A Northern California community bank holding company that lends mainly to commercial real estate projects, serving small and mid-sized businesses and individuals through branches around Sacramento and the Bay Area. Founded in 1999 by real estate developers Marvin "Buzz" Oates and Frank Ramos, it was built to offer personal, local decision-making that big national lenders lacked. The "Five Star" name signals top-tier service and high standards, and the bank went public on Nasdaq in 2021.
Net interest margin expanded to 3.63% as a single $11.4M CRA loan drove nonperforming loans to 0.30% of total loans.
A single loan pushed credit quality into the spotlight. rose 25.1% to $48.0M and climbed 33.7% to $19.4M as expanded 10 to 3.63% on a favorable funding mix. The credit story now hinges on one borrower.
Key takeaways
A single $11.4 million Community Reinvestment Act loan placed on drove nonperforming loans to 0.30% of total loans, up from 0.07% in the prior quarter and 0.06% a year ago.
rose 26.2% to $46.1 million, driven by a 17.3% increase in average loan balances and an 87.1% rise in average interest-earning deposits at banks.
improved 10 to 3.63% as a favorable shift in funding mix and balance sheet growth offset declining federal funds rates.
Section summaries
Management's Discussion and Analysis
Net income rose to $19.4M in Q2 2026 driven by loan growth and a favorable funding mix, expanding net interest margin to 3.63%.
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grew 26.2% to $46.1 million, driven by a 17.3% increase in average loan balances and an 87.1% rise in average interest-earning deposits at banks.
Total deposits increased 14.2% to $4.8 billion, with non-wholesale deposits up $813.3 million while wholesale deposits declined $215.0 million.
Non- increased 24.7% to $19.6 million, primarily from higher salaries and benefits tied to a 13.3% headcount increase and new branch offices.
Interest rate sensitivity shifted: a +300 instantaneous shock would now cut estimated by 6.21%, up from a 1.72% decline modeled at year-end 2025.
What changed
The Q1 2026 watch item on the ratio was met with a rise to 1.10% from 1.09% at year-end 2025, but the ratio was overshadowed by a single $11.4 million CRA loan driving nonperforming loans to 0.30% of total loans.
The liability-sensitive position flagged in prior quarters reversed: a +300 shock now cuts modeled by 6.21%, versus a 1.03% increase modeled in Q1 2026 and a 1.72% decline at year-end 2025.
The improvement to 38.57% flagged in Q1 2026 reversed as non- rose 24.7% to $19.6 million, outpacing growth and pushing the ratio higher.
Wholesale deposits declined $215.0 million, extending the $81.9 million decline noted in Q1 2026, while non-wholesale deposits rose $813.3 million to shift the funding mix.
What to watch
Resolution of the single $11.4 million CRA loan on and any further migration into nonperforming loans beyond the 0.30% level.
trajectory as the +300 shock now models a 6.21% decline, a sharp reversal from the 1.03% increase modeled last quarter.
Non- growth as headcount rose 13.3% and new branch offices add ongoing rent and staff costs.
ratio for any build above the 1.10% level in response to the single large nonperforming loan.
improved 10 to 3.63% as a favorable shift in funding mix and balance sheet growth offset declining federal funds rates.
Total deposits increased 14.2% to $4.8 billion, with non-wholesale deposits up $813.3 million, while wholesale deposits declined $215.0 million.
rose to 0.30% of total loans due to a single $11.4 million Community Reinvestment Act loan placed on non-accrual status.
Non- increased 24.7% to $19.6 million, primarily from higher salaries and benefits tied to a 13.3% headcount increase and new branch offices.
Total liquidity stood at approximately $2.3 billion, with all capital ratios above well-capitalized thresholds and a of 12.50%.
Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk from lending and deposit-taking is the primary market risk, managed via ALCO oversight and measured by NII and EVE sensitivity.
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The Company’s main market risk is interest rate risk because asset and liability rates may not move together, making earnings sensitive to the treasury yield curve, federal funds rate, and WSJ Prime Index.
was $46.1M for Q2 2026 and $151.9M for FY2025, with total interest income of $72.3M and of $26.2M in the quarter.
is used to gauge long-term earnings exposure; as of June 30, 2026, assets repricing within 12 months slightly exceeded liabilities if rates fall.
A Management ALCO meets monthly and a Director ALCO meets quarterly to oversee interest rate sensitivity, with management typically deploying excess liquidity into higher-yielding assets.
Under a +300 instantaneous shock, estimated would decline 6.21% and EVE would decline 6.51% as of June 30, 2026, versus declines of 1.72% and 9.70% at year-end 2025.
Under a -300 shock, estimated would rise 9.99% and EVE would rise 0.72% as of Q2 2026, compared with increases of 9.44% and 8.79% at year-end 2025.
From time to time, we are a party to various litigation matters incidental to the conduct of our business. We do not believe that any currently pending legal proceedings will have a material adverse effect on our business, financial condition, or results of operations.
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From time to time, we are a party to various litigation matters incidental to the conduct of our business. We do not believe that any currently pending legal proceedings will have a material adverse effect on our business, financial condition, or results of operations.
There have been no material changes to the risk factors previously disclosed under Item 1A of the Company’s 2025 Annual Report on Form 10-K, previously filed with the SEC.
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There have been no material changes to the risk factors previously disclosed under Item 1A of the Company’s 2025 Annual Report on Form 10-K, previously filed with the SEC.