Adjusted diluted earnings per share was $0.23, compared to $0.21 last quarter and $1 a year ago.
Loan balances increased $1.7 billion or 4.3%, compared to the prior quarter.
Growth in Paycheck Protection Program loans of $2.7 billion was offset by a reduction in C&I line utilization of $775 million.
In the consumer book, loans were down approximately $700 million as reductions in lending partnership balances were partially offset by mortgage balance increases of $200 million.
Total deposits grew $4.4 billion or 11% from the prior quarter.
Growth was largely split between DDA and interest-bearing core deposits, which grew $2.9 billion and $1.2 billion, respectively.
We continued the strategy of allowing higher-priced CDs to run off, which led to a decline of $655 million in time deposits.
Net interest income was up $3 million for the quarter.
This included a full quarter of the 150-basis point reduction in short-term rates from March along with offsets, including over $9 million in fee recognition associated with P3 loans.
The net interest margin declined 24 basis points to 3.13%.
Adjusted non-interest revenue of $95 million was greater than expected largely due to outperformance in mortgage.
Net mortgage revenue was $24 million, up $11 million from the prior quarter led by secondary mortgage production of $635 million, up $380 million from the prior quarter.
Adjusted non-interest expense totaled $276 million, up $5 million from the previous quarter.
This included $7 million of COVID-related expenses and $7 million in fees associated with the implementation of certain Synovus forward initiatives.
Commission expense was $7 million higher than the prior quarter, largely resulting from record mortgage production.
Provision for credit losses was $142 million and resulted in an allowance for credit losses ratio of 1.74%, excluding the P3 balances.
That's an increase of 35 basis points from the previous quarter and incorporates a more stressed economic outlook.
Credit quality metrics remain stable with the nonperforming loan ratio and net charge-off ratio of 37 basis points and 24 basis points, respectively.
Our CET1 ratio increased 20 basis points to 8.90% and our total risk-based capital ratio increased 41 basis points to end at 12.70%, a two-year high.
While it's too early to know exactly how deferrals will play out in the second half of 2020, reviews of customer cash flows, client surveys, and conversations and interactions with customers to date lead us to believe that somewhere between 3% to 5% of total loans will have a round two deferral granted for a 90-day deferment of principal and interest.
As we shared in May, we funded $2.9 billion in P3 loans for approximately 19,000 customers, quite an undertaking, which required a coordinated effort across our bank.
The average P3 loan was approximately $150,000 and the customers that received those loans employ over 335,000 employees.
An offset to the C&I growth from P3 loans, which ended the quarter with a balance of $2.7 billion was a decrease in loan balances from C&I line utilization.
We ended the second quarter at a record low of 41% that resulted in balance sheet declines of $775 million.
We expect C&I line utilization to normalize in the mid- to upper 40% range as the economy improves.
Highlights in the consumer portfolio include mortgage loan balance increases of over $200 million on a production of a record $800 million.
Our total exposure limit remains $1 billion for the relationship, but you'll see a shift of loan balances from held for investment to held for sale.
In the second quarter, we moved $266 million in loans to held for sale under this new arrangement.
The other meaningful item to highlight within partnership lending is a disposition of approximately $535 million in student loans.
In June, we moved those loans to held for sale, which contributed to the decline in consumer balances and resulted in an allowance release of approximately $12 million.
On Slide 5, you can see that we had unprecedented growth in deposits with DDA balances, up $2.9 billion and total deposits, up $4.4 billion in the second quarter.
However, we also saw broad-based growth across interest-bearing transaction balances with money market and NOW up 11% quarter-over-quarter while savings balances increased by 14% quarter-over-quarter.
At that time, total interest-bearing deposit costs were roughly 35 basis points.
Slide 6 shows net interest income of $377 million, an increase of $3 million from the previous quarter.
This benefited from $9 million in fee accretion from our P3 loan portfolio.
P3 processing fees totaled $95 million.
In terms of net interest margin, we ended the quarter at 3.13%, down 24 basis points from the first quarter.
Beyond the anticipated impact associated with the lower rate environment, the significant inflow of deposits throughout the quarter resulted in an excess cash position, which while not impactful to net interest income, diluted the margin by approximately 8 basis points, as compared to the prior quarter.
The impact of these recent transactions is approximately 9 basis points to the margin.
We were pleased with non-interest revenue of $173 million or $95 million adjusted, shown on Slide 7.
We realized investment gains of $78 million which includes $70 million from repositioning the securities portfolio.
While these transactions were primarily focused on agency mortgage-backed securities, part of the repositioning included the disposition of our remaining $150 million in collateralized loan obligations in the investment portfolio.
Total net mortgage revenue was $24 million which was $11 million more than the previous quarter.
This is the result of an all-time high of $635 million in secondary mortgage production and an elevated gain on sale.
Noninterest expense of $284 million or $276 million adjusted is shown on Slide 8.
As expected, we had approximately $7 million in COVID-related expenses in the second quarter.
Adjustments for the quarter of $8 million included expenses of $3 million related to branch closures and restructuring of corporate real estate, as well as, $5 million in expenses related to the Global One earnout liability.
Adjusted expenses included the $7 million in COVID-related expenses, as well as, an increase in commission expense of $7 million higher than the prior quarter due to elevated mortgage production.
The second quarter also had $7 million in upfront expenses related to efforts we've made to implement and execute certain Synovus forward initiatives.
The net charge-off ratio was 24 basis points, up 4 basis points from the prior quarter.
Net charge-offs of $24 million largely resulted from a single credit that was moved to nonaccrual last quarter.
Provision for credit losses of $142 million resulted in an allowance build of nearly $120 million from the current expectation for longer-term economic headwinds.
After adjusting for P3 loans, the ACL ratio increased 35 basis points to 1.74%.
The economic assumptions for the current quarter include the estimated impact of stimulus and an unemployment rate declining to around 10% by the end of the year, and remaining elevated throughout 2021.
CET1 improved 20 basis points to 8.9% and total risk-based capital rose 41 basis points to 12.7%, the highest level in two years.
Actions included student loan sales and the settlement of security trades in July will further reduce risk-weighted assets and will benefit CET1 by approximately 20 basis points in the third quarter.
To achieve those objectives, a total long-term payout ratio of 70% to 80% is appropriate, with approximately half of that coming from common shareholder dividends.
From December 31st to June 30th, we increased our allowance by approximately $400 million while maintaining a stable CET1 ratio.
Balances totaled $4.7 billion in these industries which is stable with the prior quarter.
As these deferrals end, we have once again taken a proactive approach and conducted thorough cash burn analyses on our customers to determine who will continue to see reduced levels of cash flows over the next 90 and 180 days.
I'll start with the hotel industry which continues to see a 40% to 60% decrease in occupancy and revenue per available room.
Given the reopenings in the southeast and the increase in occupancy in various drivable vacation destinations, we expect cash flows to increase somewhat in the coming months, and as a result, the overall deferral rate of the hotel portfolio to range between 30% and 40% in the next 90 days.
As we shared last quarter, this portfolio maintains a strong loan value, slightly over 50%, and it entered the downturn with almost 2 times debt service coverage.
For non-grocery-anchored shopping centers, we expect to see deferments in the range of 20% to 30% as certain types of retail are performing well such as home improvement and electronics, while other retail reopens and resumes their sources of revenue.
And therefore, we expect 10% to 20% of the portfolio to pursue a second round of principal and interest deferments.
Our oil-related segment, totaling approximately $300 million in outstandings was initially of greater concern due to the negative oil futures and the impact of less travel.
Another notable segment that is often discussed as a COVID-impacted industry that is not on this list is our senior housing portfolio, which is over $2 billion in outstandings.
The reason for exclusion is supported by the fact that we have only seen 4% of the outstanding balances deferred in round one, which was comprised of five loans, and the expectation at this time is that we will have no further deferments in the portfolio during round two.
As of July 14th, 2.3% of the total loan portfolio was in a 90-day deferral status.
But based upon current conditions, activity to date and ongoing discussions with our customers, as Kessel mentioned earlier, we believe this percentage could increase into the range of 3% to 5% this quarter.
Our customers overall have experienced improved cash flows since the trough in April, with the month of June exhibiting only a 6% reduction in cash inflows relative to the same month last year.
Yes, the low-rate environment helped drive volume, but it's important to also note that mortgage loan originators recruited since January 2018 have produced 42% of the year-to-date volume.
With mortgage and wholesale banking leading the way, second-quarter funded loan production was up 43% versus the same quarter last year and deposit production with increases in all of our lines of business, was up 37% versus second-quarter 2019.
As a result, production revenue of $2.9 million in the quarter, was up 210% versus the second quarter of 2019.
Our financial objective of an incremental $100 million in pre-tax income remains intact with the efficiency benefits being realized early in 2021 while the revenue benefits will continue to build throughout next year.
This work stream was accelerated and has proven to be quite fruitful with the identified savings from the renegotiation and demand management efforts yielding savings of around $25 million.
We have also completed Phase 1 of our branch consolidation and corporate real estate optimization efforts and are diligently working on subsequent opportunities that will result in additional savings in 2021.
We remain confident in our ability to generate $45 million to $65 million in expense savings through this program.
While we have focused more intently on the efficiency initiatives out of the gate, we have also turned our attention to the revenue opportunities that were identified during the diagnostic phase with the total potential pre-tax income of between $35 million and $55 million.

Summary:
Adjusted diluted earnings per share was $0.23, compared to $0.21 last quarter and $1 a year ago.
Loan balances increased $1.7 billion or 4.3%, compared to the prior quarter.