It wouldn’t surprise me if we have that outcome where the first 25, the first 50, nothing might be really happening in the marketplace since there’s a gap between that rate differential and what you could get in a money market. Right? So it might just exacerbate what’s already there. So I can see people may be holding pat or not doing as much, when you get into the next round, let’s say the next 50 to 75. Now, I would start to anticipate, let’s say, more of a matched beta, if you will, that kind of makes sense to me. And so with respect to our non-maturity, interest bearing portfolio, you’ll start to see that step down quite nicely. The time book again, is becoming more ratable, so it takes about four quarters for it to reflect the current rate.
So hopefully those long answers respond to your two questions.
Kelly Motta: Thanks, Rom. Long answers to two long questions. I appreciate it. I’ll step back.
Operator: Thank you. Our next question comes from the line of Matthew Erdner with Jones Trading. Please proceed with your question.
Matthew Erdner: Hey guys, thanks for taking the question. Turning to new loan production, you guys had a really strong quarter for commercial real estate loans. Could you talk about the profile of those asset type geography, LTV, that sort of thing?
Romolo Santarosa: Yes, most of us are in production team actually broad based mainly in hospitality, industrial, warehouse, multifamily and retail. And geographically, that’s evenly distributed from California to eastern region. And then loan to value came in, I believe 47% for new production.
Matthew Erdner: Got it, thank you. And then what kind of pipeline are you guys seeing at the moment in terms of commercial and then C&I as well?
Romolo Santarosa: Looking at the first quarter pipeline, it has been moderated from the level of in fourth quarter. And then I’m seeing elevated percentage of C&I portion than CRA.
Matthew Erdner: Got it, thank you. And then one more question from me, the loan portfolio maturity is less than a year. Could you talk about the profile of the other loans? $115 million it looks like it’s about $570 over the next three years. Could you just talk about those? Thanks.
Bonita Lee: Sure. In terms of a loan to value and debt service coverage, it will probably mirror our book, CRA book in general, which is loan to value anywhere from around average around 50%. And then that’s a risk coverage about 1.8 to two.
Matthew Erdner: Thank you.
Operator: Thank you. Our next question comes from the line of Adam Butler with Piper Sandler. Please proceed with your question.
Adam Butler: Hey, good afternoon, everybody. Thanks for taking my questions. I’m on for Matthew Clark. Looking over into noninterest income, it was nice to see the SBA production tick up quarter-over-quarter and looked like trade premiums declined by about 70 bps linked quarter. I was just curious if you can give another update on your outlook for SBA production and trade premiums. Thanks.
Bonita Lee: So in terms of a production, I think we can give a range about anywhere from 35 to 45 on a quarterly basis.
Romolo Santarosa: And then with respect to the trade premiums, I would just observe that our trade premiums, if you looked at other SBA secondary marketing notions, tend to be a little bit lower, which is a little bit more indicative of the kind of product that we originate, whether it is real estate secured or just C&I secured, if you will. So I can envision again, they’re going to be a function of the marketplace. They probably have a little bit of drift left in them, but not maybe perhaps not too much as long as the rate environment stays relatively stable.
Adam Butler: Okay, great. That’s helpful. Thanks. And then in terms of expenses is $35 million a good run rate going forward, or is there anything that you guys are envisioning in terms of technology expenses or whatnot to kind of ratchet that up, or salaries coming up in the first quarter? Thanks.
Romolo Santarosa: So specifically with respect to salaries, our merits and other adjustments don’t become effective until the second quarter. So that said, that’s probably the one of our larger spend categories. I think we’re targeting inflation, which is about 3%. And then after that, as we went through 2023, where we kind of had the five to six notions in hand, I think we’ll try to basically envision inflationary. We’ll just say three to four. I’m not sensing that there’ll be any momentous ideas unless you get to a quarter like we have here in the fourth quarter, where you see seasonally our spend goes up because of advertising. There’d be other, some ideas, but the core expenses of salaries, occupancy and data processing probably should hold probably about a 3% to 4% inflationary pressure.
Adam Butler: Okay, great. Thanks. Those are all my questions. Thank you.
Operator: Thank you. Our next question comes from Kelly Motta with KBW. Please proceed with your question.
Kelly Motta: Yes. Hey, thanks for letting me back on. I just wanted to snap on back about the buyback. You’re clearly active again this quarter, wondering about how you’re feeling about implementing that, especially as kind of loan growth is more moderate as we look out to next year, based on your commentary.
Romolo Santarosa: So, Kelly, I think we’ll continue to look. First of all, I appreciate the word active. I would prefer the word that we nibble. So we’ll probably continue to nibble as market opportunities present themselves. We also have an eye towards sufficient capital to deal with all of the worries out there relative to credit and so on. But we’ll look at that as we do every quarter. So I think we also keep an eye towards our employee share compensation programs and the best thing, because we don’t like it to be too dilutive. So we’ll be looking at those to make sure we kind of keep a fairly stable share count. So between those ideas, we’ll continue to analyze each quarter as it presents itself.
