Question-and-Answer Session
Operator
(Operator instructions) The first question comes from Louis Feldman.
Louis Feldman – Hoefer & Arnett Inc.
You know it is that when I intentionally wait, still come in first. Good morning. Hadley, would you, I wanted to double-check, you said that you got 62 million of CRE maturing over the next 24 months, about half of it is between now and June 2010 and half in 2011, is that correct?
Hadley Robbins
Correct.
Bob Sznewajs
Correct.
Louis Feldman – Hoefer & Arnett Inc.
Okay. I guess the question I have, in terms of the stuff that is maturing, in terms of some of the other longer-term loans, in terms of debt service coverage ratios, if the owner is able to meet that, will it fault the regulators to tell you whether to mark down or not, and have they given any indications that they want you to given the amount of pressure that has been written recently about the fact that banks are not taking the required marks on declining values on CRE?
Bob Sznewajs
Yes, I read the recent Wall Street article. And we don't comment on our relationship with the regulators, but what we look at essentially relative to the capacity of maturing loans to perform, and to try to position ourselves to understand how that is going to unfold in the future is, through our stress testing we delve deeply into the portfolio. Anything over $1 million we stress test NOI, and we stress test it at sequential levels of added burden and check the debt service coverage ratio, and their capacity to manage to those levels.
If we identify anything under the stress test that we apply that kicks out that is a concern, we do a full review of the credit, site visit, updated rentals and do a forecast based of that. So with that process in place we making every effort to identify do we have potential to sort this in this portfolio? At this point the performance, it is the performance and not surfacing in our stress testing is trying to look forward and we are not identifying anything at this point that is systemic.
Again I have mentioned that there are individual cases that we have as concerns, but we will be closely monitoring this going forward and report on each meeting that we have.
Louis Feldman – Hoefer & Arnett Inc.
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