periodically sells branches that it considers to be underperforming or have limited growth potential and branches may also be subject to involuntary closure under certain circumstances, such as the termination of a license agreement by one of the supermarket chains in which TCF operates branches. Gains on sales of securities available for sale of $11.5 million and $863,000 were recognized on the sales of $473.9 million and $33.6  million in mortgage-backed securities in 2002 and 2001, respectively. There were no sales of securities available for sale during 2000. Non-Interest Expense Non-interest expense increased $36.4 million, or 7.2%, in 2002, and $44.8 million, or 9.8%, in 2001,  compared with the respective prior years. The following table presents the components of non-interest expense: Year Ended December 31, Compound Annual Growth Rate 1-Year 5-Year (Dollars in thousands) 2002 2001 2000 1999 1998 2002/2001 2002/1997 Compensation and  employee benefits . . . . . . . . $295,787 $267,716 $239,544 $239,053 $217,401 10.5% 10.4% Occupancy and equipment . . . . 83,131 78,774 74,938 73,613 71,323 5.5 7.3 Advertising and promotions . . . 21,894 20,909 19,181 16,981 19,544 4.7 2.7 Other . . . . . . . . . . . . . . . . . . . 137,557 126,820 115,833 110,532 105,802 8.5 7.8 Subtotal . . . . . . . . . . . . . . . 538,369 494,219 449,496 440,179 414,070 8.9 8.8 Amortization of goodwill . . . . . – 7,777 7,706 7,713 7,816 (100.0) (100.0) Total . . . . . . . . . . . . . . . $538,369 $501,996 $457,202 $447,892 $421,886 7.2 8.6 intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually. Further detail on goodwill amortization is provided in Note 22 of Notes to Consolidated Financial Statements. Compensation and employee benefits, representing 54.9% and 53.3% of total non-interest expense in 2002 and 2001, respec- tively, increased $28.1 million, or 10.5%, in 2002, and $28.2 mil- lion, or 11.8%, in 2001. The 2002 increase of 10.5% was primarily due to costs associated with new branch expansion and the addition of lenders and sales representatives. The 2001 increase of 11.8% was primarily due to costs associated with expanded retail banking and leasing activities, along with the significant increase in mortgage banking activities. Income Taxes TCF recorded income tax expense of $124.8 mil- lion in 2002, compared with $122.5 million in 2001 and $116.6 million in 2000. Income tax expense represented 34.88% of income before income tax expense during 2002, compared with 37.14% and 38.5% in 2001 and 2000, respectively. The lower effective tax rate in 2002 primarily reflects the effect of the change in accounting for goodwill, lower state income taxes, a favorable resolution of uncer- tainties during tax examinations and the reduced effect of non- deductible expenses as a percentage of pre-tax net income. Occupancy and equipment expenses increased $4.4 million in 2002 and $3.8 million in 2001. The increases were primarily due to TCF’s new branch expansion and retail banking and leasing activ- ities, partially offset by branch sales.  Advertising and promotion expenses increased $985,000 in 2002 following an increase of $1.7 million in 2001. The increase in 2002 was primarily due to increases in retail banking media advertising. The 2001 increase was primarily due to retail banking activities and promotional expenses associated with the TCF Express Phone Card, where customers earn free long-distance minutes for use of their TCF Express Cards. TCF awarded 71 million minutes and 67 million min- utes during 2002 and 2001, respectively, under this promotion. Other non-interest expense increased $10.7 million, or 8.5%, in 2002, primarily the result of increased expenses associated with expanded retail banking and leasing operations, Express Card inter- change expense resulting from increased utilization and the higher levels of production and prepayment activity in the mortgage bank- ing area. In 2001, other non-interest expense increased $11 million, or 9.5%, primarily the result of increased expenses associated with higher levels of activity in mortgage banking and expanded retail bank- ing and leasing operations. A summary of other expense is presented in Note 25 of Notes to Consolidated Financial Statements. On January 1, 2002, TCF adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” which requires that goodwill and other page 30 TCF has Real Estate Investment Trusts (“REITs”) and related companies, that acquire, hold and manage mortgage assets and other authorized investments to generate income. These companies are consolidated with TCF National Bank and are therefore included in the consolidated financial statements of TCF Financial Corporation. The REITs must meet specific provisions of the Internal Revenue Code (“IRC”) to continue to qualify as a REIT. Two specific provi- sions applicable to REITs are an income test and an asset test. At least 75% of each REIT’s gross income, excluding gross income from pro- hibited transactions, for each taxable year must be derived directly or indirectly from investments relating to real property or mortgages on real property. Additionally, at least 75% of each REIT’s assets must be represented by real estate assets. At December 31, 2002,  TCF’s REITs met the applicable provisions of the IRC to qualify as REITs. State laws may also impose limitations or restrictions on oper- ations of these companies. These laws are subject to change. If these  companies fail to meet any of the required provisions of Federal and state tax laws, the resulting tax consequences would increase TCF’s effective tax rate.