The request entry I mention moves approximately $400 thousand out of other expenses. It reduces equipment expense by $140 thousand and it moves a total of $550 thousand after salary and benefits expense. So if you compare the salary and expense for the third and fourth quarters of 2014, you’ll see an increase of $730 thousand, $550 thousand of which is the request entry from other expenses. That leaves an increase of approximately $180 thousand that really exist between the third and fourth quarters. That increases the result of increase employees salaries due to slightly increase after numbers, regular salary increases and year end bonuses accrued that we pay in the early 2015. There’s majority of the increase in equipment expenses over third quarter is non-repeating expenses for write offs of equipment and items no longer in service.
Other real estate expense is down slightly, which is why we are in line with our cost of holding and disposing our foreclosed properties. During this year we have disposed of almost 75 properties and we currently have 37 properties on our retail inventory. All the other categories of management expenses are pretty much in line with prior quarters on our expectations. Going forward, we would be most comfortable with the range of $21 million to $21.7 million for recurring non-operating expenses. And our operating expense generally in the range of $500 thousand to $1 million per quarter. Our efficiency ratio continues to be very solid. Fourth quarter came in at 53.35%, up slightly from the third quarter’s 52.73%. Obviously fourth and third quarter numbers are negatively affected by by our decision to retain a large amount of overnight investments. And last weeks capital ratios continue to improve and stood at 8.4%, 8.46% at the end of the quarter, up from 7.99% at last year end. Now Scott will review the loan portfolio and non-performing loans.
Scott Salvador, Chief Banking Officer
Okay thanks Mike. Our fourth quarter loan portfolio continue to steadily increase. Home loans grew by $75 million with our year-over-year growth coming in at approximately $250 million. Loans grew by 2.45% in the quarter and 8.59% on the year. These are very solid growth numbers and we are please about the quarter and the year end results. As has been the norm, the day after the quarters long growth was in the residential portfolio, accounting for over $70 million of the increase. Commercial loans increased by $3.6 million in the quarter, but our small installment portfolio also showing $1.2 million in growth as our new credit card product is rolled out. We experience residential loan growth lateral markets with four to this quarter accounting for approximately 42% of our net increase.
Our loan backlog the year end was solid, but down from the third quarter. A decrease in loan activity is normal at this point of the year and the first quarter’s net loan growth is typically the slowest of the year. Most of our recent originations have been in the 4% range for a 30-year mortgage. Non-performing loans and asset quality measurements continue to improve on the quarter with significant improvements posted on year-over- year basis. Non-performing assets fell $3.1 million during the quarter to $40.5 million and declined $11.7 million for the full year. Non-performing loans decreased to 1.08% of loans on year-end versus 1.49% a year earlier. Early stage delinquencies remain low and the quarters net charge up total with the lowest since the fourth quarter of 2008. Finally the covered ratio allowance from our loan losses to nonperforming loans was 136% at year- end versus a 110% a year earlier. Bob?
Mr. Robert J.McCormick, President and Chief Executive Officer
That’s our story and we’d be happy to answer any questions you might have.
