Five Star Bancorp (FSBC) 25 Apr 232023 Q1 Earnings call transcript

Good day, and welcome to the Five Star Bancorp First Quarter Earnings Webcast. Please note, this is a closed conference call and you are encouraged to listen via the webcast. After today’s presentation, there will be an opportunity for those provided with a dial-in numbers to ask question. [Operator Instructions].

Before we get started, let me remind you that today’s meeting will include some forward-looking statements within the meaning of applicable securities laws. to trends things, company’s that results financial relate events plans, future statements and industry and may position. forward-looking among current other expectations, operating These affect the

results uncertainties future and these risks involve materially from statements activities Such and may differ expectations. and

discussion see complete risks the in report for Item Form the actual company’s more may the company’s the and materially XX-K December and to annual particular differ therein. a set from that XX, year forward-looking cause forth of Risk For XA uncertainties results information statements, XXXX, ended please the on in Factors

Please the non-GAAP which to directly comparable regarding financial the disclaimers included recorded. Slide presentation. to as refer and in the forward-looking most Please in this note included reconciliations to measures presentation, is this X presentation, which event is being appendix financial figures, information data GAAP to well of statements, the industry as includes non-GAAP

to Star to like over turn presentation and now ahead. go President would Please Bancorp I the Five Beckwith, James CEO.

Thank Bancorp's first financial review results Five you Star the of XXXX. quarter to for joining for us

Heather today Luck, Vice Chief Financial President is Officer. me Joining and Senior

of released Our To was included Investor Relations announcement will information obtain financial that at comments the visit earnings a click refer today in our please on the to the the copy website and release, yesterday. fivestarbank.com tab.

on growth new In our of the XX% above first basis first and XX%. annualized rate new accounts growing adding year, thereby quarter, of goal relationships, total target the by our was three we by an executed during deposits which growing deposits annual of months the

deposits March. total in of grew Additionally, month we the

for relationships upon to the our broader offerings, opportunities new openings account and services. response based As and sector challenges our provided

competition considering intense slower to first X challenges as focused sector these and we in dialogue, results institutions the whole, relationship affecting quarter of which have our March XX.X% our In our the as period generally the and ended substantially XXXX. this pleased, stability margin, and openness a reached ratio I'm financial business. I'm pleased base. customer approximately March the backdrop as of rates generally XXXX. events, growth. disruption with XX, months for -- I'm slower maintained a We deposit trust and we as is liquidity banking the XX, And recent cash response our to position credit the of on cash that Despite other strengthened grew our of also from we net equivalents was to customers. the current note X.XX% and to interest pleased

consistent, our XX%. efficiency of seen is management our expenses Additionally, disciplined in ratio approximately of

We This are carefully integral investment loan by faster long-term our growth. portfolio. to and priority focus our XX% X% or on approximately held annualized. to adding than our grew of portfolio deposit Net loans deposits is for purposefully

other the assets. securities of earning proportion securities As debt of as income AFS maturity comprehensive only X.XX%. a total to a interest XX, XXXX, constitute of X.XX% assets, March held proportion was earning as interest of accumulated X.XX% constituted equity only

footprint and geographic balance management, In earnings, management continued first trends of exhibited our our have quarter executive the evidenced sheet growth overview as our quarter. during XXXX, overview expense the of we In a section, brief team. strategy, provided company by of the execution

assets total Additionally, loans, since deposits and have grown prior periods. consistently

presented diversification portfolio we the to the as XXXX, first in continues loan the slide. order of end verticals solid in, have historically at operated pipeline Our of remain within

million. estate payoffs the commercial were quarter during quarter, real primarily or investment concentration Loans the originations by from loan million held for X.XX% portfolio. increased Loan $XXX the of were and within $XX.X $XX.X approximately during million prior quarter the

for credit of losses X.XX% ASC adjustment recorded non-performing credit the million losses loans related ratio losses At from day unchanged losses million the primarily the $XX.X allowance $X.X of largely quarters. and to strong total to investment the loan of Asset remain the end last On the the held quarter, adopted during allowance an to end. at we for $X.X growth. January several remaining of Xst, XX, for with for XX quarter quality totaled We representing approximately for the credit provision XXX the continues credit only for recorded one a first was million. X.XX% The portfolio, loans entry. allowance quarter, to

the largely of designated previous approximately unchanged million the Loans the totaled as was from at quarter. substandard $X.X quarter, end which

Now I discussed that continue and the loan portfolio, have we capital. will onto deposits

compared was deposits increased at quarter, to on as XXX.X previous March the from least highlight approximately the of XX.X% of to decreased the for approximately offer end depositors of accounted the Local XX.X% want years. deposit total I our of at deposits, to average balance by or XXst, To XX% detail a and Non-interest-bearing constituted the percent all X.XX% million, quarter. quarter X quarter. as at approximately a the approximately that XXXX. composition, end deposit During accounts more was previous deposits deposits million and average age totaling accounts XX XX% at deposits, the first XXX,XXX the total agency of these of deposit first account

March inflows able ended three March, XX the value. during As March for XXXX, earlier, grow we pleased and -- our being customers customer-centric deposit inflows had highlighted and months are the hold we've XXst, trust model including that supports of differentiated deposit to month net of

of relationships. of mix customer the time and had have accounts core we've dollar through a the certain high base. believe length we reliable deposit We seen As

compared total balances decreased several first while interest Non-interest XXX bearing million, during had deposits million. The quarters deposits cost had deposit increasing over by bearing quarter. quarter. XXX deposits increased the We've of basis by XXX strong deposit prior points last when to the was growth the with

all for We thresholds continue to quarter. well capital ratios above with well capitalized the be regulatory

adoption of increased retained phased to which a approximately into March over regulatory earnings ASCXXX the one X.XX% of tax December XXst, net on capital between XXXX, of impact where to effect, in X day X.X XXXX. XXXX the day January the CET ratio of includes years. Xst, is Our change decrease from three effect million, XXst, one the This X.XX% resulted and

also X CET as Friday, which common record cash our continuing effect On to May XXXX. announced a of expected on XX, April shareholders per includes share May stock declaration make board of we Our of $X.XX payments, reduces the to voting dividend by Xth, CET X. a to XXth, of XXXX paid dividend be company's of on the

it Heather note, of that hand discuss will the Heather? On over to operations. I results to

return the was average was X.XX%, the Thank And as basis over James. points XX.XX%. Net have loan million, you, on last XX.X X.XX%, yield was of that for months. the was assets income for an for increases increase Average the driven return quarter on XX rate representing quarter continued average hello the quarter, by equity everyone. XX prior and

interest prior Our net net have quarter with Consistent was for deposit margin net interest interest held the margin while X.XX%. expectations, despite X.XX% quarter, margin for costs. the was we from pressure

XX, of to on net changes, other effect result during comprehensive ended of rate $X.X of XX, other securities a XXXX our $XX.X interest unrealized by XXXX million million income and declined as tax factors, from March available-for-sale $XX.X XXXX. the as debt losses, improved in as As months of March million December XX, three

and quarter million $X.X income an volume to backed fees in in a $X.X on investment decreased in other months fluctuations XXXX. $X.X distribution to in in XX, one-time venture a the received to X December decrease due a on fund ended a in million loan loans million due income million $X.X related first quarter, primarily in the SBA the to decrease Non-interest from due previous

months by ended expense to increased other expenses Non-interest subordinated X due by due to ended grew of as $X.X to on of XX, of months the December approximately primarily and partially XXXX, XXXX, decrease non-cash March employee a expense million in debt a largely $X.X million to costs, million XX, three XXXX. compensation increase origination a in on mainly compared lower $X.X deferred December operating redemption $X.X the financing in loan offset charge costs million, related

Now back some to I will it of to hand remarks. overall results now operations, that discussed have James we provide closing the

quarter a speed as serve certainty I client of The quarter financial supports built we want discussed emblematic trust, you, first of reputation first Thank for everyone to our Bank's joining XXXX to and is success. results strength which thank execution, of us, on results. Heather. the

results sustained success attribute of powers a which result demand empathetic experience, differentiated services. and the business care. our relationship-based understanding also the financial customer prudent We truly Bank's to model spirit, are for with Our and Five an customers Star treating

shareholders. to the are of have serve, We very our including proud those we trust earned

be the remainder conditions. market we value of focus shareholder on to will guided by as XXXX, monitor we Looking a

shareholders. and on benefit we disciplined the are any We continue business our organic and to environment, in which our resilience execute will will confident believe employees, growth strategy customers, community and in practices, company's

We concludes appreciate your time today. presentation. today's This

that I to Now take happy Heather any have. and will questions may be you

a hoping dialogue, for time were we make to and of and questions sure questions. but know anticipating them and we And for it's were Well, busy happy some that everybody some knew open take to offline I also. just everybody, wanted

thank you everybody. anyway, So

a on which and growing as continued our growth of our while path is include talent. Bancorp execute Star retaining attracting initiatives, geographies Five we verticals strategic and

assets the expense Our on also S&P company banks efficiencies, contributed Market of the earning include billion. Recent annual between billion shareholders. ranking underwriting XX share nation management with practices best community rankings people, the have success the X and successes conservative with and number to in employees Global X technology, Intelligence, operating the XXXX performing and we

financial We we reports. of and and The a out also are performing company rating power with believe bank pleased is very of premier on ranking XXX rating also IDC with company our the stars super builds Superior to have trust a the XXX. community. The and created recognized of of out this Finlay customers has five five be superior

you July We XXXX. our a are customers, discuss forward to communities. in resource and trusted for advocate of force economic We for the speaking our for driving second again of quarter development, with committed a earnings look to a

Have a you for thank day listening. and great