Comparison of Results of Operations for the Three Months Ended March 31, 2023 and 2022.
General. For the three months ended March 31, 2023, the Company reported net income of $73,000, compared to a net loss of $141,000 for the three months ended March 31, 2022. Net interest income was up $215,000, or 12.3%, and non-interest income was up $97,000, or 49.2%, for the three months ended March 31, 2023, compared to the same period in 2022. Non-interest expense for the three months ended March 31, 2023 totaled $2.2 million, down $16,000, or 0.7%, from the same period in 2022.
Interest Income. Total interest income increased $356,000, or 18.6%, to $2.3 million for the three months ended March 31, 2023, compared to the three months ended March 31, 2022. Interest income on loans, investment securities, and other interest-earning assets were up by $66,000, $98,000, and $192,000, respectively.
The average loan yield was 4.94% for the three months ended March 31, 2023, up from 4.84% for the three months ended March 31, 2022. Average loans were $133.8 million for the three months ended March 31, 2023, up $2.8 million, or 2.1%, compared to the same period in 2022. Interest income on loans for the three months ended March 31, 2022 included $90,000 of recognized deferred PPP loan fees. PPP loans were fully paid-off in June 2022 and no deferred fee income has been earned from PPP loans during 2023.
The increase in interest income on investment securities was due to an increase in the average rate earned on our securities portfolio. The average rate earned on our investment securities portfolio was 1.66% for the three months ended March 31, 2023, up 38 basis points, or 29.7%, compared to 1.28% for the same period in 2022.
Interest income on other interest-earning assets, consisting primarily of interest-earning cash and deposits at other financial institutions, increased due to the impact of higher short-term interest rates during the 2023 period compared to 2022.
Interest Expense. Total interest expense increased $141,000, or 88.1%, to $301,000 for the three months ended March 31, 2023, compared to $160,000 for the three months ended March 31, 2022. Interest expense on deposits was $233,000 during the three months ended March 31, 2023, up $141,000, or 153.3%, from $92,000 for the three months ended March 31, 2022. The average rate paid on interest-bearing deposits was 0.66% for the three months ended March 31, 2023, up 41 basis points from 0.25% for the three months ended March 31, 2022.
Net Interest Income. Net interest income was $2.0 million for the three months ended March 31, 2023, up $215,000, or 12.3%, from the three months ended March 31, 2022. Our interest rate spread was 2.77% and 2.41% for the three months ended March 31, 2023 and 2022, respectively. Our net interest margin was 3.10% and 2.59% for the three months ended March 31, 2023 and 2022, respectively. The increase in interest rate spread and net interest margin over the comparable periods was primarily the result of increased yields on our interest-earning assets due to significant increases in market interest rates during 2022. Rising market rates have also led to an increase in the average cost of our deposits, though the increase in the average rate paid on our deposit accounts was not outpaced by the increase in the average yield on interest-earning asset over the comparable three-month periods.
Provision for Credit Losses. During the three months ended March 31, 2023, the Company recorded no provision or reversal to the allowance for credit losses, compared to a reversal of $71,000 for the same period in 2022. The reversal during the 2022 period primarily reflected the release of reserve builds recorded during 2020 for the estimated effects of the COVID-19 pandemic on credit quality. While our initial assessment of the impact of the COVID-19 improved during 2022, uncertainty remains due to risks related to declining government stimulus availability, persistent inflation, rising market interest rates and the potential for recession.