David Feaster: That’s helpful. And then maybe just touching on ag specifically, obviously, there’s some challenges in that space. You’ve alluded to that from commodity prices, input costs and all that. I’m curious what you’re seeing and hearing from your clients, where you’re specifically seeing any stresses? And just how do you think about managing that book going forward?
Dave Brager: Yes. I mean look, it’s a smaller part of our overall portfolio but it’s an important part of our portfolio. A lot of our offices are located in the Central Valley, which California, which is the breadbasket of the world really. I mean the largest ag producing counties in the country are in the Central Valley. So it’s an important part of what we do. We just have to be very cautious when we’re looking at it. The dairy and livestock or the ag production side have been challenged. But things recently have maybe gotten a little bit better milk prices, futures are starting to pop up a little bit. There are some of the input costs have stabilized or even gone down in some cases, there’s a lot of news that comes out of that area.
One thing we should have to worry about at least in the foreseeable future is water. We’ve had a lot of rain over the last couple of years. So that’s a good thing but it but it remains challenging. I mean it’s a hard business. We just like everything want to bank the best in each of the specific industries that we do business with. And so we just tried to pick and choose the right customers and as much as they’re picking and choosing us that is but I would say it’s going to remain sort of in that five-ish or less percent of our total loan portfolio. But it’s still an important part of what we do.
David Feaster: Okay. That’s great. And then obviously, there’s a lot of moving parts in the balance sheet right now. And we touched on a bit of that with Guy’s question with using cash and cash flows from the securities book to fund upcoming BTFP maturities. But I’m just curious how you think about managing the balance sheet. Other moves you’re considering at this point, I mean we did the swap. You’ve – we did some restructuring on the BOLI policies, be kind of curious, what implications of that. But I’m curious, how you think about managing the balance sheet and whether maybe a higher for longer outlook impacts that?
Allen Nicholson: Well, David, it’s definitely a balancing act. I mean we are balancing both our interest rate risk, which has become a little more asset sensitive as we put on these derivatives, balancing, obviously, a lot of liquidity measurements we look at and ultimately trying to fund the bank in the cheapest way possible. So there’s a lot of tweaks and sometimes we make decisions balancing against all three of those. So I do agree that interest rates probably will stay elevated for a fairly long time. In some ways, that’s not really a bad thing in my mind. And so I think long-term, as we continue to change the funding mix and put on loans well into the 7%, I think that will be positive for us a long time.
David Feaster: Okay. And any details on that BOLI restructuring?
Allen Nicholson: Well, we completed it successfully. I think you saw the impact this quarter, significantly more income. If you look year-over-year and we’re happy with it. It’s doing what we wanted to do.
David Feaster: Okay. So it’s fully reflected in this quarter. Got it.
Allen Nicholson: It is. Yes.
David Feaster: Perfect. All right. Thanks, everybody.
Dave Brager: Thank you, David.
Operator: Thank you. One moment for our next question. And that will come from the line of Gary Tenner with D.A. Davidson. Your line is open.
Gary Tenner: Thanks. Good morning, guys. A lot of my questions asked and answered, but just curious from a bigger picture perspective in terms of M&A, I think last time we spoke you kind of suggested maybe post NYCB there have been a little bit more discussion or conversations around M&A obviously, you’re in a great position from a capital and a valuation perspective. So, curious kind of how that trend has gone in terms of conversations has it tended to be more kind of the smaller end of the size spectrum in terms of who might be more willing as a seller today and your broad thoughts on topic?
Dave Brager: Yes, I would say conversations are still active. I mean, there is a lot of conversations. I think with the recent move in rates and some of the marks and the challenges on the math, that it always becomes challenging when you get down to really talking about what you can, or are willing to do. But there’s still a lot of conversations going on. And look, we’re in a good spot — we’re going to be selective like we always are, we need to really find somebody that wants to be a partner with us and really look at the combination of whatever banks are — and I think you — part of your question was sort of the size. I mean they’re all with all the conversations we’re having are. And again, these are all preliminary nothing imminent.
But all the conversations we’re having are really driven between that $1 billion to $10 billion in asset size bank. I think there’s — could be potentially, the larger you get the more regulatory pushback you might get. I mean there’s a lot of factors maybe some more factors than there would have been a couple of years ago, today. So, you just have to really make sure that you’re picking and choosing the right partners and that you can do it in a way that, you don’t dilute your existing shareholders too much and you earn it back relatively quickly. So we’re still on conversations. I would love to say, that we want to get something done, but we don’t really buy banks, they sell. So we’re kind of — they have to agree to what we’re willing to do.
So, that’s sort of where we are.
Q – Gary Tenner: Appreciate that. And since you broached the topic of kind of regulatory pushback potentially on deals have your regulators, as you’ve been in communication with them, have they been able to give you any kind of visibility or guidance on what to expect in the scenario where you announced the deal? I mean, there seems to be a lot of uncertainty out there. I’m curious, what it has been communicated to you?
