On Wednesday, DA Davidson maintained a Buy rating on Five Star Bancorp (NASDAQ:FSBC) stock and increased the price target to $35.00 from $34.00. The firm's analyst cited the company's strong quarterly performance, highlighting favorable loan and deposit trends, which held even when excluding purchased loans and increased wholesale funding. The robust asset quality and profitability levels were also noted as contributing factors to the positive outlook.
Five Star Bancorp's deposit growth in its San Francisco market was particularly emphasized, with the company now employing 24 individuals and nearing $200 million in deposits. This growth is seen as a continuation of FSBC's successful expansion and market penetration strategy.
The company reported third-quarter 2024 earnings per share (EPS) of $0.52, which was slightly below the analyst's expectation of $0.54 and the Street's mean of $0.53. The shortfall in EPS was attributed to a higher provision expense, which accounted for $0.02 per share, and a decrease in fee income, impacting $0.01 per share.
Despite the EPS miss, Five Star Bancorp demonstrated a quarter-over-quarter improvement in pre-provision net revenue (PPNR) per share, which came in at $0.85 compared to the $0.87 estimate and $0.81 reported in the previous quarter. This indicates a continued operational strength and underlines the reasons for the analyst's confidence in maintaining the Buy rating and adjusting the price target upwards.
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