"The performance of our wealth management business, which has also been an important focus, has been gratifying," Latoff explained. "We have added key revenue producing team members in this area and will continue to do so as appropriate."

Income Statement Highlights

Net interest income after the provision for credit losses was $3.43 million for the three months ended September 30, 2013 compared with $5.33 million for the three months ended September 30, 2012. This reflects the continuing low interest rate environment, a 25% reduction of total interest expense, and a provision for credit losses of $1.60 million in the quarter. The increased provision expense was primarily due to the $3.6 million write-down of three non-performing commercial credits. For the nine months ended September 30, 2013, net interest income after the provision for credit losses was $13.02 million compared with $15.38 million for the first nine months of 2012.

The company's net interest margin was 3.21% for the third quarter of 2013, compared with 3.80% for the third quarter of 2012. The decline reflects continuing pressure on margins in a low-rate environment, offset by careful interest expense management and a diminished reliance on outside borrowings. However, the reduction in non-performing assets should contribute to an expanding margin in future quarters.

Non-interest income, including fees from wealth management, gains on the sale of investment securities and SBA 7(a) loans and fees from debit cards and merchant services was $1.32 million in third quarter of 2013, up 21% compared to $1.09 million in the third quarter of 2012.  Non-interest income for the first nine months of 2013 was $3.68 million, up 16% compared to $3.17 million for the first nine months of 2012.

Fees from the company's wealth management business, which includes investment management, trust and insurance, rose 55% year over year, to $344,182 in the third quarter of 2013, compared to $222,523 in the third quarter of 2012. Wealth Management fees were $936,606 in the first nine months of 2013 compared to $689,519 in the first nine months of 2012. Assets under care were $139.49 million at September 30, 2013, compared with $115.63 million at September 30, 2012. Latoff noted: "We believe the company's wealth management business possesses great upside, as the bank operates in markets with strong customer demographics."

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