Edward Wehmer - Chief Executive Officer and President Dave Dykstra - Chief Operating Officer and Senior Executive Vice President Dave Stoehr - Chief Financial Officer and Executive Vice President

Jon Arfstrom - RBC Capital Markets John Pancari - J.P. Morgan Brad Milsaps - Sandler O'Neill Brad Vander Ploeg - Raymond James & Associates Ben Crabtree - Stifel Nicolaus Peyton Green - FTN Midwest Securities Mac Hodgson - SunTrust Robinson Humphrey Thomas Doheny - Sandler O'Neill & Partners

Good morning. My name is [Connie], and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2008 earnings conference call. (Operator Instructions) Thank you. Mr. Wehmer, you may begin your conference.

Good morning, everyone. Welcome to our first quarter conference call. With me are Dave Dykstra, our Chief Operating Officer, and Dave Stoehr, the company's Chief Financial Officer. About three years ago we talked about entering into our rope-a-dope strategy with the view that the classic credit cycle was going to be upon us, and sure enough it is. We believe that we're entering the second year of what we think will be a three-year credit cycle. And this is the second year; this is probably going to be the toughest of all the years of this particular cycle. We think it'll be challenging. Our first quarter shows there are some challenges there. At the same time, we have set the period leading up to this trying to position ourselves to get to the other side stronger than when we went in and to just weather this particular storm. As stated in our press release, there were three factors that generally related to the economy in general that affected our earnings this quarter - first, net interest margin compression. You know, the Fed's dropping of rates as precipitously as they did during the quarter put pressure on our ability to reprice our liabilities fast enough and it writes our abilities down in a commensurate amount as the overall rate dropped. The market interest rate or net interest margin compression, therefore, takes place. It's going to take us a quarter or so to get the liabilities repriced and to get back to where we were before, and then hopefully continue to grow the margin because on the positive side we see spreads moving back into the market. We have a very strong loan pipeline with those spreads built in. We're able to actually pick and choose. There's an old adage that we look at that says, you know, a lot of bad loans are made in good times, but a lot of good loans are made in bad times. By positioning ourselves as we have, we think we have the ability to take advantage of this right now and that, too, will help our margin getting back to what we would consider normal. And it's a customary part of any normal credit cycle that spreads will come back, and you need to have the ability to take care of this. We continue to work on our securitization of Premium Finance loans. As you know, we've been trying to get a $300 million to $500 million securitization in place to open up a hole on the balance sheet that will accommodate this additional loan growth [inaudible] the spreads. The securitization market appears, for premium finance loans, appears to be opening up a little. We're working with a couple of providers. Hopefully if we can get that done, that will give us the double whammy of being able to replace the loans we securitize with the pipeline that we have at good comparable spreads at the same time achieve the gain on sale on the sale of premium finance loans, which should augment earnings. Again, we're working on this, and as all of who have been in the industry know, that market's still a bit dicey. But the asset class is still well received, the Premium Finance asset class is well received. I think we're probably the only of the top three or four premium finance companies who don't or haven't utilized the securitization. So hopefully we can tag on there and that'll be a good critical part of what we would like to do. It really is a much better use of capital if we're able to do it that way and also should enhance earnings. So on the net interest margin side, that pretty much explains what went on there. We had some losses, some securities losses, and some other-than-temporary impairment charges that we took this quarter. The security losses I think relate to the other-than-temporary impairment changes and those related. We have about a $30 million high-yield portfolio that we have kept on our books for a period of time. As you know, under the accounting rules if they're underwater 10% or so for five or six months you need to mark those down to market. We still think the credits there are relatively good. I think this is a market-driven situation. The rates there are still pretty strong, and it's a positive return for us. But with widening credit spreads and the market where it is, we were subjected to that particular accounting. The other charge that we took about $900,000, we had $6 million through the course of the last five or six years that the Board and management allotted to private equity-type investments, more fund investments. One of the funds that we invested in basically took it on the chin, and we've written that off. I think there's just a little bit immaterial amount left on the books right now in terms of that. The other's investments that we have continued to - at least to date perform well and have performed well. Again, that's probably a total of a $6 million investment that we have in total there. Obviously, the biggest issue was on the credit side. Charge-offs were right around 30 basis points and we stated. We figured 20 to 30 basis points is the range that we would anticipate for charge-offs. We're at the higher end of that range right now, but I would anticipate that you would be at the higher range going into this really the bottom of the credit cycle, which I think we'll experience for the rest of this year. Not performings were up a bit, but I think if you, you know, again, we always look at the velocity. In this period of time no matter well you underwrite, non- performers - we're not bigger than the market - the nonperformers are going to wash up on shore. We really have to be working to clean the shore because you know other ones are going to come and get good velocity of that such through that nonperforming category and off of our books. In the first quarter, that was slower than we anticipated. However, if you take into consideration what's been resolved to date and what we think will be resolved by the end of the quarter, we have a letter of intent on a $10.4 million loan that would take us out of power on that particular relationship. You know, we're pretty much right about where we were, and we're making good strides and good headway in terms of getting the old ones off to make room for new ones that will, in this market, that will basically come on. All that being said, we actually added to our provision and took it out to 79 basis points from 72 basis points. I think that we use a methodology there. That methodology, with increases in our performings with the market in general, will be the remainder as long as the economy stays where it is, the banking market stays where it is, and we will be adding to the reserves over time and continue to build that reserve level. We've already been around 70 basis points in our reserves. Our charge-offs has always been about 40% to 50% of what the market has been. We believe we'll still be in that category but, again, no one's bigger than the market, and our analytics show us that we will be increasing that reserve over a period of time if things keep going like they seem to be going. So charge-offs are right where we thought they'd be in this market. Non-performings, we'd like to get a little bit more velocity of getting these things off the books, but we've had good progress in April and I think you'll see us continue to build the reserve as long as the economics stay the same. They told everyone I'm more afraid of the SEC than anyone else in terms of - people usually ask, "Why don't you just raise your reserve?" Well, you can't do that. It has to really correspond with what's going on in the markets today that - with the markets where they are, we will be increasing our reserves unless something really changes. The positive side, we talked about good loan growth and very stellar pipelines. We're in an enviable position, I think, as relates to loan volume is that we're turning down a lot of deals based on people trying to price deals based on pricing from a year or two ago that had no credit spreads or that weren't built in to where we're able to really pick and choose here. And again, a lot of good loans are made in bad times, and we're finding that this is the case here, especially in the Chicago market, where the turmoil continues. And still, we continue to make very, very good headway in terms of picking up new relationships that are profitable to us. On the expense control side, we had very good overall expense control. We are comfortable with that and really have been - continue to put the screw to our expenses as we work through this period of time. Wealth Management and the Mortgage Companies were strong for us and continue to be on track. We would expect that to continue going forward. We're real excited about the Wealth Management side of things, especially our Wayne Hummer Asset Management and some of the initiatives we're taking there. But that business continues to go well as we push to distribute through the banks. The Premium Finance business, just to comment on that, you know, that business still is continuing to do very well for us given the market where it stands. That's in spite of the fact that the very soft insurance market has taken our average ticket size down almost $10,000 from $38,000 to $28,000. We're maintaining our volumes, but we're having to do a lot more work to do that. The positive side of that is we're doing a lot more units to maintain the volumes that we had, but that means we're gaining market share and I don't think we've changed - I know we have not changed our underwriting standards. In fact, we've probably tightened them up on larger deals. But we're holding steady there. Delinquencies will rise there, but only to the level that we would consider normal. Late fees you see moving up where at the pristine end of the market. They were down to 140, but we're used to 2 to 2 and 140 basis points - we're used to 2% to 2.25% in terms of late fees. So as charge-offs might go up 10 or 15 basis points in that area, our late fees have already moved up 35 basis points and we would expect those to continue to move and get back to a more normalized rate. So Premium Finance business, although challenged just by the soft market, continues to do very well for us. In summary, this is going to be a tough year for banking. I don't think any of you who are listening need to know that. We believe that our prudence over the last few years has positioned us well to get through this and to get through this stronger than when we went into it. Again, though, you're assured of our best efforts to make sure that that actually occurs. Dave, turn it over to you for some numbers?

Yeah, I'll just briefly walk through the other income, other expense areas, that touched on the margin and provision. Our Wealth Management revenue first quarter continued to show strong revenue levels with the results being at the high end of the last five quarters, really the second best over the last five quarters with December of '07 being slightly higher due to a significant amount of trading by our customers for taxes [inaudible] in the fourth quarter of last year. But strong numbers there and we're continuing to see progress in building client relationships out of our banks and from our downtown brokerage area. On the Mortgage Banking side, we're at $6.1 million. Again, this is the second-highest revenue level over the past five quarters. Results are really in the range that we're comfortable with right now. We're seeing strong volume again in the second quarter. First quarter's results actually had a negative adjustment of about $600,000 for valuations on mortgage servicing rights. Although the portfolio that we service increased slightly in the first quarter over the fourth quarter of last year, the market value for servicing rights has declined a little so included in that number's about a $600,000 MSR valuation adjustment. Premium Finance loans, we sold about $115 million of Premium Finance loans in the quarter for a gain of roughly $1.1 million. We continue, as Ed said, to pursue the securitization or other sales of this portfolio as the pipelines on our remaining loan portfolios remain strong and our loan-to-deposit ratio is in the 90% to 95% range. We're really like to see that more in the 85% to 90% range, so we'll continue to try to sell some of the Premium Finance loans as long as the pipelines and the closings on other loan areas remain strong. Fees on covered call income, we recorded $6.8 million in the first quarter of '08. Lower rates and higher rate volatility contribute to the increase in this area. As we noted in the press release, continuing volatility in the interest rate environment allowed us to record so far in the second quarter $11 million of covered call income during the second quarter of '08 so far. As we've said before, we consider this program to be a way to offset margin compression during times of lower rates, and we continue to take advantage of the program during such times. Ed talked about the losses on securities. Within that line item we had $1.3 million worth of net losses on available for sale securities. Of that amount, there was $1.9 million related to the noncash other-than-temporary impairment write-downs on certain corporate debt securities. Each of those securities are performing but given the market conditions and the widening credit spreads, the write-downs were required based on the accounting rules. Salaries and employee benefits, held those basically steady. They were up $89,000 over the fourth quarter of '07. The increases really related to some increases in health insurance costs and our normal year-end salary increases. If you take away those costs, we really reduced the remaining salary and benefit area in the first quarter relative to the fourth quarter of last year. And if you look at all other expense categories other than salary and employee benefits, they generally were relatively stable and in fact decreased $822,000 from the fourth quarter of '07. So Ed mentioned it, but the numbers bear out that we are controlling those expenses and in fact saw a decrease over the fourth quarter of '07 if you look at all categories other than the salaries and employee benefits. So pretty stable cost control, good revenue growth, and with that, I'll turn it back over to Ed.

Well, I think that we always try to give you an encompassing press release that talks about where we are and what's going on and what our plans are so, with that and our narrative, I think you have enough information to pepper us with questions so I think we can open the floor for questions.

(Operator Instructions) Your first question comes from the line of Jon Arfstrom. Jon Arfstrom - RBC Capital Markets: You guys there?

Good morning, Jon. Jon Arfstrom - RBC Capital Markets: Hi. I've got a couple of questions here, but on the 20 to 30 basis points of anticipated credit losses, does that make you nervous at all, Ed, that being under the high end of the range and publicly stating that?

Well that's the range that we anticipate, Jon, if it's 32 or if it's 18, you know? I mean, we said 20 to 30. It was 18 last year. We're giving you what we think is a [relative] range and what we've underwritten to for our entire existence in normal credit times. We don't see anything coming down the pipeline that will change that but, you know, that being said, we're not bigger than the economy. We think our underwriting's been very strong. We're not shy about taking the charge-offs early and looking good on recovery. I wouldn't say it if I didn't think that we were in that range. And I think if you've tried to measure it on a quarterly basis, measure us on an annual basis and I think our [inaudible] over that and it pops up over down over a period of time. But given where the portfolio is right now, given how aggressive we are in terms of just trying to look good on recovery, I feel comfortable with those levels. But, you know, we'll see. Jon Arfstrom - RBC Capital Markets: In terms of the non-performing outlook, that's helpful in terms of what you have out on LOI but how do you feel about the inflow so far in the quarter? Do you feel like it's manageable or -

You mean the second quarter? Jon Arfstrom - RBC Capital Markets: Yes.

Well, second, you know - really at the end of the first quarter, we had a surprise in the first few weeks of the second quarter that [inaudible] with the first quarter very well. So I think that we were aggressive in terms of recognizing what we have and putting it in there, and this kind of stuff shows up towards the end of the second and third month. That's where we'll be adding to it. And we don't see anything huge coming down the pipeline, and hopefully we'll continue to push these other ones out the door. You know, I always think that you have to take the Premium Finance loans off of our nonperforming numbers because the Premium Finance loans are over $20 million of non-performers. Drop those back and just look at core. Those Premium Finance loans, we anticipate those to go up over time but again, hard to believe that that turns into a moneymaker for us because late fees move up much faster than we anticipate charge-offs moving up on that business. But if you take those out and look at the overall level of really core nonpeformings, I think it's still a very reasonable number. We're not kidding ourselves to think that more will not be washing up on shore in this market, and again, the secret is to push the old ones off. The first quarter was slower than I would have anticipated in terms of getting some of these things resolved, but I think we've always in the past been able to do that, push these things through, and as I said, we're not kidding ourselves. There will be more coming. We're not bigger than this market. But we haven't been surprised in the first two and a half to three weeks of this month. Jon Arfstrom - RBC Capital Markets: Okay, good. That's what I was looking for on that. And then Dave, can you talk a little bit about the margin, how it trended throughout the quarter? I know we haven't asked for margin by month in a long time, but just trying to square some of the comments on funding costs and how long it will take your margin to get back to a [inaudible] mode.

Well the key I think is how fast your CDs are going to re-price. We had a lot of assets reprice and the CDs are shorter and the compression only occurred because you've got your NOW accounts and your free money in your savings accounts and money markets that you really couldn't take down as much as the market moved. So where you're going to get relief on the funding side is from the re-pricing of your CDs. The biggest category of ours are 12-month CDs, so you're going to see it ratably occur over time. So I think there will still be some pressure in the second quarter, and then I think as we get into the third and the first quarter I would expect that to stabilize and turn around just given the fact that you've got more than half of your CD portfolio repricing in a lower environment, and we need that to happen to help us. March was an encouraging month, but I don't think you're going to see substantial expansion in the second quarter. You may see a few basis points of compression, but it should be relatively stable. But I don't think you're going to see it start rising until the majority of that CD portfolio starts to re-price. Jon Arfstrom - RBC Capital Markets: Good, that's helpful. And then just one last one. Any projected timing on your securitization?

Yes, Dave, let me project the timing on securitization. (Laughter.)

We actually do have - you know, it's a tough market out there, and we have the [inaudible] to do loan sales. We did a little less in loan sales this quarter simply because we'd been out of the market for awhile and the people that bought in the fourth quarter of last year really filled up their capacity quite a bit and didn't come back in for as much the second go round because they still had a number of loans still on their books from the fourth quarter purchase that they did. But that $115 million is not dissimilar to what we were doing when the program was up and running in its full stages prior to 2006. So we are happy with that result, but we have had two or three firms contact us and say they are interested in doing the securitization, they like the asset class of premium finance loans, they're familiar with the asset class, they're already involved with the asset class, and they're preparing, I guess, term sheets, I guess, for us to see whether we can agree that the pricing and other terms and conditions are satisfactory. So we've got meetings on that next week set up, and so we should know really by the first week of May whether that's a doable thing or not. I guess we have encouraging signs from a number of outside parties that have actually contacted us after we had contacted them last year and now they're saying that they are interested in getting back into the market. So I don't have their final pricing terms yet. At what level they're interested in getting into the market is the key question. Jon Arfstrom - RBC Capital Markets: All right. Thank you.

Your next question comes from the line of John Pancari. John Pancari - J.P. Morgan: Good morning. Dave, you'd indicated a likely bottoming there of the margin third quarter so what are you assuming by way of the Fed cuts?

Nothing. We don't - what Dave was just talking about, it's staying flat. If the Fed were to cut another quarter, again, that compression aspect would kick in. We can't lower some deposit rates much more than that. So if the Fed has additional rate cuts, that would not be - it wouldn't be basis point for basis point, but it would certainly take us a little longer to get that margin going on the upward trend again. Really, the secret's going to be on the asset side. If we can get the securitization done, we know how we're going to reprice the liabilities. If we can get that securitization done, we can, with the way our pipeline is, replace those assets at higher yields and we think that that's what's really going to start kicking the margin is just getting the spreads back in that just weren't there over the last two and a half, three years. We finally have a positive slope to the yield curve, which is good for us. One of our - there's a number of different models that we run, but the one that we really like a lot is the fact that there is inflation out in the market. What would be best for us is a positive yield curve a little bit higher. And if after the election rates start moving up, that has a very positive effect on us. But any additional rate decreases would exacerbate compression issues and lengthen the time to get back to normal. I think that's just logical. John Pancari - J.P. Morgan: Okay, that's helpful. And can you remind us on the CD maturities, just the size of what's maturing and then the rate that they're coming off at?

We haven't published that. And as I said, the vast majority of our CDs are 12-month CDs and they come on relatively ratably. So you're going to see about a quarter of that portfolio re-price over time. John Pancari - J.P. Morgan: Okay. All right. And then one question on capital. I note, Ed, that you had indicated that the reserve will likely edge higher here if we still see more of the same of what we're seeing this quarter. So assuming that, I mean, what type of range do you think is reasonable that we could see - a mid-80s ratio here in comparison to your loan portfolio?

I think if you just - you know, it's tough to say because we have a methodology that we employ that's a fairly extensive methodology. We actually run two methodologies side by side and it's become quite a process, so this is very numerically driven. But I would say that if things continue as they are that the same element of increase could be expected going forward, [7 to 8] basis points a quarter which would, you know, get you into the 90s by the end of the year. I think that works, the math works there. So I think that would make some sense. And again, that could change depending on what flows down the river. John Pancari - J.P. Morgan: Okay. Thank you.

Your next question comes from the line of Brad Milsaps. Brad Milsaps - Sandler O'Neill: Hey, good afternoon.

Hello, Brad. Brad Milsaps - Sandler O'Neill: Dave, just a question on the period-end balance sheet. You noted in the release I guess you sold some securities or maybe some securities got called away in the first quarter that didn't settle until the second. I'm just kind of curious how all that flows through, if there will be any kind of gain in the second quarter and just kind of how to think about the overall level of earning assets, et cetera, just those accrued assets and liabilities that you show at the end of the quarter.

We mentioned it only because it grossed the balance sheet up. It's just trade date versus settlement date accounting. We purchased some securities and there are some securities that were called away, and the trade date was in March and the settlement date flipped over into April. So we've got it set up, the receivables and the payables for those, and it just inflates the quarter-end balance sheet by the amounts that we noted in the press release. But there's no significant gains or losses on those. It's just the settlement. Brad Milsaps - Sandler O'Neill: Okay. Okay, I just wanted to check and see. And then also at the end of the quarter you thought you had a fairly high number of fed funds as well?

Yes. Hopefully we're going to deploy those into loans going forward, but we may do a little bit in investments there. But for a bank that's a $9plus billion bank holding company, that's not a ton of extra liquidity. Brad Milsaps - Sandler O'Neill: Sure.

And one of the things too is that we're - the markets actually haven't been the most stable. There's an old line that you always have enough liquidity until you need it. So we're very much aware of liquidity issues in this market and how tenuous the overall market on the banking side of things is, so keeping some liquidity around just seems to be a relatively prudent thing to do. You'd rather be selling a little bit of funds than being tied up on the purchase side. Brad Milsaps - Sandler O'Neill: Absolutely. Okay. And then I think total capital at the end of the year was around 10.2%. Do you have that for what it was at March 31?

We haven't published that yet. It's not going to change dramatically. Brad Milsaps - Sandler O'Neill: Okay. All right. Thank you very much.

Your next question comes from the line of Brad Vander Ploeg. Brad Vander Ploeg - Raymond James & Associates: Good morning.

Hi, Brad. Brad Vander Ploeg - Raymond James & Associates: Just curious for a little more clarification. With the huge result in the covered call number that you're going to get in the second quarter here since that typically moves in contrast to the margin why the margin wouldn't be contracting a little bit more than those few basis points that you indicated?

Humongous volatility when we placed those orders. I mean, you're usually getting 1% to 1.25% when you do this thing in kind of what you'd call normal volatility. At the time we did it, the [vol] was at 2%, so it was kind of luck of the draw, I guess.

Right. Yeah, I agree with what Ed's saying there. It's just volatility was much higher than we'd ever seen before. And although they move somewhat in concert against each other like you indicated, Brad, it really depends on volatility in the marketplace. That drives that pricing more than anything else. And volatility was extraordinarily high. Brad Vander Ploeg - Raymond James & Associates: Right. Okay. So it's entirely possible that we could see - the market's been pretty volatile for a while now - if that continues, you could have both the margin expanding and have that number continue to be quite strong?

And the securitization can't [inaudible] the loans. I mean, that would - [inaudible] a good thing.

A lot of people ask me how should I model covered call option income, and they want to put it in and get some sort of hard and fast formula for it. But there is no hard and fast formula. We would not have guessed that we would have received this much in the second quarter because we've never seen volatility that high when we've done this program in the past. But the generalities are in a falling rate environment and higher volatility that income will go up. And if rates are coming down and volatility's high, we'll do that. If rates start to move up and volatility comes down, you'll see that number fall. But we can't predict volatility in the marketplace or interest rate movements. We just take advantage of it while it's there. Brad Vander Ploeg - Raymond James & Associates: Right. And on the securitization that you're working on, I'm just curious if there's any sort of significant difference in terms of structure, whether it be recourse or you holding subordinated tranches or anything like that that's different than your whole loan sales of the past?

No, they're very similar. We probably would have a little less recourse obligation under securitization than what we're selling, and we don't have much with what we're selling. But they would end up being similar. It would just be the pricing, the funding costs of that securitization and where that falls out. But the accounting for it should be very similar. Brad Vander Ploeg - Raymond James & Associates: It might actually be a slightly lower-risk profile than whole loan sales in terms of recourse?

Quite possibly.

It should be slightly lower than that, yes. Brad Vander Ploeg - Raymond James & Associates: Okay. I think that's all I had. Thanks very much.

Thank you.

Your next question comes from the line of Ben Crabtree. Ben Crabtree - Stifel Nicolaus: Yeah. Thanks. Most of my questions have been asked. I just had a real small one. And this isn't a real big item, but I noticed a very sharp increase in professional fees, the fees paid in the quarter. I just wondered what's going on there.

Well, you know, when you get more problem loans, you end up paying the attorneys a little bit more money to work through them. I think that's probably the majority of that. Ben Crabtree - Stifel Nicolaus: Right. Thanks.

(Operator Instructions) Your next question comes from the line of Peyton Green. Peyton Green - FTN Midwest Securities: I was wondering if you could comment a little bit on the size of the watch list and I guess the velocity it takes moving out of the watch list. Are you still able to move loans out of the bank and onto others? And then also the level of 30day past dues?

Well, you know, we don't publish the 30-days past due. Our watch list is increasing slightly and simply for the reason that the velocity has slowed down a little bit. It's a little bit tougher moving the assets off the balance sheet these days than it was a year ago or so. A year ago or so people were taking some of these borrowers out and people were still buying some of the properties in a little higher degree than they are today.

The first quarter's tough to do that also. I mean, we had a lousy winter up here and there was, I mean, it does factor into it. People aren't around. But we're actually seeing a lot more - let me tell you, there are a lot of smart people now on the other end of the cycle who are starting to accumulate assets. And more funds have been put together that are coming along that are giving us options as to where to place some of these assets and get rid of them. So we would expect, you know, we've always had very, very good velocity as we work through our portfolio. First quarter was just slower than we'd anticipated, but we would hope to be able to, I mean, it's - there have been a number of all caps e-mails going out to the guys that we've got to really pick up the pace here. We put a department in place towards the end of last year with three people, soon to be four, called our [Massed] Assets Division. We were going to call it Special Assets but we figured we didn't want to be SAD, we wanted to MAD. So we actually have a group of people who are really devoted now and have been to pushing these things through and working with the banks to get this done. And that's proved very effective for us also. They're really in there. The first quarter was really their first full quarter of operations. They're hitting the ground running, and we've got a lot of good things going on. But like I said, there's going to be more stuff that washes up on shore. You can be assured of that. Hopefully we underwrote it properly; it's just going to be a matter of getting them off the books. And that's why we say the losses is in the 20 and 30 basis points we're comfortable with because we stuck with our underwriting during this period of time. We didn't change it. We didn't chase things. We feel that we've underwritten properly. We've underwritten anticipating the credit cycle that we're in right now. And so more's going to show up, but will it relate to losses? Hopefully not. And we have to clear off the old stuff. So slow in the first quarter; we anticipate it picking up and getting back to normal going forward. But, you know, [inaudible] the market. We're working pretty hard at it. Peyton Green - FTN Midwest Securities: Sure, okay. And then in terms of the Premium Finance business, what was the origination volume in the quarter? And then also, to what degree did you write options against the bond portfolio? Is it the entire bond portfolio or is it a portion of it?

Well, it's a portion of it. Not everything you can write against. The vast majority of it we wrote against during the quarter as far as covered calls, but there is a portion of it - I don't have the exact numbers in front of me, Peyton but the vast majority of it we did. Premium Finance volume, I actually don't have it in front of me either. My guess is - I guess I probably shouldn't guess in a public forum, but they're probably originating $250 and $300 million a month. Peyton Green - FTN Midwest Securities: Okay.

What's happening in that side - just something I was going to mention and forgot to - we are expanding our market share in that business with lower ticket sizes. One of the other issues we like lower ticket sizes is in the larger deals, those deals of a couple hundred thousand up to $5, $10 billion, which come through, the pricing on that is still absurd because our competitors, they securitize most of their work. They usually try to - they can work off of a 100 basis point spread. And with lower general volumes, they are being very aggressive on the larger deals and we are not being aggressive. We basically if it's not a relationship, a very strong relationship, we're in, we're not going out and doing those deals because the pricing is just way, way, way too thick. When pricing comes back to normal - and it will in that market; the deals that we pass up on are more big-time situations, transaction-type situations - and with a phone call we're back into that pit really quickly. So that's why it's off a little bit from last year, is mostly the really big deals which we've pulled back from for pricing issues.

I just had a point of reference. There's some of those deals that are going in the low 3% range, and we're just not going to chase that. Peyton Green - FTN Midwest Securities: Okay. And then in terms of you all trying to uptick the overall small ticket side, how is that going versus what you would have thought? Is it better?

It's probably about a -

Are you referring to the Broadway acquisition or general business? Peyton Green - FTN Midwest Securities: Just, I guess, before the Broadway acquisition you were noticeably trying to increase.

Yeah. We folded that into the Broadway acquisition. Peyton Green - FTN Midwest Securities: Okay.

And probably was actually in that market, the market that was one tranche below what we're doing, and that business is going very, very well. We're very comfortable with that business. We feel that there is terrific growth opportunities in that business. They are moving their offices from downtown Manhattan out to Long Island. That'll save us a little bit of money. And they will be converting to our first system, which we think is both from an accounting side of things plus from a customer delivery side of things, is head and shoulders above the competition. So we've hired some additional salespeople there. Once they get through these logistical changes, we think they'll do very, very well for us. Peyton Green - FTN Midwest Securities: Okay. So, I mean, the growth initiatives are really to come in that business over the balance of '08? They've not started yet?

Yeah. They've grown a little bit but nothing material, and we think that going forward that's the case. Peyton Green - FTN Midwest Securities: Okay. Okay, great. Thank you very much.

You're welcome.

Your next question comes from the line of Mac Hodgson. Mac Hodgson - SunTrust Robinson Humphrey: Hey, guys.

Good morning. Mac Hodgson - SunTrust Robinson Humphrey: Just one quick question. I may have missed this in the release or your comments. Where is the Private Equity impairment charge or loss show up in the income statement?

We do note it in the back. There's about $900,000 and it's in other income. Mac Hodgson - SunTrust Robinson Humphrey: Okay. So that miscellaneous?

Yes. Mac Hodgson - SunTrust Robinson Humphrey: Okay. And then I know last quarter you talked about kind of the three large NPAs. I'm assuming that LOI is related to one of them. I don't know if you could provide detail if there's any update on those other two?

On the other two? Mac Hodgson - SunTrust Robinson Humphrey: Yeah.

Well, the one is going to be with us for a period of time. We're working forward with identified joint venture partners. The property is in foreclosure, working out a monetary agreement with the guarantors is in process, so it's all in the process of collection. But when all that occurs, that's going to be put down into an LLC that we will joint venture and look for a home for. I mean, we'll get out of it if we can but in the meantime we're ready to sit on that one for a period of three or four years until it's absorbed. There is a little bit of velocity, but nothing to write home about on that particular project. The other one is working its way out just due to the general course of business. We don't anticipate any additional losses on that entire relationship. That relationship is made up of probably about seven different loans, and we made some progress on that - I think about $1.5 million in the quarter, the first quarter, to $2 million - and that was pushed through. We believe that there's two really large remaining projects, one with a very strong guarantor who has indicated a desire to step up and just move into that with some complications, and the other is a project that's an office-condo project that is basically sold out. We are just funding it to completion, and it will be sold out. So other than the [litigating] aspects of the actual borrowers themselves, the project themselves are moving along and should work their way out of here. One's working along pretty nicely and the other one's going to be with us for awhile. Mac Hodgson - SunTrust Robinson Humphrey: Okay. Thanks for the color. I appreciate it.

Your next question comes from the line of Tom Doheny. Thomas Doheny - Sandler O'Neill & Partners: Hi. Good afternoon, or good morning your time, I guess. Thanks for taking the question. I'm curious. You noted in the release in the non-performing commercial, consumer and other about $40 million of that is collateralized by residential real estate development. Is that true of the losses taken this quarter in terms of commercial and commercial real estate as well, the $4 million or so of losses, is that coming from residential real estate development as well or what's the composition of that this quarter?

Well, give us a second here.

I'd say the majority of it probably related - and I don't have the detail in front of me - but the majority of it probably related from residential development loans. Thomas Doheny - Sandler O'Neill & Partners: And then what's the overall size of the residential development and land portfolio?

Well, it's less than 10% of the loan portfolio. Thomas Doheny - Sandler O'Neill & Partners: Okay. And that includes land for the purpose of residential construction?

Yeah, if you can put together sort of the onesie , twosie residential construction loans that we do, land that we've lent on as well as commercial residential construction, which I would say would be the homebuilders with the bigger tracts, you add all that up, it's less than 10%.

Of the $4 million, about $1.5 or $1.6 related to commercial relationships. The remainder of it related to real estate oriented, and probably $0.5 million of it was a commercial real estate deal. Thomas Doheny - Sandler O'Neill & Partners: Okay. And going back to the loan portfolio again, that's 10% of the total loan portfolio?

Yeah, a little under 10% of the total loan portfolio. Thomas Doheny - Sandler O'Neill & Partners: Great. I appreciate it. Thanks.

That's it?

There are no further questions at this time. Are there any closing remarks?

Well, we thank you all for participating. Just as an aside, I was talking to an old-time banker the other day and we were talking about this particular credit cycle and how severe it really is and where we stand and he said, "You know what? This is one of those, you just keep your head down, you do the right things, and you just want to come out of it as a strong survivor." And I think that's what we've been planning to do for a couple of years and that's what we're trying to do here. Not trying to have to go out and raise a bunch of equity to bail us out. We're trying to avoid the very large losses that are being experienced across the board in the industry itself. I think this is the middle year or the part of the year that's the perfect storm. We're going to [inaudible] plus increase credit costs. I think that during the course of this year you're going to see some of that, but I think for us hopefully you're going to start seeing that fade. And as we uncork our growth initiatives and free up some room on our balance sheet, hopefully the earnings will start coming along. I mean, that's what - we've [iterated] this plan to everyone who's listened for the past couple of year. This is the hard part of it right now. And our staff, our people here, understand it. It's been well communicated to our people. And many of them have been through credit cycles before maybe not to this severity - but we're cautiously optimistic that our plan will pay off and that we will come out of this much stronger. Anytime - it's going to be a battle, but we're up for it. I appreciate everybody taking the time, and if anyone has additional questions you know you can feel free to call any of the three of us - Mr. Stoehr, Mr. Dykstra or myself. We look forward to hearing from you. So thank you, and we'll talk to you soon.

This concludes today's first quarter 2008 earnings call. You may now disconnect.