Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Craig Siegenthaler - Credit Suisse.
Craig Siegenthaler - Credit Suisse
Question for Bryan. Maybe you can help me on some of the high level of trends. I’m just looking at the decline in nonperforming assets and nonperforming loans this quarter and in your view was the first quarter actually the cyclical peak in both NPAs and NPLs or is there potential for double peak in the second half?
Bryan Jordan
We think we’ve gotten close to the peak. We’re not in a position to say we can call the top, because we don’t know how the economy is going to play out over the next couple of quarters, but if we haven’t reached it, we think we’re very, very close to it and we don’t expect based on what we’ve indicated around charge-offs and allowance levels in the second half. We don’t expect significant increases from here. So, there’s a good chance that we’ve gotten very close to the top.
Craig Siegenthaler - Credit Suisse
Maybe I can kind of ask this question a different way to kind of get at what I’m looking for. In your guidance slide on 13, basically First Horizon still expects, it looks like reserves to decline and net charge-offs to decline in the second half of this year, but your guidance actually changed on the commercial side, where now you’re expected to build reserves. Is First Horizon’s overall forecast for declining net charge-offs and reserves; is it more modest now in terms of magnitude than it was in the first quarter or should we just not really read into that?
Bryan Jordan
It maybe slightly more modest, but it’s not a significant change in our outlook and I think the pieces are going move from time-to-time, but I don’t think they’ve changed significantly. Our outlook is very similar to the way it was 30 days ago, the way it was 90 days ago. We feel very confident that our asset quality trends are on track and as we discussed a minute ago, I think you can infer from the charge-offs and allowance that NPAs would follow a similar path.
Craig Siegenthaler - Credit Suisse
I just had one question on your OTC one-time closed loan portfolio. It looks like delinquencies picked up again to about 8%, pretty high level and I’m just thinking with 64% of this portfolio now NPL, how much more potential is there for this portfolio to move into NPL?
- To read the full transcript on Seeking Alpha, click here »
