During the quarter, loan growth was more significant in the commercial and owner-occupied sectors. While we have slower growth in investor commercial real estate. Contribution to our total $469 million of loan growth during the quarter, was led by our Arizona Banking Operation which was up $137 million. Then public finance which was up $117 million and non-profit loans were up $112 million. 84% of our loan balances are entities domiciled in or collateralize by assets in our primary markets of Arizona, California and Nevada. Commercial real estate loans are managed by geography as a strong understanding of local market conditions and property locations are critical elements of prudent CRE underwriting.
At the bottom of the slide you can see that the mean loan grade is higher and the duration is shorter for loans that we make outside of our primary 3 State market area.The bottom segment of each bar is commercial & industrial loans which were up $240 million to $3.5 billion in the fourth quarter. The second largest growth category was owner-occupied CRE which increased to $113 million. Construction loans climbed $77 million to 8.9% of the portfolio, while residential and consumer continue to amortize of. Deposit growth was led by increases in savings and money market accounts which had a $185 million with 79% of the $233 million total deposit increase in the fourth quarter. Interest bearing transaction account were $46 million and non-interest bearing grew $41 million. Higher cost CDs declined.
For 2014 tangible book value per share rose $2.31 or 29 % to $10.21 at year end. 72% of this increase was from retained earnings of $1.67 and 18% from higher valuation marks on our securities portfolio. The remaining 10% was split between gains from our equity offering in which we sold 540,000 shares for a net proceeds of $13.7 million in compensation from restricted share awards which reduced earnings per share as this cost are amortized against income but increased paid in capital when it rewards best. Organic adversely graded assets consisting of ORE non-performing loans, other classified loans, and special mention declined to $264 million during the quarter and are down 13% in the past year. Acquired adversely graded assets fell at $48 million which is net of $28 million of unrecognized credit and rate discounts. Three quarters of the $68 million dollars and non-performing loans were current with regard to contractual principle of interest payments at year-end.
Gross loan charge-offs were $2.6 million during the quarter for 12 basis points of average loans annualized. While recoveries declined slightly to $3.4 million, resulting in a net recovery of $800,000 for the fourth quarter, compared to a loss of $2.1 million in the same quarter last year. While our total allowance growth loan assets climbed to $110 million at year-end, strong loan growth and improving asset quality resulted in a loan loss reserve ratio declining to 1.31% of total loans. Capital growth in excess of our asset growth contributed to push up our tangible common equity ratio which climbed to 8.6% at December 31st, from 7.4% at December 31st, 2013. The total capital ratio declined from 12.2% in the third quarter to 11.7% at year-end due to the voluntary payoff of 1/2 of the SBLF preferred stock I mentioned earlier. Under the Basell III rules — are going to affect this quarter — each regulatory capital ratio will be haircut about 20 basis points, but will still significantly exceed well-capitalized regulatory levels.
