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目录
fsblogo.jpg
美国
证券交易委员会
华盛顿特区20549
表格 10-Q
x根据1934年证券交易法第13或15(d)条款的季度报告
截至季度结束日期的财务报告2024年9月30日
或者
o根据1934年证券交易法第13或15(d)条款的过渡报告
过渡期从________到_________
委员会文件号 001-40379
五星银行
（根据其章程规定的准确名称）
加利福尼亚州75-3100966
（设立或组织的其他管辖区域）（内部税务服务雇主识别号码）
3100 Zinfandel Drive, 100套房 Rancho Cordova, 加利福尼亚州 95670
(总部办公地址) (邮政编码)
公司电话，包括区号：(916) 626-5000
根据该法案第12(b)条款注册的证券：
每一类的名称交易标的在其上注册的交易所的名称
普通股，每股无面值FSBC
纳斯达克证券交易所 LLC
请在检查标记处注明注册人（1）是否已在证券交易法第13或15（d）条所规定的过去12个月（或注册人需要提交此类报告的较短期间）内提交了所有必须提交的报告，并且（2）自过去90天以来一直受到此类提交要求的限制。
Yes x 没有 o
在检查标记中表明注册人是否已经在过去的12个月内（或者为注册人需要提交这些文件的较短期间）根据S-T法规405规定，递交了每个互动数据文件。
Yes x 没有 o
请勾选标记以说明注册人是大型快速申报人、加速申报人、非加速申报人、较小的报告公司还是新兴成长型公司。请查看《交易所法》第120亿.2条中“大型快速申报人”、“加速申报人”、“较小的报告公司”和“新兴成长型公司”的定义。
大型加速报告人o加速文件提交人x
非加速文件提交人o较小的报告公司o
新兴成长公司x
如果是新兴成长型企业，请勾选复选标记，表明注册者已选择不使用延长过渡期来符合根据证券交易法第13(a)条规定提供的任何新财务会计准则。 o
请在复选标志处注明公司是否为壳公司（根据交易所法令第12b-2条的定义）。
是的 o 没有 x
截至2024年11月4日， 21,319,083 注册人的普通股股份，無面值，已发行。

目录
目录
五星银行和子公司
第10-Q表的季度报告
2024年9月30日

目录
第一部分财务信息
项目1.基本报表
五家星银行及其子公司
基本报表
(未经审计)
（以千为单位，除股份数量外）2024年9月30日2023年12月31日
资产
现金和金融机构到期款项$44,531 $26,986 
银行中的 bearing 存款206,321 294,590 
现金及现金等价物250,852 321,576 
银行存单4,118 5,858 
可供出售证券，按公允价值计量，减免信用损失净额为$0 于2024年9月30日和2023年12月31日的摊销成本为$118,053 和 $124,788 分别为2024年9月30日和2023年12月31日）
104,238 108,083 
持有到期投资，按摊销成本计量，减免信用损失净额为$20 于2024年9月30日和2023年12月31日的公允价值为$2,643 和 $2,913 分别为2024年9月30日和2023年12月31日）
2,720 3,077 
待售贷款2,910 11,464 
投资贷款3,460,565 3,081,719 
信贷损失准备金
(37,583)(34,431)
投资持有的贷款净额，减去信贷损失准备 3,422,982 3,047,288 
联邦住房财务局(FHLb)股份15,000 15,000 
经营租赁权-使用资产，净额6,590 5,284 
资产和设备净值1,657 1,623 
银行拥有的人寿保险19,192 17,180 
应收利息及其他资产56,745 56,692 
资产总额$3,887,004 $3,593,125 
负债及股东权益
存款：
非利息负债$906,939 $831,101 
计息账户2,493,040 2,195,795 
存款总额3,399,979 3,026,896 
借款：
次级票据，净额73,859 73,749 
其他借款— 170,000 
经营租赁负债7,101 5,603 
应付利息及其他负债16,135 31,103 
负债合计3,497,074 3,307,351 
承诺和不确定事项（注8）
股东权益：
优先股，no每股面值; 10,000,000 零 截至2024年9月30日和2023年12月31日发行并流通
— — 
普通股，no每股面值; 100,000,000 21,319,583 2024年9月30日股份已发行并流通 17,256,989截止2024年3月31日，已发行股票总数为56,637,473股
302,251 220,505 
保留盈余
97,411 77,036 
归属于母公司股东的其他综合收益损失，减税后净额
(9,732)(11,767)
股东权益合计
389,930 285,774 
负债和股东权益总计’股东权益
$3,887,004 $3,593,125 
请见未经审计的合并财务报表附注。
1

五家星银行及其子公司
综合利润表
(未经审计)
三个月截止
9月30日,		九个月结束
9月30日,
（以千为单位，每股金额除外）2024202320242023
利息和手续费收入:
包括费用在内的贷款$50,390 $41,861 $140,538 $119,284 
应税证券445 472 1,396 1,401 
非税收证券175 181 527 548 
银行中的 bearing 存款
1,657 2,584 6,745 6,969 
利息和费用总额52,667 45,098 149,206 128,202 
利息支出:
存款21,076 16,386 59,304 39,733 
次级债券1,161 1,161 3,484 3,484 
其他借款44 75 196 783 
总利息支出22,281 17,622 62,984 44,000 
净利息收入
30,386 27,476 86,222 84,202 
拨备2,750 1,050 5,650 3,200 
经计提信贷损失后的净利息收入
27,636 26,426 80,572 81,002 
非息收入：
存款账户服务费165 158 542 410 
贷款销售收益306 396 1,124 1,635 
与贷款相关的费用406 355 1,205 1,052 
FHLb股票股息327 274 988 656 
BOLI的收入162 127 462 355 
其他15 74 466 1,467 
总非利息收入1,381 1,384 4,787 5,575 
非利息支出：
薪水和员工福利7,969 6,876 23,349 19,915 
租赁和设备626 561 1,898 1,635 
数据处理和软件1,327 1,020 3,719 2,905 
FDIC保险405 375 1,195 1,187 
专业服务830 700 2,304 1,917 
广告和促销费用584 535 1,659 1,686 
贷款相关费用292 345 886 924 
其他营业费用1,743 1,603 4,995 4,943 
非利息支出总额13,776 12,015 40,005 35,112 
税前收益
15,241 15,795 45,354 51,465 
所得税费用
4,300 4,750 13,000 14,530 
净利润
$10,941 $11,045 $32,354 $36,935 
基本每股收益$0.52 $0.64 $1.63 $2.15 
稀释每股收益$0.52 $0.64 $1.63 $2.15 
See accompanying notes to unaudited consolidated financial statements.
2

FIVE STAR BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2024 202320242023
Net income
$10,941 $11,045 $32,354 $36,935 
Unrealized gain (loss) on securities:
Net unrealized holding gain (loss) on securities available-for-sale during the period
3,549 (4,195)2,889 (3,516)
Less: Income tax expense (benefit) related to items of other comprehensive income (loss)
1,049 (1,240)854 (1,039)
Other comprehensive income (loss)
2,500 (2,955)2,035 (2,477)
Total comprehensive income
$13,441 $8,090 $34,389 $34,458 
See accompanying notes to the unaudited consolidated financial statements.
3

FIVE STAR BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Three Months Ended September 30, 2024 and 2023
(Unaudited)
Common Stock
Retained Earnings
Accumulated Other Comprehensive Loss
Total Shareholders’ Equity
(in thousands, except per share amounts)Shares Amount
Balance at June 30, 202317,257,357 $220,021 $62,095 $(12,976)$269,140 
Net income— — 11,045 — 11,045 
Other comprehensive loss— — — (2,955)(2,955)
Stock compensation expense— 245 — — 245 
Cash dividends paid ($0.20 per share)
— — (3,451)— (3,451)
Balance at September 30, 202317,257,357 $220,266 $69,689 $(15,931)$274,024 
Balance at June 30, 202421,319,583 $301,968 $90,734 $(12,232)$380,470 
Net income— — 10,941 — 10,941 
Other comprehensive income— — — 2,500 2,500 
Stock compensation expense— 283 — — 283 
Cash dividends paid ($0.20 per share)
— — (4,264)— (4,264)
Balance at September 30, 202421,319,583 $302,251 $97,411 $(9,732)$389,930 
See accompanying notes to the unaudited consolidated financial statements.
4

FIVE STAR BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
Common Stock
Retained Earnings
Accumulated Other Comprehensive Loss
Total Shareholders’ Equity
(in thousands, except per share amounts)Shares Amount
Balance at December 31, 202217,241,926 $219,543 $46,736 $(13,454)$252,825 
Cumulative effect of adoption of ASC 326 on retained earnings— — (4,491)— (4,491)
Net income— — 36,935 — 36,935 
Other comprehensive loss— — — (2,477)(2,477)
Stock issued under stock award plans16,978 — — — — 
Stock compensation expense— 723 — — 723 
Stock forfeitures(1,547)— — — — 
Cash dividends paid ($0.55 per share)
— — (9,491)— (9,491)
Balance at September 30, 202317,257,357 $220,266 $69,689 $(15,931)$274,024 
Balance at December 31, 202317,256,989 $220,505 $77,036 $(11,767)$285,774 
Net income— — 32,354 — 32,354 
Other comprehensive income— — — 2,035 2,035 
Common stock issued3,967,500 80,870 — — 80,870 
Stock issued under stock award plans96,380 — — — — 
Stock compensation expense— 876 — — 876 
Stock forfeitures(1,286)— — — — 
Cash dividends paid ($0.60 per share)
— — (11,979)— (11,979)
Balance at September 30, 202421,319,583 $302,251 $97,411 $(9,732)$389,930 
See accompanying notes to unaudited consolidated financial statements.
5

FIVE STAR BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(in thousands)20242023
Cash flows from operating activities:
Net income$32,354 $36,935 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses5,650 3,200 
Depreciation and amortization1,407 1,227 
Amortization of deferred loan fees and costs(272)125 
Amortization of premiums and discounts on securities721 886 
Amortization of subordinated note issuance costs109 107 
Stock compensation expense876 723 
Earnings on BOLI(462)(355)
Deferred tax provision24 79 
Loans originated for sale(19,358)(39,915)
Gain on sale of loans(1,124)(1,635)
Gross proceeds from sale of loans17,572 32,224 
Gain on partial sale of equity investment(242)(1,274)
Net changes in:
Interest receivable and other assets1,459 (5,523)
Interest payable and other liabilities(4,195)14,457 
Operating lease liability(727)(714)
Net cash provided by operating activities33,792 40,547 
Cash flows from investing activities:
Maturities, prepayments, and calls of securities available-for-sale6,370 8,134 
Capital call for equity investment(2,802)— 
Proceeds received from equity investment530 — 
Low income housing tax credits(10,559)— 
Net change in time deposits in banks1,740 2,878 
Loan originations, net of repayments(369,697)(212,137)
Purchase of premises and equipment(522)(470)
Purchase of FHLB stock— (4,110)
Purchase of BOLI(1,550)(2,000)
Net cash used in investing activities(376,490)(207,705)
Cash flows from financing activities:
Net change in deposits373,083 250,206 
Proceeds from issuance of stock, net of issuance costs80,870 — 
Payments on other borrowings(170,000)(10,000)
Cash dividends paid(11,979)(9,491)
Net cash provided by financing activities271,974 230,715 
Net change in cash and cash equivalents(70,724)63,557 
Cash and cash equivalents at beginning of period321,576 259,991 
Cash and cash equivalents at end of period$250,852 $323,548 
Supplemental disclosure of cash flow information:
Interest paid$65,223 $43,817 
Income taxes paid11,388 1,480 
Supplemental disclosure of noncash items:
Transfer from loans held for sale to loans held for investment11,464 9,416 
Unrealized gain (loss) on securities2,889 (3,516)
Operating lease liabilities exchanged for ROUA2,225 1,513 
ROUA acquired(2,225)(1,534)
See accompanying notes to the unaudited consolidated financial statements.
6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1: 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 become 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 eight branch offices in Roseville, Natomas, Rancho Cordova, Redding, Elk Grove, Chico, Yuba City, and San Francisco.
(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, 2023, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”), which was filed with the SEC on February 23, 2024.
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, 2024 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, 2024.
The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry.
(c) Segments
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 $1.0 billion in non-convertible debt; or (iii) the Company becomes a large accelerated filer with a public float of more than $0.7 billion.
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(e) Significant Accounting Policies
The Company’s significant accounting policies are included in Note 1, Basis of Presentation in the notes to our audited consolidated financial statements included in the 2023 Annual Report on Form 10-K.
(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 in 2024
In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (“ASU 2023-02”). Under current GAAP, an entity can only elect to apply the proportional amortization method to investments in low income housing tax credit (“LIHTC”) structures. The amendments in ASU 2023-02 allow entities to elect to account for equity investments made primarily for the purpose of receiving income tax credits using the proportional amortization method, regardless of the tax credit program through which the investment earns income tax credits, if certain conditions are met. ASU 2023-02 provides amendments to paragraph ASC 323-740-25-1, which sets forth the conditions needed to apply the proportional amortization method. The amendments make certain limited changes to those conditions to clarify their application to a broader group of tax credit investment programs. However, the conditions in substance remain consistent with current GAAP. The amendments in ASU 2023-02 also eliminate certain LIHTC-specific guidance to align the accounting more closely with the accounting for other equity investments in tax credit structures and require that the delayed equity contribution guidance in paragraph ASC 323-740-25-3 apply only to tax equity investments accounted for using the proportional amortization method. The Company adopted ASU 2023-02 on January 1, 2024, which did not have a significant impact on the Company’s consolidated financial statements.
Accounting Standards Issued But Not Yet Adopted
In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”), amending disclosure or presentation requirements related to various subtopics in the FASB’s ASC. ASU 2023-06 was issued in response to the SEC’s initiative to update and simplify disclosure requirements. The SEC identified 27 disclosure requirements that were incremental to those in the ASC and referred them to the FASB for potential incorporation into GAAP. To avoid duplication, the SEC intended to eliminate those disclosure requirements from existing SEC regulations as the FASB incorporated them into the relevant ASC subtopics. ASU 2023-06 adds 14 of the 27 identified disclosure or presentation requirements to the ASC. ASU 2023-06 is to be applied prospectively, and early adoption is prohibited. For reporting entities subject to the SEC’s existing disclosure requirements, the effective dates of ASU 2023-06 will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the ASC and will not become effective for any entities. ASU 2023-06 is not expected to have a significant impact on the Company’s consolidated financial statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”), amending disclosure requirements related to segment reporting primarily through enhanced disclosure about significant segment expenses and by requiring disclosure of segment information on an annual and interim basis. ASU 2023-07 is effective January 1, 2024 and for interim periods beginning after December 15, 2024. The key amendments: (i) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”) and included within each reported measure of segment profit or loss; (ii) require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition; (iii) require that a public entity provide all annual disclosures about a reportable segment’s profit or loss currently required by GAAP in interim periods as well; (iv) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, an entity may report one or more of those additional measures of segment profit; (v) require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the
8

reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources; and (vi) require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures. The requirements of this standard for such entities will apply beginning with the Company’s annual report for the year ending December 31, 2024. The Company has one reportable segment and ASU 2023-07 is not expected to have a significant impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”), which enhances the transparency and decision usefulness of income tax disclosures. ASU 2023-09 will require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. Entities will also be required to disclose income/(loss) from continuing operations before income tax expense/(benefit) disaggregated between domestic and foreign, as well as income tax expense/(benefit) from continuing operations disaggregated by federal, state, and foreign. ASU 2023-09 is effective January 1, 2025 and is not expected to have a significant impact on the Company’s consolidated financial statements.
In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements (“ASU 2024-02”). ASU 2024-02 contains amendments to the ASC that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. FASB Concepts Statements are nonauthoritative. Removing all references to Concepts Statements in the guidance is intended to simplify the ASC and draw a distinction between authoritative and nonauthoritative literature. ASU 2024-02 is effective January 1, 2025 and is not expected to have a significant impact on the Company’s consolidated financial statements.
(g) 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 loan 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 FFIEC to provide statistically meaningful support in the models developed. The Company further stratified the following portfolios as the loans in these pools have different repayment structures and credit risk characteristics: Multifamily portfolio into traditional Multifamily loans and Manufactured Home Community (“MHC”) loans, CRE Non-Owner Occupied portfolio into traditional CRE Non-Owner Occupied loans and RV Park loans, and C&I portfolio into traditional C&I loans and SBA loans. 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 credit 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) Multifamily MHC; (9) CRE Owner Occupied; (10) CRE Non-Owner Occupied; (11) CRE Non-Owner Occupied RV Park; (12) Agriculture; (13) C&I; (14) C&I SBA; (15) Consumer; and (16) Municipal.
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With the exception of the C&I SBA pool, 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 March 31, 2004 through December 31, 2019 and January 31, 2022 through March 31, 2024 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 and beyond was excluded from the data set to exclude pandemic-related data from the model.
During the three months ended September 30, 2024, the Company segregated RV Park loans from the CRE Non-Owner Occupied portfolio, as the Company identified a data source to provide sufficient historical peer loss data specific to RV Park loans. This segregation now adjusts for differences in the risk characteristics and performance of RV Parks compared to standard CRE Non-Owner Occupied properties. The Company used calculations of individual probability of default and loss given default on a loan-by-loan basis to derive an estimated loss rate. This adjustment reduced the required reserves related to the RV Park pool by approximately $3.3 million.
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 and loss given default 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. The Audit Committee of the board of directors reviews the adequacy of the allowance at least quarterly.
Accrued interest receivable is excluded from amortized cost of all financial instrument types and included in “Interest receivable and other assets” in the 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.
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.
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Note 2: Fair Value of Assets and Liabilities
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).
Table 2.1 summarizes the Company’s assets and liabilities required to be recorded at fair value on a recurring basis.
Table 2.1: Fair Value on a Recurring Basis
(in thousands)Carrying ValueQuoted 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, 2024
Assets:
Securities available-for-sale:
U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, collateralized mortgage obligations, and corporate bonds$104,238 $— $104,238 $— OCI
Derivatives – interest rate swap— — — — NI
Liabilities:
Derivatives – interest rate swap— — — — NI
December 31, 2023
Assets:
Securities available-for-sale:
U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, collateralized mortgage obligations, and corporate bonds$108,083 $— $108,083 $— OCI
Derivatives – interest rate swap10 — 10 — NI
Liabilities:
Derivatives – interest rate swap10 — 10 — 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,
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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, 2024 and December 31, 2023, 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. There was no carrying value or fair value for interest rate swaps as of September 30, 2024.
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, 2024 and December 31, 2023, 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
Table 2.2 is a summary of fair value estimates for financial instruments as of September 30, 2024 and December 31, 2023. The carrying amounts in Table 2.2 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.
Table 2.2: Fair Value Estimates for Financial Instruments
September 30, 2024December 31, 2023
(in thousands)Carrying AmountsFair ValueFair Value HierarchyCarrying AmountsFair ValueFair Value Hierarchy
Financial assets:
Cash and cash equivalents$250,852 $250,852 Level 1$321,576 $321,576 Level 1
Time deposits in banks4,118 4,118 Level 15,858 5,858 Level 1
Securities available-for-sale104,238 104,238 Level 2108,083 108,083 Level 2
Securities held-to-maturity2,720 2,643 Level 33,077 2,913 Level 3
Loans held for sale2,910 3,222 Level 211,464 12,626 Level 2
Loans held for investment, net of allowance for credit losses3,422,982 3,317,617 Level 33,047,288 2,891,925 Level 3
FHLB stock and other investments24,112 N/AN/A21,801 N/AN/A
Interest rate swap— — Level 210 10 Level 2
Financial liabilities:
Interest rate swap$— $— Level 2$10 $10 Level 2
Time deposits
491,008 490,613 Level 2466,572 465,205 Level 2
Subordinated notes73,859 73,335 Level 373,749 72,693 Level 3
Other borrowings— — Level 2170,000 170,000 Level 2
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The Company used the following methods and assumptions to estimate the fair value of its financial instruments at September 30, 2024 and December 31, 2023:
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: 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.
Commitments to extend credit: These are primarily for adjustable rate loans, and there are no differences between the committed amounts and their fair values. Commitments to fund fixed rate loans are at rates which approximate fair value at each reporting date.
Time deposits: The fair value is estimated using a discounted cash flow analysis that uses interest rates offered at each reporting date by the Company for certificates with similar remaining maturities, resulting in a Level 2 classification.
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.
Other borrowings: The carrying amount is estimated to be fair value.
13

Note 3: 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 GSEs, and corporate bonds, as reflected in Tables 3.1 and 3.2.
A summary of the amortized cost and fair value related to securities held-to-maturity as of September 30, 2024 and December 31, 2023 is presented in Table 3.1. Securities held-to-maturity had a $20.0 thousand allowance for credit losses as of September 30, 2024 and December 31, 2023.
Table 3.1: Securities Held-to-Maturity
(in thousands)Amortized CostGross UnrealizedFair Value
Gains(Losses)
September 30, 2024
Obligations of states and political subdivisions$2,720 $— $(77)$2,643 
Total held-to-maturity$2,720 $— $(77)$2,643 
December 31, 2023
Obligations of states and political subdivisions$3,077 $— $(164)$2,913 
Total held-to-maturity$3,077 $— $(164)$2,913 
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.
A summary of the amortized cost and fair value related to securities available-for-sale as of September 30, 2024 and December 31, 2023 is presented in Table 3.2. Securities available-for-sale did not have an allowance for credit losses as of September 30, 2024 or December 31, 2023.
Table 3.2: Securities Available-for-Sale
(in thousands)Amortized CostGross Unrealized Fair Value
Gains(Losses)
September 30, 2024
U.S. government agency securities$8,807 $140 $(82)$8,865 
Mortgage-backed securities64,030 23 (9,327)54,726 
Obligations of states and political subdivisions42,895 6 (4,421)38,480 
Collateralized mortgage obligations321 — (20)301 
Corporate bonds2,000 — (134)1,866 
Total available-for-sale$118,053 $169 $(13,984)$104,238 
December 31, 2023
U.S. government agency securities$10,548 $142 $(149)$10,541 
Mortgage-backed securities68,585 7 (11,619)56,973 
Obligations of states and political subdivisions43,288 12 (4,841)38,459 
Collateralized mortgage obligations367 — (35)332 
Corporate bonds2,000 — (222)1,778 
Total available-for-sale$124,788 $161 $(16,866)$108,083 
14

The amortized cost and fair value of investment securities by contractual maturity at September 30, 2024 and December 31, 2023 are shown in Table 3.3. 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.
Table 3.3: Contractual Maturities - Investment Securities
(in thousands)September 30, 2024December 31, 2023
Held-to-MaturityAvailable-for-SaleHeld-to-MaturityAvailable-for-Sale
Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
Within one year$210 $204 $— $— $277 $263 $— $— 
After one but within five years945 918 802 756 935 885 394 367 
After five years through ten years1,380 1,341 9,247 8,379 1,365 1,292 6,407 5,838 
After ten years185 180 32,846 29,345 500 473 36,487 32,254 
Investment securities not due at a single maturity date:
U.S. government agency securities— — 8,807 8,865 — — 10,548 10,541 
Mortgage-backed securities— — 64,030 54,726 — — 68,585 56,973 
Collateralized mortgage obligations— — 321 301 — — 367 332 
Corporate bonds— — 2,000 1,866 — — 2,000 1,778 
Total$2,720 $2,643 $118,053 $104,238 $3,077 $2,913 $124,788 $108,083 
15

There were no purchases or sales of investment securities during the three and nine months ended September 30, 2024 and September 30, 2023.
Pledged investment securities are shown in Table 3.4.
Table 3.4: Pledged Investment Securities
(in thousands)September 30, 2024December 31, 2023
Pledged to:
The State of California, securing deposits of public funds and borrowings$53,377 $55,435 
The Federal Reserve Discount Window, increasing borrowing capacity47,387 48,964 
Total pledged investment securities$100,764 $104,399 
Table 3.5 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, 2024 and December 31, 2023.
Table 3.5: Securities Available-for-Sale in Continuous Unrealized Loss Positions
(in thousands)Less than 12 months 12 months or moreTotal securities in a loss position
Fair ValueUnrealized Loss Fair ValueUnrealized Loss Fair ValueUnrealized Loss
September 30, 2024
U.S. government agency securities$865 $(3)$4,796 $(79)$5,661 $(82)
Mortgage-backed securities— — 53,376 (9,327)53,376 (9,327)
Obligations of states and political subdivisions— — 36,966 (4,421)36,966 (4,421)
Collateralized mortgage obligations— — 301 (20)301 (20)
Corporate bonds— — 1,866 (134)1,866 (134)
Total temporarily impaired securities
$865 $(3)$97,305 $(13,981)$98,170 $(13,984)
December 31, 2023
U.S. government agency securities$1,130 $(14)$7,081 $(135)$8,211 $(149)
Mortgage-backed securities— — 55,609 (11,619)55,609 (11,619)
Obligations of states and political subdivisions— — 36,930 (4,841)36,930 (4,841)
Collateralized mortgage obligations— — 332 (35)332 (35)
Corporate bonds— — 1,778 (222)1,778 (222)
Total temporarily impaired securities
$1,130 $(14)$101,730 $(16,852)$102,860 $(16,866)
There were 145 and 149 available-for-sale securities in unrealized loss positions at September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, the investment portfolio included 143 investment securities that had been in a continuous loss position for twelve months or more and two 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, 2024 and December 31, 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.
16

The Company’s investment in obligations of states and political subdivisions is 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 of FHLB stock at September 30, 2024 and December 31, 2023. 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, 2024 or December 31, 2023.
17

Note 4: 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. Table 4.1 presents the balance of each major product type within the Company’s portfolio as of the dates indicated.
Table 4.1: Loans Outstanding
(in thousands)September 30, 2024December 31, 2023
Real estate:
Commercial$2,812,600 $2,685,419 
Commercial land and development4,709 15,551 
Commercial construction92,841 62,863 
Residential construction3,452 15,456 
Residential33,415 25,893 
Farmland47,907 51,669 
Commercial:
Secured171,855 165,109 
Unsecured25,011 23,850 
Consumer and other270,760 38,166 
Subtotal3,462,550 3,083,976 
Net deferred loan fees(1,985)(2,257)
Loans held for investment3,460,565 3,081,719 
Allowance for credit losses(37,583)(34,431)
Loans held for investment, net of allowance for credit losses$3,422,982 $3,047,288 
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 those for 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 may be underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity
18

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 may 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.
19

Table 4.2 presents 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 the periods indicated.
Table 4.2: Loans by Risk Category and Vintage
Amortized Cost Basis by Origination Year as of September 30, 2024
(in thousands)20242023202220212020PriorRevolving LoansRevolving Converted to TermTotal
Real estate:
Commercial
Pass$323,066 $322,516 $909,581 $638,479 $212,289 $323,331 $3,141 $— $2,732,403 
Watch643 — 36,825 25,597 10,967 338 1,392 — 75,762 
Substandard— — — — — 1,786 — — 1,786 
Total323,709 322,516 946,406 664,076 223,256 325,455 4,533 — 2,809,951 
Commercial land and development
Pass1,610 1,000 1,247 — 181 676 — — 4,714 
Total1,610 1,000 1,247 — 181 676 — — 4,714 
Commercial construction
Pass4,723 55,650 15,068 — 11,231 5,898 — — 92,570 
Total4,723 55,650 15,068 — 11,231 5,898 — — 92,570 
Residential construction
Pass3,452 — — — — — — — 3,452 
Total3,452 — — — — — — — 3,452 
Residential
Pass5,677 4,800 2,890 9,532 2,221 6,481 1,832 — 33,433 
Total5,677 4,800 2,890 9,532 2,221 6,481 1,832 — 33,433 
Farmland
Pass1,111 2,067 7,045 11,572 7,105 17,693 — — 46,593 
Watch502 — 795 — — — — — 1,297 
Total1,613 2,067 7,840 11,572 7,105 17,693 — — 47,890 
Commercial:
Secured
Pass21,022 22,762 23,239 10,563 9,838 15,982 55,384 — 158,790 
Watch— 252 9,546 2,549 97 1,263 — — 13,707 
Substandard— — — — — 54 — — 54 
Total21,022 23,014 32,785 13,112 9,935 17,299 55,384 — 172,551 
Unsecured
Pass3,226 4,740 2,826 3,761 5,441 1,787 3,246 — 25,027 
Total3,226 4,740 2,826 3,761 5,441 1,787 3,246 — 25,027 
Consumer and other
Pass219,870 35,931 8,550 6,379 5 232 — — 270,967 
Substandard— — 10 — — — — — 10 
Total219,870 35,931 8,560 6,379 5 232 — — 270,977 
Total
Pass583,757 449,466 970,446 680,286 248,311 372,080 63,603 — 3,367,949 
Watch1,145 252 47,166 28,146 11,064 1,601 1,392 — 90,766 
Substandard— — 10 — — 1,840 — — 1,850 
Total$584,902 $449,718 $1,017,622 $708,432 $259,375 $375,521 $64,995 $— $3,460,565 
20

Table 4.2: Loans by Risk Category and Vintage (continued)
Amortized Cost Basis by Origination Year as of December 31, 2023
(in thousands)20232022202120202019PriorRevolving LoansRevolving Converted to TermTotal
Real estate:
Commercial
Pass$329,876 $992,181 $714,965 $238,655 $128,424 $247,030 $4,685 $— $2,655,816 
Watch— 8,534 6,274 4,727 574 4,896 — — 25,005 
Substandard— — — — — 1,890 — — 1,890 
Total329,876 1,000,715 721,239 243,382 128,998 253,816 4,685 — 2,682,711 
Commercial land and development
Pass11,388 3,229 — 184 — 733 — — 15,534 
Total11,388 3,229 — 184 — 733 — — 15,534 
Commercial construction
Pass9,074 32,154 4,189 11,230 — 5,897 — — 62,544 
Total9,074 32,154 4,189 11,230 — 5,897 — — 62,544 
Residential construction
Pass2,412 9,128 3,912 — — — — — 15,452 
Total2,412 9,128 3,912 — — — — — 15,452 
Residential
Pass4,838 3,964 6,244 2,279 1,182 5,995 1,420 — 25,922 
Total4,838 3,964 6,244 2,279 1,182 5,995 1,420 — 25,922 
Farmland
Pass2,311 8,037 12,678 7,860 12,365 8,391 4 — 51,646 
Total2,311 8,037 12,678 7,860 12,365 8,391 4 — 51,646 
Commercial:
Secured
Pass25,299 28,879 14,304 12,164 9,918 10,363 50,020 — 150,947 
Watch189 8,802 2,705 63 154 941 1,727 — 14,581 
Substandard— — — — 45 27 — — 72 
Total25,488 37,681 17,009 12,227 10,117 11,331 51,747 — 165,600 
Unsecured
Pass3,891 3,782 4,902 5,963 2,240 7 3,072 — 23,857 
Total3,891 3,782 4,902 5,963 2,240 7 3,072 — 23,857 
Consumer and other
Pass18,489 11,359 8,264 6 — 307 — — 38,425 
Watch— 16 — — — — — — 16 
Substandard— 12 — — — — — — 12 
Total18,489 11,387 8,264 6 — 307 — — 38,453 
Total
Pass407,578 1,092,713 769,458 278,341 154,129 278,723 59,201 — 3,040,143 
Watch189 17,352 8,979 4,790 728 5,837 1,727 — 39,602 
Substandard— 12 — — 45 1,917 — — 1,974 
Total$407,767 $1,110,077 $778,437 $283,131 $154,902 $286,477 $60,928 $— $3,081,719 
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 generally 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.
21

Table 4.3 shows the age analysis of past due loans by class as of the dates shown.
Table 4.3: Age Analysis of Past Due Loans by Class
(in thousands)Past Due
30-59 Days60-89 DaysGreater Than 90 DaysTotal Past DueCurrentTotal Loans Receivable
September 30, 2024
Real estate:
Commercial$— $— $— $— $2,809,951 $2,809,951 
Commercial land and development— — — — 4,714 4,714 
Commercial construction— — — — 92,570 92,570 
Residential construction— — — — 3,452 3,452 
Residential— — — — 33,433 33,433 
Farmland— — — — 47,890 47,890 
Commercial:
Secured336 93 — 429 172,122 172,551 
Unsecured— — — — 25,027 25,027 
Consumer and other154 11 — 165 270,812 270,977 
Total$490 $104 $— $594 $3,459,971 $3,460,565 
December 31, 2023
Real estate:
Commercial$— $— $— $— $2,682,711 $2,682,711 
Commercial land and development— — — — 15,534 15,534 
Commercial construction— — — — 62,544 62,544 
Residential construction— — — — 15,452 15,452 
Residential— — — — 25,922 25,922 
Farmland— — — — 51,646 51,646 
Commercial:
Secured— — — — 165,600 165,600 
Unsecured— — — — 23,857 23,857 
Consumer and other76 — — 76 38,377 38,453 
Total $76 $— $— $76 $3,081,643 $3,081,719 
There were no loans greater than 90 days past due and still accruing interest income as of September 30, 2024 or December 31, 2023.
No collateral dependent loans were in process of foreclosure at September 30, 2024 or December 31, 2023.
22

Non-accrual loans, segregated by class, as of September 30, 2024 and December 31, 2023 are shown in Table 4.4.
Table 4.4: Nonaccrual Loans
(in thousands)September 30, 2024December 31, 2023
Real estate:
Commercial$1,787 $1,893 
Commercial:
Secured54 72 
Total non-accrual loans$1,841 $1,965 
No interest income was recognized on non-accrual loans in the three and nine months ended September 30, 2024 or September 30, 2023. Non-accrual real estate loans did not have an allowance for credit losses as of September 30, 2024. 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 $37.8 thousand and $115.2 thousand for the three and nine months ended September 30, 2024, respectively, as compared to $27.1 thousand and $62.3 thousand for the three and nine months ended September 30, 2023, respectively.
Allowance for Credit Losses
Table 4.5 discloses activity in the allowance for credit losses for the periods indicated.
Table 4.5: Allowance for Credit Losses
(in thousands)Beginning BalanceEffect of Adoption of ASC 326Charge-offsRecoveriesProvision (Benefit)Ending Balance
Three months ended September 30, 2024
Real estate:
Commercial$24,708 $— $— $— $1,509 $26,217 
Commercial land and development72 — — — 17 89 
Commercial construction1,097 — — — 659 1,756 
Residential construction100 — — — (53)47 
Residential195 — — — 89 284 
Farmland402 — — — 179 581 
Commercial:
Secured7,386 — (837)53 (553)6,049 
Unsecured214 — (5)34 8 251 
Consumer and other1,232 — (59)41 1,095 2,309 
Total$35,406 $— $(901)$128 $2,950 $37,583 
23

Table 4.5: Allowance for Credit Losses (continued)
(in thousands)Beginning BalanceEffect of Adoption of ASC 326Charge-offsRecoveriesProvision (Benefit)Ending Balance
Three months ended September 30, 2023
Real estate:
Commercial$27,553 $— $— $— $348 $27,901 
Commercial land and development184 — — — 14 198 
Commercial construction1,212 — — — 8 1,220 
Residential construction217 — — — (102)115 
Residential152 — — — (1)151 
Farmland236 — — — 157 393 
Commercial:
Secured3,751 — (1,245)219 736 3,461 
Unsecured209 — — — 4 213 
Consumer and other470 — (187)207 (114)376 
Total$33,984 $— $(1,432)$426 $1,050 $34,028 
Nine months ended September 30, 2024
Real estate:
Commercial$29,015 $— $— $— $(2,798)$26,217 
Commercial land and development178 — — — (89)89 
Commercial construction718 — — — 1,038 1,756 
Residential construction89 — — — (42)47 
Residential151 — — — 133 284 
Farmland399 — — — 182 581 
Commercial:
Secured3,314 — (3,075)292 5,518 6,049 
Unsecured189 — (75)34 103 251 
Consumer and other378 — (202)228 1,905 2,309 
Total$34,431 $— $(3,352)$554 $5,950 $37,583 
Nine months ended September 30, 2023
Real estate:
Commercial$19,216 $7,606 $— $— $1,079 $27,901 
Commercial land and development54 74 — — 70 198 
Commercial construction645 882 — — (307)1,220 
Residential construction49 81 — — (15)115 
Residential175 3 — — (27)151 
Farmland644 (396)— — 145 393 
Commercial:
Secured7,098 (3,060)(2,856)358 1,921 3,461 
Unsecured116 37 — — 60 213 
Consumer and other347 80 (709)714 (56)376 
Unallocated45 (45)— — — — 
Total$28,389 $5,262 $(3,565)$1,072 $2,870 $34,028 
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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.
Table 4.6: Unfunded Loan Commitment Reserves
Three months endedNine months ended
(in thousands)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Balance at beginning of period$1,147 $1,547 $1,247 $125 
Effect of adoption of ASC 326— — — 1,092 
Provision(200)— (300)330 
Balance at end of period$947 $1,547 $947 $1,547 
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 $1.8 billion and $1.7 billion at September 30, 2024 and December 31, 2023, respectively. In addition, the Company pledges eligible tenants in common loans, which totaled $1.2 billion at September 30, 2024 and December 31, 2023, to secure its borrowing capacity with the Federal Reserve Discount Window. See Note 6, Long Term Debt and Other Borrowings, for further discussion of these borrowings.
Note 5: Interest-Bearing Deposits
Table 5.1 shows the composition of interest-bearing deposits as of September 30, 2024 and December 31, 2023.
Table 5.1: Interest-Bearing Deposits
(in thousands)September 30, 2024December 31, 2023
Interest-bearing transaction accounts$324,028 $320,356 
Savings accounts131,561 126,498 
Money market accounts1,546,443 1,282,369 
Time accounts, $250 or more
191,298 344,694 
Other time accounts299,710 121,878 
Total interest-bearing deposits$2,493,040 $2,195,795 
Time deposits totaled $491.0 million and $466.6 million as of September 30, 2024 and December 31, 2023, respectively. Scheduled maturities of time deposits as of September 30, 2024 for the next five years are shown in Table 5.2.
Table 5.2: Scheduled Maturities of Time Deposits
(in thousands)
2024$433,896 
202553,862 
20263,013 
2027101 
2028136 
Total time deposits$491,008 
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Total deposits include deposits offered through the IntraFi 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-bearing transaction 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, 2024 or December 31, 2023. The composition of network deposits as of September 30, 2024 and December 31, 2023 is shown in Table 5.3.
Table 5.3: Network Deposits
(in thousands)September 30, 2024December 31, 2023
CDARS$18,441 $16,325 
ICS682,050 620,199 
Total network deposits$700,491 $636,524 
Table 5.4 presents interest expense recognized on interest-bearing deposits for the periods ended September 30, 2024 and 2023.
Table 5.4: Interest Expense Recognized on Interest-Bearing Deposits
Three months endedNine months ended
(in thousands)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Interest-bearing transaction accounts$1,237 $972 $3,467 $2,230 
Savings accounts979 880 2,697 2,182 
Money market accounts14,688 9,536 40,231 23,108 
Time accounts, $250 or more
2,387 3,865 8,622 8,462 
Other time accounts1,785 1,133 4,287 3,751 
Total interest expense on interest-bearing deposits$21,076 $16,386 $59,304 $39,733 
Note 6: 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 (7.93% as of September 30, 2024) 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 $0.3 million has been amortized as of September 30, 2024. 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, 2024 and December 31, 2023, the carrying value of the Company’s subordinated notes outstanding was $73.9 million and $73.7 million, respectively.
Other borrowings: The Company entered into an agreement with the FHLB which granted the FHLB a blanket lien on certain loans receivable as collateral for a borrowing line. The Company’s total financing availability is based on the dollar
volume of qualifying loan collateral. The Company’s total financing availability with the FHLB is decreased by outstanding borrowings and letters of credit (“LCs”) issued on behalf of the Company, as shown in Table 6.1.
Table 6.1: Financing Availability with the FHLB
(in thousands)September 30, 2024December 31, 2023
Total financing ability from the FHLB$1,123,388 $996,712 
Less: outstanding borrowings— 170,000 
Less: LCs pledged to secure State of California deposits146,500 271,500 
Less: LCs pledged to secure local agency deposits421,000 410,000 
Total LCs issued567,500 681,500 
Available borrowing capacity with the FHLB$555,888 $145,212 
At September 30, 2024 and December 31, 2023, the Company had the ability to borrow from the Federal Reserve Discount Window. At September 30, 2024 and December 31, 2023, the borrowing capacity under this arrangement was $858.3 million and $770.6 million, respectively. There were no amounts outstanding at September 30, 2024 or December 31, 2023. The borrowing line is secured by certain liens on the Company’s loans and certain available-for-sale securities.
At September 30, 2024 and December 31, 2023, the Company had five unsecured federal funds lines of credit with its correspondent banks totaling $175.0 million. There were no amounts outstanding at September 30, 2024 or December 31, 2023.
Note 7: 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.
Table 7.1: EPS
Three months endedNine months ended
(in thousands, except share count and earnings per common share)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Net income$10,941 $11,045 $32,354 $36,935 
Basic weighted average common shares outstanding21,182,143 17,175,034 19,809,298 17,163,609 
Add: Dilutive effects of assumed vesting of restricted stock50,615 19,791 50,344 22,626 
Total dilutive weighted average common shares outstanding21,232,758 17,194,825 19,859,642 17,186,235 
Earnings per common share:
Basic EPS$0.52 $0.64 $1.63 $2.15 
Diluted EPS$0.52 $0.64 $1.63 $2.15 
The Company did not have any anti-dilutive shares at September 30, 2024 or September 30, 2023.
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(b) Dividends
On July 18, 2024, the board of directors declared a $0.20 per common share dividend, totaling $4.3 million.
(c) Stock-Based Incentive Arrangement
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 certain executives, which vest ratably over three or five years (as defined in the respective agreements), and to directors, which vest over one year. 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, 2024 and 2023 was $0.3 million and $0.2 million, respectively. Non-cash stock compensation expense recognized for the nine months ended September 30, 2024 and 2023 was $0.9 million and $0.7 million, respectively.
At September 30, 2024 and 2023, there were 137,457 and 82,324 unvested restricted shares, respectively. As of September 30, 2024, there was approximately $2.3 million of unrecognized compensation expense related to the 137,457 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 3.14 years as of September 30, 2024. 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, 2024 and 2023 was immaterial.
Table 7.2 summarizes activity related to restricted shares for the periods indicated.
Table 7.2: Restricted Share Activity
For the three months ended September 30,
For the nine months ended September 30,
2024202320242023
Shares  Weighted Average Grant Date Fair ValueSharesWeighted Average Grant Date Fair ValueSharesWeighted Average Grant Date Fair ValueSharesWeighted Average Grant Date Fair Value
Beginning of the period balance137,457 $21.43 82,324 $21.75 69,338 $20.53 96,826 $20.34 
Shares granted— — — — 96,380 21.97 16,978 28.52 
Shares vested— — — — (26,975)21.03 (29,933)20.78 
Shares forfeited— — — — (1,286)21.54 (1,547)26.95 
End of the period balance137,457 $21.43 82,324 $21.75 137,457 $21.43 82,324 $21.75 
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Note 8: 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 at the dates indicated are presented in Table 8.1.
Table 8.1: Unfunded Loan Commitments and Standby Letters of Credit
(in thousands)September 30, 2024December 31, 2023
Commercial lines of credit$203,789 $181,855 
Undisbursed commercial real estate loans102,338 107,712 
Undisbursed construction loans89,710 134,828 
Agricultural lines of credit23,832 24,635 
Undisbursed residential real estate loans7,075 6,538 
Undisbursed agricultural real estate loans— 1,200 
Other1,901 2,119 
Total commitments and standby letters of credit$428,645 $458,887 
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 $0.9 million as of September 30, 2024 and $1.2 million as of December 31, 2023, 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 86.42% of the Company’s loan portfolio at September 30, 2024 and 92.30% of the Company’s loan portfolio at December 31, 2023. 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, 2024, the Company had 101 deposit relationships that exceeded $5.0 million each, totaling $2.1 billion, or approximately 60.58% of total deposits. The Company’s largest single deposit relationship at September 30, 2024 totaled $275.0 million, or approximately 8.09% 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.
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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 approximately $39.0 million and $22.3 million at September 30, 2024 and December 31, 2023, 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.
Note 9: Subsequent Events
On October 17, 2024, the board of directors of the Company declared a cash dividend of $0.20 per common share, payable on November 12, 2024 to shareholders of record as of November 4, 2024.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion presents management’s perspective on our results of operations and financial condition on a consolidated basis. However, because we conduct all of our material business operations through our bank subsidiary, Five Star Bank (the “Bank”), the discussion and analysis relates to activities primarily conducted by the Bank.
Management’s discussion of the financial condition and results of operations, which is unaudited, should be read in conjunction with the related unaudited consolidated financial statements and accompanying notes in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and accompanying notes included in the 2023 Annual Report on Form 10-K, which was filed with the SEC on February 23, 2024. Average balances, including balances used in calculating certain financial ratios, are generally comprised of average daily balances.
Unless otherwise indicated, references in this report to “we,” “our,” “us,” “the Company,” or “Bancorp” refer to Five Star Bancorp and our consolidated subsidiary. All references to “the Bank” refer to Five Star Bank, our wholly owned subsidiary.
Cautionary Note Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of our beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are based. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to:
•risks related to the concentration of our business in California, and specifically within Northern California, including risks associated with any downturn in the real estate sector;
•changes in market interest rates that affect the pricing of our loans and deposits, our net interest income, and our borrowers’ ability to repay loans;
•changes in the U.S. economy, including an economic slowdown, inflation, deflation, housing prices, employment levels, rate of growth, and general business conditions;
•uncertain market conditions and economic trends nationally, regionally, and particularly in Northern California and California;
•the soundness of other financial institutions and the impacts related to or resulting from bank failures and other economic and industry volatility, including increased regulatory requirements and costs and potential impacts to macroeconomic conditions;
•the impact of recent and future legislative and regulatory changes, including changes in banking, securities, and tax laws and regulations and their application by our regulators, and economic stimulus programs;
•the effects of increased competition from a wide variety of local, regional, national, and other providers of financial and investment services;
•the risks associated with our loan portfolios, and specifically with our commercial real estate loans;
•our ability to maintain adequate liquidity and to maintain capital necessary to fund our growth strategy and operations and to satisfy minimum regulatory capital levels;
•risks related to our strategic focus on lending to small to medium-sized businesses;
•the sufficiency of the assumptions and estimates we make in establishing reserves for potential credit losses and the value of loan collateral and securities;
•our level of nonperforming assets and the costs associated with resolving problem loans, if any, and complying with government-imposed foreclosure moratoriums;
30

•our ability to comply with various governmental and regulatory requirements applicable to financial institutions, including supervisory actions by federal and state banking agencies;
•governmental monetary and fiscal policies, including the policies of the Federal Reserve;
•risks associated with unauthorized access, cybersecurity breaches, cyber-crime, and other threats and disruptions to data security;
•our ability to implement, maintain, and improve effective risk management framework, disclosure controls and procedures, and internal controls over financial reporting;
•our ability to adopt and successfully integrate new initiatives or technologies into our business in a strategic manner;
•our ability to attract and retain executive officers and key employees and their customer and community relationships;
•the impact of any future U.S. federal government shutdown and uncertainty regarding the U.S. federal government’s debt limit and credit rating;
•the occurrence or impact of climate change or natural or man-made disasters or calamities, such as wildfires, droughts, mudslides, floods, and earthquakes, and particularly in Northern California and California;
•changes in and impact of local, regional, and global business, economic, and political conditions and geopolitical events, such as pandemics, civil unrest, wars, and acts of terrorism; and
•other factors that are discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The foregoing factors could cause results or performance to materially differ from those expressed in our forward-looking statements, should not be considered exhaustive, and should be read together with other cautionary statements that are included in this report and those discussed in the section entitled “Risk Factors” of our 2023 Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for the three months ended March 31, 2024 and June 30, 2024, and other filings we may make with the SEC, copies of which are available from us at no charge. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We disclaim any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law.
Company Overview
Headquartered in the greater Sacramento metropolitan area of California, Five Star Bancorp is a bank holding company that operates through its wholly owned subsidiary, Five Star Bank, a California state-chartered non-member bank. We provide a broad range of banking products and services to small and medium-sized businesses, professionals, and individuals primarily in Northern California through eight branch offices. Our mission is to strive to become the top business bank in all markets we serve through exceptional service, deep connectivity, and customer empathy. We are dedicated to serving real estate, agricultural, faith-based, and small to medium-sized enterprises. We aim to consistently deliver value that meets or exceeds the expectations of our shareholders, customers, employees, business partners, and community. We refer to our mission as “purpose-driven and integrity-centered banking.” At September 30, 2024, we had total assets of $3.9 billion, total loans held for investment of $3.5 billion, and total deposits of $3.4 billion.
Critical Accounting Estimates
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Quarterly Reports on Form 10-Q and, therefore, do not include all footnotes as would be necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in shareholders’ equity, and cash flows in conformity with GAAP as contained within the FASB’s ASC and the rules and regulations of the SEC, including the instructions to Regulation S-X. However, 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
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a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as filed in our 2023 Annual Report on Form 10-K and the notes thereto.
Our most significant accounting policies and our critical accounting estimates are described in greater detail in Note 1, Basis of Presentation, in our audited consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates included in our 2023 Annual Report on Form 10-K. We have identified accounting policies and estimates that, due to the difficult, subjective, or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of our unaudited consolidated financial statements to those judgments and assumptions, are critical to an understanding of our consolidated financial condition and results of operations. We believe that the judgments, estimates, and assumptions used in the preparation of our financial statements are reasonable and appropriate, based on the information available at the time they were made. However, actual results may differ from those estimates, and these differences may be material. With the exception of the changes to the ACL described below, there have been no significant changes concerning our critical accounting estimates as described in our 2023 Annual Report on Form 10-K.
Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), as an emerging growth company, we can elect to opt out of the extended transition period for adopting any new or revised accounting standards. We have elected not to opt out of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public and private companies, we may adopt the standard on the application date for private companies.
We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company.
Allowance for Credit Losses (“ACL”)
The ACL represents the estimated probable credit losses in our loan and investment portfolios and is estimated as of September 30, 2024 using CECL. The ACL is established through a provision for credit losses charged to operations. Loans and investments are charged against the ACL when management believes that the collectability of the principal is unlikely. Subsequent recoveries of previously charged-off amounts, if any, are credited to the ACL.
The ACL is evaluated on a regular basis by management in consideration of optimistic, moderate, and pessimistic current conditions, and is based on management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions specifically impacting each loan type by purpose and by geography, and concentrations within the loan portfolio. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.
A significant amount of the ACL is measured on a collective (pool) basis by loan and investment security type when similar risk characteristics exist. Pools are determined based primarily on regulatory reporting codes as the loans and investment securities within each pool share similar risk characteristics and there is sufficient historical peer loss data from the FFIEC to provide statistically meaningful support in the models developed. Reserves for credit losses identified on a pooled basis are then adjusted for qualitative and other environmental factors to reflect current conditions.
During the three months ended September 30, 2024, we refined our methodology of measuring the ACL on CRE Non-Owner Occupied loans. Within the CRE Non-Owner Occupied portfolio, RV Park loans were segregated from traditional CRE Non-Owner Occupied loans as we identified a data source to provide sufficient historical peer loss data specific to RV Park loans. This segregation now adjusts for differences in the risk characteristics and performance of RV Park loans compared to traditional CRE Non-Owner Occupied properties. We used calculations of individual probability of default and loss given default on a loan-by-loan basis to derive an estimated loss rate. Applying this adjusted loss rate led to a decrease in the ACL for the RV Park pool of approximately $3.3 million as of September 30, 2024.
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Executive Summary
Net income for the three and nine months ended September 30, 2024 totaled $10.9 million and $32.4 million, respectively, as compared to net income of $11.0 million and $36.9 million for the three and nine months ended September 30, 2023, respectively.
The following are highlights of our operating and financial performance, and financial condition for the dates and periods presented:
•Deposits. Total deposits increased by $373.1 million from $3.0 billion at December 31, 2023 to $3.4 billion at September 30, 2024. Non-wholesale deposits increased by $323.3 million in the first nine months of 2024 to $3.0 billion. Wholesale deposits, which the Company defines as brokered deposits and public time deposits, increased by $49.8 million in the first nine months of 2024 to $409.9 million. Non-interest-bearing deposits increased by $75.8 million in the first nine months of 2024 to $906.9 million, and represented 26.67% of total deposits at September 30, 2024, as compared to 27.46% of total deposits at December 31, 2023. Our loan to deposit ratio was 101.87% at September 30, 2024, as compared to 102.19% at December 31, 2023.
•Assets. Total assets were $3.9 billion at September 30, 2024, representing a $293.9 million, or 8.18%, increase compared to $3.6 billion at December 31, 2023.
•Loans. Total loans held for investment were $3.5 billion at September 30, 2024, as compared to $3.1 billion at December 31, 2023, an increase of $378.8 million, or 12.29%. The increase was primarily attributable to increases of $232.6 million in consumer and other loans, $127.2 million in commercial real estate loans, and $30.0 million in commercial construction loans, partially offset by decreases in residential construction and commercial land and development loans of $12.0 million and $10.8 million, respectively.
•Credit Quality. Credit quality remains strong, with non-accrual loans representing $1.8 million, or 0.05% of total loans held for investment, at September 30, 2024, as compared to $2.0 million, or 0.06% of total loans held for investment, at December 31, 2023. The ratio of the allowance for credit losses to total loans held for investment was 1.09% at September 30, 2024 and 1.12% December 31, 2023.
•Net Interest Margin. Net interest margin was 3.37% and 3.30%, respectively, for the three and nine months ended September 30, 2024, and 3.31% and 3.50%, respectively, for the three and nine months ended September 30, 2023. The increase in net interest margin for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to higher yields on new and repriced loans, partially offset by an increase in interest expense due to larger average deposit balances at higher rates. The decrease in net interest margin between the nine months ended September 30, 2024 and 2023 was primarily due to increases in deposit costs.
•Efficiency Ratio. Efficiency ratio was 43.37% for the three months ended September 30, 2024, up from 41.63% for the corresponding period of 2023, mainly due to increased expenses for employees hired since September 2023 to support expansion into the San Francisco Bay Area.
•Capital Ratios. All capital ratios were above well-capitalized regulatory thresholds as of September 30, 2024. The total risk-based capital ratio for the Company was 13.94% at September 30, 2024, as compared to 12.30% at December 31, 2023. The Tier 1 leverage ratio was 10.83% at September 30, 2024, as compared to 8.73% at December 31, 2023. For additional information about the regulatory capital requirements applicable to the Company and the Bank, see the section entitled “—Financial Condition Summary—Capital Adequacy” below.
•Dividends. The board of directors declared a cash dividend of $0.20 per share on July 18, 2024.
33

Highlights of our financial results are presented in the following tables:
Table 1: Highlights of Financial Results
(dollars in thousands)September 30, 2024December 31, 2023
Selected financial condition data:
Total assets$3,887,004 $3,593,125 
Total loans held for investment$3,460,565 $3,081,719 
Total deposits$3,399,979 $3,026,896 
Total subordinated notes, net$73,859 $73,749 
Total shareholders’ equity$389,930 $285,774 
Asset quality ratios:
Allowance for credit losses to total loans held for investment1.09 %1.12 %
Allowance for credit losses to nonperforming loans2,041.44 %1,752.70 %
Nonperforming loans to total loans held for investment0.05 %0.06 %
Capital ratios:
Total capital (to risk-weighted assets)13.94 %12.30 %
Tier 1 capital (to risk-weighted assets)10.93 %9.07 %
Common equity Tier 1 capital (to risk-weighted assets)10.93 %9.07 %
Tier 1 leverage10.83 %8.73 %
Total shareholders’ equity to total assets10.03 %7.95 %
Tangible shareholders’ equity to tangible assets1
10.03 %7.95 %
Table 2: Highlights of Financial Results (continued)
For the three months ended
For the nine months ended
(dollars in thousands, except per share data)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Selected operating data:
Net interest income$30,386 $27,476 $86,222 $84,202 
Provision for credit losses$2,750 $1,050 $5,650 $3,200 
Non-interest income$1,381 $1,384 $4,787 $5,575 
Non-interest expense$13,776 $12,015 $40,005 $35,112 
Net income$10,941 $11,045 $32,354 $36,935 
Per common share data:
Earnings per common share:
Basic$0.52 $0.64 $1.63 $2.15 
Diluted$0.52 $0.64 $1.63 $2.15 
Book value per share$18.29 $15.88 $18.29 $15.88 
Tangible book value per share2
$18.29 $15.88 $18.29 $15.88 
Performance and other financial ratios:
ROAA1.18 %1.30 %1.21 %1.50 %
ROAE11.31 %16.09 %12.43 %18.70 %
Net interest margin3.37 %3.31 %3.30 %3.50 %
Cost of funds2.72 %2.28 %2.64 %1.96 %
Efficiency ratio43.37 %41.63 %43.96 %39.11 %
Cash dividend payout ratio on common stock3
38.46 %31.25 %36.81 %25.58 %
34

1Tangible shareholders’ equity to tangible assets is considered a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measure. Tangible shareholders’ equity to tangible assets is defined as total equity less goodwill and other intangible assets, divided by total assets less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholders’ equity to total assets. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible shareholders’ equity to tangible assets is the same as total shareholders’ equity to total assets at the end of each of the periods indicated.
2Tangible book value per share is considered a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for a reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measure. Tangible book value per share is defined as total shareholders’ equity less goodwill and other intangible assets, divided by the outstanding number of common shares at the end of the period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible book value per share is the same as book value per share at the end of each of the periods indicated.
3Cash dividend payout ratio on common stock is calculated as dividends on common shares divided by basic earnings per common share.
35

RESULTS OF OPERATIONS
The following discussion of our results of operations compares the three and nine months ended September 30, 2024 to the three and nine months ended September 30, 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024.
Net Interest Income
Net interest income is the most significant contributor to our net income. Net interest income represents interest income from interest-earning assets, such as loans and investments, less interest expense on interest-bearing liabilities, such as deposits, subordinated notes, and other borrowings, which are used to fund those assets. In evaluating our net interest income, we measure and monitor yields on our interest-earning assets and interest-bearing liabilities as well as trends in our net interest margin. Net interest margin is a ratio calculated as net interest income divided by total interest-earning assets for the same period. We manage our earning assets and funding sources in order to maximize this margin while limiting credit risk and interest rate sensitivity to our established risk appetite levels. Changes in market interest rates and competition in our market typically have the largest impact on periodic changes in our net interest margin.
Three months ended September 30, 2024 compared to three months ended September 30, 2023
Net interest income increased $2.9 million to $30.4 million for the three months ended September 30, 2024 compared to September 30, 2023 and our net interest margin of 3.37% for the three months ended September 30, 2024 increased from 3.31% for the three months ended September 30, 2023. The increase was primarily due to an increase in interest income driven by higher yields on new and repriced loans, partially offset by an increase in interest expense due to larger average deposit balances at higher rates. Additional detail relating to net interest margin in each period is provided below.
36

Average balance sheet, interest, and yield/rate analysis. Table 3 presents average balance sheet information, interest income, interest expense, and the corresponding average yield earned or rate paid for each period reported. The average balances are daily averages and include both performing and nonperforming loans.
Table 3: Average Balances, Interest, and Yield/Rate
For the three months ended
September 30, 2024
For the three months ended
September 30, 2023
(dollars in thousands)Average BalanceInterest Income/ExpenseAverage Yield/Rate Average BalanceInterest Income/ExpenseAverage Yield/Rate
Assets
Interest-earning deposits in banks1
$126,266 $1,657 5.22 %$198,751 $2,584 5.16 %
Investment securities1,2
106,256 620 2.32 %112,154 653 2.31 %
Loans held for investment and sale1,3
3,354,050 50,390 5.98 %2,982,140 41,861 5.57 %
Total interest-earning assets1
3,586,572 52,667 5.84 %3,293,045 45,098 5.43 %
Interest receivable and other assets, net4
91,965 77,757 
Total assets$3,678,537 $3,370,802 
Liabilities and shareholders’ equity
Interest-bearing transaction accounts1
$302,188 $1,237 1.63 %$296,230 $972 1.30 %
Savings accounts1
124,851 979 3.12 %134,920 880 2.59 %
Money market accounts1
1,578,244 14,688 3.70 %1,328,290 9,536 2.85 %
Time accounts1
326,640 4,172 5.08 %399,514 4,998 4.96 %
Subordinated notes and other borrowings1
76,988 1,205 6.23 %79,085 1,236 6.20 %
Total interest-bearing liabilities2,408,911 22,281 3.68 %2,238,039 17,622 3.12 %
Demand accounts852,872 825,254 
Interest payable and other liabilities32,062 35,123 
Shareholders’ equity384,692 272,386 
Total liabilities and shareholders’ equity$3,678,537 $3,370,802 
Net interest spread5
 2.16 % 2.31 %
Net interest income/margin6
$30,386 3.37 %$27,476 3.31 %
1Interest income/expense is divided by the actual number of days in the period multiplied by the actual number of days in the year to correspond to stated interest rate terms, where applicable.
2Yields on available-for-sale securities are calculated based on fair value. Investment security interest is earned on a 30/360 day basis monthly. Yields are not calculated on a tax-equivalent basis.
3Non-accrual loans are included in total loan balances. No adjustment has been made for these loans in the yield calculations. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs. Allowance for credit losses is not included in total loan balances.
4Allowance for credit losses is included in interest receivable and other assets, net.
5Net interest spread represents the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.
6Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets, then annualized based on the number of days in the given period.
37

Analysis of changes in interest income and expenses. Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average yields/rates. Table 4 shows the effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the current period’s average yield/rate. The effect of rate changes is calculated by multiplying the change in average yield/rate by the previous period’s volume. Changes not solely attributable to volume or yields/rates have been allocated in proportion to the respective volume and yield/rate components.
Table 4: Interest Income and Expense Change Analysis
For the three months ended
September 30, 2024 compared to
the three months ended September 30, 2023
(dollars in thousands)Volume Yield/Rate Total Increase (Decrease)
Interest-earning deposits in banks
$(958)$31 $(927)
Investment securities(36)3 (33)
Loans held for investment and sale5,508 3,021 8,529 
Total interest-earning assets4,514 3,055 7,569 
Interest-bearing transaction accounts24 241 265 
Savings accounts(77)176 99 
Money market accounts2,311 2,841 5,152 
Time accounts(947)121 (826)
Subordinated notes and other borrowings(36)5 (31)
Total interest-bearing liabilities1,275 3,384 4,659 
Changes in net interest income/margin$3,239 $(329)$2,910 
Net interest income increased $2.9 million and net interest margin increased six basis points for the three months ended September 30, 2024 compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to higher yields on new and repriced loans, partially offset by larger average deposit balances at higher interest rates. Interest income increased by $7.6 million compared to the same quarter of the prior year. The average yield on loans increased 41 basis points compared to the same quarter of the prior year due to increases in interest rates and an increase in average balances of $371.9 million, or 12.47%. The increase in interest income was partially offset by an additional $4.7 million in interest expense compared to the same quarter of the prior year. The average cost of total deposits increased 45 basis points compared to the same quarter of the prior year, due to increases in interest rates and an increase in average balances of $200.6 million, or 6.72%.
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Net interest income increased $2.0 million, or 2.40%, to $86.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, while our net interest margin of 3.30% for the nine months ended September 30, 2024 decreased 20 basis points when compared to the same period in 2023. The increase in net interest income was primarily due to an increase in interest income driven by higher yields on new and repriced loans, partially offset by an increase in interest expense due to larger average deposit balances at higher rates. Additional detail relating to net interest margin in each period is provided below.
38

Average balance sheet, interest, and yield/rate analysis. Table 5 presents average balance sheet information, interest income, interest expense, and the corresponding average yield earned or rate paid for each period reported. The average balances are daily averages and include both performing and nonperforming loans.
Table 5: Average Balances, Interest, and Yield/Rate
(dollars in thousands)
For the nine months ended
September 30, 2024
For the nine months ended
September 30, 2023
Average BalanceInterest Income/ExpenseAverage Yield/Rate Average BalanceInterest Income/ExpenseAverage Yield/Rate
Assets
Interest-earning deposits in banks1
$169,244 $6,745 5.32 %$192,976 $6,969 4.83 %
Investment securities1,2
107,081 1,923 2.40 %115,884 1,949 2.25 %
Loans held for investment and sale1,3
3,211,941 140,538 5.84 %2,911,397 119,284 5.48 %
Total interest-earning assets1
3,488,266 149,206 5.71 %3,220,257 128,202 5.32 %
Interest receivable and other assets, net4
89,499 74,184 
Total assets$3,577,765 $3,294,441 
Liabilities and shareholders’ equity
Interest-bearing transaction accounts1
$298,010 $3,467 1.55 %$320,013 $2,230 0.93 %
Savings accounts1
123,170 2,697 2.92 %143,142 2,182 2.04 %
Money market accounts1
1,512,349 40,231 3.55 %1,235,375 23,108 2.50 %
Time accounts1
342,978 12,909 5.03 %357,433 12,213 4.57 %
Subordinated notes and other borrowings1
78,498 3,680 6.26 %94,923 4,267 6.01 %
Total interest-bearing liabilities2,355,005 62,984 3.57 %2,150,886 44,000 2.74 %
Demand accounts837,604 851,608 
Interest payable and other liabilities37,377 27,883 
Shareholders’ equity347,779 264,064 
Total liabilities and shareholders’ equity$3,577,765 $3,294,441 
Net interest spread5
 2.14 % 2.58 %
Net interest income/margin6
$86,222 3.30 %$84,202 3.50 %
1Interest income/expense is divided by the actual number of days in the period multiplied by the actual number of days in the year to correspond to stated interest rate terms, where applicable.
2Yields on available-for-sale securities are calculated based on fair value. Investment security interest is earned on a 30/360 day basis monthly. Yields are not calculated on a tax-equivalent basis.
3Non-accrual loans are included in total loan balances. No adjustment has been made for these loans in the yield calculations. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs. Allowance for credit losses is not included in total loan balances.
4Allowance for credit losses is included in interest receivable and other assets, net.
5Net interest spread represents the average yield earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.
6Net interest margin is computed by calculating the difference between interest income and interest expense, divided by the average balance of interest-earning assets, then annualized based on the number of days in the given period.
39

Analysis of changes in interest income and expenses. Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average yields/rates. Table 6 shows the effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the current period’s average yield/rate. The effect of rate changes is calculated by multiplying the change in average yield/rate by the previous period’s volume. Changes not solely attributable to volume or yields/rates have been allocated in proportion to the respective volume and yield/rate components.
Table 6: Interest Income and Expense Change Analysis
(In thousands)
For the nine months ended
September 30, 2024 compared to
the nine months ended September 30, 2023
Volume Yield/Rate Total Increase (Decrease)
Interest-earning deposits in banks
$(916)$692 $(224)
Investment securities(147)121 (26)
Loans held for investment and sale13,223 8,031 21,254 
Total interest-earning assets12,160 8,844 21,004 
Interest-bearing transaction accounts(257)1,494 1,237 
Savings accounts(440)955 515 
Money market accounts7,381 9,742 17,123 
Time accounts(554)1,250 696 
Subordinated notes and other borrowings(764)177 (587)
Total interest-bearing liabilities5,366 13,618 18,984 
Changes in net interest income/margin$6,794 $(4,774)$2,020 
Net interest income increased $2.0 million, while net interest margin decreased 20 basis points for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in net interest income was primarily due to an increase in interest income driven by higher yields on new and repriced loans, partially offset by an increase in interest expense due to larger average deposit balances at higher rates. Interest income increased by $21.0 million compared to the same period of the prior year. The average yield on loans increased 36 basis points compared to the same period of the prior year due to an increase in average balances of $300.5 million, or 10.32%, and increased interest rates on new and repriced loans. The increase in interest income was partially offset by an additional $19.0 million in interest expense compared to the same period of the prior year. The cost of interest-bearing deposits increased 90 basis points compared to the same period of the prior year due to increases in interest rates and an increase in average balances of $220.5 million, or 10.73%. In addition, the average balance of non-interest-bearing deposits decreased by $14.0 million, or 1.64%, compared to the same period of the prior year. While the increase in total interest income more than offset the increase in total interest expense, net interest income relative to interest-earning assets decreased compared to the same period of the prior year.
Provision for Credit Losses
The provision for credit losses is based on management’s assessment of the adequacy of our allowance for credit losses. Factors impacting the provision include inherent risk characteristics in our loan portfolio, the level of nonperforming loans and net charge-offs, both current and historic, local economic and credit conditions, the direction of the change in collateral values, and the funding probability on unfunded lending commitments. The provision for credit losses is charged against earnings in order to maintain our allowance for credit losses, which reflects management’s best estimate of forecasted life of loan losses in our loan portfolio at the balance sheet date.
Three months ended September 30, 2024 compared to three months ended September 30, 2023
We recorded a $2.8 million provision for credit losses in the third quarter of 2024, as compared to a $1.1 million provision for credit losses for the same period of 2023. The provision recorded during the three months ended September 30, 2024 reflects loan growth and continued risks associated with general economic forecasts.
40

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
We recorded a $5.7 million provision for credit losses in the first nine months of 2024, as compared to a $3.2 million provision for credit losses for the same period of 2023. The provision recorded during the first nine months of 2024 reflects loan growth and continued risks associated with general economic forecasts.
Non-interest Income
Non-interest income is a secondary contributor to our net income, following interest income. Non-interest income consists of service charges on deposit accounts, net gain on sale of securities, gain on sale of loans, loan-related fees, FHLB stock dividends, earnings on BOLI, and other income.
Three months ended September 30, 2024 compared to three months ended September 30, 2023
Table 7 details the components of non-interest income for the periods indicated.
Table 7: Non-interest Income
For the three months ended
(dollars in thousands)
September 30, 2024
September 30, 2023
$ Change% Change
Service charges on deposit accounts$165 $158 $7 4.43 %
Gain on sale of loans306 396 (90)(22.73)%
Loan-related fees406 355 51 14.37 %
FHLB stock dividends327 274 53 19.34 %
Earnings on BOLI162 127 35 27.56 %
Other income15 74 (59)(79.73)%
Total non-interest income$1,381 $1,384 $(3)(0.22)%
Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold. During the three months ended September 30, 2024, approximately $4.4 million of loans were sold with an effective yield of 7.03%, as compared to approximately $7.0 million of loans sold with an effective yield of 5.63% during the three months ended September 30, 2023.
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Table 8 details the components of non-interest income for the periods indicated.
Table 8: Non-interest Income
For the nine months ended
(dollars in thousands)
September 30, 2024
September 30, 2023
$ Change% Change
Service charges on deposit accounts$542 $410 $132 32.20 %
Gain on sale of loans1,124 1,635 (511)(31.25)%
Loan-related fees1,205 1,052 153 14.54 %
FHLB stock dividends988 656 332 50.61 %
Earnings on BOLI462 355 107 30.14 %
Other income466 1,467 (1,001)(68.23)%
Total non-interest income$4,787 $5,575 $(788)(14.13)%
Service charges on deposit accounts. The increase resulted primarily from a $0.1 million increase in wire transfer fees recognized during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
41

Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold period over period. During the nine months ended September 30, 2024, approximately $16.4 million of loans were sold with an effective yield of 6.87%, as compared to approximately $30.6 million of loans sold with an effective yield of 5.34% during the nine months ended September 30, 2023.
Loan-related fees. The increase primarily related to an increase of $0.1 million in swap referral fees recognized during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.
FHLB stock dividends. The increase was primarily due to increased yields on dividends received, combined with an increase in the average number of FHLB shares outstanding between September 30, 2023 and September 30, 2024.
Earnings on BOLI. The increase was primarily due to additional policies purchased between September 30, 2023 and September 30, 2024.
Other income. The decrease resulted primarily from the difference between a $1.3 million gain from distributions received on equity investments in venture-backed funds during the nine months ended September 30, 2023 compared to a $0.2 million gain during the nine months ended September 30, 2024.
Non-interest Expense
Non-interest expense includes salaries and employee benefits, occupancy and equipment, data processing and software, FDIC insurance, professional services, advertising and promotional, loan-related expenses, and other operating expenses. In evaluating our level of non-interest expense, we closely monitor the Company’s efficiency ratio, which is calculated as non-interest expense divided by the sum of net interest income and non-interest income. We constantly seek to identify ways to streamline our business and operate more efficiently in order to reduce our non-interest expense over time as a percentage of our revenue, while continuing to achieve growth in total loans and assets.
Over the past several years, we have invested significant resources in personnel, technology, and infrastructure. As we execute initiatives based on growth, we expect non-interest expense to grow. Non-interest expense has increased throughout the periods presented below; however, we expect our efficiency ratio will improve going forward due, in part, to our past investment in infrastructure.
Three months ended September 30, 2024 compared to three months ended September 30, 2023
Table 9 details the components of non-interest expense for the periods indicated.
Table 9: Non-interest Expense
For the three months ended
(dollars in thousands)
September 30, 2024
September 30, 2023
$ Change% Change
Salaries and employee benefits$7,969 $6,876 $1,093 15.90 %
Occupancy and equipment626 561 65 11.59 %
Data processing and software1,327 1,020 307 30.10 %
FDIC insurance405 375 30 8.00 %
Professional services830 700 130 18.57 %
Advertising and promotional584 535 49 9.16 %
Loan-related expenses292 345 (53)(15.36)%
Other operating expenses1,743 1,603 140 8.73 %
Total non-interest expense$13,776 $12,015 $1,761 14.66 %
Salaries and employee benefits. The increase related primarily to: (i) a $1.0 million increase in salaries, benefits, and bonus expense, mainly for employees hired since September 2023 to support expansion into the San Francisco Bay Area; and (ii) a $0.2 million increase in commissions paid, primarily to new employees in the San Francisco Bay Area. This was partially offset by a $0.1 million increase in loan origination costs due to a higher number of loan originations, net of purchased consumer loans, period-over-period.
42

Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; and (iii) an increased number of licenses required for new users on our loan origination and documentation system.
Professional services. The increase was primarily due to a $0.1 million increase in fees for 2024 audits and examinations.
Other operating expenses. The increase was primarily due to $0.1 million in operational losses on deposit accounts.
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Table 10 details the components of non-interest expense for the periods indicated.
Table 10: Non-interest Expense
For the nine months ended
(dollars in thousands)
September 30, 2024
September 30, 2023
$ Change% Change
Salaries and employee benefits$23,349 $19,915 $3,434 17.24 %
Occupancy and equipment1,898 1,635 263 16.09 %
Data processing and software3,719 2,905 814 28.02 %
FDIC insurance1,195 1,187 8 0.67 %
Professional services2,304 1,917 387 20.19 %
Advertising and promotional1,659 1,686 (27)(1.60)%
Loan-related expenses886 924 (38)(4.11)%
Other operating expenses4,995 4,943 52 1.05 %
Total non-interest expense$40,005 $35,112 $4,893 13.94 %
Salaries and employee benefits. The increase was primarily a result of: (i) a $2.5 million increase in salaries, benefits, and bonus expense for new employees hired since September 2023 to support expansion into the San Francisco Bay Area; (ii) a $0.7 million increase in commission expense, primarily due to commissions paid to new employees in the San Francisco Bay Area; and (iii) a $0.2 million decrease in loan origination costs due to fewer loan originations, net of purchased consumer loans, period-over-period.
Occupancy and equipment. The increase related to rent expense for the San Francisco branch office during the nine months ended September 30, 2024, which did not exist for the nine months ended September 30, 2023.
Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; and (iii) an increased number of licenses required for new users on our loan origination and documentation system.
Professional services. The increase was primarily due to: (i) a $0.3 million increase of audit fees for 2024 audits; and (ii) a $0.2 million increase in IT consulting services due to an overall increase in service charges and product enhancements to existing platforms.
Provision for Income Taxes
Three months ended September 30, 2024 compared to three months ended September 30, 2023
The provision for income taxes was $4.3 million for the three months ended September 30, 2024, a $0.5 million decrease from the three months ended September 30, 2023. This decline was primarily driven by an overall decrease in pre-tax income combined with a $0.2 million adjustment to the provision during the three months ended September 30, 2023 to true-up the year-to-date effective tax rate, which did not occur during the three months ended September 30, 2024. The effective tax rates for the three months ended September 30, 2024 and 2023 were 28.21% and 30.07%, respectively.
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Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
The provision for income taxes was $13.0 million for the nine months ended September 30, 2024, as compared to $14.5 million for the nine months ended September 30, 2023. The decrease was primarily due to an overall decrease in pre-tax income period-over-period, partially offset by a $0.5 million state tax benefit recorded during the nine months ended September 30, 2023 relating to an overall reduction in the state tax blended rate for the Company since its transition to a C Corporation. No such benefit was recorded during the nine months ended September 30, 2024. The effective tax rates for the nine months ended September 30, 2024 and 2023 were 28.66% and 28.23%, respectively.
FINANCIAL CONDITION SUMMARY
The following discussion compares our financial condition as of September 30, 2024 to our financial condition as of December 31, 2023. Table 11 summarizes selected components of our unaudited consolidated balance sheets as of September 30, 2024 and December 31, 2023.
Table 11: Selected Components of Consolidated Balance Sheets (Unaudited)
(dollars in thousands)
September 30, 2024
December 31, 2023
Total assets$3,887,004 $3,593,125 
Cash and cash equivalents$250,852 $321,576 
Total investments$106,958 $111,160 
Loans held for investment$3,460,565 $3,081,719 
Total deposits$3,399,979 $3,026,896 
Subordinated notes, net$73,859 $73,749 
Total shareholders’ equity$389,930 $285,774 
Total Assets
At September 30, 2024, total assets were $3.9 billion, an increase of $293.9 million from $3.6 billion at December 31, 2023, primarily due to a $378.8 million increase in total loans held for investment, partially offset by a $70.7 million decrease in cash and cash equivalents. The $378.8 million increase in total loans held for investment included $254.7 million in purchases of loans within the consumer concentration of the loan portfolio.
Cash and Cash Equivalents
Total cash and cash equivalents were $250.9 million at September 30, 2024, a decrease of $70.7 million from $321.6 million at December 31, 2023. The decrease in cash and cash equivalents was primarily due to a decrease in borrowings of $170.0 million and $389.1 million in loan originations, net of repayments, partially offset by an increase in deposits of $373.1 million, $80.9 million in net proceeds from the 2024 Public Offering (as defined below), and pre-tax income of $45.4 million.
Investment Portfolio
Our investment portfolio is primarily comprised of U.S. government agency securities, mortgage-backed securities, and obligations of states and political subdivisions, which are high-quality liquid investments. We manage our investment portfolio according to written investment policies approved by our board of directors. Our investment strategy is designed to maximize earnings while maintaining liquidity with minimal credit and interest rate risk. Most of our securities are classified as available-for-sale, although we have one long-term, fixed rate municipal security classified as held-to-maturity.
Our total securities available-for-sale and held-to-maturity amounted to $107.0 million at September 30, 2024 and $111.2 million at December 31, 2023, representing a decrease of $4.2 million period-over-period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $6.4 million and an unrealized gain on securities of $2.9 million, with the remainder of the change due to amortization of premiums. For the nine months ended September 30, 2024, other comprehensive gain was $2.0 million, primarily due to rate changes and other market conditions on securities.
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Table 12 presents the carrying value of our investment portfolio as of the dates indicated.
Table 12: Carrying Value of Investment Securities
As of
September 30, 2024
December 31, 2023
(dollars in thousands)Carrying Value% of Total Carrying Value% of Total
Available-for-sale (at fair value):
U.S. government agency securities$8,865 8.29 %$10,541 9.48 %
Mortgage-backed securities54,726 51.17 %56,973 51.25 %
Obligations of states and political subdivisions38,480 35.98 %38,459 34.60 %
Collateralized mortgage obligations301 0.28 %332 0.30 %
Corporate bonds1,866 1.74 %1,778 1.60 %
Total available-for-sale104,238 97.46 %108,083 97.23 %
Held-to-maturity (at amortized cost):
Obligations of states and political subdivisions2,720 2.54 %3,077 2.77 %
Total$106,958 100.00 %$111,160 100.00 %
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Table 13 presents the carrying value of our securities by their stated maturities, as well as the weighted average yields for each maturity range, as of the dates shown.
Table 13: Stated Maturities and Weighted Average Yields - Investment Securities
Due in one year or lessDue after one year through five years Due after five years through ten years Due after ten years Total
(dollars in thousands)Carrying ValueWeighted Average YieldCarrying ValueWeighted Average YieldCarrying ValueWeighted Average YieldCarrying ValueWeighted Average YieldCarrying ValueWeighted Average Yield
September 30, 2024
Available-for-sale:
U.S. government agency securities$— — %$1,712 5.12 %$372 2.00 %$6,781 5.89 %$8,865 5.58 %
Mortgage-backed securities— — %— — %547 2.74 %54,179 1.74 %54,726 1.75 %
Obligations of states and political subdivisions— — %756 1.17 %8,379 1.62 %29,345 1.79 %38,480 1.74 %
Collateralized mortgage obligations— — %— — %301 1.76 %— — %301 1.76 %
Corporate bonds— — %1,866 1.25 %— — %— — %1,866 1.25 %
Total available-for-sale— — %4,334 2.76 %9,599 1.70 %90,305 2.07 %104,238 2.06 %
Held-to-maturity:
Obligations of states and political subdivisions210 6.00 %945 6.00 %1,380 6.00 %185 6.00 %2,720 6.00 %
Total $210 6.00 %$5,279 3.34 %$10,979 2.24 %$90,490 2.07 %$106,958 2.16 %
December 31, 2023
Available-for-sale:
U.S. government agency securities$— — %$800 3.44 %$2,010 5.36 %$7,731 5.77 %$10,541 5.51 %
Mortgage-backed securities— — %— — %609 2.74 %56,364 1.76 %56,973 1.77 %
Obligations of states and political subdivisions— — %367 0.84 %5,838 1.71 %32,254 1.76 %38,459 1.74 %
Collateralized mortgage obligations— — %— — %332 1.76 %— — %332 1.76 %
Corporate bonds— — %1,778 1.25 %— — %— — %1,778 1.25 %
Total available-for-sale— — %2,945 1.79 %8,789 2.62 %96,349 2.08 %108,083 2.12 %
Held-to-maturity:          
Obligations of states and political subdivisions277 6.00 %935 6.00 %1,365 6.00 %500 6.00 %3,077 6.00 %
Total$277 6.00 %$3,880 2.81 %$10,154 3.07 %$96,849 2.10 %$111,160 2.22 %
Weighted average yield for securities available-for-sale is the projected yield to maturity given current cash flow projections for U.S. government agency securities, mortgage-backed securities, and collateralized mortgage obligations. For callable municipal securities and corporate bonds, weighted average yield is a yield to worst. Weighted average yield for securities held-to-maturity is the stated coupon of the bond.
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Loan Portfolio
Our loan portfolio is our largest class of interest-earning assets and typically provides higher yields than other types of interest-earning assets. Associated with the higher yields is an inherent amount of credit risk, which we attempt to mitigate with strong underwriting standards. As of September 30, 2024 and December 31, 2023, our total loans amounted to $3.5 billion and $3.1 billion, respectively. Table 14 presents the balance and associated percentage of each major product type within our portfolio as of the dates indicated.
Table 14: Loans Outstanding
As of
September 30, 2024
December 31, 2023
(dollars in thousands)Amount % of Loans Amount % of Loans
Loans held for investment:
Real estate:
Commercial$2,812,600 81.17 %$2,685,419 86.76 %
Commercial land and development4,709 0.14 %15,551 0.50 %
Commercial construction92,841 2.68 %62,863 2.03 %
Residential construction3,452 0.10 %15,456 0.50 %
Residential33,415 0.96 %25,893 0.84 %
Farmland47,907 1.38 %51,669 1.67 %
Commercial:
Secured171,855 4.96 %165,109 5.33 %
Unsecured25,011 0.72 %23,850 0.77 %
Consumer and other270,760 7.81 %38,166 1.23 %
Loans held for investment, gross3,462,550 99.92 %3,083,976 99.63 %
Loans held for sale:
Commercial2,910 0.08 %11,464 0.37 %
Total loans, gross3,465,460 100.00 %3,095,440 100.00 %
Net deferred loan fees(1,985)(2,257)
Total loans$3,463,475 $3,093,183 
Commercial real estate loans consist of term loans secured by a mortgage lien on the real property, such as office and industrial buildings, manufactured home communities, self-storage facilities, hospitality properties, faith-based properties, retail shopping centers, and apartment buildings, as well as commercial real estate construction loans that are offered to builders and developers.
Commercial land and development and commercial construction loans consist of loans made to fund commercial land acquisition and development and commercial construction, respectively. The real estate purchased with these loans is generally located in or near our market.
Commercial loans consist of financing for commercial purposes in various lines of business, including manufacturing, service industry, and professional service areas. Commercial loans can be secured or unsecured but are generally secured with the assets of the company and/or the personal guaranty of the business owner(s).
Residential real estate and construction real estate loans consist of loans secured by single-family and multifamily residential properties, which are both owner-occupied and investor-owned.
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Table 15 presents the commercial real estate loan balance, associated percentage of commercial real estate concentrations, estimated real estate collateral values, and related loan-to-value (“LTV”) ranges by collateral type as of the dates indicated. Revolving lines of credit with zero balance and 0.00% LTV are excluded from this table. Collateral values are determined at origination using third-party real estate appraisals or evaluations. Updated appraisals, which are included in Table 15, may be obtained for loans that are downgraded to watch or substandard. Loans over $2.0 million are reviewed annually, at which time an internal assessment of collateral values is completed.
Table 15: Commercial Real Estate Loans
(dollars in thousands)Loan Balance% of Commercial Real EstateCollateral ValueMinimum LTVMaximum LTV
September 30, 2024
Manufactured home community$897,854 31.92 %$1,599,597 14.32 %74.52 %
RV Park367,063 13.05 %642,171 18.06 %75.00 %
Retail269,596 9.59 %538,671 6.59 %73.13 %
Industrial220,032 7.82 %486,264 5.43 %74.24 %
Faith-based181,677 6.46 %485,421 9.40 %73.95 %
Mini storage170,254 6.05 %347,632 16.32 %69.73 %
Multifamily166,383 5.92 %358,612 14.43 %75.00 %
All other types1
539,741 19.19 %1,160,579 1.90 %151.85 %
Total2
$2,812,600 100.00 %$5,618,947 
December 31, 2023
Manufactured home community$813,687 30.30 %$1,430,224 16.80 %74.52 %
RV Park343,817 12.80 %599,691 18.29 %75.00 %
Retail273,100 10.17 %540,660 6.89 %74.07 %
Multifamily211,598 7.88 %427,948 13.12 %75.00 %
Faith-based184,799 6.88 %488,160 8.33 %74.54 %
Mini storage176,380 6.57 %358,395 16.56 %70.00 %
Industrial173,192 6.45 %417,439 7.48 %83.26 %
Office135,928 5.06 %298,989 9.07 %73.52 %
All other types1
372,918 13.89 %756,541 4.00 %152.33 %
Total2
$2,685,419 100.00 %$5,318,047 
1Types of collateral in the “all other types” category are those that individually make up less than 5.00% of the commercial real estate concentration.
2Minimum LTV and maximum LTV not shown for aggregated totals, as such values are meaningful only when presented by specific category.
Over the past several years, we have experienced significant growth in our loan portfolio, although the relative composition of the portfolio has not changed materially. Our primary focus remains commercial real estate lending (including commercial, commercial land and development, and commercial construction), which constitutes 84.01% of loans held for investment at September 30, 2024. Commercial secured lending represents 4.99% of loans held for investment at September 30, 2024. We sell the guaranteed portion of all SBA 7(a) loans in the secondary market and will continue to do so as long as market conditions continue to be favorable.
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We recognize that our commercial real estate loan concentration is significant within our balance sheet. Commercial real estate loan balances as a percentage of risk-based capital were 569.86% and 682.72% as of September 30, 2024 and December 31, 2023, respectively. We have established internal concentration limits in the loan portfolio for commercial real estate loans by sector (e.g., manufactured home communities, self-storage, hospitality, etc.). All loan sectors were within our established limits as of September 30, 2024. Additionally, our loans are geographically concentrated with borrowers and collateralized properties primarily in California.
We believe that our past success is attributable to focusing on products and markets where we have significant expertise. Given our concentrations, we have established strong risk management practices, including risk-based lending standards, self-established product and geographical limits, annual evaluations of income property loans, and semi-annual top-down and bottom-up stress testing. We expect to continue growing our loan portfolio. We do not expect our product or geographic concentrations to materially change.
Table 16 sets forth the contractual maturities of our loan portfolio as of the dates indicated.
Table 16: Contractual Maturities - Gross Loans
(dollars in thousands)Due in 1 year or lessDue after 1 year through 5 yearsDue after 5 years through 15 yearsDue after 15 yearsTotal
September 30, 2024
Real estate:
Commercial$37,386 $326,867 $2,371,848 $76,499 $2,812,600 
Commercial land and development3,270 454 985 — 4,709 
Commercial construction11,461 50,352 31,028 — 92,841 
Residential construction— 3,452 — — 3,452 
Residential435 9,764 22,287 929 33,415 
Farmland1,323 6,161 40,423 — 47,907 
Commercial:
Secured47,400 50,601 76,355 409 174,765 
Unsecured3,233 9,843 11,935 — 25,011 
Consumer and other211 12,776 257,773 — 270,760 
Total $104,719 $470,270 $2,812,634 $77,837 $3,465,460 
December 31, 2023
Real estate:
Commercial$57,443 $271,306 $2,284,482 $72,188 $2,685,419 
Commercial land and development11,406 3,353 792 — 15,551 
Commercial construction27,078 10,377 25,408 — 62,863 
Residential construction11,543 3,913 — — 15,456 
Residential286 5,916 18,735 956 25,893 
Farmland2,835 3,932 44,902 — 51,669 
Commercial:
Secured36,844 48,491 90,826 412 176,573 
Unsecured574 10,789 12,487 — 23,850 
Consumer and other857 5,638 31,671 — 38,166 
Total$148,866 $363,715 $2,509,303 $73,556 $3,095,440 
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Table 17 sets forth the sensitivity to interest rate changes of our loan portfolio as of the dates shown.
Table 17: Sensitivity to Interest Rates - Gross Loans
(dollars in thousands)Fixed Interest RatesFloating or Adjustable RatesTotal
September 30, 2024
Real estate:
Commercial$579,686 $2,232,914 $2,812,600 
Commercial land and development1,427 3,282 4,709 
Commercial construction— 92,841 92,841 
Residential construction— 3,452 3,452 
Residential4,523 28,892 33,415 
Farmland4,926 42,981 47,907 
Commercial:
Secured46,753 128,012 174,765 
Unsecured16,895 8,116 25,011 
Consumer and other270,650 110 270,760 
Total $924,860 $2,540,600 $3,465,460 
December 31, 2023
Real estate:
Commercial$570,385 $2,115,034 $2,685,419 
Commercial land and development10,081 5,470 15,551 
Commercial construction— 62,863 62,863 
Residential construction3,913 11,543 15,456 
Residential1,272 24,621 25,893 
Farmland5,848 45,821 51,669 
Commercial:
Secured38,029 138,544 176,573 
Unsecured16,343 7,507 23,850 
Consumer and other38,081 85 38,166 
Total$683,952 $2,411,488 $3,095,440 
Asset Quality
We manage the quality of our loans based upon trends at the overall loan portfolio level, as well as within each product type. We measure and monitor key factors that include the level and trend of classified, delinquent, non-accrual, and nonperforming assets, collateral coverage, credit scores, and debt service coverage, where applicable. These metrics directly impact our evaluation of the adequacy of our allowance for credit losses.
Our primary objective is to maintain a high level of asset quality in our loan portfolio. We believe our underwriting policies and practices, executed by experienced professionals, appropriately govern the risk profile for our loan portfolio. These policies are continually evaluated and updated as necessary. All loans are assessed and assigned a risk classification at origination based on underlying characteristics of the transaction, such as collateral cash flow, collateral coverage, and borrower strength. We believe that we have a comprehensive methodology to proactively monitor our credit quality after the origination process. Particular emphasis is placed on our commercial portfolio, where risk assessments are reevaluated as a result of reviewing commercial property operating statements and borrower financials. On an ongoing basis, we also monitor payment performance, delinquencies, and tax and property insurance compliance. We design our practices to facilitate the early detection and remediation of problems within our loan portfolio. Assigned risk classifications are an integral part of management’s assessment of the adequacy of our allowance for credit losses. We periodically employ the
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use of an independent consulting firm to evaluate our underwriting and risk assessment process. Like other financial institutions, we are subject to the risk that our loan portfolio will be exposed to increasing pressures from deteriorating borrower credit due to general economic conditions and rising interest rates.
Nonperforming Assets
Our nonperforming assets consist of nonperforming loans and foreclosed real estate, if any. Nonperforming loans consist of non-accrual loans and loans contractually past due by 90 days or more and still accruing. Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on loans is discontinued either when reasonable doubt exists as to the full and timely collection of interest or principal or when a loan becomes contractually past due by 90 days or more with respect to interest or principal. When a loan is placed on non-accrual status, all interest previously accrued, but not collected, is reversed against current period interest income. Income on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest.
SBA Loans
During the three and nine months ended September 30, 2024, the Company sold 10 and 50 SBA 7(a) loans, respectively, with government-guaranteed portions totaling $4.4 million and $16.4 million, respectively. The Company received gross proceeds of $4.7 million and $17.5 million on the loans sold during the three and nine months ended September 30, 2024, respectively, resulting in the recognition of net gains on sale of $0.3 million and $1.1 million during the respective periods.
Non-accrual Loans
Table 18 provides details of our nonperforming and restructured assets and certain other related information as of the dates presented.
Table 18: Nonperforming and Restructured Assets
As of
(dollars in thousands)September 30, 2024
December 31, 2023
Non-accrual loans:
Real estate:
Commercial$1,787 $1,893 
Commercial:
Secured54 72 
Total non-accrual loans1,841 1,965 
Loans past due 90 days or more and still accruing:
Total loans past due and still accruing— — 
Total nonperforming loans1,841 1,965 
Real estate owned87 — 
Total nonperforming assets$1,928 $1,965 
Performing LMs (not included above)$— $— 
Allowance for credit losses to period end nonperforming loans2,041.44 %1,752.70 %
Nonperforming loans to loans held for investment0.05 %0.06 %
Nonperforming assets to total assets0.05 %0.05 %
Nonperforming loans plus performing LMs to loans held for investment0.05 %0.06 %
The ratio of nonperforming loans to loans held for investment was 0.05% at September 30, 2024, decreasing from 0.06% at December 31, 2023.
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Potential Problem Loans
We utilize a risk grading system for our loans to aid us in evaluating the overall credit quality of our real estate loan portfolio and assessing the adequacy of our allowance for credit losses. All loans are grouped into a risk category at the time of origination. Commercial real estate loans over $2.0 million are reevaluated at least annually for proper classification in conjunction with our review of property and borrower financial information. All loans are reevaluated for proper risk grading as new information such as payment patterns, collateral condition, and other relevant information comes to our attention.
The banking industry defines loans graded substandard or doubtful as “classified” loans. Table 19 shows our levels of classified loans as of the periods indicated.
Table 19: Gross Loans Held for Investment by Risk Category
(dollars in thousands)PassWatchSubstandardDoubtfulTotal
September 30, 2024
Real estate:
Commercial$2,734,952 $75,861 $1,787 $— $2,812,600 
Commercial land and development4,709 — — — 4,709 
Commercial construction92,841 — — — 92,841 
Residential construction3,452 — — — 3,452 
Residential33,415 — — — 33,415 
Farmland46,610 1,297 — — 47,907 
Commercial:
Secured158,092 13,709 54 — 171,855 
Unsecured25,011 — — — 25,011 
Consumer and other270,751 — 9 — 270,760 
Total $3,369,833 $90,867 $1,850 $— $3,462,550 
December 31, 2023
Real estate:
Commercial$2,658,504 $25,023 $1,892 $— $2,685,419 
Commercial land and development15,551 — — — 15,551 
Commercial construction62,863 — — — 62,863 
Residential construction15,456 — — — 15,456 
Residential25,893 — — — 25,893 
Farmland51,669 — — — 51,669 
Commercial:
Secured150,451 14,586 72 — 165,109 
Unsecured23,850 — — — 23,850 
Consumer and other38,139 15 12 — 38,166 
Total $3,042,376 $39,624 $1,976 $— $3,083,976 
Loans designated as watch and substandard, which are not considered adversely classified, increased to $92.7 million at September 30, 2024 from $41.6 million at December 31, 2023. There were no loans with doubtful risk grades at September 30, 2024 or December 31, 2023.
Allowance for Credit Losses
The allowance for credit losses is established through a provision for credit losses charged to operations. Provisions are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Subsequent recoveries of previously charged-off amounts, if any, are credited to the allowance for credit losses.
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The allowance for credit losses is evaluated on a regular basis by management and is based on management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.
At September 30, 2024, the Company’s allowance for credit losses was $37.6 million, as compared to $34.4 million at December 31, 2023. The $3.2 million increase in the allowance is due to a $6.0 million provision for credit losses recorded during the nine months ended September 30, 2024, partially offset by net charge-offs of $2.8 million, mainly attributable to commercial and industrial loans, during the same period.
While the entire allowance for credit losses is available to absorb losses from any and all loans, Table 20 represents management’s allocation of our allowance for credit losses by loan category, and the balance of loans in each category as a percentage of total loans, for the periods indicated.
Table 20: Allocation of the Allowance for Credit Losses
September 30, 2024
December 31, 2023
(dollars in thousands)Allowance for Credit Losses% of Loans to Total LoansAllowance for Credit Losses% of Loans to Total Loans
Real estate:
Commercial$26,217 81.17 %$29,015 86.76 %
Commercial land and development89 0.14 %178 0.50 %
Commercial construction1,756 2.68 %718 2.03 %
Residential construction47 0.10 %89 0.50 %
Residential284 0.96 %151 0.84 %
Farmland581 1.38 %399 1.67 %
Commercial:
Secured6,049 5.04 %3,314 5.70 %
Unsecured251 0.72 %189 0.77 %
Consumer and other2,309 7.81 %378 1.23 %
Total allowance for credit losses$37,583 100.00 %$34,431 100.00 %
The ratio of the allowance for credit losses to total loans held for investment was 1.09% at September 30, 2024, as compared to 1.12% at December 31, 2023.
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Table 21: Activity Within the Allowance for Credit Losses
As of and for the three months ended
As of and for the nine months ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
(dollars in thousands)Activity% of Average Loans Held for InvestmentActivity% of Average Loans Held for InvestmentActivity % of Average Loans Held for InvestmentActivity % of Average Loans Held for Investment
Average loans held for investment $3,350,125 $2,973,842 $3,203,569 $2,901,893 
Allowance for credit losses$35,406 $33,984 $34,431 $28,389 
Effect of adoption of ASC 326— — — 5,262 
  
Net (charge-offs) recoveries:  
Commercial:
Secured(784)(0.02)%(1,026)(0.03)%(2,783)(0.09)%(2,498)(0.09)%
Unsecured29 — %— — %(41)— %— — %
Consumer and other(18)— %20 — %26 — %5 — %
Net charge-offs(773)(0.02)%(1,006)(0.03)%(2,798)(0.09)%(2,493)(0.09)%
  
Provision for credit losses2,950 1,050 5,950 2,870 
  
Allowance for credit losses$37,583 $34,028 $37,583 $34,028 
Loans held for investment$3,460,565 $3,009,930 $3,460,565 $3,009,930 
Allowance for credit losses to loans held for investment1.09 %1.13 %1.09 %1.13 %
The ratio of the allowance for credit losses to loans held for investment decreased from 1.13% as of September 30, 2023 to 1.09% as of September 30, 2024. Net charge-offs as a percent of average loans held for investment decreased from 0.03% to 0.02% for the three months ended September 30, 2023 and September 30, 2024, respectively. Net charge-offs as a percent of average loans held for investment remained at 0.09% for the nine months ended September 30, 2023 and September 30, 2024, respectively.
54

Liabilities
During the first nine months of 2024, total liabilities increased by $189.7 million from $3.3 billion as of December 31, 2023 to $3.5 billion as of September 30, 2024. This increase was primarily due to an increase in total deposits of $373.1 million, comprised of an increase of $297.2 million in interest-bearing deposits and an increase of $75.8 million in non-interest-bearing deposits, partially offset by a decrease in borrowings of $170.0 million. The $297.2 million increase in interest-bearing deposits included an increase in non-wholesale deposits of $323.3 million, an increase in brokered deposits of $174.8 million, and a decrease in public time deposits of $125.0 million.
Deposits
Representing 97.22% of our total liabilities as of September 30, 2024, deposits are our primary source of funding for our business operations.
Total deposits increased by $373.1 million, or 12.33%, to $3.4 billion at September 30, 2024 from $3.0 billion at December 31, 2023. The increase was primarily attributable to increases in existing deposit relationships. Non-interest-bearing deposits increased by $75.8 million from December 31, 2023 to $906.9 million at September 30, 2024, representing 26.67% of total deposits at that date, as compared to 27.46% of total deposits at December 31, 2023. Our loan to deposit ratio was 101.87% at September 30, 2024, as compared to 102.19% at December 31, 2023. We intend to continue to operate our business with close monitoring of the loan to deposit ratio.
Table 22 summarizes our deposit composition by average deposit balances and average rates paid for the periods indicated.
Table 22: Deposit Composition by Average Balances and Rates Paid
For the three months ended
September 30, 2024
September 30, 2023
(dollars in thousands)Average AmountAverage Rate Paid% of Total DepositsAverage AmountAverage Rate Paid% of Total Deposits
Interest-bearing transaction accounts$302,188 1.63 %9.49 %$296,230 1.30 %9.93 %
Money market and savings accounts1,703,095 3.66 %53.47 %1,463,210 2.83 %49.03 %
Time accounts326,640 5.08 %10.26 %399,514 4.96 %13.39 %
Demand accounts852,872 — %26.78 %825,254 — %27.65 %
Total deposits$3,184,795 2.63 %100.00 %$2,984,208 2.18 %100.00 %
For the nine months ended
September 30, 2024
September 30, 2023
(dollars in thousands)Average AmountAverage Rate Paid% of Total DepositsAverage AmountAverage Rate Paid% of Total Deposits
Interest-bearing transaction accounts$298,010 1.55 %9.57 %$320,013 0.93 %11.01 %
Money market and savings accounts1,635,519 3.50 %52.52 %1,378,517 2.45 %47.41 %
Time accounts342,978 5.03 %11.01 %357,433 4.57 %12.29 %
Demand accounts837,604 — %26.90 %851,608 — %29.29 %
Total deposits$3,114,111 2.54 %100.00 %$2,907,571 1.83 %100.00 %
Uninsured and uncollateralized deposits totaled $1.2 billion and $1.0 billion at September 30, 2024 and December 31, 2023, respectively.
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As of September 30, 2024, our 42 largest deposit relationships, each accounting for more than $10.0 million, totaled $1.7 billion, or 48.53% of our total deposits. The average age on deposit relationships of more than $5.0 million was approximately 8.89 years. As of December 31, 2023, our 40 largest deposit relationships, each accounting for more than $10.0 million, totaled $1.5 billion, or 49.80% of our total deposits.
Table 23 shows the entity types making up our large deposit relationships at the dates indicated.
Table 23: Composition of Large Deposit Relationships
(dollars in thousands)
September 30, 2024
December 31, 2023
Municipalities$499,749 $693,685 
Non-profits197,401 188,252 
Businesses678,020 525,193 
Brokered deposits274,944 100,128 
Total$1,650,114 $1,507,258 
Our largest single deposit relationship at September 30, 2024 related to brokered deposits. The balance for this customer was $275.0 million, or approximately 8.09% of total deposits as of that date. At December 31, 2023, our largest single deposit relationship related to a government agency and had a balance of $260.0 million, or 8.59% of total deposits as of that date.
Table 24 sets forth the maturity of time deposits as of September 30, 2024.
Table 24: Scheduled Maturities of Time Deposits
(dollars in thousands)$250,000 or GreaterLess than $250,000TotalUninsured Portion
Remaining maturity:
Three months or less$154,893 $279,002 $433,895 $148,700 
Over three through six months27,490 5,553 33,043 23,990 
Over six through twelve months5,279 14,084 19,363 2,779 
Over twelve months3,636 1,071 4,707 2,136 
Total$191,298 $299,710 $491,008 $177,605 
FHLB Advances and Other Borrowings
From time to time, we utilize short-term collateralized FHLB borrowings to maintain adequate liquidity. There were no borrowings outstanding as of September 30, 2024 and borrowings of $170.0 million outstanding from the FHLB as of December 31, 2023.
In 2022, we issued subordinated notes of $75.0 million. This debt was issued to investors in private placement transactions. See Note 6, Long Term Debt and Other Borrowings, in the notes to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding these subordinated notes. The proceeds of the notes qualify as Tier 2 capital for the Company under the regulatory capital rules of the federal banking agencies.
Table 25 is a summary of our outstanding subordinated notes as of September 30, 2024.
Table 25: Subordinated Notes Outstanding
(dollars in thousands)Issuance DateAmount of NotesPrepayment RightMaturity Date
Subordinated notesAugust 2022$75,000August 17, 2027September 1, 2032
Fixed at 6.00% through September 1, 2027, then three-month Term SOFR plus 329.0 basis points (7.93% as of September 30, 2024) through maturity
56

Shareholders’ Equity
Shareholders’ equity totaled $389.9 million at September 30, 2024 and $285.8 million at December 31, 2023. The increase in shareholders’ equity was primarily a result of $80.9 million of additional common stock issued and outstanding in 2024, net income recognized of $32.4 million, and a $2.0 million increase in accumulated other comprehensive income, partially offset by $12.0 million in cash dividends paid during the nine months ended September 30, 2024.
Liquidity and Capital Resources
Liquidity Management
We manage liquidity based upon factors that include the level of diversification of our funding sources, the composition of our deposit types, the availability of unused funding sources, our off-balance sheet obligations, the amount of cash and liquid securities we hold, and the availability of assets to be readily converted into cash without undue loss. As the primary federal regulator of the Bank, the FDIC evaluates our liquidity on a stand-alone basis pursuant to applicable guidance and policies.
Liquidity refers to our capacity to meet our cash obligations at a reasonable cost. Our cash obligations require us to have cash flow that is adequate to fund loan growth and maintain on-balance sheet liquidity while meeting present and future obligations of deposit withdrawals, borrowing maturities, and other contractual cash obligations. In managing our cash flows, management regularly confronts situations that can give rise to increased liquidity risk. These include funding mismatches, market constraints in accessing sources of funds, and the ability to convert assets into cash. Changes in economic conditions or exposure to borrower credit quality, capital markets, and operational, legal, or reputational risks could also affect the Bank’s liquidity risk profile and are considered in the assessment of liquidity management.
The Company is a corporation separate and apart from the Bank and, therefore, must provide for its own liquidity, including liquidity required to meet its debt service requirements on its subordinated notes. The Company’s main source of cash flow is dividends declared and paid to it by the Bank. There are statutory and regulatory limitations that affect the ability of the Bank to pay dividends to the Company, including various legal and regulatory provisions that limit the amount of dividends the Bank can pay to the Company without regulatory approval. Under the California Financial Code, payment of a dividend from the Bank to the Company without advance regulatory approval is restricted to the lesser of the Bank’s retained earnings or the amount of the Bank’s net income from the previous three fiscal years less the amount of dividends paid during that period. We believe that these limitations will not impact our ability to meet our ongoing short-term cash obligations. For contingency purposes, the Company maintains a minimum level of cash to fund one year’s projected operating cash flow needs plus two years’ subordinated notes debt service. We continually monitor our liquidity position in order to meet all reasonably foreseeable short-term, long-term, and strategic liquidity demands. Management has established a comprehensive process for identifying, measuring, monitoring, and controlling liquidity risk. Because of its critical importance to the viability of the Bank, liquidity risk management is fully integrated into our risk management processes. Critical elements of our liquidity risk management include effective corporate governance, consisting of oversight by the board of directors and active involvement by management; appropriate strategies, policies, procedures, and limits used to manage and mitigate liquidity risk; comprehensive liquidity risk measurement and monitoring systems, including stress tests, that are commensurate with the complexity of our business activities; active management of intraday liquidity and collateral; an appropriately diverse mix of existing and potential future funding sources; adequate levels of highly liquid marketable securities free of legal, regulatory, or operational impediments that can be used to meet liquidity needs in stress situations; comprehensive contingency funding plans that sufficiently address potential adverse liquidity events and emergency cash flow requirements; and internal controls and internal audit processes sufficient to determine the adequacy of the Bank’s liquidity risk management process.
Our liquidity position is supported by management of our liquid assets and liabilities and access to alternative sources of funds. Our liquidity requirements are met primarily through our deposits, Federal Reserve Discount Window advances, FHLB advances, and the principal and interest payments we receive on loans and investment securities. Cash on hand, cash at third-party banks, investments available-for-sale, and maturing or prepaying balances in our investment and loan portfolios are our most liquid assets. Other sources of liquidity that are routinely available to us include funds from retail and wholesale deposits, advances from the FHLB and the Federal Reserve Discount Window, and proceeds from the sale of loans. Less commonly used sources of funding include borrowings from established federal funds lines from unaffiliated commercial banks, and the issuance of debt or equity securities. We believe we have ample liquidity resources to fund future growth and meet other cash needs as necessary.
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In addition, we have a shelf registration statement on file with the SEC registering $250.0 million for any combination of equity or debt securities, depository shares, warrants, purchase contracts, purchase units, subscription rights, and units in one or more offerings. Specific information on the terms of any securities being offered, including the expected use of proceeds from the sale of such securities, are provided at the time of the offering. In April 2024, we sold an aggregate of 3,967,500 shares of our common stock at a price of $21.75 per share in a public offering (the “2024 Public Offering”), for net proceeds to us, after deducting underwriting discounts and commissions and offering expenses payable by us, of approximately $80.9 million, to be used for general corporate purposes and to support continued growth, including through investments in the Bank to pursue growth opportunities, and for working capital. The 2024 Public Offering used approximately $86.3 million of our shelf registration statement on file with the SEC, leaving approximately $163.7 million available for future offerings.
Sources and Uses of Cash
Our executive officers and board of directors review our sources and potential uses of cash in connection with our annual budgeting process. Generally speaking, our principal funding source is cash from deposits, and our principal uses of cash include funding of loans, operating expenses, income taxes, and dividend payments, as described below. As of September 30, 2024, management believes the above-mentioned sources will provide adequate liquidity during the next twelve months for the Bank to meet its operating needs. In addition, in April 2024, the Company closed the 2024 Public Offering. The proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses payable by the Company, were approximately $80.9 million, providing additional cash to support the Company’s ongoing operating needs.
Loans
Loans are a significant use of cash in daily operations, and a source of cash as customers make payments on their loans or as loans are sold to other financial institutions. Cash flows from loans are affected by the timing and amount of customer payments and prepayments, changes in interest rates, the general economic environment, competition, and the political environment.
During the nine months ended September 30, 2024, we had cash outflows of $369.7 million in loan originations and advances, net of principal collected, and $19.4 million in loans originated for sale.
Additionally, in the ordinary course of business, we enter into commitments to extend credit, such as commitments to fund new loans and undisbursed construction funds. While these commitments represent contractual cash requirements, a portion of these commitments to extend credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. At September 30, 2024, off-balance sheet commitments totaled $428.6 million. We expect to fund these commitments to the extent utilized primarily through the repayment of existing loans, deposit growth, and liquid assets.
Deposits
Deposits are our primary source of funding for our business operations, and the cost of deposits has a significant impact on our net interest income and net interest margin.
Our deposits are primarily made up of money market, interest-bearing transaction, time, and non-interest-bearing demand deposits. Aside from commercial and business clients, a significant portion of our deposits are from municipalities and non-profit organizations. Cash flows from deposits are impacted by the timing and amount of customer deposits, changes in market rates, and collateral availability.
During the nine months ended September 30, 2024, we had cash inflows of $373.1 million related to an increase in deposits.
During the twelve months following September 30, 2024, approximately $486.3 million of time deposits are expected to mature, which includes $274.9 million of brokered deposits. These deposits may or may not renew due to general competition. We expect the outflow will not be significant and can be replenished through our organic growth in deposits. We believe our emphasis on local deposits and our San Francisco Bay Area expansion provide a stable funding base.
At September 30, 2024, cash and cash equivalents represented 7.38% of total deposits.
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Investment Securities
Our investment securities totaled $107.0 million at September 30, 2024. Mortgage-backed securities and obligations of states and political subdivisions comprised 51.17% and 35.98% of our investment portfolio, respectively. Cash proceeds from mortgage-backed securities result from payments of principal and interest by borrowers. Cash proceeds from obligations of states and political subdivisions occur when these securities are called or mature. Assuming the current prepayment speed and interest rate environment, we expect to receive approximately $8.9 million from our securities over the twelve months following September 30, 2024. In future periods, we expect to maintain approximately the same level of cash flows from our securities. Depending on market yield and our liquidity, we may purchase securities as a use of cash in our interest-earning asset portfolio.
During the nine months ended September 30, 2024, we had cash proceeds from sales, maturities, calls, and prepayments of securities of $6.4 million. Additionally, at September 30, 2024, securities available-for-sale totaled $104.2 million, of which $100.8 million has been pledged as collateral for borrowings and other commitments.
FHLB Financing
The Bank is a shareholder of the FHLB, which enables the Bank to have access to lower-cost FHLB financing when necessary. At September 30, 2024, the Bank had no outstanding borrowings and a total financing availability of $555.9 million, net of letters of credit issued of $567.5 million.
Federal Reserve Discount Window
The Company has the ability to borrow from the Federal Reserve Discount Window when necessary. At September 30, 2024, the Bank had no outstanding borrowings and a total financing availability of $858.3 million.
Correspondent Bank Lines of Credit
At September 30, 2024, the unused and available amount for borrowing from correspondent bank lines of credit was $175.0 million.
Total Liquidity
Total liquidity (consisting of cash and cash equivalents and unused and immediately available borrowing capacity as set forth in Table 26) was approximately $1.8 billion as of September 30, 2024.
Table 26: Total Liquidity
September 30, 2024Available
(dollars in thousands)Line of CreditLetters of Credit IssuedBorrowings
FHLB advances
$1,123,388 $567,500 $— $555,888 
Federal Reserve Discount Window858,251 — — 858,251 
Correspondent bank lines of credit175,000 — — 175,000 
Cash and cash equivalents— — — 250,852 
Total$2,156,639 $567,500 $— $1,839,991 
Future Contractual Obligations
Our estimated future contractual obligations as of September 30, 2024 include both current and long-term obligations. Under our operating leases, we have an operating lease liability of $7.1 million. We have a current obligation of $486.3 million and a long-term obligation of $4.7 million related to time deposits, as discussed in Note 5, Interest-Bearing Deposits. We have net subordinated notes of $73.9 million, all of which are long-term obligations. We also have contractual obligations on unfunded loan commitments and standby letters of credit totaling $428.6 million.
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Dividends
The Company paid dividends to its shareholders totaling $4.3 million during the three months ended September 30, 2024.
We expect to continue our current practice of paying quarterly cash dividends with respect to our common stock, subject to our board of directors’ discretion to modify or terminate this practice at any time and for any reason without prior notice. We believe our quarterly dividend rate per share, as approved by our board of directors, enables us to balance our multiple objectives of managing our business and returning a portion of our earnings to our shareholders. Assuming continued payment during the rest of 2024 at a rate of $0.20 per share, our average total dividend paid each quarter would be approximately $4.3 million based on the number of currently outstanding shares if there are no increases or decreases in the number of shares, and given that unvested RSAs share equally in dividends with outstanding common stock.
Impact of Inflation
Our unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP, which require the measurement of financial position and operating results in terms of historical dollars, without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of operations. Unlike industrial companies, nearly all of our assets and liabilities are monetary in nature. As a result, interest rates have a greater impact on our performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the price of goods or services.
Historical Information
Table 27 summarizes our consolidated cash flow activities.
Table 27: Consolidated Cash Flow Activities
Nine months ended September 30,
(dollars in thousands)20242023$ Change
Net cash provided by operating activities$33,792 $40,547 $(6,755)
Net cash used in investing activities$(376,490)$(207,705)$(168,785)
Net cash provided by financing activities$271,974 $230,715 $41,259 
Operating Activities
Net cash provided by operating activities decreased by $6.8 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Cash provided by operating activities is subject to variability period-over-period as a result of timing differences, including with respect to the collection of receivables and payments of interest expense, accounts payable, and bonuses.
Investing Activities
Net cash used in investing activities increased by $168.8 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to a higher number of loan originations, including purchased consumer loans.
Financing Activities
Net cash provided by financing activities increased by $41.3 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to deposit growth and proceeds from the 2024 Public Offering, partially offset by lower borrowings.
Capital Adequacy
We manage our capital by tracking our level and quality of capital with consideration given to our overall financial condition, our asset quality, our level of allowance for credit losses, our geographic and industry concentrations, and other risk factors on our balance sheet, including interest rate sensitivity.
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Bancorp and the Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements as set forth in Tables 28 and 29 can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material effect on our unaudited consolidated financial statements.
Historically, as a bank holding company which had less than $3.0 billion in total consolidated assets and that met certain other criteria, we had been operating under the Small Bank Holding Company Policy Statement, which provides an exemption from the Federal Reserve’s generally applicable risk-based capital ratio and leverage ratio requirements. Having passed this threshold as of September 30, 2022, we are no longer subject to this policy statement and our capital adequacy is evaluated relative to the Federal Reserve’s generally applicable capital requirements. Additionally, as of June 30, 2023, the Company’s consolidated assets were in excess of $3.0 billion, and as a consequence, beginning in March 2024, the Company no longer prepares and files financial reports with the Federal Reserve as a small bank holding company and is subject to capital ratio requirements for bank holding companies.
Under federal regulations implementing the Basel III framework, the Bank is subject to minimum risk-based and leverage capital requirements. The Bank also is subject to regulatory thresholds that must be met for an insured depository institution to be classified as “well-capitalized” under the prompt corrective action framework. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items, as calculated under regulatory accounting practices. Capital amounts for Bancorp and the Bank, and the Bank’s prompt corrective action classification, are also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors. As of September 30, 2024, both Bancorp and the Bank were in compliance with all applicable regulatory capital requirements, and the Bank qualified as “well-capitalized” under the prompt corrective action framework.
Management reviews capital ratios on a regular basis to ensure that capital exceeds the prescribed regulatory minimums and is adequate to meet our anticipated future needs. For all periods presented, the Bank’s ratios exceed the regulatory definition of “well-capitalized” under the regulatory framework for prompt corrective action, and Bancorp’s ratios exceed the minimum ratios required for it to be considered a well-capitalized bank holding company.
The capital adequacy ratios as of September 30, 2024 and December 31, 2023 for Bancorp and the Bank are presented in Tables 28 and 29. As of September 30, 2024 and December 31, 2023, Bancorp’s Tier 2 capital included subordinated notes, which were not included at the Bank level. Eligible amounts of subordinated notes included in Tier 2 capital will be phased out by 20% per year beginning five years before the maturity date of the notes.
Table 28: Capital Ratios for Bancorp

Actual Ratio
Required for Capital Adequacy Purposes1
Ratio to be Well-Capitalized under Prompt Corrective Action Provisions
(dollars in thousands)Amount
Ratio
AmountRatioAmountRatio
September 30, 2024
Total capital (to risk-weighted assets)$510,170 13.94 %$326,509 8.00 %N/AN/A
Tier 1 capital (to risk-weighted assets)$400,006 10.93 %$219,638 6.00 %N/AN/A
Common equity tier 1 capital (to risk-weighted assets)$400,006 10.93 %$164,729 4.50 %N/AN/A
Tier 1 leverage$400,006 10.83 %$147,808 4.00 %N/AN/A
December 31, 2023
Total capital (to risk-weighted assets)$404,829 12.30 %$259,090 8.00 %N/AN/A
Tier 1 capital (to risk-weighted assets)$298,749 9.07 %$197,534 6.00 %N/AN/A
Common equity tier 1 capital (to risk-weighted assets)$298,749 9.07 %$148,150 4.50 %N/AN/A
Tier 1 leverage$298,749 8.73 %$136,953 4.00 %N/AN/A
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Table 29: Capital Ratios for the Bank

Actual Ratio
Required for Capital Adequacy PurposesRatio to be Well-Capitalized under Prompt Corrective Action Provisions
(dollars in thousands)Amount
Ratio
AmountRatioAmountRatio
September 30, 2024
Total capital (to risk-weighted assets)$494,761 13.52 %$292,819 8.00 %$366,023 10.00 %
Tier 1 capital (to risk-weighted assets)$458,457 12.53 %$219,614 6.00 %$292,819 8.00 %
Common equity tier 1 capital (to risk-weighted assets)$458,457 12.53 %$164,710 4.50 %$237,915 6.50 %
Tier 1 leverage$458,457 12.41 %$147,792 4.00 %$184,740 5.00 %
December 31, 2023
  
Total capital (to risk-weighted assets)$392,114 11.93 %$262,947 8.00 %$328,684 10.00 %
Tier 1 capital (to risk-weighted assets)$359,783 10.95 %$197,211 6.00 %$262,947 8.00 %
Common equity tier 1 capital (to risk-weighted assets)$359,783 10.95 %$147,908 4.50 %$213,645 6.50 %
Tier 1 leverage$359,783 10.52 %$136,757 4.00 %$170,946 5.00 %
1The listed capital adequacy ratios exclude capital conservation buffers.
Non-GAAP Financial Measures
Some of the financial measures discussed herein are non-GAAP financial measures. In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP in our consolidated statements of income, balance sheets, statements of shareholders’ equity, or statements of cash flows.
Tangible shareholders’ equity to tangible assets is defined as total equity less goodwill and other intangible assets, divided by total assets less goodwill and other intangible assets. The most directly comparable GAAP financial measure is total shareholders’ equity to total assets. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible shareholders’ equity to tangible assets is the same as total shareholders’ equity to total assets at the end of each of the periods indicated.
Tangible book value per share is defined as total shareholders’ equity less goodwill and other intangible assets, divided by the outstanding number of common shares at the end of the period. The most directly comparable GAAP financial measure is book value per share. We had no goodwill or other intangible assets at the end of any period indicated. As a result, tangible book value per share is the same as book value per share at the end of each of the periods indicated.
We believe that these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations, and cash flows computed in accordance with GAAP. However, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those we use for the non-GAAP financial measures we disclose, but may calculate them differently. You should understand how we and other companies each calculate our non-GAAP financial measures when making comparisons.
Recent Legislative and Regulatory Developments
On September 17, 2024, the FDIC finalized changes to its Statement of Policy on Bank Merger Transactions (the “Policy Statement”), which outlines factors that the FDIC will consider when evaluating a proposed bank merger transaction. Also on September 17, 2024, the United States Department of Justice (the “DOJ”) withdrew its 1995 Bank Merger Guidelines and announced that it will instead evaluate the competitive impact of bank mergers using its 2023 Merger Guidelines that the DOJ applies to mergers in all industries. Compared to the 1995 Bank Merger Guidelines, the 2023 Merger Guidelines
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set forth more stringent concentration limits and add several largely qualitative bases on which the DOJ may challenge a merger. While the effect of these changes for particular transactions remains unclear, both the Policy Statement and the change in the DOJ’s bank merger antitrust policy may make it more difficult and/or costly for us to obtain regulatory approval for an acquisition or otherwise result in more onerous conditions to obtain approval for an acquisition.
On July 30, 2024, the FDIC issued a proposed rule that would revise the FDIC’s regulations governing the classification and treatment of brokered deposits. The proposal would, among other changes, broaden the definition of deposit broker to include agents that place or facilitate the placement of third-party deposits at only one insured depository institution and agents that receive a fee or other remuneration in exchange for the placement of deposits. In addition, the proposal would narrow the exception to the definition of deposit broker for agents whose primary purpose is not the placement of funds with depository institutions. While we are evaluating the potential impact of the proposed rule, if the rule is finalized as proposed, the Bank may be required to classify a greater amount of its deposits obtained through the involvement of third parties as brokered deposits. An increase in the amount of brokered deposits on the Bank’s balance sheet could, among other consequences, increase the Bank’s deposit insurance assessment costs.
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Glossary of Acronyms, Abbreviations, and Terms
The terms identified below are used in various sections of this Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 and the unaudited Consolidated Financial Statements and Notes to the Financial Statements in Item 1 of this Form 10-Q.
2023 Annual Report on Form 10-K
Company’s Annual Report on Form 10-K for the year ended December 31, 2023
FHLBFederal Home Loan Bank of San Francisco
ACL
Allowance for Credit Losses
FHLMCFederal Home Loan Mortgage Corporation
ASCAccounting Standards CodificationFNMAFederal National Mortgage Association
ASUAccounting Standards UpdateGAAPGenerally Accepted Accounting Principles in the U.S.
BancorpFive Star Bancorp and its subsidiaryGNMAGovernment National Mortgage Association
BankFive Star BankGSEGovernment Sponsored Entity
Basel IIIA capital framework and rules for U.S. banking organizationsIPOInitial Public Offering
BOLIBank-Owned Life InsuranceLMLoan modification made to borrower experiencing financial difficulty
CECL
Current Expected Credit Loss
NINet Income
CMEChicago Mercantile ExchangeNIINet Interest Income
CRE
Commercial Real Estate
OCIOther Comprehensive Income
C&I
Commercial and Industrial
RSARestricted Stock Award
EPSEarnings per ShareROAAReturn on Average Assets, annualized
EVEEconomic Value of EquityROAEReturn on Average Equity, annualized
FASBFinancial Accounting Standards BoardROUARight-of-Use Asset
FDICFederal Deposit Insurance CorporationSBAU.S. Small Business Administration
Federal ReserveBoard of Governors of the Federal Reserve SystemSECSecurities and Exchange Commission
FFIEC
Federal Financial Institutions Examination Council
SOFRSecured Overnight Financing Rate
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and rates. As a financial institution, the Company experiences market risk arising primarily from interest rate risk inherent in lending and deposit-taking activities. Because the interest rates on the Company’s assets and liabilities do not necessarily change at the same speed or rate as market interest rates, sudden and/or substantial changes in interest rates may adversely impact our earnings. In particular, the Company’s financial results are sensitive to significant changes in the treasury yield curve, the Federal Funds rate, and the Wall Street Prime Index.
The Company’s total interest income was $52.7 million for the three months ended September 30, 2024 and $174.4 million for the year ended December 31, 2023. Our total interest expense was $22.3 million for the three months ended September 30, 2024 and $63.5 million for the year ended December 31, 2023. Overall, our net interest income was $30.4 million for the three months ended September 30, 2024 and $110.9 million for the year ended December 31, 2023.
Economic value of equity (“EVE”) measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time for a given set of market rate assumptions. An increase in EVE due to a specified rate change indicates an improvement in the long-term earnings capacity of the balance sheet, assuming that the rate change remains in effect over the life of the current balance sheet. As of September 30, 2024, the Company carried a slightly higher balance of liabilities than assets that will reprice within the next twelve months in the event that interest rates fall.
Our policies and procedures provide management with guidelines for effective funds management, and we have established a measurement system for monitoring our net interest rate sensitivity position. This is overseen and adjusted as needed by our Management Asset Liability Committee on a monthly basis and our Director Asset Liability Committee on a quarterly basis. We have historically managed our sensitivity position within our established guidelines. With the intent of stabilizing or increasing net interest income, management typically deploys the Company’s excess liquidity and seeks to migrate certain earning assets into higher-yielding categories (from investment securities into loans, for example). However, in situations where deposit balances contract, management relies upon various borrowing facilities and/or the use of brokered deposits. The Company monitors the impact of interest rate risk on EVE by reviewing and managing assets and liabilities with varying interest rate risks, such as cash and time deposits. Assets and liabilities are subject to fluctuations at each measurement date based on the composition of the balance sheet at each measurement date. EVE results are compared to previous periods and established policies on a quarterly basis.
As of September 30, 2024, the overnight Federal Funds rate (the rate used in the interest rate shock scenarios listed below) was 4.83%, a decrease from 5.33% at December 31, 2023. The scenarios presented assume that interest rates change instantaneously (“shock”) and that there are no significant changes in the structure of the Company’s balance sheet over the twelve months being measured.
Table 30 summarizes the estimated effect on net interest income and EVE from changing interest rates as measured against a flat rate (no interest rate change) instantaneous parallel shock scenario over a twelve-month period utilizing an interest sensitivity (GAP) analysis based on the Company’s specific mix of interest-earning assets and interest-bearing liabilities as of September 30, 2024 and December 31, 2023.
Table 30: Estimated Effect on Net Interest Income and EVE from Changing Interest Rates
September 30, 2024
December 31, 2023
Change in Interest RatesEstimated Change in NII
(as % of NII)
Estimated Change in EVE
(as % of EVE)
Estimated Change in NII
(as % of NII)
Estimated Change in EVE
(as % of EVE)
(in basis points)
+300 (shock)(5.46)%(12.04)%(13.73)%(22.17)%
+200 (shock)(3.66)%(8.20)%(9.02)%(15.23)%
+100 (shock)(1.85)%(3.79)%(4.63)%(7.90)%
+ 0 (flat)— %— %— %— %
-100 (shock)1.88 %2.76 %4.43 %8.09 %
-200 (shock)4.32 %6.50 %8.93 %14.76 %
-300 (shock)7.37 %10.13 %13.72 %22.38 %
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The computation of the prospective effects of hypothetical interest rate changes requires numerous assumptions, which are based upon our experience and published industry experience. Such assumptions may not necessarily reflect the manner or timing in which our interest-earning assets and interest-bearing liabilities respond to changes in market rates. Because these assumptions are inherently uncertain, actual results will differ from simulated results.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness as of September 30, 2024 of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgment in evaluating its controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, such controls.
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PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
From time to time, we are a party to various litigation matters incidental to the conduct of our business. We do not believe that any currently pending legal proceedings will have a material adverse effect on our business, financial condition, or results of operations.
ITEM 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed under Item 1A of the Company’s 2023 Annual Report on Form 10-K, previously filed with the SEC.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)Unregistered Sales of Equity Securities
None.
(b)Use of Proceeds
Not applicable.
(c)Issuer Purchases of Equity Securities
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
During the three months ended September 30, 2024, none of our directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”.
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ITEM 6. Exhibits
The following exhibits are filed as part of this report or hereby incorporated by references to filings previously made with the SEC.
Incorporated by Reference
Exhibit NumberExhibit DescriptionFormFile No.ExhibitFiling DateHerewith
31.1Filed
31.2Filed
32.1Filed
32.2Filed
101Inline XBRL Interactive DataFiled
104Cover Page Interactive Data File (embedded within the Inline XBRL document in Exhibit 101)Filed

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Five Star Bancorp
(registrant)
November 7, 2024/s/ James E. Beckwith
DateJames E. Beckwith
President &
Chief Executive Officer
(Principal Executive Officer)
November 7, 2024/s/ Heather C. Luck
DateHeather C. Luck
Senior Vice President &
Chief Financial Officer
(Principal Financial Officer)
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