The provision for loan losses was $60,000 for both the quarter ended December 31, 2012 and 2011, respectively. The allowance for loan losses at December 31, 2012 was $1.9 million, representing 1.26% of total loans outstanding. Total non-accrual loans were $5.7 million at December 31, 2012 compared with $5.6 million at September 30, 2012 and $2.6 million at December 31, 2011. In addition, the Bank’s real estate owned and repossessed assets were $344,000 at December 31, 2012 compared with $390,000 at September 30, 2012 and $880,000 at December 31, 2011. There was $39,000 in net loan charge offs for the quarter ended December 31, 2012 compared with $49,000 in net loan charge offs for the quarter ended September 30, 2012 and $234,000 in net loan charge offs for the quarter ended December 31, 2011.
Net interest income increased $8,000, or (0.4%) to $2.0 million in the fourth quarter of 2012 compared to $2.0 million for the comparable quarter of 2011 reflecting primarily an increase in the Bank’s average loan portfolio offset with the continued low interest rate environment. Net interest margin on average interest-earning assets for the fourth quarter of 2012 was 4.58% compared with 4.74% in the fourth quarter of 2011.
Loans (excluding loans held for sale and before the allowance for loan losses) were $148.4 million at December 31, 2012, a decrease of $2.1 million, or 1.4% from $150.5 million at September 30, 2012, and an increase of $600,000, or 0.4% from $147.8 million at December 31, 2011. Deposits at December 31, 2012, were $156.5 million, a $1.1 million, or 0.7% increase from $155.4 million at September 30, 2012, and a $9.3 million, or 6.3% increase from $147.2 million at December 31, 2011.
Noninterest income for the fourth quarter of 2012, including gain on sale of loans, increased $370,000, or 152.2% to $613,000 from $243,000 for the fourth quarter of 2011. Gain on sale of loans increased $284,000 to $570,000 for the year ended December 31, 2012 from $286,000 for fiscal 2011 as a result of an increase in the production of one-to-four family mortgage loans. Excluding mortgage banking income, noninterest income increased $112,000, or 10.0%, to $1.2 million for the year ended December 31, 2012 compared with $1.1 million for fiscal 2011. The increase is primarily in mortgage servicing income due to the fair value adjustment to mortgage servicing rights net of originations and disposals of $(35,000) in 2012 compared with $(144,000) in 2011.
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