In the third quarter, Cullen/Frost earned $106.3 million or $1.65 per share compared with earnings of $95.1 million or $1.50 per share reported in the same quarter of last year.
And this compared with $116.4 million or $1.80 per share in the second quarter.
Average deposits continued their strong increase in the third quarter and were $39.1 billion, an increase of 19% compared with $32.9 billion in the third quarter of last year.
Overall, average loans in the third quarter were $16.2 billion compared with $18.1 billion in the third quarter of 2020, but this included the impact of PPP loans.
Excluding PPP loans, third quarter average loans of $14.8 billion were essentially flat from a year ago but up an annualized 6% on a linked quarter basis.
New loan commitments booked through the third quarter excluding PPP loans were up by 11% compared to the first nine months of last year.
For the quarter, new loan commitments were up by 6% on a linked quarter basis.
We were especially pleased that the linked quarter increase was due primarily to C&I commitments, which were up 30%.
Our current weighted pipeline is 41% higher than one year ago and 22% higher than last quarter.
The increases are in both C&I, up 22%; and CRE, up 28%.
In the third quarter, 69% of the deals we lost were due to structure compared to 50% in the quarter before.
We also continue to add to our commercial customer base, and we recorded 619 new commercial relationships during the quarter.
And while this was down from the same quarter a year ago when we were experiencing incredible PPP success, it is 2/3 higher than the quarter immediately before the PPP program.
Net charge-offs for the third quarter totaled $2.1 million compared with $1.6 million in the second quarter.
Nonaccrual loans were $57.1 million at the end of the third quarter, a slight decrease from the $57.3 million at the end of the second quarter.
Overall, delinquencies for accruing loans at the end of the third quarter were $95.3 million or 60 basis points of period-end loans, and these are manageable pre-pandemic levels.
What started out as $2.2 billion in 90-day deferrals granted to borrowers early in the pandemic were completely gone as of the end of the third quarter.
Total problem loans, which we define as risk grade 10 and higher, were down slightly to $635 million at the end of the third quarter compared with $666 million at the end of the second quarter.
In the third quarter, we continued making progress toward our goal of mid-single-digit concentration level in the energy portfolio over time, with energy loans falling to 6.5% of our non-PPP portfolio at the end of the quarter.
The total of these portfolio segments excluding PPP loans represented $695 million at the end of the third quarter, and our loan loss reserve for these segments was 8.8%.
Our numbers of new households were 134% of target and represented more than 12,200 new individuals and businesses.
Our loan volumes were 177% of target and represented $371.4 million in outstandings, and about 80% of this represents commercial credits with about 20% consumer.
Deposits surpassed $0.5 billion and were 111% of target.
Commercial deposits accounted for 2/3 of the total.
For example, through the first six months of this year, we had already surpassed consumer banking's all time annual growth for new customer relationships, which was 12,700 in 2019.
At the end of the third quarter this year, this had risen to 19,974 net new checking customers.
That's already more than 150% of our previous annual record.
HELOC, home improvement and purchase money second loans, which has steadily grown to in excess of $1.3 billion.
Nearly 90% of the 32,500 loans or $4.7 billion have already been helped with the loan forgiveness process.
That includes upwards of 97% of the first-round loans from 2020.
Our net interest margin percentage for the third quarter was 2.47%, down 18 basis points from 2.65% reported last quarter.
Interest-bearing deposits at the Fed averaged $15.3 billion or about 35% of our average earning assets in the third quarter, up from $13.3 billion or 31% of average earning assets in the prior quarter.
Excluding the impact of PPP loans, our net interest margin percentage would have been 2.27% in the third quarter, down from an adjusted 2.37% for the second quarter, with all of the decrease resulting from the higher level of balances at the Fed in the third quarter.
The taxable equivalent loan yield for the third quarter was 4.16%, down 12 basis points from the previous quarter.
Excluding the impact of PPP loans, the taxable equivalent loan yield would have been 3.74%, down six basis points from the prior quarter.
To add some additional color on our PPP loans, total PPP loans at the end of September were $828 million, down from $1.9 billion at the end of June.
At the end of the third quarter, we had only about $11.5 million in net deferred fees remaining to be recognized, and we currently expect about 75% of that to be recognized in the fourth quarter.
The total investment portfolio averaged $12.5 billion during the third quarter, up about $209 million from the second quarter.
The taxable equivalent yield on the investment portfolio was 3.35% in the third quarter, down one basis point from the second quarter.
The yield on the taxable portfolio which averaged $4.1 billion was 2.03%, up two basis points from the second quarter.
Our municipal portfolio averaged about $8.4 billion during the third quarter, up $230 million from the second quarter, with a taxable equivalent yield of 4.04%, down five basis points from the prior quarter.
At the end of the third quarter, 78% of the municipal portfolio was pre-refunded or PSF-insured.
The duration of the investment portfolio at the end of the third quarter was 4.5 years, up slightly from 4.4 years in the second quarter.
We made investment purchases toward the end of September of approximately $1.5 billion, consisting of about $900 million in MBS agency securities with a yield of about 2%, about $500 million in treasuries yielding 1.07% with the remainder in municipal securities.
Regarding noninterest expense, looking at the full year 2021, we currently expect an annual expense growth rate of around 3% over our 2020 total reported noninterest expenses, which is consistent with our previous guidance.
Regarding the estimates for full year 2021 earnings, given our third quarter results and the recognition of lower PPP fee accretion for the fourth quarter, we currently believe that the current mean of analyst estimates of $6.48 is reasonable.

Summary:
In the third quarter, Cullen/Frost earned $106.3 million or $1.65 per share compared with earnings of $95.1 million or $1.50 per share reported in the same quarter of last year.