HispanicBusiness

As a further benefit to its checking account clients, the Bank recently joined the Allpoint ATM network. Allpoint is the world's largest surcharge-free ATM network, offering over 55,000 ATMs worldwide. The Bank also implemented a number of upgrades to its online banking and cash management services during the first quarter of 2013, including making online wire request available to qualified businesses.

Money market deposits increased from $60.1 million at December 31, 2012 to $73.7 million at March 31, 2013. Money market deposits during 2013 benefited from:

•low (often, near zero) interest rates being paid on brokerage accounts and money market mutual funds, thereby encouraging clients to transfer their funds to higher yielding and FDIC insured accounts;

•the expiration of the FDIC Transaction Account Guaranty Program on December 31, 2012, whereby non-interest bearing checking accounts (as defined under the Program) received unlimited FDIC deposit insurance coverage (the expiration thereby encouraged certain clients to reallocate funds back to money market accounts under the FDIC's unified Standard Maximum Deposit Insurance Amount);

•the Bank's cross-selling money market accounts to new checking account clients given the easy integration and customization via the Bank's online banking service;

•the conversion of certain deposits from certificates of deposit to money market accounts given the limited yield differential between the products in the current interest rate environment; and

•the Bank's offering tiered pricing on money market accounts, whereby clients receive a higher interest rate on their entire account balance as each successively higher balance tier level is attained.



Savings deposits rose from $62.4 million at December 31, 2012 to $70.5 million at March 31, 2013. The Bank realized balance increases in both consumer and business savings products, which have been an attractive alternative for liquid funds in the current historically low interest rate environment.

Time deposits decreased from $31.3 million at December 31, 2012 to $29.4 million at March 31, 2013. Factors contributing to this decline included transfers from some maturing time deposits into transaction accounts and the Bank's moderating its time deposit pricing in response to its favorable liquidity position and the availability of alternative low cost funding.

Commenting on the Bank's deposit performance, Marilyn Goode, the Bank's Chief Administrative Officer, stated: "We are very pleased to report record total deposits of $309.9 million at March 31, 2013. This deposit growth was achieved without pursuing institutional or wholesale deposits in light of the Bank's strong liquidity position." Ms. Goode then continued: "The Bank's weighted average cost of deposits during the first quarter of 2013 was 0.22%, which derives in part from the success of our high caliber cash management services. We welcomed a notable number of new cash management clients during the first quarter of 2013, many of whom selected multiple services from our product set of ACH origination, online wire request, sweep, online banking, electronic bill payment, lockbox, positive payment, person to person payment, and remote deposit capture."

Shareholders' equity rose from $34.0 million at December 31, 2012 to $34.3 million at March 31, 2013. The first quarter net income plus $86 thousand in equity compensation expense more than offset a $46 thousand reduction in the accumulated other comprehensive income associated with securities classified as available for sale.