Loan growth was extremely strong for the quarter as funded commercial loan production increased almost 70% versus the previous quarter, which more than offset the ongoing elevated levels of payoffs and pay downs.
Fee income was up $8 million or 8% versus the second quarter, with wealth and capital markets income posting strong growth, as well as core banking fees returning to more normalized levels post COVID.
Our treasury and payments team set a new high bar in terms of new production at $10.6 million year to date, surpassing its full-year 2020 totals during the month of September.
We also continued to deliver on our Synovus Forward initiatives, which reached a pre-tax run-rate benefit of approximately $100 million by quarter-end.
And we're making great progress in planning for the additional $75 million worth of benefits to be delivered by the end of 2022.
Through the third quarter, we have migrated 90% of our clients on to Synovus Gateway, our commercial portal, and usage of My Synovus, our consumer platform, indicates that digital usage continues to expand with an additional 10% increase in enrollment in active users.
Moreover, a concerted effort has led to a 43% increase in paperless enrollment in 2021.
I'd like to begin with loan growth, which increased $923 million, excluding changes in P3 balances.
Quality deposit growth continued in the third quarter, including an increase in core transaction deposits of $1 billion.
We continue to take advantage of this liquidity environment to focus on remixing our deposit base and along with strategic repricing, this has helped lower the overall cost of deposits by an additional 3 basis points to 0.13%.
We continue to experience balanced augmentation, but a core focus on operating accounts has led to DDA and now production to increase 34% versus the prior quarter.
Total adjusted revenue of $500 million increased 2% from the prior quarter while adjusted expenses declined $1 million to $267 million.
This resulted in a 6% increase in adjusted preprovision net revenue quarter on quarter.
An $8 million reversal of provision for credit losses resulted from the provision expense associated with strong loan growth being more than offset by a reduction in life of loan loss estimates.
Adjusted net income was $178 million or $1.20 diluted earnings per share.
The net charge-off ratio declined 6 basis points this quarter to 0.22%, while the NPL and NPA ratios each fell 1 basis point.
The ACL ratio was down 12 basis points, excluding P3 loans, ending the quarter at 1.42%.
And the CET1 ratio declined 12 basis points to 9.63% and remained slightly above our stated range.
We ended the quarter with total assets of $55.5 billion and loans of $38.3 billion.
Total loans, excluding P3 balances, grew $923 million, up 3% from the prior quarter, led by growth in C&I and third-party consumer loans.
P3 balances declined $818 million.
However, transaction activity remained elevated, which led to a $500 million increase in payoffs, primarily in the CRE portfolio.
C&I line utilization declined approximately 70 basis points to 39%.
A return to normalized levels of C&I line utilization would result in over $750 million in funded balances.
The liquidity environment continues to be a headwind to consumer loan demand and resulted in declines in our HELOC portfolio of $50 million.
We continue to leverage third-party consumer lending to offset consumer loan declines as evidenced by the $267 million increase in third-party consumer loans for the third quarter.
In order to offset continued increase in liquidity, we grew the securities portfolio by $1 billion to 19% of total assets at the end of the quarter.
At the end of the third quarter, third-party held for investment balances were $1.7 billion or 3% of total assets.
As you can see on Slide 5, core transaction deposits increased $1 billion or 3% from the prior quarter.
Core noninterest-bearing deposit growth of $490 million or 3% was offset by strategic declines in time and brokered deposit portfolios.
Total deposit costs continued to decline with a reduction of 3 basis points to 13 basis points.
Time deposits declined 35% from the prior year, accounting for 5% of total deposits, compared to 9% a year ago.
As shown on Slide 6, net interest income was $385 million, an increase of $3 million from the prior quarter.
The net interest margin was stable with a decline of 1 basis point to 3.01%.
We expect P3 revenue to decline between $8 million and $12 million in the fourth quarter.
Slide 7 shows total adjusted noninterest revenue of $114 million, up $8 million from the previous quarter.
The increase was led by growth of $5 million in capital markets, which resulted from swap income and $2 million in loan syndication fees.
Broad-based growth across other NIR categories was evidenced by our performance in our treasury group and core banking fees and highlighted by our wealth areas that are up more than 25% year over year.
In the third quarter, we had approximately $4 million in revenue associated with SBA loan sales and low-income housing transactions.
Slide 8 highlights total adjusted noninterest expense of $267 million, down $1 million from the prior quarter.
A $5 million reduction in third-party processing fees was offset by a $4 million increase in production incentives and additional project spend of $2 million.
The net charge-off ratio fell 6 basis points to 0.22%, while criticized and classified loans declined 22%.
The NPA and NPL ratios were each down 1 basis point.
Past dues were flat at 0.13%, excluding the increase from P3 loans.
And assuming a similar trend in economic improvement, a further reduction in the ACL ratio, which ended the quarter down 12 basis points excluding P3 loans, to 1.42%.
However, due to economic uncertainty, our multi-scenario framework included a 45% bias to downside scenarios.
As noted on Slide 10, the CET1 ratio declined 12 basis points to 9.63% due primarily to capital deployment for growth in our loan and securities portfolios as we continue to actively manage excess liquidity.
Through the end of the third quarter, we have completed approximately $167 million of the $200 million share repurchase authorization for the year.
And we expect to repurchase the remaining $33 million in the fourth quarter.
On March 3, 2020, the Federal Reserve announced an emergency rate cut of 50 basis points.
That same day, we unveiled details of Synovus Forward, a plan we created in 2019, that would deliver an incremental pre-tax run-rate benefit of $100 million by the end of 2021.
We're excited today to share that our efforts to date have yielded approximately $100 million in pre-tax benefits.
As a result of these actions, as well as demand management, our adjusted expenses are down $15 million year to date or 2%.
We are scheduled to close an additional four branches in the fourth quarter, bringing our total consolidation to 20 locations since January 2020.
Last month, we announced the strategy to optimize our real estate here at our headquarters by selling our own real estate and consolidating our nine corporate and retail locations in Uptown Columbus into three and allows us to evolve our workplace for the future of work, while reducing our overall square footage by over 60%, leading to a lower run rate expense and greater flexibility for potential future optimization opportunities.
Of the 26-basis-point decline in deposit pricing that occurred over that time frame, our Synovus Forward initiatives drove additional product and customer level repricing, which represented 3 basis points of that decline, contributing $15 million in incremental pre-tax run-rate benefit by the end of the quarter.
Targeted remixing of a subset of consumer loans throughout 2021 has translated into relative higher yields, resulting in an incremental pre-tax run-rate benefit of $16 million.
We remain committed and on track to achieve the cumulative pre-tax run-rate benefit of $175 million by the end of 2022 and are confident about the opportunities ahead to achieve those benefits.
In July, we mentioned that we expected 2021 loan growth, excluding balance change from P3 and third-party consumer loans, to be at the low end of the 2% to 4% guidance.
Although excluded from the guidance, it's important to note that we've increased third-party consumer loans more than $1 billion year to date, and our total loans at the end of the third quarter were up 4%, excluding changes in P3 balances.
Total adjusted revenues are expected at the higher end of the negative 1% to 1% guidance, as the balance sheet management efforts we've taken throughout the year to monetize excess liquidity and reduce the cost of funds are being complemented by broad-based fee revenue growth outside of the normalization of mortgage revenues.
Similarly, total adjusted expenses are expected to end the year within the existing guidance of negative 1% to negative 2%, thus providing the opportunity to achieve positive operating leverage.
The capital guidance assumes we complete the full $200 million share repurchase authorization this year and achieve our loan growth targets.
We're also trending toward the lower half of the effective tax rate guidance of 22% to 24%.

Summary:
Adjusted net income was $178 million or $1.20 diluted earnings per share.
We remain committed and on track to achieve the cumulative pre-tax run-rate benefit of $175 million by the end of 2022 and are confident about the opportunities ahead to achieve those benefits.