Question-and-Answer Session
Operator
Yes sir, thank you. If anyone does have a question or a comment, simply press one on your touchtone phone. Once again, a question or a comment, press one on your touchtone phone. The first guest today is Steve Moss from Janney Montgomery.
Steve Moss – Janney Montgomery
Yes, good morning guys. Just a little question here, what are your expectations for the net interest margin exclusive of trust preferred refinancing as the Fed is likely to cut rates by 50 or 75 bips here going forward.
Scott Kingsley
Steve, I think that as we’ve said that the debt refunding charge that we took related to both the FHLB borrowings and the trust preferred is likely to improve our margin by ten basis points in 2008. I think that in the environment of a falling rates environment, if the Fed is moving at basis point move that’s 50 at a time, yeah we have a hard time staying up with that in terms of lowering our funding costs fast enough to keep up with that drop as it effects our variable rates or prime based or LIBOR based assets.
I think that’s a short term scenario for us in terms of impacting that result and that if we’re ever challenged in the first couple of quarters of 2008, if there were rates down, I think we’d be hopeful that we could make that up in the second half of the year.
Steve Moss – Janney Montgomery
Okay and sounds like things are looking good on the asset quality front, any areas of concern?
Mark Tryniski
Right now we really don’t have any Steve. Obviously in this environment we keep pretty close track of all of those metrics, in fact you look at the delinquency rates of all our portfolios, they’re right around 1% and it’s pretty much been there for the entirety of 2007. Our criticized assets have been stable all year long as well as you can see the charge offs were significantly less in 2007 and we think we’ve been pretty disciplined over the course of 2007 and even prior to that in the second half of 2006, we strengthened some of the lending standards, particularly in our auto installment or indirect auto lending business. We were writing in 2006, about 80% A and B paper, right now that’s up to almost 90% so the asset quality metrics, really across all our portfolios right now look very strong.
- To read the full transcript on Seeking Alpha, click here »
