Jared Wolff: Well, so hospitality is not something that we traffic in. And so I would start by staying away from that. Second is office. We don’t really have much and we would stay away from it now for sure. I mean, there aren’t a lot of — there isn’t a business that I have heard of that isn’t thinking about reducing their space. And so there begs a lot of questions. When leases come up, how that’s going to perform. Construction is obviously something that you got to be careful. Now the good side of construction is that, supplies are more available, teams are more available and the best developers know that downturn is sometimes the best time to build because you’re building when there’s no demand and then soon as you come out of the ground, you can fill it up pretty quickly.
And certainly for infill housing, there’s opportunity. So I wouldn’t say that you would avoid all construction, but what’s the price of the land that they’re contributing. What’s the building cost today? Some of the building costs have actually gone down that can offset some of the rate increases. But I would say that on most cases, you’re going to be extremely careful on construction. And I go back to just core C&I, things that are — things that are going to get triple hit with interest rates, labor shortages and supply chain. And you think about distribution and warehouse and things like that that could be hard hit. If you’re doing C&I right now, you better have a good ABL team, because that’s one of the safer ways to do C&I in this sort of environment, but even there you have to be super cautious.
I would say on the other side, SFR remains safe and we continue to see opportunities on the SFR side that look very attractive. And if it makes sense to pull the trigger, we will. We don’t originate, but we have — as you know, unique channels to get that asset. And if we see good stuff, we wouldn’t hesitate.
David Feaster: Okay. That’s helpful. Thanks everybody.
Operator: And our next question today comes from Andrew Terrell with Stephens. Please go ahead.
Andrew Terrell: Hey, good morning.
Jared Wolff: Good morning.
Andrew Terrell: Jared or maybe for Lynn, just looking at the 2023 strategic objectives. Hoping you could just maybe expand on what type of balance sheet opportunities you might look to take advantage of when speaking about enhancing kind of longer term earnings? Just maybe some incremental color there.
Jared Wolff: Yes, I mean, I think we just touched on a little bit and it was touched on the beginning. It’s a good question. We can — there are opportunities to buy securities that might be more attractive than loans. You could borrow to buy securities if you’re able to match it right and really benefit as when rates come back down, you’re going to have your funding costs come down and your securities yields probably going to go up. So there’s good opportunities there. We are seeing lending opportunities, so they’re just not robust. And then Lynn, how else would you augment that?
Lynn Hopkins: I agree with your comments. I think we started out talking about looking at average earning assets maintaining them and to the extent that there’s not opportunities in loan portfolio. I think we view that there’s opportunities in securities portfolio. Especially as we continue to manage funding costs. So I think those are primarily and I think we have to recognize the economic landscape that we’re going to be operating within, but I think there’s an ability to accomplish that.
Andrew Terrell: Yes. Okay. That’s helpful. Thank you. And maybe if I could move really quickly to the non-interest bearing deposits. I know the end of period was down maybe a bit more than the average was throughout the quarter. I was hoping just to hear any kind of color you have regarding trends so far in January?
