Mr. Shafir: Well, just to clarify, I cover a lot of regional and community banks and thrifts - some in the Mid-Atlantic and also in the traditional Northeast area. I think as a whole, my institutions, as a function of their locations and because some have more capital than average, have fared significantly better than the average bank. I think some of the problems that arose in the Northeast - problems that contributed to capital erosion at some banks - have been more securities-based as opposed to the loan portfolio issues that have been seen elsewhere. So I would say on the whole, the institutions that I look at have fared significantly better than institutions in other regions of the country.
TWST: How has it been for the banks you cover, Kevin?
Mr. Reynolds: Probably the fundamental differences between the Mid-Atlantic North and Mid-Atlantic South region that I cover is that in the South, for the last five, 10, 15 years, we were the culprits in the residential situation that is weighing on the banking sector right now. You have places like Florida and Atlanta that were so speculative and so overbuilt in terms of having a lot of banks - there was substantial new bank formation down there, and all these banks were chasing loan demand, which was arguably fictitious loan demand. And so when you pull all that together, what ended up on balance sheets in the South that weighed things down for the whole region were loans that were originated for which the underlying assumptions were just fatally flawed. And I think that's different from the Mid-Atlantic North area where, as Mike says, we've got issues that are more securities-related. That's because you didn't have builders coming in and speculating that population inflows would continue and accelerate over time, and that home prices would do the same. So with that said, there are a lot of problem banks in the South and mostly in the markets that you would expect them to be in: Atlanta, most markets in Florida, and a few other spots here and there. Overall, among the banks that I cover, there are roughly 15 or so banks that range in asset size from 35 billion down to about 2.5 billion. They've generally performed better than the national average. They are generally better capitalized or more strongly capitalized than the industry averages, but they are experiencing the difficulties that you would expect to see in a severe recession. And I think maybe perhaps for both of us the one common thing here is that we are not hampered or fatally flawed - I don't think, anyway - by either of the two big issues going on. There was the global credit crisis, which was in the shadow banking system. The pipes were clogged and that largely impacted the largest financial institutions. And then there is a severe recession underneath that, which is being felt differently in different markets. That's real, that impacts everyone. You can't escape it. That's what our banks are going through right now. So better than the national average in my universe, but worse than average from a credit perspective.
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