Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of John Hecht –JMP Securities.
John Hecht – JMP Securities
I wonder if you can give us some color on originations, Paul, by segment maybe where you’re seeing any activity, and any color on the end market activity in that regard as well.
Paul Sinsheimer
Construction is a little soft, but where the volume has fallen off meaningfully is in the transportation sector. There are many reasons for that. I believe most of them are front page type reasons: Very high fuel prices, a diminished level of freight available to be moved has caused a number of truckers to go out of business; and when there’s less amount of freight and higher costs to move it, new business opportunities in that arena become slim and none.
How long that’s going to be with us is anyone’s guess. I would tell you that intuition is that we are very close to a bottom if not at the bottom as we sit here today. Trucks do have to be replaced. If the economy shows any signs of improvement, there will be a new demand for the new trucks and there will be new business opportunities. But I’ll repeat, that is a little bit intuitive on my part because it’s very difficult as we sit here today. Waste is consistently the same. There’s not a lot of movement one way or the other.
John Hecht – JMP Securities
Shifting to that discussion on your non-performing assets, I know they remain historically low, but is there any, is it consistent that you’re seeing slowdown in transportation [inaudible] and that would be also more pressure on the delinquency side, or is there different trends emerging there?
Paul Sinsheimer
No, they’re very similar. I would tell you, I’ll make an educated guess here. I would tell you that 70% of the non-accruals we had last quarter came from the transportation sector and the transportation sector represents a little less than 40% of our total portfolio so that we’re getting twice the negative results from transportation than we are from the other industries. So it’s pretty consistent, John.
John Hecht – JMP Securities
In terms of the fluidness of the equipment market, are you able to clear the collateral pretty quickly and maintain reasonable recovery rates?
Paul Sinsheimer
You know that is a fascinating positive set of circumstances and a very negative picture. Componentry costs to be build a new truck is forcing the price of newer trucks higher. They’re not selling many, but they’re at least forcing the trucks higher, which a rising tide lifts all the boats in the harbor. So what we’re able to see right now is a solid values in the return trucks, and we’re doing pretty darn good.
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