Five Star Bancorp (FSBC) Earnings Transcript

Core Insights - The company reported a strong financial performance for the third quarter of 2025, with significant growth in loans and core deposits, resulting in a net income of $16.3 million and earnings per share of $0.77 [4] - The total assets increased by $228.3 million, primarily driven by loan growth in the commercial real estate portfolio, which grew by $77.7 million [2] - The company maintains a low volume of nonperforming loans, which decreased by $149,000 during the quarter, reflecting strong credit quality [1][3] Financial Performance - The net interest margin expanded by 3 basis points to 3.56%, while the cost of total deposits declined by 2 basis points to 2.44% [3] - Total deposits increased by approximately $208.8 million or 21% on an annualized basis, with non-wholesale deposits growing by $359 million or 11% [3] - Noninterest income rose to $2 million from $1.8 million, mainly due to an increase in swap referral fees [6] Deposit Growth - The company experienced substantial growth in interest-bearing deposits, contributing $171.6 million to overall growth, while non-interest-bearing deposits added $28.8 million [1] - Approximately 60% of deposit relationships exceed $5 million, indicating a stable funding base for future growth [1][5] - The average age of deposits is 8 years, suggesting a stable deposit portfolio [5] Loan Growth and Quality - Loans held for investment grew by $129.2 million or 14% on an annualized basis, with a strong loan pipeline remaining in place [3] - The credit quality of loans is maintained through conservative underwriting practices and robust monitoring [2] - Nonperforming loans represent only 5 basis points of total loans held for investment, indicating strong asset quality [3] Strategic Initiatives - The company opened a new full-service office in Walnut Creek, enhancing its presence in the San Francisco Bay Area, which now has 36 employees and $548.9 million in deposits [7] - Continued investment in technology and operational efficiencies is expected to benefit customers and shareholders [9] - The company is focused on organic growth and maintaining a strong relationship-based service model [8][9] Future Outlook - The company anticipates deposit growth of 1% to 2% in the fourth quarter, with a focus on optimizing the funding base [12] - There is potential for continued margin expansion in a down rate environment, with expectations of 1 to 3 basis points improvement in the fourth quarter [22] - The loan-to-deposit ratio is targeted at 95%, with flexibility to adjust based on market conditions [27]