Third quarter net interest income grew to $54.6 million, an increase of 17.8% above the third quarter of 2010, resulting from an $867 million increase in average interest-earning assets, offset by a slightly lower net interest margin. Although the Company has productively reinvested most of its cash flow generation during the last year, it still retains a significant net liquidity position, with average balances rising above $240 million for the third quarter. Low market interest rates and continued disciplined deposit pricing resulted in a 23-basis point reduction in the total cost of funds, in comparison to the third quarter of 2010. However, this was more than offset by a 28-basis point decline in earning-asset yields, reflective of lower yields on investment securities, and a $190 million increase in low-rate, invested cash equivalents versus last year’s third quarter. On a linked quarter basis the Company’s net interest margin declined nine basis points, with a significant portion of the decline related to higher invested cash balances.

Third quarter non-interest income of $23.2 million was 1.3% higher than the third quarter of last year. The Company’s employee benefits administration and consulting businesses grew revenues by 5.9 % over last year’s third quarter, and its wealth management group generated a 21.0% revenue improvement, principally from activities related to the Wilber acquisition. Mortgage banking revenues were down $0.9 million from last year’s third quarter, reflective of the very robust demand conditions in the second half of 2010. Deposit service fees of $11.1 million were essentially the same as the third quarter of 2010, despite the addition of Wilber, reflective of lower overall customer utilization and other changes in certain fee-based deposit services, including overdraft programs. Other banking services of $1.2 million for the quarter included $0.6 million of revenues derived from the Company’s retail life and disability insurance programs, consistently recognized in the third fiscal quarter annually.

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