I'm pleased to report that because of the confidence in our company, our strong capital position and our continued success, our Board of Directors voted to increase the fourth quarter dividend to $0.52, a 6.1% increase from the third quarter.
Additionally, as our stock price experienced declines in the third quarter, Prosperity repurchased 767,134 shares of its common stock at a weighted price of $67.87.
Prosperity Bank was ranked by Forbes as the second best bank in America for 2021 and has been in the top 10 of the Forbes list since 2010.
Prosperity reported net income of $128.6 million for the quarter ended September 30, '21 compared to $130 million for the same period in 2020.
The net income per diluted common share was $1.39 for the quarter ended September 30, 2021 and compared with $1.40 for the same period in 2020.
Prosperity continues to exhibit solid operating metrics and return on tangible equity of 16.2% and return on assets of 1.42% for the third quarter of 2021.
Our loans on September 30, 2021 were just shy of $19 billion, a decrease of $1.8 billion or 8.8% and compared with $20.8 billion on September 30, 2020.
Our linked quarter loans, excluding Warehouse Purchase Program and PPP loans increased $217 million or 1.3%, 5.3% annualized from $16.4 billion on June 30, 2021.
Deposits on September 30, 2021, were $29.5 billion, an increase of $3 billion or 11.3% and compared with $26.5 billion on September 30, 2020.
Our linked quarter deposits increased $341 million or 1.2%, 4.7% annualized from $29.1 billion on June 30, 2021.
Our nonperforming assets totaled $36.5 million or 11 basis points of quarterly average interest-earning assets on September 30, 2021, compared with $69 million or 24 basis points of quarterly average earning assets on September 30, 2020, and $33 million or 11 basis points of quarterly average interest-earning assets on June 30, 2021.
The reduction in nonperforming assets year-over-year is 47.4%.
The allowance for credit losses on loans was $287 million or 1.73% of total loans when excluding Warehouse Purchase Program, and PPP loans on September 30, 2021.
The allowance for unfunded commitments was $29.9 million on September 30, 2021, unchanged from prior periods.
This is a total reserve of $317 million.
Our net charge-offs were $15.7 million for three months ending September 30, 2021.
Net charge-offs included $4.6 million related to resolved PCD loans and $10.8 million related to a partial charge-off of one commercial structure real estate loan that was not a PCD loan and obtained through the acquisition.
The PCD loans have specific reserves of $3.1 million, of which $2.2 million was allocated to the charge-offs and $944,000 was moved to the general reserve.
Further, an additional $14.3 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.
Overall, in the third quarter 2021, we resolved $54.9 million in acquired loans at $15.7 million in net charge-off and we leased $15.2 million to the general reserve.
Texas is projected to increase jobs by 493,000 in 2021.
Net interest income before provision for credit losses for the three months ended September 30, 2021, was $248.6 million compared to $258.1 million for the same period in 2020, a decrease of $9.5 million or 3.7%.
The current quarter net interest income includes $5.4 million in fair value loan income compared to $22.5 million for the same period in 2020, a decrease of $17.2 million.
The net interest margin on a tax equivalent basis was 3.10% for the three months ended September 30, 2021, compared to 3.57% for the same period in 2020 and 3.11% for the quarter ended June 30, 2021.
Excluding purchase accounting adjustments, the net interest margin for the quarter ended September 30, 2021, was 3.03% compared to 3.25% for the same period in 2020 and 2.96% for the quarter ended June 30, 2021.
Noninterest income was $34.6 million for the three months ended September 30, 2021, compared to $34.9 million for the same period in 2020 and $35.6 million for the quarter ended June 30, 2021.
Noninterest expense for the three months ended September 30, 2021, was $119.8 million compared to $117.9 million for the same period in 2020.
On a linked-quarter basis, noninterest expense increased $4.6 million from $115.2 million for the quarter ended June 30, 2021.
The increase was primarily due to gain on sale of ORE of $1.8 million recorded during the prior quarter and higher current quarter salaries and benefits resulting from higher incentives.
For the fourth quarter 2021, we expect noninterest expense to be in line with the current quarter or in the range of $118 million to $120 million.
The efficiency ratio was 42.3% for the three months ended September 30, 2021, compared to 40.2% for the same period in 2020 and 41% for three months ended June 30, 2021.
During the third quarter 2021, we recognized $5.4 million in fair value loan income.
This amount includes $3.3 million from anticipated accretion, which is in line with the guidance provided last quarter and $2.1 million from early payoffs.
We estimate fair value loan income from anticipated accretion for the fourth quarter of 2021 to be around $2 million to $3 million.
As of September 30, 2021, the remaining discount balance is $18 million.
Also during the third quarter 2021, we recognized $13.4 million in fee income from PPP loans.
As of September 30, 2021, PPP loans had a remaining deferred fee balance of $15.6 million, with the majority of these deferred fees to be earned in the next two quarters.
The bond portfolio metrics at 9/30 2021 showed a weighted average life of 3.5 years and projected annual cash flows of approximately $2.6 billion.
Our nonperforming assets at quarter end, September 30, '21 totaled $36,549,000 or 19 basis points of loans and other real estate, compared to $33,664,000 or 17 basis points at June 30, '21.
This represents approximately a 9% increase in nonperforming assets, which comes from one loan.
The September 30, '21 nonperforming asset total, was made up of $36,73,000 in loans, $326,000 in repossessed assets and $150,000 in other real estate.
Of the $36,549,000 in nonperforming assets, $5,459,000 or 15% are energy credits, all of which are service company credits.
The $5,459,000 as of September 30, '21 is a 35% decline from $8,378,000 as of June 30, '21.
Since September 30, '21, $7,990,000 in nonperforming assets have been put under contracts for sale, but there is no assurance that these contracts will close.
Net charge-offs for the three months ended September 30, '21, were $15,697,000 compared to $4,326,000 for the quarter ended June 30, '21.
The $15,697,000 includes approximately $11 million charged off on one commercial credit secured by an office building.
The average monthly new loan production for the quarter ended September 30, '21, was $596 million.
Loans outstanding at September 30, '21 were approximately $18,958 billion, which includes approximately $366 million in PPP loans.
The September 30, '21 loan total is made up of 38% fixed-rate loans, 37% floating rate and 25% variable rate.

Summary:
I'm pleased to report that because of the confidence in our company, our strong capital position and our continued success, our Board of Directors voted to increase the fourth quarter dividend to $0.52, a 6.1% increase from the third quarter.
The net income per diluted common share was $1.39 for the quarter ended September 30, 2021 and compared with $1.40 for the same period in 2020.
Net interest income before provision for credit losses for the three months ended September 30, 2021, was $248.6 million compared to $258.1 million for the same period in 2020, a decrease of $9.5 million or 3.7%.