The yield on total average loan portfolio of 4.97% in the fourth quarter of 2012 declined 22 basis points from the corresponding quarter in 2011 and stayed substantially unchanged from the previous quarter. Past periods' trend of higher yielding loans in the portfolio paying off or being refinanced at lower yields combined with new loan originations at current market rates continues to drive the yield on the total portfolio lower as compared to the prior year.

 
Table 3                
AVERAGE LOANS FOR THE QUARTER
(Dollars in thousands) Dec. 31, % of Dec. 31, % of Change Sept. 30, % of
  2012 Total 2011 total Amount % 2012 Total
Commercial loans  $ 262,773 17%  $ 293,583 20%  $ (30,810) -10%  $ 287,706 19%
 Commercial real estate construction  33,534 2%  14,730 1%  18,804 128%  37,838 3%
 Residential real estate construction  8,304 1%  13,613 1%  (5,309) -39%  9,497 1%
Total real estate construction loans  41,838 3%  28,343 2%  13,495 48%  47,335 4%
 Mortgage  55,980 4%  67,579 5%  (11,599) -17%  58,393 4%
 Home equity  238,462 16%  260,849 17%  (22,387) -9%  246,330 16%
Total real estate mortgage  294,442 20%  328,428 22%  (33,986) -10%  304,723 20%
Commercial real estate loans  872,639 59%  834,362 55%  38,277 5%  841,098 56%
Installment and other consumer loans  11,918 1%  13,721 1%  (1,803) -13%  12,592 1%
 Total loans  $ 1,483,610    $ 1,498,437    $ (14,827) -1%  $ 1,493,454  
                 
Yield on loans 4.97%   5.19%    (0.22)   4.98%  
 

The Company's investment portfolio continues to have an unfavorable impact on its net interest margin. During 2012, the Company increased its investments in municipal securities while reducing its U.S. government agency securities portfolio. During this time, municipal securities purchases consisted principally of Oregon and Washington school district securities with State guarantees and fully amortizing mortgage-backed securities. The expected duration of the investment portfolio was approximately 3.0 years at December 31, 2012, compared to approximately 2.5 years twelve months earlier.

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