Nonaccrual loans decreased $21.7 million during the fourth quarter of 2012 to $109.9 million at December 31, 2012 compared to $131.6 million at September 30, 2012 and $220.3 million at December 31, 2011, representing a decrease of $110.4 million, or 50.1%, in nonaccrual loans during 2012.

Noninterest Income:

Noninterest income was $16.6 million for the fourth quarter of 2012, in comparison to $16.8 million for the third quarter of 2012 and $16.0 million for the fourth quarter of 2011.

The gain on sale of residential mortgage loans was $2.6 million, $4.3 million and $1.2 million for the fourth quarter of 2012, the third quarter of 2012 and the fourth quarter of 2011, respectively, primarily reflecting an increase in loan origination volume in our mortgage division during 2012.

Net losses associated with changes in the fair value of mortgage and SBA servicing rights were $867,000, $2.4 million and $913,000 for the fourth quarter of 2012, the third quarter of 2012 and the fourth quarter of 2011, respectively, primarily reflecting changes in mortgage interest rates and the related changes in estimated prepayment speeds during these time periods.

Noninterest Expense:

Noninterest expense was $54.6 million for the fourth quarter of 2012 compared to $51.2 million for the third quarter of 2012 and $61.4 million for the fourth quarter of 2011. The decrease in noninterest expense as compared to the fourth quarter of 2011 is primarily reflective of a lower level of expenses related to nonperforming assets and potential problem loans and the implementation of certain measures intended to improve efficiency in conjunction with the restructuring of the Company to a smaller footprint.

Write-downs and expenses on other real estate properties and repossessed assets were $7.5 million, $2.9 million and $10.0 million for the fourth quarter of 2012, the third quarter of 2012 and the fourth quarter of 2011, respectively, and primarily reflects continued write-downs on certain other real estate properties primarily resulting from a decline in fair value upon periodic re-appraising of the properties.