Fulton undertakes no obligation other than required by law to update or revise any forward-looking statements whether as a result of new information future events or otherwise. In our earnings release we have included our Safe Harbor statement and forward-looking statements. We refer you to this statement in the earnings release and the statement is incorporated into this presentation.For a more complete discussion of certain risks and uncertainties affecting Fulton, please see the sections entitled risk factors and management discussion and analysis of financial condition and results of operations set forth in Fulton's filings with the SEC. Now I would like to turn the call over to your host Scott Smith. Scott Smith Thank you, Laura, and good morning everyone, we appreciate you being with us. Phil Wenger, Charlie Nugent and I each have some prepared remarks, and then we will respond to your specific questions. Our comments will focus on linked quarter results unless we specify otherwise. We reported diluted net income per share of $0.16 for the third quarter, up $0.02 over the previous quarter and a 10% improvement over the same period last year. We continue this earnings momentum despite the absence of stronger economic activity. During the quarter we saw an increase in residential mortgage lending activity along with an increase of mortgage sale gain income. Our net interest margin also improved. There were a number of significant events that occurred during the quarter. On July 14, we redeemed our $376.5 million Treasury, deferred stock in full. Then on September 8 we repurchased the associated warrant from the Treasury. We are pleased to have both of these transactions behind us. Two weeks ago we announced the merger of our Delaware National Bank affiliate into our largest affiliate Fulton Bank. And as we have mentioned in the previous calls, we consider merging affiliates and we believe it makes sense to do so. After the systems conversion in early December we will be operating with seven affiliates, down from a high of 15 several years ago.
During the quarter preliminary lawful capital guidelines were released. Of course there will be further definition and clarification of these requirements from the US regulatory authorities. However, our current capital appears to be well in excess of the preliminary guidelines.Regulation E overdraft opt-in opt-out guidelines became effective on August 15. We've been experiencing this event since beginning of the year and as we expected the payment of overdraft, it does create value for our customers across all channels. We expect to see additional opt-in and customers who did not respond initially to our opt-in notices to do so after having a point of sale or ATM transaction declined for the first time. Nevertheless, as we expected, this quarter we began to see the impact of new regulations on our non-interest income. Charlie will provide additional information in his comments. The Dodd-Frank Act became small on July 21, in response we have established a committee of senior people who study the applicable titles under the act as well as the many rules and regulations that we will be required to implement. Dodd-Frank could create some potential opportunity for us in the marketplace. With careful planning and strategizing as we believe we are in a better position to absorb the increase compliance cost in many smaller banks. On a balance sheet standpoint, the third quarter saw a continuation of our strong core deposit growth particularly in the small business sector and of our very high priority market segments. We were able to reduce our cost of funds during the quarter and believe that we will be able to further reduce then as certificates of deposit mature and reprice in the fourth quarter. Read the rest of this transcript for free on seekingalpha.com