# EDGAR Filing Document

**Accession Number:** 0001275168
**File Stem:** 0001275168-23-000009
**Filing Date:** 2023-1
**Character Count:** 107575
**Document Hash:** 66a8ec7402f037e2d9dca98a7b23be21
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001275168-23-000009.hdr.sgml**: 20230131

**ACCESSION NUMBER**: 0001275168-23-000009

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 46

**CONFORMED PERIOD OF REPORT**: 20230130

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Regulation FD Disclosure

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230131

**DATE AS OF CHANGE**: 20230130

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FIVE STAR BANCORP
- **CENTRAL INDEX KEY:** 0001275168
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **IRS NUMBER:** 753100966
- **STATE OF INCORPORATION:** CA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40379
- **FILM NUMBER:** 23569506

**BUSINESS ADDRESS:**
- **STREET 1:** 3100 ZINFANDEL DRIVE
- **STREET 2:** SUITE 100
- **CITY:** RANCHO CORDOVA
- **STATE:** CA
- **ZIP:** 95670
- **BUSINESS PHONE:** 916-626-5000

**MAIL ADDRESS:**
- **STREET 1:** 3100 ZINFANDEL DRIVE
- **STREET 2:** SUITE 100
- **CITY:** RANCHO CORDOVA
- **STATE:** CA
- **ZIP:** 95670

?xml version="1.0" ? fsbc-20230130

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 20549** 

**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the**

**Securities Exchange Act of 1934**

**Date of report (Date of earliest event reported): <u>January 30, 2023</u>**

**FIVE STAR BANCORP**

 **(Exact Name of Registrant as Specified in Charter)** 

---

| | | |
|:---|:---|:---|
| California | 001-40379 | 75-3100966 |
| **(State or Other Jurisdiction**<br>**of Incorporation)** | **(Commission**<br>**File Number)** | **(I.R.S. Employer**<br>**Identification No.)** |

---

3100 Zinfandel Drive, Suite 100, Rancho Cordova, California, 95670

**(Address of Principal Executive Offices, and Zip Code)**

(916) 626-5000

**Registrant's Telephone Number, Including Area Code**

Not Applicable

 **(Former Name or Former Address, if Changed Since Last Report)** 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (*see* General Instruction A.2. below):

 ☐ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 ☐ Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 ☐ Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered <br> <u>Common Stock, no par value per share</u> <u>FSBC</u> <u>The Nasdaq Stock Market LLC</u>

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

------

**Item 2.02&nbsp;&nbsp;&nbsp;&nbsp;Results of Operations and Financial Condition**

On January 30, 2023, Five Star Bancorp (the "Company") issued a press release announcing its results of operations and financial condition for the quarter and year ended December 31, 2022. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

This information (including Exhibit 99.1) is being furnished under Item 2.02 hereof and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

**Item 7.01&nbsp;&nbsp;&nbsp;&nbsp;Regulation FD Disclosure**

The Company is conducting an earnings call on January 31, 2023 at 10:00am PT/1:00pm ET to discuss its fourth quarter and year end 2022 financial results. A copy of the investor presentation to be used during the earnings call is attached to this Current Report on Form 8-K as Exhibit 99.2 and is incorporated herein by reference.

This information (including Exhibit 99.2) is being furnished under Item 7.01 hereof and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

**Item 9.01**&nbsp;&nbsp;&nbsp;&nbsp;**Financial Statements and Exhibits**

**(d) Exhibits**

---

| | |
|:---|:---|
| <br>**<u>Number</u>** | **<u>Description</u>** |
| 99.1 | <u>[Press Release dated](q42022earningsrelease.htm)[January 30](q42022earningsrelease.htm)[, 202](q42022earningsrelease.htm)[3](q42022earningsrelease.htm)</u> |
| 99.2 | <u>[Fourth](invpresq42022.htm)[Quarter](invpresq42022.htm)[and Year End](invpresq42022.htm)[2022 Investor Presentation, dated](invpresq42022.htm)[January 31](invpresq42022.htm)[, 202](invpresq42022.htm)[3](invpresq42022.htm)</u> |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL) |

---

------

**SIGNATURE**

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 hereunto duly authorized.

---

| | | |
|:---|:---|:---|
| | **FIVE STAR BANCORP** | **FIVE STAR BANCORP** |
| | By: | /s/ Heather Luck |
| | | Name: Heather Luck |
| | | Title: Senior Vice President and Chief Financial Officer |
| Date: January 30, 2023 |  |  |

---

## Exhibit 99.1

![fivestarbancorplogoa.jpg](fivestarbancorplogoa.jpg)

---

| | |
|:---|:---|
| **PRESS RELEASE** | **FOR IMMEDIATE RELEASE** |

---

**Five Star Bancorp Announces Quarterly and Annual Results** 

RANCHO CORDOVA, Calif. January 30, 2023 (GLOBE NEWSWIRE) – Five Star Bancorp (Nasdaq: FSBC) (the "Company" or "Five Star"), the holding company for Five Star Bank, today reported net income of $13.3 million for the three months ended December 31, 2022, as compared to $11.7 million for the three months ended September 30, 2022 and $11.3 million for the three months ended December 31, 2021. Net income for the year ended December 31, 2022 was $44.8 million, as compared to $42.4 million for the year ended December 31, 2021.

**<u>Financial Highlights</u>**

Performance highlights and other developments for the Company for the periods noted below included the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Pre-tax net income, pre-tax, pre-provision net income, net income, and earnings per share were as follows for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **Three months ended** | **Three months ended** | **Three months ended** |
| **(dollars in thousands, except share and per share data)** | **December 31,<br>2022** | **September 30,<br>2022** | **December 31,<br>2021** |
| Pre-tax net income | $18769 | $16534 | $12630 |
| Pre-tax, pre-provision net income<sup>(1)</sup> | $20019 | $18784 | $14130 |
| Net income | $13282 | $11704 | $11309 |
| Basic earnings per common share | $0.77 | $0.68 | $0.66 |
| Diluted earnings per common share | $0.77 | $0.68 | $0.66 |
| Weighted average basic common shares outstanding | 17143920 | 17140435 | 17096230 |
| Weighted average diluted common shares outstanding | 17179863 | 17168447 | 17139693 |
| Shares outstanding at end of period | 17241926 | 17245983 | 17224848 |

---

---

| | | |
|:---|:---|:---|
|  | **Year ended** | **Year ended** |
| **(dollars in thousands, except share and per share data)** | **December 31,<br>2022** | **December 31,<br>2021** |
| Pre-tax net income | $62858 | $47148 |
| Pre-tax, pre-provision net income<sup>(1)</sup> | $69558 | $48848 |
| Net income | $44801 | $42441 |
| Basic earnings per common share | $2.61 | $2.83 |
| Diluted earnings per common share | $2.61 | $2.83 |
| Weighted average basic common shares outstanding | 17128282 | 14972637 |
| Weighted average diluted common shares outstanding | 17165610 | 14995213 |
| Shares outstanding at end of period | 17241926 | 17224848 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) See the section entitled "Non-GAAP Reconciliation (Unaudited)" for a reconciliation of this non-GAAP financial measure.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Loan and deposit growth was as follows at the dates indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **(dollars in thousands)** | **December 31,<br>2022** | **September 30,<br>2022** | **$ Change** | **% Change** |
| Loans held for investment | $2791326 | $2582978 | $208348 | 8.07% |
| Non-interest-bearing deposits | 971246 | 1020625 | (49379) | (4.84)% |
| Interest-bearing deposits | 1810758 | 1593707 | 217051 | 13.62% |
| **(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** | **$ Change** | **% Change** |
| Loans held for investment | $2791326 | $1934460 | $856866 | 44.29% |
| Loans held for investment, excluding Paycheck Protection Program ("PPP") loans<sup>(1)</sup> | 2791326 | 1912336 | 878990 | 45.96% |
| PPP loans |  | 22124 | (22124) | (100.00)% |
| Non-interest-bearing deposits | 971246 | 902118 | 69128 | 7.66% |
| Interest-bearing deposits | 1810758 | 1383772 | 426986 | 30.86% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Loans held for investment, excluding PPP loans, is a non-GAAP measure. For reconciliation to the closest GAAP measure, loans held for investment, see table above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• At December 31, 2022, the Company reported total loans held for investment, total assets, and total deposits of $2.8 billion, $3.2 billion, and $2.8 billion, respectively, as compared to $1.9 billion, $2.6 billion, and $2.3 billion, respectively, at December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The ratio of nonperforming loans to loans held for investment, or total loans at period end, decreased from 0.03% at December 31, 2021 to 0.01% at December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On December 15, 2022, the Company exercised its right of prepayment and redeemed subordinated notes with an aggregate principal amount of $28.8 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company's Board of Directors declared, and the Company subsequently paid, a cash dividend of $0.15 per share during the three months ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For the three months ended December 31, 2022, net interest margin was 3.83%, as compared to 3.86% for the three months ended September 30, 2022 and 3.67% for the three months ended December 31, 2021. For the year ended December 31, 2022, net interest margin was 3.75%, as compared to 3.64% for the year ended December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For the three months ended December 31, 2022, the Company's return on average assets ("ROAA") was 1.70% and return on average equity ("ROAE") was 21.50%, as compared to ROAA and ROAE of 1.60% and 19.35%, respectively, for the three months ended September 30, 2022, and 1.82% and 19.15%, respectively, for the three months ended December 31, 2021. For the year ended December 31, 2022, the Company's ROAA and ROAE were 1.57% and 18.80%, respectively, as compared to ROAA and ROAE of 1.86% and 22.49%, respectively, for the year ended December 31, 2021.

"While we focus on the future and maintaining a position of distinction and respect in the markets we serve, we proudly look back at 2022 as another outstanding year of consistent, sustainable financial performance. The bank achieved year-over-year growth in loans, a consistent shareholder dividend, and stable net interest margin. We managed expenses and executed on conservative underwriting practices, which continue to be foundational to our success," said Five Star Bank President and Chief Executive Officer, James Beckwith.

"Five Star Bank consistently executes on client and community-focused initiatives, and in 2022, we received a Super Premier rating from Findley Reports, an IDC rating of three hundred out of three hundred, and a Bauer rating of '5' stars. We were also awarded the prestigious 2021 Raymond James Community Bankers Cup, ranking in the top 10% of community banks in the nation. In 2022, our executives were awarded by the Sacramento Business Journal a C-Suite Award, a Women Who Mean Business honor, and a 40 Under 40 recognition. Being recognized as community leaders ensures Five Star Bank remains top-of-mind in the markets we serve as we continue to build-out our verticals. We are well-positioned to withstand an array of economic conditions as we enter 2023. I am humbled and proud of our team's accomplishments and look forward to the future," Beckwith concluded.

------

**<u>Summary Results</u>**

*Three months ended December 31, 2022, as compared to three months ended September 30, 2022*

The increase in the Company's net income from the three months ended September 30, 2022 to the three months ended December 31, 2022 was primarily due to a $1.6 million increase in net interest income driven by an increase in average loan balances and higher yields earned on interest-earning assets during the period, along with $0.2 million of growth in other income. The increase in average assets was largely the result of an increase in average loans held for investment and sale funded by increases in average interest-bearing deposits, subordinated debt and other borrowings, combined with an increase in average equity related to earnings during the period.

*Three months ended December 31, 2022, as compared to three months ended December 31, 2021*

The increase in the Company's net income from the three months ended December 31, 2021 to the three months ended December 31, 2022 was primarily due to an increase in net interest income of $7.8 million, driven by loan growth. This increase was partially offset by an increase in the provision for income taxes of $4.2 million and an increase in non-interest expense of $1.7 million due to operational growth. The increase in average assets was largely the result of an increase in average loans held for investment and sale funded by increases in average interest-bearing deposits, demand accounts, subordinated debt and other borrowings. The increase in average equity was primarily due to earnings growth, partially offset by an increase in accumulated other comprehensive loss period-over-period.

*Year ended December 31, 2022, as compared to year ended December 31, 2021*

The increase in the Company's net income from the year ended December 31, 2021 to the year ended December 31, 2022 was primarily due to an increase in net interest income of $25.5 million, driven by loan growth. This increase was partially offset by: (i) a $13.4 million increase in the provision for income taxes due to an increase in tax rates caused by the Company's transition from an S Corporation to a C Corporation during 2021; (ii) a $5.0 million increase in the provision for loan losses, largely due to loan growth; and (iii) a $4.6 million increase in non-interest expense due to operational growth. The increase in average assets was largely a result of an increase in average loans held for investment and sale, which was funded by an increase in average interest-bearing deposits, demand accounts, subordinated debt and other borrowings. The increase in average equity was primarily due to earnings growth, partially offset by an increase in accumulated other comprehensive loss year-over-year.

The following is a summary of the components of the Company's operating results and performance ratios for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended** | **Three months ended** | | |
| **(dollars in thousands, except per share data)** | **December 31,<br>2022** | **September 30,<br>2022** |<br>**$ Change** |<br>**% Change** |
| Selected operating data: |  |  |  |  |
| &nbsp;&nbsp;Net interest income | $29135 | $27523 | $1612 | 5.86% |
| &nbsp;&nbsp;Provision for loan losses | 1250 | 2250 | (1000) | (44.44)% |
| &nbsp;&nbsp;Non-interest income | 1601 | 1433 | 168 | 11.72% |
| &nbsp;&nbsp;Non-interest expense | 10717 | 10172 | 545 | 5.36% |
| &nbsp;&nbsp;Pre-tax net income | 18769 | 16534 | 2235 | 13.52% |
| &nbsp;&nbsp;Provision for income taxes | 5487 | 4830 | 657 | 13.60% |
| &nbsp;&nbsp;Net income | $13282 | $11704 | $1578 | 13.48% |
| Earnings per common share: |  |  |  |  |
| &nbsp;&nbsp;Basic | $0.77 | $0.68 | $0.09 | 13.24% |
| &nbsp;&nbsp;Diluted | $0.77 | $0.68 | $0.09 | 13.24% |
| Performance and other financial ratios: |  |  |  |  |
| &nbsp;&nbsp;ROAA | 1.70% | 1.60% |  |  |
| &nbsp;&nbsp;ROAE | 21.50% | 19.35% |  |  |
| &nbsp;&nbsp;Net interest margin | 3.83% | 3.86% |  |  |
| &nbsp;&nbsp;Cost of funds | 1.16% | 0.62% |  |  |
| &nbsp;&nbsp;Efficiency ratio | 34.87% | 35.13% |  |  |

---

------

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended** | **Three months ended** | | |
| **(dollars in thousands, except per share data)** | **December 31,<br>2022** | **December 31,<br>2021** |<br>**$ Change** |<br>**% Change** |
| Selected operating data: |  |  |  |  |
| &nbsp;&nbsp;Net interest income | $29135 | $21358 | $7777 | 36.41% |
| &nbsp;&nbsp;Provision for loan losses | 1250 | 1500 | (250) | (16.67)% |
| &nbsp;&nbsp;Non-interest income | 1601 | 1790 | (189) | (10.56)% |
| &nbsp;&nbsp;Non-interest expense | 10717 | 9018 | 1699 | 18.84% |
| &nbsp;&nbsp;Pre-tax net income | 18769 | 12630 | 6139 | 48.61% |
| &nbsp;&nbsp;Provision for income taxes | 5487 | 1321 | 4166 | 315.37% |
| &nbsp;&nbsp;Net income | $13282 | $11309 | $1973 | 17.45% |
| Earnings per common share: |  |  |  |  |
| &nbsp;&nbsp;Basic | $0.77 | $0.66 | $0.11 | 16.67% |
| &nbsp;&nbsp;Diluted | $0.77 | $0.66 | $0.11 | 16.67% |
| Performance and other financial ratios: |  |  |  |  |
| &nbsp;&nbsp;ROAA | 1.70% | 1.82% |  |  |
| &nbsp;&nbsp;ROAE | 21.50% | 19.15% |  |  |
| &nbsp;&nbsp;Net interest margin | 3.83% | 3.67% |  |  |
| &nbsp;&nbsp;Cost of funds | 1.16% | 0.16% |  |  |
| &nbsp;&nbsp;Efficiency ratio | 34.87% | 38.96% |  |  |
|  | **Year ended** | **Year ended** |  |  |
| **(dollars in thousands, except per share data)** | **December 31,<br>2022** | **December 31,<br>2021** | **$ Change** | **% Change** |
| Selected operating data: |  |  |  |  |
| &nbsp;&nbsp;Net interest income | $103070 | $77611 | $25459 | 32.80% |
| &nbsp;&nbsp;Provision for loan losses | 6700 | 1700 | 5000 | 294.12% |
| &nbsp;&nbsp;Non-interest income | 7157 | 7280 | (123) | (1.69)% |
| &nbsp;&nbsp;Non-interest expense | 40669 | 36043 | 4626 | 12.83% |
| &nbsp;&nbsp;Pre-tax net income | 62858 | 47148 | 15710 | 33.32% |
| &nbsp;&nbsp;Provision for income taxes | 18057 | 4707 | 13350 | 283.62% |
| &nbsp;&nbsp;Net income | $44801 | $42441 | $2360 | 5.56% |
| Earnings per common share: |  |  |  |  |
| &nbsp;&nbsp;Basic | $2.61 | $2.83 | $(0.22) | (7.77)% |
| &nbsp;&nbsp;Diluted | $2.61 | $2.83 | $(0.22) | (7.77)% |
| Performance and other financial ratios: |  |  |  |  |
| &nbsp;&nbsp;ROAA | 1.57% | 1.86% |  |  |
| &nbsp;&nbsp;ROAE | 18.80% | 22.49% |  |  |
| &nbsp;&nbsp;Net interest margin | 3.75% | 3.64% |  |  |
| &nbsp;&nbsp;Cost of funds | 0.57% | 0.19% |  |  |
| &nbsp;&nbsp;Efficiency ratio | 36.90% | 42.46% |  |  |

---

------

**<u>Balance Sheet Summary</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** | **$ Change** | **% Change** |
| Selected financial condition data: |  |  |  |  |
| &nbsp;&nbsp;Total assets | $3227159 | $2556761 | $670398 | 26.22% |
| &nbsp;&nbsp;Cash and cash equivalents | 259991 | 425329 | (165338) | (38.87)% |
| &nbsp;&nbsp;Total loans held for investment | 2791326 | 1934460 | 856866 | 44.29% |
| &nbsp;&nbsp;Total investments | 119744 | 153753 | (34009) | (22.12)% |
| &nbsp;&nbsp;Total liabilities | 2974334 | 2321715 | 652619 | 28.11% |
| &nbsp;&nbsp;Total deposits | 2782004 | 2285890 | 496114 | 21.70% |
| &nbsp;&nbsp;Subordinated notes, net | 73606 | 28386 | 45220 | 159.30% |
| &nbsp;&nbsp;Total shareholders' equity | 252825 | 235046 | 17779 | 7.56% |

---

The increase in total assets from December 31, 2021 to December 31, 2022 was primarily due to a $856.9 million increase in total loans held for investment, partially offset by a $165.3 million decrease in cash and cash equivalents and a $34.0 million decrease in investments. The $856.9 million increase in total loans held for investment between December 31, 2021 and December 31, 2022 was a result of $1.4 billion in non-PPP loan originations, partially offset by $22.1 million in PPP loan forgiveness and payoffs received, and $491.7 million in non-PPP loan payoffs and paydowns.

The increase in total liabilities from December 31, 2021 to December 31, 2022 was primarily attributable to an increase in Federal Home Loan Bank of San Francisco ("FHLB") advances of $100.0 million, an increase in subordinated notes, net, of $45.2 million, and an increase in deposits of $496.1 million, largely due to increases in time deposits over $250 thousand, money market deposits, and non-interest-bearing deposits of $120.3 million, $161.0 million, and $69.1 million, respectively.

Total shareholders' equity increased by $17.8 million from $235.0 million at December 31, 2021 to $252.8 million at December 31, 2022. The increase in total shareholders' equity from December 31, 2021 to December 31, 2022 was primarily a result of net income recognized of $44.8 million, partially offset by a net decline of $12.9 million in other comprehensive income and $15.3 million in cash distributions paid during the period.

------

**<u>Net Interest Income and Net Interest Margin</u>**

The following is a summary of the components of net interest income for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended** | **Three months ended** | | |
| **(dollars in thousands)** | **December 31,<br>2022** | **September 30,<br>2022** |<br>**$ Change** |<br>**% Change** |
| Interest and fee income | $37402 | $31646 | $5756 | 18.19% |
| Interest expense | 8267 | 4123 | 4144 | 100.51% |
| Net interest income | $29135 | $27523 | $1612 | 5.86% |
| Net interest margin | 3.83% | 3.86% |  |  |
|  | **Three months ended** | **Three months ended** |  |  |
| **(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** | **$ Change** | **% Change** |
| Interest and fee income | $37402 | $22253 | $15149 | 68.08% |
| Interest expense | 8267 | 895 | 7372 | 823.69% |
| Net interest income | $29135 | $21358 | $7777 | 36.41% |
| Net interest margin | 3.83% | 3.67% |  |  |
|  | **Year ended** | **Year ended** |  |  |
| **(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** | **$ Change** | **% Change** |
| Interest and fee income | $117918 | $81583 | $36335 | 44.54% |
| Interest expense | 14848 | 3972 | 10876 | 273.82% |
| Net interest income | $103070 | $77611 | $25459 | 32.80% |
| Net interest margin | 3.75% | 3.64% |  |  |

---

------

The following table shows the components of net interest income and net interest margin for the quarterly periods indicated:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three months ended** | **Three months ended** | **Three months ended** | **Three months ended** | **Three months ended** | **Three months ended** | **Three months ended** | **Three months ended** | **Three months ended** |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **(dollars in thousands)** | Average<br>Balance | Interest <br>Income/<br>Expense | Yield/ Rate | Average<br>Balance | Interest <br>Income/<br>Expense | Yield/ Rate | Average<br>Balance | Interest <br>Income/<br>Expense | Yield/ Rate |
| Assets |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Interest-earning deposits with banks | $200395 | $1841 | 3.64% | $210179 | $1145 | 2.16% | $330825 | $143 | 0.17% |
| &nbsp;&nbsp;Investment securities | 117364 | 643 | 2.17% | 126733 | 615 | 1.93% | 160315 | 541 | 1.34% |
| &nbsp;&nbsp;Loans held for investment and sale | 2703865 | 34918 | 5.12% | 2494468 | 29886 | 4.75% | 1815627 | 21569 | 4.71% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-earning assets | 3021624 | 37402 | 4.91% | 2831380 | 31646 | 4.43% | 2306767 | 22253 | 3.83% |
| &nbsp;&nbsp;Interest receivable and other assets, net | 73664 |  |  | 78112 |  |  | 159123 |  |  |
| Total assets | $3095288 |  |  | $2909492 |  |  | $2465890 |  |  |
| Liabilities and shareholders' equity |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Interest-bearing transaction accounts | $223473 | $174 | 0.31% | $213926 | $115 | 0.21% | $165709 | $42 | 0.10% |
| &nbsp;&nbsp;Savings accounts | 136753 | 247 | 0.72% | 103142 | 65 | 0.25% | 84290 | 21 | 0.10% |
| &nbsp;&nbsp;Money market accounts | 1060597 | 3652 | 1.37% | 1015698 | 1780 | 0.69% | 957030 | 351 | 0.15% |
| &nbsp;&nbsp;Time accounts | 299771 | 2467 | 3.26% | 208678 | 857 | 1.63% | 75332 | 38 | 0.20% |
| &nbsp;&nbsp;Subordinated debt and other borrowings | 114858 | 1727 | 5.96% | 72195 | 1306 | 7.18% | 28376 | 443 | 6.20% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 1835452 | 8267 | 1.79% | 1613639 | 4123 | 1.01% | 1310737 | 895 | 0.27% |
| &nbsp;&nbsp;Demand accounts | 997815 |  |  | 1041222 |  |  | 914821 |  |  |
| &nbsp;&nbsp;Interest payable and other liabilities | 17002 |  |  | 14687 |  |  | 5988 |  |  |
| &nbsp;&nbsp;Shareholders' equity | 245019 |  |  | 239944 |  |  | 234344 |  |  |
| Total liabilities & shareholders' equity | $3095288 |  |  | $2909492 |  |  | $2465890 |  |  |
| Net interest spread |  |  | 3.12% |  |  | 3.42% |  |  | 3.56% |
| Net interest income/margin |  | $29135 | 3.83% |  | $27523 | 3.86% |  | $21358 | 3.67% |

---

------

*Factors affecting interest income and yields*

Interest income increased during the three months ended December 31, 2022, as compared to the three months ended September 30, 2022, due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Rates.* The average yields on interest-earning assets were 4.91% and 4.43% for the three months ended December 31, 2022 and September 30, 2022, respectively. The increase in yields period-over-period was primarily due to increases in yields earned on interest-earning deposits with banks, and increased yields earned on loans held for investment and sale originated in the current environment of rising interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Volume.* Average interest-earning assets increased by approximately $190.2 million period-over-period, driven by new loan originations during the three months ended December 31, 2022 which resulted in increases in the average daily balance of loans and contributed to the increase in interest income.

Interest income increased during the three months ended December 31, 2022, as compared to the three months ended December 31, 2021, due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Rates.* The average yields on interest-earning assets were 4.91% and 3.83% for the three months ended December 31, 2022 and December 31, 2021, respectively. The increase in yields period-over-period was primarily due to increases in yields earned on interest-earning deposits with banks and loans held for sale. Yields on the commercial real estate portfolio increased by 0.52% to 4.93% from 4.41% for the three months ended December 31, 2022 and December 31, 2021, respectively, due to increased rates on commercial real estate loans originated in the current rising rate environment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Volume.* Average interest-earning assets increased by approximately $714.9 million period-over-period, primarily driven by new loan originations during the three months ended December 31, 2022 which resulted in increases in the average daily balance of loans and contributed to the increase in interest income.

*Factors affecting interest expense and rates*

Interest expense increased during the three months ended December 31, 2022, as compared to the three months ended September 30, 2022, due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Rates.* The average costs of interest-bearing liabilities were 1.79% and 1.01% for the three months ended December 31, 2022 and September 30, 2022, respectively. The increase in cost period-over-period was primarily due to increases in the rates paid on interest-bearing deposit accounts, with the most significant increases in rates paid on time and money market accounts. Rates on FHLB advances during the three months ended December 31, 2022 increased as compared to the three months ended September 30, 2022, but were offset by the rate paid on subordinated debt period-over-period. Additionally, the cost of funds increased from 0.62% for the quarter ended September 30, 2022 to 1.16% for the quarter ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Volume.* Average interest-bearing liabilities increased by $221.8 million period-over-period, primarily driven by increases in average balances for time accounts and other borrowings, partially offset by the redemption of subordinated notes with an aggregate principal amount of $28.8 million.

------

Interest expense increased during the three months ended December 31, 2022, as compared to the three months ended December 31, 2021, due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Rates.* The average costs of interest-bearing liabilities were 1.79% and 0.27% for the three months ended December 31, 2022 and December 31, 2021, respectively. The increase in cost period-over-period was primarily due to increases in the rates paid on interest-bearing deposit accounts, with the most significant increases in rates paid on time and money market accounts. The rate paid on subordinated debt remained relatively consistent period-over-period, while FHLB advances had an average rate of 3.93% for the three months ended December 31, 2022, as compared to no FHLB advances for the three months ended December 31, 2021. Additionally, the cost of funds increased from 0.16% for the quarter ended December 31, 2021 to 1.16% for the quarter ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Volume.* Average interest-bearing liabilities increased by $524.7 million period-over-period, primarily driven by increases in average balances for all types of interest-bearing deposit accounts, with the most substantial increases in time, money market, and interest-bearing transaction accounts period-over-period. Additionally, the issuance of $75.0 million of subordinated notes on August 17, 2022, combined with utilization of FHLB advances in the three months ended December 31, 2022, but not in the three months ended December 31, 2021, contributed to the increase in average interest-bearing liabilities period-over-period.

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The following table shows the components of net interest income and net interest margin for the annual periods indicated:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Year ended** | **Year ended** | **Year ended** | **Year ended** | **Year ended** | **Year ended** |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **(dollars in thousands)** | Average<br>Balance | Interest <br>Income/<br>Expense | Yield/ Rate | Average<br>Balance | Interest <br>Income/<br>Expense | Yield/ Rate |
| Assets |  |  |  |  |  |  |
| &nbsp;&nbsp;Interest-earning deposits with banks | $260679 | $3696 | 1.42% | $346522 | $547 | 0.16% |
| &nbsp;&nbsp;Investment securities | 131353 | 2427 | 1.85% | 147519 | 2142 | 1.45% |
| &nbsp;&nbsp;Loans held for investment and sale | 2353148 | 111795 | 4.75% | 1637280 | 78894 | 4.82% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-earning assets | 2745180 | 117918 | 4.30% | 2131321 | 81583 | 3.83% |
| &nbsp;&nbsp;Interest receivable and other assets, net | 99946 |  |  | 148830 |  |  |
| Total assets | $2845126 |  |  | $2280151 |  |  |
| Liabilities and shareholders' equity |  |  |  |  |  |  |
| &nbsp;&nbsp;Interest-bearing transaction accounts | $242221 | $425 | 0.18% | $155163 | $155 | 0.10% |
| &nbsp;&nbsp;Savings accounts | 107010 | 376 | 0.35% | 74402 | 74 | 0.10% |
| &nbsp;&nbsp;Money market accounts | 995048 | 6476 | 0.65% | 935445 | 1798 | 0.19% |
| &nbsp;&nbsp;Time accounts | 203392 | 3646 | 1.79% | 53222 | 172 | 0.32% |
| &nbsp;&nbsp;Subordinated debt and other borrowings | 61533 | 3925 | 6.38% | 28350 | 1773 | 6.25% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 1609204 | 14848 | 0.92% | 1246582 | 3972 | 0.32% |
| &nbsp;&nbsp;Demand accounts | 982915 |  |  | 835834 |  |  |
| &nbsp;&nbsp;Interest payable and other liabilities | 14709 |  |  | 8984 |  |  |
| &nbsp;&nbsp;Shareholders' equity | 238298 |  |  | 188751 |  |  |
| Total liabilities & shareholders' equity | $2845126 |  |  | $2280151 |  |  |
| Net interest spread |  |  | 3.38% |  |  | 3.51% |
| Net interest income/margin |  | $103070 | 3.75% |  | $77611 | 3.64% |

---

------

*Factors affecting interest income and yields*

Interest income increased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Rates.* The average yields on interest-earning assets were 4.30% and 3.83% for the years ended December 31, 2022 and December 31, 2021, respectively. The increase in yields period-over-period was primarily due to increases in yields earned on loans held for sale and interest-earning deposits with banks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Volume.* Average interest-earning assets increased by approximately $613.9 million period-over-period, driven by new loan originations, which drove increases in the average daily balance of loans for the year ended December 31, 2022 and contributed to the increase in interest income.

*Factors affecting interest expense and rates*

Interest expense increased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Rates.* The average costs of interest-bearing liabilities were 0.92% and 0.32% for the years ended December 31, 2022 and December 31, 2021, respectively. The increase in cost period-over-period was primarily due to increases in the rates paid on interest-bearing deposit accounts, with the most significant increases in rates paid on time and money market accounts, combined with an increase of 300 basis points on the rates paid on FHLB advances during the year ended December 31, 2022 as compared to the prior year. The rate paid on the new subordinated debt issuance remained relatively consistent with prior issuances. Additionally, the cost of funds increased from 0.19% for the year ended December 31, 2021 to 0.57% for the year ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Volume.* Average interest-bearing liabilities increased by $362.6 million period-over-period, primarily driven by increases in average balances for all types of interest-bearing deposit accounts, with the most substantial increases in time, interest-bearing transaction, and money market accounts period-over-period. Additionally, the issuance of $75.0 million of subordinated notes due September 1, 2032 on August 17, 2022 contributed to the increase in average interest-bearing liabilities period-over-period.

**<u>Asset Quality</u>**

*SBA PPP* 

All PPP loans had been forgiven or paid off by the borrower as of December 31, 2022.

*Allowance for Loan Losses* 

At December 31, 2022, the Company's allowance for loan losses was $28.4 million, as compared to $23.2 million at December 31, 2021. The $5.2 million increase is due to a $6.7 million provision for loan losses recorded during the twelve months ended December 31, 2022, offset by net charge-offs of $1.6 million during the same period. At December 31, 2022, the Company's ratio of nonperforming loans to loans held for investment decreased from 0.03% at December 31, 2021 to 0.01%, primarily due to a decrease in the Company's nonperforming commercial secured loans. Loans designated as substandard decreased to $0.4 million at December 31, 2022, from $10.6 million at December 31, 2021. This resulted in a net reduction of $0.2 million in reserves related to classified loans, offset by an increase in the provision for loan losses related to loan growth that occurred during 2022. There were no loans with doubtful risk grades at December 31, 2022 or December 31, 2021.

------

A summary of the allowance for loan losses by loan class is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
| **(dollars in thousands)** | **Amount** | **% of Total** | **Amount** | **% of Total** |
| &nbsp;&nbsp;Real estate: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial | $19216 | 67.69% | $12869 | 55.37% |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial land and development | 54 | 0.19% | 50 | 0.22% |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial construction | 645 | 2.27% | 371 | 1.60% |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction | 49 | 0.17% | 50 | 0.22% |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential | 175 | 0.62% | 192 | 0.83% |
| &nbsp;&nbsp;&nbsp;&nbsp;Farmland | 644 | 2.27% | 645 | 2.78% |
| &nbsp;&nbsp;Commercial: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Secured | 6975 | 24.57% | 6687 | 28.77% |
| &nbsp;&nbsp;&nbsp;&nbsp;Unsecured | 116 | 0.41% | 207 | 0.89% |
| &nbsp;&nbsp;Consumer and other | 347 | 1.22% | 889 | 3.82% |
| &nbsp;&nbsp;Unallocated | 45 | 0.16% | 1111 | 4.78% |
|  | 28266 | 99.57% | 23071 | 99.28% |
| Individually evaluated for impairment: |  |  |  |  |
| &nbsp;&nbsp;Commercial secured | 123 | 0.43% | 172 | 0.72% |
| Total allowance for loan losses | $28389 | 100.00% | $23243 | 100.00% |

---

The ratio of allowance for loan losses to loans held for investment, or total loans at period end, was 1.02% at December 31, 2022, as compared to 1.20% at December 31, 2021. Excluding PPP loans, the ratios of the allowance for loan losses to loans held for investment were 1.02% and 1.22% at December 31, 2022 and December 31, 2021, respectively. The decline in the ratio of allowance for loan losses to loans held for investment period-over-period is primarily due to a decline in classified loans and improvement in the historical loss factors for the SBA portfolio during 2022. The ratio of the allowance for loan losses to loans held for investment, excluding PPP loans, is considered a non-GAAP financial measure. See the section entitled "Non-GAAP Reconciliation (Unaudited)" for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure.

Beginning January 1, 2023, the Company will adopt Accounting Standards Update 2016-13 *Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments*, which replaces the current "incurred loss" model for recognizing credit losses with an "expected loss" model referred to as the Current Expected Credit Loss ("CECL") model. Utilizing CECL may have an impact on our allowance for loan losses going forward and may result in a lack of comparability between 2022 and 2023 quarterly periods.

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**<u>Non-interest Income</u>**

*Three months ended December 31, 2022, as compared to the three months ended September 30, 2022*

The following table presents the key components of non-interest income for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended** | **Three months ended** | | |
| **(dollars in thousands)** | **December 31,<br>2022** | **September 30,<br>2022** |<br>**$ Change** |<br>**% Change** |
| Service charges on deposit accounts | $97 | $132 | $(35) | (26.52)% |
| Gain on sale of loans | 637 | 548 | 89 | 16.24% |
| Loan-related fees | 407 | 447 | (40) | (8.95)% |
| FHLB stock dividends | 193 | 152 | 41 | 26.97% |
| Earnings on bank-owned life insurance ("BOLI") | 119 | 102 | 17 | 16.67% |
| Other income | 148 | 52 | 96 | 184.62% |
| Total non-interest income | $1601 | $1433 | $168 | 11.72% |

---

*Gain on sale of loans.* The increase in gain on sale of loans resulted primarily from an increase in the volume of loans sold. During the three months ended December 31, 2022, loans totaling $14.5 million were sold with an effective yield of 4.40% compared to the three months ended September 30, 2022, when loans totaling $10.5 million were sold with an effective yield of 5.20%.

*Other income.* The increase in other income resulted primarily from a $0.1 million gain recorded on a distribution received on an investment in a venture-backed fund, which did not occur during the three months ended September 30, 2022.

*Three months ended December 31, 2022, as compared to the three months ended December 31, 2021*

The following table presents the key components of non-interest income for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended** | **Three months ended** | | |
| **(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** |<br>**$ Change** |<br>**% Change** |
| Service charges on deposit accounts | $97 | $116 | $(19) | (16.38)% |
| Net gain on sale of securities |  | 15 | (15) | (100.00)% |
| Gain on sale of loans | 637 | 1072 | (435) | (40.58)% |
| Loan-related fees | 407 | 391 | 16 | 4.09% |
| FHLB stock dividends | 193 | 102 | 91 | 89.22% |
| Earnings on BOLI | 119 | 57 | 62 | 108.77% |
| Other income | 148 | 37 | 111 | 300.00% |
| Total non-interest income | $1601 | $1790 | $(189) | (10.56)% |

---

*Gain on sale of loans.* The decrease in gain on sale of loans related primarily to an overall decline in the effective yields on loans sold due to uncertainty surrounding the timing of rising interest rates during the three months ended December 31, 2022 compared to the three months ended December 31, 2021. During the three months ended December 31, 2022, approximately $14.5 million of loans were sold with an effective yield of 4.40%, as compared to approximately $9.7 million of loans sold with an effective yield of 9.38% during the three months ended December 31, 2021. Additionally, a $1.8 million consumer loan portfolio was sold for a net gain of approximately $0.2 million during the three months ended December 31, 2021, which did not occur during the three months ended December 31, 2022.

*Other income*. The increase in other income resulted primarily from a $0.1 million gain recorded on a distribution received on an investment in a venture-backed fund in the three months ended December 31, 2022, which did not occur during the three months ended December 31, 2021.

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*Year ended December 31, 2022, as compared to the year ended December 31, 2021*

The following table presents the key components of non-interest income for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Year ended** | **Year ended** | | |
| **(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** |<br>**$ Change** |<br>**% Change** |
| Service charges on deposit accounts | $467 | $424 | $43 | 10.14% |
| Net gain on sale of securities | 5 | 724 | (719) | (99.31)% |
| Gain on sale of loans | 2934 | 4082 | (1148) | (28.12)% |
| Loan-related fees | 2207 | 1306 | 901 | 68.99% |
| FHLB stock dividends | 546 | 372 | 174 | 46.77% |
| Earnings on BOLI | 412 | 237 | 175 | 73.84% |
| Other income | 586 | 135 | 451 | 334.07% |
| Total non-interest income | $7157 | $7280 | $(123) | (1.69)% |

---

*Net gain on sale of securities.* The decrease in net gain on sale of securities resulted primarily from the sale of approximately $47.1 million of municipal securities, U.S. government agency securities, and U.S. Treasuries during the year ended December 31, 2021, resulting in a $0.7 million gain, compared to the sale of approximately $1.5 million of municipal securities, resulting in a gain of $5.0 thousand during the year ended December 31, 2022.

*Gain on sale of loans.* The decrease in gain on sale of loans related primarily to an overall decline in the effective yields on loans sold due to uncertainty of the timing and magnitude of rising interest rates during the year ended December 31, 2022 compared to the year ended December 31, 2021. During the year ended December 31, 2022, approximately $50.8 million of loans were sold with an effective yield of 5.78%, as compared to approximately $41.4 million of loans sold with an effective yield of 9.46% during the year ended December 31, 2021. Additionally, a $1.8 million consumer loan portfolio was sold for a net gain of approximately $0.2 million during the year ended December 31, 2021, which did not occur during the year ended December 31, 2022.

*Loan-related fees.* The increase in loan-related fees was primarily a result of: (i) an increase of $0.6 million in swap referral fees; (ii) an increase of $0.2 million in program fees earned for loans originated and serviced by a third party; and (iii) a $0.2 million increase in fee income recognized in the year ended December 31, 2022 compared to the year ended December 31, 2021. These increases were partially offset by a decline of $0.1 million in loan referral income recognized during the year ended December 31, 2022 compared to the year ended December 31, 2021.

*FHLB stock dividends*. The increase in FHLB stock dividends primarily relates to an increase in FHLB Class B shares held for the year ended December 31, 2022 compared to the year ended December 31, 2021.

*Earnings on BOLI*. The increase in earnings on BOLI related primarily due to an additional BOLI policy purchased during the year ended December 31, 2022. Earnings on this policy were only recognized during the year ended December 31, 2022, and did not occur during the year ended December 31, 2021.

*Other income*. The increase in other income resulted primarily from a $0.4 million gain recorded on two distributions received on investments in two venture-backed funds during the year ended December 31, 2022, which did not occur during the year ended December 31, 2021.

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**<u>Non-interest Expense</u>**

*Three months ended December 31, 2022, as compared to the three months ended September 30, 2022*

The following table presents the key components of non-interest expense for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three months ended** | **Three months ended** | | |
| **(dollars in thousands)** | **December 31,<br>2022** | **September 30,<br>2022** |<br>**$ Change** |<br>**% Change** |
| Salaries and employee benefits | $5698 | $5645 | $53 | 0.94% |
| Occupancy and equipment | 511 | 515 | (4) | (0.78)% |
| Data processing and software | 839 | 797 | 42 | 5.27% |
| Federal Deposit Insurance Corporation ("FDIC") insurance | 245 | 195 | 50 | 25.64% |
| Professional services | 553 | 792 | (239) | (30.18)% |
| Advertising and promotional | 568 | 512 | 56 | 10.94% |
| Loan-related expenses | 358 | 262 | 96 | 36.64% |
| Other operating expenses | 1945 | 1454 | 491 | 33.77% |
| Total non-interest expense | $10717 | $10172 | $545 | 5.36% |

---

*Professional services.* Professional services decreased, primarily as a result of $0.2 million of legal expenses incurred to support corporate organizational matters during the three months ended September 30, 2022, which did not recur in the three months ended December 31, 2022.

*Other operating expenses.* The increase in other operating expenses was primarily due to a $0.3 million increase related to previously unamortized subordinated debt issuance costs recognized within other operating expenses upon redemption of the subordinated notes in December 2022. The remainder of the increase related to expenses incurred for travel and fees paid for attendance of professional events, conferences, and other business-related events during the three months ended December 31, 2022, as compared to the three months ended September 30, 2022.

*Three months ended December 31, 2022, as compared to the three months ended December 31, 2021*

The following table presents the key components of non-interest expense for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three months ended** | **Three months ended** | | |
| **(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** |<br>**$ Change** |<br>**% Change** |
| Salaries and employee benefits | $5698 | $5209 | $489 | 9.39% |
| Occupancy and equipment | 511 | 544 | (33) | (6.07)% |
| Data processing and software | 839 | 656 | 183 | 27.90% |
| FDIC insurance | 245 | 160 | 85 | 53.13% |
| Professional services | 553 | 444 | 109 | 24.55% |
| Advertising and promotional | 568 | 499 | 69 | 13.83% |
| Loan-related expenses | 358 | 136 | 222 | 163.24% |
| Other operating expenses | 1945 | 1370 | 575 | 41.97% |
| Total non-interest expense | $10717 | $9018 | $1699 | 18.84% |

---

*Salaries and employee benefits.* The increase in salaries and employee benefits was primarily a result of: (i) a $0.3 million increase in salaries, insurance, and benefits as a result of a 9.20% increase in headcount; (ii) a $0.6 million decrease in loan origination costs due to lower production; and (iii) a $0.1 million increase in bonus expense recognized during the three months ended December 31, 2022, as compared to the three months ended December 31, 2021. These increases were partially offset by a $0.6 million decline in commissions expense due to lower production during the three months ended December 31, 2022 compared to the three months ended December 31, 2021.

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*Data processing and software.* Data processing and software increased, 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) increased number of licenses required for new users on our loan origination and documentation system.

*Professional services.* Professional services increased, primarily due to increased audit and legal fees for services provided for the three months ended December 31, 2022 compared to the three months ended December 31, 2021.

*Loan-related expenses.* Loan-related expenses increased, primarily as a result of an overall increase in expenses incurred for insurance and taxes, loan legal fees, environmental reports, UCC fees, and inspections to support loan production in the three months ended December 31, 2022 compared to the three months ended December 31, 2021.

*Other operating expenses.* The increase in other operating expenses was primarily due to a $0.3 million increase related to previously unamortized subordinated debt issuance costs recognized as an other expense upon redemption of the subordinated notes in December 2022. The remainder of the increase related to: (i) $0.1 million of increased bank charges incurred related to correspondent bank and letter of credit fees incurred to support operations; (ii) $0.1 million of increased insurance expenses; and (iii) an overall increase in expenses incurred for travel and fees paid for attendance of professional events, conferences, and other business-related events during the three months ended December 31, 2022, as compared to the three months ended December 31, 2021.

*Year ended December 31, 2022, as compared to the year ended December 31, 2021*

The following table presents the key components of non-interest expense for the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Year ended** | **Year ended** | | |
| **(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** |<br>**$ Change** |<br>**% Change** |
| Salaries and employee benefits | $22571 | $19825 | $2746 | 13.85% |
| Occupancy and equipment | 2059 | 1938 | 121 | 6.24% |
| Data processing and software | 3091 | 2494 | 597 | 23.94% |
| FDIC insurance | 850 | 700 | 150 | 21.43% |
| Professional services | 2467 | 3792 | (1325) | (34.94)% |
| Advertising and promotional | 1908 | 1300 | 608 | 46.77% |
| Loan-related expenses | 1287 | 1045 | 242 | 23.16% |
| Other operating expenses | 6436 | 4949 | 1487 | 30.05% |
| Total non-interest expense | $40669 | $36043 | $4626 | 12.83% |

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*Salaries and employee benefits.* The increase in salaries and employee benefits was primarily a result of a $3.6 million increase in salaries, insurance, and benefits as a result of a 9.20% increase in headcount and a $0.2 million increase in commissions expense related to increased production during the year ended December 31, 2022, as compared to the year ended December 31, 2021. The increase was partially offset by an increase in loan origination costs of $1.0 million due to increased production during the year ended December 31, 2022, as compared to the year ended December 31, 2021.

*Occupancy and equipment*. The increase in occupancy and equipment was primarily the result of an overall increase in depreciation recognized for furniture, fixtures, and equipment that was purchased to support the 9.20% increase in headcount described above, combined with an overall increase in occupancy expenses period-over-period.

*Data processing and software*. The increase in data processing and software expenditures related primarily 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) increased number of licenses required for new users on our loan origination and documentation system.

*FDIC insurance.* The increase in FDIC insurance related primarily to an increase in the FDIC assessment base and asset growth for the year ended December 31, 2022 compared to the year ended December 31, 2021.

*Professional services.* Professional services decreased, primarily as a result of expenses recognized during the year ended December 31, 2021 related to the increased audit, consulting, and legal costs incurred to support corporate

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organizational matters leading up to the Company's initial public offering in May 2021, which did not recur during the year ended December 31, 2022.

*Advertising and promotional.* The increase in advertising and promotional costs was primarily related to increases in business development, marketing, and sponsorship expenses due to more in-person participation in events held during the year ended December 31, 2022, as compared to the year ended December 31, 2021.

*Loan-related expenses.* The increase in loan-related expenses related primarily to: (i) $0.1 million of increased UCC filing fees to support consumer loans originated; and (ii) an overall increase in expenses incurred for insurance and taxes, loan legal fees, environmental reports, and inspections to support loan production for the year ended December 31, 2022 compared to the year ended December 31, 2021.

*Other operating expenses*. The increase in other operating expenses includes a $0.3 million increase related to previously unamortized subordinated debt issuance costs recognized as an other expense upon redemption of the subordinated notes in December 2022. The remainder of the increase related to: (i) $0.7 million for expenses incurred for travel and fees paid for attendance of professional events, conferences, and other business-related events; (ii) $0.3 million of increased bank charges incurred related to correspondent bank and letter of credit fees incurred to support operations; and (iii) $0.2 million of increased insurance expenses during the year ended December 31, 2022, as compared to the year ended December 31, 2021. The remainder of the change related to an overall increase in expenses to support the growth in customers period-over-period.

**<u>Provision for Income Taxes</u>**

*Three months ended December 31, 2022, as compared to the three months ended September 30, 2022*

Provision for income taxes for the quarter ended December 31, 2022 increased by $0.7 million, or 13.60%, to $5.5 million, as compared to $4.8 million for the quarter ended September 30, 2022, which was primarily due to the increase in taxable income recognized during the three months ended December 31, 2022.

*Three months ended December 31, 2022, as compared to the three months ended December 31, 2021*

Provision for income taxes increased by $4.2 million, or 315.37%, to $5.5 million for the three months ended December 31, 2022, as compared to $1.3 million for the three months ended December 31, 2021. This increase is due to an increase in taxable income, combined with an increase in the effective tax rate for each period, from 10.46% to 29.23% during the three months ended December 31, 2021 and December 31, 2022, respectively. The lower effective tax rate during the three months ended December 31, 2021 was driven by the Company's termination of its Subchapter S Corporation status as of May 5, 2021 and using a blended statutory rate of 20.77% during the three months ended December 31, 2021. The 20.77% tax rate was calculated using the statutory California tax rate of 3.50% and the federal and state statutory rate, net of federal benefit, of 29.56% based on the number of days the Company was each type of corporation during 2021.

*Year ended December 31, 2022, as compared to year ended December 31, 2021*

Provision for income taxes increased by $13.4 million, or 283.62%, to $18.1 million for the year ended December 31, 2022, as compared to $4.7 million for the year ended December 31, 2021. This increase is due to an increase in taxable income, combined with an increase in the effective tax rate for each period, from 9.98% to 28.73% during the years ended December 31, 2021 and December 31, 2022, respectively. The lower tax rate used during the year ended December 31, 2021 was the result of the Company's termination of its Subchapter S Corporation status as of May 5, 2021.

**<u>Webcast Details</u>**

Five Star Bancorp will host a webcast on Tuesday, January 31, 2023, at 1:00 p.m. ET (10:00 a.m. PT), to discuss its fourth quarter and annual results. To view the live webcast, visit the "News & Events" section of the Company's website under "Events" at https://investors.fivestarbank.com/news-events/events. The webcast will be archived on the Company's website for a period of 90 days.

**<u>About Five Star Bancorp</u>**

Five Star is a bank holding company headquartered in Rancho Cordova, California. Five Star operates through its wholly owned banking subsidiary, Five Star Bank. Five Star has seven branches and one loan production office in Northern California.

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**<u>Forward-Looking Statements</u>**

This press release 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 the Company's 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. The Company cautions that the forward-looking statements are based largely on the Company's 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 the Company's control. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company's 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. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. If one or more of the factors affecting the Company's forward-looking information and statements proves incorrect, then the Company's actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this press release. Therefore, the Company cautions you not to place undue reliance on the Company's forward-looking information and statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 under the section entitled "Risk Factors," and other documents filed by the Company with the Securities and Exchange Commission from time to time.

The Company disclaims 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.

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**<u>Condensed Financial Data (Unaudited)</u>**

---

| | | | |
|:---|:---|:---|:---|
|  | **Three months ended** | **Three months ended** | **Three months ended** |
| **(dollars in thousands, except share and per share data)** | **December 31,<br>2022** | **September 30,<br>2022** | **December 31,<br>2021** |
| **Revenue and Expense Data** | | | |
| Interest and fee income | $37402 | $31646 | $22253 |
| Interest expense | 8267 | 4123 | 895 |
| Net interest income | 29135 | 27523 | 21358 |
| Provision for loan losses | 1250 | 2250 | 1500 |
| Net interest income after provision | 27885 | 25273 | 19858 |
| Non-interest income: |  |  |  |
| &nbsp;&nbsp;Service charges on deposit accounts | 97 | 132 | 116 |
| &nbsp;&nbsp;Gain on sale of securities |  |  | 15 |
| &nbsp;&nbsp;Gain on sale of loans | 637 | 548 | 1072 |
| &nbsp;&nbsp;Loan-related fees | 407 | 447 | 391 |
| &nbsp;&nbsp;FHLB stock dividends | 193 | 152 | 102 |
| &nbsp;&nbsp;Earnings on BOLI | 119 | 102 | 57 |
| &nbsp;&nbsp;Other income | 148 | 52 | 37 |
| Total non-interest income | 1601 | 1433 | 1790 |
| Non-interest expense: |  |  |  |
| &nbsp;&nbsp;Salaries and employee benefits | 5698 | 5645 | 5209 |
| &nbsp;&nbsp;Occupancy and equipment | 511 | 515 | 544 |
| &nbsp;&nbsp;Data processing and software | 839 | 797 | 656 |
| &nbsp;&nbsp;FDIC insurance | 245 | 195 | 160 |
| &nbsp;&nbsp;Professional services | 553 | 792 | 444 |
| &nbsp;&nbsp;Advertising and promotional | 568 | 512 | 499 |
| &nbsp;&nbsp;Loan-related expenses | 358 | 262 | 136 |
| &nbsp;&nbsp;Other operating expenses | 1945 | 1454 | 1370 |
| Total non-interest expense | 10717 | 10172 | 9018 |
| Total income before taxes | 18769 | 16534 | 12630 |
| Provision for income taxes | 5487 | 4830 | 1321 |
| Net income | $13282 | $11704 | $11309 |
| **Comprehensive Income** |  |  |  |
| Net income | $13282 | $11704 | $11309 |
| Net unrealized holding loss on securities available-for-sale during the period | 3714 | (4718) | (762) |
| Reclassification adjustment for net realized gains included in net income |  |  | (15) |
| Income tax benefit related to other comprehensive loss | 1098 | (1395) | (231) |
| Other comprehensive loss | 2616 | (3323) | (546) |
| Total comprehensive income | $15898 | $8381 | $10763 |

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---

| | | | |
|:---|:---|:---|:---|
| **Share and Per Share Data** | | | |
| Earnings per common share: |  |  |  |
| &nbsp;&nbsp;Basic | $0.77 | $0.68 | $0.66 |
| &nbsp;&nbsp;Diluted | $0.77 | $0.68 | $0.66 |
| Book value per share | $14.66 | $13.87 | $13.65 |
| Tangible book value per share<sup>(1)</sup> | $14.66 | $13.87 | $13.65 |
| Weighted average basic common shares outstanding | 17143920 | 17140435 | 17096230 |
| Weighted average diluted common shares outstanding | 17179863 | 17168447 | 17139693 |
| Shares outstanding at end of period | 17241926 | 17245983 | 17224848 |
| **Credit Quality** |  |  |  |
| Allowance for loan losses to period end nonperforming loans | 7027.38% | 6483.87% | 3954.30% |
| Nonperforming loans to loans held for investment | 0.01% | 0.02% | 0.03% |
| Nonperforming assets to total assets | 0.01% | 0.01% | 0.02% |
| Nonperforming loans plus performing TDRs to loans held for investment | 0.01% | 0.02% | 0.03% |
| COVID-19 deferments to loans held for investment | —% | —% | 0.63% |
| **Selected Financial Ratios** |  |  |  |
| ROAA | 1.70% | 1.60% | 1.82% |
| ROAE | 21.50% | 19.35% | 19.15% |
| Net interest margin | 3.83% | 3.86% | 3.67% |
| Loan to deposit | 100.67% | 99.22% | 85.09% |

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(1) See the section entitled "Non-GAAP Reconciliation (Unaudited)" for a reconciliation of this non-GAAP financial measure.

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---

| | | |
|:---|:---|:---|
|  | **Year ended** | **Year ended** |
| **(dollars in thousands, except share and per share data)** | **December 31,<br>2022** | **December 31,<br>2021** |
| **Revenue and Expense Data** | | |
| Interest and fee income | $117918 | $81583 |
| Interest expense | 14848 | 3972 |
| Net interest income | 103070 | 77611 |
| Provision for loan losses | 6700 | 1700 |
| Net interest income after provision | 96370 | 75911 |
| Non-interest income: |  |  |
| &nbsp;&nbsp;Service charges on deposit accounts | 467 | 424 |
| &nbsp;&nbsp;Gain on sale of securities | 5 | 724 |
| &nbsp;&nbsp;Gain on sale of loans | 2934 | 4082 |
| &nbsp;&nbsp;Loan-related fees | 2207 | 1306 |
| &nbsp;&nbsp;FHLB stock dividends | 546 | 372 |
| &nbsp;&nbsp;Earnings on BOLI | 412 | 237 |
| &nbsp;&nbsp;Other income | 586 | 135 |
| Total non-interest income | 7157 | 7280 |
| Non-interest expense: |  |  |
| &nbsp;&nbsp;Salaries and employee benefits | 22571 | 19825 |
| &nbsp;&nbsp;Occupancy and equipment | 2059 | 1938 |
| &nbsp;&nbsp;Data processing and software | 3091 | 2494 |
| &nbsp;&nbsp;FDIC insurance | 850 | 700 |
| &nbsp;&nbsp;Professional services | 2467 | 3792 |
| &nbsp;&nbsp;Advertising and promotional | 1908 | 1300 |
| &nbsp;&nbsp;Loan-related expenses | 1287 | 1045 |
| &nbsp;&nbsp;Other operating expenses | 6436 | 4949 |
| Total non-interest expense | 40669 | 36043 |
| Total income before taxes | 62858 | 47148 |
| Provision for income taxes | 18057 | 4707 |
| Net income | $44801 | $42441 |
| **Comprehensive Income** |  |  |
| Net income | $44801 | $42441 |
| Net unrealized holding loss on securities available-for-sale during the period | (18291) | (1475) |
| Reclassification adjustment for net realized gains included in net income | (5) | (724) |
| Income tax benefit related to other comprehensive loss | (5408) | (288) |
| Other comprehensive loss | (12888) | (1911) |
| Total comprehensive income | $31913 | $40530 |
| **Share and Per Share Data** |  |  |
| Earnings per common share: |  |  |
| &nbsp;&nbsp;Basic | $2.61 | $2.83 |
| &nbsp;&nbsp;Diluted | $2.61 | $2.83 |
| Book value per share | $14.66 | $13.65 |
| Tangible book value per share<sup>(1)</sup> | $14.66 | $13.65 |
| Weighted average basic common shares outstanding | 17128282 | 14972637 |
| Weighted average diluted common shares outstanding | 17165610 | 14995213 |
| Shares outstanding at end of period | 17241926 | 17224848 |

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| | | |
|:---|:---|:---|
| **Credit Quality** | | |
| Allowance for loan losses to period end nonperforming loans | 7027.38% | 3954.30% |
| Nonperforming loans to loans held for investment | 0.01% | 0.03% |
| Nonperforming assets to total assets | 0.01% | 0.02% |
| Nonperforming loans plus performing TDRs to loans held for investment | 0.01% | 0.03% |
| COVID-19 deferments to loans held for investment | —% | 0.63% |
| **Selected Financial Ratios** |  |  |
| ROAA | 1.57% | 1.86% |
| ROAE | 18.80% | 22.49% |
| Net interest margin | 3.75% | 3.64% |
| Loan to deposit | 100.67% | 85.09% |

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(1) See the section entitled "Non-GAAP Reconciliation (Unaudited)" for a reconciliation of this non-GAAP financial measure.

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| | | | |
|:---|:---|:---|:---|
| **(dollars in thousands)** | **December 31,<br>2022** | **September 30,<br>2022** | **December 31,<br>2021** |
| **Balance Sheet Data** | | | |
| Cash and due from banks | $32561 | $33280 | $136074 |
| Interest-bearing deposits in banks | 227430 | 284389 | 289255 |
| Time deposits in banks | 9849 | 10216 | 14464 |
| Securities - available-for-sale, at fair value | 115988 | 114041 | 148807 |
| Securities - held-to-maturity, at amortized cost | 3756 | 3764 | 4946 |
| Loans held for sale | 9416 | 11015 | 10671 |
| Loans held for investment | 2791326 | 2582978 | 1934460 |
| Allowance for loan losses | (28389) | (27838) | (23243) |
| Loans held for investment, net of allowance for loan losses | 2762937 | 2555140 | 1911217 |
| FHLB stock | 10890 | 10890 | 6723 |
| Operating leases, right-of-use asset | 3981 | 4227 |  |
| Premises and equipment, net | 1605 | 1694 | 1773 |
| BOLI | 14669 | 14550 | 11203 |
| Interest receivable and other assets | 34077 | 31364 | 21628 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets | $3227159 | $3074570 | $2556761 |
| Non-interest-bearing deposits | $971246 | $1020625 | $902118 |
| Interest-bearing deposits | 1810758 | 1593707 | 1383772 |
| Total deposits | 2782004 | 2614332 | 2285890 |
| Subordinated notes, net | 73606 | 102028 | 28386 |
| FHLB advances | 100000 | 105000 |  |
| Operating lease liability | 4243 | 4492 |  |
| Interest payable and other liabilities | 14481 | 9460 | 7439 |
| &nbsp;&nbsp;Total liabilities | 2974334 | 2835312 | 2321715 |
| Common stock | 219543 | 219286 | 218444 |
| Retained earnings | 46736 | 36042 | 17168 |
| Accumulated other comprehensive loss, net | (13454) | (16070) | (566) |
| &nbsp;&nbsp;Total shareholders' equity | $252825 | $239258 | $235046 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $3227159 | $3074570 | $2556761 |
| **Quarterly Average Balance Sheet Data** |  |  |  |
| Average loans held for investment and sale | $2703865 | $2494468 | $1815627 |
| Average interest-earning assets | $3021624 | $2831380 | $2306767 |
| Average total assets | $3095288 | $2909492 | $2465890 |
| Average deposits | $2718409 | $2582666 | $2197182 |
| Average total equity | $245019 | $239944 | $234344 |
| **Capital Ratio Data** |  |  |  |
| Total shareholders' equity to total assets | 7.83% | 7.78% | 9.19% |
| Tangible shareholders' equity to tangible assets<sup>(1)</sup> | 7.83% | 7.78% | 9.19% |
| Total capital (to risk-weighted assets) | 12.46% | 13.94% | 13.98% |
| Tier 1 capital (to risk-weighted assets) | 8.99% | 9.21% | 11.44% |
| Common equity Tier 1 capital (to risk-weighted assets) | 8.99% | 9.21% | 11.44% |
| Tier 1 leverage ratio | 8.60% | 8.66% | 9.47% |

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(1) See the section entitled "Non-GAAP Reconciliation (Unaudited)" for a reconciliation of this non-GAAP financial measure.

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**<u>Non-GAAP Reconciliation (Unaudited)</u>**

The Company uses financial information in its analysis of the Company's performance that is not in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations, and cash flows computed in accordance with GAAP. However, the Company acknowledges that its non-GAAP financial measures have a number of limitations. As such, investors should not view these disclosures as a substitute for results determined in accordance with GAAP. Additionally, these non-GAAP measures are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses, but may calculate them differently. Investors should understand how the Company and other companies each calculate their non-GAAP financial measures when making comparisons.

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.

Pre-tax, pre-provision net income is defined as net income plus provision for income taxes and provision for loan losses. The most directly comparable GAAP measure is pre-tax net income.

Allowance for loan losses to total loans held for investment, excluding PPP loans, is defined as allowance for loan losses, divided by total loans held for investment less PPP loans. The most directly comparable GAAP financial measure is allowance for loan losses to total loans held for investment.

The following reconciliation tables provide a more detailed analysis of these non-GAAP financial measures.

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| | | | |
|:---|:---|:---|:---|
| | **Three months ended** | **Three months ended** | **Three months ended** |
| **Pre-tax, pre-provision net income<br>(dollars in thousands)** | **December 31,<br>2022** | **September 30,<br>2022** | **December 31,<br>2021** |
| Net income | $13282 | $11704 | $11309 |
| Add: provision for income taxes | 5487 | 4830 | 1321 |
| Add: provision for loan losses | 1250 | 2250 | 1500 |
| Pre-tax, pre-provision net income | $20019 | $18784 | $14130 |

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| | | |
|:---|:---|:---|
| | **Year ended** | **Year ended** |
| **Pre-tax, pre-provision net income<br>(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** |
| Net income | $44801 | $42441 |
| Add: provision for income taxes | 18057 | 4707 |
| Add: provision for loan losses | 6700 | 1700 |
| Pre-tax, pre-provision net income | $69558 | $48848 |

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| | | |
|:---|:---|:---|
| **Total loans held for investment, excluding PPP loans <br>(dollars in thousands)** | **December 31,<br>2022** | **December 31,<br>2021** |
| Total loans held for investment | $2791326 | $1934460 |
| Less: PPP loans |  | 22124 |
| Total loans held for investment, excluding PPP loans | $2791326 | $1912336 |

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| | | |
|:---|:---|:---|
| **Allowance for loan losses to total loans held for investment, excluding PPP loans<br>(dollars in thousands)** | **December 31,<br>2022** | **December 31, 2021** |
| Allowance for loan losses (numerator) | $28389 | $23243 |
| Total loans held for investment | $2791326 | $1934460 |
| Less: PPP loans |  | 22124 |
| Total loans held for investment, excluding PPP loans (denominator) | $2791326 | $1912336 |
| Allowance for loan losses to total loans held for investment, excluding PPP loans | 1.02% | 1.22% |

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**Media Contact:**<br>Heather Luck, CFO<br>Five Star Bancorp<br>(916) 626-5008<br>hluck@fivestarbank.com

Shelley Wetton, CMO<br>Five Star Bancorp<br>(916) 284-7827<br>swetton@fivestarbank.com

## Exhibit 99.2

![](invpresq42022001.jpg)

Investor Presentation Fourth Quarter and Year End 2022

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![](invpresq42022002.jpg)

Safe Harbor Statement and Disclaimer Forward-Looking Statements In this presentation, "we," "our," "us," "Five Star" or "the Company" refers to Five Star Bancorp, a California corporation, and our consolidated subsidiaries, including Five Star Bank, a California state- chartered bank, unless the context indicates that we refer only to the parent company, Five Star Bancorp. This presentation 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 the Company's 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. The Company cautions that the forward-looking statements are based largely on the Company's 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 the Company's control. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company's 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. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company. If one or more of the factors affecting the Company's forward-looking information and statements proves incorrect, then the Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this press release. Therefore, the Company cautions you not to place undue reliance on the Company's forward-looking information and statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 under the section entitled "Risk Factors," and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company disclaims 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. Industry Information This presentation includes statistical and other industry and market data that we obtained from government reports and other third-party sources. Our internal data, estimates, and forecasts are based on information obtained from government reports, trade, and business organizations and other contacts in the markets in which we operate and our management's understanding of industry conditions. Although we believe that this information (including the industry publications and third-party research, surveys, and studies) is accurate and reliable, we have not independently verified such information. In addition, estimates, forecasts, and assumptions are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. Finally, forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this presentation. Unaudited Financial Data Numbers contained in this presentation for the quarter ended December 31, 2022 and for other quarterly periods are unaudited. Additionally, numbers contained in this presentation for the full fiscal year ended December 31, 2022 are unaudited. As a result, subsequent information may cause a change in certain accounting estimates and other financial information, including the Company's allowance for loan losses, fair values, and income taxes. Non-GAAP Financial Measures The Company uses financial information in its analysis of the Company's performance that is not in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations, and cash flows computed in accordance with GAAP. However, the Company acknowledges that its non-GAAP financial measures have a number of limitations. See the appendix to this presentation for a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures. Fourth Quarter 2022 Investor Presentation \| 2

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![](invpresq42022003.jpg)

Agenda Fourth Quarter 2022 Investor Presentation \| 3 •Company Overview •Financial Highlights •Loans and Credit Quality •Deposit and Capital Overview •Financial Results

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![](invpresq42022004.jpg)

Company Overview Fourth Quarter 2022 Investor Presentation \| 4

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![](invpresq42022005.jpg)

Company Overview Nasdaq: Headquarters: Asset Size: Loans Held for Investment: Deposits: Bank Branches: Fourth Quarter 2022 Investor Presentation \| 5 FSBC Rancho Cordova, California $3.2 billion $2.8 billion $2.8 billion 7 Note: Balances are as of December 31, 2022. Five Star is a community business bank that was founded to serve the commercial real estate industry. Today, the markets we serve have expanded to meet customer demand and now include manufactured housing and storage, faith-based, government, nonprofits, and more.

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![](invpresq42022006.jpg)

Executive Team Fourth Quarter 2022 Investor Presentation \| 6 James Beckwith President and Chief Executive Officer Five Star since 2003 John Dalton Senior Vice President and Chief Credit Officer Five Star since 2011 Mike Lee Senior Vice President and Chief Regulatory Officer Five Star since 2005 Michael Rizzo Senior Vice President and Chief Banking Officer Five Star since 2005 Brett Wait Senior Vice President and Chief Information Officer Five Star since 2011 Lydia Ramirez Senior Vice President and Chief Operations and Chief DE&I Officer Five Star since 2017 Heather Luck Senior Vice President and Chief Financial Officer Five Star since 2018 Shelley Wetton Senior Vice President and Chief Marketing Officer Five Star since 2015

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![](invpresq42022007.jpg)

Financial Highlights Fourth Quarter 2022 Investor Presentation \| 7

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$547 $565 $604 $811 $840 $973 $1,272 $1,480 $1,954 $2,557 $2,778 $2,836 $3,075 $3,227 $1,806 $2,535 $2,776 $148 $22 $2 Total Assets Excluding PPP Loans PPP Loans 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Consistent and Organic Asset Growth Fourth Quarter 2022 Investor Presentation \| 8 Note: Dollars are in millions. Balances are end of period. References to PPP are the Paycheck Protection Program. 1. CAGR is based upon balances as of December 31, 2022. 2. A reconciliation of this non-GAAP measure is set forth in the appendix. (2) CAGR (1) 5 years 10 years Total Assets 27.10 % 19.42 %

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Financial Highlights Fourth Quarter 2022 Investor Presentation \| 9 (dollars in millions except per share data) For the three months ended For the year ended 12/31/2022 9/30/2022 12/31/2021 12/31/2022 12/31/2021 Profitability Net income $13.3 $11.7 $11.3 $44.8 $42.4 Return on average assets ("ROAA") 1.70 % 1.60 % 1.82 % 1.57 % 1.86 % Return on average equity ("ROAE") 21.50 % 19.35 % 19.15 % 18.80 % 22.49 % Earnings per share (basic and diluted) $0.77 $0.68 $0.66 $2.61 $2.83 Net Interest Margin Net interest margin 3.83 % 3.86 % 3.67 % 3.75 % 3.64 % Average loan yield 5.12 % 4.75 % 4.71 % 4.75 % 4.82 % Average loan yield, excluding PPP loans(1) 5.12 % 4.75 % 4.56 % 4.73 % 4.70 % PPP income $— $— $1.1 $0.6 $6.2 PPP loans forgiven, paid off, and charged off $— $— $39.7 $22.1 $236.5 Total cost of funds 1.16 % 0.62 % 0.16 % 0.57 % 0.19 % 12/31/2022 12/31/2021 Asset Quality Nonperforming loans to loans held for investment 0.01 % 0.03 % Allowance for loan losses to loans held for investment 1.02 % 1.20 % # of PPP loans outstanding — 60 Balance of PPP loans outstanding $— $22.1 # of loans in a COVID-19 deferment period — 6 Balance of loans in a COVID-19 deferment period $— $12.2 Note: Yields are based on average balance and annualized quarterly interest income. 1. A reconciliation of this non-GAAP measure is set forth in the appendix.

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Financial Highlights - December 31, 2022 Fourth Quarter 2022 Investor Presentation \| 10 Growth • Continued balance sheet growth with $856.9 million of growth in loans held for investment and $496.1 million in deposit growth since December 31, 2021. Funding • Non-interest-bearing deposits comprised 34.91% of total deposits, compared to 39.04% as of September 30, 2022 and 39.46% as of December 31, 2021. • Deposits comprised 93.53% of total liabilities, as compared to 92.21% of total liabilities as of September 30, 2022 and 98.46% of total liabilities as of December 31, 2021. Capital • All capital ratios were above well-capitalized regulatory thresholds. • On October 21, 2022 and January 20, 2023, the Company announced cash dividends of $0.15 per share for the three months ended September 30, 2022 and December 31, 2022, respectively.

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Loans and Credit Quality Fourth Quarter 2022 Investor Presentation \| 11

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$148 $22 4.93% 5.28% 5.45% 4.96% 4.71% 5.12%Non-PPP Loans PPP Loans Average Loan Yield Average Loan Yield Excluding PPP Loans Consistent Loan Growth To ta l L oa ns (M ill io ns) $183 $121 $61 $22 $2 4.95% 4.73% 4.90% 4.71% 4.53% 4.48% 4.75% 5.12% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Fourth Quarter 2022 Investor Presentation \| 12 Note: Loan balances are end of period loans held for investment. Yields are based on average balance and annualized quarterly interest income. 1. CAGR is based upon balances as of December 31, 2022. 2. A reconciliation of this non-GAAP measure is set forth in the appendix. (2) Quarterly Trend To ta l L oa ns (M ill io ns) $148 $22 4.93% 5.28% 5.45% 4.96% 4.82% 4.75% 2017 2018 2019 2020 2021 2022 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Annual Trend CAGR (1) 5 years Total Loans 29.31 %

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Loan Portfolio Composition Fourth Quarter 2022 Investor Presentation \| 13 Commercial real estate 85.7% Commercial land and development 0.3% Commercial construction 3.2% Residential construction 0.2% Residential 0.9% Farmland 1.9% Secured 5.9% Unsecured 0.9% PPP 0.0% Consumer and other 1.0% Types of collateral securing commercial real estate ("CRE") loans Loan Balance ($000s) # of Loans % of CRE Manufactured home community $673,891 315 28.14 % RV Park $292,886 86 12.23 % Retail $264,599 80 11.05 % Multifamily $202,203 90 8.44 % Industrial $166,403 120 6.95 % Mini storage $158,650 41 6.63 % Faith-based $146,740 85 6.13 % Office $145,899 92 6.09 % All other types (1) $343,402 153 14.34 % Total $2,394,673 1,062 100.00 % Note: Balances are net book value as of period end, before allowance for loan losses and deferred loan fees, and exclude loans held for sale. 1. Types of collateral in "all other types" are those that individually make up less than 5% CRE concentration.

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$674M $293M $265M $202M $166M $159M $147M $146M $343M $1,175M $506M $490M $460M $366M $290M $383M $310M $705M Loan Balance Collateral Value Manufactured home community RV Park Retail Multifamily Industrial Mini storage Faith-based Office All other types $0M $200M $400M $600M $800M $1,000M $1,200M $1,400M CRE Collateral Values Fourth Quarter 2022 Investor Presentation \| 14 (1) Note: Balances are net book value as of period end, before allowance for loan losses and deferred loan fees, and exclude loans held for sale. 1. Types of collateral in "all other types" are those that individually make up less than 5% CRE concentration.

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Loan Portfolio Diversification We focus primarily on commercial lending, with an emphasis on commercial real estate. We offer a variety of loans to small and medium-sized businesses, professionals, and individuals, including commercial real estate, commercial land and construction, and farmland loans. To a lesser extent, we also offer residential real estate, construction real estate, and consumer loans. Fourth Quarter 2022 Investor Presentation \| 15Note: Balances are net book value as of period end, before allowance for loan losses and deferred loan fees, and exclude loans held for sale. Loans by Type Loans by Purpose Real Estate Loans by Geography CML Term CRE NOO, 38.3% CML Term Multifamily, 31.2% CML Term CRE OO, 15.8% CML Secured, 3.4% CML Const CRE, 3.2% CML Term Ag RE, 1.9% SBA 7A Secured, 1.7% Others, 4.5% CA, 60.9% TX, 5.9% AZ, 4.1% NV, 3.0% OR, 2.6% NC, 2.6% FL, 2.3% CO, 1.7% MO, 1.5% WI, 1.4% GA, 1.3% ID, 1.1% WA, 1.0% Other, 10.6% CRE Manufactured Home, 24.1% CRE RV Park, 10.5% CRE Other, 10.0% CRE Retail, 9.5% CRE Multifamily, 7.3% CRE Industrial, 6.0% CRE Mini Storage, 5.7% CRE Faith Based, 5.3% CRE Office, 5.2% Commercial Other, 5.1% Commercial Construction, 3.4% CRE Mixed Use, 3.1% CRE Agricultural, 1.9% Commercial SBA 7A, 1.7% Other, 1.2%

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Loan Rollforward Fourth Quarter 2022 Investor Presentation \| 16Note: Dollars are in millions. Beginning and ending balances are as of period end, before allowance for loan losses, including deferred loan fees, and excluding loans held for sale. Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Beginning Balance $1,707 $1,936 $2,081 $2,381 $2,583 Originations 462 313 440 321 295 Non-PPP Payoffs and Paydowns (194) (147) (138) (119) (87) PPP Forgiveness and Repayments (39) (21) (2) — — Ending Balance $1,936 $2,081 $2,381 $2,583 $2,791

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Asset Quality Our primary objective is to maintain a high level of asset quality in our loan portfolio. In order to maintain our strong asset quality, we: – Place emphasis on our commercial portfolio, where we reevaluate risk assessments as a result of reviewing commercial property operating statements and borrower financials – Monitor payment performance, delinquencies, and tax and property insurance compliance – Design our practices to facilitate the early detection and remediation of problems within our loan portfolio – Employ the use of an outside, independent consulting firm to evaluate our underwriting and risk assessment process Fourth Quarter 2022 Investor Presentation \| 17 Nonperforming Loan Trend Allowance for Loan Losses and Net Charge-off Trend Note: References to average loans HFI are average loans held for investment during the period. $3.1M $2.1M $0.8M $0.5M $0.6M $1.3M $0.4M $0.4M $0.4M 0.41% 0.22% 0.07% 0.03% 0.03% 0.06% 0.02% 0.02% 0.01% Nonperforming Loans Nonperforming Loans to Loans HFI 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 1.25% 1.21% 1.26% 1.48% 1.20% 1.02% 0.03% 0.23% 0.21% 0.12% 0.04% 0.07% Allowance for Loan Losses to Loans HFI Net Charge-offs to Average Loans HFI 2017 2018 2019 2020 2021 2022

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Allocation of Allowance for Loan Losses Fourth Quarter 2022 Investor Presentation \| 18 (dollars in thousands) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Allowance for Loan Losses Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total Real estate: Commercial $12,869 55.37 % $13,868 58.01 % $16,621 64.46 % $18,309 65.76 % $19,216 67.69 % Commercial land & development 50 0.22 % 66 0.28 % 68 0.26 % 98 0.35 % 54 0.19 % Commercial construction 371 1.60 % 430 1.80 % 508 1.97 % 546 1.96 % 645 2.27 % Residential construction 50 0.22 % 40 0.17 % 51 0.20 % 41 0.15 % 49 0.17 % Residential 192 0.83 % 208 0.87 % 188 0.73 % 175 0.63 % 175 0.62 % Farmland 645 2.78 % 611 2.56 % 616 2.39 % 664 2.39 % 644 2.27 % Total real estate loans 14,177 61.02 % 15,223 63.69 % 18,052 70.01 % 19,833 71.24 % 20,783 73.21 % Commercial: Secured 6,687 28.77 % 6,400 26.77 % 6,132 23.78 % 6,217 22.33 % 6,975 24.57 % Unsecured 207 0.89 % 246 1.03 % 265 1.03 % 278 1.00 % 116 0.41 % Total commercial loans 6,894 29.66 % 6,646 27.80 % 6,397 24.81 % 6,495 23.33 % 7,091 24.98 % Consumer and other 889 3.82 % 1,088 4.55 % 537 2.08 % 536 1.93 % 347 1.22 % Unallocated 1,111 4.78 % 308 1.29 % 648 2.51 % 829 2.98 % 45 0.16 % Individually evaluated for impairment Commercial secured 172 0.72 % 639 2.67 % 152 0.59 % 145 0.52 % 123 0.43 % Total allowance for loan losses $23,243 100.00 % $23,904 100.00 % $25,786 100.00 % $27,838 100.00 % $28,389 100.00 %

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Risk Grade Migration Fourth Quarter 2022 Investor Presentation \| 19 Classified Loans (Loans Rated Substandard or Doubtful) (dollars in thousands) 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Real estate: Commercial $9,256 $901 $888 $110 $106 Commercial land & development — — — — — Commercial construction — — — — — Residential construction — — — — — Residential 178 177 176 175 175 Farmland — — — — — Commercial: Secured 1,180 1,920 152 144 123 Unsecured — — — — — Paycheck Protection Program (PPP) — — — — — Consumer and other — 12 27 27 26 Total $10,614 $3,010 $1,243 $456 $430 % o f L oa n Po rt fo lio O ut st an di ng , b y Ri sk G ra de 99.00% 99.19% 99.03% 99.13% 99.20% 0.45% 0.67% 0.92% 0.85% 0.78%0.55% 0.14% 0.05% 0.02% 0.02% Pass Watch Substandard Doubtful 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Note: Loan portfolio outstanding is the total balance of loans outstanding at period end, before deferred loan fees, before allowance for loan losses, and excluding loans held for sale.

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Deposit and Capital Overview Fourth Quarter 2022 Investor Presentation \| 20

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Diversified Funding Fourth Quarter 2022 Investor Presentation \| 21 Total Deposits(1) = $2.8 billion 93.5% of Total Liabilities Liability Mix 1. Balance as of December 31, 2022. 2. Loan balance in loan to deposit ratio is total loans held for investment and sale at period end. Loan(2) to Deposit Ratio Non-Interest-Bearing Deposits to Total Deposits 89.7% 83.2% 90.5% 84.5% 85.1% 83.5% 95.7% 99.2% 100.7% 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 30.5% 29.0% 29.6% 39.3% 39.5% 37.6% 40.2% 39.0% 34.9% 2017 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Money Market & Savings, 41.3% Non-Interest-Bearing Demand, 32.7% Interest-Bearing Demand, 8.1% Time Deposits, 11.5% Borrowings & Subordinated Debt, 5.8% Other Liabilities, 0.6%

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$1.2B $1.3B $1.8B $2.3B $2.5B $2.5B $2.6B $2.8B $600M $708M $889M $1,001M $1,012M $1,070M $1,131M $1,228M $337M $389M $701M $902M $941M $1,006M $1,021M $971M $124M $119M $146M $279M $371M $221M $227M $240M $100M $97M $48M $104M $179M $204M $236M $343M Money Market & Savings Non-Interest-Bearing Demand Interest-Bearing Demand Time Deposits 2018 2019 2020 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Strong Deposit Growth Fourth Quarter 2022 Investor Presentation \| 22 Note: Balances are end of period. Cost of total deposits is based on total average balance of interest-bearing and non- interest-bearing deposits and annualized quarterly deposit interest expense. 1. CAGR is based upon balances as of December 31, 2022. Cost of Total Deposits 0.55% 0.81% 0.44% 0.11% 0.09% 0.17% 0.43% 0.95% CAGR (1) 4 years Total Deposits 24.42 %

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Capital Ratios Fourth Quarter 2022 Investor Presentation \| 23 Tier 1 Leverage Ratio Tier 1 Capital to RWA Total Capital to RWA Common Equity Tier 1 to RWA Note: References to RWA are risk-weighted assets. 8.26% 6.81% 7.51% 6.58% 9.47% 8.60% 2017 2018 2019 2020 2021 2022 9.32% 7.48% 8.21% 8.98% 11.44% 8.99% 2017 2018 2019 2020 2021 2022 9.32% 7.48% 8.21% 8.98% 11.44% 8.99% 2017 2018 2019 2020 2021 2022 13.23% 10.79% 11.52% 12.18% 13.98% 12.46% 2017 2018 2019 2020 2021 2022

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Financial Results Fourth Quarter 2022 Investor Presentation \| 24

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Earnings Track Record Fourth Quarter 2022 Investor Presentation \| 25 $10.9M $10.6M $13.3M $14.1M $14.5M $16.3M $18.8M $20.0M Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 $0.0M $2.5M $5.0M $7.5M $10.0M $12.5M $15.0M $17.5M $20.0M $22.5M 1. A reconciliation of this non-GAAP measure is set forth in the appendix. $46.3M $48.8M $69.6M $37.3M $47.1M $62.9M Pre-tax, pre-provision net income Pre-tax net income 2020 2021 2022 $0.0M $10.0M $20.0M $30.0M $40.0M $50.0M $60.0M $70.0M $80.0M (1) Quarterly Trend of Pre-Tax, Pre-Provision Net Income (1) Annual Trend

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Operating Metrics Fourth Quarter 2022 Investor Presentation \| 26 Efficiency RatioNet Interest Margin 3.99% 3.93% 3.98% 3.68% 3.64% 3.75% 2017 2018 2019 2020 2021 2022 37.94% 42.27% 38.63% 37.92% 42.46% 36.90% 2017 2018 2019 2020 2021 2022 Note: All 2022 figures are through December 31, 2022. Total Income Before Taxes $22.1M $23.4M $30.4M $37.3M $47.1M $62.9M 2017 2018 2019 2020 2021 2022

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Non-interest Income and Expense Comparison Fourth Quarter 2022 Investor Presentation \| 27 (dollars in thousands) For the three months ended For the year ended 12/31/2022 9/30/2022 12/31/2021 12/31/2022 12/31/2021 Non-interest Income Service charges on deposit accounts $97 $132 $116 $467 $424 Net gain on sale of securities — — 15 5 724 Gain on sale of loans 637 548 1,072 2,934 4,082 Loan-related fees 407 447 391 2,207 1,306 FHLB stock dividends 193 152 102 546 372 Earnings on bank-owned life insurance 119 102 57 412 237 Other income 148 52 37 586 135 Total non-interest income $1,601 $1,433 $1,790 $7,157 $7,280 Non-interest Expense Salaries and employee benefits $5,698 $5,645 $5,209 $22,571 $19,825 Occupancy and equipment 511 515 544 2,059 1,938 Data processing and software 839 797 656 3,091 2,494 Federal Deposit Insurance Corporation insurance 245 195 160 850 700 Professional services 553 792 444 2,467 3,792 Advertising and promotional 568 512 499 1,908 1,300 Loan-related expenses 358 262 136 1,287 1,045 Other operating expenses 1,945 1,454 1,370 6,436 4,949 Total non-interest expense $10,717 $10,172 $9,018 $40,669 $36,043

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Shareholder Returns Fourth Quarter 2022 Investor Presentation \| 28 ROAA ROAE EPS (basic and diluted) Value per Share (book and tangible book(1)) Note: All 2022 figures are through December 31, 2022. 1. See Appendix for more information on this non-GAAP measure. 2.34% 1.99% 2.15% 1.95% 1.86% 1.57% 2017 2018 2019 2020 2021 2022 27.80% 29.28% 31.40% 31.16% 22.49% 18.80% 2017 2018 2019 2020 2021 2022 $2.92 $3.08 $3.40 $3.57 $2.83 $2.61 2017 2018 2019 2020 2021 2022 $10.93 $10.88 $11.25 $12.16 $13.65 $14.66 2017 2018 2019 2020 2021 2022

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We 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 are grateful to work with community partners like Five Star Bank who advocate for the strength and resilience of our region's most vulnerable children and adults." Doug Bergman, President and CEO, UCP of Sacramento and Northern California Pictured with Harold Ashe, UCP of Sacramento and Northern California Foundation Board of Trustees "Roebbelen Contracting has been improving lives in our community for over 60 years, not just in our work as a general contractor, but in the meaningful ways we give back. We are pleased to have a banking partner in Five Star Bank who shares our values and is an integral part of our community. We both offer the resources, sophistication and reach of a large national firm while maintaining the agility, spirit and fire of a small company. We look forward to serving our customers and community for many years to come." Ken Wenham, President and CEO, Roebbelen Contracting Pictured with James Beckwith, President and CEO, Five Star Bank Five Star Bank is proud to partner with Sacramento Municipal Utility District (SMUD), a leader in clean energy and zero carbon innovation. Together, Five Star Bank and SMUD support customers across the Sacramento region in choosing clean energy solutions that reduce their carbon footprint at home, at work and on the road. We will continue to do our part to lead the way in protecting our environment, improving public health, and powering the Capital Region forward with innovative clean energy solutions. Pictured Left to Right: Brandy Bolden, Chief Customer Officer, SMUD; Paul Lau, CEO and General Manager, SMUD; Lora Anguay, Chief Zero Carbon Officer, SMUD

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Appendix: Non-GAAP Reconciliation (Unaudited) The Company uses financial information in its analysis of the Company's performance that is not in conformity with GAAP. The Company believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations, and cash flows computed in accordance with GAAP. However, the Company acknowledges that its non-GAAP financial measures have a number of limitations. As such, investors should not view these disclosures as a substitute for results determined in accordance with GAAP. Additionally, these non-GAAP measures are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses, but may calculate them differently. Investors should understand how the Company and other companies each calculate their non-GAAP financial measures when making comparisons. Average loan yield, excluding PPP loans, is defined as the daily average loan yield, excluding PPP loans, and includes both performing and nonperforming loans. The most directly comparable GAAP financial measure is average loan yield. Total assets, excluding PPP loans, is defined as total assets less PPP loans. The most directly comparable GAAP financial measure is total assets. Pre-tax, pre-provision net income is defined as net income plus provision for income taxes and provision for loan losses. The most directly comparable GAAP financial measure is pre-tax net income. 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. Fourth Quarter 2022 Investor Presentation \| 30 (dollars in thousands) For the three months ended For the year ended Average loan yield, excluding PPP loans 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 12/31/2020 12/31/2021 12/31/2022 Interest and fee income on loans $18,613 $18,626 $20,085 $21,569 $22,112 $24,879 $29,886 $34,918 $71,405 $78,894 $111,795 Less: interest and fee income on PPP loans 2,400 1,771 2,054 1,192 610 25 — — 6,535 7,417 635 Interest and fee income on loans, excluding PPP loans 16,213 16,855 18,031 20,377 21,502 24,854 29,886 34,918 64,870 71,477 111,160 Annualized interest and fee income on loans, excluding PPP loans (numerator) 65,753 67,605 71,536 80,844 87,200 99,689 118,569 138,533 64,870 71,477 111,160 Average loans held for investment and sale 1,526,130 1,578,438 1,625,995 1,815,627 1,977,509 2,227,215 2,494,468 2,703,865 1,439,380 1,637,280 2,353,148 Less: average PPP loans 176,384 158,568 89,436 44,101 8,886 427 — — 165,414 116,652 2,297 Average loans held for investment and sale, excluding PPP loans (denominator) 1,349,746 1,419,870 1,536,559 1,771,526 1,968,623 2,226,788 2,494,468 2,703,865 1,273,966 1,520,628 2,350,851 Average loan yield, excluding PPP loans 4.87 % 4.76 % 4.66 % 4.56 % 4.43 % 4.48 % 4.75 % 5.12 % 5.09 % 4.70 % 4.73 %

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Appendix: Non-GAAP Reconciliation (Unaudited) Fourth Quarter 2022 Investor Presentation \| 31 (dollars in millions) Total assets, excluding PPP loans 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Total assets $2,557 $2,778 $2,836 $3,075 $3,227 Less: PPP loans 22 2 — — — Total assets, excluding PPP loans $2,535 $2,776 $2,836 $3,075 $3,227 (dollars in millions) Three months ended Pre-tax, pre-provision net income 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Net income $10,278 $9,828 $11,026 $11,309 $9,862 $9,953 $11,704 $13,282 Add: provision for income taxes 382 734 2,270 1,321 3,660 4,080 4,830 5,487 Add: provision for loan losses 200 — — 1,500 950 2,250 2,250 1,250 Pre-tax, pre-provision net income $10,860 $10,562 $13,296 $14,130 $14,472 $16,283 $18,784 $20,019 (dollars in millions) Year ended Pre-tax, pre-provision net income 12/31/2020 12/31/2021 12/31/2022 Net income $35,928 $42,441 $44,801 Add: provision for income taxes 1,327 4,707 18,057 Add: provision for loan losses 9,000 1,700 6,700 Pre-tax, pre-provision net income $46,255 $48,848 $69,558

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