Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Steve Alexopoulos - JPMorgan
Steve Alexopoulos - JPMorgan
In your opening comments you mentioned the stress test, are your regulators putting you through the same stress tests that the banks over $100 billion in assets are going through.
Bryan Jordan
No, I was trying to emphasize that we’ve done our own set of stress testing. We have not been involved with our regulators in preparing stress testing. We’ve done our own work around it stressing for cumulative losses and trying to build in economic factors similar to what you see in the stress testing process, but this is an internal process only.
Steve Alexopoulos - JPMorgan
Can you talk about any plans you might have to sell assets to the PPIP fund.
Bryan Jordan
We’ve run the numbers, and as we look at it and based on our preliminary evaluation it looks like that the PPIP as its structured today is not likely to close the wide [inaudible] spread that exists on these assets and so right now I’d say that the likelihood that we participate is somewhat low but as it evolves we’ll learn more about it as other people use it, we’ll see whether it actually closes the gap some but at least at preliminary analysis the cost of participation looks higher then we think is appropriate for the assets.
We think we can get a lot more value out of working [inaudible].
Steve Alexopoulos - JPMorgan
With your guidance on the allowance, should we need to see a stabilization in the unemployment rate to see that come down in the second half or are you just saying that you expect that you will provide it at that point for the bulk of the losses.
Greg Olivier
I think as we talked about last quarter, its really looking at our portfolio and how its composed and the interplay, we do expect the economic conditions to deteriorate and have factored that into expectations around reserve build particularly on the consumer portfolios. The reason we feel that we will, we are positioned to release potentially in the second half is because a lot of reserve has been attracted to those national line down portfolios and they’re playing themselves out and the reserve build has actually been released on OTC the past two quarters and has been released on res CRE the last two quarters and that is expected to continue.
- To read the full transcript on Seeking Alpha, click here »
