We announced a new expanded Vancouver, Washington, office location scheduled for completion in late 2015 to continue our successful growth is Southwest Washington. Our dental banking footprint grew to 35 states during the quarter while quality performance metrics support the possibility of further expansion.
Most significant, we announced the acquisition of Capital Pacific Bank in Portland, a $255.9 million business bank, which is scheduled to close this quarter. The complementary business model and talent of our two organizations particularly a non-profit, sustainability, and community-based business lending supports further growth in already successful niche segments by giving additional scale to clients both in terms of loans and products.
The combined organization once fully integrated will give us a presence in Portland in that market with pro forma Metropolitan Portland loans and deposits of $591.1 million and $483.9 million, respectively. As previously stated, our long-term goal is to develop a $1 billion presence in the Portland market. With those introductory comments, I’ll now turn the presentation over to Mick Reynolds, who’ll provide some additional color on our financial metrics and performance. Mick?
Mick Reynolds – Executive Vice President & Chief Financial Officer
Thank you, Roger. In my portion of the presentation, I will be addressing our net interest margin, securities portfolio, provide more information on non-interest income and expense, and have some brief comments on taxes. Also when appropriate and as best possible, I will provide listeners and analysts with first quarter 2015 expectations.
Our fourth quarter reported net interest margin was 4.24% and in line with our estimates provided in last quarter’s call. We did see a decline in our earning asset yields as both the yields on loans and securities were down slightly in the fourth quarter when compared to third quarter. However a portion of the decline in earning asset yields was offset by a 3 basis point decline in our cost of funds. The core net interest margin, which removes non-recurring items and accretion of fair value marks was 4.20% for the fourth quarter and remained relatively stable with the prior quarter.
Our net interest margin in the first quarter 2015 is expected to continue to remain relatively stable with the four quarter. This stability is predicated on anticipated loan growth in the first quarter, which should enhance the earning asset mix, thus offsetting possible erosion in the yield on loans and an anticipated lower yield on the mortgage-backed securities in our portfolio.
Turning now to the securities portfolio, at December 31st, 2014, the portfolio had a pretax unrealized gain of $6.1 million, an increase of $700,000 from the prior quarter end as long term rates moved down during the quarter.
The average life and duration of the portfolio at year-end was 3.9 years and 3.6 years, compared to 4.2 years and 3.8 years at December 31st, 2013. We anticipate that portfolio balance will decline in the first quarter as projected cash flows will be used to partially fund loan growth.
