Five Star Bancorp Q2 2026 earnings show net income rose 4% to $19.4M, with loans up 29% and deposits up 30% annualized. EPS reached $0.91.
Five Star Bancorp reported Q2 2026 net income of $19.4 million, a 4% increase from the prior quarter and slightly ahead of analyst expectations. This growth was primarily driven by strong loan and deposit increases, reflecting the success of the company’s organic growth strategy.
Key Takeaways
- Net income rose to $19.4 million, up 4% from Q1 2026 and up 18% from Q2 2025.
- Earnings per share (EPS) increased to $0.91, up $0.04 from Q1 2026 and up $0.23 year-over-year.
- Total loans held for investment grew by $306.3 million, or 29% annualized, reaching $4.5 billion.
- Total deposits increased by $330 million, or 30% annualized, with non-wholesale deposits growing significantly.
- Net interest income was $46.1 million, up 6.04% from Q1 2026, despite a slight compression in net interest margin.
Strong Loan and Deposit Growth Drives Results
Total loans held for investment surged by $306.3 million in Q2 2026, marking a 29% annualized growth rate, and total deposits increased by $330 million, also up 30% annualized. This growth underscores the effectiveness of Five Star Bancorp's relationship-driven banking model. The company reported total loans of $4.5 billion and total deposits of $4.4 billion as of June 30, 2026.
| Metric | Q2 2026 | YoY | QoQ |
|---|---|---|---|
| Net income | $19.4M | +18% | +4% |
| EPS | $0.91 | +34% | +4% |
| Total loans | $4.5B | +16% | +29% annualized |
| Total deposits | $4.4B | +20% | +30% annualized |
Margin Compression and Interest Income Highlights
Five Star Bancorp's net interest income increased to $46.1 million, a 6.04% rise from $43.5 million in Q1 2026. However, net interest margin contracted by 7 basis points quarter-over-quarter to 3.63%. The growth in net interest income was largely volume-driven, with interest income rising due to a 4% increase in the average balance of loans and a 32% increase in the average balance of interest-earning deposits.
Management noted, “The growth in our average balance of non-interest-bearing deposits by $41.9 million helped partially offset the rise in deposit funding costs.” The increase in interest expense was primarily due to a $330.1 million rise in average deposit balances.
Capital Position and Credit Quality Remain Strong
Despite the challenges in the broader economic environment, Five Star Bancorp’s capital ratios remain robust. The common equity tier 1 capital ratio stood at 9.98%, and the tier 1 leverage ratio was 9.21% as of June 30, 2026. The company recorded a provision for credit losses of $2.3 million, reflecting strong loan growth while maintaining a well-capitalized status. The ratio of non-performing loans did increase to 0.30%, attributed to a single Community Reinvestment Act loan placed on non-accrual status, but management assured that the loan is well-collateralized.
Expansion into Southern California
During Q2, Five Star Bancorp announced its strategic expansion into Southern California, adding five banking professionals to penetrate the Greater Los Angeles market. This move is part of an effort to enhance its service offerings and deepen relationships with middle-market businesses. The company also opened a new full-service branch in Lodi, which aligns with its growth strategy targeting California's high-growth regions.
James Beckwith, President and CEO, mentioned, “We believe we are well positioned to deliver Five Star Bank's high-touch concierge banking services to the clients and communities of Greater Los Angeles.” This expansion is expected to solidify the company’s footprint and further support its growth objectives.
Frequently Asked Questions
Did Five Star Bancorp Common Stock beat earnings estimates in Q2 2026?
Yes, Five Star Bancorp reported earnings per share of $0.91, which was $0.04 above analyst estimates.
What was the year-over-year growth in total deposits for Five Star Bancorp in Q2 2026?
Total deposits grew by 20% year-over-year, increasing by $330 million to reach $4.4 billion as of June 30, 2026.
How did the net interest margin change from Q1 to Q2 2026?
The net interest margin decreased by 7 basis points from Q1 2026, down to 3.63% in Q2 2026.
What is the current provision for credit losses at Five Star Bancorp?
The provision for credit losses was recorded at $2.3 million during Q2 2026, reflecting strong loan growth while maintaining credit quality.
In summary, Five Star Bancorp's Q2 2026 results reveal a strong performance characterized by substantial loan and deposit growth, despite some margin compression. The upcoming quarters will be crucial in assessing the impact of the company's Southern California expansion and how it navigates potential economic challenges.
This analysis is based on public earnings call materials and is not investment advice.
