During January 2013, a $50.0 million FHLB advance, with an interest rate of 2.17%, matured. The Bank had sufficient liquidity to meet this obligation without further borrowings. The annual interest expense for this advance was $1.1 million.
Our interest rate spread and net interest margin increased 14 and 13 basis points to 2.86% and 3.09%, respectively, for the three months ended December 31, 2012, compared to the three months ended December 31, 2011. Our ratio of average interest-earning assets to average interest-bearing liabilities grew to 119.8% at December 31, 2012, from 115.0% at December 31, 2011, reflecting our efforts to convert nonearning assets to earnings assets. For the twelve months ended December 31, 2012, our interest rate spread and net interest margin were 2.85% and 3.08%, respectively, compared to 2.78% and 3.01%, respectively, for the year ended December 31, 2011.
Noninterest income for the quarter ended December 31, 2012 decreased $437,000 to $118,000 from the same quarter in 2011. There was one investment sale during the quarter ended December 31, 2012, resulting in a gain of $13,000, compared to $485,000 in net gains on the sales of investments during the same quarter in 2011. Noninterest income for the fourth quarter of 2012 remained relatively unchanged from the third quarter of 2012. For the year ending December 31, 2012, noninterest income decreased $1.7 million to $836,000, compared to $2.5 million for 2011, due to $1.9 million in higher net gains on the sales of investments during the year ended December 31, 2011.
Noninterest expense for the quarter ended December 31, 2012 decreased $1.0 million from the same quarter in 2011. This decrease was primarily due to the reduction of $448,000 of net expenses incurred during the quarter related to OREO properties. Our FDIC deposit insurance expense decreased $242,000 as a result of the termination in March 2012 of the Consent Order between the Bank, FDIC and Washington DFI. In addition, we incurred a $118,000 prepayment penalty during the fourth quarter of 2011, related to the early payoff of an FHLB advance with no comparable expense in the fourth quarter of 2012.