Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Matthew O’Connor - Deutsche Bank.
Matthew O’Connor - Deutsche Bank
The past few quarters, I think you have been a little bit more explicit your charge-off guidance and this time you’re just saying will remain elevated. Any comments you want to give in terms of what elevated might mean? I mean up another 15%, 20% flattish?
Richard Davis
As I told you in the quarters before this we were always projecting that we would see pretty much flat results from the prior quarters and then last time we met 90 days ago, we said that we start to see that coming down. In other words the trajectory of the increase would come down. I’d expect that the trajectory you saw coming down in this quarter from prior quarters will continue in that same direction in the future quarter.
In other words we are starting to see this continued reduction in increase becoming now a more consistent outcome. So, if you like what you saw between quarters one and two, I think you’ll start to see the same trajectory follow in quarters two to three.
Matthew O’Connor - Deutsche Bank
So, charge-off closed to slow, and that would apply to NPAs as well or [it will be tough there]?
Richard Davis
We’d do both. So, that both moving in, not exact lock step, but both moving in the direction the same way. It’s a fairly positive outcome.
Matthew O’Connor - Deutsche Bank
Just in general like if we think they picture here you’ve managed the risk well on the market disruption in the first part of the cycle, consumer credit, the second part. I have some folks out there, very much out there, pretty concerned on the C&I and the commercial real estate.
Two questions one, what’s your outlook for those loan buckets in general? Two, has there been a meaningful difference in underwriting at USB versus others the last several years?
Richard Davis
Yes, I want Bill to answer the specifics, but I’ll tell you I think we are continuing to enjoy the benefits of the many years of not stretching to make loans to C&I and commercial real estate customers. I think you’d agree as what we told; we were the last large bank into the recession in terms of credit distress.
I predict that we’ll be the first out because that longevity of longstanding prudence is going to pay us dividends. You’ll see that we are stressing like everyone else. I think you’ll continue to see our peaks and valleys will be muted compared to others. Bill wants to bring some color on that.
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