At March 31, 2012, fixed rate loans accounted for 39% of the loan portfolio, compared with 46% at March 31, 2011, reflecting the Company's focus on variable rate commercial lending. The weighted average yield on the variable rate and fixed rate loan portfolios (excluding loan discount accretion) at March 31, 2012 was 4.61% and 6.49%, respectively, compared with 4.82% and 7.12% at March 31, 2011.

The weighted average yield on securities available for sale for first quarter 2012 was 2.71%, compared with 2.99% for first quarter 2011 and 2.65% for fourth quarter 2011. The improvement in yield for the first quarter of 2012 over the prior quarter was due to slower prepayment speeds within the portfolio, which reduced the negative impact of premium amortization. The decline in yield from first quarter 2011 was the result of the replacement of maturing securities with lower yield investments as market interest rates declined and the impact of acquisition accounting.

The weighted average cost of deposits for first quarter 2012 was 0.56%, an improvement of 40 basis points from 0.96% for first quarter 2011, and a reduction of 15 basis points from 0.71% for fourth quarter 2011. The amortization of premium on time deposits assumed in the Center merger positively affected the weighted average cost of deposits, as summarized in the following table.
      Three Months Ended
March 31, 2012         March 31, 2011         December 31, 2011
The weighted average cost of deposits, excluding effect of acquisition accounting adjustments 0.69 % 0.96 % 0.75 %
Acquisition accounting adjustments (0.13 ) 0.00   (0.04 )
Reported weighted average cost of deposits 0.56 % 0.96 % 0.71 %

Excluding amortization of premium on time deposits assumed in the Center merger, the weighted average cost of deposits was 0.69% for first quarter 2012, compared with 0.75% for fourth quarter 2011. The improvement was driven by reductions in the cost of interest-bearing demand deposits, as well as a favorable shift in the mix of deposits to higher concentrations of non-interest bearing demand deposits. Non-interest bearing demand deposits accounted for 26% of total deposits at March 31, 2012, compared with 19% at March 31, 2011 and 25% at December 31, 2011.

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