Non-interest income for the quarter ended December 31, 2011 totaled $219 thousand compared to $953 thousand for the fourth quarter of 2010. The $734 thousand decrease from the fourth quarter of 2010 was primarily due to a $600 thousand financial assistance award received in the fourth quarter of 2010 from the U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund and a $114 thousand net gain on sales of loans in the fourth quarter of 2010.

Non-interest expense for the quarter ended December 31, 2011 totaled $4.1 million, compared to $3.5 million for the fourth quarter of 2010. The $586 thousand increase from the fourth quarter of 2010 was primarily due to a $527 thousand increase in other expense, resulting from increases in investment amortization expense and REO expenses. Additionally, compensation and benefits expense increased $325 thousand in the fourth quarter of 2011 as the year ago quarter included a $370 thousand reversal of bonus expense. These increases in non-interest expense were partially offset by a $112 thousand decrease in FDIC insurance premium expense and a $139 thousand decrease in professional services expense.

Income tax expense totaled $75 thousand for the fourth quarter of 2011 compared to $208 thousand for the same period in 2010. For the year 2011 and 2010, income tax expense was $1.8 million and $1.3 million, respectively. The effective tax rates for the quarter and year ended December 31, 2011 were (131.58%) and (24.00%), compared to 46.74% and 41.19% for the quarter and year ended December 31, 2010. The Company’s effective income tax rates for the quarter and year ended December 31, 2011 includes the impact of tax provision true-ups and an increase in the valuation allowance related to the utilization of its federal and state deferred tax assets. The increase in the valuation allowance against its federal and state deferred tax assets was due to current year losses and the Company’s inability to project sufficient future taxable income.

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