Total deposits at December 31, 2012, were $2.2 billion, a decrease of $46.8 million, or 2.0%, compared to December 31, 2011, with demand deposits increasing $78.2 million, or 23.1%, savings and interest-bearing demand deposits increasing $26.8 million, or 2.3%, and time deposits decreasing $151.7 million, or 19.4%. As of December 31, 2012, non-interest bearing demand deposits represented 18.5% of total deposits. Demand, savings and interest-bearing demand deposits, grew year-over-year by $105.0 million to $1.6 billion at December 31, 2012. Over the past twelve months, generation of demand deposits was driven primarily by the successful efforts of the Company’s team of eight business development officers, who are focused on acquisition and retention of commercial operating funds, treasury management services, and other related cross-sales. On a linked quarter basis, deposits increased $32.8 million, or 1.5%, with demand deposits increasing by $25.4 million, or 6.5%, savings and interest-bearing demand accounts increasing $25.6 million, or 2.2%, and time deposits decreasing by $18.2 million, or 2.8%. Demand, savings and interest-bearing demand deposits, grew $51.0 million during the fourth quarter of 2012, representing an annualized growth rate of 13.0%. The reduction in time deposits during the part year has been intentional and resulted from a series of interest rate reductions that continued throughout 2012. As a result of deposit rate decreases and an improving deposit mix led by growth in noninterest-bearing demand deposits, the cost of total interest-bearing deposits declined from 1.18% for the quarter ended December 31, 2011, to 0.84% for the quarter ended December 31, 2012, while the cost of total deposits declined from 1.01% for the quarter ended December 31, 2011, to 0.69% for the quarter ended December 31, 2012.
Capital Levels and Stockholders’ Equity
Stockholders’ equity decreased $38.5 million, or 13.6%, from $283.8 million at December 31, 2011, to $245.3 million at December 31, 2012, with a $67.2 million decline from the repayment of TARP preferred stock and a $2.8 million decrease in other comprehensive income, partially offset by net income available to common stockholders of $22.5 million over the twelve-month period, approximately $7.0 million in net proceeds from the exercise of warrants and $2.0 million in proceeds and tax benefits related to the exercise of options. As a result of these changes, the Company’s Tier 1 capital ratio decreased from 14.55% at December 31, 2011, to 13.25% at December 31, 2012, and its total qualifying capital ratio decreased from 15.81% to 14.51% over the same period. Sequentially, the Company’s Tier 1 and total qualifying capital ratios are each down 304 basis points, because risk-weighted assets remained steady at $2.3 billion, while stockholders’ equity declined $67.2 million due to the repurchase of TARP preferred stock, and a $2.5 million decrease in other comprehensive income, which were partially offset by net income available to common stockholders of $4.2 million in the fourth quarter. The Company’s tangible common equity ratio increased from 7.37% at December 31, 2011, and 8.08% at September 30, 2012, to 8.69% at December 31, 2012. The 132 basis point increase in tangible common equity ratio from December 31, 2011 to December 31, 2012, is primarily due to $22.5 million in retained net income available to common stockholders for the twelve months ended December 31, 2012. Sequentially, the 61 basis point increase in tangible common equity ratio is primarily related to a reduction of $181 million in total tangible assets, and $4.2 million in retained net income available to common stockholders for the fourth quarter of 2012, partially offset by a decrease of $2.5 million in other comprehensive income.
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