First quarter net income totaled $91 million or $0.28 per share, resulting in an upper quartile return on tangible common equity of 15%.
I'm so proud to state that the first quarter results are on par with pre-COVID-19 levels, an extraordinary accomplishment given the significant changes in interest rates and a less favorable economic environment during the last 12 months.
Our company remains well capitalized, with increased risk-based capital ratios and an allowance for credit losses, excluding PPP loans, at 1.57%.
We established a new record for noninterest income at $83 million, supported by strength in mortgage banking, record wealth management and insurance revenues and solid contributions from Capital Markets.
During the quarter, we originated nearly $1 billion of PPP round 2 loan.
On a linked-quarter basis, tangible book value per share increased $0.13 to $8.01, as we continue to -- our commitment to paying an attractive dividend by declaring our quarterly common dividend of $0.12 last week, while executing on $36 million of share buybacks during the quarter, at an average price of $11.91.
In addition, our CET1 ratio increased to 10% as we continue to prioritize our options for capital deployment in the manner that produces the highest risk-adjusted returns for our shareholders.
Diligent expense management remains a top priority, and we are on track to meet this year's $20 million cost savings target, completing our three-year $60 million expense reduction initiative.
The efficiency ratio totaled 58.7%, improving 36 basis points compared to the first quarter of 2020, with both quarters reflecting seasonally elevated expenses.
In what has been a challenging interest rate environment over the last 12 months, we have successfully leveraged these investments in our fee-based businesses to mitigate net interest margin headwind, specifically through significant growth in capital markets, mortgage banking, wealth management and insurance revenues.
During the first quarter of 2021, we've continued to build on last year's success as those businesses have increased $16 million or 56% compared to the first quarter of 2020.
Our mortgage banking business had a record-breaking year in 2020 with more than $3 billion in total production and $50 million in fee income.
We've expanded our capabilities significantly through building our syndications, derivatives and international banking platforms organically, with those businesses now contributing revenues from just over $1 million to more than $30 million annually.
The commercial team has originated more than $150 million in funded assets since inception, and the retail locations ranked among the upper quartile of branches relative to their key performance indicators during 2020.
The level of delinquency improved over the prior quarter to end March at 80 basis points, representing a 22-basis point improvement linked-quarter, which was driven by positive macroeconomic trends and some seasonally lower past due levels in the consumer portfolio, as is typical in the first quarter.
Excluding PPP loan volume, delinquency stands at 89 basis points.
The level of NPLs in OREO ended March at 65 basis points, an improvement of 5 bps on a linked-quarter basis, while at non-GAAP level, excluding PPP loans, stands at 72 basis points.
The improvement was largely driven by a reduction in nonaccrual loans of $12 million during the quarter, with nearly half of our NPLs continuing to pay on a contractually current basis.
Net charge-offs for the first quarter came in at a very solid level of $7 million or 11 basis points annualized and 13 bps on a non-GAAP basis, with provision expense totaling $6 million, resulting in an ending March reserve position at 1.42%.
Excluding the PPP portfolio, the non-GAAP ACL stands at 1.57%, up 1 basis point over the prior quarter.
Inclusive of the remaining acquired unamortized discount, our total reserve coverage stands at 1.78%, with our NPL coverage position also remaining favorable at 230% following the previously noted improvement in NPL levels during the quarter.
At the end of March, our deferrals are down to 1.2% of our core loan portfolio and the number of new requests from commercial borrowers have essentially ceased at this point.
As noted on Slide 5, first quarter earnings per share was solid at $0.28, up significantly on a year-over-year basis, as the first quarter of 2020, a significant reserve built at the onset of the pandemic.
Let's review the balance sheet on Page 8.
Average balances for total loans increased 8.3% on a year-over-year basis and decreased 0.8% from the fourth quarter.
On a spot basis for the first quarter of 2021, total loans were up 0.3% as PPP balances increased $330 million on a net basis, with $900 million of round 2 PPP loans funded during the quarter partially offset by $500 million of PPP forgiveness.
Commercial line utilization rates remain at record lows in the low 30s, which translates into about $0.5 billion in funded balances at a normalized utilization rate.
Average deposits grew 19.3% on a year-over-year basis and increased 5.7% annualized on a linked-quarter basis.
On a spot basis, for the first quarter of 2021, total deposits increased $1.2 billion or 16.9% annualized, led by strong growth in noninterest-bearing and interest-bearing demand deposits, partially offset by a managed decrease in time deposits.
This continued deposit growth bolsters our ample liquidity and strengthens our deposit mix, with a loan-to-deposit ratio at 84%, with 33% of our deposits being noninterest-bearing at the end of the quarter.
Net interest income declined $11.5 million or 4.9% compared to the fourth quarter.
The reported net interest margin narrowed 12 basis points to 2.75% as higher average cash balances were a 6-basis point negative impact on the margin compared to last quarter.
Excluding these impacts, the underlying margin increased 5 basis points from the fourth quarter, with benefits from continuing to manage down interest-bearing deposit costs which improved 12 basis points to 31 basis points for the quarter.
With the cost of these deposits ending the quarter at 27 basis points on a spot basis, 4 basis points lower than the average, we expect further reductions in our cost of funds moving forward.
Let's now look at noninterest income and expense on Slides 10 and 11.
Noninterest income totaled a record $83 million as mortgage banking income remained strong at $16 million, with expanded gain on sale margins and strong sold production volume that was up 69% on a year-over-year basis.
Wealth management increased 14% from the fourth quarter to record levels due to the expanded footprint and positive market impacts on assets under management.
Noninterest expense totaled $184.9 million, relatively flat with the prior quarter and year ago quarter.
On an operating basis, compared to the fourth quarter of 2020, salaries and employee benefits increased $2.7 million or 2.5%, primarily related to $5.6 million of expense in the first quarter of 2021 due to the timing of normal seasonal long-term compensation recognition, similar to last year's first quarter.
Occupancy and equipment on an operating basis increased $2.5 million or 8.1% due to investments in digital technology, expansion in key growth markets across the footprint and seasonal expenses related to adverse weather.
Our CET1 ratio improved to an estimated 10%, up from 9.1% last March, even with $75 million of buyback over this period, reflecting FNB's strategy to optimize capital deployment.
We expect continued strong contributions in mortgage banking, given the pipelines Vince mentioned, with total noninterest income expected in the high $70 million range for the second quarter.
We are on-track to achieve our expense savings target of $20 million for 2021 and expect operating expenses for the second quarter to be down from seasonally higher expenses in the first quarter, based on our current forecasted level of mortgage commissions.
Lastly, we expect the full year effective tax rate to be around 19%, assuming no change to the statutory corporate tax rate of 21%.
As it relates to the quality of people and strength of our culture, FNB has received more than 65 Greenwich Excellence and Best Brand Awards, including specific recognition for excellence in client advisory services and for its commercial banking client experience during the past decade.
FNB is one of only 75 banks in the United States to be recognized on the list, which includes a total of 500 banks from around the globe.

Summary:
First quarter net income totaled $91 million or $0.28 per share, resulting in an upper quartile return on tangible common equity of 15%.
As noted on Slide 5, first quarter earnings per share was solid at $0.28, up significantly on a year-over-year basis, as the first quarter of 2020, a significant reserve built at the onset of the pandemic.