We have asset management, a great team of people here that can help with corporate asset management should we need it. And for some clients, that’s the right solution. And so, Brandon, there’s kind of a delicate balance of how we move all these things together. We did it at Banc of California historically. And so, I would say that the things that we look at are the loan to deposit ratio and our percent of NIB and that provides the flexibility for everything else.
Brandon King: And then in your prepared remarks, you mentioned how you are adding individuals and talent. Could you elaborate on that, what types of talent are you adding? And how should we think about that as far as how it could impact expenses? I know you have a pretty tight range you are expecting this year, but just going forward?
Jared Wolff: Yes. Well, there were some positions in some areas that we want to grow. We just added a talented leader to Head of Venture in California, and lead our team here. We have, before we announced the acquisition, we brought in a new Head of Corporate Communications from City National, Debora Vrana, who is doing a great job for us. We have a head of underwriting on the Community Bank side that we brought in recently. There is a whole host of talented leaders and players at all levels that we’re bringing in. We obviously are going to have to manage it within our expense targets and getting down to that 2% OpEx ratio is going to require us to exercise some discipline. But we are confident that we can do it.
Brandon King: And then just lastly, you gave us the spot yields, which is very helpful. Could you give us the spot yield on the securities portfolio?
Jared Wolff: Joe, do you have that?
Joe Kauder: You know, I do. Just give me one second.
Jared Wolff: Okay, Brandon. We’ll take a look for that, Brandon.
Joe Kauder: No. I got it here, Jared. It’s 2.25%. I’m sorry. I read that wrong. 2.75%. I apologize. 2.75%.
Operator: Our next question comes from Gary Tenner from D.A. Davidson.
Gary Tenner: A couple of questions. One, the NIM guide of approaching 3%, just confirming that’s inclusive of the expected loan discount accretion that you kind of lay out on an annualized basis in the slide deck?
Jared Wolff: Yes.
Gary Tenner: Okay. And Jared, you kind of answered part of this with your comment around the BTFP and repaying that probably before the end of the quarter. But in the deck, it kind of one of your checklist items was to complete restructuring of the balance sheet. Now, I know there’s going to be kind of ongoing, obviously, for some period of time, kind of optimizing of the balance sheet, but just wanted to get a sense of any kind of clear discrete items outside the BTFP repayment that are still planned for the first quarter?
Jared Wolff: Well, I think its expense reductions. There are pieces of the discontinued loan portfolios that capital permitting, we might look to sell. If we think the yield is so low that we can, it’s somewhat of a negative carry relative to other funding that we could pay off. We’re constantly looking at that and looking at what the pricing is. And pricing is kind of moving around in the market as people settle in on where they think rates are going to be. So, we’re not ignoring that there are other things that we could sell. We just haven’t made the decision to definitely sell those things, absent one or two things. So, I think that’s something that you could expect, Gary. Look, there is lot of — these are somewhat unclear times from an economic standpoint, and I think a lot of banks are looking at the road ahead and it’s kind of filled with debris and they’re trying to figure out how they’re going to drive down the road and kind of get to the end zone.
I’m mixing my metaphors here, but we are — we’re fortunate that we have a very clear path and I guess a very clear road ahead and we can see very clearly what we need to do, and we have it all laid out and if we execute on the things that we set out to do, we believe it’s largely within our control to achieve the earnings targets and profitably that we set and that that includes potentially having some loan sales. And we have a lot of leverage to pull. So, if we don’t sell those loans, we got something else that we want to do. But I think loan sales is a possibility along with all of those expense savings that I mentioned that we have listed out. Joe, I don’t know, you or Bill have anything else to add here.
Joe Kauder : I would just say on the balance sheet, as the liabilities is in addition to BTFP with other broker deposits as they come due we’ll look at the market and we’ll look at all the various options we have. Do we let the wholesale funding ratio drift up, drift down, do we loan deposit ratio, et cetera. So, there’s lots of options we have, and we’re going to make those as Jared articulate, we’re going to make those decisions as they come to us and based upon the economic environment and the best, what’s best for shareholders at that time.
Gary Tenner : If I could ask one more, Jared, you mentioned that you’ve got several stories about former PacWest depositors coming back into the fold as it were post deal. You talked about the experiences to how those are coming back. Are they kind of utilizing a sweep or a kind of shared deposit product? What kind of format are those balances coming back?
Jared Wolff : It’s all different formats. I mean, I got a story right here from someone in one of our offices during the liquidity crisis. So a long time, small business client withdrew $1.3 million out of his account, and he was incredibly apologetic. He took the $1.3 million cashier’s check to BofA and opened the account. Our client quickly realized that he did not receive the same service that he always enjoyed as he continued to bank with us with much smaller balances, we continued to encourage him to bring the money back after the renewed strength of the bank and the merger and how dissatisfied he was with the impersonalized service at this other bank. The client brought back the $1.1 million and attributed to our service and our particular banker that took care of them every week.
I mean, I have pages of stories like this. And it obviously is very gratifying and it’s not surprising to me at all. We did this at Banc of California when I joined. We really focused on service and solutions. PacWest is really good at it. They had outflows based on fear that were unfounded, but they had a very, very loyal client base. And I know that if we do what we say we’re going to do, and we do it on time and we continue to execute the way we always have we will be very successful in that effort.
Operator: Our next question comes from Andrew Terrell from Stephens.
Andrew Terrell : Just a couple of quick ones for me. One, just to confirm on the kind of balance sheet size expectations, it sounds like from an average earning asset and then total asset standpoint, I mean, relatively kind of stable expectations throughout the year. Is that fair?
Jared Wolff : Yes.
Andrew Terrell : What’s the comfortable level of cash you’d be willing to run at?
Joe Kauder: I think about 8%. Is that right, Jared?
