Q: Do you think your bank is over-reserved?

No. We are not over-reserved. During the worst part of the banking industry's loan problems, our bank was considered a conservative lender. We never exceeded 1% reserve to loan rate. We are now reserved at 0.8%, and we feel that's fair.

Accountants and regulators have always said reserves are management's best estimate of the condition of quality of their loan portfolio. Our reserves are lower than industry averages.

We are pleased that our accountants as well as the Office of the Comptroller of Currency have both acknowledged the high quality of our portfolio, warranting the low levels of reserves.

With bankruptcies having risen as much as they have, our reserves are prudent. We don't see a tremendous growth spurt in the economy.

The economy just remains very quiet, very dormant. Without a bubbling economy, companies will be under a lot of pressure.

Loan-loss reserves are a reflection of our loan portfolio and our outlook for the economy. We're just being very cautious because we're still in an area of the country that's not experiencing tremendous growth.

All of us want to have healthy and strong reserves just because of the unknown factor and concern over the future of the economy.

I don't think my bank i over-reserved. Our loan-loss reserves are at 3.55% of the total loan portfolio, which is unusually high because of our circumstances and our feelings.

We had some financial difficulty a few years ago. We feel those problems are behind us, but we have reserved to a position that at least we can protect future earnings until our bank is assured of results from the changes in underwriting standards, policies and procedures that have been implemented.

We've had loan reviews and, of course, regulators have examined us since our difficulty in 1991, and we feel we now have a clean portfolio.

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