Question-and-Answer Session
Operator
(Operator Instructions) Our first question is from Brett Rabatin – FTN Midwest Securities.
Brett Rabatin – FTN Midwest Securities
Wanted to first ask, I’m curious you mentioned the third net charge-off was related to a commercial real estate loan that sounded like it went through bankruptcy. Can you give a little more color on what kind of property it was or why the loan went through distress?
Min Kim
Well it was commercial line of a credit secured by bank and land in Southern California and he had a multiple other lending relationship and he was forced to file Chapter 11 because one of the creditors forced him to pay down or pay off existing credit relationships, and so we transferred that loan to non-accrual status and we had a new appraisal done. And based on the new appraisal, we charged off $4 million, so that’s the color.
Brett Rabatin – FTN Midwest Securities
So it was essentially a commercial line of credit though but it was secured by land. I don’t think you guys have much, but how much less do you have in the land portfolio?
Min Yin
In land portfolio? Our total construction in the land portfolio is about $30 million and the land only $20 million.
Brett Rabatin – FTN Midwest Securities
So is the $20 million inclusive?
Min Kim
Inclusive construction and the land development.
Brett Rabatin – FTN Midwest Securities
I wanted to ask just given where the competitive rates are on deposits, I was curious if you weren't going to be a little bit more aggressive with utilizing some overnight borrowing and some other Fed sources of funding given the vast difference between rates to help the margin going forward. Do you have a sealing on your loan to deposit ratio that you're comfortable with?
Al Kang
Well we're trying to achieve a loan-to-deposit ratio at or below 100. So, we need to do that by going retail deposits. However we do make use of wholesale funding and that, in fact as you know, the cost of wholesale money is quite a bit cheaper than retail. So, we do make significant use of that and we look at our cash flow on a daily basis and we look at maturities of CDs and broker deposits and FHLB advances. We do try to stay short to gain the advantage on the rates, but on an overall basis we really want to address the loan-to-deposit ratio by decreasing non-core funding and increasing core funding.
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