Five Star Bancorp net income rises to $19.4 million
The bank's total loans held for investment grew 20.27% year-over-year to $4.52 billion.
Five Star Bancorp (FSBC) reported net income of $19.4 million for the second quarter of 2026.
The bank expanded its balance sheet through significant loan growth and a shift in its deposit mix, though it faced a sequential decline in net interest margin and a rise in nonperforming assets.
Net income rose from $18.6 million in the first quarter of 2026 and $14.5 million in the second quarter of 2025. Total loans held for investment grew 7.27% sequentially to $4.52 billion from $4.21 billion in the prior quarter, representing a 20.27% increase from $3.76 billion a year earlier.
Net interest margin decreased 7 basis points sequentially to 3.63% from 3.70% in the first quarter, although it expanded 10 basis points from 3.53% in the second quarter of 2025. Total deposits increased 7.38% sequentially to $4.8 billion. This growth was driven by an 11.33% increase in non-wholesale deposits, which offset a 34.74% decrease in wholesale deposits.
Non-interest expense rose 12.77% sequentially to $19.6 million from $17.4 million in the first quarter. This increase was largely due to the absence of a $1.0 million SBA loan loss contingency release that had benefited the previous quarter. Consequently, the efficiency ratio increased to 40.91% from 38.57% in the first quarter, though it remained slightly better than the 41.03% reported in the second quarter of 2025.
Asset quality shifted as the ratio of nonperforming loans to loans held for investment rose to 0.30% at June 30, 2026, from 0.07% at March 31, 2026. The increase was primarily due to a single $11.4 million Community Reinvestment Act loan placed on non-accrual status.
Five Star Bancorp intentionally reduced its gain on sale of loans to zero in the second quarter, compared to $119,000 in the second quarter of 2025, following a strategic reduction in originations of loans held for sale. The company increased its headcount of Business Development Officers to 45 from 43 in the prior quarter.
The common equity Tier 1 capital ratio declined to 9.98% as of June 30, 2026, from 10.45% as of March 31, 2026.