The daily arrival count have averaged about 30,000 per day since June, which is nearly at pre-pandemic level.
Nearly 60% of our state population is fully vaccinated as of July 21, 2021.
The state of Hawaii's unemployment rate declined to 7.7% in the month of June and is forecasted by the University of Hawaii Economic Research Organization to decline to 4.8% in 2022.
The housing market in Hawaii remains hot with the median single-family home price at $979,000 in the month of June.
As of June 30, we have just $3.5 million in loans remaining on deferral, the majority of which are residential mortgages.
Additionally, our classified assets declined during the quarter to $42 million, and our nonperforming assets remain near historic lows at just nine basis points of assets.
As part of this program, we selected our first cohort of 20 women entrepreneurs from seven different business sectors that will participate in a 10-week series of workshop on financial management, marketing, and leadership and receive free advertising and networking benefits.
In the second quarter, our core loan portfolio decreased by $103 million or 2.3% sequential quarter, which was offset by PPP paydown of $163 million.
Year-over-year, our core loan portfolio increased by 3.7%.
Our residential mortgage production continues to be very strong, with total production in the second quarter of nearly $280 million and total net portfolio growth in residential mortgage and home equity of $48 million from the previous quarter.
We ramped up 2021 new PPP originations during the second quarter with over 4,600 loans totaling more than $321 million.
PPP forgiveness is also progressing well with 70% of the loans originated in 2020 already forgiven and paid down through June 30.
On the deposit front, we saw a strong inflow of deposits with total core deposits increasing by $279 million or about 5% sequential quarter growth.
On a year-over-year basis, total core deposits increased by $705 million or 13.8%.
Net income for the second quarter was $18.7 million or $0.66 per diluted share.
Return on average assets was 1.06% and return on average equity was 13.56%.
Net interest income for the second quarter was $52.1 million, which increased from the prior quarter, primarily due to greater recognition of PPP fee income due to higher forgiveness.
Net interest income included $7.9 million in PPP net interest income and net loan fees compared to $5.2 million in the prior quarter.
At June 30, unearned net PPP fees was $15.9 million.
Net interest margin decreased to 3.16% compared to 3.19% in the prior quarter.
The net interest margin normalized for PPP was 2.93% compared to 3.12% in the previous quarter.
Investment MBS premium amortization increased by $900,000 sequential quarter due to an acceleration of prepayments in the second quarter.
To mitigate the prepayment risk going forward, we executed a sovereign coupon MBS bond swap totaling $175 million.
Second quarter other operating income remained relatively flat at $10.5 million.
Other operating expense for the second quarter was $41.4 million compared to $37.8 million in the prior quarter, with much of the increase in the salaries and benefits line.
The current quarter increase in salaries and benefits was primarily due to $1.2 million in nonrecurring reductions in the prior quarter and $2.8 million in higher incentive compensation and commission accruals, strategic hires to drive forward performance, and annual merit increase.
The efficiency ratio increased to 66.2% in the second quarter due to higher other operating expenses.
Net charge-offs in the second quarter totaled $0.8 million, with the majority of charge-offs coming from the consumer loan portfolio.
At June 30, our allowance for credit losses was $77.8 million or 1.68% of outstanding loans, excluding the PPP loans.
In the second quarter, we recorded a $3.4 million credit to the provision for credit losses due to improvements in the economic forecast and our known portfolio.
The effective tax rate was 23.9% in the second quarter and going forward, we expect the effective tax rate to be in the 24% to 26% range.
Our capital position remains strong and as Paul noted earlier, we resumed share repurchases this quarter with repurchases of 156,600 shares at a total cost of $4.3 million.
We've also repurchased an additional 78,000 shares of common stock month-to-date through July 20 at an average cost of $24.93.
Finally, our Board of Directors declared a quarterly cash dividend of $0.24 per share, which was consistent with the prior quarter.

Summary:
Net income for the second quarter was $18.7 million or $0.66 per diluted share.
Net interest income for the second quarter was $52.1 million, which increased from the prior quarter, primarily due to greater recognition of PPP fee income due to higher forgiveness.