Balance Sheet Trends
Loans increased $173.3 million (8.8%) from December 31, 2011 to $2.15 billion at December 31, 2012, in part due to the Company’s acquisition of Virginia Savings Bancorp, Inc. ($72.0 million). Excluding the Virginia Savings Bancorp, Inc. acquisition, loans increased $101.3 million (5.1%) from December 31, 2011 to $2.07 billion at December 31, 2012. Increases in residential real estate loans of $69.7 million (7.5%) and commercial real estate loans of $57.6 million (7.9%) were partially offset by a decline in commercial and industrial (“C&I”) loans of $23.9 million.
Total average depository balances increased $186.9 million, or 8.5%, from the quarter ended December 31, 2011 to the quarter ended December 31, 2012. This growth was primarily attributable to deposits acquired from Virginia Savings Bancorp, Inc. ($122.7 million). Exclusive of this contribution, the Company experienced increases in noninterest-bearing demand deposits ($35.2 million), savings deposits ($31.5 million), and interest-bearing demand deposits ($20.3 million) that were partially offset by a decrease in time deposits ($22.9 million).
Income Tax ExpenseThe Company’s effective income tax rate for the quarter and year ended December 31, 2012 was 34.9% and 34.3%, respectively, compared to 33.2% and 33.6% for the quarter and year ended December 31, 2011, respectively. Capitalization and Liquidity One of the Company’s strengths is that it is highly profitable while maintaining strong liquidity and capital. With respect to liquidity, the Company’s loan to deposit ratio was 89.1% and the loan to asset ratio was 73.6% at December 31, 2012. The Company maintained investment securities totaling 13.8% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 51.1% of assets at December 31, 2012. Time deposits fund 31.5% of assets at December 31, 2012, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.
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