Five Star Bancorp(US:FSBC)2026-01-27 19:00Financial 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 Q4 included net income of $17.6 million, 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 by 10 basis points to 3.66%, while 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 Q4, and total deposits increased by $97.6 million, or 10% on an annualized basis [6][9] - The commercial real estate portfolio saw significant growth, increasing by $161.4 million in Q4 and $448.5 million for the year [8] Market Data and Key Metrics Changes - The company experienced outstanding balance sheet growth, with total assets increasing by $113.1 million in Q4 and $701.6 million for the full year [8] - Non-wholesale deposits increased by $738.1 million, or 25%, while wholesale deposits decreased by $95 million, or 17% [6][10] 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 [17] - Five Star Bancorp aims to maintain a focus on innovation and service excellence, with a commitment to organic growth and community engagement [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve 10% growth in both loans and deposits for 2026, despite acknowledging the competitive landscape [26][44] - The company is focused on maintaining strong asset quality, with non-performing loans representing only 8 basis points of total loans held for investment [6][9] Other Important Information - The company announced a cash dividend increase to $0.25 per share, marking the first increase since April 2023 [8] - The efficiency ratio was reported at 40.62% for Q4 and 41.03% for the year, indicating a focus on managing expenses while supporting growth [5][6] Q&A Session Summary Question: Drivers behind loan origination growth - Management noted strong performance across all verticals, particularly in food and agriculture, with seasonal factors contributing to loan production [21][22] Question: Competitive landscape for deposits - The market is highly competitive, but the company believes its business development team provides a competitive advantage in attracting core deposits [24][25] Question: Expense growth outlook - Management anticipates a moderate increase in expenses, targeting an expense-to-asset ratio of 148%-155% for 2026 [36][37] Question: Loan origination yields and competition - The company is experiencing competitive pressures on loan spreads, particularly in owner-occupied real estate and lines of credit [38][39] Question: Capital comfort and growth expectations - Management expressed confidence in maintaining capital ratios with a 10% growth rate, but acknowledged that higher growth rates would necessitate additional capital [42][44]