Quarterly operating expenses of $47.7 million (excluding acquisition expenses and special charges) were $3.4 million, or 7.7% above the third quarter of 2010, reflective of additional operating costs associated with the Wilber acquisition completed in early April, partially offset by a decline in FDIC insurance and core system processing costs.
Average earning assets for the third quarter of $5.74 billion were $867.4 million above the third quarter of 2010, and $80.4 million higher than the second quarter of 2011. Ending loans increased $396.1 million from September 2010, reflective of the Wilber acquisition. Total net loans were down $1.6 million from the end of June, comprised of $21.7 million of net organic loan growth offset by $23.3 million of contractual and other principal reductions in the acquired Wilber portfolio, including the disposition of certain impaired loans in the quarter. Solid results in consumer mortgage and installment products more than offset continued soft demand in business lending. In addition, a portion of the Company’s low-rate, longer-term mortgage originations continued to be sold into the secondary market during the quarter. Average investment securities were down $9.4 million from the third quarter of 2011, while cash equivalents of $240.1 million increased $63.0 million, creating downward pressure on the Company’s net interest margin during the quarter. Quarterly average deposits were $839.8 million higher than the third quarter of 2010 and 2.5% higher than the second quarter of 2011, including relationships acquired from Wilber, where customer retention efforts have been very successful. Average borrowings for the quarter of $832.5 million were consistent with both the second quarter of 2011 and the third quarter of last year. Quarter-end shareholders’ equity of $755.6 million was $139.8 million higher than September 30, 2010, and included the issuance of 3.4 million additional shares in conjunction with the Wilber acquisition. The Company’s net tangible equity to net tangible assets ratio improved to 6.79% at quarter-end, up 58 basis points from the end of last year’s third quarter.