executivespresented an optimistic view of the credit environment during a conference callto discuss first-quarter earnings.
Managementsaid they expect increases in reserves due to energy weakness will be offset byreserve releases in other parts of the portfolio, and there was little concernabout nascent weakness in auto finance. Even when addressing the oil and gassector, management said they are well-prepared for credit deterioration.
"Wethink the reserves we have right now are the right reserves for our portfolio.Build and releases in the future are going to be based upon how companies adaptto the level and duration of lower oil prices as well as our net charge-offs,and we think companies are adapting," said Paul Donofrio, CFO for thebank, adding that reserve releases can be expected in the bank's consumerportfolio but at a slower pace.
"Consumerreleases would likely go to offset any builds in commercial," Donofriosaid.
Laterin the call, Donofrio was asked about credit quality concerns for any areaoutside of energy.
"Outsideof energy and metals and mining, we don't see issues with credit quality,"he said.
Analystsalso asked the bank about its auto loan exposure considering concerns haveemerged about the quality of underwriting in the space. Donofrio responded thathe expects the bank's focus on prime credit in auto finance to minimize anycredit quality issues.
"We'remaintaining our market share in auto lending," he said. "We'revery focused onoriginating prime and super prime loans. … I think if we stick to that, we'llbe fine."