 2023 Beginning Balance $ 2,583 $ 2,7
Slide 18: Asset Quality
Asset Quality Our primary objective is to maintain a high level of asset quality in our loan portfolio. In order to maintain our strong asset quality, we: – Place emphasis on our commercial portfolio, where we reevaluate risk assessments as a result of reviewing commercial property operating stateme
Slide 19: Allocation of Allowance for Credit Losses
Allocation of Allowance for Credit Losses Second Quarter 2023 Investor Presentation | 19 (dollars in thousands) December 31, 2022 March 31, 2022 June 30, 2023 Allowance for Credit Losses Amount % of Total Amount % of Total Amount % of Total Real estate: Commercial $ 19,216 67.69 % $ 26,846 78.56 % $
Slide 20: Risk Grade Migration
Risk Grade Migration Second Quarter 2023 Investor Presentation | 20 Classified Loans (Loans Rated Substandard or Doubtful) (dollars in thousands) 2021 2022 Q1 2023 Q2 2023 Real estate: Commercial $ 9,256 $ 106 $ 102 $ — Commercial land & development — — — — Commercial construction — — — — Residentia
Slide 21: Deposit and Capital Overview
Deposit and Capital Overview Second Quarter 2023 Investor Presentation | 21
Slide 22: Deposit Composition
Government, 25.08% Other, 15.15% Commercial Real Estate and Construction, 12.94% Small to Medium Sized Business, 10.64% Practices and Professional Services, 10.23% MHC, 7.29% Nonprofit, 6.98% Healthcare, 6.35% Faith Based, 2.20% Venture Banking, 1.89%Agriculture and Ag-Tech, 0.77% SBA and Wholesale
Slide 23: Diversified Funding
Diversified Funding Second Quarter 2023 Investor Presentation | 23 Total Deposits(1) = $2.9 billion 93.5% of Total Liabilities Liability Mix 1. Balance as of June 30, 2023. 2. Loan balance in loan to deposit ratio is total loans held for investment and sale at period end. Loan(2) to Deposit Ratio No
Slide 24: Strong Deposit Growth
$1.2B $1.3B $1.8B $2.3B $2.8B $2.9B $2.9B $600M $708M $889M $1,001M $1,228M $1,437M $1,510M$337M $389M $701M $902M $971M $837M $834M $124M $119M $146M $279M $240M $274M $208M $100M $97M $48M $104M $343M $373M $378M Money Market & Savings Non-Interest-Bearing Demand Interest-Bearing Demand Time Depos
Slide 25: Capital Ratios
Capital Ratios Second Quarter 2023 Investor Presentation | 25 Tier 1 Leverage Ratio Tier 1 Capital to RWA Total Capital to RWA Common Equity Tier 1 to RWA Note: References to RWA are risk-weighted assets. 6.81% 7.51% 6.58% 9.47% 8.60% 8.67% 2018 2019 2020 2021 2022 Q2 2023 7.48% 8.21% 8.98% 11.44% 8
Slide 26: Financial Results
Financial Results Second Quarter 2023 Investor Presentation | 26
Slide 27: Earnings Track Record
Earnings Track Record Second Quarter 2023 Investor Presentation | 27 $14.5M $16.3M $18.8M $20.0M $19.4M $18.4M $13.5M $14.0M $16.5M $18.8M $18.5M $17.2M Pre-tax, pre-provision income Pre-tax income Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 $0.0M $2.5M $5.0M $7.5M $10.0M $12.5M $15.0M $17.5M $2
Slide 28: Operating Metrics
Operating Metrics Second Quarter 2023 Investor Presentation | 28 Efficiency RatioNet Interest Margin 3.93% 3.98% 3.68% 3.64% 3.75% 3.59% 2018 2019 2020 2021 2022 2023 YTD 42.27% 38.63% 37.92% 42.46% 36.90% 37.92% 2018 2019 2020 2021 2022 2023 YTD Note: All 2023 figures are through June 30, 2023. Tot
Slide 29: Non-interest Income and Expense Comparison
Non-interest Income and Expense Comparison Second Quarter 2023 Investor Presentation | 29 (dollars in thousands) For the three months ended 6/30/2023 3/31/2023 6/30/2022 Non-interest Income Service charges on deposit accounts $ 135 $ 117 $ 130 Gain on sale of loans 641 598 831 Loan-related fees 389
Slide 30: Shareholder Returns
Shareholder Returns Second Quarter 2023 Investor Presentation | 30 ROAA ROAE EPS (basic and diluted) Value per Share (book and tangible book(1)) Note: All 2023 figures are through June 30, 2023. 1. A reconciliation of this non-GAAP measure is set forth in the appendix. 1.99% 2.15% 1.95% 1.86% 1.57%
Slide 31: Supporting women in business and community customers
Five Star Bank proudly supports women in business and those serving our region’s most vulnerable. Our customers advocate for communities, drive collaboration, and foster responsive, community-based programs that promote healthy relationships while supporting survivors of sexual assault, domestic vio
Slide 32: Appendix: Non-GAAP Reconciliation (Unaudited)
Appendix: Non-GAAP Reconciliation (Unaudited) The Company uses financial information in its analysis of the Company's performance that is not in conformity with GAAP. The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplement
Slide 33: Appendix: Non-GAAP Reconciliation (Unaudited)
Appendix: Non-GAAP Reconciliation (Unaudited) Second Quarter 2023 Investor Presentation | 33 (dollars in millions) Total assets, excluding PPP loans 12/31/2020 12/31/2021 12/31/2022 3/31/2023 6/30/2023 Total assets $ 1,954 $ 2,557 $ 3,227 $ 3,397 $ 3,403 Less: PPP loans 148 22 — — — Total assets, ex