reduced loan portfolio size due to increased payoff activity including one substandard credit, and lower levels of criticized assets. As demonstrated historically, the Company continues its strategic conviction that a strong allowance for loan losses is needed, which has proven to be essential given the support provided to certain borrowers as they fully recover from the COVID-19 pandemic. Overall, we believe that non-performing assets remain well controlled totaling $3.2 million, or 0.34% of total loans, on June 30, 2022. The Company continues to experience low net loan charge-offs, which were $105,000, or 0.02% of total average loans, in the first six months of 2022 and is relatively consistent with net loan charge-offs of $93,000, or 0.02% of total average loans, for the first six months of 2021. Even though the Company recognized a loan loss provision recovery during the first half of the year, the balance in the allowance for loan losses at June 30, 2022 is only slightly lower than the balance of the allowance at June 30, 2021 by $184,000, or 1.6%. The Company remains committed to prudently working with our borrowers that have been hardest hit by the pandemic by granting them loan payment modifications. On June 30, 2022, loans totaling approximately $5.2 million, or only 0.5% of total loans, were on a payment modification plan. These loans include three commercial borrowers in the hospitality and personal care industries. Management continues to carefully monitor asset quality with a particular focus on these customers that have requested payment deferrals. In summary, the allowance for loan losses provided 357% coverage of non-performing assets, and 1.20% of total loans, on June 30, 2022, compared to 373% coverage of non-performing assets, and 1.26% of total loans, on December 31, 2021.
Total non-interest income in the second quarter of 2022 decreased by $261,000, or 5.9%, from the prior year's second quarter and for the first six months of 2022 decreased by $540,000, or 6.0%, from the first six months of 2021. Net realized gains on loans held for sale decreased by $87,000, or 71.3%, for the quarter and decreased by $487,000, or 78.9%, for the six months, due to the lower level of residential mortgage loan production which reflects a reduced level of mortgage loan refinance activity due to the quick escalation of interest rates since the beginning of 2022. Residential mortgage loan production totaled $15.3 million in the first six months of 2022 and was 73.4% lower than the production level of $57.7 million achieved in the first half of 2021. The reduced level of mortgage loan production also caused mortgage related fees to decline by $67,000, or 67.7%, for the quarter and by $164,000, or 71.6%, for the six months. Revenue from bank owned life insurance (BOLI) dropped by $110,000, or 20.0%, in the first half of 2022, after the Company received a death claim in 2021. Wealth management fees increased by $247,000, or 4.2%, for the six-month time period of 2022 but declined by $46,000, or 1.5%, comparing the second quarter of 2022 to the second quarter of 2021. The decrease in quarterly performance between years reflects the unfavorable impact of the declining equity markets on wealth management fee income which was partially offset by new customer business growth. The fair market value of wealth management assets declined since the fourth quarter of 2021 by $339.9 million, or 12.5%, and totaled $2.4 billion at June 30, 2022. Finally, service charges on deposit accounts increased by $110,000, or 25.9%, in the first six months of 2022 compared to the first six months of 2021, as consumers are more active this year, increasing their spending habits.
The Company has demonstrated good expense control as total non-interest expense in the second quarter of 2022 increased by $72,000, or 0.6%, when compared to the second quarter of 2021 and increased in the first half of 2022 by $246,000, or 1.1%, when compared to 2021. Salaries & employee benefits increased by $96,000, or 1.4%, for the quarter and are $560,000, or 4.1%, higher for the six-month time period in 2022. Within total salaries & benefits expense, salaries costs are higher by $727,000, or 8.2%, through six months due to merit increases and a higher level of full-time equivalent employees. Also, there were additional increases to health care costs and other employee benefits. Partially offsetting these higher costs within salaries & benefits through six months was lower incentive compensation by $215,000, or 21.7%, due to the reduced level of loan production. Similar to what occurred in 2021, the Company was required to recognize a settlement charge in connection with its defined benefit pension plan in the second quarter of 2022. The amount of the 2022 charge was $1,014,000 which is $163,000 higher than the $851,000 settlement charge recognized in the second quarter of 2021. A settlement charge must be recognized when the total dollar amount of lump sum distributions paid from the pension plan to retired employees exceeds a threshold of expected annual service and interest costs in the current year. So far in 2022, all but one employee that retired have elected to take a lump sum distribution as opposed to collecting future monthly annuity payments since the value of the lump sums continued to be elevated this year due to the low level where interest rates were late in 2021 when these lump sums were calculated. It is anticipated that the Company will be required to recognize additional settlement charges through year end as more people retire. However, it is important to note that since the retired employees have chosen to take the lump sum payments, these individuals are no longer included in the pension plan. Therefore, we expect that the Company’s normal annual pension expense should be lower in the future, which has been evident so far in 2022 as the normal amount of pension expense required to be recognized is lower than the 2021 level. Professional fees were $124,000, or 4.6%, higher for the first six months of 2022 due primarily to higher legal costs within our wealth management group. Net occupancy expenses are $109,000, or 8.2%, higher through six months of 2022 due to increased utilities cost along with maintenance & repair expense which was primarily related to the new branch office. Partially offsetting these higher costs were other expenses decreasing by $531,000, or 12.1%, for the first six months of 2022 when compared to the same time period from last year. Contributing to the lower level of other expense was no additional costs related to a branch acquisition in 2022 after $303,000 of expense was recognized for this purpose in 2021. Other expenses were also favorably impacted by a $149,000 credit for the unfunded commitment reserve after $56,000 of expense was recognized in the first half of last year, resulting in a $205,000 favorable shift.
The Company recorded an income tax expense of $496,000, or an effective tax rate of 20.0%, in the second quarter of 2022. This compares to an income tax expense of $420,000, or an effective tax rate of 19.7%, for the second quarter of 2021. Similarly, for the first six months of 2022, the Company recorded income tax expense of $1.1 million, or an effective tax rate of 20.0%, compared to income tax expense of $940,000 in 2021, or an effective tax rate of 19.9%.
