Company: FSBC
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050090
Chunk: 228

Company: FIVE STAR BANCORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 2
Chunk 228
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, 2025 or December 31, 2024.

53

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.

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, 2025, the Company’s allowance for credit losses was $42.1 million, as compared to $37.8 million at December 31, 2024. The $4.3 million increase in the allowance is due to a $7.1 million provision for credit losses recorded during the nine months ended September 30, 2025, partially offset by net charge-offs of $2.8 million, primarily 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 LossesSeptember 30, 2025December 31, 2024(dollars in thousands)Allowance for Credit Losses% of Loans to Total LoansAllowance for Credit Losses% of Loans to Total LoansReal estate:Commercial$23,473 80.86 %$25,864 80.75 %Commercial land and development30 0.02 %78 0.11 %Commercial construction4,355 3.52 %2,268 3.15 %Residential construction108 0.15 %64 0.13 %Residential351 0.92 %270 0.93 %Farmland425 1.48 %607 1.34 %Commercial:Secured10,400 4.91 %