Total interest expense increased $185 thousand, or 3.75%, to $5.12 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. Deposit costs decreased $33 thousand, or 1.25%, to $2.60 million for the fourth quarter of 2012 compared with the fourth quarter of 2011, which was primarily due to an 18 basis point decrease in the average rate paid on interest-bearing deposits. Borrowing costs increased $218 thousand, or 9.49%, to $2.52 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. The average rate paid on interest-bearing liabilities decreased 20 basis points to 1.01% for the fourth quarter of 2012 compared with the fourth quarter of 2011. The average balance of interest-bearing liabilities increased $399.15 million, or 24.71%, to $2.01 billion for the fourth quarter of 2012 compared with the fourth quarter of 2011, which included a $379.81 million increase in average interest-bearing deposits and a $19.34 million increase in average total borrowings. The increases were primarily the result of the Peoples and Waccamaw acquisitions that occurred during the second quarter of 2012.

Provision for Loan Losses

The provision for loan losses for the fourth quarter of 2012 decreased $1.22 million, or 49.92%, to $1.22 million, compared with the same period of the prior year. Provision for the twelve months of 2012 decreased $3.37 million, or 37.24%, to $5.68 million, compared with the same period of the prior year. The fourth quarter of 2012 marks the ninth consecutive quarter of provision decreases when compared to the prior year's comparable quarter.

Noninterest Income

Noninterest income increased $1.64 million, or 24.84%, to $8.25 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. The Company realized a $316 thousand net gain on sale of securities for the fourth quarter of 2012, which was an increase of $290 thousand, or 11.15%, compared to the fourth quarter of 2011. Wealth management revenues increased $44 thousand, or 5.38%, for the fourth quarter of 2012 compared with the fourth quarter of 2011. The Trust and Wealth Management Divisions reported $876 million in assets under management as of December 31, 2012. Service charges on deposit accounts increased $376 thousand, or 10.90%, for the fourth quarter of 2012 compared with the fourth quarter of 2011, which are attributable to the addition of Waccamaw. Insurance commissions increased $45 thousand, or 3.85%, to $1.22 million for the fourth quarter of 2012 compared with the same quarter of 2011. The Company incurred no other-than-temporary impairment charges for the fourth quarter of 2012 compared to $1.55 million recorded for the fourth quarter of 2011.

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