We closed our merger of equals with IBERIABANK, we acquired the 30 branches from SunTrust Truist, really excited about that.
And as we've talked about over the last ten years or 12 years, we have really significantly restructured the balance sheet and the focus is more on C&I.
We had net charge-offs of 44 basis points during the quarter and we saw a slight tick up in nonperforming assets, but we ended the period with about $1.3 billion of capacity for loss taking.
We captured another $8 million of run rate, excuse me of run rate in our quest for $170 million plus in expense savings.
We came in with a CET1 ratio of 9.15%.
I feel like we're well positioned in terms of a strong balance sheet, strong while taking capacity, strong capital and also positioned with a tailwind in the sense that we have our non -- our counter-cyclical businesses and we also have the ability to realize a significant amount of cost savings over the next 18 months to 24 months.
We generated net interest income of $532 million in the quarter, up $227 million linked quarter, driven by the impact of the merger.
Third quarter results included a $44 million benefit from accretion or about 12 basis points on the NIM which was modestly higher than we originally expected given higher prepayments.
Reported NIM came in at 2.84% in the quarter, down 6 basis points, reflecting the impact of low rates and continued elevated levels of liquidity, somewhat offset by accretion.
Our deposit rate paid was down again this quarter with interest bearing deposit costs down to 36 basis points.
Our goal is to manage down interest bearing deposit cost toward the levels we saw in a prior zero interest rate cycle back in 2015 of around 24 basis points.
We estimate excess cash to lower the third quarter margin approximately 12 basis points.
We averaged about $3 billion of excess cash, which grew to $4.5 billion at quarter end.
Moving on to Slide 8 and 9, I would note that here, we have provided our results versus prior period combined results for FHN and IBERIA.
We delivered solid performance in fee income again in the third quarter with relatively stable results on a linked quarter basis and a 23% year-over-year increase as the benefit of our counter-cyclical businesses in fixed income and mortgage banking helped to mitigate COVID related pressure in some of our more traditional banking fee income streams.
Fixed income results came in as expected with relatively stable results linked quarter and a $33 million increase year-over-year given average daily revenues of $1.5 million.
Mortgage banking again delivered standout results with a $13 million increase linked quarter and almost $40 million year-over-year.
Secondary originations of $1.2 billion were up 3% from strong second quarter levels while gain on sale margins expanded over 100 basis points to 3.93%.
Linked quarter expenses were down $15 million as the reduction in personnel expense and other non-interest expense was partially offset by an expected increase in intangibles, amortization from the Merger and Branch acquisition.
Salaries and benefits increased $7 million, driven by the alignment of benefits across the combined platform, the addition of personnel from the 30 acquired branches and an increase in healthcare costs following the pandemic driven slowdown.
Our results this quarter also reflect the benefit of $8 million in net merger cost saves, giving us a year-to-date total of $18 million.
Turning to Slide 13 and 14, you see a review of our loan growth and funding profiles relative to combined First Horizon, IBERIA results.
Bright spot in the quarter was continued strong mortgage warehouse demand, which drove loans to mortgage companies up $1.6 billion on a spot basis and approximately $430 million on average.
On the liability side, period-end deposits were up $2.3 billion, driven by the branch acquisition primarily as well as continued strong customer inflows, which enabled us to run off higher cost non customer balances.
We also further improved our funding profile with a $1.2 billion reduction in borrowings from 2Q combined levels as we leveraged our excess liquidity to pay down legacy IBERIA that Federal [Phonetic] Home Loan Bank advances.
Net charge-offs came in at 44 basis points, up from 20 basis points for legacy FHN driven by energy-related losses and we saw a relatively modest 6 basis point increase in NPLs to 75 basis points of total loans, despite the impact of the merger.
On Slide 13, you see, we continue to add reserves this quarter as the impact of the merger and branch acquisition added $475 million to the allowance for credit losses.
Outside of merger math, we also built reserves by a modest $13 million.
Therefore, we ended the quarter with reserves of $1.1 billion, which is equivalent to 2.15% of the loan portfolio, excluding the low risk PPP and loans to mortgage companies portfolios and about four times annualized net charge-offs.
When you also factor in the unrecognized discount on acquired loans, we have total loss absorbing capacity of $1.3 billion or over 2% of total loans.
We continue to do very detailed portfolio reviews of industries currently affected and in the quarter, we reviewed in detail $9 billion of loans in the commercial portfolio across these various sectors.
As a result of that, as well as other broader portfolio reviews, we believe that just under 11% of our total loans should be and are subject to a heightened level of monitoring.
It's important to note that other sectors such as essential services, recreational goods, manufacturing and home improvement are continuing to perform well, and additionally our higher quality consumer portfolio is performing well as well with a weighted average FICO score of 750 on a refreshed basis.
We've provided data in the appendix on the reserve coverage across our portfolio, as well as on deferrals which have now declined meaningfully to around 2.4% of federal loan balances from a peak of almost 13%.
Overall, we continue to feel very comfortable with our risk profile and reserve levels, particularly after going through the very detailed process of marking the IBERIA loan book, which represents about 45% of the portfolio.
Moving on to capital and tangible book value per share on Slide 15, as we mentioned, TBV per share of $9.92 remained relatively stable to second quarter as strong earnings were offset by the impact of the IBERIA merger and the Truist branch acquisition and the CET1 ratio ended the quarter at $9.15.
Near term, we expect to continue targeting a CET1 ratio in the 9% to 9.25% range.
We're on track to convert various other platforms and are currently planning for the full systems conversion to occur in the fall of 2021.
Again as Bryan said, in the third quarter, we delivered $8 million of cost savings, bringing the year-to-date total to $18 million.
We continue to be highly confident in our ability to deliver at least $170 million of annualized savings in 2022, but the path of the save got shifted by a quarter or so.
In third quarter 2020, our annualized expense base excluding incentives and commissions totaled about $1.52 billion, and based on our expectations for the timing of the merger sales, we believe that our 2021 expenses excluding incentives and commissions should reflect a low single-digit decrease.

Summary:
We generated net interest income of $532 million in the quarter, up $227 million linked quarter, driven by the impact of the merger.
We're on track to convert various other platforms and are currently planning for the full systems conversion to occur in the fall of 2021.