Net charge-offs to average outstanding loans in the total portfolio, on an annualized basis, were 0.48% for the second quarter of 2010 versus 0.88% for the first quarter of 2010 and 0.26% in the year-earlier period. Management believes that nonperforming assets and net charge-offs will likely remain at elevated levels, at least in the near term, because of the continued weakness in the economy. Accordingly, the Company increased its provision for loan losses to $650,000 for the second quarter of 2010 from $500,000 in both the first quarter of 2010 and the year-earlier quarter. At June 30, 2010, the allowance for loan losses represented 1.54% of total loans outstanding versus 1.70% of total loans outstanding at March 31, 2010, and 1.94% of total loans outstanding at June 30, 2009.
Noninterest income declined 4% to $1,955,000 for the second quarter of 2010 from $2,039,000 in the year-earlier quarter, primarily reflecting reduced gains on the sale of available-for-sale securities, which more than offset increases in account charges and fees. Noninterest income for the first half of 2010 increased 2% to $3,766,000 from $3,684,000 in the year-earlier period, with the increase reflecting higher account charges and fees, as well as increased brokerage commissions, which together were partially offset by reduced gains on the sale of securities and lower mortgage origination fees.
Noninterest expense for the second quarter of 2010 increased 21% to $5,745,000 from $4,742,000 in the second quarter of 2009, as salaries and employee benefits increased from the year-earlier quarter due to the Company's expansion and the net acquisition of eight branch locations during the past year. Additionally, the Company incurred one-time conversion expenses of approximately $267,000 in the second quarter related to its acquisition of five Park Avenue Bank branches in May 2010. These higher expenses were offset partially by a swing to gains on the sale of OREO during the quarter from losses and write-downs on OREO in the year-earlier quarter. Noninterest expense for the six months ended June 30, 2010, rose 18% to $10,449,000 compared with $8,856,000 for the year-earlier period. Again, this increase reflected higher year-over-year personnel costs related to expansion, gains on the sale of OREO versus losses and write-downs in the first half of 2009, and conversion costs related to acquired branches. The Company's efficiency ratio was 86.38% and 81.18%, respectively, for the second quarter and six months ended June 30, 2010, versus 86.80% and 83.03%, respectively, in the year-earlier periods.