Question-and-Answer Session
Operator
Thank you (Operator Instructions). Our first question comes from Morgan Stanley's Ken Zerbe. Please go ahead, sir.
Ken Zerbe - Morgan Stanley
Thanks. The first quarter has been increasing funding through CDs, but a number of firms this quarter have seen a decline in the core checking and savings and they have been offsetting through CDs and it seems the Valley is no exception there. Can you just talk about A, I guess the duration of the CDs that you’re putting on? And how sticky those are? And this is something that is sustainable at where you want to be over the long-term by shifting more into CDs? Thanks.
Gerald Lipkin
We always look to bring in the core deposits as our first source of funding. We like to match funds against our loan portfolio or assets to the extent that we can. To the extent we get in longer term CDs then we are happier because most of our term lending is for more than a three or six month period.
The competition in our area continues to be very stiff especially with regards to certificates and deposit and the pricing that we’re facing is what we're adjusting our rates too. I'd be very happy if the competition in this area, where to drop a bit and we’ll be able to drop it.
We did experience, as I'm sure many financial institutions did, a lot of concern on depositors with regard to their deposits being in amounts in excess of FDIC insurance and initially we did start to see some withdrawals of funds. That seems to have reversed itself though ever since the FDIC has increased its limits I think there is more comfort on the street, I hope that when [the street] recharge numbers and they see the level of our performance that will further fortify the confidence of the depositor base and we'll continue to see deposit inflows.
Ken Zerbe - Morgan Stanley
Then what was the duration of the CDs you’re putting on during the quarter, the average duration?
Gerald Lipkin
Nine months is probably on the average.
Ken Zerbe - Morgan Stanley
I see. Okay. The second question, I had, was under the assumption that where the de-novos of your auto portfolio is still holding up very well relative to the industry. I guess, when you look going forward, I mean, obviously the economy is weakening. What do you look at that’s being sort of the potential drivers of that? I mean is it just as easy as raising unemployment, if that goes up by 100 basis points then auto your losses are likely to pickup or are there other things that you also look out for?
- To read the full transcript on Seeking Alpha, click here »
