Founder and Chairman of the Board George Duncan added, "The quarter ending December 31, 2012 represents our 93 rd consecutive profitable quarter and our total assets under management have grown to $2.33 billion. These milestones represent significant accomplishments in only twenty-four years for our community bank. We believe we were able to achieve such success because of our strong service culture and product capabilities, combined with our core values. As we embark on our twenty-fifth year of caring for the financial needs of our customers and our communities, we believe we are better positioned than ever to serve our expanding market area with a broad range of competitive products, state-of-the-art delivery channels, and a dedicated team of knowledgeable banking professionals." 

Results of Operations

The Company's growth contributed to increases in net interest income and the level of operating expenses for both the quarter and the year ended December 31, 2012. In 2012, the provision for loan losses decreased compared to the 2011 periods, while non-interest income increased.

Net interest income for the quarter ended December 31, 2012 amounted to $15.9 million, an increase of $614 thousand, or 4%, compared to the December 2011 quarter. Net interest income for the twelve months ended December 31, 2012 amounted to $61.9 million, an increase of $3.6 million, or 6%, compared to the same period in 2011. The increases in net interest income over the comparable 2011 periods were due primarily to revenue generated from loan growth, which has been funded primarily through non-interest bearing deposits, partially offset by a decrease in tax equivalent net interest margin ("margin"). Average loan balances (including loans held for sale) increased $102.8 million and $97.5 million, respectively, for the three and twelve months ended December 31, 2012, compared to the three and twelve month averages for the same periods in 2011. Net interest margin was 4.21% for the quarter ended December 31, 2012, compared to 4.39% for the quarter ended December 31, 2011. The margin was 4.20% for the quarter ended September 30, 2012. Margin for the twelve months ended December 31, 2012 was 4.27% compared to 4.37% for 2011. Consistent with the industry, the 2012 margin continued to trend downward, as the yield on interest-earning assets declined faster than the cost of funding, as funding rates have reached a level leaving little room for significant reductions. 

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