Net interest income was $5.3 million for the three months ended December 31, 2012 compared to $5.4 million for the same period in 2011. The decrease for the fourth quarter 2012 was primarily due to lower interest and fees on loans due to lower average net loan balances. Net interest income for the full year 2012 was $22.0 million compared to $21.5 million for 2011.

Non-interest income excluding gains on the sale of investment securities and SBA loans and the write down of OREO properties increased 36.30% for the three months ended December 31, 2012 compared to the same period in 2011. Non-interest income as defined above for the fourth quarter of 2012 was $1.2 million compared to $865,000 for the same period in 2011. Service charges on deposits and fees from wealth management services and products continued their positive trend, exceeding fourth quarter 2011 by approximately $38,000 or 12.00% and $145,000 or 73.02% respectively. Non-interest income as defined above for the full year of 2012 was $3.9 million compared to $3.4 million for 2011, a 17.97% increase.

Non-interest expense for the three months ended December 31, 2012 increased 4.36% or $186,000, compared to the same period in 2011. The variance was due largely to increased costs for occupancy, third party services (mainly legal), charitable contributions, and an increase in the reserve for unfunded commitments, offset in part by lower staffing costs. Non-interest expenses for the full year 2012 increased 3.21% or approximately $537,000 compared to 2011.

During the fourth quarter 2012 and 2011, DNB provided $180,000 and $202,000, respectively, for credit losses. The allowance for credit losses at December 31, 2012 was $6.8 million compared to $6.2 million at December 31, 2011. The allowance as a percentage of total loans and leases increased to 1.72% at December 31, 2012, compared to 1.53% at December 31, 2011. Our coverage ratio, defined as the allowance for credit losses as a percentage of non-performing loans was 65.54% on December 31, 2012, compared to 80.66% at December 31, 2011.

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