Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Alex Twerdahl - Sandler O’Neill.
Alex Twerdahl - Sandler O’Neill
My first question is you mentioned the downgrades of risk ratings on certain credits. Aside from the four large problem loans, how many other credits were downgraded and how much of total loans does that represent?
Linda A. Niro
Alex, there was a fair amount activity in the quarter. But those were the major loans that were downgraded and that had an impact.
Alex Twerdahl - Sandler O’Neill
And my second question is the effective tax rate has jumped around in recent quarters. Can you give us an idea what the normalized tax rate should be going forward to 2008?
Linda A. Niro
Yes, we estimate that our normalized tax rate will be 27%.
Operator
The next question comes from Ross Haberman - The Haberman Fund.
Ross Haberman - The Haberman Fund
A quick question, did you mention your interest rate sensitivity at year end and if would you see another cut or two, how you see that effecting the margin?
Linda A. Niro
Again near term, we expect that it may have no real significant effect. We’re starting to see deposit rates, our average costs on deposits come down very slowly and that’s really tied to the competitive marketplace. Whereas rates on our floating rate assets are repricing almost immediately with changes in prime rate or LIBOR.
So near term, until we can start seeing time deposits roll down in rate and depending on where we can go in our marketplace, and how rapidly we can respond, we don’t see within the first quarter any significant improvement in the margin.
Ross Haberman - The Haberman Fund
In terms of your specific markets, can you touch open what sectors either by category or geographic, what’s good, what’s bad, certainly refinancing is going to be good. Is the Northern part of the market better than the Southern or could you touch upon that in terms of loan and loan financing?
Christopher Martin
The market itself where we’re located in Northern Central New Jersey is still doing fairly well. We haven’t had many issues regarding that specific area. There is nothing really that’s wrong in the markets we’re in.
I think there is just a general slowdown in the economy that will probably affect how those come out, but housing has been okay, it’s not running all great guns. The urban areas some of the projects we have, have still done fairly well, albeit a little bit slower, but we don’t see anything dramatic on the horizon.
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