Li Yu: I’ll fix it with a situation. Now, I can give you a rough number right now. I cannot tell you exactly down 100 basis points and so on. We haven’t got a chance to do that. I think previously we disclosed to you, I mean, rate sensitive loans. It’s about 87%. I can’t quote you exactly. Now we’re down to about the mid 70% or maybe slightly lower than mid 70%. So if you compare to the sensitive liability we have, that we’re in pretty good balance right now.
Andrew Terrell: Yes, okay. Yes, the mid 70s is definitely a big move. That’s really helpful. I appreciate it. And then maybe one on the expense base. Just expectations on kind of the 2Q expense run rate. I know that its looks like maybe a new LPO opening. Just curious on how you see expenses trending in the second quarter?
Edward Czajka: So a number of things that Mr. Yu and Wellington alluded to. We have the new Irvine office, which is in a prime, prime location in Orange County in the Culver Center in Irvine. In addition to that, the Silicon Valley LPO, both of those require staff as well as lease costs. So I think going forward, I think the 20 million you saw this quarter is probably a fairly plus or minus going forward for next quarter.
Andrew Terrell: Okay. Very good. Thank you for taking the questions this morning. I appreciate it.
Li Yu: Thank you.
Operator: [Operator Instructions] Our next question comes from David Feaster with Raymond James. Please go ahead.
David Feaster: All right. Good morning, everybody.
Li Yu: Good morning, David.
David Feaster : You touched on the two MPAs. But I was hoping to get your thoughts on credit more broadly. You’ve got a track record of, you know, being aggressive managers or credit. I’m curious, what are you seeing more broadly in the health of your clients? Are you seeing any signs of stress and just any, you know, any thoughts on credit more broadly from your perspective?
Li Yu: Okay, let me state that from a, from a way back, you know, let’s say in 2022, okay, a little bit earlier, when we started to worry about the rates and credit and so on, and inflation and so on. If I had seen or thought that the, was this period almost two years gone by with the charge-offs we have and the loss we have had and the level of MPLs and the level of criticize assets as of today, I wouldn’t be so happy those days. But as you know that the one of the trick in dealing with credit is try to identify early and try to fully reserve that. Okay? So that’s our basic principle. But talking about what our customer is concern, most of our customer is started to turn a little more positive. And being basically obviously inflation is one factor that is down.
And another factor, the rate is stabilized, although everybody would like to see it down a little bit. But all we all know from this point of time, sooner or later, it’s going to be lower. It’s a matter of whether it’s half a year or one year or whatever. Sooner or later, we’ll be back on that. And from what I read for all the big banks reporting numbers, their credit posture is also better than expected and internally expected or what. Okay? So generally speaking, I think the marketplace is start to feel, see the light at the end of the tunnel. In fact, many of our more opportunistic customers, they started to thinking about new investments. I wonder if that’s all you have. I mean, any additional related to that?
David Feaster: That’s great color. Does that indicate that maybe you’re having a bit of, you know, maybe less cautiousness and maybe that we should see growth start to accelerate? It sounds like demand starting to improve. You alluded to improving pipelines. It seems like you strategically decelerated growth from the conversations that we’ve had. Does it sound — and my reading between the lines that maybe we could see you’re a bit less cautious today and we could see growth reaccelerate in the back half of the year?
Li Yu: I don’t want to be really associate growth being less cautious. Okay? I think to put it right situation is that it finally seems to be that we can take on the opportunity that will be presented to us and we have to be ready. As you know, your app personnel that their production will come maybe three to six months later. So that’s not immediate effect on that. And the general feeling is that, as I said, to me, I personally believe the big picture is that rate is finally coming down and sooner or later it will stabilize into a new norm situation, which will be reasonably lower than it is today. And although every pricing activity is adjusted to the new loan, new rate, and every pricing is new inflation number, product number, things will start to sort of like normalize themselves.
And with our current strengths of economy, I personally believe that business opportunity has increased and there will be less risk of doing transaction today as compared to one year ago.
David Feaster: That makes sense. Makes a lot of sense. Thank you for that color. And then last one for me, maybe just following up on the branch expansion LPO. I love seeing the continued expansion in investment. I’m curious. How do you think about De novo expansion priorities at this point? What other markets are interesting to you? And just kind of curious how you think about it as you continue to expand. Where are you focused?
Li Yu: David, our expansion really has two different directions. One is that areas we think we have a lot of business we want to be. And another situation is that when we have to personnel. And Preferred Bank is the small institutions, so we can go anywhere and get a reasonable amount of business with a new operation. And therefore, if we are finding the banker has the book of business, we tend to build a team around him and set it down with the operation there. Having said that, and Silicon Valley is one of the areas that we have wanted to be there. And then we have never been able to get the right person there in the last 10 years so on. Finally, situation comes. Wellington is able to locate a couple of people he thinks it will be fitting to our needs and so on. So we are starting that particular operating. It’s the right place for us and probably the people is the right people.
