The net interest margin was 3.49 percent, a decrease of 7 bps from 3.56 percent in the previous quarter. The decline in net interest margin was driven by the 4 bps benefit in the third quarter from non-recurring items described above as well as lower loan and securities yields. The margin otherwise benefited by 2 bps from the full quarter impact of the TruPS redemption in the third quarter and 1 bp from the FHLB debt termination in December.

Compared with the fourth quarter of 2011, net interest income decreased $17 million and the net interest margin decreased 18 bps, driven by lower asset yields partially offset by higher average loan balances, run-off in higher-priced CDs and mix shift to lower cost deposit products.

Securities

Average securities and other short-term investments were $16.8 billion in the fourth quarter of 2012 compared with $16.6 billion in the previous quarter and $17.2 billion in the fourth quarter of 2011. The sequential increase in average balances was related to the pre-investment in the third quarter of anticipated fourth quarter cash flows. The year-over-year decline was due to the timing of reinvestment in portfolio cash flows during 2011 as well as lower cash balances held at the Federal Reserve.

Loans
  For the Three Months Ended   % Change
December   September   June   March   December    
2012   2012   2012   2012   2011   Seq   Yr/Yr
Average Portfolio Loans and Leases ($ in millions)
Commercial:
Commercial and industrial loans $34,301 $33,111 $32,734 $31,371 $29,891 4% 15%
Commercial mortgage 9,193 9,567 9,810 10,007 10,262 (4%) (10%)
Commercial construction 686 742 873 992 1,132 (8%) (39%)
Commercial leases   3,509   3,481   3,469   3,543   3,351   1%   5%
Subtotal - commercial loans and leases   47,689   46,901   46,886   45,913   44,636   2%   7%
Consumer:
Residential mortgage loans 11,846 11,578 11,274 10,828 10,464 2% 13%
Home equity 10,129 10,312 10,430 10,606 10,810 (2%) (6%)
Automobile loans 11,944 11,812 11,755 11,882 11,696 1% 2%
Credit card 2,029 1,971 1,915 1,926 1,906 3% 6%
Other consumer loans and leases   306   314   326   345   402   (3%)   (24%)
Subtotal - consumer loans and leases   36,254   35,987   35,700   35,587   35,278   1%   3%
Total average loans and leases (excluding held for sale) $83,943 $82,888 $82,586 $81,500 $79,914 1% 5%
 
Average loans held for sale   2,237   1,941   1,920   2,257   2,364   15%   (5%)
 

Average loan and lease balances (excluding loans held-for-sale) increased $1.1 billion, or 1 percent, sequentially and increased $4.0 billion, or 5 percent, from the fourth quarter of 2011. Period end loan and lease balances (excluding loans held-for-sale) increased $2.7 billion, or 3 percent, sequentially and $4.8 billion, or 6 percent, from a year ago.

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