Five Star Bancorp Q4 2024 Earnings Report

PETROLEO BRASIL/S EPS Results

• Actual EPS: $0.63
• Consensus EPS: $0.59
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: N/A

PETROLEO BRASIL/S Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $34.09 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

PETROLEO BRASIL/S Announcement Details

• Quarter: Q4 2024
• Date: 1/27/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, January 28, 2025
• Conference Call Time: 1:00PM ET

Petróleo Brasileiro S.A. - Petrobras operates in the oil, natural gas, and energy industries in Brazil and internationally. It engages in prospecting, drilling, refining, processing, trading, and transporting crude oil from producing onshore and offshore oil fields and shale or other rocks, as well as oil products, natural gas, and other liquid hydrocarbons. The company's Exploration and Production segment engages in the exploration, development, and production of crude oil, natural gas liquids, and natural gas primarily for supplies to the its domestic refineries. Its Refining, Transportation and Marketing segment is involved in the refining, logistics, transport, and trading of crude oil and oil products; exportation of ethanol; and extraction and processing of shale, as well as holding interests in petrochemical companies. The company's Gas and Power segment engages in the logistic and trading of natural gas and liquid natural gas; generation of electricity through thermoelectric power plants; holding interests in transportation and distribution of natural gas; and fertilizer business operations. Its Biofuels segment is involved in the production of biodiesel and its co-products, as well as production and trading of ethanol, sugar, and electric power generated from sugarcane bagasse. The company's Distribution segment sells oil products, including gasoline and diesel; ethanol; and vehicle natural gas, as well as distributes oil products in South America. Petróleo Brasileiro S.A. - Petrobras was founded in 1953 and is headquartered in Rio de Janeiro, Brazil.

PETROLEO BRASIL/S Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Welcome to 5 Star Bancorp 4th Quarter and Year End Earnings Webcast. Please note this is a closed conference call and you are encouraged to listen via the webcast. After today's presentation, there will be an opportunity for those provided with a dial in number to ask questions. Before we get started, we would like to remind you that today's meeting will include some forward looking statements within the meaning of applicable securities laws. These forward looking statements relate to, among other things, current plans, expectations, events and industry trends that may affect the company's future operating results and financial position, which states the risks and uncertainties and uncertainties and results may differ materially from these expectations.

[Operator]

For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from the company's forward looking statements, please see the company's annual report on Form 10 ks for the year ended December 31, 2023, and quarterly reports on Form 10 Q for the 3 months ended March 31, 2024, June 30, 2024 and September 30, 2024, in particular, the information set forth in Item 1A, Risk Factors in those reports. 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 also note today's event is being recorded. At this time, I'd like to turn the floor over to James Beckwith, 5 Star Bancorp President and CEO.

[Operator]

Please go ahead.

[James Beckwith, President & CEO at Five Star Bancorp]

Thank you for joining us to review 5 Star Bancorp's financial results for the Q4 year ended December 31, 2024. Joining me today is Heather Luck, Executive Vice President and Chief Financial Officer. 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 5starbank.com and click on the Investor Relations tab. 2024 was another outstanding year of achievement underpinned by successful continuation of our San Francisco market expansion.

[James Beckwith, President & CEO at Five Star Bancorp]

In addition to opening a full service office in San Francisco's Financial District on September 3, 2024, we added 18 more seasoned professionals during 2024 to support the expansion. We also continue to add new core deposit accounts and relationships across our full footprint as seen in the growth of non wholesale deposits of $331,300,000 during the year ended December 31, 2024. In the Q4, we maintained our ability to conservatively underwrite as evidenced by our 49.92 percent LTV on commercial real estate, manage expenses with our 41.21 percent efficiency ratio and deliver value to shareholders with our $0.20 per share dividend for each quarter of 2024. Additionally, in the 4th quarter, we were able to maintain our net interest margin, which decreased by only 1 basis point and grow our total loans, assets and deposits over prior periods. Loans held for investment increased during the quarter by $72,100,000 or 2.08 percent from the prior quarter and increased $451,000,000 or 14 point 6 3 percent year over year.

[James Beckwith, President & CEO at Five Star Bancorp]

Average loan yields improved each quarter in both 2023 2024. Consumer and other concentrations of the loan portfolio increased most significantly year over year from 1.2% as of December 31, 2023 to 7.9% as of December 31, 2024 due to purchased consumer loans. The commercial real estate concentration of the real estate portfolio decreased year over year from 86.76% as of December 31, 2023 to 80.75 percent as of December 31, 2024. Our commercial real estate concentration is differentiated by diversification within the portfolio and our ability to conservatively underwrite as evidenced by a 49.92 percent LTV. Our pipeline continues to remain solid at the end of 2024 within the verticals in which we have historically operated.

[James Beckwith, President & CEO at Five Star Bancorp]

Loan originations during the quarter were $263,300,000 while payoffs and paydowns were $72,500,000 $118,700,000 respectively. During 2024, loan originations were $1,100,000,000 and payoffs and paydowns were $263,000,000 $423,000,000 respectively. Asset quality continues to remain strong. Non performing loans remained at 0.05 percent of loans held for investment at period end as compared to 0.05% at the end of the prior quarter and 0.06% at the end of the prior year. As of December 31, 2024, the allowance for credit losses totaled $37,800,000 We recorded a $1,300,000 provision for credit losses during the Q4, primarily related to loan growth for a total provision for credit losses of $7,000,000 for the year ended December 31, 2024.

[James Beckwith, President & CEO at Five Star Bancorp]

The ratio of allowance for credit losses to total loans held for investment was 1.07% at year end. Loans designated as substandard or doubtful totaled $2,600,000 at the end of 2024, representing an increase of approximately $800,000 from the prior quarter and an increase of approximately $700,000 from the previous year end. During the Q4, deposits increased by $158,000,000 or 4.65 percent. During 2024 deposits increased by $531,100,000 or 17.55 percent. The year over year increase was largely driven by increases in money market, time and non interest bearing demand deposits, partially offset by decreases in interest bearing demand and savings deposits.

[James Beckwith, President & CEO at Five Star Bancorp]

Non interest bearing deposits as a percent of total deposits decreased to 25.93% at the end of the 4th quarter from 26.67% at the end of the prior quarter and 27.46% at the end of the prior year. As noted earlier, we are pleased that we had a net non wholesale deposit inflows for the year ended December 31, 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 relationships, we believe we have a reliable core deposit base. To offer more detail on our deposit composition, I want to highlight that the deposit relationships totaling greater than $5,000,000 constituted 61.13 percent of our total deposits and the average age on these accounts was approximately 9.28 years as of December 31, 2024.

[James Beckwith, President & CEO at Five Star Bancorp]

Local agency deposits accounted for 23% of deposits as of December 31, 2024. Overall deposit balances have increased when compared to the prior quarter. Wholesale deposits which we defined as broker deposits and public time deposits increased by $150,000,000 or 36.59 percent quarter over quarter. Non wholesale deposits increased by $8,000,000 or 0.27 percent driven by a $15,700,000 increase in non interest bearing deposits, partially offset by a $7,700,000 decrease in non wholesale interest bearing deposits compared to the prior quarter. Cost of total deposits was 258 basis points during the Q4 of 2024 and 255 basis points for the year.

[James Beckwith, President & CEO at Five Star Bancorp]

We continue to be well capitalized with all capital ratios well above regulatory thresholds for the quarter the year. Our common equity Tier 1 ratio increased from 10.93% to 11.2% between September 30, 2024 and December 31, 2024. On January 16, 2025, our Board declared a cash dividend of $0.20 per share on the company's common voting stock expected to be paid on February 10, 2025 to shareholders of record as of February 3, 2025. On that note, I will hand it over to Heather to discuss the results of operations. Heather?

[Heather Luck, Executive Vice President & CFO at Five Star Bancorp]

Thank you, James, and hello, everyone. Net income for the quarter was $13,300,000 return on average assets was 1.31% and return on average equity was 13.48%. Net income for the year was $45,700,000 return on average assets was 1.23% and return on average equity was 12.72%. Average loan yield for the quarter was 6.01%, representing an increase of 3 basis points over the prior quarter. Average yield on loans for 2024 was 5.89%, representing an increase of 37 basis points over 2023.

[Heather Luck, Executive Vice President & CFO at Five Star Bancorp]

Our net interest margin was 3.36% for the quarter, while net interest margin for the prior quarter was 3.37%. Our net interest margin was 3.32 percent for the year, while net interest margin for the prior year was 3.42%. As a result of changes in interest rates and other factors, our other comprehensive loss was $2,600,000 during the 3 months ended December 31, 2024, as unrealized losses, net of tax effect, increased on available for sale debt securities from $9,700,000 as of September 30, 2024 to $12,400,000 as of December 31, 2024. Non interest income increased to $1,700,000 in the 4th quarter from $1,400,000 in the previous quarter. Due primarily to income received on equity investments in venture backed funds during the 3 months ended December 31, 2024, combined with a loss from equity investments in venture backed funds during the 3 months ended September 30, 2024.

[Heather Luck, Executive Vice President & CFO at Five Star Bancorp]

Non interest income decreased to 6 $500,000 in 2024 from $7,500,000 in 2023, due primarily to lower income received on equity investments and venture backed funds during the year. Non interest expense increased to $14,500,000 in the 4th quarter from $13,800,000 in the previous quarter, due primarily to increased commissions related to higher loan production and increased advertising and promotional expenses. Non interest expense increased from $47,800,000 in 2023 to $54,500,000 in 2024, due primarily to an increase in salaries and employee benefits related to our expansion in the San Francisco Bay Area. Now that we've discussed the overall results of operations, I will hand it back to James to provide some closing remarks.

[James Beckwith, President & CEO at Five Star Bancorp]

Thank you, Heather. I want to thank everyone for joining us as we discuss 4th quarter year end results. 5 Star Bank has built a reputation on trust, speed to serve and certainty of execution, which support our client success. Our financial performance is the result of a truly differentiated customer experience, which continues to power the demand for 5 Star Bank's relationship based services. We are very proud to have earned the trust of those we serve, including our shareholders.

[James Beckwith, President & CEO at Five Star Bancorp]

Looking to 2025, 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 may have.

[Operator]

Our first question today comes from Will Jones from KBW. Please go ahead with your question.

[William Jones, Associate Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)]

Yes. Hey, thanks for the question. Subbing in for Woody Lay this afternoon. I just wanted to start on deposits. Another quarter of really strong growth, though I know it was really kind of a largely wholesale fund quarter.

[William Jones, Associate Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)]

Just hoping you could give us a little bit of the flavor for tender deposits that you brought on, like whether it be duration or cost of the incremental deposits this quarter?

[James Beckwith, President & CEO at Five Star Bancorp]

Sure. As we pointed out and as you referenced, for the most part, our deposit growth was on the wholesale side. And what we've chosen to do is to remain pretty short on those certificates of deposits. And we've kind of set up a Will, you can imagine this kind of a rolling every 3 months re pricing of those deposits they come due. So they're very short term CDs.

[James Beckwith, President & CEO at Five Star Bancorp]

And so we think with that structure with our wholesale deposits, which are CDs, all of them are CDs, Heather, right?

[Heather Luck, Executive Vice President & CFO at Five Star Bancorp]

Yes.

[James Beckwith, President & CEO at Five Star Bancorp]

We think that we'll be able to take advantage of any rate cuts that may occur in 2025, just like we did in the Q4. So that's really kind of how they're set up, Will. And the cost of those deposits are they're probably sitting right on top of treasuries when we did them.

[Heather Luck, Executive Vice President & CFO at Five Star Bancorp]

Yes. So right now, the weighted average rate for that portfolio and there's about $560,000,000 in there is 4.59 percent and they'll reprice, as James noted, on a 3 month basis. Right.

[William Jones, Associate Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)]

Okay, great. That is all very helpful. And then as you just kind of look into 2025 and you kind of think about your growth plans, how are you thinking about the ability to generate organic core deposits? I feel like there's this floating narrative out there that as industry as a whole kind of reignites itself into a state of growth that the competition for deposits is only going to increase into the year. So maybe if you could just give me any commentary on how maybe you kind of view like the competitive landscape unfolding in 2025?

[William Jones, Associate Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)]

And then what is the ultimate outlook for the ability to grow core deposits?

[James Beckwith, President & CEO at Five Star Bancorp]

Thank you. Sure. This business is always very competitive. So we're not necessarily seeing any great changes. We fight it day in and day out in all the markets and the verticals in which we serve.

[James Beckwith, President & CEO at Five Star Bancorp]

There's nothing that's easy in terms of attraction of core deposits and it is the most challenging aspect of being in commercial banking right now.

[James Beckwith, President & CEO at Five Star Bancorp]

So, as we look to 2025 in terms of our growth, we're targeting about an 8% annual growth rate that might be kind of chunky, but we think that that's probably the best sense of what it might be.

[William Jones, Associate Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)]

Yes. Okay. That's great. And then just lastly from me, I just wanted to touch on expenses. I know you guys kind of bear one of the best efficiency ratios of the banking.

[James Beckwith, President & CEO at Five Star Bancorp]

Thank you for noticing. Well, thank you for noticing.

[William Jones, Associate Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)]

It's hard to miss it. But at the same time, you guys are a growth company and operating leverage has been a little bit more challenging to come by just as you go through this investment period. But as you look to 25% and maybe the margin has more of an upward slope to it and you kind of look behind and see that a lion's share of the investment in San Francisco has kind of been made and is behind you as do you feel like operating leverage could be on the table for 2025?

[James Beckwith, President & CEO at Five Star Bancorp]

Sure. We do see some slight margin expansion in our future. And so that's I think that will really drop most of that will drop to the bottom line. We have invested to your point in personnel costs and acquisition of personnel costs, which we may not see that to the same degree in 2025. So we do expect that group of people of which number 28 people right now to really help us drive growth.

[James Beckwith, President & CEO at Five Star Bancorp]

But we're excited about growth across our entire platform. As I previously mentioned, we think that we can grow 8% on deposits. We also think we can grow loans by 8%. So that's kind of what we're targeting. So we do see some operating leverage for us and some of the investments that we made last year, I think they're beginning to pay off.

[James Beckwith, President & CEO at Five Star Bancorp]

We did invest in some new technology, which we're very excited about and coming to fruition this year. So, yes, I think your point is well taken. We do expect to have slightly increased margins and with growth and given where those earning assets will be put on in terms of yield, we're excited about our future.

[William Jones, Associate Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)]

Yes, okay. That's great. Well, nice year guys. Thank you for the time.

[James Beckwith, President & CEO at Five Star Bancorp]

Thanks so much. Thank you.

[Operator]

Our next question comes from David Feaster from Raymond James. Please go ahead with your question.

[David Feaster, Director - Banking at Raymond James Financial]

Hi, good morning everybody.

[James Beckwith, President & CEO at Five Star Bancorp]

Hey, good morning, David. How are you?

[David Feaster, Director - Banking at Raymond James Financial]

Doing great. Doing great. I just wanted to follow-up on kind of that loan growth commentary a bit. Look, the increase in originations is very encouraging. I was hoping you could maybe just how much do you think the increase in originations is a function of improving demand versus market share gains?

[David Feaster, Director - Banking at Raymond James Financial]

And then on the other side of the coin, payoffs and paydowns increased too. I'm curious some of trends you're seeing there. Is that asset sales, competitive dynamics where others might be refinancing debt elsewhere? Just kind of curious some of the dynamics that you're seeing underlying that loan growth?

[James Beckwith, President & CEO at Five Star Bancorp]

Yes, let's just talk about origination side and then we've got some commentary on the payoffs and whatnot. So on the origination side, where rates are right now, it's not the most favorable environment that the 5 year and the 10 year have been kind of ticked up over the last part of the year and then right now they're in terms of one of our businesses which in our mobile home park business David, there's not it's not the greatest environment, but I will say there's still activity happening. And so we're excited about that. I think our loan growth well, I don't think our loan growth is really driven by, let me use a fishing analogy, how many lines of the walk, how many lines we have in the water. We've got a lot of people that are working that are in business development right now.

[James Beckwith, President & CEO at Five Star Bancorp]

We've got 31 of them. And given that cadre of professionals that are constantly looking for new relationships and strong relationships while taking care of their existing relationships, we think we have a competitive advantage in terms of growth. And so, I think it's really a function of how active we are, how many feet we have on the street, the environment for growth itself, given the interest rate environment, I mean it's okay. Obviously, people are excited about what's going on in terms of what our President is doing in his administration. So there may be some aspect of what do we call it Heather, animal spirits that's happening, but on all aspects it's positive.

[James Beckwith, President & CEO at Five Star Bancorp]

Now on the payoff side, David, part of our business is what happens in a lot of our businesses is that folks will take their debt structures they have on their commercial real estate and take them to agency or life companies or some CMBS market. That's okay. I mean that's kind of a planned payoff. And so we saw a fair amount of that in the Q4. We'll probably see a little bit of that in the Q1 here, but that's a natural progression in terms of how our commercial real estate portfolio works.

[James Beckwith, President & CEO at Five Star Bancorp]

And so that just means we have to run a little harder, be more active in order to stay ahead of the game, But we do expect those things to happen year in and year out.

[David Feaster, Director - Banking at Raymond James Financial]

Okay. That's great color. And maybe following up on your commentary, like looking at the breakdown, your point on manufactured housing, maybe not the greatest environment right now. Where do you expect growth to be driven from? It was very diversified this quarter.

[David Feaster, Director - Banking at Raymond James Financial]

Do you expect maybe more diversified CRE production going forward, just again as you have more lines in the water to use your analogy?

[James Beckwith, President & CEO at Five Star Bancorp]

Yes, I think that's a good point because of the fact that we've got a lot of people down in the Bay Area looking for deals right now and we expect that to be very active. And so, year over year or 2 years ago same time, we expect our originations to be a lot more diversified to your point. So, it's not that the mobile home park and RV park activity is dead. In fact, it's not. It still represents a big piece of our pipeline.

[James Beckwith, President & CEO at Five Star Bancorp]

It's just that we brought on some folks that are really will add to the diversification of originations, which is all by design.

[David Feaster, Director - Banking at Raymond James Financial]

That's great. And then you just touched on the Bay Area. I was hoping to get a sense kind of on the pulse there. You've been extremely active making some market share gains, continuing to hire, already brought on a new person in 2025. Could you just talk the pulse of that market?

[David Feaster, Director - Banking at Raymond James Financial]

What you're seeing there? Your ability to continue to gain share and just kind of the plans you have for continued expansion there?

[James Beckwith, President & CEO at Five Star Bancorp]

Sure. First of all, it's a great market and there's still an aspect of, I'm going to say, turmoil and certainly repairing given what happened to Silicon Valley Bank and First Republic Bank and some of the mergers that have happened and what happened to even Signature Bank. So, we're still very excited about that. We're providing a great platform for experienced bankers to come join us. And so, our next expansion efforts will from a fiscal perspective will probably be in the East Bay, most likely in Walnut Creek as we continue to grow.

[James Beckwith, President & CEO at Five Star Bancorp]

And we're always looking to add talented folks and I think what's important to note is that success breeds success and word-of-mouth because bankers do like to talk, we've created something down there that it's really has its own momentum right now in terms of business attraction and also talent attraction. So that's kind of where we're heading from a geographic perspective David down there. But we're interested in the entire Bay Area. The Bay Area is a diverse place. And you've got the North Bay, you've got San Francisco proper, you've got the Peninsula, you've got the South Bay, you've got Silicon Valley, you got East Bay, Oakland Alameda, you got Walnut Creek, Concord.

[James Beckwith, President & CEO at Five Star Bancorp]

All these places are different. They're all their own economic nodes. And in order to play in that space and do it effectively, you've got to get people who are very experienced and know their markets and know the customers and know the industries that are there. And so that's what we're trying to accomplish down there. And it's exciting and it's not we're not doing this to diminish what we're doing certainly up in the Capital region all the way up into the North State.

[James Beckwith, President & CEO at Five Star Bancorp]

In fact, we've added a couple of people up in Chico that we're excited about. So, we continue to grow and develop and we're always looking for talent, David. We never stop doing that.

[Operator]

Our next question comes from Andrew Terrell from Stephens. Please go ahead with your question.

[Andrew Terrell, Managing Director at Stephens Inc]

Hey, good morning, James. Good morning, Heather.

[James Beckwith, President & CEO at Five Star Bancorp]

Hey, good morning, Andrew.

[Andrew Terrell, Managing Director at Stephens Inc]

Just a few questions here. Anything, James, that seasonally impacted the non wholesale deposits we saw this quarter up a little bit less than maybe I was expecting. Just wondering if there is any kind of seasonal impact that we should be aware of for the Q4?

[James Beckwith, President & CEO at Five Star Bancorp]

In terms of deposit flows?

[Andrew Terrell, Managing Director at Stephens Inc]

Yes, deposit flows, not wholesale.

[James Beckwith, President & CEO at Five Star Bancorp]

Yes, I think that we saw some, geez, in the last week, it probably would have a dramatically different result. I think we saw a lot of distributions being made by our commercial customers coming out in the last 2 weeks of December. And the flows were really quite significant, well over $50,000,000 And I think that's normal. People are paying out bonuses. A lot of people like to get that done prior to the end of the year.

[James Beckwith, President & CEO at Five Star Bancorp]

For staff, maybe some of the executives are a little bit later. But that's something that we really picked up on notice. It wasn't no relationships went away, it's rather just people distributed their cash. And so that's what we saw. It was very noticeable.

[Andrew Terrell, Managing Director at Stephens Inc]

Got it. Okay. Yes. Thank you. I appreciate that.

[Andrew Terrell, Managing Director at Stephens Inc]

And then when I think about the parameters you're putting around kind of loan and deposit growth next year, I think you said both expected around that 8%. Just within those two figures, would you assume any runoff of the wholesale deposits, essentially implying the kind of non wholesale deposit could be better than 8%. And then within loan growth, should we expect any PH and G purchases throughout 2025 and were there any in this quarter?

[James Beckwith, President & CEO at Five Star Bancorp]

So there were some in this quarter and so big picture what we're trying to maintain is about a $300,000,000 book with BHG, which means we have to be active every quarter to kind of fill up what gets paid off. It's very rapid amortization. So we plan to keep the BHG balances around $300,000,000 We also plan to keep our wholesale book pretty consistent throughout the whole year. So the strategy there is just to roll, keep rolling those CDs.

[Heather Luck, Executive Vice President & CFO at Five Star Bancorp]

And just to put some context around that, James noted we're going to stay within that $300,000,000 concentration. So, for comparison purposes, in Q4, we only purchased $17,000,000 of BHG loans for a total as of year end at $270,000,000 That's compared to $109,000,000 purchased in Q3. So you can kind of see the level of activity now that we're almost to that level of kind of typical activity that we'll do.

[James Beckwith, President & CEO at Five Star Bancorp]

So no diminishment of our wholesale deposit book.

[Andrew Terrell, Managing Director at Stephens Inc]

Got it. Okay. I appreciate it. And then maybe just one more just going back on, I think it was Will's point around the efficiency. If I look at the expense growth this past year was I think 14% versus 2023 levels.

[Andrew Terrell, Managing Director at Stephens Inc]

Heather, how should we be thinking about just overall level of expense growth in 2025?

[Heather Luck, Executive Vice President & CFO at Five Star Bancorp]

Yes. As James mentioned earlier, we have been investing in not only the Bay Area, but also Sacramento and the Valley and in the North State, and also in back office support too to help support all of the new activity and new customers coming in. So, I expect to have for the first half of the year to use Q4's expenses as your proxy. I think that that's a good new baseline for where we expect to be for the first half of this year.

[Andrew Terrell, Managing Director at Stephens Inc]

Got it. Okay. So pretty similar 4Q into the first half and then maybe we'll reassess them depending on kind of hiring and future investments?

[James Beckwith, President & CEO at Five Star Bancorp]

Correct. Correct. Okay. Glad you brought that question up because we were just talking about that in terms of we were opportunistic, Andrew. If a team becomes available, we're going to jump on it.

[James Beckwith, President & CEO at Five Star Bancorp]

And so, these folks aren't cheap, as you know.

[Andrew Terrell, Managing Director at Stephens Inc]

Yes. Well, you guys have done a great job in remaining opportunistic. So, I appreciate it.

[James Beckwith, President & CEO at Five Star Bancorp]

Thank you. Thank you.

[Operator]

And ladies and gentlemen, at this time, we're going to conclude today's question and answer session. I'd like to turn the floor back over to management for closing remarks.

[James Beckwith, President & CEO at Five Star Bancorp]

Great. Thank you. 5 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 expense management have also contributed to the successes we share with our employees and shareholders. These successes include numerous ratings and awards. 5 Star Bank consistently execute on client and community focused initiatives and 2024 was no exception.

[James Beckwith, President & CEO at Five Star Bancorp]

We received a super premier rating from Findlay Reports and IDC Superior rating and a Bauer Financial rating of 5 stars. We were also awarded the prestigious 2023 Raymond James Community Bankers Cup. We are among S and P Global Market Intelligence 2023 Top 20 Best Performing Community Banks in the nation and we are ranked 5th in the 2024 Bank Director Magazine Best U. S. Banks with Assets Less Than 5,000,000,000 dollars We also received the Greater Sacramento Economic Council's Sustainability Award, recognizing a company that has supported industry growth in the Greater Sacramento region.

[James Beckwith, President & CEO at Five Star Bancorp]

In 2024, our senior leadership was recognized by the Sacramento Business Journal with the C Suite Award, a Women Who Mean Business Honor, a 40 Under 40 Recognition and placement on the Power 100 list. Our senior leadership was also recognized in the San Francisco Business Times Newsmaker 100 list as part of the Independent Community Bankers 40 Under 40 Emerging Community Bankers among the Association of Latino Professionals for America's Top 50 Most Powerful Latinas and with the National Association of Women Business Owners Sacramento Valley Outstanding Women Leaders Executive Woman Award. Being recognized as community leaders ensures 5 Star Bank remains top of mind in the markets we serve as we continue to build out our market presence. I am humbled and proud of our team's accomplishment and look forward to the future. We look forward to speaking with you again in April to discuss earnings for the Q1 of 2025.

[James Beckwith, President & CEO at Five Star Bancorp]

Have a great day and thank you for listening.

[Operator]

Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.

Participants

Analysts

• James Beckwith, President & CEO at Five Star Bancorp
• Heather Luck, Executive Vice President & CFO at Five Star Bancorp
• William Jones, Associate Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)
• David Feaster, Director - Banking at Raymond James Financial
• Andrew Terrell, Managing Director at Stephens Inc