Five Star Bancorp

Welcome to the Five Star Bancorp Third 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 number to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Before we get started, we would like to remind you that today's meeting will include some forward-looking statements within the meeting 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 31, 2024. and quarterly reports on Form 10-Q for the three months ended March 31, 2025, and June 30, 2025, and, in particular, the information set forth in Item 1A, Risk Factors, in those reports. Please refer to Slide 2 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 note, this event is being recorded. I would now like to turn the presentation over to James Beckwith, Five Star Bancorp President and CEO. Please go ahead.

Thank you for joining us to review Five Star Bancorp's financial results for the third quarter of 2025, which were released yesterday. The release is available on our website at fivestarbank.com under the Investor Relations tab. Joining me today is Heather Luck, Executive Vice President and Chief Financial Officer. Our third quarter results include outstanding growth in loans and core deposits attributable to our differentiated client experience and organic growth strategy. We maintain our unwavering commitment to clients and community partners throughout Northern California. Financial highlights during the third quarter include $16.3 million of net income, earnings per share of 77 cents, return on average assets of 1.44% and return on average equity of 15.35%. Our net interest margin expanded three basis points to 3.56% and our cost of total deposits declined by two basis points to 2.44%. Our efficiency ratio was 40.13% for the third quarter. During the third quarter, we saw continued balance sheet growth as loans held for investment grew by $129.2 million or 14% on an annualized basis. Total deposits increased by approximately $208.8 million or 21% on an annualized basis. During the quarter, non-wholesale deposits increased by $359 million or 11% while Wholesale deposits decreased by 150.2 million, or 23%. Our asset quality remains strong, with non-performing loans representing only five 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 October 16th, our board declared a cash dividend of 20 cents per share on the company's common stock, expected to be paid in November. We continue to deliver value to our shareholders. Our total assets increased during the third quarter by 228.3 million, largely driven by loan growth within the commercial real estate portfolio, which grew by 77.7 million. Our loan pipeline remains strong. The credit quality of loans remains strong due to our conservative underwriting practices, robust monitoring 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, which declined by 149,000 during the third quarter. We recorded a $2.5 million provision for credit losses during the quarter, primarily due to loan growth. The increase of our total liabilities during the third quarter was the result of growth in interest-bearing and non-interest-bearing deposits related to new accounts. The new interest-bearing deposit accounts contributed to $171.6 million of overall growth. New non-interest-bearing deposits contributed to $28.8 million of overall growth. Non-interest-bearing deposits remained consistent at 26% of total deposits as of September 30, 2025. Approximately 60% of our deposit relationships total more than $5 million. These deposits have a long tenure with the bank, with an average age of eight years. We believe our deposit portfolio to be stable funding base for our future growth. And now, I will hand it over to Heather to present the results of operations. Heather?

Thank you, James, and hello, everyone. Net interest income increased $2.8 million from the previous quarter primarily due to a $4.3 million increase in interest income driven by new loan production at higher rates, contributing to overall improvement in the average yield on loans. This was partially offset by a $1.4 million increase in interest expense related to core deposit growth during the quarter of $359 million, which exceeded the $150.2 million of higher cost wholesale deposits maturing during the quarter. Non-interest income increased to $2 million in the third quarter from $1.8 million in the previous quarter, primarily due to an increase in swap referral fees recognized during the three months ended September 30, 2025, partially offset by no gain on sale of loans recognized during the quarter in connection with our strategic shift to reduce wholesale SBA loan production and sales. Non-interest expense grew by $900,000 in the three months ended September 30, 2025. This is primarily due to an increase in salaries and employee benefits related to increased headcount to support customer facing and back office operations. We continue to invest in our Bay Area expansion, evidenced by the opening of our newest full service office in Walnut Creek, contributing to a slight increase in occupancy and equipment. And now I'll hand it back to James for closing remarks.