Balance Sheet Trends
Loans have increased $112.1 million (5.7%) from December 31, 2011 to $2.09 billion at September 30, 2012, in part due to the Company’s acquisition of Virginia Savings Bancorp, Inc. ($72.0 million). Excluding the Virginia Savings Bancorp, Inc. acquisition, loans have increased $40.1 million (2.0%) from December 31, 2011 to $2.01 billion at September 30, 2012. Increases in residential real estate loans of $36.6 million (3.9%) and commercial real estate loans of $34.5 million (4.7%) were partially offset by a decline in commercial and industrial (“C&I”) loans of $28.4 million.
Total average depository balances increased $68.1 million, or 2.9%, from the quarter ended June 30, 2012 to the quarter ended September 30, 2012. This growth was primarily attributable to deposits acquired from Virginia Savings Bancorp, Inc. ($81.8 million). Exclusive of this contribution, the Company experienced decreases in interest-bearing deposits ($6.6 million), time deposits ($4.4 million), and noninterest-bearing deposits ($3.0 million).
Income Tax ExpenseThe Company’s effective income tax rate for the third quarter of 2012 was 34.3% compared to 33.6% for the year ended December 31, 2011, and 33.5% for the quarter ended September 30, 2011. The effective rate is based upon the Company’s expected tax rate for the year ending December 31, 2012. Capitalization and Liquidity The Company’s loan to deposit ratio was 87.6% and the loan to asset ratio was 71.9% at September 30, 2012. The Company maintained investment securities totaling 14.3% of assets as of this date. The Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 50.1% of assets at September 30, 2012. Time deposits fund 32.0% of assets at September 30, 2012, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.