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- **Record Growth**: Q3 net income $16.3M (+14% annualized loans, +21% deposits), with 11% non-wholesale deposit expansion.
- **Core Funding Shift**: Wholesale deposits down 23%, targeting stable >$5M core deposits (26% of total).
- **Margin Expansion**: 1-3bps Q4 expansion from rate cuts, $850K/25bps benefit offset by 90-day gov deposit lag.
- **Strategic Hiring**: +$0.9M expenses for 41 new biz dev staff, focusing on agribusiness and Bay Area C&I.
- **Cautious M&A**: No deals, but open to acquisitions for deposit scale or lower-cost funding.

**【CEO Opening Remarks】**
- Q3 2025 net income: $16.3 million (EPS $0.77), up 14% annualized in loans and 21% in deposits.
- Loan growth: $129.2 million (14% annualized), driven by commercial real estate.
- Deposit growth: $208.8 million (21% annualized), with non-wholesale deposits up 11%.
- Asset quality: Nonperforming loans at 5 basis points, provision for credit losses $2.5 million.
- Expansion: 9th Bay Area office opened in Walnut Creek, with $548.9 million in deposits.

**【CFO Financial Commentary】**
- Net interest income +$2.8 million Q/Q, driven by higher loan rates (+$4.3 million) offset by deposit cost growth (+$1.4 million).
- Noninterest income +$0.2 million Q/Q, due to swap fees, with no loan sale gains.
- Expenses +$0.9 million Q/Q, mainly from headcount expansion (e.g., Bay Area team).
- Efficiency ratio: 40.13%, stable vs. prior quarter.

**【Q&A Highlights】**
- **Deposit Strategy**: Reduced wholesale deposits by 23% Q/Q, focusing on core deposits (>60% >$5M AUM, 8-year avg tenure). Q4 deposit growth expected 1-2% vs. 21% Q3.
- **Loan Payoffs**: $77.7M CRE growth offset $149K NPL decline. Payoffs driven by MHC/RV reset schedule, not competitive loss.
- **Margin Outlook**: 1-3bps expansion in Q4 from rate cuts, $850K benefit per 25bps cut. Govt deposit repricing lagged 90 days.
- **Expansion**: Hiring 41 biz dev staff, targeting agribusiness, storage, and Bay Area C&I. 27-state RV/MHC footprint.
- **M&A**: No active deals, but open to opportunistic acquisitions for deposit scale or lower-cost funding.

Five Star Bancorp (FSBC) Q3 2025 Earnings Call Transcript

- **Strong Q2 Growth**: 15% loan growth, 17% deposit growth, and 8 bps NIM expansion highlight robust organic expansion.
- **Deposit Strength**: Noninterest-bearing deposits now 26% of total, driven by new accounts and long-tenured relationships.
- **Efficiency Potential**: 41.03% efficiency ratio with sub-40% possible as growth continues.
- **Strategic Expansion**: New food & agribusiness vertical and Walnut Creek office opening support Bay Area dominance.
- **CRE Resilience**: 6 bps NPL ratio and conservative underwriting maintain asset quality despite CRE growth.


**【CEO Summary Section】**
- **Q2 Financial Highlights**: Net income of $14.5 million, EPS of $0.68, ROA of 1.37%, and ROE of 14.17%. Net interest margin expanded by 8 bps to 3.53%, with loans and deposits growing 15% and 17% annualized, respectively.
- **Balance Sheet Growth**: Commercial real estate loans increased by $125.4 million, driven by mobile home parks, multifamily, and student housing. Nonperforming loans remained low at 6 bps of total loans.
- **Strategic Initiatives**: Expansion into food and agribusiness with a new team, Walnut Creek office opening in September, and 5 new business development officers. Bay Area deposits reached $456.9 million as of Q2.
- **Dividend Announcement**: $0.20 per share dividend declared for August 2025.

**【CFO Financial Commentary】**
- **Net Interest Income**: Increased $2.5 million Q/Q, driven by loan growth and higher yields. Interest expense rose $1 million due to deposit growth.
- **Noninterest Income**: Grew to $1.8 million (from $1.4 million) due to venture-backed fund earnings. Noninterest expenses rose $700,000 due to business development and training costs.
- **Efficiency Ratio**: 41.03% for Q2, with potential for sub-40% if growth continues. Back-office support teams are being expanded to match sales growth.

**【Q&A Key Highlights】**
- **Deposit Growth Sustainability**: Noninterest-bearing deposits grew to 26% of total deposits, driven by new accounts and long-tenured relationships. Management expects continued growth through 2025.
- **Expense Outlook**: Walnut Creek office will add $500,000-$750,000 in Q3 expenses. No major tech or back-office investments planned beyond headcount additions.
- **Loan Pipeline Confidence**: Maintaining 10-12% annual growth target. CRE sub-verticals like San Francisco office buildings (50-60% LTV) are seen as safe opportunities.
- **Tax Rate Guidance**: Effective tax rate expected to remain around 26.65% for 2025.
- **Food & Agribusiness Vertical**: New team targeting $50M-$500M ag processors in California, aiming to diversify away from CRE concentration.


Five Star Bancorp (FSBC) Q2 2025 Earnings Call Transcript

- **Outperformance in Key Metrics**: 10%-12% loan growth target, 3.45% net interest margin, and 0.05% NPL ratio highlight operational strength.
- **Strategic Expansion**: SF Bay Area BDOs drive 2.52% QoQ loan growth, while 60.87% of deposits >$5M ensure stable funding.
- **Resilient Asset Quality**: Mobile home park/RV portfolio outperformed in prior downturns; 9% reserve ratio on SBA loans reflects prudence.
- **Liquidity Management**: Wholesale deposits (23.21% QoQ growth) used strategically, with 90-day maturity profiles to capitalize on rate declines.
- **Economic Resilience**: CRE focus and 50.03% LTV limit tariff-related risks, while 2025 ACL increases tied to macroeconomic forecasts.

**【CEO Opening Remarks】**
- Q1 2025 loan growth of $89.1M (2.52% QoQ), driven by commercial real estate (81.11% of portfolio) and 36 seasoned BDOs in SF Bay Area and Capital Region.
- Deposit growth of $178.4M (5.0% QoQ), including $48.4M in non-wholesale deposits and 60.87% of deposits >$5M with 8.8-year average tenure.
- Net interest margin expanded 9bps to 3.45%, with 50.03% LTV on CRE loans and 0.05% NPL ratio.
- 10%-12% annual loan growth expected, targeting core deposit growth to match loan expansion while maintaining <100% loan-to-deposit ratio.

**【CFO Financial Highlights】**
- Q1 net income: $13.1M; ROA: 1.3%; ROE: 13.28%.
- Average loan yield: 6.02% (1bps QoQ); cost of deposits: 248bps (10bps decline QoQ).
- Non-interest income: $1.4M (down $0.3M QoQ due to equity investment income).
- Efficiency ratio: 42.58%; $0.20 dividend declared for Q1.

**【Q&A Key Takeaways】**
1. **Loan Growth Strategy**: 10%-12% annual target, supported by 16 SF Bay Area BDOs and disciplined CRE underwriting. 2025 originations pipeline remains strong.
2. **Funding Mix**: Wholesale deposits ($130M QoQ growth) used strategically for liquidity, with 90-day maturity profiles to benefit from rate declines. Core deposits expected to match loan growth.
3. **Asset Quality**: Mobile home park/RV park portfolio outperformed in prior recessions; 9% reserve ratio on small business/SBA loans reflects cautious approach.
4. **Economic Risks**: Tariffs may impact consumer lending, but CRE focus and 50.03% LTV provide buffer. 2025 ACL increases driven by FOMC economic forecasts, not portfolio-specific issues.
5. **Interest Rate Sensitivity**: Loan repricing in 2025 (e.g., +220bps April reset) managed with strong cash flow analysis; yield curve flattening limits margin expansion opportunities.

Five Star Bancorp (FSBC)-29 Apr 25-2025 Q1 Earnings call transcript

- **Revenue Momentum**: Loans grew 14.6% Y/Y, driven by commercial real estate (80.75% of portfolio) and 7.9% consumer loan expansion.
- **Deposit Strategy**: Wholesale CDs (4.59% cost) reprice quarterly, positioning for rate cuts. Non-wholesale deposits grew 17.6% Y/Y.
- **2025 Targets**: 8% loan and deposit growth, with $300M BHGE book maintained via $17M Q4 purchases.
- **Efficiency**: 41.2% efficiency ratio; 2025 expenses expected to stabilize at Q4 levels ($14.5M) as Bay Area hiring slows.
- **Market Expansion**: 28 new hires in 2024; next phase focuses on East Bay (Walnut Creek) expansion.


**【CEO Opening Remarks】**
- **Revenue Growth**: Total loans held for investment increased by $72.1 million (2.08%) Q/Q and $451 million (14.63%) Y/Y. Average loan yields improved sequentially in both 2023 and 2024.
- **Market Expansion**: Opened a full-service office in San Francisco's Financial District in Q3 2024 and added 18 seasoned professionals. Non-wholesale deposits grew $331.3 million Y/Y.
- **Asset Quality**: Nonperforming loans remained stable at 0.05% of loans held for investment. Allowance for credit losses was $37.8 million (1.07% of loans) at year-end.
- **Dividend Policy**: Maintained $0.20 quarterly dividend, totaling $0.80 for 2024.

**【CFO Financial Highlights】**
- **Net Income**: $13.3 million for Q4, $45.7 million for 2024. ROA of 1.31% (Q4) and 1.23% (2024). ROE of 13.48% (Q4) and 12.72% (2024).
- **Net Interest Margin (NIM)**: 3.36% for Q4, 3.32% for 2024. NIM declined 10 bps Y/Y due to rate environment.
- **Noninterest Income**: $1.7 million for Q4 (up 21% Q/Q), $6.5 million for 2024 (down 13% Y/Y) due to lower venture fund income.
- **Expenses**: Noninterest expense grew 14% Y/Y to $54.5 million, driven by salary increases for Bay Area expansion.

**【Q&A Key Takeaways】**
- **Deposit Strategy**: Wholesale deposits grew $150 million Q/Q (36.6%), while non-wholesale deposits increased $8 million. Wholesale CDs are short-duration (3-month repricing) to capitalize on rate cuts.
- **2025 Growth Targets**: Aiming for 8% loan and deposit growth. Loan originations of $1.1 billion in 2024 vs. payoffs/paydowns of $686 million.
- **Efficiency Ratio**: 41.21% for Q4, stable despite $54.5 million in 2024 expenses. Expect modest operating leverage in 2025 as Bay Area hiring slows.
- **San Francisco Expansion**: Added 28 new hires in 2024. Focus on East Bay (Walnut Creek) for next phase of Bay Area growth.
- **BHGE Purchases**: Maintained $300 million book of purchased consumer loans, adding $17 million in Q4.
- **Asset Sensitivity**: 61% of deposits >$5 million with 9.28-year average tenure, providing stable core funding.


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