F.N.B. second quarter earnings per share totaled $0.31, representing an 11% increase on a linked-quarter basis.
Operating net income reached a record $101 million and total revenue increased to $308.
Our performance resulted in a return on tangible common equity of 16% and growth in tangible book value per share to $8.20, an increase of $0.19 or 2%.
The quarter's efficiency ratio of 56.8% improved due to the benefit of increased revenue and continued expense discipline as we achieved the 2021 operating cost savings floor of $20 million.
Our company remains well capitalized with an estimated CET1 ratio of 10.02% for the second quarter.
On a year-to-date basis, wealth management revenues increased over 6 million, as total wealth management and insurance revenues increased 26% and 8% respectively.
Looking at the balance sheet, on an annualized linked-quarter basis, F.N.B. demonstrated strong fundamental performance as we saw a pickup in lending activity that translated into a significant spot loan growth of 9% when excluding the impact of PPP loan.
Non-interest bearing deposits grew to $10.2 billion at June 30 and now comprise a third of total deposits.
This brings our loan-to-deposit ratio to 82.4% providing F.N.B. with ample liquidity and a favorable funding mix moving forward.
The level of delinquency excluding PPP balances ended June at 80 bps, a 9 basis point improvement linked quarter, which was driven by broad improvements across all portfolios, notably commercial and [Indecipherable].
The level of NPLs and OREO also improved to end the quarter at 58 basis points, representing a 14 basis point decrease from the prior quarter's ex-PPP level.
Our NPLs decreased meaningfully down nearly $30 million during the quarter, which was driven primarily by a $21 million reduction in the commercial portfolio, including the resolution of a credit that was previously reserved for.
Net charge-offs for the quarter were very low at $3.8 million or 6 basis points annualized.
While year-to-date net charge-offs remained at a very solid 9 bps annualized.
Non-GAAP net charge-offs excluding PPP balances were 7 bps and 10 bps for the quarter and year respectively.
We recognized a $1.1 million net benefit in provision this quarter following broadly improving economic activity and positive credit quality results through June, resulting in a stable reserve position at 1.42% while the ex-PPP reserve stands at 1.51%.
NPL coverage also remains very favorable at 278% due to reduced NPL levels during the quarter.
Our total ending reserve position inclusive of acquired unamortized discounts totals 1.58%.
I think quickly on loan deferrals, we ended June at a level of 0.7% of our core loan portfolio with these levels continuing to decline as new requests have essentially ceased and borrowers returned to contractual payment schedules.
We made significant progress working down rated credits as indicated by a 15% reduction in classifieds, reflecting the tireless efforts put forth by our work out teams to reduce exposure to more sensitive industries and take risk off the table as economic conditions continue to improve.
As noted on Slide 5, first quarter earnings per share increased to $0.31,, up significantly from the prior and year ago quarters.
Looking at highlights for the quarter, on an operating basis, net income available to common stockholders increased $18.3 million or 22% to a record $101.5 million as total revenue increased $2.1 million or 0.7%.
Operating expenses were well controlled, down $5 million linked quarter.
Linked quarter growth and operating PPNR of $7 million or 6% reflects the company's strong performance in the quarter even without provision benefit.
Period-end loan balances excluding PPP increased $515 million or 9.1% annualized on a linked quarter basis.
On an average balance basis, total loans decreased $56 million reflecting accelerated PPP forgiveness during the second quarter.
On the deposit side, average deposits increased $1.1 billion or 3.9% to over $30 billion, a record high with non-interest bearing deposits comprising 33% of total deposits.
Net interest income increased $5 million to $227.9 million as the PPP contribution increased $2.2 million -- $25 million [Phonetic], which was offset by $1.9 million decreased contribution of purchase accounting accretion to $5.0 million.
The underlying net interest income trends improved due to a more favorable balance sheet mix and our continued focus on reducing deposit costs in the lower interest rate environment was evidenced by our total cost of interest bearing deposits declining 7 basis points to 24 basis points.
Reported net interest margin decreased 5 basis points to 2.70% as earning asset yield declined 9 basis points, which was partially offset by the 6 basis point reduction in the cost of funds.
The yield on total loans and leases remain stable at 3.51%.
When excluding the higher cash balances, purchase accounting accretion and PPP impacts, the underlying net interest margin would be 2.71%, representing a 1 basis point increase compared to the first quarter 2021 and the second quarter in a row of improving underlying net interest margin.
Let's now look at non-interest income and expense on Slides 9 and 10.
Non-interest income totaled $80 million decreasing $3 million from record levels last quarter.
We achieved record wealth management revenue of $15 million through contributions across the geographic footprint and positive market impacts on assets under management.
SBA volume and average size of transactions increased during the quarter, driving SBA premium revenues to $2.6 million almost double the prior quarter.
Mortgage banking operations income decreased $8.3 million as gain on sale margins tightened meaningfully in the second quarter 2021 throughout the industry.
Held for sale pipeline declined significantly elevated levels and the benefit for mortgage servicing rights impairment valuation recovery was $2.2 million lower than last quarter.
Non-interest expense decreased $2.4 million linked quarter on a reported basis.
When excluding $2.6 million of branch consolidation costs in the quarter, non-interest expense decreased $5 million or 2.7%.
On an operating basis, salaries and employee benefits decreased %5.3 million or 4.9%, primarily related to the timing of normal annual long-term stock awards recognized in the first quarter each year.
Outside services expenses increased $1.8 million reflecting increases from third-party technology providers, legal costs and other consulting engagements.
We are very pleased with this quarter's results with record operating net income, accelerating sequential loan growth, strong revenue growth, solid credit quality metrics, continued growth in tangible book value per share, increasing $0.19 per share to $8.20.
Our current thinking is that we will see around $500 million of forgiveness in the third quarter, which would translate into a $79 million reduction in net interest income contribution from PPP loans.
We expect non-interest income to be in the high $70 million area given the diversified nature of our non-interest income revenue streams.
With the Howard merger, we will grow to the number 6 deposit share in the Baltimore MSA, while adding meaningful customer density to the Mid-Atlantic region, which covers Maryland, Washington DC and Northern Virginia.
If you look at our market expansion strategy in the Mid-Atlantic, our four acquisitions since 2013 came in a lower relative acquisition cost with a weighted average price to tangible book of 1.5 times.
Our growth strategy in the Mid-Atlantic region provided access to a population of 10 million and more than 300,000 businesses with revenue greater than 100,000.
Since the end of 2015, our compounded annual organic loan growth for F.N.B in Maryland is 15%.
Furthermore, as a company overall, we have nearly doubled our annual non-interest income since 2015 from $162 million to $294 million, most of which has to do with our investment in products and services, but also bringing those capabilities into our expansion markets and broadening our client relationships.
The Howard franchise increases F.N.B. Baltimore deposits by $1.7 billion to $3.5 billion on a pro forma basis, while creating a combined organization of more than $41 billion in total assets.
We view the transaction as financially attractive with a 4% earnings per share accretion with fully phased-in cost savings and enhanced pro forma profitability metrics, which included 200 basis point improvement in the efficiency ratio and an internal rate of return greater than 25%.
Consistent with our approach to capital management, the transaction is expected to be neutral to CET1 at closing and includes minimal tangible book value dilution of 2%.
As I noted earlier, our TBV growth this quarter alone was 2%, essentially earning the TBV dilution back in one quarter.

Summary:
F.N.B. second quarter earnings per share totaled $0.31, representing an 11% increase on a linked-quarter basis.
Operating net income reached a record $101 million and total revenue increased to $308.
As noted on Slide 5, first quarter earnings per share increased to $0.31,, up significantly from the prior and year ago quarters.
Net interest income increased $5 million to $227.9 million as the PPP contribution increased $2.2 million -- $25 million [Phonetic], which was offset by $1.9 million decreased contribution of purchase accounting accretion to $5.0 million.