Net income for the twelve months ended December 31, 2010 was $524,000 compared to net income of $493,000 for the twelve months ended December 31, 2009. Net interest income increased by $382,000 to $8.2 million for the twelve months ended December 31, 2010 from $7.8 million for the twelve months ended December 31, 2009, noninterest income increased $537,000 and income tax expense decreased by $55,000. In contrast, noninterest expense increased by $173,000 and our provision for loan losses increased by $770,000 during 2010.

Net interest income increased by $91,000, or 4.4%, to $2.2 million for the quarter ended December 31, 2010 from $2.1 million for the quarter ended December 31, 2009, as our net interest-earning assets increased to $28.2 million from $16.4 million. Partially offsetting the increase in net interest-earning assets was a 5 basis point decrease in our net interest rate spread to 3.68% from 3.73%, and a 3 basis point decrease in our net interest margin to 3.80% from 3.83%. 

We recorded a provision for loan losses of $152,000 for the quarter ended December 31, 2010 compared to a provision for loan losses of $188,000 for the quarter ended December 31, 2009.  

Noninterest income increased by $342,000, or 55.6%, to $957,000 for the quarter ended December 31, 2010 from $615,000 for the quarter ended December 31, 2009. The increase was due primarily to an increase in gains from the sale of securities and mortgage loans.

Noninterest expense increased by $250,000, or 11.3%, to $2.5 million for the quarter ended December 31, 2010 from $2.2 million for the quarter ended December 31, 2009. This increase was primarily attributable to an increase in compensation, including mortgage commissions.

Net interest income increased by $382,000, or 4.9%, to $8.2 million for the twelve months ended December 31, 2010 from $7.8 million for the twelve months ended December 31, 2009, as our net interest-earning assets increased to $18.4 million from $14.1 million. This impact was partially offset by a decrease in our interest rate spread of 16 basis points to 3.64% from 3.80%, and a decrease in our net interest margin of 17 basis points to 3.73% from 3.90%.

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