The effective tax rate for full year 2012 was 33.8%. The effective tax rate was reduced from the statutory tax rate primarily due to the utilization of tax credits related to affordable housing investments. Additionally, in 2012, the effective tax rate was further reduced due to a settlement with the California Franchise Tax Board.
As a result of continued credit quality improvement, nonperforming assets as of December 31, 2012, were down to $141.0 million, a decrease of 2% from the previous quarter and 19% from the prior year. The provision for loan losses for non-covered loans slightly increased to $13.8 million for the fourth quarter of 2012, an increase of 3% or $452 thousand from the prior quarter, and decreased as compared to the fourth quarter of 2011 by 30% or $6.0 million. The provision for loan losses for non-covered loans for the full year 2012 decreased 35% to $60.2 million as compared to the prior year. Additionally, nonaccrual loans, excluding covered loans, totaled $108.1 million or 0.72% of total loans as of December 31, 2012.Total net charge-offs on non-covered loans decreased to $9.6 million for the fourth quarter of 2012, down from $10.6 million in the third quarter of 2012. The allowance for non-covered loan losses was $229.4 million or 1.92% of non-covered loans receivable at December 31, 2012. This compares to an allowance for non-covered loan losses of $223.6 million or 2.00% of non-covered loans at September 30, 2012 and $209.9 million or 2.04% of non-covered loans at December 31, 2011. The total nonperforming assets, excluding covered assets, to total assets ratio was under 1.0% for the third consecutive year with nonperforming assets of $141.0 million or 0.63% of total assets at December 31, 2012. Covered Loans During the fourth quarter of 2012, the Company recorded a reversal of provision for loan losses of $689 thousand, on covered loans outside of the scope of ASC 310-30. For the full year 2012, the company recorded $5.0 million of provision for loan losses on covered loans outside of the scope of ASC 310-30. Charge-offs on these loans were $35 thousand during the fourth quarter and $6.5 million during the full year 2012. There were no charge-offs recorded on these loans in 2011. As these loans are covered under loss-sharing agreements with the FDIC, for any charge-offs the Company records income of 80% of the charge-off amount in noninterest income as a net increase in the FDIC receivable, resulting in a net impact to earnings of 20% of the charge-off amount.
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