Tim Coffey: Hey good morning, gentlemen.
Jared Wolff: Good morning.
Joe Kauder: Good morning.
Tim Coffey: So I appreciate all the details in the press release today, especially the spot rates. If I were to look at the spot rates and applies into period end balances, I started giving a net interest income number closer to $300 million. Is that a reasonable estimate for the profitability of that company today?
Joe Kauder: I don’t know that we’re ready to say that yet. We are yet to confirm that number as being high or low. The reason being is there’s a lot of moving pieces. And I think we understand why it’s difficult because we only had one-month combined balance sheet with a whole bunch of stuff moving around. What we’d like to do is deliver a Q1 balance sheet and income statement, and I think it’s going to be much easier for us to guidance off of that. But to forecast today what Q1 kind of run rate PPNR or other things are going to be we’re not – we don’t want to do that yet. We want to make a little bit more progress. Hopefully people took away a lot of confidence from what we’ve done. I mean, I think what we accomplished in Q4 was tremendous.
We did this at Banc of California. We always did it faster than we said we were going to do it. And I can’t promise that that’s going to happen here, but I have every level of confidence in our ability to execute and be successful. And so I’d like to get through Q1, Tim, to be able to guide from there.
Tim Coffey: Okay. Appreciate that. And then I also appreciate the cadence of the cost saves throughout the year. I’m wondering, as it comes to a reflection of the balance sheet – we do in the balance sheet, is there anything coming up in 1Q of significance?
Jared Wolff: The FDIC I think it’s pretty big. Is it Joe?
Joe Kauder: Yes. So on the cost the FDIC assessment, assuming we get that’s a very big run rate item. And then there are some other initiatives we have, which they come in throughout the year. The other things are happening in the first quarter. But I think were you asking about the balance sheet restructuring in the first quarter because on that, I think you could see us deploying some of our excess liquidity against, for example, the BTFP, which is going to come due in March.
Tim Coffey: Got it. Yes, that’s actually what I was asking about. It’s on the balance sheet side. Is it just the BTFP then that – that’s front?
Joe Kauder: Well, there’s other higher-cost broker deposits, which are coming due in the first quarter. And that’s, I made a comment earlier about how we evaluate them as they come due. When you look at the situation, the economic environment at the time and we make decisions what’s best trying to manage the portfolio optimally on a day-by-day basis.
Tim Coffey: Okay. Appreciate that. Thank you. And then Jared…
Jared Wolff: Tim, one other thing, we did mention that we are constantly looking at loan sales. And so I don’t know that we’re going to execute it depends on the price, but I wouldn’t be surprised if we did because we have opportunities to do that. But if we don’t get the right price, we obviously won’t do it.
Tim Coffey: Okay. That piece of the multifamily is off the market now, right? You’re going to hold on to that?
Jared Wolff: Yes. Yes, we’re going to hold onto that.
Joe Kauder: I would say there might be a very small subset of the multifamily that was a very small subset that there seems to be a lot of interest in that, that piece of it we may, but it would not be a large portion.
Tim Coffey: Okay. Okay. I understand. Thank you. And then my follow question is, Jared, on the size of the balance sheet and I’m not being critical because I think he adds what you do is pretty much unprecedented in banking this merger. But I thought at announcement, the balance sheet wasn’t going to be smaller than it is today. And I’m just kind of wondering, did you kind of just run out of time to do all the stuff you want to do? Or was this more – was there a strategic reason for keeping it bigger?
Jared Wolff: Well, the first piece of it was keeping the extra piece of multifamily and we have more cash, I think, than we planned. But I do see it coming down. But like I said, we’re not – we’re really managing the profitability and to that 110 ROA. And obviously, 110 ROA on a bigger balance sheet means more earnings. So if we might need to bring down the balance sheet based on where we see earnings and it’s a delicate balance, obviously, because you get rid of assets and they’re earning something and where the expenses that go along with it. But we’re managing all of that to make sure we get to that 110 ROA out of the gate of Q4 to start 2025. So I don’t know where we’re going to land, but I’m confident we’re going to get to our profitability targets.
Tim Coffey: Great. Those are my questions. Thank you very much.
Jared Wolff: Thanks Tim.
Operator: And our final question is a follow-up from Timur Braziler from Wells Fargo. Please go ahead with your question.
Timur Braziler: Hi. Thanks for the follow-up. Just one quick one, what are the assumptions for purchase accounting that are embedded in your estimates for 2024?
