## 2011 vs. 2010 comparison 

Service charges on deposit accounts were $1.2 million in 2011, compared to $1.3 million in 2010. The decrease is primarily due to a decline in insufficient funds charges, reflecting changes in customer behavior and spending patterns. 

Mortgage lending income was $1.9 million in 2011, compared to $2.5 million in 2010. A decline in the level of mortgage refinance activity during 2011 when compared to the levels experienced during 2010 contributed to the decrease in mortgage lending income. The Company's income from mortgage lending typically fluctuates as mortgage interest rates change and is primarily attributable to origination and sale of new mortgage loans. 

Losses related to affordable housing partnership investments were $0.6 million in 2011, compared to $0.3 million in 2010. The increase in losses on affordable housing partnership investments was primarily due to the Company’s increased total investment in these projects in 2011. While the losses incurred by the partnerships are recognized in pre-tax earnings, these investments are designed to generate a return primarily through the realization of federal tax credits. As a result, these investments have significantly reduced the Company’s income tax expense during 2011 when compared to 2010. In January of 2012, the Company sold its interests in three affordable housing partnership investments. The Company will recognize a pre-tax gain on sale of $3.2 million related to these investments in 2012. Accordingly, the Company expects it will not incur any losses related to affordable housing partnership investments subsequent to the sale. In addition, the Company does not expect to receive any federal tax credits related to affordable housing partnership investments in 2012. 

The net gain on securities was $0.9 million in 2011, compared to a net gain of $1.4 million in 2010. Gross realized gains of $1.7 million in 2011 were reduced by gross realized losses of $0.5 million and other-than-temporary impairment charges of $0.3 million related to trust preferred securities. Gross realized gains of $3.5 million in 2010 were primarily reduced by approximately $2.0 million in other-than-temporary impairment charges related to trust preferred securities and corporate debt securities. 

## 2010 vs. 2009 comparison 

Service charges on deposit accounts were $1.3 million in 2010, compared to $1.2 million in 2009. The increase was primarily due to increased insufficient funds charges, reflecting changes in customer behavior and spending patterns. 

Mortgage lending income was $2.5 million in 2010, compared to $3.3 million in 2009. A significant decline in the level of mortgage refinance activity during 2010 when compared to the record levels experienced during 2009 contributed to the decrease in mortgage lending income. The Company’s income from mortgage lending typically fluctuates as mortgage interest rates change and is primarily attributable to origination and sale of new mortgage loans. 

Losses related to affordable housing partnership investments were $0.3 million in 2010, compared to $0.2 million in 2009. The increase in losses on affordable housing partnership investments was primarily due to the Company’s increased total investment in these projects. While the losses incurred by the partnerships are recognized in pre-tax earnings, these investments are designed to generate a return primarily through the realization of federal tax credits. 

The net gain on securities was $1.4 million in 2010, compared to a net loss of $3.7 million in 2009. Gross realized gains of $3.5 million in 2010 were offset by gross realized losses of $2.1 million. Gross realized losses in 2010 primarily related to other-than-temporary impairment charges for trust preferred securities and corporate debt securities. Gross realized losses of $6.6 million in 2009 primarily related to other-than-temporary impairment charges for trust preferred securities and an investment in the common stock of Silverton Financial Services, Inc. These losses were offset by gross realized gains of $2.9 million during the same period. 

