As a result of continued account growth over recent periods and increased customer activity, deposit fees and other service charges were $6.3 million in the second quarter of 2012, compared to $5.9 million in the preceding quarter and a 10% increase compared to $5.7 million in the second quarter a year ago. Significant homeowner refinance activity contributed to strong revenues from mortgage banking activities, which increased 8% to $2.9 million in the second quarter of 2012, compared to $2.6 million in the immediately preceding quarter. Income from mortgage banking operations was $855,000 in the second quarter of 2011.
“Operating expenses declined for the second quarter compared to the preceding quarter and the second quarter a year ago, largely due to lower costs associated with the real estate owned portfolio, particularly valuation adjustments, and a reduction in our deposit insurance premiums,” said Grescovich. “We believe credit costs, including REO expenses, will continue to decline as we continue to resolve remaining problem assets.”
Total other operating expenses (non-interest expenses) were $35.7 million in the second quarter of 2012, compared to $37.9 million in the preceding quarter and $40.3 million in the second quarter of 2011. In the first six months of 2012, total other operating expenses were $73.6 million compared to $78.4 million in the first six months of 2011. The decrease was largely a result of decreased costs related to real estate owned and FDIC deposit insurance.
Balance Sheet Review“Loan balances declined modestly compared to the previous quarter primarily as a result of the impact of refinancing activity on residential mortgage loans and further reductions in commercial construction and land development loans. Aside from seasonal increases in agricultural loans, net loan originations and credit line utilizations have remained modest, and a bit disappointing, as the weak economy continues to temper loan demand by both businesses and consumers. We expect a continued challenging economic environment going forward as businesses and consumers maintain a cautious approach to spending and borrowing,” said Grescovich.