The weighted average yield on loans for fourth quarter 2012 decreased 41basis points from fourth quarter 2011 and 72 basis points on a core basis excluding acquisition accounting adjustments. The reduction in the core yield, excluding the effect of acquisition accounting adjustments, is primarily attributed to the significant pricing pressures in the market place over the past year and the lower yielding acquired loan portfolio.
Compared with preceding third quarter 2012, the weighted average yield on loans declined 22 basis points, and 15 basis points on a core basis, excluding the acquisition accounting adjustments. The more moderate decrease in the core yield, excluding the effect of acquisition accounting adjustments, versus the year-over-year comparison, reflects a stabilization in the competitive pricing environment in the market place during fourth quarter 2012. The weighted average yield on new loans originated during fourth quarter 2012 was 4.54%, compared with 4.53% for third quarter 2012.
The composition of fixed and variable rate loans and the associated weighted average yield, excluding loan discount accretion, is summarized in the following table:
|Fixed rate loans|
|As a percentage of total loans||40||%||40||%||—||%||38||%||2||%|
|Weighted average yield||5.63||%||6.61||%||(0.98||)||%||5.97||%||(0.34||)||%|
|Variable rate loans|
|As a percentage of total loans||60||%||60||%||—||%||62||%||(2||)||%|
|Weighted average yield||4.52||%||4.64||%||(0.12||)||%||4.57||%||(0.05||)||%|
The increased composition of fixed rate loans as a percentage of total loans reflects the high demand for fixed rate commercial real estate loans in the current interest rate environment.
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