David J. Turner, Jr.
Senior Executive Vice President, Chief Financial Officer at Regions Financial
Thank you, John. Let's start with the balance sheet. Average and ending loans remained relatively stable on a sequential quarter basis. Within the business portfolio, while average loans remained relatively stable, ending loans increased 1%. Despite near-term macroeconomic and political uncertainty, pipelines are beginning to rebuild. Average consumer loans also remained stable as modest growth in residential mortgage and consumer credit card were offset by declines in home equity and other miscellaneous consumer loans. We continue to expect 2024 average loans to be stable to down modestly compared to 2023.
From a deposit standpoint, deposits remained relatively stable on an average basis, while ending balances declined 2%. These declines in the second quarter reflect anticipated tax seasonality. Having largely returned to pre-pandemic patterns, we expect relative stability in deposits, which is typical for summer and early fall. As expected, deposit remixing has slowed. Competitive pricing and customer demand for promotional products has stabilized. Over the second quarter, the proportion of non-interest-bearing deposits relative to total deposits has remained steady in the low-30% range.
Now let's shift to net interest income. Net interest income increased modestly during the quarter, outperforming our expectations. The increase reflects stabilizing deposit trends and asset yield expansion. Also exceeding expectations, the net interest margin declined only 4 basis points, resulting primarily from higher average cash levels. As expected, deposit remixing and cost increases slowed meaningfully in the quarter.
The full-cycle interest-bearing deposit beta remained stable at 43%, and we continue to expect a mid-40% deposit beta will be the peak this cycle. Asset yields benefited from the maturity and replacement of fixed-rate loans and securities at current higher rate levels. This includes the repositioning of approximately $1 billion of securities late in the quarter with an estimated payback period of 2.6 years relative to the $50 million pre-tax loss recorded this quarter.
Following our successful $750 million debt issuance in June, we used the proceeds to purchase a like amount of securities with a similar duration in order to maintain a relatively neutral balance sheet position and bolster liquidity. We believe net interest income has reached an inflection point and is expected to grow over the second half of the year as deposit trends continue to improve and the benefits of fixed-rate asset turnover persist.
As we move further into 2024, a stabilizing deposit and funding environment, along with securities repositioning and favorable debt issuance levels, have pushed our expectation for net interest income towards the upper end of our $4.7 billion to $4.8 billion range. This narrow range portrays a well-protected profile under a wide array of possible economic outcomes.
Now let's take a look at fee revenue performance this quarter. Adjusted non-interest income declined 3%, driven primarily by lower capital markets and mortgage income. If you recall, capital markets experienced seasonally elevated activity in the first quarter as several deals were pushed from the fourth quarter of 2023.
Over time and in a more favorable interest rate environment, we expect our capital markets business can consistently generate quarterly revenue of approximately $100 million. But in the near term, we expect it will run around $70 million to $80 million per quarter. The decline in mortgage income was primarily driven by a positive $6 million adjustment to the company's mortgage pipeline valuation in the first quarter that did not repeat.
While modestly lower versus the seasonally high first quarter, treasury management continues to perform exceptionally well. Versus the second quarter of last year, treasury management's client base has increased 6% while total revenue is up 8%. Helping to offset this quarter's fee income declines, wealth management increased 3% to a new quarterly record, reflecting increased sales activity and stronger markets.
Based on a strong first half of the year, we now expect full year 2024 adjusted non-interest income to be at the top end of our $2.3 billion to $2.4 billion range.
Let's move on to non-interest expense. Adjusted non-interest expense decreased 6% compared to the prior quarter, driven primarily by lower salaries and benefits, occupancy and professional fees. The improvement in salaries and benefits was attributable primarily to lower base salaries and seasonally higher HR-related expenses in the first quarter. Operational losses also decreased during the quarter and current activity continues to normalize within expected levels. We continue to expect full year 2024 operational losses to be approximately $100 million.
We remain committed to prudently managing expenses to fund investments in our business. We will continue focusing on our largest expense categories, which include salaries and benefits, occupancy and vendor spend. Based on results through the first half of the year, including outperformance in revenue and our expectation to be towards the top end of our previously provided full year revenue ranges, we now expect full year 2024 adjusted non-interest expenses to be between $4.15 billion and $4.2 billion.
Regarding asset quality, as John indicated, overall credit performance improved during the quarter. Provision expense was essentially equal to net charge-offs at $102 million and the resulting allowance for credit loss ratio remained relatively stable at 1.78%. We expect full year 2024 net charge-offs to be towards upper end of our 40 basis point to 50 basis point range attributable to a few large credits within our higher risk portfolios. However, those losses are fully reserved for. Assuming stable loan balances and a relatively stable economic outlook, we expect our ACL ratio to remain flat to declining over the second half of the year.
Let's turn to capital and liquidity. We ended the quarter with an estimated common equity Tier 1 ratio of 10.4% while executing $87 million in share repurchases and $220 million in common dividends during the quarter. Earlier this week, the Board of Directors declared a quarterly common stock dividend of $0.25 per share, a 4% increase over the second quarter. This increase is in addition to the 20% increase last year, representing three consecutive years of robust dividend growth, well supported by underlying financial performance.
Additionally, we received notification of our supervisory capital stress test results, including the preliminary stress capital buffer, which will remain at 2.5% for the fourth quarter of 2024 through the third quarter of 2025. We expect to maintain our common equity Tier 1 ratio consistent with current levels over the near term. This level will provide sufficient flexibility to meet proposed regulatory changes along the implementation timeline while supporting strategic growth objectives and allowing us to continue to increase the dividend and repurchase shares commensurate with earnings.
With that, we'll move to the Q&A portion of the call.
