At September 30, 2012, total assets were $507.3 million compared to $522.9 million at June 30, 2012. Net loans decreased $9.3 million, or 2.9%, to $313.2 million at September 30, 2012, compared to $322.5 million at June 30, 2012, due to reduced loan demand combined with normal paydowns on existing loans. Reduced loan demand is primarily the result of continued economic weakness in the Bank’s market areas.
Total deposits decreased $16.5 million, or 3.9%, to $407.4 million at September 30, 2012 compared to $423.9 million at June 30, 2012. Certificates of deposit decreased $6.9 million, or 4.1%, to $163.5 million while transaction accounts decreased $9.6 million, or 3.8%, to $243.9 million at September 30, 2012. The average cost of interest-bearing deposits for the three month period ended September 30, 2012 was 0.49% compared to 0.96% for the corresponding period in 2011. Certificates of deposit comprised 40.1% of total deposits at September 30, 2012 compared to 40.2% of total deposits at June 30, 2012.
The Bank continues to be well-capitalized under regulatory requirements. At September 30, 2012, the Bank's total risk-based, Tier 1 risk-based, and Tier 1 leverage capital ratios were 14.00%, 12.74%, and 8.68%, respectively, compared to 13.42%, 12.17%, and 8.23%, respectively, at June 30, 2012. At September 30, 2012, the Company had 6,629,753 common shares outstanding with a book value of $8.02 per common share.
Nonperforming assets totaled $24.7 million, or 4.87% of total assets, at September 30, 2012, compared to $25.2 million, or 4.82% of total assets, at June 30, 2012. Nonaccrual loans totaled $17.3 million at September 30, 2012 compared to $18.6 million at June 30, 2012. Nonaccrual loans with a current payment status represented approximately 64% of total nonaccrual loans at September 30, 2012. Foreclosed real estate amounted to $6.8 million at September 30, 2012 compared to $6.1 million at June 30, 2012. Net charge-offs for the three months ended September 30, 2012 were $391,000, or 0.48% of average loans annualized, compared to $963,000, or 1.01% of average loans annualized, for the quarter ended September 30, 2011. The allowance for loan losses was $5.8 million, or 1.80% of total loans, at September 30, 2012 compared to $5.9 million, or 1.78% of total loans, at June 30, 2012. The provision for loan losses totaled $300,000 for the quarter ended September 30, 2012, compared to $3.0 million for the quarter ended September 30, 2011. The adequacy of the allowance for loan losses is evaluated quarterly and adjusted as necessary to maintain an appropriate reserve for probable losses in the loan portfolio. In addition, the Federal Deposit Insurance Corporation and Tennessee Department of Financial Institutions, as an integral part of their examination process, periodically review our allowance for loan losses and may require the Company to recognize adjustments to the allowance for loan losses based on their judgments about information available to them at the time of their examination.
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