“Operating expenses declined for both the fourth quarter and the full year compared to the respective periods a year ago, largely due to lower costs associated with the real estate owned portfolio, particularly valuation adjustments,” said Grescovich. “While we expect collection expenses and costs associated with real estate owned to remain elevated in the near term, these credit costs should continue to decline as further problem asset resolution occurs.”

Total other operating expenses, or non-interest expenses, were $38.7 million in the fourth quarter of 2011, compared to $41.0 million in both the preceding quarter and in the fourth quarter of 2010. For the year 2011, total other operating expenses decreased 2% to $158.1 million compared to $160.8 million for 2010, largely as a result of decreased costs related to real estate owned and FDIC deposit insurance which were partially offset by increased compensation-related expenses.

* Earnings information excluding fair value and OTTI adjustments (alternately referred to as other operating income from core operations or revenues from core operations) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company’s core operations reflected in the current quarter’s results. Where applicable, the Company has also presented comparable earnings information using GAAP financial measures.

Balance Sheet Review

“We increased net loan balances by $74.3 million during the quarter, primarily in the commercial real estate and commercial business portfolios, as our production levels for targeted loans remained encouraging. Further, the calling efforts and responsiveness of our local bankers are resulting in a consistent pipeline of lending opportunities. While we expect a continued challenging economic environment, we believe that these well focused marketing efforts will allow us to capitalize on additional lending opportunities going forward,” said Grescovich.

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