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FIVE STAR BANCORP (FSBC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered steady profitability: diluted EPS $0.62 (vs. $0.63 in Q4’24; flat YoY), ROAA 1.30% and ROAE 13.28%, with net interest margin expanding 9 bps to 3.45% and cost of funds down 9 bps QoQ .
  • Mix-driven deposit growth (+$178.4M QoQ, +5.01%) and loan growth (+$89.1M QoQ, +2.52%) supported balance-sheet momentum; cash rose to $452.6M (12.11% of deposits) and available liquidity to ~$2.03B .
  • Results vs S&P Global consensus: EPS beat ($0.62 vs $0.59)* while S&P-defined “Revenue” missed ($33.44M actual vs $35.27M estimate)*; beat was driven by lower deposit costs/NIM expansion; revenue shortfall reflects lower interest income from reduced balances/yields on interest-earning deposits in banks and softer non-interest income .
  • Outlook catalysts: management raised its tone on 2025 loan growth to ~10–12% (vs. ~8% discussed previously by analysts); expects core deposits to match loan growth and does not anticipate additional wholesale funding near term; keeping wholesale maturities very short to capture lower rates as they fall .

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and funding cost improvement: NIM rose to 3.45% (+9 bps QoQ) with cost of funds down 9 bps to 2.56%, reflecting disciplined deposit pricing and a 15 bps decline in average rates on interest-bearing deposits .
  • Strong core franchise growth: Deposits +$178.4M QoQ (+5.01%), non-wholesale +$48.4M (+1.61%), wholesale +$130.0M (+23.21%); loans HFI +$89.1M (+2.52%); Bay Area deposits reached $379.8M with the team expanding to 31 employees .
  • Asset quality remained robust: NPLs steady at 0.05% of loans; CET1 11.00%; liquidity capacity ~$2.03B; cash 12.11% of deposits .

Management quote: “We improved our net interest margin by 9 basis points and grew our total loans, assets and deposits… [and] declared another cash dividend of $0.20 per share.” — CEO James Beckwith .

What Went Wrong

  • Revenue line (S&P-defined) missed consensus*: despite NIM expansion, interest income decreased QoQ due to lower balances and yields on interest-earning deposits in banks; non-interest income softened sequentially on lower venture-backed fund income .
  • Efficiency ratio ticked up QoQ to 42.58% (from 41.21%) as salaries/benefits rose with headcount growth, partly offset by lower advertising/other operating expenses .
  • Reserve build and model sensitivity: Provision rose to $1.9M (from $1.3M) on growth and macro forecasts; management noted the ACL is sensitive to FOMC scenarios and could increase in Q2 with model updates .

Financial Results

P&L, Margins, Profitability (oldest → newest; $USD Millions unless noted)

MetricQ1 2024Q4 2024Q1 2025Q1 2025 Consensus
Diluted EPS ($)$0.62 $0.63 $0.62 $0.59*
Net Income$10.63 $13.32 $13.11 —
Net Interest Income$26.74 $33.49 $33.98 —
Non-Interest Income$1.83 $1.67 $1.36 —
Pre-tax Income$14.96 $19.37 $18.39 —
Net Interest Margin (%)3.14% 3.36% 3.45% —
Efficiency Ratio (%)44.50% 41.21% 42.58% —
Cost of Funds (%)2.62% 2.65% 2.56% —
ROAA (%)1.22% 1.31% 1.30% —
ROAE (%)14.84% 13.48% 13.28% —
“Revenue” (S&P-defined)——$33.44*$35.27*

Note: “Revenue” above reflects S&P Global’s banking revenue definition used for consensus and may differ from company presentation. Values marked with * retrieved from S&P Global.

Balance Sheet and Liquidity (period-end; $USD Millions)

MetricQ1 2024Q4 2024Q1 2025
Total Assets$3,476.36 $4,053.28 $4,245.06
Loans HFI$3,104.13 $3,532.69 $3,621.82
Total Deposits$2,955.77 $3,557.99 $3,736.35
Non-Interest-Bearing Deposits$817.39 $922.63 $933.65
Cash & Equivalents$185.33 (sum of cash+IB deposits) $352.34 $452.57
CET1 Ratio (%)9.13% 11.02% 11.00%
NPLs/Loans HFI (%)0.06% 0.05% 0.05%
Insured & Collateralized Deposits (% of total)—66.92% 67.55%
Total Liquidity Available—~$1.90B ~$2.03B

Results vs Estimates (S&P Global)

MetricConsensusActualSurprise
Primary EPS ($)0.59*0.62 +0.03*
“Revenue” ($M, S&P-defined)35.27*33.44*-1.83*

Values marked with * retrieved from S&P Global.

KPIs and Mix

KPIQ4 2024Q1 2025Commentary
Deposit Growth ($)$3,557.99B $3,736.35B +$178.36M QoQ (+5.01%)
Non-Wholesale Deposits84.26% of total 81.53% of total Wholesale increased QoQ
Wholesale Deposits QoQ—+$130.0M (+23.21%) Short-dated to ride falling rates
Cash/Deposits9.90% 12.11% Liquidity build
LDR (%)99.38% 97.01% Policy target <100%
Bay Area Deposits$229.5M at 12/31/24 $379.8M at 3/31/25 Team 27→31 QoQ

Guidance Changes

Metric/PolicyPeriodPrevious Guidance/CommentaryCurrent Guidance/CommentaryChange
Loan growth (HFI)FY 2025~8% (analyst recollection of prior commentary) Management “more bullish,” ~10–12% for remainder of year Raised (qualitative)
Core deposit growth vs loans2025—Core deposits expected to match loan growth New/clarified
Wholesale funding usageNear term—Not anticipating additional wholesale funding near term Maintained/clarified
Wholesale maturity profileOngoing—Keep maturities ~90 days to capture falling rates; expect ~100% beta on declines Policy articulated
ACL outlookQ2 2025—Possible increase as FOMC economic forecasts update; model sensitive to GDP/unemployment Cautious bias
Cash and LDR targetsOngoing—Maintain ~10% cash and LDR <100% Policy reiterated
DividendQ1 & Q2 2025$0.20/share declared Jan 16, 2025 (paid Feb 10) $0.20/share declared Apr 17, 2025 (payable May 12) Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Two Quarters Ago)Q4 2024 (Prior Quarter)Q1 2025 (Current)Trend
NIM & Funding CostsNIM 3.37%; cost of total deposits up 16 bps QoQ to 2.72% NIM 3.36%; cost of funds 2.65% NIM 3.45% (+9 bps); cost of funds 2.56% (-9 bps) Improving NIM; easing funding costs
Deposit Growth & MixDeposits +$250.3M; wholesale +$157.4M heavy Deposits +$158.0M; wholesale +$150.0M Deposits +$178.4M; wholesale +$130.0M; non-wholesale +$48.4M Growth robust; still mix aided by wholesale
Bay Area ExpansionSF office opened; deposits $189.0M; team 19→24 Team 24→27; $229.5M Bay Area deposits Team 27→31; $379.8M Bay Area deposits Accelerating penetration
Credit & ACLNPLs 0.05%; ACL to loans ~1.09% NPLs 0.05%; ACL to loans 1.07% NPLs 0.05%; ACL to loans 1.08%; model sensitive to FOMC Stable credit; cautious on macro inputs
Macro/Tariffs & Consumer——CFO/CEO discuss tariff risk; CRE (MHC/RV) viewed resilient; SBA/consumer monitored; ~9% reserve on SBA book Heightened monitoring; portfolio seen resilient

Management Commentary

  • Strategic focus: “The strength of Five Star Bank’s first quarter 2025 financial results is emblematic of a reputation built on… speed to serve and certainty of execution… As we continue to grow our presence, we now have 31 San Francisco Bay Area employees… $379.8 million in total deposits [in the Bay Area].” — CEO James Beckwith .
  • Profitability drivers: “We improved our net interest margin by 9 basis points… grew total loans, assets and deposits… [and] declared another cash dividend of $0.20 per share.” — CEO James Beckwith .
  • Operating discipline: “Net interest margin was 3.45%… with lower average cost of deposits as the primary driver… Noninterest income decreased… due primarily to a reduction in income received on equity investments… Noninterest expense grew… primarily due to increases in salaries and employee benefits…” — CFO Heather Luck .
  • Outlook: “We’re a little more bullish… you’re going to see a 10% to 12% loan growth… [We have] 36 BDOs… bullish on growth on both sides of the balance sheet.” — CEO James Beckwith .
  • Funding strategy: “We think core deposit growth will match loan growth… not anticipating… additional wholesale funding… keep [wholesale] pretty like 90 days out… [expect] the beta… 100% [to declines].” — CEO/CFO .

Q&A Highlights

  • Loan growth outlook raised: Management now targets ~10–12% loan growth for the rest of 2025, citing strong pipelines and a larger, experienced BDO team (36 total; 16 SF/20 capital region) .
  • Funding mix and costs: Core deposits expected to match loans; no incremental wholesale anticipated; wholesale maturities ~90 days to capture falling rates; CFO noted rolling wholesale down by 24 bps QoQ; expecting ~100% beta on declines .
  • Tariffs/macro and portfolio resilience: CRE segments (manufactured housing/RV parks) viewed as historically resilient; monitoring consumer/SBA exposures; SBA reserve near ~9% .
  • ACL dynamics: Reserve increase driven by loan growth, net charge-offs (~$0.7M) and FOMC macro updates; model is sensitive to GDP/unemployment; further increases possible with Q2 forecast refresh .
  • Loan pricing competition: Spreads tighter in multifamily; still achieving acceptable spreads; repricing on legacy credits contributing to yields, without emerging credit concerns at this time .

Estimates Context

  • EPS: $0.62 actual vs $0.59 S&P Global consensus; beat of $0.03, aided by lower deposit costs and NIM expansion . Values retrieved from S&P Global.*
  • “Revenue” (S&P-defined): $33.44M actual vs $35.27M consensus; miss of ~$1.83M.* Company drivers included lower interest income from reduced balances/yields on interest-earning deposits in banks and lower non-interest income QoQ due to absence of venture-backed fund income .
  • Estimate counts: 4 estimates for both EPS and “Revenue” in Q1 2025.*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • NIM inflection: A 9 bps QoQ NIM increase with a 9 bps reduction in cost of funds suggests near-term earnings support if deposit costs continue to trend lower and wholesale betas transmit promptly .
  • Balance sheet momentum: Loans (+2.52% QoQ) and deposits (+5.01% QoQ) grew, with Bay Area traction accelerating; management now targets 10–12% loan growth through year-end .
  • Funding strategy de-risks rate paths: Short-dated wholesale deposits and a focus on core growth position FSBC to benefit from rate declines while maintaining liquidity (~$2.03B) and cash (12.11% of deposits) .
  • Credit stable but macro-sensitive: Very low NPLs (0.05%) and diversified CRE; ACL modeling is sensitive to FOMC forecast updates—watch Q2 reserve trajectory .
  • Operating leverage watch: Efficiency ratio rose QoQ to 42.58% on people investments; sustained revenue growth and cost control are key to defending mid-40s efficiency .
  • Dividend continuity: $0.20/share dividend declared again in April; capital ratios comfortably “well-capitalized” (CET1 11.00%) .
  • Near-term stock drivers: Raised loan growth tone, NIM tailwinds, and Bay Area expansion updates vs. any signs of deposit mix normalization and ACL updates tied to macro forecasts .

Additional Detail and Source Highlights

  • Q1 2025 8-K/press release: comprehensive financials, liquidity, capital, mix and KPI disclosures .
  • Dividend PR: $0.20/share declared Apr 21, 2025 (payable May 12, 2025) .
  • Prior quarters for trend: Q4 2024 (EPS $0.63; deposits +$158M QoQ; NIM 3.36%; wholesale deposits +$150M) ; Q3 2024 (EPS $0.52; deposits +$250M QoQ; NIM 3.37%) .
  • Earnings call transcript: Raised loan growth outlook; funding mix/strategy; tariff/consumer commentary; ACL sensitivities; pricing dynamics; SBA reserve commentary .