We have over 2,000 people on the wait list who are looking to be the first to sign up for Shaka.
Product benefits include the opportunity to get your paycheck up to two days early, a reimbursement of ATM fees up to $20 a month and a higher than average return on funds in the account.
Our statewide vaccination rate has risen to over 70%, as many employers in the state have mandated vaccinations to protect their employees, their customers and the community in general.
The state of Hawaii unemployment rate declined to 6.6% in the month of September and is forecasted by the Department of Business Economic Development and Tourism to decline further to 6.4% in 2022.
The housing market in Hawaii remained very hot with our median single-family home price surpassing the $1 million mark this past quarter.
Our asset quality continues to be strong with non-performing assets at just 10 basis points of total assets as of September 30th.
Additionally, total classified assets were less than 1% of total loans.
As of September 30th, we have just $1.3 million in loans remaining on deferral.
Finally, net charge-offs declined to just $0.2 million in the third quarter.
Shifting to our employees, we are very pleased that 95% of our employees are now fully vaccinated against COVID-19.
We also offered a $500 cash incentive for un-vaccinated employees who got vaccinated after September 1st.
In the third quarter, our loan portfolio increased by $184 million or 4% sequential quarter, which was offset by PPP forgiveness paydowns of $216 million.
Year-over-year, our core loan portfolio increased by 7%.
Approximately $58 million or 32% of the quarter's loan growth came from Mainland consumer loans.
Our residential mortgage production continue to be very strong with total production in the third quarter of nearly $245 million and total net portfolio growth in residential mortgage and home equity of $72 million from the previous quarter.
PPP forgiveness continues to progress well with 93% of the loan balances originated in 2020 and 40% of the balances originated in 2021, already forgiven and paid down through September 30th.
During the third quarter, we purchased an auto loan portfolio for about $20 million from one of our Mainland auto loan origination partners, and we continued consumer unsecured purchases on an ongoing flow basis based on our established credit guidelines.
The purchase during the quarter had a weighted average FICO score of 750.
As of September 30th, total mainland consumer, unsecured and auto purchase loans were approximately 5% of total loans.
Our target range for total Mainland loans, including commercial and consumer is around 15% of total loans.
On the deposit front, we continue to see strong inflow of deposits with total core deposits increasing by $267 million or 4.6% sequential growth.
On a year-over-year basis, total core deposits increased by $1.1 billion or 21.6%.
Additionally, our average cost of total deposits dropped in the third quarter to just 5 basis points.
Net income for the third quarter was $20.8 million or $0.74 per diluted share, an increase of $2.1 million or $0.08 per diluted share from the prior quarter.
Return on average assets in the third quarter was 1.15%, and return on average equity was 14.83%.
Net interest income for the third quarter was $56.1 million, which increased by $4 million from the prior quarter due to core loan and investment portfolio growth, loan and investment yield improvements and slightly higher PPP fee recognition.
Net interest income included $8.6 million in PPP net interest income and net loan fees compared to $7.9 million in the prior quarter.
At September 30th, unearned net PPP fees was $7.9 million.
The net interest margin increased to 3.31% in the third quarter compared to 3.16% in the previous quarter.
The NIM normalized for PPP was 2.96% in the third quarter compared to 2.93% in the prior quarter.
Third quarter other operating income remained relatively flat at $10.3 million.
During the quarter, there was a decrease in bank-owned life insurance income of $0.7 million driven by market fluctuations.
Other operating expense for the third quarter was $41.3 million, which was in line with the prior quarter.
The efficiency ratio decreased to 62.3% in the third quarter due to higher net interest income.
We expect annual future savings of approximately $800,000 from this consolidation.
At September 30th, our allowance for credit losses was $74.6 million or 1.55% of outstanding loans, excluding PPP loans.
In the third quarter, we recorded a $2.6 million credit to the provision for credit losses due to improvements in the economic forecasts and our loan portfolio.
The effective tax rate was 24.7% in the third quarter.
Going forward, we continue to expect the effective tax rate to be in the 24% to 26% range.
Our capital position remains strong and during the third quarter we repurchased 234,700 shares at a total cost of $5.9 million or an average cost per share of $25.12.
Finally, on October 26, our Board of Directors declared a quarterly cash dividend of $0.25 per share, which was an increase of $0.01 or 4.2% from the previous quarter.

Summary:
Net income for the third quarter was $20.8 million or $0.74 per diluted share, an increase of $2.1 million or $0.08 per diluted share from the prior quarter.
Net interest income for the third quarter was $56.1 million, which increased by $4 million from the prior quarter due to core loan and investment portfolio growth, loan and investment yield improvements and slightly higher PPP fee recognition.