Five Star Bancorp(US:FSBC)2024-11-07 17:50Financial Performance - Net income for the three months ended September 30, 2024, was $10.9 million, compared to $11.0 million for the same period in 2023[168]. - Earnings per common share (basic) decreased to $0.52 for the three months ended September 30, 2024, down from $0.64 for the same period in 2023, a decline of 18.8%[178]. - Net interest income for the three months ended September 30, 2024, was $30,386 thousand, an increase of 10.4% from $27,476 thousand for the same period in 2023[178]. - Total non-interest income for the three months ended September 30, 2024, was $1,381,000, a slight decrease of $3,000 or 0.22% compared to $1,384,000 for the same period in 2023[207]. - Total non-interest expense for the three months ended September 30, 2024, was $13,776,000, an increase of $1,761,000 or 14.66% from $12,015,000 in the same period of 2023[216]. Asset and Loan Growth - Total assets increased by $293.9 million, or 8.18%, to $3.9 billion at September 30, 2024, compared to $3.6 billion at December 31, 2023[169]. - Total loans held for investment rose by $378.8 million, or 12.29%, to $3.5 billion at September 30, 2024, driven by increases in consumer and other loans, commercial real estate loans, and commercial construction loans[170]. - Total deposits increased by $373.1 million to $3.4 billion at September 30, 2024, with non-wholesale deposits rising by $323.3 million to $3.0 billion[168]. - Total shareholders' equity increased to $389,930 thousand as of September 30, 2024, up from $285,774 thousand on December 31, 2023, reflecting a growth of 36.4%[177]. - Total loans increased to $3.5 billion as of September 30, 2024, compared to $3.1 billion at December 31, 2023, with loans held for investment representing 99.92% of total loans[241]. Capital Adequacy - The total risk-based capital ratio was 13.94% at September 30, 2024, compared to 12.30% at December 31, 2023, indicating strong capital adequacy[174]. - The Tier 1 capital ratio improved to 10.93% as of September 30, 2024, up from 9.07% as of December 31, 2023, indicating stronger capital adequacy[177]. - Bancorp's Tier 1 capital to risk-weighted assets ratio was 10.93% as of September 30, 2024, above the required minimum of 6.00%[331]. - Both Bancorp and the Bank were in compliance with all applicable regulatory capital requirements as of September 30, 2024, qualifying as "well-capitalized" under the prompt corrective action framework[328]. Credit Quality - Non-accrual loans represented $1.8 million, or 0.05% of total loans held for investment, at September 30, 2024, showing stable credit quality[171]. - The allowance for credit losses increased to $37.6 million at September 30, 2024, from $34.4 million at December 31, 2023, due to a $6.0 million provision for credit losses recorded during the nine months ended September 30, 2024[272]. - The ratio of nonperforming loans to loans held for investment was 0.05% at September 30, 2024, decreasing from 0.06% at December 31, 2023[265]. - Loans designated as watch and substandard increased to $92.7 million at September 30, 2024, from $41.6 million at December 31, 2023[269]. Interest Income and Margin - The net interest margin was 3.37% for the three months ended September 30, 2024, compared to 3.31% for the same period in 2023, reflecting higher yields on new and repriced loans[172]. - Interest income rose by $7.6 million, driven by higher yields on new and repriced loans, with an average yield on loans increasing by 41 basis points[193]. - The average yield on total interest-earning assets was 5.71% for the nine months ended September 30, 2024, compared to 5.32% for the same period in 2023[196]. - The net interest margin for the nine months ended September 30, 2024, was 3.30%, a decrease of 20 basis points from the prior year[194]. Deposits and Liquidity - Total deposits rose by $373.1 million, or 12.33%, to $3.4 billion at September 30, 2024, compared to $3.0 billion at December 31, 2023[279]. - Non-interest-bearing deposits increased by $75.8 million to $906.9 million, representing 26.67% of total deposits as of September 30, 2024[279]. - As of September 30, 2024, total liquidity was approximately $1.8 billion, consisting of cash and cash equivalents and unused borrowing capacity[313]. - The loan to deposit ratio was 101.87% at September 30, 2024, down from 102.19% at December 31, 2023[279]. Operational Efficiency - The efficiency ratio increased to 43.37% for the three months ended September 30, 2024, up from 41.63% for the corresponding period of 2023, primarily due to increased employee expenses[173]. - The average rate paid on total deposits increased to 2.63% for the three months ended September 30, 2024, compared to 2.18% for the same period in 2023[280]. Market and Regulatory Environment - The FDIC finalized changes to its Statement of Policy on Bank Merger Transactions on September 17, 2024, which may impact future merger approvals[338]. - The proposed FDIC rule on brokered deposits could increase the Bank's deposit insurance assessment costs if finalized as proposed[340].