Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Jon Arfstrom – RBC Capital Markets
Jon Arfstrom – RBC Capital Markets
Charles you talked, a phrase you used in your prepared comment, right sizing the balance sheet, can you maybe expand on that a little bit and give us an idea of where you expect the size of the balance sheet to go.
Charles Christmas
Yes Jon, what I meant by right sizing the balance sheet is we had a pretty significant level of federal funds sold as well as some CD investments we made at a correspondent bank with some of those funds that came in as a result of the reduction of our loan portfolio and also some of the local deposit growth that we had.
Going forward what we would expect is that that fed funds sold, maybe some CD investments, will probably be in the range of $30 to $35 million on an average basis, which is obviously significantly lower then we were on average in the first quarter but also at the end of the first quarter as you saw in our financial statements. So that’s what I mean by right sizing the balance sheet, is bleeding off quite a bit of that current short-term investments and using those funds to let some of the brokered CDs and possibly some federal loan and bank advances go without replacing as they mature.
Jon Arfstrom – RBC Capital Markets
How is the market in terms of loan demand, I think Michael you talked a little bit last quarter about more rational lending occurring in the market, it sounds like things maybe changed pretty severely over the last few months.
Michael Price
Yes, back to your original question, what is the loan demand out there, its pretty soft right now as you might imagine. Charles’ comments highlighted the fact that we saw a significant reduction in loan balances out there. Part of that was intentional on our part where we’re deliberately trying to move some commercial real estate out of the bank and we’ve been fairly successful in doing that.
But another fairly good sized portion of the loan reduction came from less line balance from our commercial C&I customers and that’s the direct result of there’s just not a lot of economic activity or certainly at a reduced level. New loan requests are fairly scarce these days and what we do see are things that we deliberately do not want which is commercial real estate because our portfolio is already got enough of that in there.
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