There was no provision for loan losses for the three months ended December 31, 2012 compared to $75,000 for the three months ended December 31, 2011. Net charge-offs were $205,000 for the three months ended December 31, 2012 compared to $96,000 for the three months ended December 31, 2011. Despite an increase in net charge-offs, the provision for loan losses in the current period was positively influenced by lower current year charge-off results that were incorporated into the loss history factors. In addition, a $714,000 substandard loan relationship was individually evaluated for impairment during the quarter and it was determined a specific reserve was not necessary.
Noninterest income decreased $72,000, or 7.2%, to $932,000 for the three months ended December 31, 2012 compared to $1.0 million for the three months ended December 31, 2011. The Company recognized a $305,000 gain on the sale of available-for-sale securities in the prior period which was partially offset by a $259,000 increase in insurance commissions in the current period.
Noninterest expense decreased $903,000, or 25.5%, to $2.6 million for the three months ended December 31, 2012 compared to $3.5 million for the three months ended December 31, 2011. Compensation expense decreased $919,000 primarily due to the termination of the Company’s supplemental executive retirement plan in the prior period. In addition, occupancy expense decreased $88,000 as a result of fully depreciated assets and a decrease in rent due to branch consolidation. This was partially offset by an $80,000 increase in other miscellaneous expenses primarily due to a marketing agreement signed by our insurance subsidiary.
Year-to-Date ResultsNet interest income decreased $295,000 to $10.3 million for the year ended December 31, 2012 compared to $10.6 million for the year ended December 31, 2011. Paydowns and payoffs of higher yielding loans and securities resulted in a $1.6 million decline in interest income. This was partially offset by a $769,000 decrease in deposits expense due to interest rate reductions on deposits and a $519,000 decrease in borrowings expense due to payoffs of higher cost borrowings that were replaced with short-term, lower-cost borrowings.
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