Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Matt Olney, Stephens, Inc.
Matt Olney, Stephens, Inc.
With what you’re seeing on the past due trends, it sounds like you still expect charge offs to be south of the 3% range near term, is that fair?
Thomas May
I think that’s exactly right. I think looking at the past dues and looking at the migration that we have seen, our past due trends are still very good. Past dues less than 90 days on the credit cards are at a level of about 1.3%, 1.4%. The charge off ratio this quarter was actually down.
If I remember correctly Q2 was at about 2.75% and the numbers were down close to 2.57%, 2.58% on this quarter. So when you take the happenings of the last quarter and you couple that with the past due trend, we feel like we hope to continue to see that level. As you know, we are continuing to reserve at a 3% level though.
Matt Olney, Stephens, Inc.
Charge off below 15% for credit cards is impressive so congrats on that. In your prepared remarks I believe you mentioned something about an expense initiative. I’m not sure if I caught that right or not, but could you give us more details on that?
Thomas May
We did. And what we basically said is as we go back actually the latter part of 2007 when we started projecting out our three year strategic plan, there’s several things that we were looking at. Obviously we were looking at turbulent waters in front of us relative to our pipeline and we also were looking at our efficiency ratio. We felt that this would be an opportune time for us to begin to do some work in that particular area.
As you well know the efficiency ratio has been impacted at least to some degree by the number of locations that we have compared to our relative size. Likewise, it has been impacted by the model that we have of the company and the acquisitions that we have done since 1995.
So what we did is we brought in two different groups to help us look at the way we were doing business; one basically is called our process initiatives. In other words, the way we’re actually doing business. Are there some ways that we can do it better that will be more efficient to both the customer, our associates and to the bottom line?
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