RANCHO CORDOVA, Calif., April 28, 2025 (GLOBE NEWSWIRE) -- Five Star Bancorp (Nasdaq: FSBC) (“Five Star” or the “Company”), a holding company that operates through its wholly owned banking subsidiary, Five Star Bank (the “Bank”), today reported net income of $13.1 million for the three months ended March 31, 2025, as compared to $13.3 million for the three months ended December 31, 2024 and $10.6 million for the three months ended March 31, 2024.
First Quarter Highlights
Performance and operating highlights for the Company for the periods noted below included the following:
| Three months ended | |||||||||||
| (in thousands, except per share and share data) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||||
| Return on average assets (“ROAA”) | 1.30 | % | 1.31 | % | 1.22 | % | |||||
| Return on average equity (“ROAE”) | 13.28 | % | 13.48 | % | 14.84 | % | |||||
| Pre-tax income | $ | 18,391 | $ | 19,367 | $ | 14,961 | |||||
| Pre-tax, pre-provision income(1) | $ | 20,291 | $ | 20,667 | $ | 15,861 | |||||
| Net income | $ | 13,111 | $ | 13,317 | $ | 10,631 | |||||
| Basic earnings per common share | $ | 0.62 | $ | 0.63 | $ | 0.62 | |||||
| Diluted earnings per common share | $ | 0.62 | $ | 0.63 | $ | 0.62 | |||||
| Weighted average basic common shares outstanding | 21,209,881 | 21,182,143 | 17,190,867 | ||||||||
| Weighted average diluted common shares outstanding | 21,253,588 | 21,235,318 | 17,272,994 | ||||||||
| Shares outstanding at end of period | 21,329,235 | 21,319,083 | 17,353,251 | ||||||||
| (1) See the section entitled “Non-GAAP Reconciliation (Unaudited)” for a reconciliation of this non-GAAP financial measure. | |||||||||||
James E. Beckwith, President and Chief Executive Officer, commented:
“The strength of Five Star Bank’s first quarter 2025 financial results is emblematic of a reputation built on an unwavering commitment to customers and community partners who rely on our speed to serve and certainty of execution for their own successes. This differentiated customer experience has created great demand for our services and seized market opportunities in San Francisco. As we continue to grow our presence, we now have 31 San Francisco Bay Area employees. As of March 31, 2025 our San Francisco Bay Area operations had $379.8 million in total deposits.
At the Company level, total loans held for investment increased by $89.1 million, or 2.52% (10.09% when annualized). Total deposits increased by $178.4 million, or 5.01% (20.05% when annualized), with wholesale deposits increasing by $130.0 million, or 23.21%, and non-wholesale deposits increasing by $48.4 million, or 1.61%. Short-term borrowings remained at zero as of March 31, 2025 and December 31, 2024. Net interest margin increased by nine basis points to 3.45% and our efficiency ratio increased to 42.58%, as compared to 41.21% for the fourth quarter of 2024, while cost of funds decreased nine basis points to 2.56%.
In the first quarter of 2025, we were pleased to declare another cash dividend of $0.20 per share. We were also pleased to have been ranked third among best-performing banks in the nation by S&P Global Market Intelligence (among banks with assets between $3 billion and $10 billion).
As we execute on the expansion of industry verticals and our presence in new geographies to meet customer demand, we expect the ongoing acceleration of our growth to benefit our customers, employees, and shareholders. We also expect our demonstrated ability to adapt to changing economic conditions to serve us well into the future as we remain vigilant and focused on disciplined business practices. We thank our employees for their outstanding commitment to ensuring Five Star Bank remains a safe, trusted, and steadfast banking partner.”
Financial highlights during the quarter included the following:
- The San Francisco Bay Area team increased from 27 to 31 employees who generated deposit balances totaling $379.8 million at March 31, 2025, an increase of $87.4 million from December 31, 2024.
- Cash and cash equivalents were $452.6 million, representing 12.11% of total deposits at March 31, 2025, as compared to 9.90% at December 31, 2024.
- Total deposits increased by $178.4 million, or 5.01%, during the three months ended March 31, 2025, due to increases in both non-wholesale and wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits. During the three months ended March 31, 2025, non-wholesale deposits increased by $48.4 million, or 1.61%, and wholesale deposits increased by $130.0 million, or 23.21%.
- The Company had no short-term borrowings at March 31, 2025 or December 31, 2024.
- Consistent, disciplined management of expenses contributed to our efficiency ratio of 42.58% for the three months ended March 31, 2025, as compared to 41.21% for the three months ended December 31, 2024.
- For the three months ended March 31, 2025, net interest margin was 3.45%, as compared to 3.36% for the three months ended December 31, 2024 and 3.14% for the three months ended March 31, 2024. The effective Federal Funds rate was 4.33% as of March 31, 2025, remaining constant from December 31, 2024 and decreasing from 5.33% at March 31, 2024.
- Other comprehensive income was $0.7 million during the three months ended March 31, 2025. Unrealized losses, net of tax effect, on available-for-sale securities were $11.6 million as of March 31, 2025. Total carrying value of held-to-maturity and available-for-sale securities represented 0.06% and 2.35% of total interest-earning assets, respectively, as of March 31, 2025.
- The Company’s common equity Tier 1 capital ratio was 11.00% and 11.02% as of March 31, 2025 and December 31, 2024, respectively. The Bank continues to meet all requirements to be considered “well-capitalized” under applicable regulatory guidelines.
- Loan and deposit growth in the three and twelve months ended March 31, 2025 was as follows:
| (in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | ||||||||
| Loans held for investment | $ | 3,621,819 | $ | 3,532,686 | $ | 89,133 | 2.52 | % | ||||
| Non-interest-bearing deposits | 933,652 | 922,629 | 11,023 | 1.19 | % | |||||||
| Interest-bearing deposits | 2,802,702 | 2,635,365 | 167,337 | 6.35 | % | |||||||
| (in thousands) | March 31, 2025 | March 31, 2024 | $ Change | % Change | ||||||||
| Loans held for investment | $ | 3,621,819 | $ | 3,104,130 | $ | 517,689 | 16.68 | % | ||||
| Non-interest-bearing deposits | 933,652 | 817,388 | 116,264 | 14.22 | % | |||||||
| Interest-bearing deposits | 2,802,702 | 2,138,384 | 664,318 | 31.07 | % | |||||||
- The ratio of nonperforming loans to loans held for investment at period end remained at 0.05% from December 31, 2024 to March 31, 2025.
- The Company’s Board of Directors declared on January 16, 2025, and the Company subsequently paid, a cash dividend of $0.20 per share during the three months ended March 31, 2025. The Company’s Board of Directors subsequently declared another cash dividend of $0.20 per share on April 17, 2025, which the Company expects to pay on May 12, 2025 to shareholders of record as of May 5, 2025.
Summary Results
Three months ended March 31, 2025, as compared to three months ended December 31, 2024
The Company’s net income was $13.1 million for the three months ended March 31, 2025, as compared to $13.3 million for the three months ended December 31, 2024. Net interest income increased by $0.5 million, primarily due to a decrease in interest expense due to lower average rates on deposits, partially offset by a decrease in interest income driven by lower balances and yields on interest-earning deposits in banks, as compared to the three months ended December 31, 2024. The provision for credit losses increased by $0.6 million, reflecting adjustments to expectations for credit losses based on economic trends and forecasts in the three months ended March 31, 2025 compared to the three months ended December 31, 2024. Non-interest income decreased by $0.3 million, primarily due to a reduction in income received on equity investments in venture-backed funds during the three months ended March 31, 2025, as compared to the three months ended December 31, 2024. Non-interest expense increased by $0.6 million, primarily related to an increase in salaries and employee benefits, partially offset by decreases in advertising, promotional, and other operating expenses during the three months ended March 31, 2025, as compared to the three months ended December 31, 2024.
Three months ended March 31, 2025, as compared to three months ended March 31, 2024
The Company’s net income was $13.1 million for the three months ended March 31, 2025, as compared to $10.6 million for the three months ended March 31, 2024. Net interest income increased by $7.2 million, primarily due to an increase in interest income driven by a higher balance of loans with higher yields, partially offset by an increase in interest expense due to larger average deposit balances, as compared to the three months ended March 31, 2024. The provision for credit losses increased by $1.0 million, relating to loan growth and adjustments to expectations for credit losses based on economic trends and forecasts during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. Non-interest income decreased by $0.5 million, primarily due to a reduction in income received on equity investments in venture-backed funds during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. Non-interest expense increased by $2.3 million during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, with an increase in salaries and employee benefits related to increased headcount as the leading driver.
The following is a summary of the components of the Company’s operating results and performance ratios for the periods indicated:
| Three months ended | |||||||||||||||
| (in thousands, except per share data) | March 31, 2025 | December 31, 2024 | $ Change | % Change | |||||||||||
| Selected operating data: | |||||||||||||||
| Net interest income | $ | 33,977 | $ | 33,489 | $ | 488 | 1.46 | % | |||||||
| Provision for credit losses | 1,900 | 1,300 | 600 | 46.15 | % | ||||||||||
| Non-interest income | 1,359 | 1,666 | (307 | ) | (18.43 | )% | |||||||||
| Non-interest expense | 15,045 | 14,488 | 557 | 3.84 | % | ||||||||||
| Pre-tax income | 18,391 | 19,367 | (976 | ) | (5.04 | )% | |||||||||
| Provision for income taxes | 5,280 | 6,050 | (770 | ) | (12.73 | )% | |||||||||
| Net income | $ | 13,111 | $ | 13,317 | $ | (206 | ) | (1.55 | )% | ||||||
| Earnings per common share: | |||||||||||||||
| Basic | $ | 0.62 | $ | 0.63 | $ | (0.01 | ) | (1.59 | )% | ||||||
| Diluted | $ | 0.62 | $ | 0.63 | $ | (0.01 | ) | (1.59 | )% | ||||||
| Performance and other financial ratios: | |||||||||||||||
| ROAA | 1.30 | % | 1.31 | % | |||||||||||
| ROAE | 13.28 | % | 13.48 | % | |||||||||||
| Net interest margin | 3.45 | % | 3.36 | % | |||||||||||
| Cost of funds | 2.56 | % | 2.65 | % | |||||||||||
| Efficiency ratio | 42.58 | % | 41.21 | % | |||||||||||
| Three months ended | |||||||||||||||
| (in thousands, except per share data) | March 31, 2025 | March 31, 2024 | $ Change | % Change | |||||||||||
| Selected operating data: | |||||||||||||||
| Net interest income | $ | 33,977 | $ | 26,744 | $ | 7,233 | 27.05 | % | |||||||
| Provision for credit losses | 1,900 | 900 | 1,000 | 111.11 | % | ||||||||||
| Non-interest income | 1,359 | 1,833 | (474 | ) | (25.86 | )% | |||||||||
| Non-interest expense | 15,045 | 12,716 | 2,329 | 18.32 | % | ||||||||||
| Pre-tax income | 18,391 | 14,961 | 3,430 | 22.93 | % | ||||||||||
| Provision for income taxes | 5,280 | 4,330 | 950 | 21.94 | % | ||||||||||
| Net income | $ | 13,111 | $ | 10,631 | $ | 2,480 | 23.33 | % | |||||||
| Earnings per common share: | |||||||||||||||
| Basic | $ | 0.62 | $ | 0.62 | $ | — | — | % | |||||||
| Diluted | $ | 0.62 | $ | 0.62 | $ | — | — | % | |||||||
| Performance and other financial ratios: | |||||||||||||||
| ROAA | 1.30 | % | 1.22 | % | |||||||||||
| ROAE | 13.28 | % | 14.84 | % | |||||||||||
| Net interest margin | 3.45 | % | 3.14 | % | |||||||||||
| Cost of funds | 2.56 | % | 2.62 | % | |||||||||||
| Efficiency ratio | 42.58 | % | 44.50 | % | |||||||||||
Balance Sheet Summary
| (in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | |||||||||
| Selected financial condition data: | |||||||||||||
| Total assets | $ | 4,245,057 | $ | 4,053,278 | $ | 191,779 | 4.73 | % | |||||
| Cash and cash equivalents | 452,571 | 352,343 | 100,228 | 28.45 | % | ||||||||
| Total loans held for investment | 3,621,819 | 3,532,686 | 89,133 | 2.52 | % | ||||||||
| Total investments | 99,696 | 100,914 | (1,218 | ) | (1.21 | )% | |||||||
| Total liabilities | 3,838,606 | 3,656,654 | 181,952 | 4.98 | % | ||||||||
| Total deposits | 3,736,354 | 3,557,994 | 178,360 | 5.01 | % | ||||||||
| Subordinated notes, net | 73,932 | 73,895 | 37 | 0.05 | % | ||||||||
| Total shareholders’ equity | 406,451 | 396,624 | 9,827 | 2.48 | % | ||||||||
- Insured and collateralized deposits were approximately $2.5 billion, representing 67.55% of total deposits as of March 31, 2025, as compared to 66.92% as of December 31, 2024. Net uninsured and uncollateralized deposits were approximately $1.2 billion as of March 31, 2025, remaining constant from December 31, 2024.
- Non-wholesale deposit accounts constituted 81.53% of total deposits as of March 31, 2025, as compared to 84.26% at December 31, 2024. Deposit relationships of greater than $5 million represented 60.87% of total deposits, as compared to 61.13% as of December 31, 2024, and had an average age of approximately 8.80 years as of March 31, 2025, as compared to 9.28 years as of December 31, 2024.
- Cash and cash equivalents as of March 31, 2025 were $452.6 million, representing 12.11% of total deposits at March 31, 2025, as compared to 9.90% as of December 31, 2024.
- Total liquidity (consisting of cash and cash equivalents and unused and immediately available borrowing capacity as set forth below) was approximately $2.0 billion as of March 31, 2025, as compared to $1.9 billion at December 31, 2024.
| March 31, 2025 | |||||||||||||
| (in thousands) | Line of Credit | Letters of Credit Issued | Borrowings | Available | |||||||||
| Federal Home Loan Bank of San Francisco (“FHLB”) advances | $ | 1,276,072 | $ | 731,500 | $ | — | $ | 544,572 | |||||
| Federal Reserve Discount Window | 856,366 | — | — | 856,366 | |||||||||
| Correspondent bank lines of credit | 175,000 | — | — | 175,000 | |||||||||
| Cash and cash equivalents | — | — | — | 452,571 | |||||||||
| Total | $ | 2,307,438 | $ | 731,500 | $ | — | $ | 2,028,509 | |||||
The increase in total assets from December 31, 2024 to March 31, 2025 was primarily due to a $100.2 million increase in cash and cash equivalents and an $89.1 million increase in total loans held for investment. The $100.2 million increase in cash and cash equivalents primarily resulted from net cash inflows related to financing and operating activities of $174.1 million and $15.5 million, respectively, partially offset by net cash outflows related to investing activities of $89.3 million. The $89.1 million increase in total loans held for investment between December 31, 2024 and March 31, 2025 was a result of $259.3 million in loan originations and advances, partially offset by $65.6 million and $104.6 million in loan payoffs and paydowns, respectively. The $89.1 million increase in total loans held for investment included $19.8 million in purchases of loans within the consumer concentration of the loan portfolio.
The increase in total liabilities from December 31, 2024 to March 31, 2025 was primarily due to an increase in interest-bearing deposits of $167.3 million. The increase in interest-bearing deposits was largely due to increases in time and money market deposits of $131.2 million and $52.2 million, respectively.
The increase in total shareholders’ equity from December 31, 2024 to March 31, 2025 was primarily a result of net income recognized of $13.1 million and a $0.7 million increase in accumulated other comprehensive income, partially offset by $4.3 million in cash dividends paid during the period.
Net Interest Income and Net Interest Margin
The following is a summary of the components of net interest income for the periods indicated:
| Three months ended | |||||||||||||||
| (in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | |||||||||||
| Interest and fee income | $ | 57,087 | $ | 57,745 | $ | (658 | ) | (1.14 | )% | ||||||
| Interest expense | 23,110 | 24,256 | (1,146 | ) | (4.72 | )% | |||||||||
| Net interest income | $ | 33,977 | $ | 33,489 | $ | 488 | 1.46 | % | |||||||
| Net interest margin | 3.45 | % | 3.36 | % | |||||||||||
| Three months ended | |||||||||||||||
| (in thousands) | March 31, 2025 | March 31, 2024 | $ Change | % Change | |||||||||||
| Interest and fee income | $ | 57,087 | $ | 47,541 | $ | 9,546 | 20.08 | % | |||||||
| Interest expense | 23,110 | 20,797 | 2,313 | 11.12 | % | ||||||||||
| Net interest income | $ | 33,977 | $ | 26,744 | $ | 7,233 | 27.05 | % | |||||||
| Net interest margin | 3.45 | % | 3.14 | % | |||||||||||
The following table shows the components of net interest income and net interest margin for the quarterly periods indicated:
| Three months ended | |||||||||||||||||||||||||||
| March 31, 2025 | December 31, 2024 | March 31, 2024 | |||||||||||||||||||||||||
| (in thousands) | Average Balance | Interest Income/ Expense | Yield/ Rate | Average Balance | Interest Income/ Expense | Yield/ Rate | Average Balance | Interest Income/ Expense | Yield/ Rate | ||||||||||||||||||
| Assets | |||||||||||||||||||||||||||
| Interest-earning deposits in banks | $ | 328,571 | $ | 3,575 | 4.41 | % | $ | 363,828 | $ | 4,335 | 4.74 | % | $ | 233,002 | $ | 3,102 | 5.35 | % | |||||||||
| Investment securities | 100,474 | 581 | 2.34 | % | 103,930 | 607 | 2.33 | % | 109,177 | 653 | 2.41 | % | |||||||||||||||
| Loans held for investment and sale | 3,567,992 | 52,931 | 6.02 | % | 3,498,109 | 52,803 | 6.01 | % | 3,082,290 | 43,786 | 5.71 | % | |||||||||||||||
| Total interest-earning assets | 3,997,037 | 57,087 | 5.79 | % | 3,965,867 | 57,745 | 5.79 | % | 3,424,469 | 47,541 | 5.58 | % | |||||||||||||||
| Interest receivable and other assets, net | 93,543 | 91,736 | 93,983 | ||||||||||||||||||||||||
| Total assets | $ | 4,090,580 | $ | 4,057,603 | $ | 3,518,452 | |||||||||||||||||||||
| Liabilities and shareholders’ equity | |||||||||||||||||||||||||||
| Interest-bearing transaction accounts | $ | 303,822 | $ | 1,112 | 1.48 | % | $ | 298,518 | $ | 1,249 | 1.66 | % | $ | 300,325 | $ | 1,126 | 1.51 | % | |||||||||
| Savings accounts | 123,599 | 772 | 2.53 | % | 127,298 | 887 | 2.77 | % | 124,561 | 861 | 2.78 | % | |||||||||||||||
| Money market accounts | 1,540,879 | 12,435 | 3.27 | % | 1,596,116 | 13,520 | 3.37 | % | 1,410,264 | 12,155 | 3.47 | % | |||||||||||||||
| Time accounts | 706,528 | 7,629 | 4.38 | % | 617,596 | 7,438 | 4.79 | % | 429,586 | 5,369 | 5.03 | % | |||||||||||||||
| Subordinated notes and other borrowings | 73,908 | 1,162 | 6.37 | % | 73,872 | 1,162 | 6.25 | % | 82,775 | 1,286 | 6.25 | % | |||||||||||||||
| Total interest-bearing liabilities | 2,748,736 | 23,110 | 3.41 | % | 2,713,400 | 24,256 | 3.56 | % | 2,347,511 | 20,797 | 3.56 | % | |||||||||||||||
| Demand accounts | 910,954 | 921,881 | 842,105 | ||||||||||||||||||||||||
| Interest payable and other liabilities | 30,389 | 29,234 | 40,730 | ||||||||||||||||||||||||
| Shareholders’ equity | 400,501 | 393,088 | 288,106 | ||||||||||||||||||||||||
| Total liabilities & shareholders’ equity | $ | 4,090,580 | $ | 4,057,603 | $ | 3,518,452 | |||||||||||||||||||||
| Net interest spread | 2.38 | % | 2.23 | % | 2.02 | % | |||||||||||||||||||||
| Net interest income/margin | $ | 33,977 | 3.45 | % | $ | 33,489 | 3.36 | % | $ | 26,744 | 3.14 | % | |||||||||||||||
Net interest income during the three months ended March 31, 2025 increased $0.5 million, or 1.46%, to $34.0 million compared to $33.5 million during the three months ended December 31, 2024. Net interest margin totaled 3.45% for the three months ended March 31, 2025, an increase of nine basis points compared to the prior quarter. The increase in net interest income is primarily attributable to a $1.1 million decrease in interest expense, driven by a 15 basis point decrease in the average rate on interest-bearing deposits compared to the prior quarter. The decrease in interest expense was partially offset by a $0.7 million decrease in interest income, primarily due to a $35.3 million, or 9.69%, decrease in the average balance of interest-earning deposits in banks, combined with a 33 basis point decrease in the average yield on interest-earning deposits in banks.
As compared to the three months ended March 31, 2024, net interest income increased $7.2 million, or 27.05%, to $34.0 million from $26.7 million. Net interest margin totaled 3.45% for the three months ended March 31, 2025, an increase of 31 basis points compared to the same quarter of the prior year. The increase in net interest income is primarily attributable to an additional $9.1 million in loan interest income due to a $485.7 million, or 15.76%, increase in the average balance of loans and a 31 basis point improvement in the average yield on loans during the three months ended March 31, 2025 compared to the same quarter of the prior year. The increase in interest income was partially offset by a $2.4 million increase in deposit interest expense compared to the same quarter of the prior year. The increase in deposit interest expense is primarily attributable to a $478.9 million, or 15.42%, increase in the average balance of deposits and a five basis point increase in the average cost of deposits during the three months ended March 31, 2025 compared to the same quarter of the prior year.
Loans by Type
The following table provides loan balances, excluding deferred loan fees, by type as of March 31, 2025:
| (in thousands) | ||||
| Real estate: | ||||
| Commercial | $ | 2,941,201 | ||
| Commercial land and development | 3,556 | |||
| Commercial construction | 113,002 | |||
| Residential construction | 5,747 | |||
| Residential | 34,053 | |||
| Farmland | 43,643 | |||
| Commercial: | ||||
| Secured | 170,525 | |||
| Unsecured | 34,970 | |||
| Consumer and other | 277,093 | |||
| Net deferred loan fees | (1,971 | ) | ||
| Total loans held for investment | $ | 3,621,819 | ||
Interest-bearing Deposits
The following table provides interest-bearing deposit balances by type as of March 31, 2025:
| (in thousands) | ||||
| Interest-bearing transaction accounts | $ | 295,633 | ||
| Money market accounts | 1,577,473 | |||
| Savings accounts | 128,210 | |||
| Time accounts | 801,386 | |||
| Total interest-bearing deposits | $ | 2,802,702 | ||
Asset Quality
Allowance for Credit Losses
At March 31, 2025, the Company’s allowance for credit losses was $39.2 million, as compared to $37.8 million at December 31, 2024. The $1.4 million increase in the allowance is due to a $2.2 million provision for credit losses recorded during the three months ended March 31, 2025, partially offset by net charge-offs mainly attributable to commercial and industrial loans of $0.7 million, during the same period.
The Company’s ratio of nonperforming loans to loans held for investment remained at 0.05% from December 31, 2024 to March 31, 2025. Loans designated as watch decreased from $123.4 million to $112.0 million between December 31, 2024 and March 31, 2025. Loans designated as substandard increased from $2.6 million to $3.7 million between December 31, 2024 and March 31, 2025. There were no loans with doubtful risk grades at March 31, 2025 or December 31, 2024.
A summary of the allowance for credit losses by loan class is as follows:
| March 31, 2025 | December 31, 2024 | |||||||||||
| (in thousands) | Amount | % of Total | Amount | % of Total | ||||||||
| Real estate: | ||||||||||||
| Commercial | $ | 27,027 | 68.91 | % | $ | 25,864 | 68.44 | % | ||||
| Commercial land and development | 70 | 0.18 | % | 78 | 0.21 | % | ||||||
| Commercial construction | 2,227 | 5.68 | % | 2,268 | 6.00 | % | ||||||
| Residential construction | 78 | 0.20 | % | 64 | 0.17 | % | ||||||
| Residential | 279 | 0.71 | % | 270 | 0.71 | % | ||||||
| Farmland | 598 | 1.52 | % | 607 | 1.61 | % | ||||||
| 30,279 | 77.20 | % | 29,151 | 77.14 | % | |||||||
| Commercial: | ||||||||||||
| Secured | 5,905 | 15.05 | % | 5,866 | 15.52 | % | ||||||
| Unsecured | 403 | 1.03 | % | 278 | 0.74 | % | ||||||
| 6,308 | 16.08 | % | 6,144 | 16.26 | % | |||||||
| Consumer and other | 2,637 | 6.72 | % | 2,496 | 6.60 | % | ||||||
| Total allowance for credit losses | $ | 39,224 | 100.00 | % | $ | 37,791 | 100.00 | % | ||||
The ratio of allowance for credit losses to loans held for investment was 1.08% at March 31, 2025, as compared to 1.07% at December 31, 2024.
Non-interest Income
The following table presents the key components of non-interest income for the periods indicated:
| Three months ended | |||||||||||||
| (in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | |||||||||
| Service charges on deposit accounts | $ | 215 | $ | 179 | $ | 36 | 20.11 | % | |||||
| Gain on sale of loans | 125 | 150 | (25 | ) | (16.67 | )% | |||||||
| Loan-related fees | 448 | 400 | 48 | 12.00 | % | ||||||||
| FHLB stock dividends | 331 | 332 | (1 | ) | (0.30 | )% | |||||||
| Earnings on bank-owned life insurance | 161 | 182 | (21 | ) | (11.54 | )% | |||||||
| Other income | 79 | 423 | (344 | ) | (81.32 | )% | |||||||
| Total non-interest income | $ | 1,359 | $ | 1,666 | $ | (307 | ) | (18.43 | )% | ||||
Service charges on deposit accounts. The increase resulted primarily from individually immaterial increases in fees earned for services and products to support deposit accounts including, but not limited to, service charges, check order fees, and debit card income.
Gain on sale of loans. The decrease resulted from a decline in the volume and effective yield of loans sold. During the three months ended March 31, 2025, approximately $1.7 million of loans were sold with an effective yield of 7.24%, as compared to approximately $2.0 million of loans sold with an effective yield of 7.60% during the three months ended December 31, 2024.
Other income. The decrease resulted primarily from $0.3 million of income received on equity investments in venture-backed funds during the three months ended December 31, 2024 which did not reoccur during the three months ended March 31, 2025.
The following table presents the key components of non-interest income for the periods indicated:
| Three months ended | |||||||||||||
| (in thousands) | March 31, 2025 | March 31, 2024 | $ Change | % Change | |||||||||
| Service charges on deposit accounts | $ | 215 | $ | 188 | $ | 27 | 14.36 | % | |||||
| Gain on sale of loans | 125 | 369 | (244 | ) | (66.12 | )% | |||||||
| Loan-related fees | 448 | 429 | 19 | 4.43 | % | ||||||||
| FHLB stock dividends | 331 | 332 | (1 | ) | (0.30 | )% | |||||||
| Earnings on bank-owned life insurance | 161 | 142 | 19 | 13.38 | % | ||||||||
| Other income | 79 | 373 | (294 | ) | (78.82 | )% | |||||||
| Total non-interest income | $ | 1,359 | $ | 1,833 | $ | (474 | ) | (25.86 | )% | ||||
Gain on sale of loans. The decrease related primarily to an overall decline in the volume of loans sold, partially offset by an improvement in the effective yield of loans sold. During the three months ended March 31, 2025, approximately $1.7 million of loans were sold with an effective yield of 7.24%, as compared to approximately $5.2 million of loans sold with an effective yield of 7.08% during the three months ended March 31, 2024.
Other income. The decrease related primarily to $0.3 million of income received on equity investments in venture-backed funds during the three months ended March 31, 2024, which did not reoccur during the three months ended March 31, 2025.
Non-interest Expense
The following table presents the key components of non-interest expense for the periods indicated:
| Three months ended | |||||||||||||
| (in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | |||||||||
| Salaries and employee benefits | $ | 9,134 | $ | 8,360 | $ | 774 | 9.26 | % | |||||
| Occupancy and equipment | 637 | 649 | (12 | ) | (1.85 | )% | |||||||
| Data processing and software | 1,457 | 1,369 | 88 | 6.43 | % | ||||||||
| Federal Deposit Insurance Corporation (“FDIC”) insurance | 455 | 440 | 15 | 3.41 | % | ||||||||
| Professional services | 913 | 774 | 139 | 17.96 | % | ||||||||
| Advertising and promotional | 522 | 752 | (230 | ) | (30.59 | )% | |||||||
| Loan-related expenses | 319 | 321 | (2 | ) | (0.62 | )% | |||||||
| Other operating expenses | 1,608 | 1,823 | (215 | ) | (11.79 | )% | |||||||
| Total non-interest expense | $ | 15,045 | $ | 14,488 | $ | 557 | 3.84 | % | |||||
Salaries and employee benefits. The increase related primarily to: (i) a $0.9 million increase in salaries, benefits, and bonus expense; and (ii) a $0.3 million decrease in loan origination costs due to fewer loan originations, net of purchased consumer loans. The increase was partially offset by a $0.5 million decrease in commissions expense due to fewer loan originations, net of purchased consumer loans, period-over-period.
Professional services. The increase was primarily due to $0.1 million in fees paid for compensation consulting services, which did not occur in the three months ended December 31, 2024.
Advertising and promotional. The decrease related primarily to a $0.1 million decrease in expenses related to sponsored events and partnerships and $0.1 million decrease related to business development expenses.
Other operating expenses. The decrease was primarily due to a $0.1 million decrease in director expenses, such as conferences and meetings, combined with individually immaterial decreases in expenses related to o
