Question-and-Answer Session
Operator
[Operator Instructions] Your first question comes from Ken Zerbe – Morgan Stanley.
Ken Zerbe – Morgan Stanley
Dan, maybe you can comment a little about what you guys are seeing in terms of additional FDIC assisted opportunities within the Texas market and I guess as a follow on to that, if you were to get another deal done, how would you feel about substantially lowering your loan to deposit ratio from here given it’s already at the lowest in the industry, and would that be a hurdle for another deal?
Dan Rollins
I think David and I will probably both take a stab at that. I think opportunities in Texas for FDIC, we believe there’s going to be opportunities out there, the FDIC is doing their part and we think they’re doing a fine job of trying to keep everything together on their side of the aisle. When those opportunities present themselves, we want to be prepared to look at them.
Remember, we value core deposits above all else so the core deposits is where the value is in a commercial banking franchise such as ours. It’s not on the asset side of the aisle. As we can all see today, assets aren’t selling at par. Assets are at discount and a problem for banks. So core funding is where the key strength and the key value in banks are.
However, as you know, most banks today the FDIC is marketing outside of a very few that we’ve seen are being sold as whole banks so you’re getting assets with the deposits. In the Franklin transaction, let’s go back and walk through that. Remember Franklin had $3.7 billion in deposits at the time we took them over and we said at that time we were going to immediately run off the brokered funds.
We had no need for those brokered funds. We didn’t want those brokered funds, and what we valued the most out of the Franklin transaction was the core low cost sticky funding and if you look at our performance in the past year, I think you can see that the Franklin transaction has been very beneficial to us in the fact that even though we only have $300 million or $400 million in loans in those locations that we’ve acquired and we’ve made a little bit since then, we’re still sitting on $1.6 million or $1.7 million, I don’t need to tell you the exact number, of deposits that are out of the Franklin transaction, yet our earnings have been [inaudible] greatly from that.
- To read the full transcript on Seeking Alpha, click here »
