Question-and-Answer Session
Operator
Yes, sir. Thank you. (Operator Instructions)
Your first question comes from the line of Andrea Jao, with Lehman Brothers. Please proceed.
Andrea Jao - Lehman Brothers
Good evening. Andrea Jao from Lehman Brothers. How are you?
Joseph M. (Jody) Grant
Hi, Andrea.
Andrea Jao - Lehman Brothers
Well, it looks like operating trends are better than expected, you know, loan growth strong and demand deposits actually turned out to be strong.
Why not kitchen sink more potential losses given that trends are strong right now, or do you feel that, after a look at your loan portfolio, it's totally not necessary?
Joseph M. (Jody) Grant
Andrea, we have looked at the portfolio in depth and based upon the status of every loan in that portfolio today, we believe we have adequately accounted for and reserved for any possible contingencies.
Andrea Jao - Lehman Brothers
Okay. Now, as you looked at your loan portfolio, what kind of assumptions did you have for 2008? Are you assuming a stable economic scenario in Texas in 2008 versus what it is now?
Joseph M. (Jody) Grant
Andrea, obviously Texas has changed over the years, and we are somewhat more vulnerable to the national trends.
However, as we've stated previously, we didn't experience the housing bubble in Texas that the rest of the nation experienced. And I think I've cited these statistics before, wherein, in the five-year period ended at the end of last year - last year meaning '06 in this case - the median price of homes in Texas increased 22% versus 55% in the rest of the country.
Now, we've experienced what the rest of the country has experienced in terms of the slowdown in housing starts, slowdown in housing permits, and the slowdown in the resale of existing homes. I think the good news in all of that is that prices have held up reasonably well and, in fact, in homes over $200,000, they've actually gone up a little bit.
George should comment on our lot exposure and our exposure to homebuilders as well. And I'll just remind you, we don't bank any of the major big homebuilders that have made most of the news.
George F. Jones, Jr.
Yeah, I think we've mentioned in the past that our starter home portfolio is roughly in the $20 million range, and there are about seven builders that relate to that particular side of our business. So it's very little exposure from our standpoint.
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