“Moving into 2013, we expect to deliver another year of strong profitability. Although modest loan demand and continued compression in our net interest margin will present challenges for growing our net interest income, we believe we can offset these pressures through further increases in our non-interest income, continued improvement in operating efficiencies, and a reduction in credit costs resulting from continued improvement in asset quality,” said Mr. Garding.

                 

REVENUE SUMMARY

(Unaudited; $ in thousands)
 
For the Three Months Ended

Sequential Quarter% Change

Year Over Year% Change
        December 31,2012       September 30,2012       December 31,2011            
Interest income $ 67,601       $ 68,175       $ 72,006 -0.8% -6.1%
Interest expense       6,628         7,170         8,971         -7.6%       -26.1%
Net interest income 60,973 61,005 63,035 -0.1% -3.3%
Non-interest income:
Income from the origination and sale of loans 12,321 11,665 8,087 5.6% 52.4%
Other service charges, commissions and fees 8,774 8,774 8,062 —% 8.8%
Service charges on deposit accounts 4,401 4,395 4,543 0.1% -3.1%
Wealth management revenues 3,659 3,557 3,280 2.9% 11.6%
Investment securities gains, net 53 66 1,488 -19.7% -96.4%
Other income       1,427         1,725         1,537         -17.3%       -7.2%
Total non-interest income       30,635         30,182         26,997         1.5%       13.5%
Total revenues       $ 91,608         $ 91,187         $ 90,032         0.5%       1.8%
Tax equivalent net interest margin ratio       3.55 %       3.63 %       3.79 %                
 
      For the Year Ended      

Year Over Year% Change
        December 31,2012       December 31,2011      
Interest income $ 273,900       $ 292,883 -6.5%
Interest expense       30,114         42,031         -28.4%
Net interest income 243,786 250,852 -2.8%
Non-interest income:
Income from the origination and sale of loans 41,790 21,153 97.6%
Other service charges, commissions and fees 34,226 31,689 8.0%
Service charges on deposit accounts 17,412 17,647 -1.3%
Wealth management revenues 14,314 13,575 5.4%
Investment securities gains, net 348 1,544 -77.5%
Other income       6,771         6,264         8.1%
Total non-interest income       114,861         91,872         25.0%
Total revenues       $ 358,647         $ 342,724         4.6%
Tax equivalent net interest margin ratio       3.66 %       3.80 %        
 

Net Interest Income

The Company's net interest margin ratio decreased to 3.55% during fourth quarter 2012, as compared to 3.63% during third quarter 2012. The fourth quarter 2012 net interest margin ratio included $425 thousand of recoveries of charged-off interest. Exclusive of these interest recoveries, the Company's net interest margin ratio was 3.53% during fourth quarter 2012. The decline in the net interest margin ratio, as compared to third quarter 2012, was primarily due to lower yields earned on the Company's loan and investment portfolios. The impact of lower asset yields was partially offset by increases in average outstanding loans and investment securities and a 5 basis point reduction in the cost of interest-bearing liabilities due to a continuing favorable shift in the mix of deposits from higher costing time deposits into non-interest bearing demand deposits.

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