Welcome everyone to the Bank of the Ozarks fourth quarter 2008 earnings release conference call. (Operator Instructions) Ms. Blair, you may begin your conference.

Good morning, I’m Susan Blair, Executive Vice President in charge of Investor Relations for Bank of the Ozarks. The purpose of this call is to discuss the company’s results for the fourth quarter and full year of 2008 and our outlook for upcoming quarters. Our goal is to make this call as useful as possible in understanding our recent operating results and future plans, goals, expectations, and outlook. To that end, we will make certain forward-looking statements about our plans, goals, expectations, beliefs, estimates, and outlook for the future, including statements about economic, housing market, competitive, credit, unemployment and interest rate conditions, revenue growth, net income, net interest margin including our goal of maintaining net interest margin at or near the 4.52% level achieved in the fourth quarter of 2008, net interest income, including our goal of achieving record net interest income in each quarter of 2009 non-interest income, including service charge, mortgage lending, and trust income, and BOLI life benefit claims, non-interest expense, our efficiency ratio, asset quality, including expectations for our net charge-off ratio, our allowance for loan and lease losses to total loans and leases ratio, and our other asset quality ratios, loan, lease, and deposit growth, and changes in the volume, yield and values of our securities portfolio. You should understand that our actual results may differ materially from those projected in the forward-looking statements due to a number of risks and uncertainties, some of which we’ll point out during the course of this call. For a list of certain risks associated with our business, you should also refer to the forward-looking information caption of the management’s discussion and analysis section of our periodic public reports, the forward-looking statements caption of our most recent earnings release, and the description of certain risk factors contained in our most recent annual report on Form 10-K, all as filed with the SEC. Forward-looking statements made by the company and its management are based on estimates, projections, beliefs, and assumptions of management at the time of such statements and are not guarantees of future performance. The company disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information, or otherwise. Now let me turn the call over to our Chairman and Chief Executive Officer, George Gleason.

Thank you for joining us today, we’re very pleased to have you on the call. In the quarter just ended we achieved records in net income and diluted earnings per share for the third consecutive quarter. This helped up achieve our eighth consecutive year of record net income. These record quarterly and annual results are particularly gratifying because they were achieved in the midst of a very challenging and truly extraordinary economic environment. Our success in 2008 was in large part a result of our ability to capitalize on many of the opportunities created by 2008’s dynamic economic conditions while at the same time effectively addressing many of the challenges we encountered as a result of those same economic conditions. The year 2008 was a year of both great challenges and great opportunities all at the same time. In our conference call last January we stated that one of our important goals for 2008 was to get back on a record quarterly earnings pace. We achieved that goal in the second, third, and fourth quarters of 2008. In the quarter just concluded we did this by achieving record quarterly net interest income for the eighth consecutive quarter, improving our net interest margin for the fifth consecutive quarter, achieving record trust income and a record efficiency ratio. We have a lot to talk about today so let’s get to the details. Net interest income is our largest source of revenue. In the quarter just ended net interest income accounted for almost 90% of total revenue compared to 84% of our total revenue for the full year of 2008. The increased dominance of net interest income in our fourth quarter revenue results is due to three factors. First we experienced exceptional expansion in our net interest margin in the fourth quarter. Second…

(Operator Instructions) Your first question comes from the line of Matt Olney - Stephens Inc.

Did you provide guidance on levels of NPAs and non accruals in 2009?

We did not, the only thing I said on that is that we wouldn’t be surprised to see one or all of those four asset quality ratios increase. We did give guidance on charge-offs at an expectation of 70 basis points of loans and leases plus or minus. But I think the important guidance and I think it is a very good guidance is within the relevant ranges that we consider plausible for growth in nonperformers and charge-offs we still think that we can generate a good level of net income and very possibly, very probably even record levels of net income in each quarter. We see 2009 as providing more asset quality challenges because obviously in the fourth quarter the economy took a significant step down and that’s effected a lot of people. Read any newspaper in the country and that’s very evident. But at the same time our revenue has grown in a very robust sort of way and our allowance has grown very significantly so we think we’re very well positioned to effectively manage through any challenges that the economy presents.

As far as the jump in delinquent credits during 4Q can you give some more details in terms of location.

That’s primarily due to two credits, and one of those credits is in Texas in the Metro Dallas area. It’s a $20 million credit so obviously that created a 100 basis points of the past dues right there. It’s a credit in which we have about a 65% loan to cost basis. We’ve got I think $20.2 or $20.3 million loaned. The customer has almost $11 million invested cash equity in it. At the time we originated the loan it was a 65% loan to value and 65% loan to cost transaction. In just the last few weeks we’ve had two appraisers reappraise the project and one appraiser on the low side each gave a value range but taking the low value from each appraiser, one would indicate a 64% loan to value currently, one would indicate an 86% loan to value. So if you average those the assumption is 75% loan to value. This customer a very big national player in their sector and has just simply run into problems on a lot of other projects that has rendered them unable to make a payment. They went 30 days past due on the 31st day of December so they just got into the ratio about one day. The equity sources on this deal have also gotten into trouble elsewhere and as a result they are not stepping forward to continue to make payments so the loan went 30 days past due on the last day of the year. Now this, to give you an idea of the conservatism of our practices, we are told by this borrower that all of the other banks which are dozens of other banks that they deal with across the nation on a couple of hundred projects, we’re told that every other bank that…

So it doesn’t sound like any of the 4Q charge-offs we saw this quarter were related to any of those projects.

They were not. The 4Q charge-offs rose because of some interesting reasons that honestly are probably, I know that everybody talks a lot about our big construction and development book but the 4Q charge-offs included some of that as they have for all quarters but the real significant increase in the 4Q charge-offs were not related to that. As you know the automobile sector is under considerable stress and we’ve got a small portfolio of loans where we financed owner occupied automobile dealerships. We put three of those loans on non accrual in the fourth quarter. We had a GM dealership that’s a 60 plus dealership and a been a long, long time relationship in Arkansas with one of our banks. They got their franchise pulled. They’re in one of our small rural communities, they got their franchise pulled. We have a Mitsubishi dealership in South Carolina that the guy simply was not able to be profitable. That dealership is closed. And then we had another dealership here in Arkansas that we put on non accrual in the fourth quarter. The property has been vacated as well. So the stress in the auto sector caused us some distress there in regard to non accruals and some, in the case of the one dealership will have a charge-off on that. The other properties we think we’re in at something like a 60% to 70% loan to value on them. Those should not be issues and we’re working through those things fairly quickly. Another thing that contributed noticeably to our Q4 charge-offs relates to the poultry industry and our real estate book we have loans, probably $10 to $20 million to various people that grow chickens and turkeys and as you know the poultry producers, the big integrated companies are having serious…

Your next question comes from the line of [Brant Creese] – Unspecified Company [Brant Creese] – Unspecified Company : On some of the securities that you bought during the quarter could you talk a bit about the yield on some of those and the duration of the securities because it looked like you got a pretty nice lift in the yield on the tax, looks like they picked up about 300 basis points this quarter.

In the vast majority of those securities are municipal housing authority bonds and the underlying bonds are Jennie Mae, Fannie Mae, Freddie Mac, VA, FA, or USDA rule development guaranteed mortgages. All of the mortgages underneath those credits are guaranteed and that’s almost all of the 80% AAA that I talked about. I think I said 6% or 8% was AA and that was almost all of that AAA and AA. Most of these housing authority bonds are older origination. There are a few of them that are newer but most of them are older originations, 1998, 2000, 2001 originated mortgages and these bonds have been sitting out there for quite a while. Basically what we bought is the pack structure, if there was support tranche type structure. A lot of them are just straight mortgage pass-throughs. And we just found a gigantic aberration in the market in October and November on these things. At that time in October and November a Jennie Mae was trading in the low five’s, Fannie and Freddie mortgage-backed securities were trading in the mid to upper five’s and we were buying, and that’s new origination stuff, we were buying this very seasoned stuff a lot of which was in pack structures and we were buying it to yield a six to a, at deep discounts to yield a six plus yield, probably on average about a 6.25, 6.50 yield to the absolute final maturity. Assuming that there was never a payment on any mortgage and you went all the way, 20, 15, 30 years to the absolute final and with any sort of reasonable prepayment speeds, we were generating yields in the seven, eight, nine’s on some of it. So we just found a situation where you could basically buy Jennie, Fannie, Freddie, FHA,…

No. I’ll explain that to you. I’m not quite sure why this is the case but in December I think we recognized $64,000 of discount accretion on the municipal portfolio and if you divide our total discount accretion by $64,000 that’s like a 35 year amortization of that discount accretion so it seems to us that our third party processor who processes our securities portfolio took an extraordinarily conservative view because the average maturity of the bonds, the absolute final maturity, and none of them will reach final maturity, is not 35 years. Its more probably in the 20’s or something. So we are expecting significant potential to accelerate that discount accretion and I’ll tell you we’ve not budgeted that in the guidance I gave today because who knows how that works but we’ve assumed in the guidance I’ve given today, we’ve assumed a continuation of a $64,000 a month discount accretion which is frankly impossible because if you did that the bonds would all be paid off and you’d still have discount on the books. The other thing I would tell you of interest about our discount accretion and to show you our conservative mindset, when we received from our servicer, our discount accretion on our taxable CMO portfolio in December the first run showed $2 million of discount accretion and we’ve only got $8 million on the books and the assumptions that they were running that off of, if you use the [aspill] method of calculating prepayment speed and so forth, and we went back to our third party servicer and said that’s absurd and they just said that’s what the [aspill] method produces and we said we’re not going to report that as income, that’s ludicrous. So we went back and took all of the people who…

I don’t know what else I can tell you. That’s the income off of it. And that’s the discount accretion we took and the rest of it is just coupon yield income. That’s why we’ve given the guidance that we think going forward in 2009 our net interest margin is going to be in or around that 452 level or slightly or higher.

Your next question comes from the line of David Bishop – Stifel Nicolaus David Bishop – Stifel Nicolaus : In terms of getting back to the outlook for loan growth next year, in terms of projects you’re still funding out there or segments you’re still funding, what looks enticing our where do you see the growth coming from.

Well a couple of deals we closed in the fourth quarter are, we closed a couple of retail deals and I know everybody is worried about retail deals but one of these was an existing project that’s already in place and has in place the tenants and so forth. There are several more buildings and pads to be done and basically we’ve got a stabilized project that’s producing good debt service coverage and they want to develop one more pad or one more building at a time and we’re going to let them do that as they get each building 50% leased. So when we did the math on that if they started every building in the project that remains to be built and they had then only 50% each preleased which is probably won’t happen, they’ll probably build one at 50% lease it up and then build another one. But if they started every one simultaneously we’d still have about a 90-something basis point debt service coverage on it. So those are sort of projects you can do. You’ve got to establish property with a good tenant base and a good location and its not fully built out. There are more phases or buildings to be built and you get a good chunk of preleasing on each one and keep building and that makes it a very low risk sort of project. We’re doing some apartment deals with high equity contributions. We used to do apartments with 20% cash down and then it got to be 30% cash and we’re working on, we approved a couple of apartment deals in the 35 to 40% cash range that got closed last quarter. We’re working on one now that’s a 50% cash equity deal so I think we will find retail, industrial, hotel, apartment, I think there’ll be a variety of projects that we can do that have either established income streams on them or sufficient cash equity that it will allow us a very wide margin for error from the economy and still have a quality project. David Bishop – Stifel Nicolaus : Deposit pricing, what are you seeing across your markets there.

Deposit pricing is coming down sharply. I think our cost, our deposits, or our total cost of funds came down 34 basis points in Q4 from Q3 and the cost of funds is just dropping rapidly. I think its going to continue to happen. I think a lot of people were asleep at the switch and thought that before the fed wasn’t going to go all the way back down, and they kept paying robustly high prices for deposits. Deposits were actually down 37 basis points in Q4 versus Q3 and total cost of funds were down 34 basis points. So we see quite a bit of room to continue to lower our cost of funds going forward and a lot of the craziness is out of the market now. The guys that were doing the crazy high priced stuff seem to be choking on it now. David Bishop – Stifel Nicolaus : In terms of, you alluded to the FDIC insurance premiums, do you have the dollar amount paid this quarter.

I don’t have that. Its basically going to double. Slightly more then double in the first quarter. As a long-term committed member of the FDIC insurance fund we’re afraid that those costs are going to go up more and more in the future years because it seems like the FDIC is on the hook for a whole lot of loss exposure and a lot of these deals they’re resolving. So we think that’s a long-term upward moving cost item. Its currently running about $290,000 a quarter and it will more then double, so $600,000 plus.

Your next question comes from the line of [Stewart Quint] – Unspecified Company [Stewart Quint] – Unspecified Company : Could you update us as to your thoughts on the use for the TARP capital.

We received $75 million of equity from the TARP infusion. I will say again what I’ve said many times and that is we didn’t need it. We’re well capitalized without it. Obviously we’re very profitable and just had no absolute need for it. On the other hand we believe that it’s a relatively cost effective source of funds and gives us considerable flexibility. We delayed our decision to participate in the TARP really for two reasons. One we wanted to see as clearly as we could what if any strings were going to be attached by the Treasury or Congress or the administration, to receipt of the TARP money that might be offensive and at this point I don’t think that’s going to be a problem at least for the initial guys that got TARP although it will be interesting to see where that develops. And the second thing we wanted to see is could we get enough earning assets in place on the books before we pulled the trigger and made a decision that we could believe that we could absorb the cost of that and continue to put up a positive earning stream for common shareholders over the next few quarters. And certainly the investments that we were able to find early in the quarter put us in an excellent position to do that. With that said what we’re going to use the money for is obviously we’ve already used a chunk of it to buy investments and are continuing to use some of it to buy investments although I think our investment portfolio probably won’t grow much from year-end. I think payoffs will pretty much mitigate any further growth. We hope to use it to support loan growth and we hope that there will be an opportunity to acquire the deposit bases and physical franchise of some failed institutions from the FDIC on cheap terms that would make long-term sense to the growth of our company.

Your next question comes from the line of [Dean Armgar] – Unspecified Company [Dean Armgar] – Unspecified Company : I know that there’s been a lot of the BOLI issue and the increase in tax exempt securities, I just wanted to ask about the tax that you showed on the income statement this quarter of only $655,000, could you just elaborate, explain why it was so low and what’s it likely to be going forward given the larger tax exempt portfolio you have.

The reason it was so low is because we had a big chunk of income from the BOLI. We had a huge amount of tax-exempt income in the investment securities portfolio and the higher level of provision was either for current or deferred purposes deductible and the impairment charges and the loss on the bonds were deductible. So our extra expense and unusual expense items were all deductible. The extra income and the unusual income item being the BOLI were all tax exempt. So that led to a very low lever of tax. We’re projecting an effective tax rate for 2009 in the 25% to 26% range. The Q4 number was a bit of an anomaly just because of the mix of the income and so forth and the mix of the expenses in the quarter. [Dean Armgar] – Unspecified Company : On the loan growth when we talked earlier you mentioned about how you were well positioned, the bank is strong, you’re open for business, a lot of the competitors were impaired, loan terms were coming back to what they normally are, I’m just trying to get a sense of with the situation out there is it you’re being less likely to lend or has the demand gone down or obviously—

I think demand has gone down and to put some perspective on that just totally a personal comment here, I’ve got three personal friends all very well to do, financially well off individuals that have all put their plans to build a new house on hold just because they’re concerned about this economy and what its doing to their investment portfolios and so forth. There’s much ado in Washington about, oh banks took the TARP money and they’re not lending. Well the economy is contracting and we see it every week in the unemployment numbers and month to month in the employment data and all sorts of other data. The economy is just shrinking and when you have that kind of economic environment people are putting projects on hold and so forth. There are just a variety of reasons that projects that are viable, feasible could be done are not getting done just because people are saying, I’m just going to put this on hold. We were working on a transaction that we spent a lot of time on in the third quarter and was supposed to close early in the fourth quarter that was basically we were going to loan 50% of the cost of acquiring a piece of property and the customer was going to put in 50% plus three years of interest in the deal. If you factored in the interest, we were basically going to be about a 40% loan to cost and the customer just decided to put that deal on hold and is going to try to renegotiate their purchase price on the property because they said in this economy ought to be able to retrade that deal and get a better price on it. We had another deal that we were doing for…

Your next question comes from the line of Brian Martin - Howe Barnes Hoefer & Arnett Brian Martin - Howe Barnes Hoefer & Arnett : The OREO this quarter its about 40% of nonperforming, could you give a little color as far as what’s in that just as far as future potential write-downs if need be. Is it large credits, is it small credits, is it real estate, is it--

Obviously its OREO so its all real estate by definition and there’s not anything particularly large in there. There are quite a few houses in there. There are a very small handful of lots. There’s some raw land in there. There’s a convenience store in there. Its just a mish mash of things that you acquire. We’re continuing to sell that stuff. The oldest piece of OREO we got on the books today is a July 2007 piece so its eight months old and the vast majority of it was put in there within the last three to six months. So we’re selling a lot of that stuff. We’re moving pieces of it every month and getting good values for it. It just takes time to sell stuff.

Your next question comes from the line of Kevin Reynolds – Unspecified Company Kevin Reynolds – Unspecified Company : I was curious if you could give a break down of the loan portfolio by state as of year-end and then also any update or thoughts on branch expansion. Do you put things on hold with the serious recession our there going forward or are there opportunities now to actually open new stores as some of the competitors peel away.

On the statewide distribution and this is distribution by the state in which we originated the loan, where our offices are we’ll give you in the 10-K Annual Report, you’ll get the distribution by location of collateral on various parts of the portfolio. But Texas accounts for a little over 29% of the portfolio, North Carolina just under 5%, and Arkansas 66%. And on the deposit side, Arkansas is just under 87% of deposits and Texas is just over 13% of deposits. So Texas is continuing to grow both the loan book and the deposit book and Arkansas is continuing to have a little shrinking percentage wise and North Carolina is pretty much holding its own. On branch expansion I think we’ve got two branches that we will open next year, one is in downtown Little Rock, and another company we bought the old Federal Reserve building downtown because we don’t have a branch in the main city part of downtown Little Rock. Our downtown branch is sort of on the edge of the downtown area. We’ll open that probably in the second quarter and then late in the year we’ll open one branch in Allen, Texas. And we do have an operation center building that’s nearing completion in Ozark, Arkansas but its not a branch. We’re only going to add two branches next year and we’ve got that branch on the periphery of downtown Little Rock. We’re going to run the two branches downtown dual for a while. We will see what the business volume at our existing branch is and if that branch is not sufficient after we open the other branch to justify continuing one branch we would close one down there and sell that property. Very small expansion, you’re right. With the economy as weak as it is and all the challenges that the industry is facing and our economy is facing we just think its not the time to go out and build a bunch of new branches. Kevin Reynolds – Unspecified Company : As you talked about Texas, roughly its approaching a third of the loans originations there with oil prices falling as they have, I know you’re not a big energy lender or not in the Houston or down along the coast, what do you hear on the ground in Texas as far as the psychology today versus three months ago, six months ago and is it something that’s starting to become worrisome to the average person on the ground in Texas.

I think the Texas association with oil and gas is overstated. Now certainly there’s a significant oil and gas business in Texas, but its not near the preponderance dominant piece of the economy like it was 20 or 30 years ago. That’s become a highly diversified state and because of Texas very pro business environment, low cost of living, and favorable climatic and other environmental conditions, you’ve had massive numbers of companies move their national headquarters to Texas. You’ve had many that hadn’t moved their national headquarters move substantial regional headquarters. If you just look at the list of Fortune 500 companies where they’re headquartered and look at that 20 years ago versus today you’ll see Texas having massive gains in that regard and significant diversification. Probably 20 years ago I would guess that almost every Fortune 500 company in Texas was either an oil company or an oil services company. That’s a broadly diversified economy down there. Certainly the Texas economy, even the Metro Dallas economy is probably one of the best in the country has had some setbacks but along with everybody else in this economic slowdown. But its still I think pretty good. I’ll cite you a couple of statistics in support of that. Of course we don’t know what the last state in MSA level unemployment data was but in November when the national unemployment level was 6.8% North Carolina was high at 7.9%. Arkansas was low at 5.7% and Texas was even lower at 5.1%. I was looking at an article in Fortune magazine about a month ago, December 22 issue of Fortune, and they projected home prices for Dallas, Irving area and the Fort Worth, Arlington area, Dallas, Irving next year is projected that home prices are going to decline 1.2%, Fort Worth Arlington 0.4% decline. Little Rock is projected to decline 1.6% and Charlotte 5.9%. You never like to see home prices decline or unemployment rise but if you look at those numbers for unemployment and you look at those numbers for home prices nationally there are not many places that are better to be then where we are in Arkansas and Texas, and Texas is better then Arkansas and Arkansas at this time is better then North Carolina. So that goes back to the comment early in the call it’s a challenging economy nationally. Its gotten so deep so long now in this economic slowdown that no place is immune from it. But I’d still rather be in Texas and Arkansas and don’t feel too bad about being in North Carolina as opposed to a large number of other places in the country. I still think we’re in relatively good shape as things go.

Your next question is a follow-up from the line of Matt Olney - Stephens Inc.

I know that you mentioned in the past that the loan balances in the market in Northwest Arkansas will continue to contract, could you give us an idea of what we should expect in the 10-K with the loan balances in that area.

I don’t know that data. I wish I could. I’m confident that they did [inaudible] quarter. I do not know the magnitude. I would tell you that we’ve commented for several quarters that we have been building our allowance for loan and lease losses, doing a little reserve building because of uncertainty about the economy in general and Northwest Arkansas in particular is the way we’ve said it and we’ve said it that way for very specific reasons that we think there are more issues to come up there. We did in the fourth quarter we reappraised a large number of the pieces of collateral that support a lot of our loans up there and these are loans that are performing loans, they’re paying, they are typically not past due but we also know that if they became nonperformers we might have some exposure on them or we were concerned we might have some exposure so we went through in the fourth quarter and paid for reappraisals on a number of those properties. That was one of the factors that led to a further increase in our allowance for loan and lease losses and again these are predominantly performing loans but we know if they became nonperforming in that market with the stress that is there that you would have some losses on them. So what we did is did that and when we did that that suggested we probably ought to keep building the reserve and we have set aside specific reserves for those loans even though they are performing and paying and not past due and very likely will never become past due in many cases. But that resulted, our unallocated allowance at September 30 was $7.2 million and our unallocated allowance at December 31 was $6.7 million so our unallocated allowance actually dropped $500,000 even though we built the reserve of $4 million and change in the quarter. But the reason for that is we allocated several million dollars to, kind of in our head we sort of, it was in unallocated but we thought we’re going to need that for Northwest Arkansas and we allocated it specifically based on reappraisals of that market. So its still a challenging market but I think we’ve got a good handle on what we’ve got there and are continuing to work through it pretty well.

So based on the results of the reappraisals recently and just your overall opinion how has the market changed in Northwest Arkansas the last three months since we last spoke.

Continued to decline moderately.

Any more so then the other markets you’re in.

I would say probably yes. Probably slightly more so then other markets and its just, there’s just the continued disequilibrium of supply and demand up there and what’s ironic about that is the unemployment rate in November in that market was 3.9%. It’s the lowest unemployment rate of any of the major markets that we’re in but and we’ve talked about that its still creating jobs albeit very slowly but there is just such a tremendous oversupply that its just taking a long time to work through it and the longer it takes to work through it the more damage is being done to prices. I mentioned in my remarks that we reevaluate our OREO and foreclosed assets every quarter and we took almost $500,000 of additional [write-downs] because of changes in value, considerable piece of that was in Northwest Arkansas. It’s a tough market up there.

Revisiting the TARP discussion after paying the deferred dividend and accounting for the warrants and the other expenses what kind of effect do you think the TARP capital will have on your bottom line in 2009.

I think we’ve got that factored in in our guidance. The cost of it for the first five years is going to be about 6%. I had originally thought it was going to be more line 8% or 9% but when we priced out the warrants and allocated the discount on the warrants between the preferred stock and the common stock warrants and so forth you’ve got your 5% interest you’re paying on the preferred and about a percent of discount accretion related to that discount which is roughly equivalent to the value of the warrants using the [inaudible] valuation model. So its about a 6% cost and we think with the robust growth in our earning assets and the robust growth in our margin which I’ve already talked about which we think is sustainable and can be even possibly improved further that we’ll absorb that cost of the preferred stock. We’ll absorb higher credit cost next year and still be in a position to put up very good to record earnings on a quarter to quarter basis. And I will comment, we’re talking a lot about credit cost and I said we’re expecting budgeting about 70 basis points of credit cost, we’re of course budgeting growth in the allowance for loan and lease losses for 10% estimated growth in the loan portfolio and I commented that we expect they’ll probably because of deteriorating economic conditions probably be a little more reserve billing next year of 10 to 15 basis points, if you do that math on that that’s $22 million or so in estimated allowance, in provision. And we had $19 million this year. So even though we’re projecting a much higher level of credit losses next year it really doesn’t knock our provision expense up that much because this year we raised our allowance from 105 to 1.46% of loans so we had a big reserve building this year and that means that even with noticeably higher credit cost and charge-offs next year that it really doesn’t raise our provision expense very much.

Your next question comes from the line of Andrew Stapp - B. Riley & Company, Inc Andrew Stapp - B. Riley & Company, Inc: Could you tell me what the percentage of construction loans to total loans was at year-end.

It was 34.4% construction and land development, that’s up 1.6% from September 30. That pretty much was offset by a decline in multifamily from 4.9% of the portfolio at September 30 to 3.0%. I mentioned in the prepared comments that we had a couple of large apartment deals pay off that went secondary market on us in Q4. Andrew Stapp - B. Riley & Company, Inc: Do you have any leads to sublease your former headquarters.

We do, we’re in pretty late stage negotiations with a potential tenant who would take all of the building other then the retail branch space in it and we’ve got two pretty firm prospects that are each potential takers of a floor in the building and it’s a three-storey building. So if our whole building user fell through, the two other potentials if we could land both of them, we would have about 80% of the space other then the branch space leased. And I will tell you we didn’t put any revenue from that in the budget so we’ve assumed that’s a zero revenue item and it’s a [debt] cost to carry for the full year of 2009. So if we get something in there that would actually reduce our occupancy expense. We show rental income on facilities as a credit in the occupancy expense line item. Andrew Stapp - B. Riley & Company, Inc: Salaries and benefits came in lower then I expected, anything going on there.

We just don’t want to overcharge you for what we’re doing down here. Nothing unusual there at all. Obviously I would have loved to have had that come in a whole lot higher because we had a lot more income to pay bonuses with. We didn’t achieve our target level of income that would have triggered us paying our general cash bonus program so I wish that could have been otherwise but it is what it is. Andrew Stapp - B. Riley & Company, Inc: Do you hold any trust-preferred securities.

We have a $1 million trust preferred security that’s an insurance trust preferred. We at one time had a pretty good portfolio of bank trust preferred securities and those things ran up in value and we sold them and booked a pretty good profit, decided that the risk reward ratio was no longer favorable and we sold them, we booked that income about two or three years ago and the only one we kept was this insurance trust preferred and it’s a pooled $1 million trust preferred and its performing, paying, there’s not deferment on it. Looks like its going to keep performing and paying so we don’t think that’s an issue. Andrew Stapp - B. Riley & Company, Inc: The first $20 million loan that you mentioned went just beyond a day beyond 30-days past due, I presume that’s construction loan, was it commercial or residential oriented.

It’s a land, big land piece right near downtown Dallas. It’s a PUD so you would expect that to be apartments, retail, condo, office, it’s a multiuse building.

Your next question comes from the line of Joe Fenech – Sandler O’Neill Joe Fenech – Sandler O’Neill : I don’t want this question to come across the wrong way because what I think you’ve been able to do in the securities portfolio is certainly very impressive, you’ve been able to do it successfully for a long time but my concern is with the lack of visibility and predictability of some of this stuff. I know things are very volatile but speaking for myself I was shocked at the margin expansion you put out this quarter and I feel like I have no way of projecting whether or not you can sustain that so it makes modeling your earnings very difficult. If you look at your stock today I know the group is down now but you’re down almost 8% and you handily beat consensus. It doesn’t seem on the surface that you’re getting paid for the perceived risk you may be taking in the investment portfolio in an area frankly that doesn’t seem connected to your core banking business.

Our business is to make money for shareholders. And we basically have a deposit gathering franchise that gathers the deposits and makes loans and investments with those deposits and whether or not our earning asset book is all loans or a mixture of loan and deposits is going to be based on the relative risk and rewards of each scenario. For example when we found this anomaly between tax exempt mortgage-backed securities and taxable mortgage-backed securities in October and what caused that was there were a bunch of hedge funds and other investors that were having to liquidate large portfolios because of problems in their business and liquidity issues and because they were having to liquidate these large portfolios you had a bunch of this product being put on the market and the normal buyers weren’t there. Banks wouldn’t look at it because it was non-[BU] paper and CMO traders didn’t look at it because they don’t have the analytics and a CMO trading desk just never looks at it. So it was just an anomaly. And we looked at it and said, my gosh this while its non-bank qualified 100% [TEFRA] paper its AAA you can look at the analytics, you can look at the performance of these portfolios, you can look at the age and seasoning of them, you can look at the demographic to the market, this stuff is easy to underwrite from a credit perspective because you’ve got a ton of data on it and I’m getting yields that are a lot bigger then I can get on loan yields with lots less risk in a liquid instrument. Why would I say well gosh I’m a bank, I oughta just take deposits and make loans when I can make more money buying these couple hundred million…

Number one, and I say this in all due respect and I like you, we’re friends, but you are making a comparison now I’m going to make the contrast. You have a Lehman Brothers, a Bear Stearns, and a Morgan Stanley and a Merrill Lynch and all these guys that number one are not very good credit guys. They’re just deal guys. And number two they’re funding this with a combination of short-term commercial paper and bank debt so they’re funding their balance sheet with highly volatile borrowings. We’re funding this with retail deposits, FHLB advances, you’ve got the Federal Reserve back up, you’ve got broker deposits, there’s a litany of well developed deposit sources that we have and if you look at our cost of funds, you’ll realize boy those are well developed deposit sources and they’re doing this with cheap cost of funds and a stable diverse source of funds. So number one, we don’t have the liquidity issues that those guys had. Number two we are credit people and those guys are deal guys and we’re looking at the credit on this and I’ve been doing credit for 30 years and this is good credit. And these are great yields and great returns on that credit. Number two the stuff we’re buying at $0.70 and $0.80 and $0.90, they were probably buying some of the same stuff, and when the stuff was issued it was coming out at 106 and 107 cents. This stuff was par or premium paper when it was originated and we’re buying it at deep deep discounts and we’re buying the good stuff and I don’t know who’s buying the garbage that they had on their books but this is high quality good credit stuff. We’ve underwritten credit, we’ve understand the credit, we’re…

Well you included the OTTI charge— Joe Fenech – Sandler O’Neill : I’m sorry, the reverse, that’s the rationale for including the OTTI charge as part of co-operating earnings.

But I would argue with you that the BOLI benefits ought to be included on the same basis as the OTTI charge simply because if you’re going to follow your logic the cost of carrying that BOLI has been in my earnings for seven years and at some point we’re going to get those death benefits, and I’ve paid the cost on it for seven years and I’ve got the benefits and using your analogy on the OTTI charge the BOLI ought to be treated the same way. We view our $0.54 earnings number as a core number. So just a philosophical difference and I appreciate and I understand where you’re coming from but I would note that I philosophically disagree with the way you handled that. Friends notwithstanding that.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Thank you very much, we appreciate you guys phoning in on the call today and your interest and support for our company. Thank you very much. We look forward to talking with you again in about 90 days. Have a great day.