Core other expense decreased by $2.0 million in the first quarter of 2012 compared with the fourth quarter of 2011. Occupancy and equipment expense increased as a result of higher maintenance costs. Computer services and telecommunication expense decreased primarily due to product and system enhancement activities completed in the fourth quarter of 2011. The decrease in other operating expenses was primarily due to a $1.7 million decrease in the clawback liability related to our loss share agreements with the FDIC.
Core other expense increased by $1.2 million from the first quarter of 2011 to the first quarter of 2012. Salaries and employee benefits expense increased due to officer raises, higher health insurance claims and one extra day in the first quarter of 2012. 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 increased holding costs related to other real estate owned. The decrease in other operating expenses was primarily due to a $1.7 million decrease in the clawback liability related to our loss share agreements with the FDIC. Non-core other expense was primarily impacted by $1.0 million of fixed asset impairment charges due to our decision to close a branch in the first quarter of 2011.
The Company had income tax expense of $8.4 million for the three months ended March 31, 2012. Tax expense in the first quarter of 2011 included $2.1 million of income tax benefit due to an increase in deferred tax assets as a result of an increase in the Illinois corporate income tax rate enacted in the first quarter of 2011.LOAN PORTFOLIO The following table sets forth the composition of the loan portfolio, excluding loans held for sale, as of the dates indicated (dollars in thousands):
|March 31,||December 31,||September 30,||June 30,||March 31,|
|% of||% of||% of||% of||% of|
|Commercial related credits:|
|Commercial loans collateralized by assignment of lease payments (lease loans)||1,209,942||21||%||1,208,575||20||%||1,067,191||18||%||1,031,677||17||%||1,038,507||16||%|
|Commercial real estate||1,877,380||32||%||1,853,788||31||%||1,844,894||32||%||1,863,223||32||%||2,084,651||33||%|
|Construction real estate||128,040||2||%||183,789||3||%||210,206||4||%||246,557||4||%||356,579||6||%|
|Total commercial related credits||4,255,702||73||%||4,359,275||73||%||4,164,874||72||%||4,249,752||72||%||4,634,188||73||%|
|Residential real estate||309,644||5||%||316,787||5||%||316,305||5||%||317,821||5||%||335,423||5||%|
|Total other loans||913,535||16||%||929,176||16||%||930,297||16||%||932,607||15||%||956,174||15||%|
|Gross loans excluding covered loans||5,169,237||89||%||5,288,451||89||%||5,095,171||88||%||5,182,359||87||%||5,590,362||88||%|
|Covered loans (1)||620,528||11||%||662,544||11||%||718,566||12||%||755,670||13||%||777,634||12||%|
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