FSBC - Earnings call transcript Q1 2024

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Operator

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. [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. 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.

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

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

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

James Beckwith

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

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

the the To wasn't refer click [ financial on fivestarbank.com will that today and copy a the our obtain announcement comments earnings please website of the at Relations to Our visit information tab. release, in released Investor included ] yesterday.

our the ordering Our X.XX the announcement proceeds general XXX,XXX shares public story of growth the quarter million intention first for using with continued to support organic our and corporate and net underwritten for shares to continued growth of underwriters' stock an additional in the bank's working purposes, of capital. option up common of purchase with to the

of XXXX. seen months accounts million to continue as X an ended add San Bay and Francisco seasoned relationships We to wholesale of the March also non in the added deposit core Area X support XX, deposits increase our in professionals $XXX expansion more new market and

deliver on quarter the our ability and Despite continued as of XX% to LTV the and our first evidenced dividend $X.XX managed conservatively to by for our fourth quarter real share of per headwinds, efficiency with estate, expenses ratio XX% our value shareholders XXXX. a we with commercial underwrite external XXXX maintained

compression, although first growth we're the quarters, management The execution earnings remain we strategy, quarter focused quarter. organic our of prior the maintain to during to compared expense exhibited and able slowing margin trends continued on and XXXX of

grown the consistently total positions future us this result in of is prior decrease which less for deposits deposits borrowings, have and periods. assets Loans and The growth. quarter, since relying on wholesale during short-term well the

XXXX. Our continues of solid at end first pipeline the remain of to the quarter

quarter million during the as Loans and during in Within by quarter verticals, diversification $XX.X operated loan portfolio. $XX.X in the portfolio and loan we have or downs the pay of respectively. million, $XX.X the payoffs investment for from presented X.XX% approximately $XXX.X the originations historically were million, increased while slide. Loan consumer held million prior concentration were the within quarter primarily

related quality Asset $X.X designated was losses increased quarter. and -- reserves only of end strong, previous continues third a of at factors. the the credit of the increases a the qualitative for $X.X at to $X.X for investment decrease loans losses million at in reduction in charge-offs, quarter of qualitative in end at the provision the quarter they $XX.X from end. million recorded for remain first the was allowance reserves primarily quarter The beginning credit loans net ratio though of the to the quarter million to XXXX, of the represent X.XX% non-performing of to total during we Loans the approximately the quarter, substandard end which million, were totaled X.XX% totaled portfolio continue effect as

at slightly the quarter. compared at $XX.X total the Noninterest-bearing the of increased first by decreased of the a previous previous XX.X% or as During the deposits end end from percentage the quarter as million to quarter. deposits first XX.X% quarter, X.XX% deposits of to

As for XXXX. inflows March the noted X XX, months are had we ended deposit pleased we non-wholesale net a earlier,

supports our dollar the reliable deposit accounts we relations, duration model of believe through and deposit grow the that core our high as to ability differentiated certain Our customers customer-centric accounts customer value of trust have we mix and a base. seen

of To more our the these deposits. to composition, XX, XX% deposit I of relationships XXXX. agency accounted deposit years. offer want accounts deposits on depositors age totaling Local approximately of X $X million March total approximately of approximately highlight at least for was detail And that constituted XX% as average

interest-bearing deposits deposits. less compared million Overall, and deposits deposit prior as deposits, the Non-wholesale when in increased result a $XXX.X Cost by focus first costly deposits increase in decreased $XX.X of by which deposits offset basis quarter wholesale the deposits was Wholesale we million by a by balances XXX have points million. quarter. $XXX decrease total noninterest-bearing define time partially $XXX.X a during driven on rely to decreased deposits. broker our to million, as of public

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

equity on May to Tier to increased December common cash X XXXX. by expected a of and of per company's $X.XX dividend as we April record by XX, on XX, XX, X.XX% of common Our stock X, the between May the Directors, from share of On announced be to XX, ratio declaration voting March X.XX% shareholders XXXX. XXXX XXXX paid our Board

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

Heather Luck

you, James, hello, Thank everyone. and

Net quarter. quarter $XX.X loan on X.XX% was increase return income return Average the of equity average X for XX.XX%. was X.XX%, representing the points and million, for average was the an basis yield was quarter prior assets on over

XXXX for X.XX% put quarter Fed pressure X.XX%. costs. prior net Our in was net interest deposit continue the while on increases rate was to interest for the quarter, margin margin

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

from $X.X fees March of referral in first and X and partially to which decreased reductions the quarter XXXX. due income Noninterest in previous the funds to XX, lock a in in investments on from primarily losses rate distributions the $X.X million million reduction of occur gains the ended the quarter venture-backed by in during The decreases first did net securities, quarter of offset not months sale were in on the XXXX. swap recognition

XXXX, This as as grew other salaries partially increase $XX,XXX in months employee December XXXX. offset an in operating by primarily expense and Noninterest ended to declines expenses during the XX, ended March in X benefits, well promotional X XX, to due months expenses by the quarter. is and advertising the compared

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

James Beckwith

Heather. a discuss you, for speed joining I built Five us results. Bank and Thank success. has as want serve to we certainty quarter trust, clients' execution, on Star reputation of which to our everyone thank support first

performance result to which to experience, differentiated an truly spirit, for is continues sustained customers treating the empathetic our model services. power demand and prudent tariff. understanding the relationship-based Our Five customer of Star Bank's business success with attribute financial the We and

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

XXXX, by monitor market on are into we value lean guided focus we conditions. a as continued As we shareholder

environment any and strategy. are resilience our We in on company's long-term the remain the and confident in focused future

our to community employees, We growth and execute customers, business on disciplined will our we which shareholders. practices, and believe benefit organic continue will

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

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

Operator

[Operator Instructions] question Terrell today first Andrew The Stephens. comes with from

Andrew Terrell

you the couple the I during deposits deposits? weighted a quarter? Just and in fund the When time have me. the occurred did do in mean on for runoff cost brokered public those average of deposits deposits

Heather Luck

We had a of wholesale did So probably I going into ran we would million. the that second deposits weighted balance off. quarter on year, about the -- say, about of the average first X.XX% had $XXX of deposits wholesale rate of quarter when the for a most half the and really the

weighted a So balance a now we're and $XXX X.XX% then of of total currently average rate sitting million. at

Andrew Terrell

And then you was very Yes. mean, remix about talk quarter impressive. -- obviously this the I can

you left in expect the like kind deposit runoff of would any something wholesale got remind And us deposit for then you of $XXX wholesale. that the the kind within Can of more year? guidance? growth just deposits expectations You've million

James Beckwith

to to XX%. of wholesale at We of QX for Sure. -- runoff our We're runoff that plan deposits. in up accounting to stick includes going XX% end That growth. deposit

as Andrew, like a respect, for static, think of expect I great California but particularly right the this the now, relationships, state maintaining of are pretty a quarter-by-quarter wouldn't too of important. certain sit continued in on we'll be I rest year, with We at we a kind we where wholesale is of probably of the runoff look basis.

have think would I piece July. so in And that a left small brokered we

Heather Luck

million. $XX

James Beckwith

greater be to able eliminate which But that, million, we'll nothing than Andrew. $XX hopefully probably that.

Andrew Terrell

million deposit this or contrast and compare just think maybe you could it $XXX for growth, non-wholesale I then was quarter. the And so

today kind roll the sheet costs the saw what versus new quarter? off a first we average money on Just weighted of in bringing you're the balance

James Beckwith

all of bringing lot is of about the probably this on when balances a the -- A thinking in we're And has and to now are stuff we of probably terms rate it, I interest-bearing, average interest-bearing weighted through. I'm about noninterest-bearing around amalgamate shy that But little was as if X%. -- Sure. what I think interest-bearing. a is on that handle expect right X%

bringing driven down. the we're on, that increases, successful by will if noninterest-bearing so of those really with numbers the remainder that's our relationships year for -- deposit And we're work in that and new

our think we're in paying effort deposit those San that terms Francisco yield I of customers.

Heather, the falling of I my top do head? information off have that you got because

Heather Luck

X%. to Close

James Beckwith

X.XX%. Yes, it's a little shy of X%,

I think DJ's was deck. that in

in new at these on. -- terms these kind So bringing new what relationships what now that's of looking we're right on we're of relationships

our we're their Andrew, as note their And customers footprint, really is new liquidity. bank and across accounts it's operating after to these we important entire

in totality we look terms things of at cost So of in funds.

a And transactional we sub-X%. So somebody just you think we the deliver entire strategy. relationship X% the and can their bank liquidity pay will, that, if account, winning for that's if we that can hopefully,

Andrew Terrell

one. appreciate March? that. around have Heather, could I the last of margin. Understood. month the one ask in you the Do totally If margin I just

Heather Luck

do. of Oh, in the March, month I

apologies, me just for X.XX%. of net was the interest March about our month for interest margin Net -- that So piece let pull or of it.

Operator

[Operator Gary D.A. next Davidson. Instructions] with question comes The from Tenner

Gary Tenner

expense to thinking I ask on side. loaded of for the levels new hires? fully wanted kind the near-term on is What expense

Heather Luck

Yes.

for QX, look conferences if do We that QX if have think QX, what I some new also QX. that add your good should expenses we model have to but we we for incurred I through $XXX,XXX than there. for little hires, shape about that put we a for some So in bigger then in run expenses think at are

James Beckwith

going to and develop is the the to spend third go the we Area. up and as quarter fourth advertising in our quarter second And continue quarter Bay

Gary Tenner

as of I you have answer I it. Heather, the you may heard apologize NIM, XX, this provide said. rates you March missed but March I then you missing And the mention, for if spot did I did, think,

Heather Luck

sure. Spot was for cost ]. No, rate deposits to [ $X.XX

Operator

over concludes I remarks. conference closing any question-and-answer for our would session. to like the to This management back turn

James Beckwith

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

and to conservative have with efficiencies, rating and operating our employees. awards. numerous we include technology, success also people, underwriting successes Our share the practices expense These contributed management shareholders,

Family-owned the In leadership Women Also by in Year the of by Small Sacramento Small and Champion. Business Association the Business recognized the the first our Business Outstanding were Business Small X Company Executive quarter, Mean XXX Minority also quarter, list. Business recognized Women list first Power on customers Women of Award. the Journal the the and of company's of Owners, Business was Who Administration the leadership Leaders, in received National Women Sacramento categories the

development, our Bank for economic a for be Five driving trusted continues a and committed community. a for force Star customers advocate our resource to

We discuss thank look you Have listening. in speaking of forward for to July quarter great again a you day, the to for second with XXXX. earnings and

Operator

presentation. Thank concluded. The today's now conference attending has you for

You disconnect. may now

Five Star Bancorp (FSBC) 30 Apr 242024 Q1 Earnings call transcript