Question-and-Answer Session
Operator
Thank you. (Operator instructions). Today’s first question is from Jeff Rulis of D.A. Davidson. Your line is open.
Jeff Rulis – D.A. Davidson
Good morning.
Harold Gilkey
Good morning, Jeff.
Dan Byrne
Good morning.
Jeff Rulis – D.A. Davidson
You mentioned in the press release some Northern California commercial real estate issues, hoping to get a little more detail there. Along what line in a retail, office, industrial, and then sort of refined geography is that like in Sonoma County specifically, if you could comment on that?
Harold Gilkey
Jeff, essentially it runs from our acquisition of Sonoma National Bank and runs from the area of Santa Rosa toward Sacramento and there is one industrial project that is a problematic issue. Office and retail are about equal and essentially it’s rent-up of the locations are just slower than normal and thereby, the evaluation of – as is impacted. On the other hand, the overall valuation of the project in completion stage is well above our level of involvement.
Jeff Rulis – D.A. Davidson
In other areas of your footprint, (inaudible) is holding up reasonably well?
Harold Gilkey
Yes. The one element that struck me this quarter was the one commercial project in Phoenix. It is cash flowing and is a shopping strip center on a corner that has a anchor tenant and the developer just looks like he has too many projects and to focus his time on and has indicated on five different transactions that he is turning those back. We are proceeding with the foreclosure proceeding, but it just seems to me that what’s happening is there’s a little of a – we are running out of cash basis kind of thing and we don’t have the resources to manage everything we have. But this one looks it – it’s just a matter of time to take it over and then resell it.
Dan Byrne
And I would just add that when Harold mentioned the five being handed back some of those go to other banks.
Jeff Rulis – D.A. Davidson
Okay.
Harold Gilkey
Well – but no, no, the majority of them. We just picked up one, Jeff.
Jeff Rulis – D.A. Davidson
All right. Okay, and then on the deposit side, if you can touch on – a little bit more on the sort of the success on the interest-bearing account increase, do you have a program in place there? Is there a seasonal shift happening that’s a pretty big jump on a sequential basis?
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