The provision for loan losses totaled $1.5 million for the current quarter compared with $2.0 million and $4.2 million for the quarters ended March 31, 2012 and June 30, 2011, respectively. Although credit costs remain somewhat elevated in this persistently difficult economic operating environment, the lower provision reflects the continued progress in improving overall asset quality and reducing the level of problem loans. The Company remains confident in its ability to continue its progress in addressing problem loans.

The allowance for loan losses at June 30, 2012 was $16.1 million, or 2.9% of total loans. This compares with an allowance of $16.9 million, or 3.0% of total loans, at March 31, 2012, and $30.0 million, or 5.2% of total loans, at June 30, 2011. The decrease from June 30, 2011 resulted from charging off loans that were previously treated as specific valuation allowances. The allowance's coverage of nonperforming loans again improved during the quarter, increasing to 80.7% at June 30, 2012, compared with 71.8% at March 31, 2012, and 59.6% at June 30, 2011.

Non-interest Expense Managed

Non-interest expense totaled $6.6 million for the current quarter, compared with $6.5 million for the fiscal 2012 third quarter and $6.3 million for the year-ago quarter. The Company continues to successfully manage its expense level while executing its turnaround and investing in the infrastructure and personnel necessary to expand the targeted business lines as part of its transformation.

Pre-tax, Pre-credit Provision Income Improves Sequentially

One metric that management believes is useful in analyzing performance is pre-tax, pre-credit provision income, which adjusts earnings to exclude loan loss provision expense, credit-related charges involving the valuation and disposition of other real estate owned, and securities gains or losses. In addition, earnings are adjusted for items identified by management to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by management at the time to be infrequent or short-term in nature, which management believes may distort the Company's underlying performance trends. The quarterly pre-tax, pre-credit provision income at June 30, 2012 was $2.8 million, compared with $3.0 million for the quarter ended March 31, 2012, and $0.5 million for the prior-year quarter.

If you liked this article you might like

10 Buy-Rated Bank Stocks With Highest Dividend Yields

Wednesday's Financial Winners & Losers

Wednesday's Financial Winners & Losers