Question-and-Answer Session
Operator
Yes. We’ll go to our first question with Kevin Fitzsimmons with Sandler O'Neill.
Kevin Fitzsimmons - Sandler O’Neill
Good afternoon everyone. Just a couple of questions; I was wondering if, first, you could help us feel a little more comfortable with the allowance percentage of non-performing loans. I think we spoke about this last quarter and the way you guys are probably looking at it is making an adjustment for impaired loans; if we could talk about that.
Then secondly, John just wondering, I mean it seems like a theme we’re hearing this quarter is the inflow to criticized loans seems to be potentially slowing on the Florida construction side, because that’s remaining stable, but it’s picking up in all these other areas and I’m just curious, is that how you view it? Are we at that kind of function point and then is that a good thing or a bad thing? Because it seems like while not increasing may stay elevated for a while, but these other areas are picking up and just kind of how you view that. Thank you.
John Hope
Okay. Let’s go to question one, just briefly have the reserve process for the non-performance. Joe Exnicios and Lewis will give out.
Joe Exnicios
Kevin, as you probably have already noted, our reserves to NPAs remain flat at about 53%. As you know, a large portion of our NPAs are impaired and we have specific reserves against those. I don’t know if we feel that it’s adequate at the moment.
Lewis Rogers
I think the only color I would add is that as it’s true, I think probably at every bank, Kevin, it’s a ongoing discipline to update those values frequently as it relates to getting new appraisals and establishing proper reserves and/or taking losses on those collateral dependent credits.
We do that in a robust manner. It’s time consuming to do that analysis and the number that falls out is not a target, we don’t have a target of 53%, 50%, 75% or in terms of coverage, we go look at these on a loan by loan basis and establish reserves on the basis that we think estimates the inherent loss in those credits.
Kevin Fitzsimmons - Sandler O’Neill
Lewis, is there an adjusted number though? Some companies give that, where if you back out impaired loans, here’s what the allowance is to on anything that hasn’t been impaired to this point?
- To read the full transcript on Seeking Alpha, click here »
