Five Star Bancorp Q2 FY2025 earnings call

Financial Highlights - Net income $14.5M, EPS $0.68, return on average assets 1.37%, return on average equity 14.17%. - Net interest margin 3.53%, cost of total deposits 2.46%, efficiency ratio 41.03%. ### Balance Sheet Growth - Loans held for investment grew $136.2M (15% annualized), deposits grew $158.3M (17% annualized). - Total assets increased $168.4M, driven by commercial real estate loan growth $125.4M. ### Asset Quality - Nonperforming loans 6 basis points of total loans, strong asset quality. ### Dividend - Board declared $0.20 per share cash dividend. ### Business Expansion - Announced expansion of food and agribusiness vertical, Walnut Creek office opening in Sept 2025, added 5 business development officers. - 34 employees in Bay Area with $456.9M in deposits as of June 30, 2025.

During the second quarter of 2025, Five Star Bancorp reported net income of $14.5 million, with earnings per share of $0.68. The net interest margin expanded by 8 basis points to 3.53%, and the cost of total deposits declined by 2 basis points to 2.46%. Efficiency ratio was 41.03%. Loans held for investment grew by $136.2 million (15% annualized), and deposits grew by approximately $158.3 million (17% annualized). Total assets increased by $168.4 million, largely driven by commercial real estate loan growth of $125.4 million. Nonperforming loans represented 6 basis points of total loans held for investment.

Resilience - Confident in company's ability to adapt to changing economic conditions. ### Growth Expectations - Targeting low teen loan and deposit growth for full year. ### Efficiency Ratio - Sub-40% efficiency ratio possible with continued investment in business.

Forward-looking statements involve risks and uncertainties; for a complete discussion, refer to the company's annual report on Form 10-K for the year ended December 31, 2024, and quarterly report on Form 10-Q for the 3 months ended March 31, 2025, particularly Item 1A, Risk Factors.

Q: David Feaster asked about core deposit growth and funding costs.

A: James Beckwith noted growth across all verticals and geographies driven by business development officers, and on funding costs, mentioned not relying on rate cuts but expecting slight further reduction.

Q: Woody Lay asked about expenses with Walnut Creek office.

A: Heather Luck said add $500,000 to $750,000 for third quarter.

Q: Ahmad Hasan asked about loan purchases and tax rate.

A: James Beckwith discussed loan purchases targeting $300M average outstanding, and Heather Luck provided tax rate outlook of ~26.65%.

Q: Jackson Laurent asked about loan growth and food agribusiness.

A: James Beckwith expected low teen loan growth to continue, and discussed the food and agribusiness vertical led by Cliff Cooper with significant growth potential.