Five Star Bancorp

Welcome to the Five Star Bancorp Second 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 the dial-in number to ask questions. To ask a question, you may press star and then one on your telephone keypad. To withdraw your questions, you may press star and two. Before we get started, we would like to remind you that today's meeting will include some forward-looking statements within the meaning of applicable securities laws. These forward-looking statements relate to, among other things, current plans, expectations, events, and industry trends that may affect the company's future operating results and financial position. Such statements involve risks and uncertainties, and future activities and results may differ materially from these expectations. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from the company's forward-looking statements, please see the company's annual report on Form 10-K for the year ended December 31st, 2024, and the quarterly report on Form 10-Q for the three months ended March 31st, 2025. And in particular, the information set forth in item 1A, risk factors in those reports. Please refer to slide two of the presentation which includes disclaimers regarding forward-looking statements, industry data, unaudited financial data, and non-GAAP financial information included in this presentation. Reconciliations of non-GAAP financial measures to their most directly comparable GAAP figures are included in the appendix to the presentation. The presentation will be referenced during this call but not followed exactly and is available for closer viewing on the company's website under the Investor Relations tab. Please also note today's event is being recorded. At this time, I'd like to turn the presentation over to James Beckwith, 5 Star Bancorp President and CEO. Please go ahead.

Thank you for joining us to review 5 Star Bancorp's financial results for the second quarter of 2025, which were released yesterday. The release is available on our website at 5starbank.com under the Investor Relations tab. Joining me today is Heather Luck, Executive Vice President and Chief Financial Officer. The strength of our second quarter results is emblematic of our differentiated client experience through our unwavering commitment to clients and community partners throughout Northern California. Financial highlights during the second quarter included $14.5 million of net income, earnings per share of 68 cents, return on average assets of 1.37%, and return on average equity of 14.17%. Our net interest margin expanded by eight basis points to 3.53%, and our cost of total deposits declined by two basis points to 2.46%. Our efficiency ratio was 41.03 for the second quarter. During the second quarter, we saw continued balance sheet growth as loans held for investment grew by $136.2 million or 15% on an annualized basis. Deposit growth was approximately $158.3 million or 17% on an annualized basis. Our asset quality remains strong with non-performing loans representing only six basis points of total loans held for investment. We continue to be well capitalized with all capital ratios well above regulatory thresholds for the quarter. On July 17th, our board declared a cash dividend of 20 cents per share on the company's common stock expected to be paid in August. We continue to deliver value to our shareholders. Our total assets increased during the second quarter by $168.4 million, largely driven by loan portfolio growth within our commercial real estate portfolio, which grew by $125.4 million. Our loan pipeline remains strong. The credit quality of our overall loan portfolio remains strong due to our conservative underwriting practices, robust monitoring program throughout the life of a loan, and our relationship-based approach to lending. As a result, we have a very low volume of non-performing loans. Despite a half a million dollar increase during the second quarter, this increase was due to one commercial real estate loan been put on non-accrual status during the quarter. We recorded a $2.5 million provision for credit losses during the quarter. The increase in our total liabilities during the second quarter was primarily the result of the increase in both interest-bearing and non-interest-bearing deposits. Interest-bearing deposit growth was largely due to new money market deposit counts being opened in the quarter pushing $87.4 million in new balances. Non-interest bearing deposits was mainly driven by the opening of new accounts during the quarter, pushing $68.7 million in new balance. Non-interest bearing deposits made up 26% of total deposits as of June 30, 2025, an increase from 25% as of the end of the prior quarter. Approximately 59.9% of our deposit relationships total more than $5 million. These deposits have a long tenure with the bank, with an average age of 8.3 years. We believe our deposit portfolio to be a stable funding base for our future growth. Heather?

Thank you, James. Net interest income increased $2.5 million from the previous quarter. primarily due to a $3.5 million increase in interest income driven by loan growth and improvement in the average yield on loans. This is partially offset by a $1 million increase in interest expense related to deposit growth. Noninterest income increased to $1.8 million in the second quarter from $1.4 million in the previous quarter, primarily due to an overall improvement in the estimated earnings related to investments in venture-backed funds during the three months ended June 30, 2025. Noninterest expense grew by $700,000 in the three months ended June 30, primarily due to increases in business travel, conferences, training, and promotional expenses associated with the expansion of business development teams. This was partially offset by an increase in deferred loan origination costs. I'll now hand it back to James.