Net income per diluted share was $0.14 for the third quarter of 2014 as compared to $0.11 per diluted share for the second quarter of 2014 and $0.09 per diluted share for the third quarter of 2013.
"The community banking and mortgage banking segments performed well during the quarter with revenue and net income up in both segments on a linked quarter and year-over-year basis, reflecting our balance sheet growth, improving credit quality, and focus on operating efficiency," said Doug Gordon, President and Chief Executive Officer of the Company.
The increase in net income compared to the previous quarter and the same quarter in the prior year was attributable to both the community banking and mortgage banking segments. Community banking segment net income totaled $3.4 million for the quarter ended September 30, 2014 compared to $2.8 million for quarter ended June 30, 2014 and $2.5 million for the quarter ended September 30, 2013. Community banking operations were positively impacted by a $1.2 million increase in net interest income to $10.5 million during the third quarter of 2014 compared to $9.3 million during the third quarter of 2013. Net income for the community banking segment was also positively impacted by a $750,000 decline in provision for loan losses from $1.0 million during the third quarter of 2013 to $250,000 in the third quarter of 2014 due to the improving credit quality metrics set forth below. Expense related to real estate owned returned to a more normalized level during the quarter ended September 30, 2014, compared to the quarter ended September 30, 2013, which was positively impacted by property sales with significant gains.
Mortgage banking segment net income totaled $1.2 million for the quarter ended September 30, 2014 compared to $1.0 million for quarter ended June 30, 2014 and $639,000 for the quarter ended September 30, 2013. Mortgage banking operations were positively impacted by a 13.3% increase in the volume of loans originated and sold as well as a 6.3% increase in the margins earned on loan sales during the quarter ended September 30, 2014 compared to the quarter ended September 30, 2013.
Credit quality continued its steady pace of improvement during the third quarter of 2014. Nonaccrual loans have declined by 6.3% to $43.1 million at September 30, 2014 from $46.0 million at June 30, 2014 and have declined 15.4% from $51.0 million at December 31, 2013. Total past due loans declined 21.1% to $34.6 million at September 30, 2014 from $43.9 million at June 30, 2014 and have declined 21.3% from $44.0 million at December 31, 2013. Total loans past due less than 90 days have declined 69.6% to $5.3 million at September 30, 2014 from $17.3 million at June 30, 2014 and have declined 60.1% from $13.2 million from December 31, 2013. The level of loans past due less than 90 days, which represent an early stage indicator of future potential loan loss, is at its lowest level in approximately ten years.
