Question-and-Answer Session
Michelle Debkowski
Thank you, Glenn. We had several questions presented during the webcast and Mike I will begin with you.
Mike, what is your outlook for the net interest margin given today’s rate cut?
Michael R. Reinhard
Our interest rate risk model generally shows liabilities repricing to a greater extent than assets. That’s a good thing given today’s declining rate environment. Our concern, though, is that in the current competitive market for deposits, we have not been able to move deposit rates downward to the extent that we assume in our model. So the overall positive environment is being muted somewhat by the challenging deposit market.
Michelle Debkowski
Mike, can you comment on the increase in other expenses?
Michael R. Reinhard
As we mentioned in the presentation, excluding the insurance payment in 2006, year-over-year expenses were up only 1.86%. However on a linked quarter basis, fourth quarter expenses were up by a wider margin due primarily to merger related expenses.
Michelle Debkowski
Thank you, Mike.
Glenn, a few questions for you concerning credit, has your watch list increased over the past quarter?
Glenn E. Moyer
No, as a percent of total loans the watch list credits were flat.
Michelle Debkowski
How was the construction lend portfolio performing, in other words the percent of non-performing assets?
Glenn E. Moyer
We had only one non-performing asset at fiscal year end ’07 that was from our construction portfolio. That represented $3.2 million of the total $15.3 million in net non-performing assets. Overall we do continue to note a slowing sales pace in the residential construction credits in our portfolio.
Michelle Debkowski
Are there any concentrations such as construction on the watch list or in non-performing assets?
Glenn E. Moyer
Let me just try and share a couple of numbers here that might be helpful in this question. Commercial real estate non-performers equal 21.6% of total non-performing assets compared to 23% of total relationships. As a percent of total watch loans, this again is commercial real estate, as a percent of total watch loans they are 15.64%.
Michelle Debkowski
Glenn, a couple of questions concerning our stock, a question came in from an individual that said, ?I reported to the bank that illegal naked short-selling was taking place in the bank’s stock. What did you find out? Could it have been the cause of the stock’s drop from 21 to 14, representing a third drop in the price??
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