The Company recorded income tax expense of $1.9 million in the fourth quarter of 2010 versus an $8.7 million income tax benefit in the comparable period a year ago.
Earnings Summary for the Year Ended December 31, 2010
The Company recorded net income of $11.4 million for the year ended December 31, 2010, compared to a net loss of $14.8 million in 2009. The improvement in net income in 2010 resulted from multiple factors, most notably a $26.6 million decrease in the provision for loan losses, increases in net interest income and non-interest income of $2.6 million and $6.7 million, respectively, and a reduction in operating expenses of $6.5 million.
The decrease in the provision for loan losses in 2010 versus the comparable 2009 period was due to several factors, most notably the disposition of lower-quality and non-accrual loans in the fourth quarter of 2009.The increase in net interest income was due to an 18 basis point widening of the Company's net interest margin to 4.21% in 2010 from 4.03% a year ago. The growth in non-interest income in 2010 resulted principally from a $2.5 million increase in net gains on sales of securities, a $4.0 million decrease in other-than-temporary impairment ("OTTI") charges on securities as the Company had no such charges in 2010 and a $440 thousand increase in income from bank owned life insurance. Deposit service charge income declined by $316 thousand in 2010 principally due to a lower volume of overdraft and other service charges. Total operating expenses decreased by $6.5 million or 13.4% to $42.0 million in 2010 primarily due to $4.0 million in write-downs of loans held for sale to their estimated fair value in 2009 and a $942 thousand decrease in FDIC and NYS assessment expenses in 2010. The decrease in FDIC and NYS assessment expenses resulted largely from the $730 thousand FDIC special assessment recorded in the second quarter of 2009. In addition, there was $740 thousand in expenses in the fourth quarter of 2009 related to the debt for equity exchange. Partially offsetting these improvements was a $793 thousand increase in marketing and advertising expenses due to an expanded corporate advertising and branding campaign undertaken in 2010.