Five Star (FSBC) Q3 2026 Earnings Report

The call was strongly positive overall. Management reported higher net income, pretax pre-provision income, net interest income, net interest margin, loans, liquidity and capital, along with improved efficiency and stable credit quality. The company also continued expanding across California and maintained positive loan growth guidance. Offsetting factors included lower return on average equity, modest share dilution, higher deposit funding costs, lower noninterest income, increased expenses, competitive pricing pressure, a slowdown in acquisition financing and continued economic and rate uncertainty.

Management said it was “pretty comfortable with the margin from 3.65% to 3.75%,” expects funding costs to go up “in the next few quarters,” and is “guiding 10% to 12% in Q4 and probably 10% to 12% for 2027” for loan growth; new relationships with noninterest-bearing transactional balances and liquidity balances may be priced “with a 2 handle, blended, maybe high 2s,” while loan repricing is expected to support yields “probably for the next 3 or 4 quarters,” including about $135 million of 5-year loans repricing in the current quarter from a weighted average rate of 4.27% and about $694 million repricing next year from a weighted average rate of 5%, with manufactured home loans repricing to 6.75% to 7.25%; for expenses, management said adding about $200,000 for Q4 2026 would likely be appropriate and expects expenses to remain between 1.45% to 1.50% of average assets.