Net interest margin for the fourth quarter 2012 was 3.79 percent, down from 4.00 percent at September 30, 2012, but only slightly less than third quarter 2012 net interest margin of 3.86 after excluding the $1.4 million of periodic yield adjustments recorded in accordance with GAAP. Net interest margin was up slightly from 3.78 percent for the quarter ended December 31, 2011. Strong loan growth in the majority of the Company’s loan portfolios and a slight decrease in the cost of borrowing were offset by continued rate pressures on the commercial loan and lease and other consumer loan portfolios.NON-INTEREST INCOME Non-interest income was $6.5 million for the fourth quarter 2012, up $2.7 million from the third quarter 2012. The increase in non-interest income as compared to the third quarter is primarily due to a $1.9 million gain on a sale of equipment leases totaling $19.6 million during the quarter undertaken to manage concentration risk. Non-interest income was $18.6 million for the year ended December 31, 2012, up $13.5 million from the year ended December 31, 2011. The growth in 2012 was primarily driven by $13.0 million in non-interest income attributable to Bancorp Rhode Island. NON-INTEREST EXPENSE AND TAX PROVISION Non-interest expense of $28.9 million in the fourth quarter 2012 decreased $1.6 million from the third quarter 2012. Significant changes in non-interest expense included the following:
- Compensation and employee benefit expense increased $1.0 million, or 7.1 percent during the fourth quarter 2012, as a result of the addition of loan officers and other individuals in key support areas of the Company. The increase in compensation and employee benefit expense was offset by a $0.4 million decrease in professional services expense.
- Equipment and data processing expense decreased $0.9 million, or 21.1 percent as a result of the reduction in conversion costs incurred in conjunction with Brookline Bank’s core system conversion.
- The increase in other expenses in the third quarter as compared to the fourth quarter is associated with the Company’s continued migration to standardized, consolidated operating and financial reporting platforms.