Question-and-Answer Session
Operator
Thank you. We’ll now begin the question-and-answer session. (Operator instructions) Standing by for questions. Thank you. We have a question from Chris McGratty from KBW. Please go ahead.
Chris McGratty – KBW
Hi, good morning guys.
Bill McManaman
Good morning.
Chris McGratty – KBW
First question is on the deferred tax asset. I just find I need a little bit more explaining on slide seven. What is the current dollar amount of the DTA, and then was there an impairment this quarter? I see that you guys are excluding it from your capital calculations. Could you walk me through your math?
Bill McManaman
Chris, this is on slide seven?
Chris McGratty – KBW
Right.
Judy Carre Sutfin
Yes. Our deferred tax asset total is $80 million, Chris. And the regulatory rules for calculating these capital ratios limit us to what we could use in the – in a one year time period. Even though, GAAP and tax laws will allow us to go forward by 20 years.
Bill McManaman
The deferred tax assets that we’re talking about here, in large measure, relate directly to the loan loss reserves. Obviously, for book purposes, you book the losses as you estimate their occurrence. But, for tax purposes, you’re only allowed to deduct your charge-offs.
Judy Carre Sutfin
Right. So this is not GAAP. This is the regulatory calculations.
Chris McGratty – KBW
Okay. Maybe this is more color in terms of being able to use – we’ve seen a lot of companies increase their DTA given the losses. I was wondering, how are you thinking about – for you to realize that going forward is that – you’ll have to return the profitability. What’s your feeling on impairing the DTA going forward?
Judy Carre Sutfin
Absolutely. And that again, GAAP and tax rules will allow us to carry that forward. And, this will require us to return the profitability. This is the reason why we are taking the aggressive action on our expenses. This is the reason why we’re trying to reposition our portfolio and focus on customers with a wide variety of relationships that we can serve.
Chris McGratty – KBW
Okay. I guess my second question is on the changes that you made this quarter, the executive comp decline, headcount reduction? What are you going to speak to the broad speaking on the elimination of merit increases across the firm and just how the effect on morale, and how are you keeping these talented people?
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