The provision for loan losses was $2.1 million for the fourth quarter of 2012, as compared to $30.3 million for the third quarter in 2012. The provision expense in the third quarter of 2012 included $29.4 million directly associated with the bulk asset sale. The provision for loan losses was $39.3 million for all of 2012, as compared to $24.7 million for all of 2011.
Net Interest Income and Margin
Net interest income for the three months ended December 31, 2012 was $14.0 million, as compared to $14.1 million in the prior quarter. The net interest margin improved six basis points from 3.17% during the third quarter to 3.23% during the fourth quarter.
Total interest income decreased $394,000 in the fourth quarter of 2012 compared to the third quarter of 2012, primarily as a result of a decrease of $128.8 million in the average balance of outstanding loans. Home Savings also experienced a decrease in yield on those assets of 31 basis points during the quarter.Total interest expense decreased $277,000 for the quarter ended December 31, 2012, as compared to the previous quarter. The change was due to a reduction of $278,000 in interest paid on deposits. The average outstanding balance of certificates of deposit declined by $51.9 million, while non-time deposits increased by $5.4 million. Also contributing to the change was a reduction of seven basis points in the cost of certificates of deposit. Net interest income for the twelve months ended December 31, 2012 and December 31, 2011, was $60.4 million and $65.2 million, respectively. Total interest income decreased $17.9 million in 2012 compared to 2011, primarily as a result of a decrease of $295.0 million in the average balance of outstanding loans. United Community also experienced a decrease in the yield on net loans of 28 basis points. Home Savings’ construction and segments of its commercial real estate loan portfolios declined as a result of executing its strategic objective of reducing specific concentrations in these portfolios, as well as the bulk asset sale.