Net loans were $3.16 billion at September 30, 2012, compared to $3.13 billion three months earlier and $3.21 billion a year ago. Commercial and agricultural business loans increased 3% to $848.1 million at December 31, 2012 compared to $822.7 million three months earlier and $819.6 million a year ago. Commercial real estate and multifamily real estate loans were $1.21 billion at December 31, 2012 compared to $1.22 billion at September 30, 2012 and $1.23 billion at December 31, 2011.
The aggregate total of securities and interest-bearing deposits declined to $745.5 million at December 31, 2012 compared to $764.4 million at September 30, 2012, but increased from $691.7 million at December 31, 2011. The change in the mix of interest-bearing deposits and securities holdings compared to a year ago reflects a modest extension of the expected duration of this aggregate position designed to increase the yield relative to interest-bearing deposits. The securities purchased in recent periods were primarily short- to intermediate-term U.S. Government Agency notes and mortgage-backed securities and, to a lesser extent, intermediate-term tax-exempt municipal securities. The average duration of Banner's securities portfolio at December 31, 2012 was 4.6 years.
Total deposits increased 2% to $3.56 billion at December 31, 2012, compared to $3.49 billion three months earlier and $3.48 billion a year ago. Non-interest-bearing account balances increased 7% to $981.2 million at December 31, 2012, compared to $919.0 million at September 30, 2012, and increased 26% compared to $777.6 million a year ago. Interest-bearing transaction and savings accounts totaled $1.55 billion at December 31, 2012, compared to $1.48 billion at September 30, 2012 and $1.45 billion a year ago.
"The continued growth in core deposits and improvement in our deposit mix have been rewarding and reflect a value proposition that is clearly resonating with our client base," said Grescovich. "Our super community bank strategy that involves lowering our funding costs by reducing our reliance on high-priced certificates of deposit, growing new client relationships, and improving our core funding position is consistently producing results and enhancing our deposit franchise." Banner's cost of deposits declined six basis points to 0.35% for the quarter ended December 31, 2012 compared to 0.41% for the quarter ended September 30, 2012, and declined 24 basis points from 0.59% for the quarter ended December 31, 2011.
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