FIVE STAR BANCORP Q1 FY2025 earnings call

• Continued building strength in historical markets and San Francisco Bay Area expansion, adding four professionals to support Bay Area expansion. • Maintained conservative underwriting with 50.03% LTV on commercial real estate and 42.58% efficiency ratio. • Improved net interest margin by nine basis points and grew total loans, assets, and deposits. • Commercial real estate segment of loan portfolio increased. • Strong asset quality with non-performing loans at 0.05%. • Deposits increased by $178.4 million, with non-wholesale deposit inflows. • Well-capitalized with all capital ratios above regulatory thresholds. • Declared $0.20 per share dividend.

Total loans held for investment increased by $89.1 million or 2.52% from the prior quarter. Average loan yields increased by one basis point to 6.02%. The commercial real estate segment of the loan portfolio increased from 80.75% of the loan portfolio as of December 31st, 2024 to 81.11% at March 31st, 2025. Deposits increased by $178.4 million or 5.0% compared to the previous quarter. Non-wholesale deposits had an inflow of $48.4 million. Net interest margin improved by nine basis points. Total loans, assets, and deposits grew over prior periods. Non-performing loans remained at 0.05% of loans held for investment. The allowance for loan losses totaled $39.2 million, with a $1.9 million provision for credit losses. Deposit relationships totaling greater than $5 million constituted 60.87% of total deposits, with an average age of approximately 8.80 years.

• Expecting 10% to 12% loan growth for the rest of 2025, more bullish than previous outlook. • Expect core deposit growth to match loan growth. • No additional wholesale funding anticipated. • Bullish on growth due to experienced sales force and strong pipelines.

• Tariff impacts could affect certain asset classes, particularly small business and consumer loans. • Sensitivity of allowance for credit losses to economic factors like GDP and unemployment. • Repricing risk in the loan portfolio as credits reprice.

Q: Andrew Terrell asked about loan growth outlook and deposit funding.

A: James Beckwith said they're bullish with 10%-12% loan growth expected, expecting core deposits to match loan growth and no additional wholesale funding. Heather Luck added they've rolled down wholesale deposits by 24 basis points.

Q: Gary Tenner asked about allowance increase.

A: James Beckwith and Heather Luck said growth of the portfolio and revised economic forecast models drove the allowance increase.

Q: Liam Coohill asked about customer hesitancy and market differences.

A: James Beckwith discussed strong demand in certain asset classes like MHC, but small business loans (especially SBA) have challenges with high reserves and tariff impacts.