Net income available to common shareholders was $9.4 million, or $0.79 per basic common share and $0.78 per diluted common share for the three months ended March 31, 2021, an increase of $2.2 million, or 30.8%, compared to net income available to common shareholders of $7.2 million, or $0.61 per basic common share and $0.60 per diluted common share for the same quarter in 2020.
The increase is primarily driven by an increase in net interest income, reduced loan loss provision, and higher non-interest income, partially offset by higher non-interest expense.
Net interest income increased 10.6% to $16.8 million for the three months ended March 31, 2021, compared to $15.2 million for the same period in 2020.
Interest income decreased $1.0 million for the first quarter of 2021 compared to the same period in 2020, primarily due to the impact of lower interest rates on average deposits held in the Federal Reserve Bank (FRB). The Federal Reserve Board reduced interest rates in response to the COVID-19 pandemic.
Interest expense decreased $2.6 million for the first quarter of 2021 compared to the same period in 2020, primarily due to lower interest rates on deposits.
The provision for loan losses decreased $896,000 to $500,000 for the first quarter of 2021, compared to the same period in 2020. The decrease in the provision was primarily due to lower loan growth over the quarter in addition to the continued impact of the COVID-19 pandemic.
For the first quarter of 2021, non-interest income increased $1,249,000, compared to the same period of 2020, primarily attributable to an increase in service fees from deposit accounts related to our cannabis related businesses.
Non-interest expense increased $901,000 for the first quarter 2021, compared to the same period of 2020, primarily due to an increase in professional fees related to our BSA remediation efforts, and various other expense categories as a result of the growth of the Company.
Income tax expense increased $693,000 for the first quarter 2021 compared to the same period in 2020. The effective tax rate for first quarter was 25.4% compared to 25.7% for the same period in 2020. ■