While net interest income increased by $85,000 for the quarter as compared to the same period in 2012, the increase would have been greater if not for a $291,000 decline in the accretion of fair value discounts on acquired loans for the period. We recognized $240,000 of fair value accretion in the three month period ended March 31, 2013 as compared to $531,000 for the three month period ended March 31, 2012.
First quarter non-interest revenue was $148,000 or 16.87% higher than the first quarter of 2012, primarily because of an increase of $354,000 in gains on investment securities. These gains were partially offset by a $200,000 loss on the sale of other real estate owned compared to a $32,000 loss in the period ended March 31, 2012. We also incurred an $86,000 loss with the disposal of assets due to the closing of Old Line Centre.
Non-performing assets to total assets declined to 0.94% at March 31, 2013 compared to 1.12% at December 31, 2012 and 1.31% at March 31, 2012 while the allowance for loan losses as a percent of gross loans remained unchanged at 0.66%. The entire loan portfolio's asset quality remained strong and continued to improve during the quarter ended March 31, 2013. As a result, we decreased the provision expense for the first quarter of 2013. Based on our internal analysis, the ratio of non-performing assets to total assets, and the satisfactory historical performance of the loan portfolio, management believes that the allowance continues to appropriately reflect the inherent risk of loss in our portfolio and the current economic climate. However, should we see any evidence that there is deterioration in the loan portfolio we would adjust the allowance accordingly.
As we have previously reported, on September 10, 2012, we announced that we had executed a merger agreement that provided for the acquisition of WSB. During the first quarter of 2013, we received all of the required regulatory approvals, and subsequent to quarter end received all required stockholder approvals with respect to the merger. We plan to complete the merger during the second quarter of 2013. Until completion, we anticipate that we will continue to incur merger related expenses that may cause earnings to be lower than would otherwise be expected. However, we anticipate the WSB merger will be accretive to earnings within three quarters of closing. This combination will create a $1.2 billion banking institution and will allow us to expand our financial services with the addition of a successful and growing mortgage origination team. We also anticipate that the acquisition and integration of WSB will enhance the liquidity of our stock as well as our overall financial condition and operating performance.
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