Question-and-Answer Session
Operator
We’ll now begin the question and answer session [Operator Instructions]. Our first question is coming from the line of Sheryl Tate from Morgan Stanley; please go ahead with your question.
Sheryl Tate- Morgan Stanley
I just wanted to get your thoughts on credit quality in the construction portfolio in general. I think you said it was better this quarter than fourth quarter. If you could just talk a little bit about the trends that you’re seeing there.
Bill Norris
Sheryl, this is Bill Norris. The marketplace is still a tough one and there’s obviously a lot of weakness out there. I think the comments that Ted made are observations that we saw throughout the quarter but probably more so I would tell you in really the last six weeks or so the weather has gotten a little nicer, we get out of the dog days of winter and a lot of our construction; most of it is residential, not all of it.
We’ve just seen an uptick in traffic. We’ve seen an uptick in terms of sales activity. Again, remember, this is coming off of pretty low levels but just a little bit of a feeling in general on the construction side that things are not getting worse, at least not in the recent past.
We don’t know where that’s going but for the moment we’ve just seen an uptick in activity and more sales activity and just like I say, a little sense that at a minimum that the slide we have seen for a number of months at a minimum we think has declined in terms of the deterioration of descent. When we go forward we’re not sure but for the moment we’re seeing some slightly encouraging signs.
Sheryl Tate- Morgan Stanley
Then just on the auto portfolio is that part of a new strategy to reduce exposure, the decrease in loans Q over Q?
Bill Norris
Do you mean on the indirect auto loans?
Sheryl Tate- Morgan Stanley
Yes.
Bill Norris
I think we probably talked last quarter; that’s really a decision we made back in the summer and that was strategic. We kind of looked at where our loan volumes were coming from, where we thought the opportunities were, where we thought we’d get the most leveragability from our loan dollars in terms of ancillary business, deposits, fee income.
We really consciously made a decision to try to shift that away from the auto indirect. The easiest way to do that is, quite frankly, through pricing and so we made some adjustments. We’ve also made adjustments that I think we’ve talked before over the past probably 18 months quite frankly in terms of the underwriting criteria under which we’ll make those loans and that has only tightened up over that period of time.
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