Decreases in net interest margin ratio during the three and six months ended June 30, 2012, as compared to the same periods in 2011, were due to lower outstanding loan balances and lower yields earned on the Company's loan and investment portfolios, which were partially offset by reductions in the cost of interest bearing liabilities combined with a shift from higher-costing savings and time deposits to lower-costing demand deposits.
Non-interest income increased during the three and six months ended June 30, 2012, as compared to the same periods in the prior year and the three months ended March 31, 2012, primarily due to increases in income from the origination and sale of residential mortgage loans. While refinancing activity represented 59% of the Company's residential loan origination activity during second quarter 2012, new loans for home purchases increased 68% over the prior quarter and 41% from second quarter 2011.
Other income decreased during second quarter 2012, as compared to first quarter 2012 and second quarter 2011, primarily due to fluctuations in earnings on securities held under deferred compensation plans. Decreases in earnings on securities held under deferred compensation plans were partially offset by a $581 thousand gain on the sale of a bank building during second quarter 2012.
|(Unaudited; $ in thousands)|
|For the Three Months Ended||Sequential Quarter % Change||Year Over Year % Change|
|June 30,2012||March 31,2012||June 30,2011|
|Salaries and wages||$||21,640||$||21,564||$||20,554||0.4||%||5.3||%|
|Furniture and equipment||3,189||3,138||3,129||1.6||%||1.9||%|
|Outsourced technology services||2,179||2,266||2,212||-3.8||%||-1.5||%|
|Other real estate owned ("OREO") expense, net of income||1,806||1,105||2,042||63.4||%||-11.6||%|
|FDIC insurance premiums||1,601||1,595||1,629||0.4||%||-1.7||%|
|Mortgage servicing rights amortization||817||895||671||-8.7||%||21.8||%|
|Mortgage servicing rights impairment (recovery)||52||(868||)||27||106.0||%||92.6||%|
|Core deposit intangibles amortization||355||355||361||0.0||%||-1.7||%|
|Total non-interest expense||$||57,299||$||57,440||$||54,192||-0.2||%||5.7||%|
|For the Six Months Ended||Year Over Year% Change|
|June 30,2012||June 30,2011|
|Salaries and wages||$||43,204||$||40,757||6.0||%|
|Furniture and equipment||6,327||6,349||-0.3||%|
|Outsourced technology services||4,445||4,453||-0.2||%|
|FDIC insurance premiums||3,196||4,095||-22.0||%|
|OREO expense, net of income||2,911||3,753||-22.4||%|
|Mortgage servicing rights amortization||1,712||1,478||15.8||%|
|Mortgage servicing rights impairment recovery||(816||)||(320||)||155.0||%|
|Core deposit intangibles amortization||710||723||-1.8||%|
|Total non-interest expense||$||114,739||$||107,150||7.1||%|
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