Shares of Five Star Bancorp (NASDAQ: FSBC) surged 5.91% on October 30, 2024, after the regional bank reported its third-quarter financial results. While the company missed analyst expectations for revenue and earnings per share, investors seemed optimistic about its growth prospects and strong fundamentals.

For the third quarter, Five Star Bancorp reported revenue of $29.0 million, up 4.3% year-over-year but missing analyst estimates by 1.6%. Net income remained flat at $10.9 million, and earnings per share decreased to $0.52 from $0.64 in the same quarter last year, missing expectations by 1.3%.

Despite the mixed earnings results, several positive factors likely contributed to the stock's impressive performance. During the earnings call, the company highlighted strong deposit growth, with non-wholesale deposits increasing by $92.9 million during the quarter. Additionally, asset quality remained robust, with nonperforming loans decreasing to 0.05% of loans held for investment.

Furthermore, Five Star Bancorp's management expressed confidence in the company's growth prospects, with revenue forecasted to grow at an average of 20% per annum over the next three years. This growth rate is significantly higher than the 6.7% forecast for the broader banking industry in the United States.

However, the company faced some challenges during the quarter. Non-interest income decreased to $1.4 million from $1.6 million in the previous quarter, primarily due to reduced gains from loans sold. Non-interest expenses also increased by $0.3 million, driven by higher salaries and employee benefits.