What Five Star Bancorp told the SEC could break it.

Real-estate-related loans represented roughly 86.07% of total loans at year-end 2025, a high concentration that amplifies exposure to real-estate-market and CRE downturns.

“we have a high concentration of real estate related loans, which represented approximately 86.07% of total loans before deferred fees at December 31, 2025.”

Because the bank's assets and liabilities are monetary, interest rates have a greater impact on performance than inflation, affecting loan/deposit pricing and net interest income.

“interest rates have a greater impact on our performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the price of goods or services.”

Substantially all of Five Star's customers are in California, with ~56.89% of real estate loans secured by California collateral (mostly Northern California), making it highly sensitive to that regional economy.

“substantially all of our customers are individuals and businesses located and doing business in the state of California. As of December 31, 2025, approximately 56.89% of our real estate loans measured by dollar amount were secured by collateral located in California, a majority of which is in Northern California.”

The 2023 DOJ merger guidelines impose more stringent concentration limits and qualitative bases to challenge bank mergers, potentially making Five Star's acquisition-driven growth harder or costlier to get approved.

“the 2023 Merger Guidelines set forth more stringent concentration limits and add several largely qualitative bases on which the DOJ may challenge a merger. While the effect of changes in the DOJ's bank merger antitrust policy for particular transactions remains unclear, the changes may make it more difficult and/or costly for us to obtain regulatory approval for an acquisition.”