Prosperity Bank has been ranked as the number 2 best bank in America for 2021 and has been in the top 10 of Forbes' America's Best Banks since 2010.
Our net income was $133.3 million for the three months ending March 31, 2021, compared with $130.8 million for the same period in 2020, an increase of $2.5 million or 1.9%.
The net income per diluted common share was $1.44 for the three months ended March 31, 2021, compared with $1.39 for the same period in 2020, an increase of 3.6%.
Our annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2021, were a 1.54% return on average assets, 8.6% return on average common equity and 18.43% on average tangible common equity.
Our Prosperity's efficiency ratio, excluding net gains and losses on the sale or writedown of assets and taxes, was 41.25% for the three months ended March 31, 2021.
Our loans at March 31, 2021, were $19.6 billion, an increase of $511 million or 2.7% when compared to $19.127 billion at March 31, 2020, primarily due to a $558 million increase in warehouse purchase program loans.
Our linked quarter loans decreased $608 million or 3% from $20.2 billion at December 31, 2020, and that was primarily due to a $570 million decrease in the Warehouse Purchase Program loans, more of a seasonal issue.
At March 31, 2021, the company had $1.1 billion in PPP loans.
At March 31, 2021, our oil and gas loans totaled $503 million, net of the discount and excluding the PPP loans totaling $142 million compared with oil and gas loans of $718 million net of the discount at March 30, 2020.
This represented a decrease of $214 million in oil and gas loans year-over-year, most of which was planned.
Our deposits at March 31, 2021, were $28.7 billion, an increase of $4.9 billion or 20.7% compared with $23.8 billion at March 31, 2020.
Our linked quarter deposits increased $1.4 billion or 5.1%, 20.5% annualized from $27.3 billion at December 31, 2020.
Our year-over-year nonperforming assets decreased 34.2%.
Our nonperforming assets totaled $44.2 million or 15 basis points of quarterly average interest-earning assets at March 31, 2021, compared with $67.2 million or 25 basis points of quarterly average interest-earning assets at March 31, 2020.
Further, the Dallas Fed Reserve is projecting over 6% job growth, meaning over 700,000 new jobs in Texas for 2021, and Texas is expected to outperform most of the other states for the next three years.
Net interest income before provision for credit losses for the three months ended March 31, 2021, was $254.6 million compared to $256 million for the same period in 2020, a decrease of $1.4 million or 0.6%.
The current quarter net interest income includes $16.3 million in fair value loan income and $13 million in fee income from PPP loans.
The net interest margin on a tax equivalent basis was 3.41% for the three months ended March 31, 2021, compared to 3.81% for the same period in 2020 and 3.49% for the quarter ended December 31, 2020.
Excluding purchase accounting adjustments, the net interest margin for the quarter ended March 31, 2021, was 3.19% compared to 3.36% for the same period in 2020 and 3.26% for the quarter ended December 31, 2020.
Excess liquidity during the first quarter of 2021 impacted the net interest margin by five basis points compared to the quarter ended December 31, 2020, and by 15 basis points compared to the same period in 2020.
Noninterest income was $34 million for the three months ended March 31, 2021, compared to $34.4 million for the same period in 2020 and $36.5 million for the quarter ended December 31, 2020.
Noninterest expense for the three months ended March 31, 2021, was $119.1 million compared to $124.7 million for the same period in 2020.
On a linked-quarter basis, noninterest expense decreased $1.1 million from $120.2 million for the quarter ended December 31, 2020.
For the second quarter of 2021, we expect noninterest expense of $118 million to $120 million.
The efficiency ratio was 41.3% for the three months ended March 31, 2021, compared to 42.9% for the same period in 2020 and 40.8% for the three months ended December 31, 2020.
During the first quarter of 2021, we recognized $16.3 million in fair value loan income.
This amount includes $6.3 million from anticipated accretion and $10 million from early payoffs.
We estimate fair value loan income for the second quarter of 2021 to be around $4 million to $5 million.
Also, during the first quarter 2021, we recognized $13 million in fee income from PPP loans, majority from the forgiveness of the first round PPP loans.
As of March 31, 2021, the first round of PPP loans had a remaining deferred fee balance of $9.4 million, we anticipate more than half of this remaining balance will be recognized in the second quarter 2021 due to loan forgiveness.
Regarding the second round of PPP loans, as of March 31, 2021, we recorded $530.7 million in loans and generated about $24 million in deferred fees, which will be recognized over a five year period or until the PPP loan is forgiven.
The bond portfolio metrics at 3/31/2021 showed a weighted average life of 3.9 years and projected annual cash flows of approximately $2 billion.
Our nonperforming assets at quarter end March 31, 2021, totaled $44.162 million or 22 basis points of loans and other real estate compared to $59.570 million or 29 basis points at December 31, 2020.
This represents approximately a 26% decline in nonperforming assets.
The March 31, 2021 nonperforming asset total was comprised of $43.338 million in loans, $362,000 in repossessed assets and $462,000 in other real estate.
Of the $44.162 million in nonperforming assets, $9.505 million or 22% are energy credits, all of which are service company credits.
Since March 31, 2021, $844,000 in nonperforming assets have been removed.
Net charge-offs for the three months ended March 31, 2021, were $8.858 million compared to $7.567 million for the quarter ended December 31, 2020.
The average monthly new loan production for the quarter ended March 31, 2021, was $645 million.
This includes an average of $177 million in PPP loans per month.
Loans outstanding at March 31, 2021, were approximately $19.6 billion, which includes approximately $1.1 billion in PPP loans.
The March 31, 2021 loan total is made up of 39% fixed rate loans, 36% floating rate loans and 25% that reset at specific intervals.

Summary:
The net income per diluted common share was $1.44 for the three months ended March 31, 2021, compared with $1.39 for the same period in 2020, an increase of 3.6%.