Question-and-Answer Session
Operator
Thank you gentlemen.
(Operator Instructions)
Our first guest today is David Darst.
David Darst - FTN Midwest Securities Corp.
Scott, the securities transaction, so the first question, you indicated you sold about $130 million taxable and repurchased $52 million of non-taxable.
Scott Kingsley
Actually, David that was a process that we started last year in the fourth quarter, so by the time you get to the end of the first quarter that’s pretty close to the net results, yes.
David Darst - FTN Midwest Securities Corp.
Okay, so that was over two quarters you did that?
Scott Kingsley
Absolutely.
David Darst - FTN Midwest Securities Corp.
Okay, any further repositioning you want to do or are there any opportunities for you to leverage a little bit with municipal bonds?
Scott Kingsley
I think that there are still some opportunities in terms of leverage and I think we constructively review those opportunities versus alternative uses of capital opportunities on an ongoing basis. I will say this David; we are not far away from alternative minimum tax levels. So the continued usability and functionality of more tax-exempt securities does actually run into a wall not too far away from where we are.
David Darst - FTN Midwest Securities Corp.
Okay. What would be an outlook for the securities portfolio from where it is at quarter end?
Scott Kingsley
I think we are certainly planning on a flat line for now. We don’t have a significant amount of investment cash flows coming in the second quarter. We have a little bit larger expectation of cash flows coming back to us in the third quarter, but I think certainly for modeling purposes I think baseline flat out into the end of first quarter is reasonable.
David Darst - FTN Midwest Securities Corp.
Okay, what would be a good tax rate to use for the second quarter?
Scott Kingsley
I think I would stay in that 22.5-23.5% range. I think we are capable of maintaining that, assuming again that the proportion of non-taxable securities stays similar to what it is today.
David Darst - FTN Midwest Securities Corp.
Okay. Could you comment on your consumer demand? This quarter, is that seasonal or are you doing anything on the indirect side to let that run off?
Mark Tryniski
Yeah, I guess I would answer that question by separating consumer into their component parts. The consumer mortgage demand has been very strong in the first quarter. We actually had a consumer mortgage growth in two of our three markets in the first quarter which was a good result. The indirect installment portfolio, however, was down. I think it was about $8 million or so in the first quarter which is not unusual.
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