Core other expense increased by $9.9 million from the year ended December 31, 2010 to the year ended December 31, 2011. Salaries and employee benefits expense increased due to additional employees added in April 2010 in connection with the New Century and Broadway FDIC-assisted acquisitions, problem loan remediation staff added throughout 2010, and increased leasing incentive compensation on higher leasing revenues. FDIC insurance premiums decreased due to lower deposits, a change in the assessment computation during the second quarter of 2011, and the impact of improved credit quality on the computation. Other real estate expense increased as a result of more properties in other real estate owned throughout 2011 compared to 2010. Non-core other expense was primarily impacted by $1.6 million of fixed asset impairment charges due to our decision to close three branches throughout 2011.
The Company had income tax expense of $7.8 million for the three months ended December 31, 2011 and $5.3 million for the year ended December 31, 2011. The three month and annual tax expenses are calculated based on pre-tax income excluding tax-exempt items. The annual amount also reflects a $2 million increase in deferred tax assets as a result of an increase in the Illinois corporate income tax rate which was enacted and effective in the first quarter of 2011.
LOAN PORTFOLIOThe following table sets forth the composition of the loan portfolio, excluding loans held for sale, as of the dates indicated (dollars in thousands):
|December 31,||September 30,||June 30,||March 31,||December 31,|
|Amount||% of Total||Amount||% of Total||Amount||% of Total||Amount||% of Total||Amount||% of Total|
|Commercial related credits:|
|Commercial loans collateralized by assignment of lease payments (lease loans)||1,208,575||20%||1,067,191||18%||1,031,677||17%||1,038,507||16%||1,053,446||16%|
|Commercial real estate||1,853,788||31%||1,844,894||32%||1,863,223||32%||2,084,651||33%||2,176,584||33%|
|Construction real estate||183,789||3%||210,206||4%||246,557||4%||356,579||6%||423,339||6%|
|Total commercial related credits||4,359,275||73%||4,164,874||72%||4,249,752||72%||4,634,188||73%||4,860,353||73%|
|Residential real estate||316,787||5%||316,305||5%||317,821||5%||335,423||5%||328,482||5%|
|Total other loans||929,176||16%||930,297||16%||932,607||15%||956,174||15%||945,128||15%|
|Gross loans excluding covered loans||5,288,451||89%||5,095,171||88%||5,182,359||87%||5,590,362||88%||5,805,481||88%|
|Covered loans (1)||677,770||11%||718,566||12%||755,670||13%||777,634||12%||812,330||12%|
|(1)||Covered loans refer to loans we acquired in FDIC-assisted transactions that are subject to loss-sharing agreements with the FDIC.|
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