During the fourth quarter, our total balance of loans on payment deferrals decreased significantly and was down to 3% of total loans, excluding PPP loans at year-end.
Finally, our Board of Directors declared a quarterly cash dividend of $0.23 per share and approved a new share repurchase authorization.
The daily visitor arrival counts have recently been in the 5,000 to 8,000 range per day, but is still significantly down compared to a year ago.
In the fourth quarter, excluding PPP loan pay-offs of $112 million, the bank grew its loan portfolio by $46 million, driven by growth in commercial, construction, residential mortgages, HELOC and commercial mortgages.
Our residential lending team continues to outperform with record levels of production, resulting in $5.4 million in mortgage banking income for the quarter.
For the 2020-year, mortgage banking income was $13.7 million, which was more than double the income from the previous year, augmented by over $1 billion in loan production.
During the fourth quarter, we received and processed a significant amount of PPP forgiveness applications, which resulted in the recognition of $5.4 million in fee income.
Core deposits during the fourth quarter increased by $132 million, which is consistent with year-end seasonal inflows augmented by our front-line business development efforts.
For the 2020 year, core deposits increased by $787 million.
Additionally, our cost of total deposits declined by 4 basis points from the prior quarter and is now down to 9 basis points.
At year-end, the loan portfolio totaled $4.96 billion with 55% consumer and 45% commercial.
At quarter-end, the total balance of loans on payment deferrals declined to $120 million or 3% of the total loan portfolio, excluding PPP balances.
Our redeferral rate was 15% and was primarily driven by residential loans where payment deferrals were extended to nine months.
Of the approximately 4,200 consumer loans that returned to payments, only 7% are granted a short-term loan modifications with 93% resuming payment at contractual terms.
In the commercial and commercial real estate loan portfolios, the total balance of loans on payments deferrals declined to $47 million or 1% of the total loan portfolio, excluding PPP balances.
The highest exposure by industry continues to be Real Estate and Rental & Leasing totaling $33 million, a decline of $14 million sequential quarter.
Loan payment deferrals for our high-risk industries totaled $12 million or 0.3% of the total loan portfolio, excluding PPP balances.
As of January 20th, our total balance of loans on payment deferrals decreased further to $101 million or 3% of total loans, excluding PPP balances.
Additional details on our loan payment deferrals can be found on Slides 20 and 21.
During the quarter, criticized loans declined by $4.5 million sequential quarter to $192 million or 4.2% of the total loan portfolio, excluding PPP balances.
Special mention loans declined by $6.3 million to $142 million or 3.1% of the total loan portfolio, excluding PPP balances and classified loans increased by $1.7 million to $50 million or 1.1% of the total loan portfolios, excluding PPP balances.
We sold a classified and non-accrual commercial real estate loan at par of $4.2 million and settled a payoff of another classified and non-accruals commercial real estate and commercial loan at 92 [Phonetic] or $2.9 million.
Approximately 32% of special mention balances and 10% of classified balances also received PPP loans.
Additional details on loans rated special mention and classified can be found on Slides 22 and 23.
Net income for the fourth quarter of 2020 was $12.2 million or $0.43 per diluted share.
Return on average assets in the fourth quarter was 74 basis points and return on average equity was 8.87%.
For the full 2020 year, net income was $37.3 million or $1.32 per diluted share.
Return on average assets was 0.58% and return on average equity was 6.85%.
Pre-tax pre-provision earnings for 2020 was $88.2 million compared to $84.2 million in 2019.
Additionally, in the fourth quarter, there were several one-time expenses which totaled $5.9 million.
Net interest income for the fourth quarter was $51.5 million, which increased from the prior quarter due to accelerated recognition of PPP's fee income as PPP loans were forgiven by the SBA.
Net interest income included $6.3 million in PPP net interest income and net loan fees compared to $3.4 million in the prior quarter.
The net interest margin increased to 3.32% in the fourth quarter compared to 3.19% in the prior quarter.
The NIM normalized for PPP was 3.17 in the fourth quarter compared to 3.26 in the prior quarter.
Fourth quarter other operating income totaled $14.1 million compared $11.6 million in the prior quarter.
The increase was primarily due to higher mortgage banking income of $1.1 million sequential quarter.
Additionally, in the current quarter, we realized a gain on sale of securities of $0.2 million compared to a loss on sale of securities of $0.4 million in the prior quarter.
Other operating expense for the fourth quarter was $45.1 million, which was an increase of $8.1 million compared to the prior quarter.
The increase was largely driven by one-time expenses totaling $5.9 million which related to employee incentives and benefits, branch consolidation costs, litigation settlement, debt prepayment fees, and other one-time expense accruals.
The efficiency ratio increased to 68.8% in the fourth quarter compared to 60.9% in the previous quarter, primarily due to the one-time expenses.
Excluding one-time expenses of $5.9 million, the fourth quarter efficiency ratio would have been 59.8%.
Net charge-offs in the fourth quarter totalled $1.8 million compared to net charge-offs of $1.3 million in the prior quarter.
At December 31st, our allowance for credit losses was $83.3 million or 1.83% of outstanding loans, excluding PPP loans.
This compares to 1.79% coverage as of the prior quarter-end.
The effective tax rate was 23.7% in the fourth quarter.
And going forward, we expect the ETR to continue to be in the 24% to 26% range.
With the $55 million subordinated note offering we completed in the fourth quarter, our CPF total risk-based capital ratio increased to 15.2% as of December 31st.

Summary:
Net income for the fourth quarter of 2020 was $12.2 million or $0.43 per diluted share.
Net interest income for the fourth quarter was $51.5 million, which increased from the prior quarter due to accelerated recognition of PPP's fee income as PPP loans were forgiven by the SBA.