Q1 2024 Five Star Bancorp Earnings Call
Operator: Please refer to slide 2 of the presentation, which includes disclaimers regarding forward-looking statements, industry data, and non-GAAP financial information included in this presentation. Reconciliations of non-GAAP financial measures to their most directly comparable GAAP figures are included in the appendix to the presentation. Please note that this event is being recorded. I would now like to turn the presentation over to James Beckwith, Five Star Bancorp's President and CEO. Please go ahead
Please refer to slide two of the presentation, which includes disclaimers regarding forward looking statements industry data and non-GAAP financial information included in this presentation.
James Eugene Beckwith: Reconciliations of non-GAAP financial measures to their most directly comparable GAAP figures are included in the appendix to the presentation.
James Eugene Beckwith: Please note this event is being recorded.
James Eugene Beckwith: I would now like to turn the presentation over to James back with five Star Bancorp's, President and CEO. Please go ahead.
James Eugene Beckwith: Thank you for joining us to review Five Star Bancorp's financial results for the first quarter of 2024. Joining me today is Heather Luck, Senior Vice President and Chief Financial Officer.
James Eugene Beckwith: Thank you for joining us to review <unk> Bancorp's financial results for the first quarter of 2024.
James Eugene Beckwith: Joining me today is Heather look senior Vice President and Chief Financial Officer.
James Eugene Beckwith: Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy of the release, please visit our website at fivestarbank.com and click on the Investor Relations tab. Our organic growth story continued in the first quarter with the announcement of our underwritten public offering of 3,450,000 shares of the bank's common stock and the Underwriter's option to purchase up to an additional 517,500 shares, with the intention of using the net proceeds for general corporate purposes to support our continued growth and for working capital.
James Eugene Beckwith: Our comments today will refer to the financial information that was included in the earnings announcement released yesterday.
James Eugene Beckwith: Obtained a copy of the release please visit our website at five Star Bank Dot Com and click on the Investor Relations tab.
James Eugene Beckwith: Our organic growth story continued in the first quarter with the announcement of our underwritten public offering of $3 million 450000 shares of the bank's common stock and underwriters option to purchase up to an additional 517500 shares.
James Eugene Beckwith: With the intention of using the net proceeds for general corporate purposes to support our continued growth and for working capital.
James Eugene Beckwith: We also added five more seasoned professionals to support our expansion in the San Francisco Bay Area market and continue to add new core deposit accounts and relationships, as seen in the increase in non-wholesale deposits of $112 million in the three months ended March 31, 2024. Despite continued external headwinds, we maintained our ability to conservatively underwrite, as evidenced by a 50% LTV on commercial real estate, manage expenses with our 45% efficiency ratio, and deliver value to our shareholders with our 20 cents per share dividends for the fourth quarter of 2023 and the first quarter of 2024.
James Eugene Beckwith: We also added five more seasoned professionals to support our expansion in the San Francisco Bay area market.
James Eugene Beckwith: And continue to add new core deposit accounts and relationships.
James Eugene Beckwith: And the increase of non wholesale deposits of $112 million in the three months ended March 31 2024.
James Eugene Beckwith: Despite continued external headwinds, we maintained our ability to conservatively underwrite.
James Eugene Beckwith: Evidenced by a 50% LTV on commercial real estate.
James Eugene Beckwith: Manage expenses with our 45% efficiency ratio and.
James Eugene Beckwith: And deliver value to our shareholders with our <unk> per share dividends for the fourth quarter of 2023, and the first quarter of 2024.
James Eugene Beckwith: The first quarter of 2024 exhibited continued margin compression, although slowing compared to prior quarters. We remain focused on the execution of our organic growth strategy, and we were able to maintain earnings and expense management trends during the quarter.
James Eugene Beckwith: The first quarter of 2024 exhibited continued margin compression.
James Eugene Beckwith: Although slowing compared to prior quarters.
James Eugene Beckwith: We remain focused on the execution of our organic growth strategy, and we're able to maintain earnings and expense management trends during the quarter.
James Eugene Beckwith: Loans have consistently grown since prior periods. The decrease in deposits and total assets during the quarter is the result of relying less on wholesale deposits and short-term borrowings, which positions us well for future growth. Our pipeline continues to remain solid at the end of the first quarter of 2024 within verticals we have historically operated in, as presented in the loan portfolio diversification slide.
James Eugene Beckwith: Loans have consistently grown since prior periods.
James Eugene Beckwith: The decrease in deposits and total assets during the quarter is the result of relying less on wholesale deposits and short term borrowings which positions us well.
James Eugene Beckwith: Well for future growth.
James Eugene Beckwith: Our pipeline continues to remain solid at the end of the first quarter of 2024 within verticals. We have historically operated in as presented in the loan portfolio diversification slide.
James Eugene Beckwith: Loans held for investment increased during the quarter by $22.4 million, or 0.73% from the prior quarter, primarily within the consumer concentration of the loan portfolio. Loan originations during the quarter were approximately $149.9 million, while payoffs and paydowns were $77.2 million and $50.3 million, respectively. Acid quality continues to remain strong.
James Eugene Beckwith: Loans held for investment increased during the quarter by $22 4 million or seven 3% from the prior quarter, primarily within the consumer concentration of the loan portfolio.
James Eugene Beckwith: Loan originations during the quarter were approximately $149 9 million, while payoffs and Paydowns.
James Eugene Beckwith: Were $77 2 million.
James Eugene Beckwith: $53 million respectively.
James Eugene Beckwith: Asset quality continues to remain strong.
James Eugene Beckwith: Though non-performing loans increased beginning in the third quarter of 2023, they continued to represent only 0.06 of the portfolio at the end of the first quarter. At the end of the first quarter, the allowance for credit losses totaled $34.7 million. We recorded a $0.9 million provision for credit losses during the quarter, primarily related to the net effect of charge-offs, increases in qualitative reserves, and a reduction in Reserves for Qualitative Factors. The ratio of the allowance for credit losses to total loans held for investment was 1.12% at quarter end. Loans designated as substandard totaled approximately $1.9 million at the end of the quarter, which was a decrease from the $2.0 million at the end of the previous quarter.
Speaker Change: So non performing loans increased beginning in the third quarter of 2023.
James Eugene Beckwith: Continued to represent only 0.06 over the portfolio at the end of the first quarter.
James Eugene Beckwith: At the end of the first quarter the allowance for credit losses totaled 33.
James Eugene Beckwith: <unk> $34 7 million, we recorded a <unk> 9 million provision for credit losses during the quarter, primarily related to the net effect of charge offs increases in qualitative reserves and reduction in reserves for qualitative factors.
James Eugene Beckwith: The ratio of the allowance for credit losses to total loans held for investment was one 1% 2% at quarter end.
James Eugene Beckwith: Loans designated as substandard totaled approximately one.
James Eugene Beckwith: $1 9 million at the end of the quarter, which was a decrease from the 2.0 million at the end of the previous quarter.
James Eugene Beckwith: During the first quarter, deposits decreased by 71.7 million, or 2.35%, as compared to the previous quarter; non-interest bearing deposits as a percentage of total deposits at the end of the first quarter increased slightly to 27.7% from 27.5% at the end of the previous quarter. As noted earlier, we are pleased we had a net non-wholesale deposit inflows for the three months ended March 31st, 2024. 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 relations.
James Eugene Beckwith: During the first quarter deposits decreased by $71 7 million or 235% as compared compared to the previous quarter.
James Eugene Beckwith: Noninterest bearing deposits as a percentage of total positive at the end of the first quarter increased slightly to 27, 7% from 27, 5% at the end of the previous quarter.
James Eugene Beckwith: As noted earlier, we are pleased we had a net non wholesale deposit inflows for the three months ended March 31 2024.
James Eugene Beckwith: Our ability to grow deposit accounts supports our differentiated customer centric model that our customers trust and value.
James Eugene Beckwith: As seen through the mix of high dollar accounts and the duration of certain customer relations.
James Eugene Beckwith: We believe we have a reliable core deposit base. To offer more detail on our deposit composition, I want to highlight that deposit relationships totaling at least $5 million constituted approximately 58% of total deposits, and the average age of these accounts was approximately nine years.
James Eugene Beckwith: We believe we have a reliable core deposit base.
James Eugene Beckwith: To offer more detail on our deposit composition I want to highlight that deposit relationships totaling at least 5 million constituted approximately 58% of total deposits.
James Eugene Beckwith: And the average age of these accounts was approximately nine years.
James Eugene Beckwith: Local agency depositors accounted for approximately 24% of deposits as of March 31st, 2024. Overall, deposit balances have decreased when compared to the prior quarter as a result of our focus on relying less on costly wholesale deposits. Wholesale deposits, which we defined as broker deposits and public time deposits, decreased by 183.1 million; non-wholesale deposits increased by $112 million, driven by a $125.7 million increase in interest-bearing deposits partially offset by a $13.7 million decrease in non-interest-bearing deposits.
James Eugene Beckwith: Local agency depositors accounted for approximately 24% of deposits.
James Eugene Beckwith: As of March 31, 2024.
James Eugene Beckwith: Overall deposit balances have decreased when compared with the prior quarter.
James Eugene Beckwith: As a result of our focus to rely less on costly wholesale deposits.
James Eugene Beckwith: Wholesale deposits, which we defined as broker deposits and public time deposits decreased by $183 1 million.
James Eugene Beckwith: Non wholesale deposits increased by $112 million.
James Eugene Beckwith: Driven by a $125 7 million increase in interest bearing deposits, partially offset by a $13 7 million decrease in noninterest bearing deposits.
James Eugene Beckwith: The cost of total deposits was 253 basis points during the fourth quarter. We continue to be well capitalized, with all capital ratios well above regulatory thresholds for the quarter. Our common equity tier one ratio increased from 9.07% to 9.13% between December 31st, 2023 and March 31st, 2024. On April 19th, we announced, by a declaration by our board of directors, a cash dividend of 20 cents per share on the company's voting common stock expected to be paid on May 13, 2024 to shareholders of record as of May 6, 2024. On that note, I will hand it over to Heather to discuss the results of operations. Heather? Thank you.
James Eugene Beckwith: Cost of total deposits was 253 basis points during the fourth quarter.
Heather: We continue to be well capitalized with all capital ratios well above regulatory thresholds for the quarter.
Heather: Our common equity tier one ratio increased.
Heather: From nine 7% to nine 3% between December 31, 2023, and March 31 2024.
Heather: On April 19th we announced by the declaration by our board of directors, a cash dividend of <unk> 20 per share on.
Heather: On the company's voting common stock expected to be paid on may 13th 2024 to shareholders of record as of May six 2024.
James Eugene Beckwith: On that note I will hand, it over to Heather to discuss the results of operations Heather.
Heather Christina Luck: Thank you, James, and hello everyone. Net income for the quarter was $10.6 million; return on average assets was 1.22%, and return on average equity was 14.84%. Average loan yield for the quarter was 5.71%, representing an increase of seven basis points over the prior quarter. Our net interest margin was 3.14% for the quarter, while the prior quarter's was 3.19%. Fed rate increases in 2023 will continue to put pressure on deposit costs.
Heather: Thank you Jane and Hello, everyone.
Heather Christina Luck: Net income for the quarter was $10 6 million.
Heather Christina Luck: Return on average assets was 122% and return on average equity was 14 eight 4%.
Heather Christina Luck: Average loan yield for the quarter with $5, 71%, representing an increase of seven basis points over the prior quarter.
Heather Christina Luck: Our net interest margin was $3, one 4% for the quarter, while net interest margin for the prior quarter with $3 one 9%.
Heather Christina Luck: Fed rate increases in 2023 continue to put pressure on deposit costs.
Heather Christina Luck: As a result of changes in interest rates and other factors, our other comprehensive loss was $0.7 million during the three months ended March 31st, 2024, as unrealized losses, net of tax effect, increased on available for sale debt securities from $11.8 million as of December 31st, 2023 to $12.4 million as of March 31st, 2024. Non-interest income decreased to $1.8 million in the first quarter from $1.9 million in the previous quarter due primarily to reductions in gains from distributions on investments in venture-backed funds and the recognition of rate lock and swap referral fees during the three months ended March 31, 2024.
Heather Christina Luck: As a result of changes in interest rates and other factors are other comprehensive loss was <unk> 7 million. During the three months ended March 31, 2024, as unrealized losses net of tax effect increased on available for sale debt securities from $11 eight.
Heather Christina Luck: As of December 31, 2023 to $12 4 million as of March 31, 2024.
Heather Christina Luck: Noninterest income decreased to $1 8 million in the first quarter from $1 9 million in the previous quarter due primarily to reductions in gains from distributions on investments in venture backed funds and the recognition of rate lock and swap referral fees. During the three months ended March three.
Heather Christina Luck: <unk> 2024.
Heather Christina Luck: The decreases were partially offset by a reduction in net losses on the sale of securities, which did not occur in the first quarter of 2024. Non-issued expense grew by $53,000 in the three months ended March 31, 2024, compared to the three months ended December 31, 2023. This was primarily due to an increase in salaries and employee benefits, partially offset by declines in advertising and promotional expenses, as well as other operating expenses during the quarter. Now that we've discussed the overall results of operations, I will now hand it back to James to provide some closing remarks.
Heather Christina Luck: The decreases are partially offset by a reduction in net losses on the sale of securities, which did not occur in the first quarter of 2024.
Heather Christina Luck: Non interest expense grew by $53000 in the three months ended March 31, 2024 compared to the three months ended December 31, 2023. This is primarily due to an increase in salaries and employee benefits, partially offset by declines in advertising and promotional expense.
James: <unk> as well as other operating expenses during the quarter.
James: Now that we have discussed the overall results of operations I will now hand, it back to Jamie to provide some closing remarks.
James Eugene Beckwith: I want to thank everyone for joining us as we discussed the first quarter results. Five Star Bank has a reputation built on trust, speed to serve, and certainty of execution, which support our clients' success. 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.
James: Thank you Heather.
James Eugene Beckwith: I want to thank everyone for joining us as we discussed first quarter results five Star Bank has a reputation built on trust speed to serve and certainty of execution.
James Eugene Beckwith: Which support our clients' success, our financial performance through the result of a truly differentiated customer experience.
James Eugene Beckwith: <unk> continues to power the demand for five Star Bank relationship based services.
James Eugene Beckwith: We attribute sustained success to our prudent business model and treating customers with an empathetic spirit understanding and care.
James Eugene Beckwith: We are very proud to have earned the trust of those we serve, including our shareholders. As we lean into 2024, we are 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 on our organic growth and disciplined business practices, which we believe will benefit our customers, employees, community, and shareholders. We appreciate your time today. This concludes today's presentation. Now Heather and I will be happy to take any questions that you might have.
James Eugene Beckwith: We are very proud to have earned the trust of those we serve including our shareholders.
James Eugene Beckwith: As we lean into 2024, we are guided by our continued focus on shareholder value as we monitor market conditions.
James Eugene Beckwith: We are confident in the company's resilience in any environment and remain focused on the future and our long term strategy.
James Eugene Beckwith: We will continue to execute on our organic growth and disciplined business practices, which we believe will benefit our customers employees community and shareholders.
James Eugene Beckwith: We appreciate your time today. This concludes today's presentation now Heather and I will be happy to take any questions that you might have.
Operator: We will now begin the question and answer session. To ask a question, those dialed in may press star then 1 on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question of Darden May Press Star then one on your telephone keypad.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Operator: To withdraw your question, please press star, then two. Questions will be taken in the order received. The first question today comes from Andrew Terrell, with Stevens. Please go ahead.
Speaker Change: To withdraw your question. Please press Star then two.
Robert Andrew Terrell: Questions will be taken in the order received.
Robert Andrew Terrell: The first question today comes from Andrew <unk> with Stephens. Please go ahead.
James Eugene Beckwith: Hey, good afternoon, Andrew.
Robert Andrew Terrell: Hey, good afternoon.
Robert Andrew Terrell: Hey, good afternoon Andrew.
Robert Andrew Terrell: Just a couple of questions on deposits for me. When did the runoff in the brokered deposits and public fund time deposits occur during the quarter? Heather, do you have the weighted average cost of those deposits?
Robert Andrew Terrell: Just a couple around deposits for me.
Robert Andrew Terrell: When did the runoff in the brokered.
Robert Andrew Terrell: Deposits on public fund time deposits occurred during the quarter.
Robert Andrew Terrell: The weighted average cost of.
Robert Andrew Terrell: Those deposits.
Heather Christina Luck: So going into the first quarter of the year, we had a weighted average rate of about 5.26% on the wholesale deposits, and that had a balance of about $360 million. We really did, I would say probably the second half of the quarter was when most of the wholesale deposits ran off. So now we're currently sitting at a weighted average rate of 5.12%, and then a total balance of $177 million.
Robert Andrew Terrell: So going into.
Heather Christina Luck: The first quarter for the year, we had a weighted average rate of about 5% to 6% on the wholesale deposits and that had a balance of about $360 million.
Heather Christina Luck: We really did I would say probably the second half of the quarter, yes. So in the most most of the.
Heather Christina Luck: Wholesale deposits ran off so now we're currently sitting at a weighted average rate of five 1% and 2%.
Heather Christina Luck: And then the total <unk>.
Heather Christina Luck: $177 million.
Heather Christina Luck: Yes.
James Eugene Beckwith: I mean, can you talk about your, I mean, the remix this quarter was obviously very impressive. You've got something like 177 left of... Wholesale. Can you just remind us the kind of deposit growth expectations for the year? And then would you expect any more runoff in the wholesale deposits within that kind of deposit guidance?
Heather Christina Luck: Yes.
Speaker Change: Could you talk about you.
James Eugene Beckwith: The remix this quarter was obviously.
James Eugene Beckwith: Very impressive you've got it sounds like 177 last of wholesale can you just remind us the kind of deposit growth expectations for the year and then would you expect any more runoff in the wholesale deposits within that kind of.
James Eugene Beckwith: Deposit guidance.
James Eugene Beckwith: Sure. We're going to stick to our 10% deposit growth, and we plan to end up in that at 10%, which includes accounting for the runoff of, you know, Q1 runoff of wholesale deposits. I think as we sit right now, I wouldn't expect too much of a continued runoff of wholesale. We'll probably be pretty static, Andrew, for the rest of the year, but we'll look at this on a quarter-by-quarter basis. We kind of like where we are, and in a certain respect, maintaining relationships, particularly with the state of California, is important. And so I would think that we have a small brokered piece left in July.
James Eugene Beckwith: Sure.
James Eugene Beckwith: We're going to stick to our 10% of deposit growth.
James Eugene Beckwith: <unk>.
James Eugene Beckwith: We plan to end up in that.
James Eugene Beckwith: 10% that includes accounting for runoff.
James Eugene Beckwith: Q1, and runoff of wholesale deposits.
James Eugene Beckwith: I think as we sit right now.
James Eugene Beckwith: I wouldn't expect too great of a continued runoff of wholesale.
James Eugene Beckwith: We'll probably be pretty static Andrew for the rest of the year, but we will look at this on a quarter by quarter basis, we kind of like where we are.
James Eugene Beckwith: In a certain respect maintaining relationships, particularly with the state of California is important.
James Eugene Beckwith: And so.
James Eugene Beckwith: I would think that we.
James Eugene Beckwith: We have a small brokerage piece left in July $42 million, and $42 million, which hopefully will be able to eliminate that but nothing nothing probably greater than that Andrew.
James Eugene Beckwith: 42 million, which hopefully we'll be able to eliminate that, but probably nothing greater than that.
James Eugene Beckwith: Okay.
James Eugene Beckwith: Okay, great, I appreciate it. Could you maybe just compare and contrast for the non-wholesale deposit growth, I think it was 112 million or so this quarter, just the way that average costs you're bringing kind of new money on the balance sheet today versus what we saw roll off in the first quarter?
Speaker Change: I appreciate that and then.
James Eugene Beckwith: Could you maybe just.
James Eugene Beckwith: Compare and contrast.
James Eugene Beckwith: The non wholesale deposit growth I think it was $112 million or so this quarter just the weighted average cost you're bringing in kind of new money on the balance sheet today versus what we saw roll off in the in the first quarter.
James Eugene Beckwith: Sure.
James Eugene Beckwith: Sure, a lot of the balances that we're bringing on right now are interest-bearing, and when I think about if I were to amalgamate what we expect in terms of non-interest-bearing and interest-bearing, you know, that weighted average rate is probably around a little shy of 3%. But the interest-bearing stuff probably has about a 4% handle on it, as I'm And so if we're successful in our, you know, for the remainder of the year with non-interest bearing deposit increases.
James Eugene Beckwith: A lot of the balances that were bringing on right now are interest bearing.
James Eugene Beckwith: And when I think about.
James Eugene Beckwith: If I was to amalgamate, what we expect in terms of noninterest bearing and interest bearing.
James Eugene Beckwith: That that weighted average rate is probably around little shy of 3%.
James Eugene Beckwith: But the interest bearing stuff is probably has about a 4% handle on it.
James Eugene Beckwith: As I'm thinking all this through.
James Eugene Beckwith: And so if we're successful in our for.
James Eugene Beckwith: For the remainder of the year with noninterest bearing deposit increases.
James Eugene Beckwith: And that's really driven by new relationships that we're bringing on, you know, that'll work those numbers down. I think our San Francisco effort in terms of yield that we're paying those deposit customers, Heather, do you have that information on hand, because I'm going to recall it off the top of my head.
James Eugene Beckwith: And that's really driven by new relationships that were bringing on.
Heather: That'll work those number that number is down I think our San Francisco effort.
Heather: In terms of.
Heather: Yield that we're paying those deposit customers.
James Eugene Beckwith: Heather do you have that information because engelberg fallen off the top of my head I wanted to say its close to three it's a little shy of 3% to 77% I think that was in the DJ is that correct.
Heather Christina Luck: I want to say it's close to three. Yeah, it's a little shy of three.
James Eugene Beckwith: Yeah, it's a little shy of 3%, 277. I think that was on DJ's deck.
James Eugene Beckwith: Um... So that's kind of what we're looking at right now, in terms of what we're bringing to these new relationships. These new relationships And Andrew, it's important to note as we bank these new customers across our entire footprint. You know, we're really after their operating accounts and their liquidity. So we look at things in totality in terms of cost of funds. So if we can pay somebody 4% for their liquidity and just bank their transactional account, if you will, we think that that's a winning strategy, and hopefully, we can deliver the entire relationship under 3%.
James Eugene Beckwith: So that's kind of what we're looking at right now.
James Eugene Beckwith: And in terms of what we're bringing on these new relationships with these new relationships on.
James Eugene Beckwith: And Andrew it's important to note as we as we bank these new customers.
James Eugene Beckwith: Across our entire footprint.
James Eugene Beckwith: Really after their operating accounts and their liquidity. So we look at things in totality in terms of cost of funds. So.
James Eugene Beckwith: So if we can pay somebody 4% further liquidity.
James Eugene Beckwith: And just bank their non op their transactional account if you will.
James Eugene Beckwith: We think that that's a winning strategy and hopefully we can deliver the entire relationship sub 3%.
Heather Christina Luck: Yep, totally appreciate that. Understood. If I can ask just one last one, Heather, around the margin, do you have the margin of the month of March?
James Eugene Beckwith: Yes.
Andrew: Paul I appreciate that I understood if I could ask just one last one other on the margin do you have the margin.
Speaker Change: Our margin in the month of March.
Heather Christina Luck: Oh, in the month of March? Yes, I do.
Heather: Oh in the month of March two alone so our net interest margin for.
Heather Christina Luck: So our net interest margin for... Colleges, let me pull up that piece of it. Niners Smart, just for the month of March, was about 3.18.
Heather: Let me pull up that piece of it.
Heather: <unk> are just for the month of March was about 318.
Speaker Change: Perfect. Okay. Thank you for taking my questions I'll step back.
Robert Andrew Terrell: Perfect. Okay. Thank you for taking the questions. I'll step back.
Speaker Change: Thank you.
Speaker Change: Again, if you have a question. Please press Star then one.
Operator: Again, if you have a question, please press star then 1. The next question comes from Gary Tenner with D.A. Davidson. Please go ahead.
Robert Andrew Terrell: The next question comes from Gary Tenner with D. A Davidson. Please go ahead.
Gary Peter Tenner: Thanks, Good morning.
Gary Peter Tenner: I wanted to ask on on the expense side.
Gary Peter Tenner: Thanks, good morning. I wanted to ask on the expense side, you know, what the near-term thinking is on expense levels, kind of fully loaded for
Gary Peter Tenner: What the near term thinking is on expense levels kind of fully loaded for.
Gary Peter Tenner: New hires.
Heather Christina Luck: Yeah, so I think if we look at Q2, I think if we add about $500,000 for Q2's expenses to what we incurred for Q1, that should put your model in good shape there. We do have some new hires, but also some expenses for conferences that we have running through that are a little bigger than Q1.
Gary Peter Tenner: Yeah. So I think if we look at for Q2.
Heather Christina Luck: I think if we add about $500000 for Q2's expenses to what we incurred for Q1 that should put your model in good shape. There. We do have some new hires but then also some some expenses for conferences that we have running through that are a little bigger than Q1.
Heather Christina Luck: Our advertising spend is.
Heather Christina Luck: Going to go up in the second quarter third quarter fourth quarter.
Heather Christina Luck: As we continue to develop the bay area.
James Eugene Beckwith: And our advertising spend is going to go up in the second quarter, third quarter, fourth quarter, as we continue to develop the Bay Area.
Speaker Change: Okay I appreciate it.
James Eugene Beckwith: And then I may have missed this answer secondly, I heard you mentioned I think the March NIM, Heather, but did you provide the spot rates as of March 31, If you did I apologize for missing that.
Gary Peter Tenner: Okay, I appreciate it. And then I may have missed this answer a second ago. I heard you mention, I think, the March NIM, Heather, but did you provide the spot rates as of March 31? If you did, I apologize for missing it. No, sure. The spot rate for all the deposits was $249.
Gary Peter Tenner: No sure spot rate for our cost of deposits was $2 49.
Gary Peter Tenner: Great.
Speaker Change: Thanks very much.
Gary Peter Tenner: No.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
Speaker Change: Great. Thank you five star Bancorp is on a continued path of growth as we execute on strategic initiatives, which include growing our verticals and geographies, while attracting and retaining talent our people technology operating efficiencies conservative underwriting practices and <unk>.
Heather Christina Luck: Oh, no, sure. The spot rate for across all the deposits was $249.
Operator: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Operator: <unk> management have also contributed to the success, we so we share with our shareholders employees.
James Eugene Beckwith: Great, thank you. Five Star Bancorp is on a continued path of growth as we execute on strategic initiatives that 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 shareholders' employees. These successes include numerous ratings and awards. In the first quarter, the company's leadership was recognized by the Sacramento Business Journal on the Power 100 list and the Women Who Mean Business list.
James Eugene Beckwith: These successes include numerous rating and awards.
James Eugene Beckwith: In the first quarter the company's leadership was recognized by the sacramental business Journal on.
James Eugene Beckwith: On the power 100 list and the women, who mean business list.
James Eugene Beckwith: Company leadership also received a National Association of women business owners outstanding women leaders Executive Women Award.
James Eugene Beckwith: Also in the first quarter two of our customers were recognized by the Sacramento small business administration in the categories of family owned small business of the year and minority small business champion.
James Eugene Beckwith: Five Star Bank continued continues to be a driving force for economic development.
James Eugene Beckwith: Rusted resource for our customers.
James Eugene Beckwith: And a committed advocate for our community.
James Eugene Beckwith: Company leadership also received the National Association of Women Business Owners' Outstanding Women Leaders Executive Woman Award. Also, in the first quarter, two of our customers were recognized by the Sacramento Small Business Administration in the categories of Family-Owned Small Business of the Year and Minority Small Business Champions. Five Star Bank continues to be a driving force for economic development, a trusted resource for our customers, and a committed advocate for our community. We look forward to speaking with you again in July to discuss earnings for the second quarter of 2024. Have a great day, and thank you for listening.
James Eugene Beckwith: We look forward to speaking with you again in July to discuss earnings for the second quarter of 2024 and have a great day and thank you for listening.
Speaker Change: The conference has now concluded.
Speaker Change: You for attending today's presentation you may now disconnect.
James Eugene Beckwith: [music].
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thanks for watching!
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