The effective tax rate for the second quarter of 2012 was 33.04 percent compared with 27.55 percent in the previous quarter and 29.12 percent during the same quarter last year. The lower effective tax rate in the first quarter of 2012 was due to a $2.7 million credit related to the early termination of leveraged leases. The lower effective tax rate for the second quarter of 2011 was primarily due to the release of reserves related to the closing of Internal Revenue Service audits.
The Company’s business segments are defined as Retail Banking, Commercial Banking, Investment Services, and Treasury & Other. Results are determined based on the Company’s internal financial management reporting process and organizational structure. Selected financial information for the business segments is included in Tables 13a and 13b.
The Company’s overall asset quality remained strong during the second quarter of 2012 and reflects the improving Hawaii economy. Total non-performing assets were $41.5 million at June 30, 2012, up slightly from $41.4 million at March 31, 2012. Non-performing assets continue to be impacted by the lengthy judiciary foreclosure process for residential mortgage loans. As a percentage of total loans and leases and foreclosed real estate, non-performing assets were 0.73 percent at June 30, 2012, down slightly from 0.74 percent at March 31, 2012 and up from 0.64 percent at June 30, 2011.Accruing loans and leases past due 90 days or more were $7.2 million at June 30, 2012, down from $10.1 million at March 31, 2012 and $7.8 million at June 30, 2011. Restructured loans not included in non-accrual loans or accruing loans past due 90 days or more were $31.1 million at June 30, 2012 and was primarily comprised of residential mortgage loans with lowered monthly payments to accommodate the borrowers’ financial needs for a period of time. More information on non-performing assets and accruing loans and leases past due 90 days or more is presented in Table 11.