Quarter-end shareholders’ equity of $904.6 million was $149.0 million, or 19.7%, higher than September 30, 2011, and up $19.5 million from the end of the second quarter of 2012. The year-over-year increase was driven by the January 2012 issuance of 2.1 million additional shares in support of the Company’s recently completed branch acquisitions, appreciation in the available-for-sale investment portfolio, and continued solid growth in retained earnings due to record levels of net income generation. Despite the completion of the branch acquisitions in the third quarter, the Company continued to strengthen its capital position as was evidenced by the 75 basis-point increase in the net tangible equity to net tangible assets ratio from the end of the third quarter of 2011.

Asset Quality

The Company’s asset quality metrics continue to be markedly better than comparative peer and industry averages and illustrate the long-term effectiveness of the Company’s disciplined risk management and underwriting standards. Net charge-offs were $1.7 million for the third quarter, compared to $2.1 million for the second quarter of 2012 and $1.1 million for third quarter of 2011. Nonperforming loans as a percentage of total loans at September 30, 2012 were 0.81% (0.74% excluding acquired loans), down from the 0.90% at June 30, 2012, and up from a very modest 0.54% of total loans at the end of last year’s third quarter. The total delinquency ratio of 1.79% at the end of the third quarter (1.65% excluding acquired loans) was up eight basis points from second quarter 2012, and 23 basis points higher than the 1.56% level at September 30, 2011. The third quarter provision for loan losses of $2.6 million was $0.5 million higher than the second quarter provision and up $1.6 million from the third quarter of 2011, and reflected solid organic loan growth and $0.5 million for certain loans acquired in the recently completed branch transactions. The allowance for loan losses to nonperforming loans was 139% at September 30, 2012, compared to 131% at June 30, 2012 and 135% as of December 31, 2011.

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