Net interest income
Net interest income for the quarter ended December 31, 2012 grew to $174.6 million from $140.7 million for the quarter ended December 31, 2011. Net interest income for the year ended December 31, 2012 was $597.6 million as compared to $499.2 million for the year ended December 31, 2011.
The Company’s net interest margin, calculated on a tax-equivalent basis, was 6.70% for the quarter ended December 31, 2012 as compared to 6.54% for the quarter ended December 31, 2011. Significant factors impacting the trend in net interest margin for the fourth quarter of 2012 included:
- Higher than projected proceeds of $29.9 million from the sale of ACI loans from a pool with a carrying value of zero were recorded in interest income. The fourth quarter also benefited from an adjustment to accretion on non-ACI residential loans resulting from a change in estimated prepayment rates.
- Exclusive of the impact of proceeds from the loan sale, the tax-equivalent yield on loans declined by 3.83% for the quarter ended December 31, 2012 as compared to the quarter ended December 31, 2011, primarily because new loans originated at yields lower than those on the covered loan portfolio comprised a greater percentage of total loans.
- The tax-equivalent yield on investment securities declined to 2.78% for the quarter ended December 31, 2012 from 3.24% for the quarter ended December 31, 2011, reflecting the impact of lower prevailing market rates of interest.
- The average rate on interest-bearing liabilities declined to 1.17% for the quarter ended December 31, 2012 from 1.54% for the quarter ended December 31, 2011, primarily due to declining market interest rates.
The tax-equivalent net interest margin for the year ended December 31, 2012 was 6.04% as compared to 6.21% for the year ended December 31, 2011. The decline in net interest margin reflected lower yields on loans and investment securities, partially offset by a reduced cost of funds.
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