Noninterest expense increased in the third quarter and first nine months of 2012 primarily due to the $601,300 one-time charge for the redemption of the $14 million fixed-rate subordinated debt. Noninterest expense for the third quarter of 2012 was $10.1 million, compared to $9.8 million for the third quarter of 2011, and $9.5 million for the second quarter of 2012. Noninterest expense in the first nine months of 2012 was $30.5 million, compared to $29.7 million in the first nine months of 2011.
Income tax expense for the third quarter of 2012 was $939,000, compared to a tax benefit of $2.5 million for the third quarter of 2011, and an income tax expense of $1.2 million for the second quarter of 2012. For the first nine months of 2012, the income tax expense was $3.1 million, compared to a tax benefit of $1.1 million for the first nine months a year ago. The income tax benefit for the third quarter and the first nine months of 2011 included a $3.0 million reduction of a partial valuation allowance on deferred taxes.
The efficiency ratio for the third quarter of 2012 was 68.69%, compared to 72.06% for the third quarter of 2011, and 66.70% for the second quarter of 2012. The efficiency ratio was 70.95% for the first nine months of 2012, compared to 73.60% for the first nine months of 2011.
Balance Sheet Review, Capital Management and Credit QualityHeritage Commerce Corp’s total assets increased 8% to $1.36 billion at September 30, 2012, from $1.25 billion a year ago, and increased 2% from $1.32 billion at June 30, 2012. The investment securities available-for-sale portfolio totaled $410.7 million at September 30, 2012, an increase of 32% from $312.1 million at September 30, 2011, and an increase of 5% from $389.8 million at June 30, 2012. At September 30, 2012, the securities available-for-sale portfolio was comprised of $334.9 million agency mortgage-backed securities (all issued by U.S. Government sponsored entities), $55.0 million of corporate bonds, and $20.8 million of single entity issue trust preferred securities.
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