Five Star Bancorp Q4 FY2025 earnings call

• 2025 was an outstanding year with growth across markets, including opening a Walnut Creek office and expanding agribusiness. - Balance sheet growth: loans up 15%, deposits up 18%, wholesale deposits reduced by $95 million. - Asset quality strong with nonperforming loans at 8 basis points of total loans. - Well capitalized, cash dividend increased by $0.05 per share. - Net interest income increased due to loan growth and lower deposit costs. - Noninterest income fluctuated; noninterest expense increased due to headcount. - Tax provision changed due to tax credits and pretax income changes.

In the fourth quarter, loans held for investment grew by $187.7 million (19% annualized) and total deposits increased by $97.6 million (10% annualized). For the full year, loans held for investment grew by $542.2 million (15%) and total deposits increased by $643.1 million (18%). The net interest margin was 3.66% in the fourth quarter (up 10 basis points) and 3.55% for the year (up 23 basis points). The cost of total deposits was 2.23% in the fourth quarter (down 21 basis points) and 2.40% for the year (down 16 basis points). Net income was $17.6 million in the fourth quarter and $61.6 million for the year.

• Projecting 10% growth on both loan and deposit sides for 2026. - Loan resets in 2026 may impact spreads and loan retention. - Organic earnings expected to fund 10% growth; capital ratios may be affected by growth.

• Competitive deposit market. - Loan resets potentially affecting spreads and loan retention. - Outsized growth could impact capital ratios.

Q: Wanted to start on the origination side, drivers behind acceleration and pipeline for 2026 A: All verticals performed well, seasonal in ag, Bay Area volume; pipeline looks good for 2026 Q: Competitive landscape for deposits and core deposit growth outlook A: Markets competitive, 42 business development folks as competitive advantage; projecting 10% growth in 2026, needing to reduce wholesale deposits Q: Thoughts on expense run rate into first quarter and full year 2026 A: Q1 expense to add ~$300k, full year expense as % of assets 1.48%-1.55% Q: Competitive dynamics on loan rate competition and resets in 2026 A: Competitive in some areas, loan resets in 2026 with impact on spreads and loan retention Q: Capital outlook with strong growth and CET1 ratio A: Comfortable with current capital, organic earnings expected to fund 10% growth; outsized growth would require capital event later