Despite the measures taken by management during the first half of this year to moderate the Bank's loan growth and reduce the overall size of the Bank's balance sheet, the average balances of loans and tax-exempt securities grew significantly when comparing the first nine months of 2010 to 2009, largely because of strong growth in these asset categories throughout most of 2009. The average balance of loans was up by 24.1%, or $165.9 million, and the average balance of tax-exempt securities was up by 35.5%, or $61.3 million. Growth in these asset categories, which was funded primarily by an increase in average total deposits of $256 million, or 24.5%, is the key driver of the earnings growth experienced thus far this year. Also contributing to this year's earnings growth is a $455,000 increase in gains on sales of available-for-sale securities and the fact that 2009 was burdened with an FDIC special assessment of $647,000.The loan growth principally occurred in what management considers to be lower risk loan categories, including multifamily commercial mortgages, owner occupied commercial mortgages, and first lien residential mortgages having terms generally between ten and fifteen years. By contrast, management considers construction and land development loans and unsecured loans to individuals to be high risk and has purposely not grown these categories. With respect to deposit growth, significant contributing factors were new branch openings and expansion of existing branches, deposit rate promotions, development of new commercial banking relationships, competitively priced deposit products and what management believes to be a high level of customer service. The positive impact on earnings of the factors previously described was partially offset by a $1.8 million increase in the provision for loan losses. The elevated provision for the first nine months of this year is primarily attributable to management's current assessment of national and local economic conditions which have been weak for an extended period of time. The provision for the first nine months of last year was reduced by the reversal of previously established impairment reserves amounting to $300,000. The Bank's allowance for loan losses at September 30, 2010 was $12.5 million, or 1.41% of total loans, compared to $10.3 million, or 1.25% of total loans, at year-end 2009. Management will continue to carefully assess the adequacy of the Bank's allowance for loan losses in light of a variety of factors including national and local economic conditions and the specific composition and characteristics of the Bank's loan portfolio. Depending on this assessment, and even if there is no significant increase in identified problem loans, management may continue to increase the Bank's allowance for loan losses relative to total loans.