Five Star Bancorp (FSBC) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $10.8 million, up from Q1 2024 but down from $12.7 million in Q2 2023; YTD net income was $21.4 million, down from $25.9 million YTD 2023.

• Total assets reached $3.63B, with loans held for investment at $3.27B and deposits at $3.15B as of June 30, 2024.

• Public offering in April 2024 raised $80.9 million, supporting Bay Area expansion and organic growth.

• Asset quality remained strong, with nonperforming loans at 0.06% and allowance for credit losses at 1.08%.

• Cash dividend of $0.20 per share declared for Q1, Q2, and Q3 2024.

Financial highlights

• Net interest income for Q2 2024 was $29.1 million, up $1.5 million year-over-year; net interest margin was 3.39%, up from 3.14% in Q1 2024 but down from 3.45% in Q2 2023.

• Provision for credit losses increased to $2.0 million in Q2 2024 from $1.3 million in Q2 2023.

• Non-interest income for Q2 2024 was $1.3M–$1.6M, down year-over-year due to lower gains on loan sales and equity investments.

• Non-interest expense rose to $13.5M in Q2 2024, driven by higher salaries, data processing, and expansion costs.

• Efficiency ratio increased to 44.07% from 39.41% year-over-year.

Outlook and guidance

• Management expects continued strong loan and deposit growth, especially in the Bay Area, and will maintain quarterly cash dividends, subject to board discretion.

• Net interest margin projected to moderate to 3.40%-3.45% in Q3 2024.

• SBA gain on sale income expected to decrease in the second half of 2024.

• Non-interest expense run rate expected to increase by $250,000 per quarter for the remainder of 2024.

• Capital and liquidity levels are expected to support ongoing growth and regulatory compliance.