Question-and-Answer Session
Operator
All right, thank you. (Operator Instructions). Just one moment please for our first question, and that is coming from Brett Rabatin with FTN Midwest. Please go ahead.
Brett Rabatin - FTN Midwest
Hey, good morning everyone.
George Leis
Good morning Brett.
Brett Rabatin - FTN Midwest
I wanted to I guess first spend a minute just talking about the construction portfolio and then the construction loan that went on non-accrual in the fourth quarter. I didn’t quite understand, the loan is -- as two areas you indicated were soft and so you had gotten some updated appraisals and you felt like the loss exposure was minimal.
I didn’t understand why on the size of that loan there wasn’t some meaningful write-down to give you a comfort. Given what has happened in those markets? Maybe you can just talk about the underwriting there and if it was so conservative that the loss exposure is minimal. But I didn’t quite understand the discussion about that one large credit and why the exposure there is modest for losses going forward?
Dave Porter
Brett, this is Dave Porter. In this particular case, we looked at what we do when we have a non-accrual loan, we look at the underlying collateral and get a current value that we can then evaluate in terms of the length of time we expected to go through that -- liquidate the collateral and in addition any selling costs that are part of that. This particular borrower has had property in the Reno area for many years and has had a very low basis in that property. So as we looked at current values, there was actually some pretty good equity remaining in that collateral. So as we go through and evaluate our potential exposure on this, we take all that into account as well as discounting as we mentioned to the current values that we’re seeing in the market.
Brett Rabatin - FTN Midwest
Okay, and then I wanted to get some more color on -- it sounds like you’ve got about -- it sounds like 107 to $110 million of exposure to Reno and the Central Valley in aggregate, is that a fair assessment based on the percentage that you gave?
Dave Porter
Approximately that amount, yes.
Brett Rabatin - FTN Midwest
And so 110 or so of the 650 is in those areas. Can you talk about the remaining 650 and just where the exposure is and how much is commercial versus residential?
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