At the end of the fourth quarter, nonperforming assets to total assets were 0.50%, and increased eight basis points from the prior quarter. Nonperforming originated loans as a percentage of originated loans increased to 1.07% at December 31, 2012 from 0.93% at September 30, 2012. Approximately a third of the $29 million sequential increase in nonperforming originated loans related to guidance issued by the Office of the Comptroller of the Currency (OCC) to place consumer loans discharged in bankruptcy on nonaccrual status. The remaining increase in commercial nonaccruals was driven primarily by one large commercial credit in the company's Eastern Pennsylvania market.

At December 31, 2012, the allowance for loan losses on originated loans totaled $160.9 million or 1.20% of such loans, compared to $147.2 million or 1.20% of loans at September 30, 2012.

Acquired loans

The provision for losses on acquired loans totaled $0.2 million, compared to $0.4 million in the prior quarter. Net charge-offs on those portfolios totaled $1.3 million during the quarter, compared to $1.0 million in the prior period.  At December 31, 2012, the allowance for loan losses on acquired loans totaled $1.6 million, compared to $2.7 million at September 30, 2012. Acquired nonperforming loans totaled $29.6 million, compared to $28.2 million at the end of the prior quarter. At December 31, 2012, remaining credit marks available to absorb losses on a pool-by-pool basis totaled $176 million.

Fee Income

Fourth quarter 2012 non-GAAP operating noninterest income of $91.8 million decreased 5% or $5.0 million compared to the prior quarter. 

Continued strength in derivative swap activity and increased assets under management in the company's wealth management platform contributed to 11% and 8% sequential increases in capital markets and wealth management fees, respectively.

These increases were offset by lower mortgage banking revenues as well as typical fourth quarter declines in insurance fees. Mortgage banking revenues decreased $2.9 million from the prior quarter driven by lower application volumes and gain-on-sale margins. However, closed mortgage origination volumes increased 12% from the prior quarter to an all-time high. During the quarter, the company opened a third mortgage processing center to expediently meet and exceed the needs of its customers.

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