The cost of funds decreased 3 basis points from 0.67% in the third quarter of 2012 to 0.64% in the fourth quarter of 2012. The reduction in the cost of funds and interest expense is primarily due to management’s ongoing actions to reduce higher cost funding and time deposits, and grow core deposits. The Company increased core deposit balances by 7%, quarter over quarter. These combined actions resulted in an overall reduction in the cost of deposits of 1 basis point to 0.40% for the fourth quarter of 2012 from 0.41% in the prior quarter.
Noninterest (Loss)/ Income & Expense
The Company reported total noninterest (loss)/income for the fourth quarter of 2012 of ($18.5) million, a decrease from noninterest income of $2.8 million in the third quarter of 2012 and $937 thousand in the fourth quarter of 2011. The decrease in noninterest (loss)/income from the prior quarter and prior year is primarily attributable to an increase in the net reduction of the FDIC indemnification asset and FDIC receivable.
Branch fees, letter of credit and foreign exchange income, ancillary loan fees and other operating income increased to $26.9 million in the fourth quarter of 2012, an increase from $24.0 million in the third quarter of 2012 and $17.2 million in the fourth quarter of 2011. In addition, included in noninterest income for the fourth quarter of 2012 were net gains on sales of fixed assets of $4.2 million. A summary of fees and other operating income for the fourth quarter of 2012, compared to the third quarter of 2012 and fourth quarter of 2011 is detailed below:
|Quarter Ended||% Change|
|($ in thousands)||December 31, 2012||September 30, 2012||December 31, 2011||(Yr/Yr)|
|Letters of credit fees and foreign exchange income||7,932||7,166||5,504||44||%|
|Ancillary loan fees||2,818||1,817||2,228||26||%|
|Other operating income||7,788||6,699||1,393||459||%|
|Total fees & other operating income||$||26,860||$||24,029||$||17,197||56||%|
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