Net income for the quarter ended March 31, 2021 was $905,664, which compares to $1,118,435 for the previous quarter and $640,139 for the first quarter of the prior year.
Total interest income decreased 6% when comparing the first quarter of 2021 to the fourth quarter of 2020. This decrease was driven by lower fees recognized as interest income in association with PPP loan forgiveness during the first quarter of 2021 as compared to the prior quarter.
Total interest income rose 7% from $3,979,535 for the three months ended March 31, 2020 to $4,272,194 for the three months ended March 31, 2021.
This increase was the result of 34% loan growth when comparing March 31, 2021 to a year prior, partially mitigated by a 68 basis point decline in loan yields when comparing the first quarter of 2020 to the first quarter of 2021.
This loan yield decline is a result of lower yielding PPP loans booked in the second and third quarters of 2020 and the first quarter of 2021 and the impact of the Federal Reserve 150 basis point rate cuts in March 2020, partially offset by fees recognized in association with PPP loan forgiveness during the first quarter.
Total interest expense decreased 15% when comparing the first quarter of 2021 to the fourth quarter of 2020. This decrease was driven by a 13 basis point decrease in the cost of deposits during the quarter. Interest expense on deposits continues to be actively managed to lower costs.
Total interest expense decreased 35% from $1,075,516 for the three months ended March 31, 2020 to $701,489 for the three months ended March 31, 2021.
The vast majority of this decreased expense was related to an overall 84 basis point decline in the cost of interest bearing deposits, led by a 63 basis point decrease in the cost of money market accounts and an 81 basis point decrease in the cost of certificates of deposit, year over year.
Overall interest expense was also mitigated by strong growth in non-interest bearing deposits, which increased 108% when comparing March 31, 2021 to the year prior.
Net interest income was $3,570,705 for the quarter ended March 31, 2021 as compared to $3,718,405 for the previous quarter, a decline of 4%. The net interest margin decreased 10 basis points from 3.69% for the quarter ended December 31, 2020 to 3.59% for the quarter ended March 31, 2021.
The overall yield on interest earning assets decreased 21 basis points during the first quarter led by a 44 basis point decrease in loan yields to 4.74%, which was partially mitigated by lower cash balances in the first quarter of 2021 as compared to the fourth quarter of 2020. The cost of interest bearing deposits decreased 13 basis points during the first quarter to 0.77%, with the majority of that decrease attributed to lower cost money market accounts and certificates of deposit.
The provision for loan losses increased from $229,538 for the three months ended December 31, 2020 to $240,153 for the three months ended March 31, 2021. The provision for loan losses increased from $144,033 for the three months ended March 31, 2020, to $240,153 for the three months ended March 31, 2021. ■