At the end of the third quarter, nonperforming assets to total assets were 0.42%, comparable to the prior quarter. Nonperforming originated loans as a percentage of originated loans decreased slightly to 0.93% at September 30, 2012 and totaled $114.2 million. At September 30, 2012, the allowance for loan losses on originated loans totaled $147.2 million or 1.20% of such loans, compared to $135.2 million or 1.19% of loans at June 30, 2012.

Acquired loans

The provision for losses on acquired loans totaled $0.4 million, compared to $2.4 million in the prior quarter. Net charge-offs on those portfolios totaled $1.0 million during the quarter, compared to $0.7 million in the prior period. At September 30, 2012, the allowance for loan losses on acquired loans totaled $2.7 million, compared to $3.3 million at June 30, 2012. Acquired nonperforming loans totaled $28.2 million, up from $19.4 million at June 30, 2012. At September 30, 2012, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $212 million.

Fee Income

Third quarter 2012 non-GAAP operating noninterest income of $96.9 million increased 22% or $17.2 million compared to the prior quarter. The increase was driven by stronger mortgage banking revenues as well as the full quarter benefit of the HSBC transaction. Deposit service charges increased $5.0 million or 23% over the prior quarter primarily with the benefit of the accounts acquired from HSBC. Mortgage banking revenues increased $3.8 million or 53% over the prior quarter driven by higher gain-on-sale margins as well as sustained strength in origination volumes. Merchant and card fees increased 30% over the prior quarter to $12.0 million reflecting the upside of the credit card accounts acquired from HSBC.

On a GAAP basis, noninterest income totaled $102.2 million, including a $5.3 million gain recognized on the sale of mortgage-backed securities in the second quarter. The gain represents the company's share of the sale proceeds in excess of the floor price set on the date of original sale to a third party.

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