Q4 2023 Five Star Bancorp Earnings Call
James Eugene Beckwith: 4% and 17.85%, respectively. Our organic growth story continued during 2023 with the addition of 10 seasoned professionals to support our expansion into the San Francisco Bay Area market. We also continue to add new deposit accounts and relationships, as seen in the growth of non-broker deposits of $269.8 million during the year ended December 31, 2023, despite expected headwinds on the horizon. Our ability to conservatively underwrite and manage expenses with our 44% efficiency ratio and deliver value to our shareholders with our 20 cents per share dividend will also continue. We believe we are well positioned to continue to endure and succeed as conditions change.
Again, 85% respectively.
Our organic growth story continued during the 2023 with the addition of 10 seasoned professionals to support our expansion into the San Francisco Bay area market.
We also continued to add new deposit accounts and relationships.
<unk> seen in the growth of non broker deposits of $269 8 million during the year ended December 31 2023.
Despite expected headwinds on the horizon.
Our ability to conservatively underwrite and manage expenses with our 44% efficiency ratio and deliver value to our shareholders with our <unk> 20 per share dividend continue. We believe we are well positioned to continue to endure and succeed as conditions change.
James Eugene Beckwith: The fourth quarter of 2023 exhibited continued execution of our growth strategy, as evidenced by our earnings, expense management, and balance sheet trends during the quarter. Additionally, loans and total assets have consistently grown since prior periods, while deposits have decreased slightly. Our pipeline continues to remain solid at the end of 2023 within verticals we have historically operated in, as presented in the portfolio diversification slide. Loans held for investment increased during the quarter by $71.8 million, or 2.39% from the prior quarter, and increased by $290.4 million, or 10.40% year over year, primarily within the commercial real estate concentration of the loan portfolio. Loan originations during the quarter were approximately $144.1 million, and payoffs were $72.3 million. During 2023, loan originations are expected to be approximately $668.2 million, and payoffs are $3.2 million. $377.8 million. Acid quality continues to remain strong.
Quarter of 2023 exhibited continued execution of our growth strategy as evidenced by our earnings expense management and balance sheet trends during the quarter. Additionally, loans and total assets have consistently grown since prior periods.
While deposits have decreased slightly.
Our pipeline continues to remain solid at the end of 2023 within verticals. We have historically operated in as presented in the portfolio diversification slide.
Loans held for investment increased during the quarter by $71 8 million or $2, 39% from the prior quarter.
And increased by $290 4 million or 10, four zero percent year over year.
Primarily within the commercial real estate concentration of the loan portfolio.
Loan originations during the quarter were approximately $144 1 million and payoffs were $72 3 million.
During 2023 loan originations were approximately $668 2 million in payoffs.
377 8 million.
Asset quality continues to remain strong.
James Eugene Beckwith: Though non-performing loans have increased over the last several quarters as a result of financial challenges experienced by a small subset of our borrowers, they represent only 0.06% of the portfolio. As of December 31st, 2023, the allowance for credit losses totaled $34.4 million. We recorded a.8 million provision for credit losses during the fourth quarter, primarily related to loan growth, for a total provision for credit losses of $4 million for the year ended December 31, 2023. The ratio of the allowance for credit losses to total loans held for investment was 1.12% at year end.
Nonperforming loans have increased over the last several quarters as a result of financial challenges experienced by a small subset of our bottle borrowers.
They represent only 0.06% of the portfolio.
As of December 31, 2023, the allowance for credit losses totaled 34 4 million.
We recorded $8 8 million provision for credit losses during the fourth quarter.
Primarily related to loan growth.
For a total precision provision for credit losses of $4 million for the year ended December 31 2023.
The ratio of the allowance for credit losses to total loans held for investment was one 2% at year end.
Loans designated as substandard totaled approximately $2 million at the end of 2023 Rep.
James Eugene Beckwith: Loans designated as substandard totaled approximately $2 million at the end of 2023, representing an increase of approximately 1.5 million from the previous year end, while remaining consistent with the prior four. During the fourth quarter, deposits decreased slightly by 5.3 million, or 0.18%, as compared to the previous quarter. During 2023, deposits increased by $244.9 million or 8.8% since the end of 2022. 208.8 million of this increase related to money market accounts. Non-interest bearing deposits as a percent of total deposits at the end of the fourth quarter remained stable at 27.5 percent as compared to the end of the previous quarter and decreased from 34.9 percent at the end of the previous year. To offer more detail on our deposit composition, I want to highlight that deposit relationships totaling at least $5 million constitute approximately 62% of our total deposits, and the average age on these accounts was approximately 29 years. Local agency depositors accounted for approximately 27% of our deposits as of December 31st, 2023.
Representing an increase of approximately $1 5 million from the previous year and <unk>.
While remaining consistent with the prior quarter.
During.
The fourth quarter deposits decreased slightly by $5 3 million or one 8% as compared to the previous quarter.
During 2023 deposits increased by.
$244 9 million or eight 8%.
Since the end of 2022.
$208 $8 million of this increase related to money market accounts noninterest bearing deposits as a percent of total posits.
At the end of the fourth quarter remained stable at 27, 5% as compared to the end of the previous quarter and decreased from 34, 9% at the end of the previous year.
We will offer more detail on our deposit constant composition I want to highlight.
That deposit relationships totaling at least 5 million constitute approximately 62% of our top deposits of our total deposits.
And the average age on these accounts was approximately two <unk>.
Nine years.
Local agency depositors accounted for approximately 27% of our deposits.
As of December 31, 2023.
James Eugene Beckwith: As noted earlier, we are pleased that we had net deposit inflows for the year ended December 31st, 2023. Our ability to grow deposit accounts supports our differentiated customer-centric model that our customers trust and value, as seen through the mix of high dollar accounts and the duration of certain customer relationships. We believe we have a reliable core deposit base. Overall Deposit Balances have decreased slightly when compared to the prior quarter.
As noted earlier.
We are pleased that we've had net deposit inflows for the year ended December 31, 2023, our ability to grow deposit accounts supports our differentiated customer centric model that our customers trust and value.
As seen through the mix of high dollar accounts and the duration.
Of certain customer relationships we.
We believe we have EUR and reliable core deposit base.
Overall deposit balances.
Have decreased slightly when compared to the prior quarter noninterest bearing deposits decreased by $2 3 million, while interest bearing deposits decreased by three points zero million quarter over quarter.
Heather Christina Luck: Non-interest bearing deposits decreased by $2.3 million, while interest-bearing deposits decreased by $3.0 million quarter over quarter. Cost of total deposits was 239 basis points during the fourth quarter and 197 basis points during 2023 overall. We continue to be well capitalized with all capital ratios well above regulatory thresholds for the quarter and the year. Our common equity tier one ratio remained constant at 9.07% between September 30th, 2023 and December 31st, 2023. On Friday, January 19th, we announced a declaration by our board of a cash dividend of 20 cents per share on the company's voting common stock, expected to be paid on February 12th, 2024 to shareholders of record as of February 5th, 2024. On that note, I will hand it over to Heather to discuss the results of operations. Heather?
Cost of total posits was 239 basis points during the fourth quarter.
And 197 basis points.
During 2023 overall.
We continue to be well capitalized with all capital ratios well above regulatory thresholds for the quarter and the year, our common equity tier one ratio main remained constant at nine 7% between September 32023, and December 31 2023.
On Friday January 19th we announced a declaration by our board of a cash dividend of <unk> 20 per.
Per share on the company's voting common stock expected to be paid on February 12, 2024 to shareholders of record as of February February five 2024.
On that note I will hand, it over to Heather to discuss the results of operations Heather. Thank.
Heather Christina Luck: Thank you, James, and hello everyone. Net income for the quarter was $10.8 million. Return on average assets was 1.26%, and return on average equity was 15.45%. Net income for the year was $47.7 million, return on average assets was 1.44%, and return on average equity was 17.85%. Average loan yield for the quarter was 5.64%, representing an increase of seven basis points over the prior quarter. Average yield on loans for 2023 was 5.52 percent, representing an increase of 77 basis points over 2022. Our net interest margin was 3.19% for the quarter, while the net interest margin for the prior quarter was 3.31%. Our net interest margin was 3.42 for the year, while the net interest margin for the prior year was 3.75.
Thank you James and Hello, everyone.
Net income for the quarter with $10 8 million return on average assets was 126% and return on average equity was 15, 5%.
Net income for the year with 47.
7 million return on average assets was one 4% and return on average equity was $17 eight 5%.
Average loan yield for the quarter was $5 six 4%, representing an increase of seven basis points over the prior quarter.
Average yield on loans for 2023, with 552% representing an increase of 77 basis points over 2020 tail.
Our net interest margin was $3, one 9% for the quarter, while net interest margin for the prior quarter was 331%. Our net interest margin was 342 for the year, while net interest margin for the prior year with $3 seven 5%.
Heather Christina Luck: Fed rate increases in 2023 will continue to put pressure on deposit costs. As a result of changes in interest rates and other factors, our other comprehensive income was $4.2 million, as unrealized losses, net of tax effects, decreased on available for sale debt securities from $15.9 million as of September 30, 2023 to $11.8 million as of December 31, 2021. Non-interest income increased to $1.9 million in the fourth quarter from $1.4 million in the previous quarter, due primarily to gains from distributions on investments in venture-backed funds and the recognition of swap referral fees during the quarter.
Fed rate increases in 2023 continue to put pressure on deposit costs.
As a result of changes in interest rates and other factors or other comprehensive income with $4 2 million.
Unrealized losses net of tax effect.
Creased unavailable for available for sale debt securities from $15 9 million as of September 32023 to $11 8 million as of December 31, 2023.
Noninterest income increased to $1 9 million in the fourth quarter from $1 4 million in the previous quarter.
Due primarily to gains from distributions on investments in venture backed funds and the recognition of swap referral fees during the quarter.
Noninterest income increased to $7 5 million in 2023 from $7 2 million in 2022, due primarily to gains from distributions on investments in venture backed funds during the year.
Heather Christina Luck: Non-interest income increased to $7.5 million in 2023 from $7.2 million in 2022 due primarily to gains from distributions on investments and venture-backed funds during the year. Non-interest expense increased to $12.7 million in the fourth quarter from $12 million in the previous quarter, primarily due to increased salaries, employee benefits, advertising, promotion, and other operating expenses related to the company's expansion into the San Francisco Bay Area. Non-interest expense increased from $40.7 million in 2022 to $47.8 million in 2023, driven primarily by a $1.2 million increase in salaries and employee benefits related to the expansion into the bank, a $2.7 million decline in loan origination costs, a $0.7 million increase in FDIC insurance assessments, and an overall increase in expenses incurred to support a larger customer base. Now that we've discussed the overall results of operations, I'll I want to thank everyone for joining us as we discuss the fourth quarter and year-end results. Five Star Bank has a reputation built on trust. Speed to Serve and Certainty of Execution, which supports our clients' success.
Noninterest expense increased to $12 7 million in the fourth quarter from $12 million in the previous quarter, primarily due to increased salaries and employee benefit advertising promotional and other operating expenses related to the company's expansion into the San Francisco Bay area.
Yes.
Noninterest expense increased from $40 7 million in 2022 to $47 8 million in 2023, driven primarily by a one $2 million increase in salaries and employee benefits related to the expansion into the bay.
$2 $7 million decline in loan origination costs.
$8 7 million increase in FDIC insurance assessments.
And an overall increase in expenses incurred to support a larger customer base as the leading drivers of this increase.
Now that we've discussed the overall results of operations I will now hand, it back to James to provide some closing remarks.
Thank you Heather.
I want to thank everyone for joining us as we discuss fourth quarter and year end results five Star Bank has a reputation built on trust speed to serve and certainty of execution, which supports our clients' success. Our financial performance is the result of a truly differentiated customer experience, which.
James Eugene Beckwith: Our financial performance is the result of a truly differentiated customer experience which continues to power the demand for Five Star Bank's relationship-based services. We attribute sustained success to our prudent business model and treating customers with an empathetic spirit, understanding, and care. We are very proud to have earned the trust of those we serve, including our shareholders. Looking to 2024, we will be guided by a continued focus on shareholder value. As we monitor market conditions, we are confident in the company's resilience in any environment and remain focused on the future and our long-term strategy. We will continue to execute our organic growth and disciplined business practices, which we believe will benefit our customers, employees, community, and shareholders. We appreciate your time today.
Continues to power the demand for five Star Bank relationship based services.
We attribute sustained success.
Prudent business model and treating customers with an empathetic spirit understanding and care. We are very proud to have earned the trust of those we serve including our shareholders.
Looking to 2024, we will be guided by our continued focus on shareholder value as we monitor market conditions. We are confident in the company's resilience in any environment and remain focused on the future.
And our long term strategy.
We will continue to execute our organic growth and disciplined business practices, which we believe will benefit our customers employees community and shareholders.
We appreciate your time today that concludes today's presentation now Heather and I will be happy to take any questions that you might have.
James Eugene Beckwith: That concludes today's presentation. Now, Heather and I will be happy to take any questions that you might have. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key to withdraw your question. Please press star, then 2.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speaker phone please pick up your handset before pressing the keys.
To withdraw your question.
Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our roster. Our first question today comes from Woody Lay with KBW. Please go ahead.
At this time, we will pause momentarily to assemble our roster.
Our first question today comes from Woody lay with <unk>. Please go ahead.
Hey, good morning, guys.
Heather Christina Luck: Hey, good morning, guys. Hey, Woody. Hi, Woody.
Hi, Wendy.
Wanted to just start out on the margin.
James Eugene Beckwith: Wanted to just start out on the margin, you know; I was wondering if you had any expectations for the outlook over the next couple of quarters, just assuming that, you know, if rates stayed stable from here. Sure, we do have expectations. So, you know, we think that Q1 will probably be the bottom of our margin, if you were going to graph this out. So we're expecting our margin to be anywhere between $3.15 and $3.20 for the quarter. And, you know, if rates don't change, Woody, I think we might see an increase in our margin as we continue to execute our growth strategy and grow more for deposits. But I think that's kind of what we're thinking right now. And we'll see how the first quarter ends up.
I was wondering if you had any expectation.
For the outlook over the next couple of quarters just.
Assuming that if rates stayed stable from here.
Sure we.
We do have expectations.
We think that Q1 will probably be the bottom of our margin. If you were going to grab this out.
So we're expecting.
Our margin to be anywhere between $3 15, and $3 20 for the quarter.
And.
If rates don't change Woody I think we might see it but the increase in our margin.
As we continue to execute our growth strategy.
And drove more for deposits.
But I think thats kind of what we're thinking right now.
And we'll see how the first quarter ends up.
Yes.
Having.
James Eugene Beckwith: Yeah, having said that, if we've got any movement, which I think certainly the market expects to have some rate cuts this year, the timing is still up in the air a little bit when the first one's going to occur. But if that happens, we are slightly liability sensitive, so we expect a decent benefit to happen with the Fed moving in. We will be aggressive on moving rates down. I think sometimes what happens in the industry is that banks are not aggressive and mindful in a declining rate environment. We do not expect it to be that way.
Bad debt.
If we've got any movement, which I think certainly in the market expects to have.
Some rate cuts this year the timing is still up in the air a little bit when the first one is going to occur but.
That happens and we are slightly liability sensitive so we expect.
Decent benefit.
To happen with the fed moving and and and.
And we will be aggressive on moving rates down.
I think sometimes that happens in the industry is that banks are not.
Aggressive and mindful.
In a declining rate environment, we do not expect to be that way.
Got it.
James Eugene Beckwith: [inaudible] Yeah, we're expecting an 8% loan growth and a 10% deposit growth as we move into 2024, which has kind of been our mantra for the last four quarters, right? And I think we achieved loan growth that was probably a little higher than, you know, 8%. I think we went for, we're over 10%. And deposit growth was about 9% in 2023. So we'd like to see 10% deposit growth and 8% loan growth. And we think we're fully capable and fully able to do that given our business development activity. Yeah, and would you expect the manufactured home community segment would drive a majority of that growth? I would expect they'll continue to do what they've done in the past in 2023.
For color.
Maybe shifting over to loan growth.
It was another steady quarter of growth.
As we look into 2024 and you look at your pipeline does it feel like the high single digit range is still the still the right target for you all.
Yes, we're expecting a.
8% loan growth.
10% deposit growth.
As we as we move into 2024, which is kind of been our mantra for.
The last four quarters.
I think we achieved loan growth was probably a little higher than 8% I think we.
We're over 10% deposit growth was about 9% in 2023, so we'd like to see a 10% deposit growth and an 8% loan growth and we think we are.
Fully capable.
Fully able to doing that given our our business development activities.
Yeah and would you expect.
The manufactured home community.
<unk> would drive a majority of that growth.
I would expect they'll continue to do what they've done in the past.
2023, so I would probably think anywhere between.
James Eugene Beckwith: So I would probably think anywhere between, you know, 30 to 40% of our lung growth is going to come from that particular vertical, which, by the way, we include RV parks and also storage. But, you know, that's what we're thinking. [inaudible] Thanks, Woody. The next question comes from Andrew Terrell with Stevens. Please go ahead. Hey, good morning.
Sure.
30% to 40% of our loan growth is going to come from that space.
That particular vertical which by the way we include RV in that RV parks and also storage.
Sure.
But that's what we're thinking.
Got it alright, that's all for me thanks for taking my questions.
Thanks Lee.
The next question comes from Andrew Charles with Stephens. Please go ahead.
Hey, good morning.
James Eugene Beckwith: Hey, good morning, Andrew. Hi Andrew. Maybe if I could start on the deposit base. I mean, it was really good to see the kind of flat, non-inspiring deposits this quarter. And I know a lot of California banks faced some headwinds on the NIBs from tax payments this quarter. So on a relative basis, the strength is impressive.
Hey, good morning, Andrew Andrew.
Maybe if I could start on the deposit base.
It was really good to see the kind of I'd call. It flat non interest bearing deposits this quarter and I know it sounds like a lot of <unk>.
California banks faced some headwinds on the <unk> from from tax payments this quarter.
On a relative basis. The strength is impressive I'm just curious if you could quantify maybe the season, all our tax related headwind that.
James Eugene Beckwith: I'm just curious if you could quantify maybe the seasonal or tax-related headwind that you guys faced during the fourth quarter. Just trying to get a sense of the underlying kind of new growth that you saw that was able to offset, potentially, that headwind. Yeah, there were a couple factors that happened, especially in the last part of December, frankly, a lot of bonus payments and a lot of our, you know, professional service firms were paying out their top employees. So we saw some decline and some balances from that. And also, you know, in California, most of the counties were on the deferral. Given the amount of atmospheric rain that we had in January, we were declared, I guess, a disaster county. I don't know what Sacramento was.
Do you guys face during the fourth quarter I'm, just trying to get a sense of like the underlying.
Kind of new growth that you saw that was able to offset potentially that headwind.
Yes, there was a couple of factors that happen.
And the last part of December frankly.
Lot of bonus payments, there's a lot of our professional service firms.
Missing out there comp employees.
So we saw some decline in some balances from that.
And also.
California most of the counties.
We're on the deferral.
Kevin.
The atmospheric rain that we had in January we were declared I guess, a disaster County, I know Sacramento was.
Heather Christina Luck: So that allowed a lot of the counties and the businesses that reside in those counties and individuals to not have to make their final payments until October 15. So that did have an impact. That was offset by, I think, some pretty strong activity that we saw from our San Francisco folks and then also other activity that we saw in our, you know, in our operations out here in the Capital Region. So, net-net, when you all roll that all together, we're in an ever so slight decline, and It was a lot of effort to get to that, too. Yeah, okay. I appreciate it. And Heather, do you have the spot costs on either the interest-bearing or the total deposits as of 12-31? Yeah, so the totaled spot rate was 2.48 at year end.
So that allowed a lot of the counties.
And the businesses that reside in those counties and the individuals.
<unk> not have to make their final payments until October 15, so that did have an impact.
That was offset by I think some pretty strong activity that we saw from our San Francisco folks and then also.
Other activity that we saw in her.
In our operations out here in the capital region.
So net net when you roll that altogether.
Ever so slight decline.
And.
I think it was.
It was a lot of effort to get to that too.
Yes.
Hey.
I appreciate it.
And are there do you have the.
The spot costs on either the interest bearing on the total deposits as of 12 31.
Yeah. So in total the spot rate was 248 at year end.
Okay.
James Eugene Beckwith: OK. Thank you for that. And then, James, if I could get maybe your thoughts on you've done a really impressive job on the new hire front, particularly in the back half of 2023. And I know it's been your mantra for a long time here. Just as you look into 2024, do you see any incremental talent additions on the horizon? I know there was a deal, possibly, announced in your neck of the woods earlier today.
Thank you for that.
And then James if I could get maybe your thoughts on you've done a really impressive job on the new higher fraud, particularly in the back half of 2023.
What's been your mantra for <unk>.
For a long time here just as you as you look into 2024 do you see any incremental.
Talent additions on the Horizon I know there was a deal maybe announced in your neck of the woods.
Earlier today, and any opportunities you see coming out of that.
James Eugene Beckwith: Any opportunities you see coming out of that? Well, we certainly know the folks from California Bank of Commerce that operate within the Capital Region pretty well, actually. Most of them kind of came out of the Wells Fargo, you know, operations here. Some good small to medium-sized businesses, you know, professionals. I mean, they focus on that, C&I, and there's some good talent there. Time will tell. I haven't, you know, I haven't talked to any of them yet but plan to do so.
Well, we certainly know the folks from California Bank of Commerce that operate within the capital region pretty well actually.
Most of them kind of came out of the Wells Fargo.
Operations here.
Some good small to medium size.
No.
Professionals, they focus on that C&I.
And there is some good talent there time will tell I haven't I haven't talked to any of them yet.
But plan to do so.
James Eugene Beckwith: Yeah, I'm, you know, we continue to be opportunistic. I mean, there is some talent there, but there's also talent down in the Bay Area, too, that we're continuing to be excited about in terms of growing out what we're doing down there. So I would expect some additional business development hires to happen in the first half of the year 2024. I mean, we are planning for that. So to answer your question, we're going to bring some more firepower to bear in the markets we serve. Good deal.
Yes.
We continue to be opportunistic I mean, there is some talent there, but theres also talent down in the Bay area too that we're we're we're continue to excited about in terms of growing out what we're doing down there. So I would expect some additional business development hires to happen in the first half of the year.
<unk> 20.
2004, I mean, we are planning on that so.
Answer your question, we're going to bring some more <unk>.
Firepower to bear and the markets we serve.
Good deal.
James Eugene Beckwith: Do you have a target in mind of what you would kind of target in terms of new hires in the first half or for the year? I think we're probably going to add, you know, two to four new BizDev people as we sit here today into January. You know, we do.
Do you have a target in mind of what you what you would kind of target in terms of new hires in the first half or for the year.
I think we're probably going to add two to four new Biz Dev people as we sit here today and to January.
We.
James Eugene Beckwith: We certainly pivoted, you know, in 2023 in terms of being opportunistic about hiring talent. And I think as the year goes and transactions happen, we want to continue to be opportunistic, but as we sit here today, I think that's a good number, two to four folks. Yeah, okay.
We certainly pivoted in 2023 in terms of being opportunistic about hiring talent.
And I think.
As the year goes in transactions happen.
We can we want to continue to be opportunistic, but as we sit here today I think thats a good number two to four folks.
Okay.
Heather Christina Luck: And maybe last one for me, for Heather, just, I mean, kind of throughout this year, you've done a really good job managing the expense space. Just as you look into 2024, any thoughts on the expense run rate into next year and then the overall kind of expense growth you'd be looking at for 2024? Yeah, so we, you know, thank you for that.
Maybe last one for me for Heather.
I mean kind of throughout the theory has done a really good job managing the expense base.
Just as you look into 2020 for any any thoughts on.
Our expense run rate.
And the next year, and then overall kind of expense growth you'd be looking out for 'twenty four.
Yeah. So.
Thank you for that we definitely pride ourselves on managing expenses and being mindful there.
Heather Christina Luck: We definitely pride ourselves on managing expenses and being mindful there. You know, if you look at 2024, really looking at Q1, you could add about $250,000 to what we had rolling in from Q4. I think that's probably a good proxy for where we'll start to shake out. You know, we will see a little bit of a creep in the second half of the year once we have rent expense flowing through in the Bay from the new location there. But I think if you add about $250,000 to $500,000 for the first half of the year, you should be okay.
If you look at 2024 really looking at Q1, you could add about 250000 of what we had rolling in from Q4.
I think thats, probably a good proxy for where it will start to shake out.
We will see a little bit of a creep the second half of the year. Once we have rent expense flowing through in the bay from the new location, there, but I think if you add about $2 50 to 500 for the first half of the year you should be okay.
Heather Christina Luck: Okay, very good. I appreciate it. Thank you guys for taking the question. Thank you, Andrew. Again, if you have a question, please press star then 1. The next question is from Gary Tenner with D.A. Davidson. Please go ahead.
Okay.
Very good I appreciate it. Thank you guys for taking the questions.
Thank you Andrew.
Again, if you have a question. Please press Star then one the next question is from Gary Tenner with D. A Davidson. Please go ahead.
James Eugene Beckwith: Thanks for the morning. Going back to the Bay Area team, you know, we've been on board for, you know, call it two quarters and something over $70 million in deposits, I think in the door. Where's that team relative to kind of the year-one expectations that you had in mind for them? And maybe beyond that, you talk about just the deposit trends outside that. Sure. It was 2X from what we thought we would be, so they really performed well, and it was. It's great working with them; we spend a lot of time down there and helping them onboard their customers and their relationships. We expect that to continue to grow, maybe at that similar level. As we look at 12-31-2024, we hope that we'll be able to double the deposit base down there from where it ended up at 12-31-2023. In terms of growth outside of the Bay Area, we're excited about what we're doing in all of our verticals, and we're off to a pretty good start. I think it's going to be very supportive of our target of 10% deposit growth. So that's kind of where we stand on that.
Thanks, Good morning.
Hey, good morning, guys going back to the Bay area team.
<unk> been on board for call.
Call it two quarters in shopping over $70 million of deposits I think in the door.
Where does that team relative to kind of a year one expectations that you had in mind for them.
And maybe beyond that can you talk about just the deposit trends outside.
Sure it.
It was <unk>.
From what we thought.
We would be so they they really performed well.
Okay.
It was great.
Great working with him and spent a lot of time down there and helping them onboard they're customers.
And their relationships so.
We expect.
That to continue to grow maybe at that similar level. So.
So as we look at 12 31, 2024 weeks, we hope that we'd be able to double the deposit base down there from where it ended up at 12 31 2023 in terms of growth outside of the Bay area. We're excited about what we're doing in all of our verticals and we're off to a pretty good start so.
I think that is going to be very supportive of our target of.
10% deposit growth so.
That's kind of.
Where we stand on that I think we're starting to really execute.
James Eugene Beckwith: I think we're starting to really execute in our special district business. I'm excited about that, and in our professional services non-profit business, I think it's doing well, and just our basic CNI business, and especially in our construction industry business, we're seeing some decent deposit growth there. So I think what they're, you know, across the board in all of our verticals, they're going to execute with respect to Deposit Group. You know, we're still working with our healthcare practice group; we expect to have a decent win here in Q1, but that's, you know, that particular vertical is something that we want to spend more time on in terms of really getting it going. Thanks, I appreciate that, James. And then just to follow up, I think in your prepared remarks. I don't remember the exact term or phrase you used if it was on the horizon or storm clouds on the horizon.
And our special district business, which excited about that.
And.
In our professional services nonprofit business I think is doing well.
Our basic C&I business and especially in our.
Construction of the industry business, we're seeing some decent deposit growth there.
Think what they were.
Across the board in all of our verticals theyre going to execute with respect to the.
Deposit growth.
And we're still we're working with our health care practice group.
Expect to have.
A decent win here in Q1.
But thats.
That particular vertical is something that we want to spend more time on in terms of really getting it going.
Thanks, I appreciate that James and then just a follow up I think in your prepared remarks, I don't remember the exact term phrase you used if it was on the horizon, our storm clouds on the horizon. Thank you.
Could you talk about kind of your broader view.
James Eugene Beckwith: But can you talk about kind of your broader view that kind of, you know, made you kind of, Note that in your prepared remarks and kind of your confidence in the underlying economy in your core market? Well, there is still a fair amount of uncertainty associated with the economy and how it's going to, if there's going to be a soft landing or a recession, a mild recession. We just, we just don't know.
Kind of.
Maybe kind of note.
Note that in your prepared remarks, and kind of your confidence in the underlying economy in your in your core markets.
Well.
There is.
Still a fair amount of uncertainty associated with.
The economy and how it is going to if theres going to be a soft landing or a recession mild recession. We just we just don't know I think hopefully as every quarter goes by.
James Eugene Beckwith: I think, hopefully, as every quarter goes by, we continue to have the type of national GDP that we've seen without any appreciable increase in unemployment. In our markets here in California, they remain strong. You know, we've got a few, I'm gonna say, issues with respect to commodity prices as it relates to our ag business. But I think we're working through that. And a lot of our farmers are diversified in terms of the crops that they grow, which is really helpful.
We continue to have the type of national GDP.
We've seen without any appreciable increase in unemployment.
In our in our markets here in California.
They remain strong.
We've got a few.
I'm going to say issues with respect to commodity prices as it relates to our AG business, but I think we're working through that.
And a lot of our farmers are diversified in terms of the crops that they grow which is really helpful. So we don't anticipate any problems there, but I'm just being cautious.
James Eugene Beckwith: So we don't anticipate any problems there. But, you know, I'm just being cautious, Gary, I think with those statements. You can't pick up a business newspaper without having some article that speaks about rates and recession, and you know it's just a continual bombardment of data points that affect people's opinions and when the Fed's going to move and when they're not going to move, and I'd like to see things settle down a bit. You've got a national election coming up, that is creating some uncertainty. But you also have some geopolitical events that are happening right now in the world that could be problematic for our economy here.
Gary I think with those statements.
Hugh.
You can't pick up.
Our business newspaper without having some article that speaks about rates in recession.
The continual bombardment of data points that affect people's opinions and when the fed is going to move in when they are not going to move and it's just.
I'd like to see things settle down a bit you've got a national election that.
Is creating some uncertainty but you also have some geopolitical events that are happening right now in the world that are could be problematic.
Our economy here, so I think it's kind of a comprehensive.
James Eugene Beckwith: So I think it's kind of a comprehensive problem. Cautiousness, I guess, if you will, given all those facts. Great, appreciate your thoughts. This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Cautiousness I guess, if you will given all the all those facts.
Great appreciate your thoughts sure.
This concludes.
Our question and answer session I would like to turn the conference back over to management for any closing remarks.
Great. Thank you.
Five Star Bank Corp is on a continued path of growth as we execute on our strategic initiatives, which included includes growing our verticals and geographies, while attracting and retaining talent our people technology operating efficiencies conservative underwriting practices and as expense management.
James Eugene Beckwith: Five Star Bancorp is on a continued path of growth as we execute on our strategic initiatives, which include growing our verticals and geographies while attracting and retaining talent. Our people, technology, operating efficiencies, conservative underwriting practices, and expense management have also contributed to the success we share with our employees and shareholders. These successes include numerous ratings and awards.
Also contributed to the success, we share with our employees and shareholders.
These successes include numerous ratings and awards in 2023 received Diffidently reports Super Premier performing rating and IDC Superior rating Bauer financial Superior rating five stars out of five we were also awarded the prestigious 2020 to Raymond James Community Bank.
James Eugene Beckwith: In 2023, we received the Finley Reports Super Premier Performing Rating, an IDC Superior Rating, and a Bauer Financial Superior Rating, five stars out of five. We were also awarded the prestigious 2022 Raymond James Community Bankers Cut, and we were among the 2023 Piper Sandler SM All-Stars. In 2023, we were recognized as the 2022 S&P Global Market Intelligence number one best performing community bank in the nation. That's with banks with assets sized between $3 billion and $10 billion.
And we were among the 2023 Piper Sandler SM all stars.
In 2023, we were recognized as the 2020 to S&P Global market Intelligence number one best performing community bank in the nation with banks with asset size between 3 billion and $10 billion.
We were also listed on independent bankers top commercial banks in 2023.
With banks more than $1 billion in assets and ranked number six in the nation.
We were listed among American Banker's top performing banks in 2023 banks with $2 billion to $10 billion in assets.
And ranked number 12.
In 2023, our executives and senior leaders were awarded a sacramental business Journal C Suite Award a sacramental be let.
James Eugene Beckwith: We were also listed on Independent Bankers' Top Commercial Banks in 2023, with banks with more than $1 billion in assets and ranked number six in the nation. We were listed among American Bankers' top performing banks in 2023, banks with $2 billion to $10 billion in assets, ranked number 12. In 2023, our executives and senior leaders were awarded a Sacramento Business Journal C-Suite Award, a Sacramento Bee Latino Changemakers Award, a Commercial Real Estate Women Award, and Comstock Magazine's Women in Leadership Award. Being recognized as community leaders ensures Five Star Bank remains top of mind in the markets we serve as we continue to build out our verticals. We are humbled and proud of our team's accomplishments.
<unk> change makers award a commercial real estate Women Award a comstock magazines women in leadership Award.
Being recognized as community leaders insurers five star Bank remains top of mind and the markets. We serve as we continue to build out our verticals.
We are humbled and proud of our team's accomplishments. We look forward to speaking with you again in April to discuss earnings for the first quarter of 2024.
Have a great day and thank you for listening.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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James Eugene Beckwith: We look forward to speaking with you again in April to discuss earnings for the first quarter of 2024. Have a great day, and thank you for listening. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. The Ultimate Parody Site! BF-WATCH TV 2021, [inaudible] BF-WATCH TV 2021
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