Question-and-Answer Session
Operator
(Operator Instructions) Your first questions from Steve Alexopoulos – JP Morgan.
Steve Alexopoulos – JP Morgan
Could you talk about what you saw on inflows and the credit size and classify for commercial real estate loans during the second quarter?
Rene F. Jones
Let me start Steve by talking about our focus on non-performing and then I will get my way to your question. If you look at the quarter, non-performings went from 2.05 to 2.11 but it was a very active quarter so we had a number of credits that were actually paid out [inaudible] a number of auto dealers. We also saw a number of residential development properties which we resolved because we sold down the notes.
Remember, in a couple of cases what you have is through the normal workout process M&T is not going to become a builder of homes so at some point on particularly the raw land type of things, our exit would be to sort of sell the notes. What was encouraging about that is there actually appears to be a lot more appetite not only from financers but also from builders coming back in to the space, particularly in the Mid Atlantic looking to sort of step in to projects. So, through those types of things we had a number of items that went out.
If you look at the items that went back in to non-performing and we had for example, a provider of healthcare services which while still paying is having difficulty in the retirement space where they are very dependent on people to sell their existing homes before they can actually buy in to the new retirement communities. We had a continued migration of a number of builder related type projects which is sort of the normal progression from what we’ve been talking about quarter in quarter out on the residential development side.
We had also had a various number of other things. The company focused on utilities and natural resources that went in to non-performing. So, a lot of ins and outs and I think on the whole what that tells you is that the migration still continues. But, having said that, that the market for assets [inaudible] has improved and we’re actually seeing some improvements as we’ve worked through the portfolios that we’ve spent time on over the past 18 months.
I would say particularly in the commercial real estate space, most of the activity has still been around the residential development portfolio. We do see migration in the investor real estate portfolios but as you can see not a lot has gotten its way through the process to sort of go in to the sort of non-performing classification. That will likely happen down the road but we just haven’t seen it today getting in to those late stages. I think you’ve read a lot about commercial real estate and so I would expect to see at least a migration there in to non-performing but that will be later in the year, early in 2010 is what we’re thinking today.
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