Question-and-Answer Session
Operator
(Operator Instructions) We’ll pause for just a moment to compile the Q&A roster. The first question is from Todd Hagerman with Credit Suisse.
Todd Hagerman – Credit Suisse
Just a couple of questions, first off maybe Brad and Ray, questions on the reserve and the un-allocated portion that you referenced earlier, why the change linked quarter? Was there a change in the methodology? And, could you give us a little bit more background in terms with the $86 million that you reference, how is that allocated against the residential construction A&D portfolio?
Raymond P. Davis
Let me address the un-allocated question that you had. You know after we finished our computations of the reserve, of the amount that we should be providing, you know, due to the economic times that are going on, we have a company policy that we have always followed in computing our reserve and our company policy states clearly that our un-allocated reserve will remain between 0% and 5%. With the situation going on throughout the United States right now we felt it was prudent for us to add some reserve in the fourth quarter to bolster our reserves and watch and see what happens to the economy over the next few months.
Todd Hagerman – Credit Suisse
Okay but there’s nothing necessarily in terms of you referenced the 30 to 89 past due, there’s nothing necessarily there that suggests that that un-allocated will show up as allocated next quarter?
Raymond P. Davis
No there is nothing there, that’s correct.
Todd Hagerman – Credit Suisse
Okay and then again just could you give us a better sense of how the $86 million applies to the kind of the troubled residential A&D portfolio?
Raymond P. Davis
75% Todd.
Todd Hagerman – Credit Suisse
Okay and if I look at the charge-offs that you’ve recognize over the last two quarters if you will and the impairment reserves and so forth, can you break that down for me in the sense of give me a picture of kind of the average hair cut that you’ve taken in on these non-performing loans that you’ve recognize?
Raymond P. Davis
Todd, we anticipated that question and let me say this to you, we don’t want to answer that and we don’t want to answer it primarily because we are in intense negotiations to resolve future credits and I think to show all our cards on that would really be a mistake for us so we’re going to pause on that particular part of your question.
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