Question-and-Answer Session
Operator
(Operator instructions) Your first question is coming from David Darst from FTN.
David Darst – FTN
Good morning.
Ted Peters
Good morning, David.
David Darst – FTN
Congratulations on your baseball win.
Ted Peters
Thank you. I think we are a little sleepy today, but thank you.
David Darst – FTN
Could you go over some of the issues in the leasing portfolio? I know we talked about it in last quarter, but I wonder if geographically your asset class is the same that you don’t want last quarter but is creeping in other parts of that portfolio.
Ted Peters
Good. That’s a good question, David. We have Joe Keefer with us who is the Chief Credit Officer of the Bank. So I’ll turn it over to Joe for that question.
Joe Keefer
David, we tightened up our underwriting standards towards the end of ’07 and into ’08. And on those mid-leases that we have written, they performed very well. In fact, the delinquency or problems there are de-minimus, and we’re pleased with that success. If you look at the portfolio by state or by equipment type, we don’t see any trends where one particular state or equipment type is performing worse than the other, but we do look at that monthly. And if we see that, we will adjust. I will say that we probably have a larger percentage of medical leases in our portfolio that have zero delinquency right now. So – hope that answers your question.
David Darst – FTN
Yes. Are those the type of assets you’re pursuing more going forward?
Joe Keefer
We would do – we’re looking to do more medical leases because historically they perform better.
David Darst – FTN
Okay. And so the annualized charge-off the rate is close to 6% this quarter. Do you think – based on the volume that you had prior to changing underwriting standards, how many more quarters do you think we see our provision have provision expense and charge-offs?
Joe Keefer
That’s a very good question. It’s hard to determine. When we scope the portfolio where we had most of the problems released is that we’ve written in excess of $50,000. And if we did 220 leases last year in that amount, we probably did under 50 this year. And when you scope that portfolio, the level of problems that we had are cut in half. So we actually anticipated that we would see some improvement in the fourth quarter, but we probably won’t see that until sometime in 2009 where we expect that the leasing portfolio will start contributing to earnings.
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