FirstMerit Corporation Q3 2008 Earnings Call Transcript

FirstMerit Corporation (FMER)

Q3 2008 Earnings Call Transcript

October 28, 2008, 2:00 pm ET

Executives

Tom O'Malley – Director of Corporate Communications and IR

Paul Greig – Chairman and CEO

Bill Richgels – EVP and Chief Credit Officer

Terry Bichsel – EVP and CFO

Analysts

Scott Siefers – Sandler O’Neill

John Pancari – JP Morgan

Andrea Jao – Barclays

Erika Penala – Merrill Lynch

Andrew Marquardt – Fox-Pitt Kelton

Terry McEvoy

Presentation

Operator

Good afternoon. My name is Patricia and I'll be your conference operator today. At this time, I would like to welcome everyone to the FirstMerit's third quarter 2008 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions) Thank you.

Mr. Tom O'Malley, you may begin your conference.

Tom O'Malley

Thanks, Patricia. Welcome to our third quarter 2008 earnings conference call for FirstMerit. Joining me today are Paul Greig, our Chairman and Chief Executive Officer; Bill Richgels, our Chief Credit Officer; Terry Bichsel, our Chief Financial Officer; and Mark DuHamel, our Treasurer. We will have a question-and-answer session following our prepared remarks.

I'll now turn the call over to Paul Greig.

Paul Greig

Thank you, Tom, and good afternoon everyone and thank you for joining our call. We're in the midst of unprecedented times in the financial services industry. Challenges in the international, national, and local economies have brought hardship to many. Some of our competitors had a significant risk to their balance sheets and our now struggling to adjust across these issues. While it's difficult to predict future developments in the economy, FirstMerit has been and is kicking to organic growth strategies based on the Super Community banking model. To that end, we stand among the most stable financial institutions today.

FirstMerit's third quarter numbers reflect continued success in our initiatives to generate consistent and profitable organic growth. For the quarter, we reported earnings per share of $0.37 compared with $0.36 in the second quarter and $0.38 one year ago.

FirstMerit is committed to sound and fundamental banking strategies. We have not wavered from this approach since I joined the company in May of 2006. Our dedication to these principles solidly positions FirstMerit to face potential challenges in an uncertain banking environment.

The following are five key points I want to make and why we're prepared to face successfully both future challenges and opportunities. First, we have a strong balance sheet. We have appropriately built our reserve levels, maintained high capital levels, and have ample liquidity. The balance sheet is structured to maintain our net interest margin.

Our marketing programs and products are producing core deposit growth. Our capital levels are amongst the highest in the industry. A number of financial institutions are receiving calls from their primary regulators, encouraging participation in the Treasury Department's capital purchase program. We also have received these calls. Our Board is carefully assessing the merits of participating in this attractive program.

Secondly, we're generating profitable organic growth. Commercial loan growth for the quarter was an annualized 13.2%, continuing a trend of high-quality loan growth supported by intense quality efforts and the tremendous opportunities before us from market disruption in Northeast Ohio. While our commercial loan growth has been robust, I want to stress that we're applying the highest level of scrutiny to the new business we are bringing on.

Third, we have strong risk management and credit practices. Net charge-offs for the quarter were 64 basis points, in line with our previous expectations. Credit performance results reflect our enhanced portfolio management practices implemented in 2006. We remain diligent in our underwriting and portfolio management practices and we'll continue to strive for superior credit performance.

Fourth, we continue to drive expense management practices throughout our organization. Our efficiency ratio for the third quarter is 57.6%. This marks the fourth consecutive quarter of significant improvement.

In the third quarter of 2007, our efficiency ratio was 61.8%. This quarter also marks the fourth consecutive year-over-year reduction in quarterly operating expenses, demonstrating ongoing diligence in managing our cost.

And fifth, we're successfully building our franchise with the super community banking model. The influx of new banking relationships we are developing speaks to both one, our reputation as a solid and stable financial institution, and secondly, the fact that while we compete with the national and super regional banks, we distinguish ourselves from the competitors in the minds of prospective customers.

While the economic headwinds in this country and around the world are strong, I believe FirstMerit is well positioned for the future. Fully understanding the needs of our customers, their markets and their communities has been and remains the strength of FirstMerit.

With our commitment to stability, profitability, and organic growth, we are prepared to take on future challenges and seek new opportunities to enhance the value of the FirstMerit franchise.

I'll now turn the call over to Bill Richgels, our Chief Credit Officer. Bill?

Bill Richgels

Thank you, Paul, and good afternoon. As Paul has indicated, FirstMerit is not immune to the pressures of this unprecedented credit environment. We will continue to execute on our plan and focus our efforts accordingly.

Net charge-offs totaled $11.76 million or 64 basis points of average loans, consistent with our guidance. Non-performing assets came in at $43.5 million, an increase of $1.8 million from quarter before. We continue to see the pressure of reduced liquidity in the banking industry impacting this absolute level.

As reported, our C&C or criticized and classified assets category decreased $10.7 million, 5.8% to $250 million this quarter. Our home builder portfolio was reduced to $141 million at quarter end, down from $160 million at June 30, 2008. Our emphasis and focus continues to positively impact this specific portfolio.

Our 90 days past due and still accruing accounts totaled $16.2 million at September 30, up roughly $5.6 million from the quarter before. This number tends to bounce around monthly and reflects credits and process like renewals, renegotiations, things of that nature. This quarter's numbers include $3.4 million in seven names that will be gone this quarter. $1.2 million of this increase represents an increased retail delinquency factor.

To put this account in perspective, the absolute level is up only $1 million for the commercial book year-over-year and up $1 million for the retail book for the year ending December 31, 2007. Again, it tends to move around on a month-to-month basis.

Despite the modest increase in NPLs, non-performing loans, we remain better positioned than any other companies in our industry. Within this economic crisis, there is little liquidity in the marketplace. We applaud the efforts of the government to address these problems. What happens in the next few quarters to help both Wall Street and Main Street will impact our portfolios greatly.

Our general commercial portfolio continues to perform well. $2.66 billion of our C&I book with related our occupied real estate has demonstrated remarkable consistency with no observable deterioration characteristics.

At quarter end, September 30, 2008, total commercial real estate equaled $2.38 billion comprised of owner-occupied real estate at $708 million, office-medical at $298 million, multi-family at $214 million, retail at $184 million, general income production not otherwise classified at $546 million, industrial commercial construction at $293 million, and the previously referenced home builder portfolio. Within our retail income-producing properties, we have not seen increased vacancies nor observed significant valuation changes.

Let's focus on the retail portfolio. Credit cycle continues to pressure the consumer. Our retail loan charge-offs increased modestly to $7.9 million from roughly $7.7 million the quarter before. Our overall delinquency in retail increased quarter-over-quarter to 2% from 1.8% and overall value deterioration in vehicles and home values still negatively reflect the losses on asset realization on a year-over-year basis and will continue to do so in the foreseeable future.

Total consumer average FICO scores for originations have increased this quarter, reflecting consistent underwriting with an average of 742 versus 736 the quarter before. Average utilization of home equity lines of credit remained stable at 40%, consistent with last quarter. First lien HELOCs are 46% of that portfolio, 33% of the second lien HELOCs have a first mortgage with FirstMerit as either owner or a servicing agent basis, and total weighted-average loan to value approximates 69%. Weighted-average FICO equals 744, with rescores indicating stable to slightly up trends, again reflecting appropriate and conservative underwriting.

NPAs for the entire 715 million portfolio equaled $2.3 million or 32 basis points. Foreclosures for our book, both mortgage loans and HELOCs, increased 1 from 53 to 54 at quarter ending September 30 against a universe of 65,232 foreclosures in our core 25-county geographic counties.

As of quarter-end September, our allowance for credit losses was $108.5 million, representing 1.47% of loans and 281% to non-performing loans. Given our consistent review valuations and write-downs, we feel adequately reserved at this time.

As we review the credit pressure, liquidity needs, and rising unemployment rates of the consumer portfolio, it's prudent to be cautious and pessimistic in the short run. Our retail portfolio show modesty deterioration in delinquency and losses and I don't believe we will benefit from a small seasonal decline in delinquency rates this quarter, as we have in past years. Our C&I and commercial real estate portfolios continue to show stability with the exception of those credits specifically linked to housing.

Our view in this current quarter calls for some measure of stability in absolute NPA levels, with some additional pressure on the charge-off level dependent on unemployment rates and general consumer behavior. As unemployment rate goes, so goes consumer loss rates. We continue to execute along our plan and manage the risk and opportunity in our portfolios.

At this time, I will turn the call over to Terry Bichsel, our CFO. Terry?

Terry Bichsel

Thank you, Bill, and good afternoon everyone. As Paul and Bill noted, our third quarter financial performance met expectations. The quarter showed revenue momentum, a stable net interest margin, charge-offs within expectations and a strong expense management.

Let me now outline what we expect for the fourth quarter. We expect to report a net interest margin within a range of 3.7% to 3.78%. We are beginning to see wider spreads on commercial relationships and we are incorporating pricing for more risk in the consumer loans. We may begin to see competitive deposit pricing abate with higher FDIC limits. The annualized fourth quarter outlook is 4% to 4.5% commercial loan growth, with a potential to achieve growth consistent with the third quarter if competitive market opportunity continues. On the consumer side, a contraction of 1% to 2% is expected as consumer balance sheets are being repaired.

We indicated last quarter that we were going to compete for CD funding and we did. The category was up an unannualized 7.8% from the second quarter. Focus on core deposits will continue within our business segments along with CD growth.

Annualized fourth quarter deposit growth of 5% to 7% is expected, which will have the effect of reducing borrowings. The investment portfolio will be maintained at its current size with maturing cash flows reinvested back into the investment portfolio. Approximately $350 million of investment securities cash flow is expected over the next 12 months. Non-interest income in the fourth quarter is expected to be flat to down 2%, lower mortgage, deposit activity charges, and trust fees will be offset by higher credit card fees. Expenses will continue to be controlled in the $81 million per quarter range. Net charge-offs will be in the range of 68 to 75 basis points with non-performing assets being maintained near the current levels. The tax rate will continue to be in the 29.2% range.

The outlook for the fourth quarter is consistent with continuing the fundamental stability in growth of our super community banking franchise.

Thank you. That concludes my remarks. I will now return the call to Tom O’Malley. Tom?

Tom O’Malley

Thanks, Terry. Patricia, at this time, our formal comments are over and we'd like to take questions from the field, please.

Question-and-Answer Session

Operator

(Operator instructions) Our first question comes from Scott Siefers with Sandler O’Neill.

Tom O’Malley

Hello, Scott.

Scott Siefers – Sandler O’Neill

Hello?

Tom O’Malley

Hi, Scott.

Scott Siefers – Sandler O’Neill

Hey! Can you guys hear me now?

Tom O’Malley

Yes.

Scott Siefers – Sandler O’Neill

Good afternoon. I was wondering, you talked about some of the dislocation obviously with MetCity [ph] now in the process of being acquired, I was wondering if you can talk about any opportunities to pick up employees, specifically like commercial lenders?

Paul Grieg

Yes, Scott. We’ve been talking to a number of employees over the past year and we have hired a number both on the commercial side as well as on the loan [ph] side and I think we clearly have that opportunity and we'll continue those discussions and we'll see what evolves over the next few months.

Scott Siefers – Sandler O’Neill

Okay, perfect. And then, could you also extend a bit on what you're seeing on the pricing side? You alluded, I think, a couple times to some betters spreads on the loan side. If you could just expand the part of that just a bit.

Paul Grieg

Yes, commercial spreads in general has started to widen. I've mentioned on previous calls that in the middle market, those spreads are some of the last to widen. They are beginning to widen. We have been charging increased spreads or have been receiving increased spreads on our indirect portfolio for probably a good six months now and I've also increased our spreads on the general consumer portfolio.

Scott Siefers – Sandler O’Neill

Okay. And then, just last question will be a more strategic one. On the M&A front, what's the general appetite, FirstMerit, what kind of things would you be interested in doing? What kind of availability do you see as you look out here over the 12 to [ph] next year or so?

Paul Grieg

We have had an ongoing program between Terry Bichsel, Mark DuHamel, our treasurer, and myself, of talking to enough number of folks in the marketplace that we may have an interest in partnering with or buying. The general tone until the last several weeks has been that because of depressed stock prices, the institutions have little interest to sell at a depressed stock price. We have made the regulatory agencies aware of names that we have an interest in, should a failure occur and we're very carefully assessing all of our options. Clearly, anything we do will have a shareholder vote [ph] focus and be looking to grow our shareholder value.

Scott Siefers – Sandler O’Neill

Okay, perfect. Thank you very much.

Paul Grieg

Thank you, Scott.

Operator

The next question comes from John Pancari with JP Morgan.

Paul Grieg

Hello, John.

John Pancari – JP Morgan

Good afternoon. Coming off of Scott's question, can you just elaborate a little bit more in terms of, would you expect to redeploy the capital through (inaudible)? Is it primarily going to be M&A, is your first priority or if you can just elaborate if there's any other alternatives that you're looking at?

Paul Grieg

Well, as we've mentioned in our prepared comments, our organic growth has been substantial this year. I commented on the 13.2% annualized commercial loan growth that we’ve seen. My view is that we’re going to continue to have significant organic growth opportunities to finish out ’08 and well until ’09. As far as use for M&A, that would be transaction specific, and again we’d really focus on the transactions that would be accretive to our shareholders.

John Pancari – JP Morgan

Okay. And then in terms of your top line growth efforts, I know you're – again you mentioned the growth opportunities that you’re seeing. I know that was the next line of fire for you in terms of your approach to turning the bank around since you’ve been there, with credit being the first line of which you’re tracking, and so can you talk a little bit more about your strategy here in addressing top line growth? You've seen it through the calling efforts. So can you just talk a little bit more about your – the rest of that approach. Thanks.

Paul Grieg

Sure. And why don’t we do that by line of business. It might be the easiest to do. Beginning with commercial, I’ve talked about the loan growth that we’ve been experiencing. The majority of that loan growth has been new business acquisition and if you look at Northeast Ohio is having some growth, but certainly not – just few percent [ph] growth. We clearly have been taking market share from the competition. The focus on the commercial side is a relationship focus. We’re not looking to solely book loans but rather we’re building a deposit book and asking new customers for all of their fee-related services to go along with the loan relationship.

The commercial banking business also has a concerted focus on deposit-only relationships. Part of the commercial business as well has been an enhanced focus on business banking. We have a robust business banking practice already; however, we’re missing the piece prior to the beginning of 2008 which was the inclusion of our branch managers in both the servicing as well as the business solicitation in the business banking marketplace. We’ve done a lot of training during 2008, have discrete calling activity goals in front of every branch manager and are starting to get some traction of that. Hopefully we’ll produce some good 2009 results in business banking.

On the retail side, a revamping of our organizational structure which occurred all the way back in 2006, adding the branch managers and a focus on our high-value accounts has been very good to us. But additionally, in July of last year, we introduced a Reality Checking product and also introduced a Reality Savings product. Those are our names for our new checking product and the new savings product. The savings product was added towards the end of 2007. Through September 30, that has contributed over $250 million of new DDA to the company and almost $500 million of savings funding to the company. So those have been very successful. We’ve been seeing net accounts grow on a month-by-month basis in retail and we have not been seeing that for many, many years in the payoffs; we have been seeing net accounts attrition. So the turnaround in retail from the perspective of account growth as well as stability of the workforce and stability of the retail enterprise has been great.

On the wealth side, we hired Ken Dorsett about a year ago. He’s reorganized our wealth business into a team construct. We’ve actually been building new relationships on a net basis in wealth. We’ve recently repriced our Trust wealth product which gives us a significant new fee opportunity for the company and the market penetration of new relationships has been welcome. That has been – that business has been a real core strength of the company, but have faltered for several years in its new customer acquisition efforts and is back on track along those lines.

John Pancari – JP Morgan

All right, well, thank you. You probably don’t need to have your Analyst Day now. Thank you. A very good quarter.

Paul Grieg

Thank you.

Operator

Your next question comes from Andrea Jao with Barclays.

Andrea Jao – Barclays

Good afternoon, everyone.

Paul Grieg

Hi, Andrea. We know it's pronounced Jao. Sorry about that.

Andrea Jao – Barclays

Not at all. Well, I was hoping to get your outlook or the underlying assumptions you have regarding interest rates in the economic environment. Because based on that, what do you see happening to the drivers in ’09? How much do you think commercial loan growth would slow after the fourth quarter if consumers continue to actually run off? Or do you still have more stability there? What will happen?

Terry Bichsel

Andrea, it’s Terry Bichsel.

Andrea Jao – Barclays

Hey, Terry.

Terry Bichsel

Good afternoon. We are not going to give you guidance for 2009 at this point. We are in the middle of our planning cycle and marching our way through that. We gave guidance for the fourth quarter. And as the economy goes here right now, the most recent Fed Cleveland Beige Book noted that the economy had slowed moderately and we can’t control the economy, but we can control how we execute on the outline that Paul just gave you within each one of our business lines. As you know, we have avoided some of the areas of concern today, particularly subprime and other high LTV loan products. So that sets us up well for the future.

As we look to the fourth quarter, we do expect a Fed cut in interest rates and our balance sheet is structured to protect the net interest margin. We did give you some color on what we view in terms of competitive posture for pricing. We think spreads will be widening a bit and we are hopeful that deposit pricing, our market pricing particularly for certificates of deposits has been rather fierce, and we think with the FDIC limits coming up and some of the consolidation that’s occurring in the market, that deposit pricing may be a little bit more rational as we confront the fourth quarter and beyond. I hope that gives you a bit of flavor without getting into the 2009 environment.

Andrea Jao – Barclays

It does help. How much more of a Fed cut have you built into your 4Q NIM expectations?

Terry Bichsel

We would be down to 1% in the fourth quarter.

Andrea Jao – Barclays

Okay. By October? In a couple of days?

Terry Bichsel

Yes. Let me not get that specific.

Andrea Jao – Barclays

Okay.

Terry Bichsel

Yes.

Andrea Jao – Barclays

Okay, fair enough. Now regarding the TARP, as you discussed this internally, could you share with us how you’re weighing the pros and countries, and what kind of exit strategy at this point would you implement if you do take advantage of the capital purchase program?

Paul Grieg

Andrea, allow me to address that. This is an active discussion at the Board level right now and it would be inappropriate for me to discuss on a call like this discussions within the Boardroom. So as I’ve said in my remarks, we have been encouraged by our regulators to participate in the program. We’re carefully assessing the merits of participating in the program. Should we participate, our range of investment will be somewhere between $80 million and $250 million and the questions that you’re asking amongst many others are currently being contemplated.

Andrea Jao – Barclays

Understood. Thank you so much.

Paul Grieg

Thank you, Andrea.

Operator

Your next question comes from Erika Penala with Merrill Lynch.

Erika Penala – Merrill Lynch

Hello.

Paul Grieg

Hi, Erika.

Erika Penala – Merrill Lynch

I have a quick question on your ability to continue to poach market share going forward, and you’ve done such a great job of it year-to-date, but do you suspect that now that some of the larger banks in your footprint have gotten TARP capital, does that mute your opportunity going forward?

Paul Grieg

Well, interestingly, we’ve been competing almost exclusively against larger regional and national banks for years. So competing against these same folks, we are not intimidated by and consider a significant opportunity. As you look about at the specific consolidation that’s going on in our market now, acquisitions of this nature always create disruption in the marketplace. Customers absolutely do not like change and from my perspective, change is a given. And that change can be – most likely will be change in a relationship management structure. On the commercial side, there will most definitely be credit policy decisioning changes. There may be a slowing of responsiveness as a new product regime which resides outside of this region is now going to be looking at credits for the first time ever.

So, I think we’re very well positioned to help local businesses and individuals sort through this disruption and I think we’re going to have continued organic opportunities. Specifically on the TARP, we have not seen the recipients of TARP limit their lending appetite within our footprint. So I don’t see that having TARP is going to give them any greater appetite to lend or create any additional competition for us.

Erika Penala – Merrill Lynch

Okay. And also I guess my last question is on the credit side, could you give us sense of what the early-stage delinquencies are looking like by loan bucket?

Paul Grieg

I’ll answer it in – you see our general numbers and our rollover rates are up slightly and you saw that reflected in our 90 days past due and still accruing. Out of buckets themselves, the indirect was the most directly negative in terms of – increases delinquency rate up approximately to 116 basis points from 106. The equity line themselves came down to about 35 basis points delinquent from 49 basis points. So it’s a mixed bag but the biggest negative would have been in the indirect bucket. That tends to be a seasonal influence as well, as you know Erica, specifically it is at this point in the season in North East Ohio where if you have people who are giving up, to give up on the RVs, to give up on the boats and we have seen perhaps greater than our share in those two product classes.

Erika Penala – Merrill Lynch

Thank you for taking my call.

Paul Grieg

Thank you.

Operator

Our next question comes from Andrew Marquardt from Fox-Pitt Kelton.

Andrew Marquardt – Fox-Pitt Kelton

Good afternoon, guys.

Paul Grieg

Hi, Andrew.

Andrew Marquardt – Fox-Pitt Kelton

Two quick questions. First, did you guys mention what you expect for reserve income going forward?

Terry Bichsel

Andrew, it’s Terry Bichsel. What we would anticipate would be that our charge-offs would equal provision plus a provision for loan growth that would be stratified relative to the risk rating that we would have on that loans that we will be bringing on to the balance sheet. That’s pretty much the approach that we’ve been taking quarter in and quarter out. If there were to be any risk rating downgrades within the portfolio, there would be additional reserves attached to those or any specific reserves on individual loans that are risk rated outside of the numeric rating scale but the process that we go through would be provisioning for charge-offs plus provision for growth, plus a delta for that change in the risk rating of the embedded portfolio.

Andrew Marquardt – Fox-Pitt Kelton

Okay. So is it fair to assume that the reserve – I’m not sure if that's (inaudible) to look at it, 1.47% of loans at quarter end should either be the same or slightly tick up from there?

Terry Bichsel

That’s a fair assumption.

Andrew Marquardt – Fox-Pitt Kelton

Okay. Thanks. And then my second question was on the reserve for unfunded commitments declined against core [ph], can you help me understand the drivers of those?

Terry Bichsel

Yes, and I’ll take that. As you know our reserve is formulaic and in the main, one should focus on, Andrew, the fact that we increased the reserve by $3 million. The roughly $817 decrease is the function of the formula and without going into the formula, the formula computes over a five-year cycle and then it tries to get an additional two-year trailing 12 and some of those factors fell off in the quarter resulting in a decreased allocation to that specific account. Again, we focused on the main and that main increased $3 million on an absolute basis.

Andrew Marquardt – Fox-Pitt Kelton

Thanks. Have you seen a change in the level of commitments being tapped?

Terry Bichsel

No, in fact, I think we’re seeing stable about a 59% utilization and again, that is consistent with companies that are not under duress, that are not utilizing and the supporting losses of their availability.

Paul Greig

The line [ph] utilization was actually down a bit from the second quarter of ‘08. At the end of the second quarter, it was 61% and it was down to 59%, a little over 59% at the end of the third quarter.

Andrew Marquardt – Fox-Pitt Kelton

Okay, thank you.

Paul Greig

Thank you

Operator

The last question comes from Terry McEvoy.

Paul Grieg

Hello Terry.

Terry McEvoy

Just a couple of last question here, for Terry. Your guidance for the margin would suggest a compression in the fourth quarter but yet you talk about improving loan spreads hopefully and easing of deposit price range. Is it simply just the lack of benefit from the yield on the investment security portfolio going up that signals the compression?

Terry Bichsel

No. It really is a function of a couple of things that the rollover on the investment portfolio will continue. The absolute level of interest rates that we are now at on many of the core deposit categories, it will be difficult to continue to take those any further down. Within our net interest margin, this particular quarter, we were, as you know the rollover of the investment portfolio, but more particularly on the deposit side, the maturing Certificate of Deposits were coming off at higher rates than we were putting them on even though the marketplace was very fierce for deposit pricing. So the floors on the core deposit products and the demand deposit products don’t allow you to reduce the liability cost in a manner that we have in this quarter would be indicative of the slight compression and I think there is one other point in there. If you look at our GAAP report in our published financials, we have more assets that were repriced down than liabilities in the first 90 days.

Terry McEvoy

And then just a question for Bill. It’s been a year maybe since you've broken up the installment loan portfolio. Can you maybe just provide a breakdown of the $1.6 billion of loans at September 30?

Bill Richgels

Certainly. You would have within the direct roughly $473 million, and the indirect $1.14 billion, the HELOC about $718, mortgage company at about $459 million and the credit card at roughly $148 million.

Terry McEvoy

And then maybe just once step further on that indirect bucket, the $1.14 billion between RV, trucks, and boat loans?

Bill Richgels

Certainly. RV would be at 12.3%, trucks at roughly 12%, boats at roughly 14.3%, and RV all in at roughly 25% to 26%.

Terry McEvoy

You said the first one is RV at 12%, would that have been maybe cars or just –

Bill Richgels

I’m sorry. The first one I had given you was the cars.

Terry McEvoy

Okay. Perfect. Thank you.

Bill Richgels

Thank you.

Paul Greig

Thank you. That concludes our call. We appreciate you all for joining us. We look to forward to talking with you. If you have any follow-up question, we’ll be available today. Thanks again. Goodbye.

Operator

Thank you for participating in today’s FirstMerit third quarter 2008 earnings conference call. You may now disconnect.

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