Premises and equipment expenses amounted to $3.8 million and $3.9 million for the three months ended March 31, 2020 and 2019, respectively, a 1% decrease. For the three months ended March 31, 2020, the Company recognized $104 thousand of sublease revenue as compared to $124 thousand for the same period in 2019. Sublease revenue is accounted for as a reduction to premises and equipment expenses.
Marketing and advertising expenses totaled $1.1 million for both the three months ended March 31, 2020 and 2019.
Data processing expense increased to $2.5 million for the three months ended March 31, 2020 from $2.4 million for the same period in 2019, a 5% increase.
Legal, accounting and professional fees and expenses for the three months ended March 31, 2020 increased to $7.0 million from $1.7 million for the same period in 2019, a 309% increase. Legal fees and expenditures of $4.6 million for the first quarter were primarily associated with previously disclosed ongoing governmental investigations and related subpoenas and document requests and our defense of the previously disclosed class action lawsuit, where we filed a motion to dismiss on April 2, 2020. These elevated legal expenses included substantial expenses associated with the reviews by the Special Compliance Committee and the Audit Committee, with the assistance of outside legal counsel, of the facts and circumstances associated with these various governmental investigations and legal proceedings. These reviews have since concluded. The amount of legal fees and expenditures for the quarter is net of expected insurance coverage where we believe we have a high likelihood of recovery pursuant to our D&O insurance policies but does not include any offset for potential claims we may have in the future as to which recovery is impossible to predict at this time.
FDIC insurance increased to $1.4 million for the three months ended March 31, 2020 from $1.1 million for the same period in 2019, a 28% increase due to a higher assessment base resulting from growth in total assets.
Other expenses decreased to $3.7 million for the three months ended March 31, 2020 from $4.5 million for the same period in 2019, a decrease of 16%, due primarily to lower broker fees ($1.1 million) partially offset by higher telephone expenses ($173 thousand) associated with the transition to a new phone provider. The major components of cost in this category include broker fees, franchise taxes, core deposit intangible amortization and insurance expense.
The efficiency ratio, which measures the ratio of noninterest expense to total revenue, was 43.83% for the first quarter of 2020, as compared to 43.87% for the first quarter of 2019.
As a percentage of average assets, total noninterest expense (annualized) was 1.58% for the three months ended March 31, 2020 as compared to 1.81% for the same period in 2019.
Income Tax Expense
The Company’s ratio of income tax expense to pre-tax income (“effective tax rate”) was 26.5% for the three months ended March 31, 2020 as compared to 26.1% for the same periods in 2019. The higher effective tax rate for the three months ended March 31, 2020, was due primarily to a discrete item related to restricted stock awards vesting that increased the effective tax rate.
FINANCIAL CONDITION
Summary
Total assets at March 31, 2020 were $9.99 billion, a 19% increase as compared to $8.39 billion at March 31, 2019, and an increase of 11% as compared to $8.99 billion at December 31, 2019. Total loans (excluding loans held for sale) were $7.84 billion at March 31, 2020, a 9% increase as compared to $7.17 billion at March 31, 2019, and a 4% increase as compared to $7.55 billion at December 31, 2019. Loans held for sale amounted to $60.0 million at March 31, 2020 as compared to $20.3 million at March 31, 2019, a 196% increase, and $56.7 million at December 31, 2019, a 6% increase. The investment portfolio totaled $858.9 million at March 31, 2020, an 11% increase from the $772.2 million balance at March 31, 2019. As compared to December 31, 2019, the investment portfolio at March 31, 2020 increased by $15.6 million or 2%.
Total deposits at March 31, 2020 were $8.14 billion compared to $6.68 billion at March 31, 2019, a 22% increase and $7.22 billion at December 31, 2019, a 13% increase. Total borrowed funds (excluding customer repurchase agreements) were $567.8 million at March 31, 2020, $467.4 million at March 31, 2019 and $467.7 million at December 31, 2019.