Core other income increased by $7.5 million from the year ended December 31, 2010 to the year ended December 31, 2011. Loan service fees increased due to an increase in prepayment, exit and interest rate swap fees partly offset by a decrease in letters of credit fees. Net lease financing increased primarily due to an increase in the sales of third party equipment maintenance contracts and related income. Trust and asset management fees increased primarily due to the addition of a significant number of accounts during the third quarter of 2010, which impacted the full year in 2011. The increase in cash surrender value of life insurance was higher due to an improvement in overall asset yields. Accretion of indemnification asset decreased as a result of corresponding decrease in the indemnification asset balance during the year ended December 31, 2011. Other operating income increased primarily due to additional income from our international banking line of business and increased income from a Small Business Investment Company (SBIC) investment. Non-core other income decreased in the year ended December 31, 2011 compared to the year ended December 31, 2010 primarily as a result of the acquisition related gains recognized on the Broadway Bank and New Century Bank FDIC-assisted transactions in the second quarter of 2010, lower gains on sales of investment securities in 2011 and higher losses recognized on other real estate owned in 2011.
Other Expense (in thousands):
|Three Months Ended||Year Ended|
|December 31,||September 30,||June 30,||March 31,||December 31,||December 31,||December 31,|
|Core other expense:|
|Salaries and employee benefits||$||39,826||$||38,827||$||37,657||$||37,588||$||35,802||$||153,898||$||143,787|
|Occupancy and equipment expense||8,498||9,092||8,483||9,394||7,938||35,467||34,845|
Computer services and telecommunication expense
|Advertising and marketing expense||1,831||1,740||1,748||1,719||1,573||7,038||6,465|
|Professional and legal expense||1,422||1,647||1,853||1,225||1,718||6,147||5,803|
|Brokerage fee expense||137||363||574||483||448||1,557||1,926|
|Other intangible amortization expense||1,410||1,414||1,416||1,425||1,632||5,665||6,214|
|FDIC insurance premiums||2,662||2,272||3,502||3,428||3,930||11,864||15,600|
|Other real estate expense, net||1,464||1,181||1,251||398||858||4,294||2,694|
|Other operating expenses||7,187||6,989||6,516||6,572||6,855||27,264||26,265|
|Total core other expense||68,819||67,013||66,570||65,677||64,018||268,079||258,214|
|Non-core other expense: (1)|
|Branch impairment charges||594||-||-||1,000||-||1,594||-|
|Increase (decrease) in market value of assets held in trust for deferred compensation (A)||20||(405||)||158||187||597||(40||)||562|
|Total non-core other expense||614||(405||)||158||1,187||597||1,554||562|
|Total other expense||$||69,433||$||66,608||$||66,728||$||66,864||$||64,615||$||269,633||$||258,776|
|(1)||Letters denote the corresponding line items where these non-core other expense items reside in the consolidated statements of income as follows: A – Salaries and employee benefits.|
Core other expense increased by $1.8 million in the fourth quarter of 2011 compared with the third quarter of 2011. Salaries and employee benefits increased due to an increase in leasing incentive compensation on higher leasing revenues and an increase in health and benefits expense. We are largely self-insured for health insurance and expense can vary from quarter to quarter. Occupancy and equipment expense was down in the fourth quarter as most major maintenance projects were completed by the end of the third quarter. Computer services and telecommunication expense increased due to product and system enhancements during the fourth quarter of 2011. Non-core other expense was primarily impacted by $594 thousand of fixed asset impairment charges as a result of our decision to close two branches during the fourth quarter.
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