Our tax equivalent net interest margin (“NIM”) was 3.10%, down 12 basis points from prior quarter. The NIM decline was primarily driven by lower hedge income, lower accretion and earning asset mix shifts out of higher yielding loans and into lower yielding investment securities. The decline was partially mitigated by a continued decline in total deposit costs, which decreased five basis points in the quarter to 0.15%. Net charge-offs were $8.7 million or 0.29% annualized of average loans, a level consistent with our longer-term expectations for our portfolio mix. We continued to deleverage the balance sheet, paying off $50 million in senior debt in the quarter in addition to the $40 million sub-debt paid off in the first quarter of this year.
Adjusted pre-tax pre-provision net revenue(1) (“PPNR”) remained strong at $85.2 million or 1.83% of average assets, compared to first quarter 2021 PPNR of $86.4 million or 1.86% of average assets. Second quarter 2021 highlights are as follows:
The allowance for credit losses (“ACL”) reflected continued reserve releases driven by improving credit metrics and economic forecasts, and incorporated a ($51.9) million provision release in the second quarter of 2021 compared to a ($48.3) million provision release in the linked quarter. The ACL remained robust at 2.13% of total loans. Excluding Paycheck Protection Program (“PPP”) loans, our ACL to loans ratio was 2.17% at June 30, 2021. Our ratio of ACL to total nonperforming loans was 202%. Second Quarter 2021 Highlights:
Adjusted annualized returns on average assets(1) and adjusted tangible common equity(1) were 2.28% and 22.08%, respectively. Balance Sheet: Annualized returns on average assets and tangible common equity were 2.17% and 21.12%, respectively.
Our adjusted efficiency ratio(1) remained stable at 53.9%. Our capital ratios remained robust, with the Common Equity Tier 1 ratio increasing to 14.7% and total risk weighted capital increasing to 17.0%.
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