Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from John Pancari - J.P. Morgan.
John Pancari - J.P. Morgan
I want to see if you can help us a little here on the potential loss content of the energy credit; how did you arrive at the $3.7 million required reserves and is that plus that upcoming $600,000; is that’s the total amount of reserves against this credit?
Downey Bridgwater
Based on what we know at this time, yes that’s the total amount of reserve against this credit, and the stores are the basis for our decision is based on conversations with both the borrower and the banker and our relative counsel.
John Pancari - J.P. Morgan
In terms of that’s how you’re getting to that 3.7, is it? I mean is there a level of repayment that you’re assuming here and I am just trying to get an idea of how you’re coming up that number per se?
Downey Bridgwater
Right it’s based on collateral valuations and estimates of everything from liquidating values and values of various other pieces of the company being sold as on going concern or the entire franchise being sold. So I don’t want to really go into a lot of detail as I’m under a confidentiality agreement with the bank group, but we do believe and as I’ve said in my portion of the call that we have significant fixed assets, energy assets that will allow us to exit this credit fairly quickly. I don’t believe this is going to be a long drawn out process and you have some of the largest and most sophisticated banks in the industry in this relationship. It is highly unusual and it blind side the entire group as far as I know.
John Pancari - J.P. Morgan
I know you’ve indicated that your SNCs are largely within the energy books. So, what is your total energy SNCs that you have on balance sheet right now?
Downey Bridgwater
Our energy portfolio was about 10% of our total loan portfolio, so roughly $350 million, $360 million and about 75% of the energy portfolio are SNCs.
John Pancari - J.P. Morgan
In terms of the drivers of the increases in NPA’s extra credit I know you talked about the auto dealer book, what are you seeing in terms of that book? You have these two issues here in the used car dealer? Are you seeing added pressure there that you need to worry about other than in that portfolio and then just give us an idea of how big that portfolio is?
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