Net charge-offs from the non-covered loan portfolio were $28.0 million, or .97% of average total loans on an annualized basis in the fourth quarter. Excluding the impact of the bulk sale noted above, non-covered net charge-offs for the fourth quarter of 2012 were $11.8 million, or .41% of average total loans, compared to $9.7 million, or .34% of average total loans, for the third quarter of 2012.
Hancock recorded a total provision for loan losses for the fourth quarter of 2012 of $28.1 million, up from $8.1 million in the third quarter of 2012. Excluding the impact of the bulk sale noted above, provision expense for the fourth quarter of 2012 was $14.4 million. The provision for non-covered loans, excluding the impact of the bulk sale, increased to $14.2 million in the fourth quarter of 2012 from $8.1 million in the third quarter of 2012. This increase reflects the $2.1 million higher level of net charge-offs in the current quarter and the allowance build activity noted above.
During the fourth quarter of 2012, the Company recorded a $4.0 million increase in the allowance for losses related to impairment of certain pools of covered loans, with a related increase of $3.8 million in the Company's FDIC loss share indemnification asset. The net impact on provision expense from the covered portfolio was $.2 million in the fourth quarter, compared to no provision impact for the third quarter of 2012.
Net Interest IncomeNet interest income (TE) for the fourth quarter of 2012 was $182.8 million, up from $180.1 million in the third quarter of 2012. Average earning assets were $16.2 billion in the fourth quarter of 2012, up $416 million from the third quarter of 2012. The net interest margin (TE) was 4.48% for the fourth quarter of 2012, down 6 basis points (bps) from 4.54% in the third quarter of 2012. The core margin of 3.61% (reported net interest income (TE) excluding total net purchase accounting adjustments, annualized, as a percent of total earning assets) compressed approximately 14bps during the fourth quarter, mainly from a decline in both the core yield on the loan and the securities portfolios. The margin was favorably impacted by changes in the mix of earning assets and funding sources and a slight decline in funding costs.
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