Question-and-Answer Session
Operator
Yes, sir. (Operator instructions) And our first question comes from Todd Hagerman with Credit Suisse. Go ahead please.
Todd Hagerman – Credit Suisse
Good morning, everybody.
Ed Jamison
Hi, Todd.
Todd Hagerman – Credit Suisse
Hi, Ed. I was just wondering if you could just talk a little bit more about the deposit strategies and just kind of the outflow that we saw this quarter? And specifically what I was looking for, just how you guys are measuring your liquidity position, how the regulators are measuring that liquidity position? And what is the – is there more of a mix shift? Are the customers going out the door, a little bit more detail would be helpful.
Ed Jamison
Let me – I’ll address some of that question and then I’ll turn some of it over for clarity to Patrick. But Todd, what we saw is a convergence of national news. Of the national news, at least in our local media, talks about failing banks whereas mostly they were talking about Lehman Brothers and investment banks. But the Main Street doesn’t differentiate Wall Street to Main Street or your commercial bank. So that noise is going on, as you will know. And then we had Silver State, another large business bank in our community, to fail as well. So the convergence of those things caused some apprehension and anxiety in the customers. We have not lost number of customers. In fact, over the last 30 to 45 days we’ve gained a number of customers, but they did reallocate their resources, and candidly, as we see, we're no different than any other bank. And there was movement from our bank to banks that are termed too big to fail, if you understand. And so we have seen that. We have lots of relationships that are still there, and we’re seeing some movement back. So there has been a shifting of that. We were concerned about the one institution in our market that was having the struggles. So we've built up over the quarter a tremendous amount of liquidity anticipating that. And so we were well prepared for that, but it did change the mix, as I mentioned before, of what our deposits are. Patrick, do you want to give a little more?
Patrick Hartman
Yes. Probably the most significant thing that we did in preparation for this was to bring a considerable amount of liquidity on our balance sheet. In the past we have sought to minimize the excess liquidity and focus on NIM. Because of the liquidity risk presented by the Wall Street experience and the closure of a couple of banks in our marketplace, we thought it would be prudent to accept some compression of NIM and make sure that we had enough liquidity to deal with whatever came our way. We brought liquidity on the balance sheet. We paid off any lines of credit we had with the FHLB and positioned the bank to be compared to whether any issues that came up. We do track this constantly. And as Ed said, the activities of depositors to seek safety of something they perceive to be too big to fail has slowed down and is beginning to reverse now.
- To read the full transcript on Seeking Alpha, click here »
