Credit Quality

Our adjusted non-performing assets as a percentage of total assets decreased to 1.63% at March 31, 2012 from 1.86% at December 31, 2011. We recorded provision for loan and lease losses of $11.4 million at March 31, 2012, which is a decrease of $6.7 million when compared to the first quarter of 2011. Net charge-offs during the first quarter of 2012 declined to $10.9 million from $22.1 million in the first quarter of 2011. On an annualized basis, net charge-offs were 0.65% of total average loans and leases held for investment outstanding for the first quarter of 2012 in comparison to 1.45% for the first quarter of 2011.

Capital Strength

Total shareholder’s equity was $995 million at March 31, 2012 compared to $968 million at December 31, 2011. The bank’s Tier 1 (core) capital ratio was 7.7% and total risk-based capital ratio was 15.2% at March 31, 2012.

In addition, we completed our initial public offering on May 8, 2012 which raised approximately $200 million of growth capital.

Income Statement Highlights

Net Interest Income

For the first quarter of 2012, net interest income increased by $1.9 million to $115.6 million from $113.7 million for the first quarter of 2011. This increase in net interest income was attributable to a decrease in interest expense of $6.6 million, partially offset by a decrease in interest income of $4.6 million. Our net interest margin decreased to 3.97% for the first quarter of 2012 from 4.33% for the first quarter of 2011. The primary driver of the decrease in net interest margin was a reduction in accretion income partially offset by a reduction in deposit and borrowing interest expense.

Noninterest Income

Noninterest income for the first quarter of 2012 increased by $7.3 million or 11% to $73.2 million compared to the same period in 2011. This increase was driven by production revenues and gain on sale of loans which increased by $35.7 million to $55.6 million. This was partially offset by a decrease in net loan servicing income which decreased $25.0 million to $1.1 million. Net loan servicing income includes a non-cash MSR impairment of $15.1 million as well as elevated amortization expense of $29.3 million. These changes were primarily related to an increase in residential lending volume of $0.7 billion to $1.9 billion and related pay-off activity.

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