Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mathew O’Connor – Deutsche Bank.
Mathew O’Connor – Deutsche Bank
Can you give a little more color the sale of some of the OREO’s that you did this quarter in terms of what you got versus what it was being carried at, and then I assume that feeds into some of the OREO expenses that we saw this quarter.
Kelly King
We’ve been basically selling, primarily focusing on the verticals during the most recent quarter, and I think as we reported the sales price, if you look at it from all the way through from the original loan all the way to the final exit value, there’s a reduction of 37%. What we do is, when we put it into OREO, we take a reduction. That’s usually about 27%.
And then we write it down if necessary based on further appraisals during the time we had it and that for the last quarter averaged about 10% and then we actually sold it for about 5% less on average than what we had it at. So that math doesn’t exactly add up because you’re talking about the 10% is off the 73% and the 5% is off, so you know you have to go through that.
But when you go through all the math, the final disposition price to us is about 37% of the original loan balance.
Mathew O’Connor – Deutsche Bank
I know it’s impossible to know what the sales activity will look like this quarter, but if you think about the OREO costs going forward, is this a decent run rate to start off or should we be adjusting it up or down?
Kelly King
That’s a good question and a hard one to answer, but I intuitively think we are at a level where we’ll kind of be at for the next two or three quarters. I don’t see it materially changing one way or the other because what happens to you, is you kind of, at a work release kind of projects, you kind of get the project in, you have some early costs, you have to cut the grass or you’ve got to get all the upfront things done.
Sometimes there are repairs that have to be made if it’s a house or if it’s a project. So you get a lot of that kind of upfront expense. But then when you kind of get it up to resell state, you’re just kind of holding it, then you just kind of got the taxes, so then whether or not you have any write downs. But I think we are kind of at a level that we’ll probably be able to sustain for the next two or three quarters.
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