Increases in mortgage banking income have been favorably impacted by increased residential mortgage originations due to the effect of lower long-term interest rates. Increases in merchant services are due to the overall growth of the Company. Noninterest income increased 8 percent in the first quarter of 2001 from the fourth quarter of 2000. The increase was primarily due to personnel costs associated with the Company's geographic expansion as well as merchant services, taxes and licenses, and other expenses. Gains and losses on sales of investment securities were excluded from the calculation of the Company's efficiency ratio.
Total loans exclude loans held for sale.
As a result of the deterioration of this single credit relationship, the Company undertook a comprehensive review of the process currently in place to detect and react to other potential loan portfolio deterioration. In order to provide management with another perspective on the issue, the Company has retained the Secura Group, a nationally recognized firm with expertise in commercial loan credit review, to conduct an independent assessment of the Columbia's loan and collateral monitoring procedures. Based on information currently known to Columbia, management believes that the additional collateral being obtained to support the loan may reduce the Company's loss exposure. Through our experienced team of local bankers, we are positioned for significant growth in high quality business loans and new relationships in this large market area. During the second quarter, we expect to open a private banking and commercial banking presence in the Columbia Tower in downtown Seattle, continue the expansion of our presence in Bellevue, and open a retail office in Issaquah.