Financial Data and Key Metrics Changes - In 2025, Five Star Bancorp achieved a year-over-year growth in total loans held for investments of 15%, total deposit growth of 18%, net income growth of 35%, and an increase in earnings per share of 28% to $2.90 per share [5][6] - Financial highlights for the fourth quarter include $17.6 million in net income, earnings per share of $0.83, return on average assets of 1.50%, and return on average equity of 15.97% [5][6] - The net interest margin expanded 10 basis points to 3.66%, and the total cost of deposits declined by 21 basis points to 2.23% [5][6] Business Line Data and Key Metrics Changes - Loans held for investment grew by $187.7 million, or 19% on an annualized basis, in the fourth quarter, while total deposits increased by $97.6 million, or 10% on an annualized basis [6] - The commercial real estate portfolio saw significant growth, increasing by $161.4 million in the fourth quarter and $448.5 million for the year [7] Market Data and Key Metrics Changes - Non-wholesale deposits increased by $139.1 million during the fourth quarter and $738.1 million during the year, while wholesale deposits decreased by $41.4 million during the quarter and $95 million during the year [8][9] - Total non-interest-bearing deposits accounted for 26% of total deposits, with approximately 61% of deposit relationships totaling more than $5 million [9] Company Strategy and Development Direction - The company plans to further develop all business verticals while expanding into new markets, emphasizing a blend of technology and personalized service [16] - Five Star Bancorp aims to maintain a focus on innovation and service excellence, with a commitment to building deep, meaningful relationships with clients [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth pipeline for 2026, indicating that while growth may not match the previous year, a target of 10% growth on both sides of the balance sheet is achievable [24][25] - The competitive landscape for deposits is described as very competitive, with a focus on core deposit growth as a competitive advantage [23][24] Other Important Information - The company successfully reduced its balance of wholesale deposits by $95 million, or 17%, in 2025, while growing non-wholesale deposits by 25% [6][7] - A cash dividend of $0.25 per share was announced, marking the first increase since April 2023 [7] Q&A Session Summary Question: Drivers behind the acceleration in loan originations - Management noted strong performance across all verticals, particularly in food and agriculture, with seasonal factors contributing to growth [21] Question: Competitive landscape for deposits - Management acknowledged a highly competitive environment for core deposits but emphasized their business development team's effectiveness in attracting core relationships [22][23] Question: Expense growth outlook - Management indicated that expenses are expected to grow at a rate of 1.48%-1.55% of total assets in 2026, accommodating growth and regular maintenance [35][36] Question: Capital comfortability and outlook - Management expressed confidence in maintaining capital positions with a 10% growth rate, but noted that higher growth rates would necessitate a capital event in the future [44][45]

Financial Data and Key Metrics Changes - The company reported net income of $30 million or $0.66 per diluted share on revenue of $110 million, with adjusted net income at $33.8 million or $0.75 per diluted share [13][14] - Total revenue increased by $7.4 million for the quarter, representing an 11% year-on-year growth [14] - The net interest margin expanded by 11 basis points to 4.18% compared to the prior quarter [16][24] - The efficiency ratio was excellent at 48.2% for the quarter, with a cost-to-asset ratio of 228 basis points, down 18 basis points from the prior quarter [16][18] Business Line Data and Key Metrics Changes - Total loans increased to $7.4 billion, with a growth of $307 million or 17.5% annualized, including $153 million from the First Security transaction [21] - Total deposits rose to $7.8 billion, up 13.7% annualized from the prior quarter, driven by money market and non-interest bearing demand accounts [23] - Non-interest income totaled $14.5 million, slightly lower than the prior quarter due to a negative fair value mark on servicing assets [25] Market Data and Key Metrics Changes - The company experienced a 9% increase in net interest income, attributed to higher balances and improved asset mix [15][24] - Loan origination activity was strong, with $359 million in new loans, up 16% quarter-over-quarter and 20% year-over-year [22] - The cost of deposits decreased by three basis points to 2.27% [23] Company Strategy and Development Direction - The company aims to become the preeminent commercial bank in Chicago, focusing on clear communication and execution of strategic plans [5][6] - The management emphasized a disciplined approach to risk and a commitment to employee engagement and development [9][10] - The company is well-positioned to seize opportunities for organic and inorganic growth while maintaining a sustainable dividend and share repurchase strategy [42][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the healthy customer activity and loan growth prospects despite macroeconomic uncertainties [37][38] - The company is prepared for potential regulatory changes as it approaches the $10 billion threshold, maintaining a long-term view on compliance [68][69] - The outlook for net interest income remains positive, with projections ranging from $95 million to $97 million for the next quarter [24] Other Important Information - The company repurchased approximately 418,000 shares, returning about $10 million to shareholders in addition to regular dividends [19][29] - The allowance for credit losses increased to $107.7 million, representing 1.47% of total loans, reflecting adjustments for macroeconomic conditions and loan growth [26][27] Q&A Session Summary Question: Insights on loan growth prospects - Management indicated that loan growth is a combination of gaining market share and improved client sentiment, with healthy customer activity continuing [35][38] Question: M&A opportunities and capital management - Conversations around M&A remain active, with management expressing a flexible approach to capital deployment, prioritizing organic growth and sustainable dividends [39][42] Question: Increase in nonaccrual loans and credit migration - Management noted that the increase in nonaccrual loans was not centered on a single line of business, and they are confident in their credit management strategies [45][48] Question: Securities portfolio growth outlook - Management indicated that they are likely to let cash flows run off and focus on funding loan growth rather than expanding the securities portfolio [54][55] Question: Cost outlook for the third quarter - The increase in costs is primarily related to the First Security acquisition, with guidance for the next quarter slightly higher due to marketing expenses [60][61] Question: Sustainability of earnings power - Management acknowledged that the earnings power has increased due to the First Security transaction and ongoing core business growth, but emphasized the need for continued execution [61][63]