Nonaccrual loans increased $16.9 million to $121.2 million during the quarter. Loans past due 90 days and still accruing interest totaled $1.7 million at September 30, 2012, up from $0.8 million at June 30, 2012 and down from $2.1 million at September 30, 2011. Loans past due 30-89 days, still accruing interest totaled $10.2 million at quarter end, down from $13.8 million at June 30, 2012 and from $12.4 million at September 30, 2011.

Classified assets to Tier I capital plus allowance for credit losses, a common regulatory measure of asset quality, improved to 39 percent at September 30, 2012 from 42 percent at September 30, 2011. 1

Net loss on sales and valuation of repossessed assets (primarily other real estate) was $0.1 million for the third quarter of 2012 compared to $0.9 million for the second quarter 2012 and $2.1 million in the third quarter 2011. At September 30, 2012, other repossessed assets were valued at $78 million compared to $77 million at June 30, 2012 and $87 million one year ago.

During the quarter, the Company sold its 24.9% interest in Miller/Russell Associates for a gain of $0.8 million. The Company is in discussions to sell its 80% ownership in Shine Investment Advisory Services, Inc. resulting in impairment charges of goodwill and intangibles of $3.4 million during the third quarter 2012.

Balance Sheet

Gross loans totaled $5.33 billion at September 30, 2012, an increase of $168 million from June 30, 2012 and an increase of $806 million from $4.53 billion at September 30, 2011. At September 30, 2012, the allowance for credit losses was 1.83 percent of total loans down from 1.89 percent at June 30, 2012 and 2.21 percent at September 30, 2011.

Deposits totaled $6.16 billion at September 30, 2012, an increase of $161 million from $6.0 billion at June 30, 2012 and an increase of $529 million from $5.63 billion at September 30, 2011.

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