The credit provision for the fourth quarter included net charge-offs of $7 million and a $4.8 million decrease to the allowance. Our allowance for loan and lease losses at the end of the first quarter was $135.6 million or 2.4% of outstanding loan and leases.
Non-performing assets were $41.4 million at the end of the first quarter and represented 0.74% of loans. Included in non-performing loans are $26.4 million in the residential mortgage loans as of March 31.
Non-interest income for the first quarter was $48.1 million compared to $43.4 million in the fourth quarter, and $53.9 million in the first quarter of 2011. The increase compared to the fourth quarter was primarily due to a $3.5 million gain in the sale of our equity interest and two leverage leases, partially offset by a $1 million loss on an aircraft lease in the first quarter.
Also contributing to the increase was $1.6 million increase in mortgage banking income. The decrease compared to the first quarter of 2011 was primarily due to the $6.2 million decrease in securities gains and $3 million lower debit interchange revenue as a result of the Durbin Amendment, partially offset by the net gains from the sale of leases previously mentioned.Non-interest expense totaled $85.2 million in the first quarter, compared to $84.4 million in the fourth quarter and $86.1 million in the first quarter of 2011. The increase compared to the fourth quarter was primarily due to higher payroll taxes, associated with incentive compensation accrued in 2011 and paid in the first quarter of 2012 and $1.2 million for our personal computer refresh program. The decrease compared to the first quarter of 2011 was primarily due to a decrease in FDIC insurance expenses and lower operational losses. The effective income tax rate was 27.6% in the first quarter compared to 26.1% in the fourth quarter and 32.6% in the first quarter of 2011. The lower rate this quarter was primarily due to the previously mentioned lease transactions, which resulted in a $2.7 million credit to provision for income taxes. Read the rest of this transcript for free on seekingalpha.com