So as we look to provide guidance for this year, we start with our Q4 run-rate and obviously look forward to a full year’s benefit from the acquisitions of Great Lakes and National Machine Tool. Then as we add our expectations for organic growth which we think will meet or exceed last years’ experience, we believe fee income growth will well exceed our 2014 growth levels.
So now turning to credit for a couple of minutes, we continued here again our strong progress and performance in the fourth quarter. Aggregate credit costs were better than expectations we set in previous calls. Charge-offs dropped substantially to just over $2 million as we generated better outcomes in moving some credits as well as in recoveries. This favorable result more than offset approximately $2 million in incremental and we would expect non-recurring expense in the quarter namely OREO write-downs and professional fees in our special assets area.
NPAs at 1.5% of loans are at a very manageable level for the long term, yet we anticipate further reductions in coming quarters driven by our low levels of past dues that Mike alluded to, as well as the visibility we have around some specific anticipated pay downs. Adverse performing loans also remain at a very manageable level. So in summary, we expect these dynamics to drive further credit quality improvements and lower annual credit costs going forward. And so with that, I will turn it over to Paul for margins and expenses.
Paul Clemens – Executive Vice President & Chief Financial Officer
Okay. Thanks, Mark and good morning, everyone. For the second consecutive quarter, net interest income increased 7% from the linked quarter. The increase from the third quarter was substantially due to the full quarter impact of the August 8th Popular acquisition and some smaller benefit from the December 2nd acquisition of Great Lakes Bank. Some of the key drivers associated with Great Lakes is the $200 million in loans with Great Lakes which added 4% loan growth as well as a higher yield of 4.50% compared to our legacy weight yield of 4.19%. The Great Lakes portfolio much like the Popular portfolio has a slightly greater proportion of fixed rate loans, roughly 60% to 40% ratio and ours is closer to 50/50 or slightly less.
Likewise, deposits increased 4% with the $400 million in deposits from Great Lakes, offsetting the seasonal decline in municipal deposits. The weighted average cost of Great Lakes deposits is 13 basis points which is consistent with our legacy deposit base and we also acquired $210 million in securities from the Great Lakes portfolio, that acquisition.
We anticipated when we talked to you last our net interest margin excluding the impact of acquisitions would be in line with the third quarter and the full quarter impact of Popular would add 3 to 5 basis points including some level of accretion on the Popular loans. In fact for the quarter, we saw a slight decline from lower accretion on our covered loan portfolio of about 5 basis points which tends to jump around from one quarter to the other and some smaller amount of margin compression on our legacy portfolio. This is more than offset by a greater yield on our Popular portfolio which included $1.6 million or roughly 8 basis points from the accretion of the purchase accounting discount recorded on the acquired loans as well as a small benefit from Great Lakes for December.
As we look to 2015, I guess we should weigh in on our outlook for rates. Our current outlook for 2015 is that rates in the one month, the five-year part of the curve which is where we currently invest in lends start to move mid-2015 as the Fed moves on short-term rates. Therefore, margin for the first quarter should generally be in line with the fourth quarter though away from accretion. We will continue to see probably some further margin compression on our legacy portfolio with growth and net interest income driven primarily by the loans, investments and core deposits acquired from Great Lakes.
