The disruption that shook the banking industry in March 2023, including the failures of two prominent San Francisco banks as well as New York-based Signature Bank, resulted in a tremendous state of flux. Five Star Bancorp in Rancho Cordova, California, wasted no time exploiting it.
CEO James Beckwith “called me that Sunday night
Kurtze signed on as Five Star’s San Francisco Bay Area president in June 2023. Now one of his main tasks is to convince Bay Area businesses Five Star means business with its ambitious growth plans. Kurtze was quick to mention the bank signed a 10-year lease on its soon-to-open San Francisco branch, on California Street.
“At the end of the day, San Francisco is the heart of the Bay area,” Kurtze said. “There’s a lot of fantastic markets, and you need to capture all of them if you’re going to be a great Northern California bank. It starts in San Francisco.”
Other banks, to be sure, are laying their own expansion plans in San Francisco and the Bay Area. The Providence, Rhode Island-based Citizens Financial Group is
Few institutions, however, moved as quickly and dramatically toward that end as the $3.6 billion-asset Five Star, parent to Five Star Bank.
The company, which focused on its core, Sacramento-area markets throughout most of its 25-year history, has been working to expand in the Bay Area since
Kurtze described the offering proceeds as “extra fuel.”
“If we see [another] market opportunity, we’ll be able to go after it more aggressively than maybe we would have without the raise,” Kurtze said.
While the spate of bank failures in spring 2023 created a natural expansion opportunity for community banks eager to grow, problems in the San Francisco economy — crime, a housing shortage, a local recession — have acted as headwinds. Kurtze is convinced a rebound is inevitable, pointing to the Bay Area’s underlying economic strength. “Say what you will about the challenges San Francisco has had and is still working its way [through],” Kurtze said. “This area has been a place of innovation for decades. It’s always gotten out of every economic downturn really well, so I think there’s a huge opportunity.”
Scott Anderson, chief U.S. economist at BMO Capital Markets, indicated he agreed with Kurtze’s thesis “long-term,” though he added the market still hasn’t fully regained its economic footing. “Overall, we think the Bay Area will still lag the national economy in terms of job growth this year,” Anderson said in an interview. “It’s coming out of what was really a mild recession in 2023. … We actually had many months of negative job growth.”
In 2025, however, Anderson and BMO see regional job growth doubling to around 1%, housing starts returning to positive territory and personal and household income growing solidly.
“The Bay Area still has a tremendous amount going for it,” Anderson, who works from San Francisco, said. “The biggest tech companies in the world are based here, there’s still a vibrant venture capital and private equity environment, especially for technology. We’re starting to see the next wave of the technological revolution happening in terms of artificial intelligence, and the Bay Area is certainly the epicenter.”
Five Star reported net income totaling $10.6 million for the quarter ending March 31, bolstered by $22.5 million in new deposits captured by its expanding Bay Area banking team, according to Beckwith. Kurtze called it a taste of things to come.
“It’s really just beginning,” Kurtze said. “More than half of our team has been on board for three to six months. They’re just hitting their stride.”
