Turning to page 17, credit quality in the 4th Quarter remained strong, with a net charge off ratio of 34 basis points of average loans. The $67 million increase in net charge offs from 3rd Quarter was primarily driven by lower recoveries down $54 million, which we would expect at this stage of the credit cycle. Non-performing assets have declined for nine consecutive quarters and were down $739 million from 3rd Quarter. Non-accrual loans declined $517 million, and foreclosed assets declined $222 million. The reserve release was $250 million in the 4th Quarter, down $50 million from 3rd Quarter and down $350 million from a year ago. Our capital levels remain strong, with our estimated common equity Tier 1 ratio under Basel III, using the advanced approach fully phased in at 10.44% in the 4th Quarter. Our ratio declined slightly from the 3rd Quarter, reflecting an increase in risk weighted assets primarily from strong loan growth in the quarter.
We have stated that our long term target is 10%, which includes a buffer over required minimums. Since we have achieved our targeted level, our capital ratios may fluctuate from quarter to quarter, reflecting changes in asset levels or composition, or changes in OCI impacted by market volatility. These potential changes are why we maintain a buffer.
As shown on slide 19, we returned $3.9 billion to shareholders in the 4th Quarter. Our common shares outstanding declined by 45 million shares in the 4th Quarter, reflecting 62 million shares purchased during the quarter. In addition, we entered into a $750 million forward repurchase contract that is expected to settle in the 1st quarter for approximately 14 million shares. As a reminder our share issuance is usually higher in the first half of the year, given the timing of certain employee benefit plan issuances.
So in summary, our results in 2014 and for the 4th quarter reflected the benefit of our diversified business model, with strong growth in loans and deposits. Our loan portfolio is well diversified and charge offs were near historic lows. We increased the amount of our capital and liquidity and returned $12.5 billion to shareholders through dividends and share repurchase. Our net payout ratio was 57% for the year within our targeted range of 55% to 75%. We believe we are well positioned to benefit from an improving economy, an increased customer base, our diverse product line and our continued risk discipline. Our diversified business model has performed well across a variety of economic and interest rate environments and I am optimistic that it will continue to produce opportunities for our customers, our team members and our shareholders in the year ahead. We will now be happy to answer your questions.
Operator
At this time I would like to remind everyone, in order to ask a question press star, then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Our first question will come from the line of Joe Morford, RBC Capital Markets. Please go ahead.
Joe Morford, RBC Capital Markets.
Thanks. Good morning everyone. I just wondered if you could speak to how we should think about weighing the positive and negative effects of the sharp drop in energy prices on the bank. While it should help out the consumer businesses, is this enough to offset any potential credit issues or possibly slowdown in loan growth and investment banking activity?
