Noninterest expense for the three months ended December 31, 2012 increased $1.8 million, or 15.3%, to $13.4 million compared to $11.6 million for the three months ended December 31, 2011. This increase was primarily related to $1.5 million in prepayment penalties on Federal Home Loan Bank (FHLB) borrowings repaid during the second fiscal quarter of fiscal 2013 and a $1.1 million or 21.2% increase in salaries and employee benefits as compared to the same period in the prior fiscal year.
Noninterest expense for the six months ended December 31, 2012 increased $5.1 million, or 23.7%, to $26.8 million compared to $21.6 million for the six months ended December 31, 2011. This increase was primarily related to $3.1 million in prepayment penalties on FHLB borrowings repaid during the period and a $2.3 million or 21.7% increase in salaries and employee benefits as compared to the same period in the prior fiscal year. Salaries and employee benefits increased during the three and six months ended December 31, 2012 as a direct result of hiring an additional 40 full time employees (primarily in mortgage banking, credit administration, and regulatory compliance) coupled with additional expense related to the Company's new employee stock ownership plan.
Balance Sheet Review
Total assets decreased $133.2 million, or 7.7%, to $1.59 billion at December 31, 2012 from $1.72 billion at June 30, 2012, primarily due to the refunding of $76.0 million in funds held on deposit for orders to purchase shares of the Company's common stock in its oversubscribed stock offering, which was consummated on July 10, 2012. In addition, net loans receivable decreased $46.8 million or 3.9% to $1.14 billion at December 31, 2012 from $1.19 billion at June 30, 2012 as new loan originations during the quarter were offset by normal loan repayments, charge-offs and foreclosures.Total deposits decreased $316.9 million or 21.6% from $1.47 billion at June 30, 2012 to $1.15 billion at December 31, 2012. This decrease was primarily due to the withdrawal on July 10, 2012 of $264.2 million in funds held on deposit relating to orders to purchase shares of the Company's common stock. In addition, certificates of deposit decreased $67.6 million during the six month period as a result of the managed decline of higher rate certificates of deposit consistent with the Company's strategy to decrease the percentage of time deposits in its deposit base and to increase the percentage of lower cost checking and savings accounts. Other borrowings decreased $15.1 million, or 67.8%, at December 31, 2012 to $7.2 million from $22.3 million at June 30, 2012 as all outstanding FHLB advances were repaid.
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