The decrease in net interest and dividend income was largely due to a planned reduction in the size of the Bank's balance sheet. In Q3-12, total average interest-earning assets decreased by $245 million from Q3-11, reflecting decreases of $66 million in average loans and $179 million in average total securities and overnight investments. At the same time, average deposits and borrowed funds decreased by $222 million and $12 million, respectively, while average stockholders' equity increased by $13 million. The net interest margin benefited from an improved interest rate spread, partially offset by an $11 million decrease in net average interest-earning assets (due to a higher level of cash on hand). The spread increased by 20 basis points due to the steady reduction in rates paid on deposits and run off of higher-cost CDs and borrowings, largely offset by payoffs of higher yielding loans and calls of security investments, coupled with the re-investment of a large portion of these cash inflows into new loans and securities at lower market interest rates. Overall, the average cost of funds decreased by 46 basis points to 2.35% in Q3-12, from 2.81% in Q3-11, while the average yield on earning assets decreased at a slower pace or by 26 basis points to 4.48% in Q3-12, from 4.74% in Q3-11.Net earnings for 9mths-12 increased by $0.5 million over 9mths-11 due to a $4.0 million decrease in the total provision for loan and real estate losses and a $0.4 million increase in noninterest income, partially offset by a $2.2 million decrease in net interest and dividend income, a $0.8 million increase in real estate expenses, a $0.4 million increase in operating expenses and a $0.5 million increase in income tax expense.
Intervest Bancshares Corporation Reports 2012 Third Quarter Earnings Of $2.2 Million Or $0.10 Per Share
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