| | Noninterest
income (excluding the above referenced gain) for 2004 increased $1.8 million,
or 4.3%, over 2003. The increase primarily reflects a higher level of deposit
service charge fees, asset management fees, data processing fees, and merchant
services fees, partially offset by a decrease in mortgage banking revenues. The
table below reflects the major components of noninterest income. 
Various
significant components of noninterest income are discussed in more detail below.
Service Charges on Deposit Accounts. Deposit service charge fees increased
$3.2 million, or 18.0%, in 2005, compared to an increase of $1.3 million, or 7.7%,
in 2004. Deposit service charge revenues in any one year are dependent on the
number of accounts, primarily transaction accounts, the level of activity subject
to service charges, and the collection rate. The increase in deposit service charge
fees in 2005 is due to higher overdraft and nonsufficient funds ("NSF") fees due
to growth in deposit accounts attributable to Recent Acquisitions and "Absolutely
Free Checking." The increase in | | service
charge revenues in 2004 was primarily attributable to growth in overdraft and
NSF fees primarily associated with a revised fee structure implemented in mid-2004.
Asset Management Fees. In
2005, asset management fees increased $412,000, or 10.3%, versus an increase of
$1.4 million, or 51.2%, in 2004. At year-end 2005, assets under management totaled
$693.0 million, reflecting net growth of $40.0 million, or 6.1% over 2004. The
increase reflects new business which produced growth in assets of $118.0 million
partially offset by normal distribution activity within managed accounts and estates.
At year-end 2004, assets under management totaled $653.0 million, reflecting growth
of $249.0 million, or 61.6% over 2003. This growth was due to the purchase of
$208.0 million in trust and investment management accounts from Synovus Trust
Company in connection with the Quincy State Bank acquisition, growth in new business,
and improved asset returns. Mortgage
Banking Revenues. In 2005, mortgage banking revenues increased $864,000, or
26.9%, compared to a decrease of $2.9 million, or 47.3% in 2004. The increase
in 2005 reflects a 19.2% increase in production over 2004 which was driven by
increased home purchase and construction activity in Bank markets and lower interest
rates for residential real estate financing. The decrease in 2004 was due to a
decline in fixed rate mortgage production that was affected by a general slow-down
in residential lending markets. We generally sell all fixed rate residential loan
production into the secondary market. The level of interest rates, origination
volume and percent of fixed rate production have significant impacts on our mortgage
banking revenues. Merchant Services
Fees. Merchant services fees increased $1.0 million, or 20.2% in 2005 compared
to a $572,000, or 12.5% increase in 2004. The improvement in both periods is directly
related to growth in merchant card transaction volume primarily driven by growth
in the client base. Noninterest income
as a percent of average assets was 1.98% in 2005, compared to 2.52% in 2004, and
2.32% in 2003. The decline from 2004 to 2005 primarily reflects the impact of
the one-time gain on sale of the Bank’s credit card portfolio in August 2004.
The decline from 2003 versus 2005 reflects the impact of Recent Acquisitions which
brought a lower and less diverse level of noninterest income in relation to the
consolidated asset base. | |
