Five Star Bancorp(US:FSBC)2025-05-08 18:21Part I: Financial Information Financial Statements (Unaudited) The company reported increased assets and net income in Q1 2025, driven by loan growth and higher net interest income Consolidated Balance Sheets The balance sheet reflects significant asset growth, primarily in loans and cash, funded by increased deposits and shareholders' equity Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | $4,245,057 | $4,053,278 | +4.7% | | Cash and cash equivalents | $452,571 | $352,343 | +28.4% | | Loans held for investment, net | $3,582,595 | $3,494,895 | +2.5% | | Total Liabilities | $3,838,606 | $3,656,654 | +5.0% | | Total deposits | $3,736,354 | $3,557,994 | +5.0% | | Total Shareholders' Equity | $406,451 | $396,624 | +2.5% | Consolidated Statements of Income Net income increased significantly due to higher net interest income, despite increased provision for credit losses and non-interest expenses - Net income for Q1 2025 increased by 23.3% to $13,111 thousand, primarily due to a 27.1% increase in net interest income to $33,977 thousand, with diluted EPS remaining flat at $0.62 year-over-year12 Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $33,977 | $26,744 | +27.1% | | Provision for credit losses | $1,900 | $900 | +111.1% | | Non-interest Income | $1,359 | $1,833 | -25.9% | | Non-interest Expense | $15,045 | $12,716 | +18.3% | | Net Income | $13,111 | $10,631 | +23.3% | | Diluted EPS | $0.62 | $0.62 | 0.0% | Consolidated Statements of Cash Flows Cash and cash equivalents increased significantly, primarily driven by financing activities offsetting cash used in investing - Cash and cash equivalents increased by $100,228 thousand for Q1 2025, primarily due to $174,094 thousand from financing activities, offsetting $89,338 thousand used in investing activities19 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $15,472 | $247 | | Net cash used in investing activities | ($89,338) | ($11,923) | | Net cash provided by (used in) financing activities | $174,094 | ($124,575) | | Net change in cash and cash equivalents | $100,228 | ($136,251) | Notes to Consolidated Financial Statements The notes detail accounting policies, loan and deposit composition, credit quality, and capital adequacy, confirming the company's well-capitalized status - The company operates as a single banking segment, primarily serving small to medium-sized businesses and individuals in Northern California25 - The loan portfolio is heavily concentrated in real estate, comprising 86.62% of total loans as of March 31, 2025126 - As of March 31, 2025, 104 deposit relationships exceeded $5.0 million each, totaling $2.3 billion and representing 60.87% of total deposits127 - A cash dividend of $0.20 per share was declared and paid in Q1 2025, with another $0.20 per share declared in April 2025113133 Management's Discussion and Analysis (MD&A) MD&A highlights strong Q1 2025 performance driven by loan and deposit growth, improved net interest margin, robust credit quality, and strong capital ratios Executive Summary & Highlights The executive summary outlines key financial achievements including asset growth, strong credit quality, improved net interest margin, and robust capital - Total assets grew by 4.73% to $4.2 billion in Q1 2025, driven by a $89.1 million (2.52%) increase in loans and a $178.4 million (5.01%) increase in deposits150 - Credit quality remains strong, with non-accrual loans at 0.05% of total loans and the allowance for credit losses stable at 1.08%150 - Net interest margin improved to 3.45% for Q1 2025, up from 3.14% in Q1 2024, driven by higher loan balances and yields150 - All capital ratios exceed well-capitalized regulatory thresholds, with a Tier 1 leverage ratio of 10.17% as of March 31, 2025150 Results of Operations Operating results show increased net interest income driven by loan growth and yields, offset by higher provision for credit losses and non-interest expenses Change in Net Interest Income (Q1 2025 vs Q1 2024, in thousands) | Component | Change due to Volume | Change due to Yield/Rate | Total Change | | :--- | :--- | :--- | :--- | | Interest Income | $7,858 | $1,688 | $9,546 | | Loans | $6,916 | $2,229 | $9,145 | | Interest Expense | $3,605 | ($1,292) | $2,313 | | Change in Net Interest Income | $4,253 | $2,980 | $7,233 | - The provision for credit losses increased to $1,900 thousand in Q1 2025 from $900 thousand in Q1 2024, reflecting loan growth and economic forecast adjustments164 - Non-interest income decreased by $500 thousand (25.9%) year-over-year, mainly due to lower gains on loan sales and reduced income from equity investments167168 - Salaries and employee benefits increased by $1,600 thousand (20.6%), driven by a 13.19% increase in headcount and higher commissions172173 Financial Condition Financial condition shows asset and loan portfolio growth, strong asset quality, increased deposits, and higher shareholders' equity Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2025 | % of Total | | :--- | :--- | :--- | | Commercial Real Estate | $2,941,201 | 81.11% | | Commercial Construction | $113,002 | 3.12% | | Commercial (Secured & Unsecured) | $205,495 | 5.66% | | Consumer and other | $277,093 | 7.64% | | Other Real Estate & Farmland | $83,443 | 2.30% | | Total Loans Held for Investment | $3,623,790 | 99.93% | - Commercial real estate loan concentration was 576.23% of risk-based capital as of March 31, 2025, remaining within internal limits199 - Asset quality remains strong with nonperforming loans at $1,800 thousand, or 0.05% of total loans, and an allowance for credit losses to nonperforming loans of 2,222%213 - Total deposits grew by $178.4 million in Q1 2025, with non-interest-bearing deposits increasing by $11.0 million to $933.7 million, representing 24.99% of total deposits228 Liquidity and Capital Resources The company maintains strong liquidity and capital, with available liquidity of $2.0 billion and capital ratios exceeding well-capitalized thresholds Total Liquidity as of March 31, 2025 (in thousands) | Source | Available Amount | | :--- | :--- | | FHLB advances | $544,572 | | Federal Reserve Discount Window | $856,366 | | Correspondent bank lines of credit | $175,000 | | Cash and cash equivalents | $452,571 | | Total | $2,028,509 | Capital Ratios as of March 31, 2025 | Ratio | Bancorp | Bank | Well-Capitalized Minimum (Bank) | | :--- | :--- | :--- | :--- | | Total capital (to risk-weighted assets) | 13.97% | 13.50% | 10.00% | | Tier 1 capital (to risk-weighted assets) | 11.00% | 12.48% | 8.00% | | Common equity tier 1 capital | 11.00% | 12.48% | 6.50% | | Tier 1 leverage | 10.17% | 11.52% | 5.00% | - The company's primary parent company liquidity source is Bank dividends, subject to regulatory limitations, which management believes will not impact its ability to meet obligations244 Quantitative and Qualitative Disclosure About Market Risk The company manages interest rate risk by monitoring NII and EVE sensitivity, showing a liability-sensitive position in rising rate scenarios Interest Rate Sensitivity Analysis as of March 31, 2025 | Change in Interest Rates (bps) | Estimated Change in NII (%) | Estimated Change in EVE (%) | | :--- | :--- | :--- | | +300 | (5.26)% | (10.22)% | | +200 | (3.52)% | (7.04)% | | +100 | (1.95)% | (3.55)% | | -100 | 2.03% | 3.16% | | -200 | 4.29% | 5.87% | | -300 | 7.61% | 8.99% | - Interest rate risk management policies are overseen by the Management and Director Asset Liability Committees294 Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025299 - No material changes to internal control over financial reporting occurred during the first quarter of 2025300 Part II: Other Information Other Disclosures (Items 1-5) This section confirms no material legal proceedings, no changes to risk factors, and no unregistered equity sales or issuer purchases - The company is not a party to any pending legal proceedings expected to have a material adverse effect on its business302 - No material changes to risk factors previously disclosed in the Company's 2024 Annual Report on Form 10-K have occurred303 - No unregistered sales or issuer purchases of equity securities occurred during the quarter304306