Non-performing assets decreased to $118.9 million at December 31, 2011, compared to $151.6 million at September 30, 2011 and $254.3 million at December 31, 2010. At December 31, 2011, Banner’s non-performing assets were 2.79% of total assets, compared to 3.53% at the end of the September 2011 and 5.77% a year ago.One- to four-family residential construction, land and land development loans were $241.7 million, or 7.3% of the total loan portfolio at December 31, 2011, compared to $321.1 million, or 9.4% of the total loan portfolio a year earlier. The geographic distribution of these residential construction, land and land development loans was approximately $80.0 million, or 33%, in the greater Puget Sound market, $109.9 million, or 45%, in the greater Portland, Oregon market and $4.9 million, or 2%, in the greater Boise, Idaho market as of December 31, 2011. The remaining $46.9 million, or 20%, was distributed in the various eastern Washington, eastern Oregon and northern Idaho markets served by Banner Bank. Income Statement Review “The realignment of our delivery platforms and execution by our sales teams, as well as further maturing of our expanded branch system along with a targeted marketing campaign, have allowed Banner Bank to add client relationships and increase core deposits. That core deposit growth has enabled us to significantly reduce our cost of funds during the year through changes in our deposit mix and pricing strategies and has supported increased deposit fees despite the adverse impact of regulatory changes on overdraft revenues. The reduced cost of funds coupled with changes in our asset mix made it possible for us to maintain a strong net interest margin in recent quarters and to increase it by 26 basis points compared to the fourth quarter a year ago, despite continued downward pressure on asset yields,” said Grescovich. Banner’s net interest margin was 4.07% in the fourth quarter of 2011, compared to 4.10% in the preceding quarter and 3.81% in the fourth quarter a year ago. For the year 2011, Banner’s net interest margin was 4.05%, a 38 basis point improvement compared to 3.67% for 2010.