Five Star Bancorp
Annual Report 2021

Plain-text annual report

2021 Annual Report www.fivestarbank.com | Nasdaq: FSBC CHICO DOWNTOWN SACRAMENTO (LPO) REDDING ROSEVILLE RANCHO CORDOVA ELK GROVE NATOMAS SANTA ROSA (LPO) YUBA CITY *LPO: Loan Production Ofce Every achievement, every action and every good deed in this report are a tribute to our founders, shareholders, employees and clients. Dear Clients and Shareholders: We are very pleased to share Five Star Bancorp’s 2021 Annual Report – our frst report as a public company! While we all experienced challenges, 2021 was also a remarkable year of growth, renewed purpose and commitment to our shareholders, employees, clients and the communities we serve. Every day, we worked as a team toward common goals while individual talents contributed to shared wins. Yet, it is how we succeeded that shaped and defned us. Most banks ofer similar, if not the same, products. However, it has been said it is not what you do, but how you do it. No other bank has our engaged team, our speed to serve or our certainty of execution. No other bank has our commitment to treating clients with an empathetic spirit, understanding and care. We are proud to have earned the trust of those we serve. Dollars in Millions Financial Highlights 2016-2021 DECEMBER 31, 2016 2017 2018 2019 2020 2021 FRANCHISE GROWTH 2016-2021 LOANS +24.7% CAGR $ 0.6 B $ 1.9 B Total Assets Total Loans Held for Investment Total Deposits Total Tier 1 Capital Net Income Return on Average Assets Return on Average Shareholders’ Equity $840.4 $641.4 $761.2 $78.7 $15.8 2.0% 24.6% $972.8 $771.6 $864.5 $81.2 $21.4 2.3% 27.8% $1,272.1 $1,479.9 $1,953.8 $2,556.8 $960.2 $1,180.3 $1,503.2 $1,934.5 $1,161.4 $1,311.8 $1,784.0 $2,285.9 $233.4 $42.4 1.9% 22.5% $130.3 $35.9 2.0% 31.2% $107.4 $29.3 2.2% 31.4% $81.5 $22.6 2.0% 29.3% A History of Organic Growth Five Star Bancorp was founded in 1999 by a group of local entrepreneurs who wanted to create the kind of personalized banking services they desired themselves – services provided by industry experts who are committed to partnerships grounded in shared vision and goals. Today, Five Star Bancorp is a community business bank guided by purpose-driven banking, community stewardship, regional and industry expertise and a commitment to economic development. In May 2021, the Company completed its initial public ofering. Prior to this achievement, and for over twenty years, the Company focused on organic growth by strategically and thoughtfully expanding its reach in Northern California (and beyond) and by developing its team, business verticals, internal processes, community partnerships and brand. Today, the Company provides a broad range of banking products and services to small and medium-sized businesses, professionals and individuals primarily in Northern California through seven branch ofces, two loan production ofces and the internet with our mobile banking application. Our primary loan products are commercial real estate loans, commercial loans, commercial land and construction loans and farmland loans. Our principal geographic market is the Roseville/Sacramento/Rancho Cordova/Elk Grove area (Greater Sacramento Area). The Greater Sacramento Area has a proftable and productive economy driven by the governmental, education, technology, healthcare, agricultural and manufacturing sectors. Since 2016, our market share of the total deposits in the Greater Sacramento Area has increased signifcantly, according to the Federal Deposit Insurance Corporation (FDIC) Deposit Market Share Reports. We believe our market growth confrms the quality of the purpose-driven and integrity-centered banking we strive to deliver to clients. Our mission is to become the top business bank in the markets we serve through exceptional service, deep connectivity and client empathy. 2016–2021 DEPOSITS +24.6% CAGR $ 0.8 B $ 2.3 B A Year of Service & Recognition In 2021, we added to our board of directors, signifcantly expanded our team, adopted new technology, expanded our verticals, deepened our commitment to Diversity, Equity and Inclusion (DE&I) initiatives and created robust internal training programs. We also established an investor relations function, introduced and expanded new product oferings and created a department to manage energy efciency loans – all while adhering to COVID-19 protocols and maintaining a deep sense of purpose. The strength of our team also brought Five Star Bancorp a tremendous amount of recognition and awards including placement on the Sacramento Business Journal’s Best Places to Work and Fastest Growing Companies lists, a Comstock’s Magazine Woman in Leadership recognition, a Vistage Leadership Award, the Sacramento Asian Pacifc Chamber of Commerce’s Corporate Steward of the Year Award and the Sacramento Business Journal’s Corporate Champion of the Year. These awards are attributable to our highly engaged, motivated and committed team of employees. 2016–2021 5 FIVE STAR BANCORP - Annual Report 2021 A Culture of Engagement & Belonging | Diversity, Equity & Inclusion We facilitate talent attraction and retention through an inclusive, safe and healthy workplace where employees have opportunities to grow and develop their careers. They are also supported by strong compensation, benefts and health and welfare programs. As of December 31, 2021, we had 163 full-time and fve part-time employees. In addition to salaries, we ofer annual bonus opportunities, a 401(k) plan with an employer matching contribution, healthcare and insurance benefts, fexible spending accounts, paid time of, family leave and an employee assistance program. We invest in the growth and development of our employees by providing a multi-dimensional approach to learning that empowers, intellectually grows and professionally develops our employees through support to attend conferences and obtain degrees, licenses and certifcations. This support has resulted in a highly educated and exceptionally engaged workforce. Further, DE&I initiatives and programs are foundational to our core business model as we seek to ensure forward- thinking principles permeate workforce development as well as relationships with community partners and clients. We understand and appreciate the complexity and importance of the inclusion of a full range of identity groups, from ethnicity and nationality to age, gender, religious commitment, socioeconomic status, sexual orientation and those with disabilities. We also recognize DE&I initiatives build trust which afects fnancial ecosystems and drives companies’ bottom lines. Banking can often leave clients feeling vulnerable and exposed as they reveal details of their fnancial history. There is a vulnerability that can be difcult to overcome if trust has not been created – and trust is often more easily established between those with shared experiences. We believe embracing and understanding this reality through a diverse workforce creates opportunity not only from a business perspective but also opportunity to profoundly help those from diverse communities. We believe a successful program will ultimately beneft both the Company and those the Company serves. Environmental, Social & Governance Five Star Bancorp has taken a proactive approach to Environmental, Social and Governance (ESG) initiatives and believes our ability to manage ESG demonstrates strength in leadership and governance that are essential to sustainable growth. We are executing ESG strategies that will drive positive change while focusing on the impacts of our business, social factors in the communities we serve and the governance of our board of directors. As stewards of our environment, we also support clients focused on sustainable energy and environmental impact, from afordable energy to climate action. We believe social impact is inherent in banking and we work with clients and partners committed to the same values. We also support clients who provide innovative environmental solutions and restore life and vitality to areas devastated by catastrophic events. We are proud to be a partner to energy efciency and sustainability-focused organizations including those who provide energy efciency loan programs. In 2021, the Company was selected to work with a local utility district on a new energy efciency loan program that allows for the community to “go green” and bring energy efcient devices into their homes. Beginning in June 2021, we onboarded over 2,000 loans in this micro-loan program which funded residential energy efciency equipment. We have reduced our own carbon footprint by utilizing e-signature to conduct business to reduce paper consumption and reducing in-ofce occupation, where possible. Exceptional Credit Quality Exceptional asset quality has consistently been our focus. We have well-established loan policies and underwriting practices that have resulted in very low levels of charge-ofs and nonperforming assets. Additionally, we have a multi- faceted loan monitoring framework established to regularly evaluate our asset quality after the origination process. Our 2021 results are a testament to the strength of our loan portfolio. The ratio of nonperforming loans to period end loans was three basis points as of December 31, 2021, representing no change from the prior year. Our allowance for loan losses increased slightly from 2020, as general economic conditions improved from the previous year, albeit at a pace slower than expected due to unforeseen disruptions in the supply chain and increasing energy prices. Looking ahead to 2022, and as economic conditions continue to improve, asset quality remains at the forefront of our objectives. 6 FIVE STAR BANCORP - Annual Report 2021 Five Star Bank customer SSEC doesn’t just lead the environmental services industry - they helped create it and have been protecting the earth’s natural resources for more than 50 years. We thank SSEC for rebuilding, restoring and renewing our region after catastrophic wildfires and for their commitment to environmental sustainability and wildlife protection. Pictured left to right: Jay W. Selby, Founder, SSEC; Jen Matulich, SVP, Business Development Ofcer, Five Star Bank; Jay R. Selby, President, SSEC COMPOUND ANNUAL GROWTH RATE 2016-2021 TOTAL INCOME BEFORE TAXES +23.6% CAGR $ 16.4 M $ 47.1 M Strong and Growing Capital We continue to be well-capitalized and on May 7, 2021, we completed our IPO and raised approximately $111.2 million in net proceeds after deducting underwriting discounts, commissions and other certain ofering expenses. Our book value per share as of December 31, 2021 was $13.65 per share, representing an increase of approximately $1.49 per share, or 12.3% compared to 2020. We have paid cash dividends on our common stock in every quarter since January 2002, with the exception of the third and fourth quarters of 2009 and all quarters of 2010. It is currently the intention of the board of directors to continue payment of cash dividends on a quarterly basis. During the year ended December 31, 2021, we paid approximately $51.9 million in dividends. This included a $27.0 million cash distribution to shareholders of record as of May 3, 2021, for the payout of the Accumulated Adjustments Account (AAA), which was described in further detail in our Registration Statement on Form S-1. 2021 Results Results for 2021 refect the continuation of our organic growth story and 2021 was our strongest year yet. As of December 31, 2021, our total assets were $2.6 billion, an increase of $603.0 million, or 30.9%, from the prior year. Net income increased from the prior year by approximately 18.1% to $42.4 million, which included the impact of increased taxes from our conversion to a C Corporation during the year in conjunction with our IPO. Our return on average assets and return on average equity during 2021 were 1.9% and 22.5%, respectively. Total loans, net, were $1.9 billion as of December 31, 2021. Loan originations, net of repayments, totaled $426.9 million for the year, growing the loan portfolio by approximately 29.0% during 2021. 2016–2021 CAGR computed over 5 years since December 31, 2016 Total deposits were $2.3 billion as of December 31, 2021. Deposits grew by $501.9 million, or 28.1%, during 2021, and we ended the year with a 39.5% ratio of non-interest- bearing deposits to total deposits. Information Technology Investments In 2021, we continued to make signifcant investments in our information technology systems and staf for our banking and lending operations and treasury management activities. We believe this investment will support our continued growth and enable us to enhance our capabilities to ofer new products, improve the overall client experience, improve proftability through efciencies and provide scale for future growth. We utilize nationally recognized software vendors, using their cloud/hosted models, which allows us to outsource the processing of our data which provides greater scalability and disruption avoidance. Community Engagement & Investment In 2021, Five Star Bancorp was an engaged member of 16 Chambers of Commerce. Among other initiatives, we were committed to supporting educational programs, wildfre relief eforts, afordable housing, and clients and community partners who continued to experience the impacts of COVID-19. We were also committed to a robust Community Reinvestment Act (CRA) Program. You will read more about these eforts in this report. We stand on a sturdy foundation of what we have built together so that we may encourage, support and strengthen those who need us most. TANGIBLE BOOK VALUE PER SHARE +5% CAGR $ 10.48 $ 13.65 2016–2021 CAGR computed over 5 years since December 31, 2016 8 FIVE STAR BANCORP - Annual Report 2021 Five Star Bank supports the men and women fighting wildfires in our communities. Join us and the Del Oro Division of The Salvation Army to make a donation today - 100% of donations go toward disaster readiness and direct support for the initial and long-term recovery of evacuees and first responders. Together, we can make a difference. THANK YOUFIREFIGHTERSAND FIRSTRESPONDERS Executive Leadership Depth Five Star Bancorp’s leadership team includes executives who have diverse backgrounds, education, ages and areas of expertise. They share a depth of knowledge in the Company’s corporate culture, strategic objectives, core business model, business verticals and client expectations. They are each committed to an exceptional client experience guided by a speed to serve and certainty of execution. Our executive leadership is a synergistic and dynamic team with a high level of mutual respect and trust; this trust permeates the entire organization and has made Five Star Bancorp an attractive company for employees to experience their own successes. A Look Ahead While we remain focused on the future and maintaining a position of distinction and respect in the markets and communities we serve, we are proud to look back at 2021 as an extraordinary year of achievement. The Company’s stellar performance included a successful IPO, outstanding year-over-year growth in loans, assets, and deposits, strong earnings per share, and a regular shareholder dividend. This is the culmination of our entire team’s eforts, even while working through a pandemic. This is also emblematic of the cohesion that exists among our team which grew in strength and stamina after being a vital force for clients in 2020. An adaptive team is critical to our success and we will continue to hire those who can quickly respond to changing market conditions and demands. In the coming year, we will stay at the forefront of innovation and technology by making investments in people and processes. We will also remain focused on the successful execution of our ongoing digital transformation and the continued build-out of our verticals. We are humbled and proud of our team’s accomplishments and look forward to the continuation of our organic growth story. Five Star Bancorp has never been better positioned for the future. We look to the coming year with optimism and in anticipation of the possibilities it holds for all of us. Our clients, shareholders and employees are our driving force, our reason for existing and our greatest champions. It has been our privilege to serve you. James Beckwith President & CEO Jack Dalton SVP, Chief Credit Ofcer Mike Lee SVP, Chief Regulatory Ofcer Heather Luck SVP, Chief Financial Ofcer Lydia Ramirez SVP, Chief Operations Ofcer & Chief DE&I Ofcer Mike Rizzo SVP, Chief Banking Ofcer Brett Wait SVP, Chief Information Ofcer Shelley Wetton SVP, Chief Marketing Ofcer 10 FIVE STAR BANCORP - Annual Report 2021 James Beckwith President & CEO Jack Dalton SVP, Chief Credit Ofcer Mike Lee SVP, Chief Regulatory Ofcer Heather Luck SVP, Chief Financial Ofcer Lydia Ramirez SVP, Chief Operations Ofcer & Chief DE&I Ofcer Mike Rizzo SVP, Chief Banking Ofcer Brett Wait SVP, Chief Information Ofcer Shelley Wetton SVP, Chief Marketing Ofcer 11 FIVE STAR BANCORP - Annual Report 2021 Our Clients CLIENT INDEX PAGE VERTICALS CLIENT Non-profit 3Strands Global Foundation Manufactured Housing Monte Christo Communities Business - Auto Dealership Von Housen Automotive Group Construction A.P. Thomas Construction Professional Services & Practice Bal & Associates, CPA Inc. Non-profit Saint John’s Program for Real Change Venture Banking, Tech & Start-Up Black Star Fund Small Business DC Investments One LLC Venture Banking, Tech & Start-Up Moneta Ventures Faith-Based William Jessup University Professional Services & Practice Afineol IT Consulting Small Business Woody’s Brewing Company Non-profit CapRadio 16 18 20 22 24 26 28 30 32 34 36 38 40 14 FIVE STAR BANCORP - Annual Report 2021PAGE VERTICALS CLIENT 42 44 46 48 50 52 54 56 58 60 62 64 Small Business Rytina Fine Cleaners Agriculture & Ag Tech Millennium Farms Small Business Fizz Champagne & Bubbles Bar Non-profit SMUD MOSAC Venture Banking, Tech & Start-Up Growth Factory Construction SRBX Professional Services & Practice Pacific Staffing Government El Dorado Hills CSD Commercial & Industrial Business General Produce Non-profit NFIB California Professional Services & Practice Group Concepts Business - Auto Dealership Maita Automotive 15 FIVE STAR BANCORP - Annual Report 2021N O N - P R O F I T : 3Strands Global Foundation “We are so grateful for FIVE STAR BANK. They help us focus on those we serve so that we can make sure our clients have the basic necessities to survive.” Ashlie Bryant, Co-Founder & CEO 3Strands Global Foundation is a local non-proft working toward creating a world free from human trafcking. They serve survivors by providing support and employment opportunities. They also work to educate the public about the dangers and signs of human trafcking and have educated over 500,000 adults and students. Through hosted events, such as their annual Break Free Run, 3Strands Global Foundation is able to mobilize communities to combat human trafcking and advocate for freedom. 16 FIVE STAR BANCORP - Annual Report 2021M A N U FA C T U R E D H O U S I N G C O M M U N I T I E S : Monte Christo Communities “What separates FIVE STAR BANK from the rest is the entrepreneurial spirit of their people. Since day one of our relationship, Five Star’s people have gone out of their way to demonstrate that they are here to be a partner in our success.” John McDougall, Principal & CEO Monte Christo Communities operates manufactured housing communities and RV parks throughout the Western United States. They know that this form of housing is needed and valued now more than ever and are proud to serve the communities they have been given stewardship over. With decades of combined experience, Monte Christo is dedicated to investing in their communities to build long-term value for their team, residents, and investors, which they afectionately refer to as their “Trinity.” 18 FIVE STAR BANCORP - Annual Report 2021 B U S I N E S S - A U T O D E A L E R S H I P : Von Housen Automotive Group “Our commitment to serve our team members and the community has always been my frst priority. FIVE STAR BANK makes sure we keep that commitment.” George Grinzewitsch, Owner & CEO For more than 60 years, Von Housen Automotive Group has delivered high-end luxury vehicles to discerning clients throughout the Greater Sacramento Area. They are known for quality, service and a large selection of Mercedes-Benz vehicles. 20 FIVE STAR BANCORP - Annual Report 2021C O N S T R U C T I O N : A.P. Thomas Construction “The FIVE STAR BANK team makes banking easy! They are proactive and provide solutions to make us successful.” Amy Thomas, Vice President A.P. Thomas Construction is an award-winning, full-service general contractor based in the Sacramento area. For two decades, they have delivered innovation and quality to commercial, retail and industrial projects. The A.P. Thomas Construction team listens and then carefully executes a plan to bring their customers’ visions to life. 22 FIVE STAR BANCORP - Annual Report 2021 P R O F E S S I O N A L S E R V I C E S & P R A C T I C E : Bal & Associates, CPA Inc. “FIVE STAR BANK has provided exceptional customer service and easy fnancing to meet the needs of our busy clients. They have positively impacted and supported our community projects and work tirelessly to help us fnd solutions to achieve our goals in a timely manner.” Baljit Bal, CPA, MST, CEO Bal & Associates, CPA Inc., ofers a wide range of professional services in the areas of accounting, bookkeeping, payroll, tax and fnancial planning with the goal of building strong and long-lasting relationships with their clients and community. They proudly serve California’s Central Valley with one ofce in Rocklin and another in Fresno. 24 FIVE STAR BANCORP - Annual Report 2021N O N - P R O F I T : Saint John’s Program for Real Change “Saint John’s Program for Real Change is grateful for FIVE STAR BANK’s responsiveness, service and partnership. Their service allows us to continue our mission work and strengthen our community.” Julie Hirota, CEO Saint John’s Program for Real Change is designed to help homeless women and children living in crisis. They provide women the ability to rise above devastating, negative elements and achieve job readiness and self-sustainability through supportive services, mental health services, career education and on-the- job training. 26 FIVE STAR BANCORP - Annual Report 2021 V E N T U R E B A N K I N G , T E C H N O L O G Y & S TA R T- U P : Black Star Fund “FIVE STAR BANK has been with Black Star Fund from the beginning. What sets Five Star Bank apart is their focus on customer service and support. From our customer relationship manager helping us to integrate multiple accounts through the online portal to the President of the bank checking in to make sure everything is moving smoothly, everyone at Five Star Bank has always treated Black Star Fund as a VIP client.” Kwame Anku, Chairman & CEO Black Star Fund invests in innovators and those who see new enterprise as a gateway to a world that is more abundant, balanced and productive. Their approach to investing combines the ease of early stage “friends and family” funding with the rigor of venture capital. Black Star Fund keeps their investment philosophy simple because they know the harvest is only as good as the cultivation. 28 FIVE STAR BANCORP - Annual Report 2021 S M A L L B U S I N E S S : DC Investments One, LLC “The biggest beneft of working with FIVE STAR BANK is that it’s a local bank that caters towards entrepreneurs. Their service and willingness to help us achieve our goals and dreams is what we appreciate the most.” Chenoa Rivera and David Rivera, Owners Chenoa Rivera and David Rivera are real estate investing experts and the stars of HGTV’s Rustic Rehab. They share a passion for transforming neglected houses into beautiful homes. Chenoa and David also own Brooklyn Bridge Bagel Works in Downtown Chico, California. 30 FIVE STAR BANCORP - Annual Report 2021V E N T U R E B A N K I N G , T E C H N O L O G Y & S TA R T- U P : Moneta Ventures “A lot of banks will not look at early-stage companies. The fact that FIVE STAR BANK is willing to take a look benefts our portfolio and supports companies in getting to the next stage.” Lokesh Sikaria, Founder & Managing Partner Moneta Ventures invests in early-stage companies in the enterprise technology, healthcare and internet/ consumer application sectors in the Greater Sacramento Area. Aside from capital investment, the Moneta Ventures team works closely with entrepreneurs, developers and sales and marketing teams to optimize growth and proftability so promising early-stage startups can thrive. 32 FIVE STAR BANCORP - Annual Report 2021FA I T H - B A S E D : William Jessup University “FIVE STAR BANK has been a terrifc banking partner for William Jessup. We value the personalized service their team provides and the fact that their team is always just a phone call away.” Dr. John Jackson, President As a nationally-ranked Christian university, William Jessup University seeks to develop the whole person by developing skills in communication, quantitative reasoning and critical thinking and by exposing students to a broad cross-section of knowledge in science, social science and the humanities. The university aims to maintain high academic standards while guiding students toward fulflling careers and authentic relationships with Christ. 34 FIVE STAR BANCORP - Annual Report 2021P R O F E S S I O N A L S E R V I C E S & P R A C T I C E : Afineol IT Consulting “We found a partner in FIVE STAR BANK the moment we became a customer. They helped us through the everchanging landscape of the past few years with professionalism and outstanding customer service.” Margaret Strong, President Afneol IT Consulting has been serving the Sacramento region since 2000. Their team of dedicated IT professionals has a strong focus on customer service and the technical skills to keep their clients’ businesses running smoothly. 36 FIVE STAR BANCORP - Annual Report 2021S M A L L B U S I N E S S : Woody’s Brewing Company “I don’t consider FIVE STAR BANK just a bank - I consider them friends. Talk to any of them and I can almost guarantee you’ll walk out a new customer.” Andrew Wlodarczyk, Operations Manager Woody’s Brewing Company started with a passion for brewing (and consuming) beer and has turned into one of Redding’s most beloved spots for delicious food and great beer. Family-owned, family-brewed and fnely-crafted, Woody’s Brewing Company earned the title of the Best of North State’s Best Bar in 2020. 38 FIVE STAR BANCORP - Annual Report 2021N O N - P R O F I T : CapRadio “FIVE STAR BANK has been a catalyst for our growth over the last 12 years and has been instrumental in keeping us whole during the most challenging times.” Jun Reina, General Manager CapRadio is a trusted and indispensable source of information, music and entertainment while strengthening the civic and cultural life of the Greater Sacramento Region. Over 470,000 listeners tune into classical, jazz, news and public afairs programming each week on one of CapRadio’s seven National Public Radio (NPR) stations serving California’s Central Valley and the Sierra Nevadas. 40 FIVE STAR BANCORP - Annual Report 2021 S M A L L B U S I N E S S : Rytina Fine Cleaners “It is during the tough times that I have learned who really has our back... FIVE STAR BANK has ours!” Katie Brown, Owner Rytina Fine Cleaners is a third-generation, family-owned business ofering more than 60 years of expertise in caring for Sacramento’s fnest fashions. From garment care and laundering to alterations and specialty items, Rytina ofers couture level service and quality to every textile that passes through their doors. 42 FIVE STAR BANCORP - Annual Report 2021A G R I C U LT U R E & A G T E C H N O L O G Y: Millennium Farms “Our family has been involved in farming for nearly 50 years and has dealt with many banks. We appreciate the speed and quality of service provided by FIVE STAR BANK. They are up front regarding what they can and can’t do, and unlike other banks, they get the job done in a timely fashion and often faster than promised.” Gurvinder Pamma and Amar Pamma, Owners Millennium Farms has been growing and harvesting walnuts, almonds, prunes and peaches for nearly 50 years. The family-owned and operated farm spans over 2,500 acres in Live Oak, California, and provides delicious, fresh produce to the Greater Sacramento Region. 44 FIVE STAR BANCORP - Annual Report 2021S M A L L B U S I N E S S : Fizz Champagne & Bubbles Bar “FIVE STAR BANK doesn’t just talk the talk or walk the walk... they run the race with you! They are the bank of the entrepreneur, the small business, the dreamer, and I couldn’t be more honored to have created a lifelong banking partnership and friendship with them.” Raymond James Irwin, Chief Champagne Officer, 2020 SBA Sacramento District Entrepreneur of the Year Fizz is a champagne bar with more than 150 diferent champagnes and sparkling wines. They are located in the heart of Downtown Sacramento and help their customers celebrate the smallest wins and the biggest life events. 46 FIVE STAR BANCORP - Annual Report 2021 N O N - P R O F I T : SMUD Museum of Science and Curiosity “The best way to describe FIVE STAR BANK is community champions! Their leadership and staf are committed to lending their expertise to support our community in challenging times and help our community thrive in good times. “ Shahnaz Van Deventer, Director of Marketing & Development The SMUD Museum of Science and Curiosity (MOSAC) is a dynamic epicenter for science, technology, engineering, arts and math education and an anchor point for Sacramento’s revitalized waterfront. MOSAC serves as a regional hub that engages and inspires people of all ages to explore the wonders, possibilities and responsibilities of science. 48 FIVE STAR BANCORP - Annual Report 2021V E N T U R E B A N K I N G , T E C H N O L O G Y & S TA R T- U P : Growth Factory “Our family of companies proudly banks with FIVE STAR BANK. Together, we are a winning combination for entrepreneurship.” Mark Haney, Founding Partner The Growth Factory is a non-proft pre-seed accelerator and accompanying venture capital fund on a mission to scale great companies in the Greater Sacramento Region. Designed for highly-motivated, action- oriented entrepreneurs, Growth Factory helps companies through 12 months of structured support. 50 FIVE STAR BANCORP - Annual Report 2021C O N S T R U C T I O N | N O N - P R O F I T : Sacramento Regional Builders Exchange (SRBX) “FIVE STAR BANK is not just our bank. They are a key partner in helping us serve the Capital Region’s commercial construction industry.” Tim Murphy, CEO Founded in 1901, Sacramento Regional Builders Exchange is the construction industry’s oldest and largest association in the region. Members include contractors and subcontractors, suppliers and industry support organizations. SRBX provides education programs, safety programs, bidding information, political advocacy, networking opportunities and other related information and events for the construction industry. 52 FIVE STAR BANCORP - Annual Report 2021 P R O F E S S I O N A L S E R V I C E S & P R A C T I C E : Pacific Staffing “Pacifc Stafng sincerely appreciates FIVE STAR BANK’s customer service, attention to detail and accountability. We look forward to doing business with them for years to come.” Preet Kaur, CEO For more than 30 years, Pacific Staffing has helped Northern California hire better, staff more efficiently and find more rewarding jobs. They are a trusted partner for their clients and candidates because of their innovative approach to staffing. They focus on the details and bring success to both employers and job seekers. 54 FIVE STAR BANCORP - Annual Report 2021 G O V E R N M E N T : El Dorado Hills Community Services District “FIVE STAR BANK epitomizes a value-add business relationship that goes beyond to the point of a partnership. They are equipped with all the big-time banking tools and resources, while never losing sight of the meaningfulness of relationship building.” Kevin Loewen, General Manager The El Dorado Hills Community Services District (CSD) serves a large, densely developed suburban population located east of the Sacramento County line and mostly north of Highway 50. The CSD owns and manages approximately 535 acres of land including 254 acres of parks and 281 acres of open space. Their mission is to improve the quality of life for the El Dorado Hills community through responsible leadership and by providing superior services and facilities. 56 FIVE STAR BANCORP - Annual Report 2021C O M M E R C I A L & I N D U S T R I A L B U S I N E S S : General Produce “FIVE STAR BANK makes you feel like you are the most important customer in the world to them. Moving to Five Star Bank was an easy decision.” Thomas Chan and Dan Chan, Owners General Produce is a third-generation, locally-owned and operated fresh produce company located in Northern California. They distribute fresh fruits and vegetables that are local, organic, sustainable, regional and globally sourced. General Produce plays an integral part in stocking grocery store shelves with fresh produce and also provides produce to hotels, restaurants, caterers and schools. 58 FIVE STAR BANCORP - Annual Report 2021N O N - P R O F I T : National Federation of Independent Business (NFIB) California “FIVE STAR BANK has superior banking services, team members and programs to serve our number one job creators - small businesses - and so many others throughout our communities.” John Kabateck, President, Kabateck Strategies and CA State Director, NFIB CA The National Federation of Independent Business (NFIB) California is the voice of small business, advocating on behalf of America’s small and independent business owners. When a big issue afects small and independent businesses, NFIB is there. For the past 75 years, NFIB has advocated on the most pressing small business issues, such as taxes, healthcare and regulations. 60 FIVE STAR BANCORP - Annual Report 2021P R O F E S S I O N A L S E R V I C E S & P R A C T I C E : Group Concepts “Moving my bank accounts to FIVE STAR BANK was one of the best decisions I have made as a business owner. I highly recommend Five Star Bank to any business!” Andrea Casillas, Owner & President Group Concepts is a seasoned association management company, serving trade associations with sound and proftable membership services since 1976. They specialize in leveraging technology to increase efciency in volunteer organizations. Group Concepts provides fnancial management, member services, executive oversight, marketing, professional development, and conference planning to not-for-proft trade associations. 62 FIVE STAR BANCORP - Annual Report 2021 B U S I N E S S - A U T O D E A L E R S H I P : Maita Automotive Group “FIVE STAR BANK has provided a new level of customer service to the Maita Automotive Group. They streamlined our banking processes, added efciencies and provided resources that have been extremely benefcial to our operations, but it is their ongoing speed to serve and responsiveness that is truly impressive.” Steve Maita, Owner The Maita Automotive Group is a family-owned dealership and an integral part of the community. They provide the vehicles that their customers need without jeopardizing their customers’ budgets or long-term fnancial goals. 64 FIVE STAR BANCORP - Annual Report 2021CONTEN TS PAGE CONTENT 68 71 75 78 89 95 The Entrepreneur’s Bank & Overview of Business Verticals Financial Summary Additional Information Community Reinvestment Executive Leadership Board of Directors 100 Core Values 102 Locations 67 FIVE STAR BANCORP - Annual Report 2021 The Entrepreneur’s Bank Five Star Bancorp recognizes entrepreneurs are the foundation of a strong and growing economy. Whether a business is just getting started or is a thriving enterprise, we are committed and compassionate bankers ready to serve. This commitment is authentic and meaningful and has resulted in Five Star Bancorp earning a high level of trust among our clients. Further, the depth and scope of our expertise in specifc verticals ensure our clients are provided a greater level of service than our competitors can provide. Agriculture & Ag Tech We have a long history and extensive experience fnancing agricultural operations throughout California. We help farmers, ranchers and growers with irrigation, agriculture development, land clearing and leveling, agriculture real estate, livestock and dairy, crop loans, equipment fnancing and more. We also serve customers with vineyards and wineries. Business Lending Five Star Bancorp helps clients by providing specialized business fnancing products, including lines of credit, term loans, equipment leasing, business vehicle loans and more. We also ofer a full suite of treasury solutions including receivables, payables and liquidity management. Commercial Real Estate & Construction In 1999, we were founded to serve the commercial real estate industry. Today, our vast market knowledge serves developers and brokers through loan programs that assist with the purchase or refnance of general-purpose, owner- occupied and investment properties for both commercial and industrial real estate. Our expertise includes commercial ofce buildings, industrial warehouses, industrial manufacturing facilities and retail shopping centers. Faith Community Our experienced, trusted and highly respected team has provided fnancial tools to pastors and church administrators for over 30 years. Widely known as leaders in faith banking innovation, Five Star Bancorp ensures our faith partners can focus on what they do best by serving others. 68 FIVE STAR BANCORP - Annual Report 2021 Government We fully support public entities and their critical role in our communities by ensuring they meet the three priorities of managing public funds: Safety, Liquidity and Yield. As a trusted partner, we help reduce costs, increase interest earnings and improve efciency. Manufactured Housing, RV & Self Storage Five Star Bancorp is widely regarded as a leader in manufactured housing lending, providing fnancial tools to the manufactured housing community (MHC) and RV park owners and operators nationwide. We fnance the land, not the homes themselves. While we work with MHC owners and operators, we understand our clients often provide opportunity for home ownership for many while also serving as critical workforce housing. Non-profit As community stewards with extensive experience working with non-profts, we know cost-efective banking services are vital to successfully managing cash fow and maximizing return. Our commitment to our non-proft clients goes beyond simply providing banking services. As a long-time supporter of many local non-proft organizations, we understand the unique fnancial challenges of the modern charitable institution. Practice & Professional Services Five Star Bancorp takes our clients’ professional practices to the next level. Every day, we provide clients with access to capital and customized banking solutions to create successful medical, veterinarian, dental, legal and accounting practices and more. Whether our clients are acquiring, buying-in, selling or expanding their business, we advise them on a path of sustainable success. We also provide law frms, accounting frms and other professional services providers with cost-efective and efcient banking services. Small Business Administration (SBA) Five Star Bancorp has consistently been named among the top producing SBA lenders in the nation. Ensuring small business owners have the support, resources and capital to build successful companies is embedded in our mission and culture. We also provide loans to minorities, women and veterans, in cities and rural communities. Our SBA Department manages loans from our own originations and works with several wholesale partners. Venture Banking, Technology & Start-Up Entrepreneurs need a partner who understands their industry, business model, investment requirements and banking needs. We are the only bank in our market dedicated to emerging business. In 2021, we were a founding launch partner of the Sacramento Business Journal’s Sacramento Inno web platform which covers our region’s innovation economy. We are the creator of Five Star Bank Tank which brings together start-ups with investors. We are also a partner of Growth Factory which helps accelerate companies in our region. 69 FIVE STAR BANCORP - Annual Report 2021 2021 Financial Summary Consolidated Statements of Income in thousands, except per share data Year ended December 31, 2021 2020 Interest and dividend income Loans, including fees Taxable securities Nontaxable securities Interest-bearing deposits in other banks Interest expense Deposits Subordinated notes Net interest income Provision for loan losses Net interest income after provision for loan losses Non-interest income Service charges on deposit accounts Net gain on sales of securities Gain on sale of loans Loan-related fees Federal Home Loan Bank of San Francisco ("FHLB") stock dividends Earnings on bank-owned life insurance (“BOLI”) Other Non-interest expense Salaries and employee benefts Occupancy and equipment Data processing and software Federal Deposit Insurance Corporation insurance Professional services Advertising and promotional Loan-related expenses Other operating expenses Income before provision for income taxes Provision for income taxes Net income Basic earnings per share Diluted earnings per share $ $ $ $ See notes to consolidated fnancial statements in our Annual Report on Form 10-K. 78,894 1,321 821 547 81,583 2,199 1,773 3,972 77,611 1,700 75,911 424 724 4,082 639 372 237 802 7,280 19,825 1,938 2,494 700 3,792 1,300 1,045 4,949 36,043 47,148 4,707 42,441 2.83 2.83 $ $ $ $ 71,405 1,287 500 1,198 74,390 7,407 1,773 9,180 65,210 9,000 56,210 367 1,438 4,145 2,309 321 220 502 9,302 16,084 1,715 1,982 1,137 1,960 1,102 732 3,545 28,257 37,255 1,327 35,928 3.57 3.57 71 FIVE STAR BANCORP - Annual Report 2021Consolidated Balance Sheets in thousands, except share data Assets Cash and due from fnancial institutions Interest-bearing deposits in banks Cash and cash equivalents Time deposits in banks Securities available-for-sale, at fair value Securities held-to-maturity, at amortized cost (fair value of $5,197 and $8,755 at December 31, 2021 and December 31, 2020, respectively) Loans held for sale Loans held for investment, net of allowance for loan losses of $23,243 and $22,189 at December 31, 2021 and December 31, 2020, respectively FHLB stock Premises and equipment, net BOLI Interest receivable and other assets Total assets Liabilities and Shareholders’ Equity Deposits Non-interest-bearing Interest-bearing Total deposits Subordinated notes, net Interest payable and other liabilities Total liabilities Shareholders’ equity $ $ $ December 31, 2021 2020 $ 136,074 289,255 425,329 14,464 148,807 4,946 10,671 1,911,217 6,723 1,773 11,203 21,628 2,556,761 $ 902,118 $ 1,383,772 2,285,890 28,386 7,439 2,321,715 46,028 244,465 290,493 23,705 114,949 7,979 4,820 1,480,970 6,232 1,663 8,662 14,292 1,953,765 701,079 1,082,922 1,784,001 28,320 7,669 1,819,990 Preferred stock, no par value; 10,000,000 shares authorized; zero issued and outstanding at December 31, 2021 and December 31, 2020 _ _ Common stock, no par value; 100,000,000 shares authorized; 17,224,848 shares 218,444 110,082 issued and outstanding at December 31, 2021; 11,000,273 shares issued and outstanding at December 31, 2020 Retained earnings Accumulated other comprehensive (loss) income, net Total shareholders’ equity Total liabilities and shareholders’ equity 17,168 (566) 235,046 $ 2,556,761 $ 22,348 1,345 133,775 1,953,765 See notes to consolidated fnancial statements in our Annual Report on Form 10-K. 72 FIVE STAR BANCORP - Annual Report 2021 Consolidated Statements of Changes in Shareholders’ Equity in thousands, except share and per share data Common Stock Accumulated Other Comprehensive Income (Loss), Net $ Shares 9,674,875 _ _ 1,250,000 9,398 _ 16,000 50,000 _ Amount Retained Earnings of Taxes Total 96,114 _ _ 12,500 _ 316 252 900 _ $ 12,789 $ 35,928 _ _ _ _ _ _ (26,369) (26) _ 1,371 _ _ _ _ _ _ $ 108,877 35,928 1,371 12,500 _ 316 252 900 (26,369) Balance at December 31, 2019 Net income Other comprehensive income Stock ofering Stock issued under stock award plans Stock compensation expense Director stock compensation expense Common stock issued Cash dividends paid ($2.63 per share) Balance at December 31, 2020 11,000,273 $ 110,082 $ 22,348 $ 1,345 $ 133,775 Net income Other comprehensive loss Stock ofering Stock issued under stock award plans Stock compensation expense Director stock compensation expense Restricted stock forfeitures Reclassifcation of retained defcit Cash dividends paid ($4.55 per share) _ _ 6,054,750 132,707 _ 41,640 (4,522) _ _ _ _ 111,243 _ 594 846 _ (4,321) _ 42,441 _ _ _ _ _ _ 4,321 (51,942) _ (1,911) _ _ _ _ _ _ _ 42,441 (1,911) 111,243 _ 594 846 _ _ (51,942) Balance at December 31, 2021 17,224,848 $ 218,444 $ $17,168 $ (566) $ 235,046 See notes to consolidated fnancial statements in our Annual Report on Form 10-K. 73 FIVE STAR BANCORP - Annual Report 2021 Consolidated Statements of Cash Flows in thousands Cash fows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses Loans originated for sale Gain on sale of loans Proceeds from sale of loans Net gain on sale of securities Earnings on BOLI Stock compensation expense Director stock compensation expense Change in deferred loan fees Amortization and accretion of security premiums and discounts Amortization of subordinated notes issuance costs Depreciation and amortization Deferred taxes Net changes in: Interest receivable and other assets Interest payable and other liabilities Net cash provided by operating activities Cash fows from investing activities: Proceeds from sale of securities available-for-sale Maturities, prepayments and calls of securities available-for-sale Purchases of securities available-for-sale Increase (decrease) in time deposits in banks Loan originations, net of repayments Purchase of premises and equipment Purchase of FHLB stock Purchase of BOLI Net cash used in investing activities Cash fows from fnancing activities: Net change in deposits Proceeds from issuance of common stock FHLB repayment Cash dividends paid Net cash provided by fnancing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental disclosure of cash fow information: Interest paid Income taxes paid Supplemental disclosure of noncash investing and fnancing activities: Transfer from loans held for investment to loans held for sale Unrealized (loss) gain on securities Disposal of premises and equipment Reclassifcation of retained defcit See notes to consolidated fnancial statements in our Annual Report on Form 10-K. 74 Year ended December 31, 2021 2020 $ 42,441 $ 35,928 1,700 (48,169) (4,082) 43,024 (724) (237) 594 846 (1,689) 1,561 66 607 (4,001) (3,050) (230) 28,657 47,096 18,732 (99,686) 9,241 (426,882) (717) (491) (2,304) (455,011) 501,889 111,243 _ (51,942) 561,190 134,836 290,493 425,329 4,505 10,450 4,820 (2,199) 515 4,321 $ $ $ $ $ $ $ 9,000 (98,399) (4,145) 108,149 (1,438) (220) 316 252 2,367 1,138 67 461 (143) (3,548) 1,690 51,475 46,406 16,118 (97,571) (3,761) (330,837) (833) (1,152) (1,000) (372,630) 472,251 13,400 (25,000) (26,369) 434,282 113,127 177,366 290,493 $9,713 $1,655 $6,527 $1,422 _ _ $ $ $ $ $ $ $ FIVE STAR BANCORP - Annual Report 2021 Consolidated Statements of Comprehensive Income in thousands Year ended December 31, 2021 2020 Net income $ 42,441 $ Net unrealized holding (loss) gain on securities available-for-sale during the period Reclassifcation adjustment for net realized gains included in net income Income tax (beneft) expense related to other comprehensive (loss) income Other comprehensive (loss) income Total comprehensive income (1,475) (724) (288) (1,911) $ 40,530 $ 35,928 2,860 (1,438) 51 1,371 37,299 See notes to consolidated fnancial statements in our Annual Report on Form 10-K. Five Star Bancorp Common Stock The Company’s common stock, no par value per share, is traded on the Nasdaq Global Select Market under the symbol “FSBC.” As of December 31, 2021, there were 240 holders of record of the Company’s common stock. Additional Information and Where to Find It In accordance with the Securities Exchange Act of 1934 (Exchange Act), the Company fles annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and proxy statements for the annual meeting of shareholders, copies of which are also available in the Investor Relations section of our website at https://investors. fvestarbank.com/fnancial-information/sec-flings, or upon written request to us at Corporate Secretary, Five Star Bancorp, 3100 Zinfandel Drive, Suite 100, Rancho Cordova, California 95670. Forward – Looking Statements This document 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 identifed 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 difer 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 afect the Company. If one or more of the factors afecting the Company’s forward-looking information and statements proves incorrect, then the Company’s actual results, performance or achievements could difer materially from those expressed in, or implied by, forward-looking information and statements contained in this document. 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 difer 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 fled 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 refect actual results or changes in the factors afecting the forward-looking statements, except as specifcally required by law. 75 FIVE STAR BANCORP - Annual Report 2021 We believe in action over words and recognize it is the effort of our entire team that allows us to donate, volunteer, engage and lead. Community Reinvestment At Five Star Bancorp, we seize opportunities, embrace challenges and value the intrinsic reward of serving others. It is our hope you fully understand our commitment extends to our community’s most vulnerable, under-resourced and underrepresented. As such, we are also committed to a robust Community Reinvestment Act Program (CRA) and are grateful to be a source of strength for our clients and advocates for our community and our region’s non-profts. Non-profit & Economic Impact Five Star Bancorp is extensively engaged with a wide range of non-profts and economic development corporations in the communities we serve through direct charitable giving and through active board engagement. Our executive team members serve on numerous non-proft boards of directors, including 3Strands Global Foundation, the Sacramento Hispanic Chamber of Commerce, the Sacramento Black Chamber of Commerce, the Asian Pacifc Chamber of Commerce, Sacramento Regional Conservation Corps, Sacramento Food Bank & Family Services, Project R.I.D.E. and the American River Parkway Foundation. In 2021, we made donations to non-profts to soften the continued impact of COVID-19. We also led a regional fundraising campaign in support of the Salvation Army’s Del Oro division to help those afected by Northern California’s wildfres. We continued our commitment to educational initiatives as mentors, funders and advocates, including Cristo Rey High School Sacramento, City Year Sacramento and more. We support the meaningful work of those who serve students from low-to-moderate income communities who have little fnancial and emotional support. Education Supporting educational institutions is critically important to us. Five Star Bancorp supports robust educational programs at the elementary school, high school, college and university levels. Cristo Rey High School Sacramento Cristo Rey High School transforms lives by providing college preparatory education and professional work experience to high school students with limited fnancial and emotional support. The school’s vision is to create the most efective and highly regarded high school that transforms underserved students into faith-flled, educated, professional and service- oriented people through work experience programs. City Year Sacramento City Year partners with schools and school districts across the United States to create positive learning environments that beneft the entire school community. In 2021, Five Star Bancorp helped fund a City Year AmeriCorps member who served as a student success coach, supporting the development, growth and success of students while cultivating skills to be leaders in their communities and successful in their careers. 78 FIVE STAR BANCORP - Annual Report 2021 The Sacramento State University Business Honors Program The Sacramento State University Business Honors Program immerses students in an exceptional learning experience through cohort groups and prepares them to become highly qualifed managers through a cross-functional and integrated program. Our employees also teach classes on business marketing. When the program was on the verge of being closed due to budget cuts, Five Star Bancorp stepped in to sponsor the cohort from 2017 to 2024. University of the Pacifc Five Star Bancorp underwrites University of the Pacifc’s Leadership Development Program and the Five Star Bank Leadership Fund which provide fnancial support to students. Our employees present leadership development webinars and have regularly taught as visiting lecturers. University of California, Davis The Five Star Bank Athletes in Business Group serves student athletes interested in careers in banking or fnance and provides opportunities for employees to interact with students while providing insight into transitioning from college to the workforce. Women in Business The Company recognizes the impact of connecting, supporting and celebrating women in business which leads to the expansion of our client base. This also infuences our customers’ success while creating brand loyalty (and advocacy) that translate to revenue. The Company’s support of women in business also positively afects corporate culture by promoting authentic, meaningful and mutually benefcial business relationships. Affordable Housing Five Star Bancorp provided fnancing for multifamily rental properties in low-to-moderate income census tracts that beneft the residents. The Company also provided fnancing to a non-proft organization that ofers low-income housing to college students in the Sacramento region. The Company also invests in mortgage-backed securities that support low-to-moderate income homeowners. Chambers of Commerce In 2021, Five Star Bancorp funded a Program Manager position for the Sacramento Asian Pacifc Chamber of Commerce’s Connecting Diverse Communities Program (CDCP) through a donation of $60,000. This donation funded the salary of a Project Manager who connected minority-owned businesses with funding opportunities to support their business, including but not limited to, government funding, capital resources and business coaching. 79 FIVE STAR BANCORP - Annual Report 2021 “I see what FIVE STAR BANK does for other women-owned businesses like mine and I’m blown away by the love and care. I’m grateful that I have Five Star Bank in my corner!” Kellie DeMarco, President Kellie DeMarco Communications WO MEN IN BU SI NESS 80 FIVE STAR BANCORP - Annual Report 2021 “FIVE STAR BANK has taken business banking to the next level. From the very frst call through our banking transition and ongoing business needs, we could not be happier with our relationship with Five Star Bank.” Michelle Shipman, Founder & CEO SearchLight Properties 81 FIVE STAR BANCORP - Annual Report 2021 “We are so grateful to FIVE STAR BANK for being long term supporters and advocates for Corpsmembers and the work of the SRCC.” Paula Birdsong, Executive Director Sacramento Regional Conservation Corps NON-PR OFIT 82 FIVE STAR BANCORP - Annual Report 2021 “It is critical that we have a relationship with our fnancial institution. Our relationship with FIVE STAR BANK has been incredible. They care about the community and about our mission and the people we serve.” Blake Young, President & CEO Sacramento Food Bank & Family Services 83 FIVE STAR BANCORP - Annual Report 2021 Five Star Bank is committed to the vision and mission of the Sacramento Hispanic Chamber of Commerce and is very pleased to announce our SVP, Chief Operations Officer & Chief DE&I Officer, Lydia Ramirez, will assume the role of SHCC Board Chair in 2021! Cathy Rodriguez Aguirre, President & CEO, SHCC pictured with Lydia Ramirez CHAM BERS OF COMMERCE 84 FIVE STAR BANCORP - Annual Report 2021 “The Sacramento Asian Pacific Chamber of Commerce is pleased to present Five Star Bank with the 2021Corporate Steward Award! We are grateful to work with community partners like Five Star Bank who advocate for the strength, resilience and vitality of our region’s businesses.” Pat Fong Kushida, President & CEO Sacramento Asian Pacifc Chamber of Commerce (Pat Fong Kushida pictured with James Beckwith) 85 FIVE STAR BANCORP - Annual Report 2021 “Five Star Bank is an extraordinary supporter of the Business Honors Cohort. The close partnership we enjoy connects our students with businesses and brings new perspective and innovative best practices to our classrooms.” Dr. Pingsheng Tong, Faculty Director, Business Honors Program “Five Star Bank was one of the frst corporate partners to recognize the impact that the Aggie Evolution System (EVO) has. Their generosity, wisdom and partnership are enormous contributors to our ability to help student athletes better know and navigate the world of work.” Dr. Michael Lorenzen, Executive Director, EVO “Students who engage with Five Star Bank are inspired and motivated. Beyond elevating leadership skills, this partnership is boosting students’ confdence in approaching their careers in an unusually difcult economic environment. We are excited to collaborate in the development of future business leaders with Five Star Bank’s exceptional team.” Margaret Roberts, Director, Eberhardt Career Management Center “Five Star Bank has been an incredible partner to City Year Sacramento and has a deep commitment to the communities we serve. Thank you, Five Star Bank, for being a champion of City Year.” Jef Owen, Executive Director, City Year Sacramento EDUC ATION 86 FIVE STAR BANCORP - Annual Report 2021 “Our mission is to educate and prepare young people for college and our region’s workforce. Paola Jimenez represents this mission come to fruition! Paola is a Cristo Rey High School graduate and a member of the Five Star Bank team - one of our Work Study partners. As we prepare for the coming school year, we celebrate our students and the support we receive from our community. Cristo Rey really is the school that works.“ ~David Perry, Ed.D., President, Cristo Rey High School Sacramento Pictured left to right: David Perry, Ed.D., President, Cristo Rey High School Sacramento; Paola Jimenez, Treasury Specialist, Five Star Bank; Tracy Beckwith, 2020-22 Board Chair, Cristo Rey High School Sacramento 87 FIVE STAR BANCORP - Annual Report 2021 Executive Leadership Executive Leadership James Beckwith President & CEO With nearly 30 years of experience, Mr. Beckwith serves as our President and Chief Executive Ofcer and is a member of our board of directors. Mr. Beckwith joined Five Star Bank in 2003. He is deeply connected to the Sacramento community and has chaired several community- based organizations which include the Sacramento Metro Chamber of Commerce, Valley Vision, and KVIE (the local PBS afliate). Mr. Beckwith is currently the Chair of the Western Bankers Association, a Private Sector Director with the Greater Sacramento Economic Council, and a member of the Sacramento State University College of Business Advisory Council. Mr. Beckwith previously served as Chief Financial Ofcer and Chief Operating Ofcer of National Bank of the Redwoods in Santa Rosa, California. He graduated from San Francisco State University with a Bachelor of Science degree in Business Administration with a concentration in Accounting. He is also a graduate of Pacifc Coast Banking School at the University of Washington where he was class president. Recently, Mr. Beckwith was recognized by the Sacramento Metro Chamber of Commerce as the Businessman of the Year in 2020, and he was named among the Most Admired CEOs of 2020 by the Sacramento Business Journal. Jack Dalton Senior Vice President, Chief Credit Ofcer Mr. Dalton joined Five Star Bank as Senior Vice President and Chief Credit Ofcer in 2011. He has more than 41 years of experience in the lending and banking industry. Prior to joining us, Mr. Dalton started his lending career with the Farm Credit System in 1980 as a Credit Analyst, then transitioned into roles as a Loan Ofcer, Branch Manager and Senior Vice President and Senior Lender. In 1991, Mr. Dalton moved to Stockmans Bank as their Senior Vice President and Chief Credit Ofcer. Through a merger in 2008, he later served as Senior Vice President and Region Credit Administrator at PremierWest Bank. Mr. Dalton currently serves on the Sacramento Metro-PAC board of directors and is a member of the District 3 Grower Liaison Committee for Blue Diamond. He is also a member of the Sacramento Sutter Club’s Member Service Committee. Mr. Dalton serves on the board of Project R.I.D.E., a nonproft organization based in Elk Grove, California that provides those with disabilities with therapeutic horseback riding. Mr. Dalton graduated from California Polytechnic State University, San Luis Obispo, with a Bachelor of Science degree in Animal Science. 89 FIVE STAR BANCORP - Annual Report 2021 Executive Leadership Mike Lee Senior Vice President, Chief Regulatory Ofcer Heather Luck Senior Vice President, Chief Financial Ofcer Mr. Lee has served as our Senior Vice President and Chief Regulatory Ofcer since 2010. He joined us in 2005 as Chief Financial Ofcer after serving over 14 years with the Federal Deposit Insurance Corporation. He later transitioned to the position of Chief Credit Ofcer in 2007 and served in that position until being appointed Chief Regulatory Ofcer in 2010. Mr. Lee graduated from Midwestern State University in Texas with a Bachelor of Business Administration degree with a concentration in Economics. He graduated with honors from the Pacifc Coast Banking School at the University of Washington. He serves on the boards of directors of the Sacramento Asian Pacifc Chamber of Commerce and the Sacramento Regional Conservation Corps. Ms. Luck serves as our Senior Vice President and Chief Financial Ofcer, a position she has held since February 2021. She frst joined Five Star Bank in October 2018 as Vice President and Director of Finance. Prior to this, she was a Manager in Assurance Services for Ernst & Young, LLP from 2010 through 2017 where she led multiple audit engagements simultaneously, including coordination with tax, valuation, and other specialist groups required to achieve audit objectives in accordance with standards enumerated by the PCAOB and American Institute of Certifed Public Accountants. Her audit experience at Ernst & Young, LLP comprised of work within several industries including manufacturing, real estate, technology, media and entertainment, and telecommunications. Ms. Luck’s client portfolio included multinational SEC registrants, private issuers, and sub-orders. She then served as Senior Assistant Controller- Global Business Units and Mergers & Acquisitions at Oracle from March 2018 until September 2018 where she was responsible for overseeing the integration of general ledgers of newly acquired entities onto the Oracle Cloud Platform, which included ensuring compliance with accounting policies and intercompany eliminations. Ms. Luck earned a Bachelor of Science degree in Marketing from the University of Utah and earned a Master of Science degree in Accounting and Finance from the University of Maryland Global Campus. She is a licensed Certifed Public Accountant in the state of California and is currently a student at Pacifc Coast Banking School at the University of Washington. 90 FIVE STAR BANCORP - Annual Report 2021Executive Leadership Michael Rizzo Senior Vice President, Chief Banking Ofcer Mr. Rizzo joined Five Star Bank in 2005 as Senior Vice President and Business Development Ofcer. He helped establish our business banking practice and developed commercial real estate loans. He opened our de novo Rancho Cordova ofce in June 2006. As of January 2017, he serves as our Senior Vice President and Chief Banking Ofcer, supporting and managing the bank’s team of Business Development Ofcers. As of January 2021, Mr. Rizzo also oversees our SBA division. He earned a Bachelor of Science degree in Business Administration with a concentration in Finance from California State University, Sacramento. He is also a graduate of Pacifc Coast Banking School at the University of Washington. Mr. Rizzo currently serves as Board Chair of the American River Parkway Foundation. Lydia Ramirez Senior Vice President, Chief Operations Ofcer & Chief DE&I Ofcer Ms. Ramirez serves as Senior Vice President and Chief Operations Ofcer and Chief DE&I Ofcer, a position she has held since 2021. She previously served as Senior Vice President and Director of Operations from 2018 to 2021 and as Senior Vice President and Director of Branch Administration from 2017 to 2018. Ms. Ramirez has over 16 years of experience in senior-level banking and is skilled in strategic operational processes and sales management. Before joining us, she served as Vice President and Multi-Branch Manager at MUFG Union Bank from 2010 to 2017 where she implemented and steered sales activities, developed a team to act as trusted client advisors, and provided leadership on operational integrity and compliance awareness. Ms. Ramirez graduated from the University of California, Davis, with a Bachelor of Science degree in Psychology and Bachelor of Arts degree in Spanish. She is a member of the UC Davis Alumni Association Board. She recently graduated from California State University, Sacramento, with a Master of Business Administration degree. Ms. Ramirez is also a graduate of CBA Executive Banking School. She is the Chair of the board of directors and a member of the executive committee of the Sacramento Hispanic Chamber of Commerce. She also serves on the boards of directors of the Sacramento Black Chamber of Commerce, the Sacramento Food Bank & Family Services, and the North Natomas Little League. 91 FIVE STAR BANCORP - Annual Report 2021Executive Leadership Brett Wait Senior Vice President, Chief Information Ofcer Shelley Wetton Senior Vice President, Chief Marketing Ofcer Mr. Wait frst joined Five Star Bank in 2011 and currently serves as Senior Vice President and Chief Information Ofcer, a position he has held since 2018. He has over 15 years of community bank experience and information technology fuency and served in various roles with us including Operations Ofcer from 2011 to 2013, Vice President and Technology & Operations Manager from 2013 to 2015, and Senior Vice President and Chief Operating Ofcer from 2015 to 2017. He also served as Chief Information Ofcer of River City Bank from 2017 to 2018 where he was responsible for overseeing information technology, information security, and data analytics, before rejoining us in his current position in 2018. Mr. Wait graduated from the University of Wisconsin - Whitewater with a Bachelor of Business Administration degree in Finance. He also holds a Master of Business Administration degree from California State University, Sacramento. Ms. Wetton has served as Senior Vice President and Chief Marketing Ofcer, since 2018, after frst joining Five Star Bank in 2015 as Vice President, Community Relations and Communications. She has 25 years of corporate branding, media relations, and strategic marketing expertise. She previously served as Vice President of Corporate Communications at The Buzz Oates Group of Companies where she worked for Buzz Oates for over 15 years and until his passing in 2013. She has worked closely with our board of directors since our inception in 1999. Ms. Wetton is responsible for strategic branding initiatives and leads all marketing and branding eforts. She is also responsible for corporate partnerships and corporate giving. Ms. Wetton earned her Bachelor of Arts and Master of Arts degrees in English from California State University, Sacramento. She is a graduate of the Sacramento Metro Chamber Foundation’s 2018 Leadership Sacramento class. She currently serves on the board of directors of 3Strands Global Foundation. She recently served on the Board of Trustees of the Leukemia & Lymphoma Society from 2017 to 2020. 92 FIVE STAR BANCORP - Annual Report 2021 Board of Directors Board of Directors David J. Lucchetti, Chairperson of the Board Mr. Lucchetti serves as Chairperson of the board of directors, a position he has held since May of 2019. Mr. Lucchetti currently serves as the Executive Chairman of the board of directors of Pacifc Coast Building Products, Inc. He also previously served as the President and Chief Executive Ofcer of Pacifc Coast Building Products, Inc., from 1979 and 1988, respectively, until his retirement in 2021, after originally joining the company in 1970. Mr. Lucchetti also serves on the board of directors and executive committee of the Greater Sacramento Economic Council. He has been a member of the California State University Sacramento Business Advisory Board and a member of the boards of trustees of the Sacramento Regional Foundation and Sacramento Neighborhood Housing Service. He previously served as a gubernatorial appointee to the Contractors State License Board. He has also previously served on numerous charitable foundations. Mr. Lucchetti is a member of the Governance and Nominating Committee. David F. Nickum, Vice Chairperson of the Board Mr. Nickum serves as Vice Chairperson of the board of directors, a position he has held since May of 2019. Since 2010, Mr. Nickum has served as Owner and President of Waveco, Inc. d.b.a. Valley Farm Transport, Inc., one of the largest agricultural trucking companies in the United States, after being employed there in various capacities since 1988. Mr. Nickum is a past chairperson of Make-A-Wish Foundation of Northeastern and Central California and Northern Nevada, a former board member of St. Michael’s Episcopal Day School, and a past board member of Tesco Controls, Inc. Mr. Nickum is also a member of Cal Poly College of Agriculture, Food, and Environmental Sciences’ Dean’s Advisory Council. Larry Allbaugh, Board Member Mr. Allbaugh has served as an executive of Buzz Oates Commercial Real Estate since 1990, serving as Chief Executive Ofcer for the past eleven years. Mr. Allbaugh serves on the board of directors of Teichert Inc. and serves as Chair of its Audit Committee. He also serves on the boards of directors of the Greater Sacramento Economic Council as its Vice Chair and the Marvin Buzz Oates Charitable Foundation as a founding director. He is active in multiple charitable and faith-based activities locally and internationally. Mr. Allbaugh is the Chairperson of the Governance and Nominating Committee. 95 FIVE STAR BANCORP - Annual Report 2021 Board of Directors James Beckwith, President, Chief Executive Ofcer and Board Member With nearly 30 years of experience, Mr. Beckwith serves as our President and Chief Executive Ofcer and is a member of our board of directors. Mr. Beckwith joined Five Star Bank in 2003. He is deeply connected to the Sacramento community and has chaired several community-based organizations which include the Sacramento Metro Chamber of Commerce, Valley Vision, and KVIE (the local PBS afliate). Mr. Beckwith is currently the Chair of the Western Bankers Association, a Private Sector Director with the Greater Sacramento Economic Council, and a member of the Sacramento State University College of Business Advisory Council. Mr. Beckwith previously served as Chief Financial Ofcer and Chief Operating Ofcer of National Bank of the Redwoods in Santa Rosa, California. He graduated from San Francisco State University with a Bachelor of Science degree in Business Administration with a concentration in Accounting. He is also a graduate of Pacifc Coast Banking School at the University of Washington where he was class president. Recently, Mr. Beckwith was recognized by the Sacramento Metro Chamber of Commerce as the Businessman of the Year in 2020, and he was named among the Most Admired CEOs of 2020 by the Sacramento Business Journal. Michael Campbell, Board Member Mr. Campbell served as a Partner at Ernst & Young, LLP, an international accounting frm, in the Seattle, Washington ofce from 1971 to 1994. From 1994 to 2004, Mr. Campbell served as Chief Financial Ofcer at Surewest Communications (Nasdaq: SURW), a publicly traded telecommunications company, directing all accounting, fnance, audit, regulatory, external afairs, investor relations, human resources and administrative service functions for the corporation and each of its subsidiaries. He then served as Chief Executive Ofcer of the California Trucking Association from 2005 until his retirement in 2013. Shannon Deary-Bell, Board Member Ms. Deary-Bell serves as President and Chief Executive Ofcer of Nor-Cal Beverage, a position she has held since 2010. She has held several positions in her more than 30 years of service at Nor-Cal Beverage, including positions in the food service and vending divisions, Assistant Manager of the Sacramento Vending Department, Branch Manager of the Stockton facility, and Executive Vice President of Operations. Ms. Deary-Bell has been an active member of the Women Business Leaders of Sacramento since 2015, a member of the Sacramento Host Committee, and a member of Vistage, a CEO coaching and peer advisory organization, since 2013. Ms. Deary-Bell serves on the board of directors of Nor-Cal Beverage and served on the Jesuit High School board of directors for six years. Ms. Deary-Bell is a member of the Governance and Nominating Committee. 96 FIVE STAR BANCORP - Annual Report 2021Board of Directors Warren Kashiwagi, Board Member Mr. Kashiwagi has over 40 years of professional public accounting experience. A retired certifed public accountant, he has advised, counseled, and represented various businesses in tax planning and compliance, business succession planning, strategic planning, and merger and acquisition consulting. From 2011 to 2017, Mr. Kashiwagi was a tax partner with Crowe Horwath, LLP. Prior to that role, he was a tax partner with Perry-Smith LLP from 1988 to 2011. Mr. Kashiwagi has served on the boards of directors of the Sacramento Metropolitan Chamber of Commerce, the California Asian Pacifc Chamber of Commerce, the Los Rios Colleges Foundation, and the Crocker Art Museum. He also served as Board Chair of Sutter Community Hospitals and as Board President of the Sacramento Japanese American Citizens League. Mr. Kashiwagi is a member of the Audit Committee. Donna Lucas, Board Member Ms. Lucas has been the President and Chief Executive Ofcer of Lucas Public Afairs since its opening in 2006. Ms. Lucas served as Deputy Chief of Staf for strategic planning and initiatives for Governor Arnold Schwarzenegger and Chief of Staf for First Lady Maria Shriver. Ms. Lucas was also the Deputy Press Secretary for Governor George Deukmejian, Deputy Treasurer for State Treasurer Tom Hayes, and California Press Secretary for the 1988 presidential campaign of then-Vice President George H.W. Bush. Ms. Lucas is a past Chair of the California Chamber of Commerce board of directors and the Maria Shriver’s Women’s Alzheimer’s Movement. She serves as the chair of the College Futures Foundation and is on the boards of directors of the Scripps Institution of Oceanography and John Burton Advocates for Youth. Ms. Lucas is also a member of the Statewide Leadership Council of the Public Policy Institute of California (PPIC) and was on the PPIC’s board of directors from 2007 to 2019, chairing the Board from 2013 to 2016. Ms. Lucas is a founding member of She Shares, a unique conversation series featuring trailblazing women leaders who have created a lasting impact on women in California and beyond. She was named by the Sacramento Metro Chamber of Commerce as the Sacramento Businesswoman of the Year in 2018. Robert T. Perry-Smith, Board Member Mr. Perry-Smith founded and served as Chief Executive Ofcer of Perry-Smith LLP, an accounting and consulting frm that provided professional services to the banking industry, primarily in California. Upon his retirement in 2013, Mr. Perry-Smith concluded his 40-year career as a certifed public accountant at both the national and regional levels, where he provided a number of professional services to the banking industry, specializing in audits, regulatory compliance, capital structures, and merger and acquisition services. Mr. Perry-Smith has been a frequent speaker at banking industry conferences and trade association meetings, including the Western Bankers Association. He is a member of the American Institute of Certifed Public Accountants and the California Society of Certifed Public Accountants. Mr. Perry-Smith has served on the board of directors of Presidio Bank, Sierra Vista Bank (as Chairman), and the Perry-Smith Foundation. Mr. Perry-Smith is the Chairperson of the Audit Committee and a member of the Compensation Committee. 97 FIVE STAR BANCORP - Annual Report 2021Board of Directors Kevin Ramos, Board Member Mr. Ramos is the Chief Investment Ofcer of Buzz Oates Commercial Real Estate, a position he has held since 1995, and Investment Committee Chairman of Pac West Industrial Equities, LP, a position he has held since 2017. He has 35 years of experience in the commercial real estate industry with specifc experience in fnance, entitlement, development, leasing, property management, investment, and asset management. He also currently serves on the board of directors of Saint John’s Program for Change and the Sacramento chapter of NAIOP, a national commercial real estate association. Mr. Ramos is a member of the Compensation Committee. Randall Reynoso, Board Member Mr. Reynoso has 40 years of banking experience, including serving as Executive Vice President of Wells Fargo Bank from 2007 until his retirement in 2020, leading the bank’s Business Banking for the San Francisco Bay Area and investor real estate for the nation and serving as Middle Market Banking Leader for Northern California. Prior to this, Mr. Reynoso served as President and Chief Operating Ofcer, and on the boards of directors, of both Placer Sierra Bancshares and Placer Sierra Bank. Additionally, Mr. Reynoso was instrumental in taking Placer Sierra Bank public in 2004 as well as facilitating the sale of the bank to Wells Fargo Bank in June 2007. A native of Sacramento, Mr. Reynoso has held leadership roles with numerous Northern California philanthropic organizations, including the San Francisco Opera Association, the San Francisco Travel Association, and the Zuckerberg San Francisco General Hospital. Past service includes leadership roles with the Sacramento Hispanic Chamber of Commerce, the Stanford Home for Children, the Mondavi Center for the Performing Arts, KVIE, the Nonproft Resource Center, and Naturebridge. Mr. Reynoso is a member of the Audit Committee. Judson Riggs, Board Member Mr. Riggs is the Chief Executive Ofcer and Chairman of Teichert Inc., positions he has held since 2003 and 2010, respectively. Mr. Riggs serves on the boards of directors of Teichert Inc., the Greater Sacramento Economic Council, the Host Committee, the Dean’s Advisory Council of the Graduate School of Management at University of California, Davis, and the Juvenile Justice Chaplaincy, and is the Vice Chair of the board of directors and Chair of the Finance Committee of PRIDE Industries. Mr. Riggs is the Chairperson of the Compensation Committee. Leigh White, Board Member Ms. White has over 30 years of experience in key positions in television broadcast management throughout the United States. From 2015 to 2020, Ms. White served as Vice President and General Manager of KTXL-TV in Sacramento, California (FOX, Tribune Broadcasting). In February of 2022, Ms. White joined Vydiant, Inc., as Chief Revenue Ofcer. Ms. White recently completed service as Board Chair of the Sacramento Metro Chamber of Commerce. In addition, she is a member of the Salvation Army board of directors and past Chair of its Public Relations/Marketing Committee. Ms. White recently joined the Capital City Airshow Board as Director. She is a graduate of the University of Minnesota with a Bachelor of Science degree in Applied Studies/Communications. She is also a graduate of Leadership Sacramento and Leadership Knoxville. She most recently graduated from the Saïd School of Business Digital Disruption Program at the University of Oxford in Oxford, England. She is currently pursuing her MBA in Finance at Louisiana State University. Retired: Phil Jofe, Retired 12/31/2021 98 FIVE STAR BANCORP - Annual Report 2021 CORE VALUES W e f o s t e r a s e n s e o f u r g e n c y t o w a r d t h o u g h t f u l a c t i o n . W e h i r e , r e t a i n a n d d e v e l o p c u s t o m e r - c e n t r i c t a l e n t . W e c r e a t e a c u l t u r e o f b e l o n g i n g a n d e n g a g e m e n t t h r o u g h a d i v e r s e a n d i n c l u s i v e w o r k f o r c e . W e e n g a g e w i t h o u r c o m m u n i t y f o r m u t u a l s u c c e s s t h r o u g h r e p r e s e n t a t i o n , i n n o v a t i o n a n d i n v e s t m e n t . W e f u l f i l l c o m m i t m e n t s a s p r o m i s e d , o n t i m e a n d w i t h t h e h i g h e s t s t a n d a r d s . W e s e r v e c u s t o m e r s a n d c o l l e a g u e s w i t h p r o f e s s i o n a l i s m a n d r e s p e c t . 101 FIVE STAR BANCORP - Annual Report 2021LOC ATIONS Chico Office Natomas Office Roseville Office 1370 E. Lassen Avenue, Suite 100 2400 Del Paso Road, Suite 100 2240 Douglas Boulevard, Suite 100 Chico, CA 95973 530.924.5121 Sacramento, CA 95834 916.640.1500 Roseville, CA 95661 916.626.5000 Downtown Sacramento Office (LPO) Rancho Cordova Office Santa Rosa Office (LPO) 555 Capitol Mall, Suite 985 3100 Zinfandel Drive, Suite 100 250 D Street, Suite 202 Sacramento, CA 95814 Rancho Cordova, CA 95670 Santa Rosa, CA 95404 916.306.1655 916.851.5440 707.292.0892 Elk Grove Office Redding Office Yuba City Office 9250 Laguna Springs Drive, Suite 102 358 Hartnell Avenue, Suite B 855 Harter Pkwy, Suite 350B Elk Grove, CA 95785 916.714.2444 Redding, CA 96002 530.223.6652 Yuba City, CA 95993 530.431.0950 2240 Douglas Blvd, Suite 100 Roseville, CA 95661 T: 916.626.5000 www.fivestarbank.com Five Star Bancorp maintains a healthy, sustainable environment through the responsible use of renewable resources. Printed on Forest Stewardship Council certifed paper. The FSC®’s mission is to promote environmentally sound, socially benefcial and economically prosperous management of the world’s forests. 

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