Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from the line of Mr. Joe Morford.
Joe Morford - RBC Capital Markets
Thanks. Nice quarter guys particularly on the credit front. Couple of questions. First, just really clarification on HRJ. I hear you that it doesn’t impact the net income of the provision, what are your current expectations for any recoveries on the $7.5 million or so that you charged off and how much of any specific reserves would be freed up in the allowance and what would be the timing of that? Would that be third quarter as well?
Dave Jones
Joe this is Dave Jones and as indicated in Mike's remarks the near-term expectations of anything in HRJ are nominal. So the extent to which there could be a modest reversal of specific reserve for HRJ it would be very modest. This is my belief based on present understanding and the recovery opportunities are likely to be over an extended period of time. So I wouldn’t anticipate anything in very near future.
Michael Descheneaux
Just one clarification, when we are saying nominal we are talking about the nominal impact of the provision or bottom line net income.
Dave Jones
Correct.
Joe Morford - RBC Capital Markets
Okay. Can you talk a little bit more about the event that led to the large recovery coming through in the third quarter. Is that taken into account in the net charge-off guidance, which I think was 140 basis points for the second half of the year?
Dave Jones
This is Dave again. So we have a transaction that is presently in the works that would sell our debt position to another party and the information contained in the press release and in our comments today would reflect our confidence that the transaction is going to settle in the near-term.
In terms of it being reflected. So the $11.5 million would represent over 20 basis points relative to our gross loans and it is one of the factors. So we have the 20 plus basis points reflected in the anticipated recovery. We have another 90 basis points roughly in specific reserves for impaired accounts, those account most likely to incur loss and then over and above that, is our guidance for 142, possibly 145 basis points.
Joe Morford - RBC Capital Markets
Okay, that’s helpful Dave and then lastly I guess on average loan growth, I see the guidance now is for mid-single digit growth for the full year but more specifically for the second half.
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