Heather Luck: Sure. Yes. So we have successfully completed a year of parallel runs. We’re currently going through with our auditors the final review of our day one adjustment, but we are anticipating a day one adjustment between the reserve and then the reserve for unfunded all in ranging anywhere between $6 million to $7 million for an increase for our day one adjustment, which we’ll have finalized and ready for Q1.
Woody Lay: Got it. All right, thanks for taking my questions.
James Beckwith: You bet.
Operator: Our next question comes from Andrew Terrell with Stephens. Please go ahead.
Andrew Terrell: Hey, thanks for the follow up. Back on the margin. Just a quick one here. I wanted to get a sense for what new production kind of on a weighted average basis is coming on the portfolio just as we think about. I know there’s maybe some pressure on the funding cost side and competition there just trying to think about what the incremental margin looks like.
Heather Luck: Yes. So for Q4 our overall kind of weighted average rate for new loans was about 6.54%, definitely thought to get from the rising interest rate environment. For Q1 though, we’re looking at an overall NIM ranging anywhere from like 3.75 to 3.85.
James Beckwith: Yes. Our standard pricing is 300 over the five year for our typical CRE portfolio loan and as the five year jumps around and what not, you could have as high as 7, 7.15 to 6.5 right now or 6 almost 6 in three quarters. So that’s what we expect in terms of production, where that will land in 2023. And certainly saw that in the fourth quarter, which resulted in really moving our loan yields up quarter-over-quarter.
Andrew Terrell: Yes. Okay. Now last one for me. Just for Heather on the expense base, just working in 2023. can you just remind us the normal seasonality that we might, I guess of the expense base throughout the year and then any estimate on kind of clean run rate starting out the year and Q1 €˜23?
Heather Luck: Sure. I really do think I know, you all stripped out at the $300,000 of subject costs that we ran through Q4. But I really do feel like Q4 is a good proxy for our expenses going forward. As we look for the year, you could estimate about 1.33 as far as non-interest expense to assets. But Q4 is a pretty good proxy to those subject costs.
Andrew Terrell: Okay. Very good. Thank you for taking the follow up questions.
Operator: Ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to management for any closing remarks.
James Beckwith: Well, thank you, and appreciate everybody being on the call. Five Star Bank continues to execute on strategic initiatives which include growing our verticals in geographies while attracting and retaining talent to our people, our technology, our operating efficiencies, conservative underwriting practices and expense management have also contributed to the success we share with our employees and shareholders. At Five Star Bancorp we seize opportunities, embrace challenges and value the intrinsic reward of serving others. We look forward to speaking with you again in April to discuss our earnings for the first quarter of 2023. Have a great day and thank you for listening.
Operator: This conference is now concluded. Thank you for attending today’s presentation. You may now disconnect your lines and have a wonderful day.
