Results of Operations
Net Interest Income
Net interest income was $16.3 million, up $1.6 million, or 11%, from the second quarter of 2012 and an increase of $4.3 million, or 36%, from the third quarter of 2011. Total average interest earning assets increased modestly from the prior quarter as higher mortgage production volumes resulted in a higher average balance of loans held for sale, partially offset by a decrease in cash and cash equivalents which was redeployed for loans held for sale production. Total average interest bearing deposit balances declined as a result of declines in higher-cost certificates of deposit, largely offset by an increase in lower-cost transaction and savings deposits. The net interest margin increased to 3.08% from 2.83% in the second quarter of 2012 primarily as a result of the repricing and conversion of maturing certificates of deposit and the recognition of accumulated interest collected on nonaccrual loans that were paid off in the quarter.
Noninterest IncomeNoninterest income was $68.1 million, up $12.6 million, or 23%, from $55.5 million in the second quarter of 2012 and up $31.2 million, or 84%, from $37.0 million in the third quarter of 2011. The increase from prior quarter was primarily due to an $18.9 million increase in net gain on mortgage loan origination and sale activities, reflecting an increase in single family mortgage loan production volume and secondary market profit margins, partially offset by a $6.6 million decrease in mortgage servicing income, reflecting a decrease in income recognized from MSR risk management activities, largely reflecting a shift towards lower sensitivity to interest rates for the Company's mortgage servicing rights, which has resulted in a lower net gain from derivatives economically hedging MSRs. Noninterest Expense Noninterest expense was $45.8 million, down $1.0 million, or 2%, from $46.8 million in the second quarter of 2012 and up $13.5 million, or 42%, from $32.3 million in the third quarter of 2011. The decrease from prior quarter was primarily due to lower OREO expense, which decreased $5.7 million, partially offset by a $3.3 million increase in salary and related costs, reflecting an increase in employees and higher incentive compensation driven by elevated mortgage loan production volume.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV