Net income for the three months ended March 31, 2021 was $1.13 million, representing an increase of 89% compared with the same period of 2020. Earnings per share for the first quarter 2021 were $0.28 compared with $0.15 for the first quarter 2020.
As of March 31, 2021, total assets were $466.8 million. Since December 31, 2020, total assets have increased $1.9 million or 0.41%, and since March 31, 2020, total assets have increased by $132.7 million or 40%.
Anker Fanoe, President and CEO, commented, "Economic circumstances continue to improve in Monterey County as companies work toward returning to pre-pandemic operations. Every day we see more people returning to work as businesses navigate the COVID restrictions and create healthy environments for both employees and clients. Our local economy and our clients continue to see significant growth in liquidity. We anticipate that as the economy recovers, we will see more of that liquidity put to work by our clients and the Bank."
As of March 31, 2021, total deposits were $424.1 million compared with total deposits of $423.4 million at December 31, 2020, representing an increase of $700 thousand, or 0.4% during the first quarter of 2021. Total deposits have increased by $127.6 million or 43% compared to a year ago.
Total gross loans outstanding were $370.1 million as of March 31, 2021, which includes $105.8 million in Paycheck Protection Program (PPP) loans. Total gross loans exceeded gross loan balances at March 31, 2020 by $108.0 million, representing an increase of 40% year-over-year.
However, gross loans net of PPP loans increased only slightly when compared to March 31, 2020. Sandi Eason, EVP and Chief Operating Officer, commented that, "The Bank continues to support our community with involvement in the current round of PPP that opened in January. The Bank is pleased to have the opportunity to help so many in the community and keep doors open for small businesses and non-profit clients as they recover from the impacts of the pandemic.
These new PPP loans contributed to loan growth for the quarter, additional deferred fees to be recognized in future quarters, and new opportunities to expand our commercial client base."
Shareholder Equity was $40.3 million at March 31, 2021, representing growth of $3.9 million, or 10.6% over a year ago. The Bank is considered to be well capitalized and its Capital Ratios exceed regulatory minimums.
Net Interest Income was $4.0 million, $3.9 million and $3.2 million for the three months ending March 31, 2021, December 31, 2020, and March 31, 2020, respectively.
The Bank's cost of funds decreased compared to the first quarter of last year resulting in $216 thousand less in interest expense, primarily due to certificate of deposit maturities. The net interest margin in the first quarter of 2021 equated to 3.61% compared with 3.73% last quarter, and 3.56% for the first quarter of 2020.
The gradual decrease in net interest margin over the past several quarters is due primarily to the Bank's participation in the PPP Program which allows for short-term forgivable loans with an interest rate of 1.00%. While the origination of PPP loans has applied downward pressure to net interest margin, the PPP loans originated in the first and second rounds during 2020, and from the third round in 2021, have had a significant impact on the Bank's financial statements.
During the first quarter of 2021, the Bank recognized $792 thousand in deferred fees in conjunction with PPP loans of which $450 thousand from forgiven PPP loans originated during the first two rounds of the program. These PPP loans along with any additional PPP loans that fund through the end of the program will continue to impact the Bank's profitability going forward.
For the three months ended March 31, 2021, Non-Interest Income was $237 thousand compared with December 31, 2020, at $225 thousand, and $157 thousand for the same period of 2020, representing increases of 5% and 51%, respectively.
Operating expenses were $2.6 million for the first quarter 2021, an increase of $93 thousand, or 4% compared with the fourth quarter of 2020, and an increase of $215 thousand, or 9%, over the three months ended March 31, 2020. ■