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East Boston Savings Bank saw record earnings in the fourth quarter as the bank increased its net interest income.

The bank had fourth quarter net income of $18.1 million, or $0.36 per diluted share, compared to $17.1 million, or $0.33 per diluted share, for the fourth quarter of 2019.

Earnings for full-year 2020 were slightly lower than in 2019, with net income of $65.1 million, or $1.29 per diluted share, compared to $67.0 million, or $1.30 per diluted share, in 2019.

Richard Gavegnano, East Boston Savings’ chairman, president and CEO, said in the bank’s earnings statement that the results reflected a significant increase in net interest income in both the fourth quarter and throughout 2020. He said the bank’s management had focused on “maintaining loan yields while aggressively decreasing the cost of funds.”

Low interest rates have driven down the amount paid on deposits, and the bank said increases in net income in the fourth quarter and the full year were primarily driven by the substantial reduction in the cost of funds. The bank’s net interest income was $51.5 million in the fourth quarter, up $2.6 million, or 5.4 percent, from the third quarter and $7.8 million, or 17.9 percent, from the fourth quarter of 2019. The net interest margin was 3.24 percent in the fourth quarter compared to 3.13 percent in the third quarter and 2.84 percent in the fourth quarter of 2019.

Net interest income in 2020 increased by $19.8 million over 2019, or 11.4 percent, to $192.7 million. The net interest margin was 3.12 percent for 2020 compared to 2.86 percent in 2019.

East Boston Savings Bank’s total deposits were $5.08 billion on Dec. 31, up $159.6 million, or 3.2 percent, from $4.92 billion at the end of 2019. Core deposits, which do not include certificates of deposit, increased $510.3 million, or 15.2 percent, in 2020 to $3.86 billion. Core deposits made up 76 percent of total deposits, compared to 68.1 percent at the end of 2019.

The bank had more non-interest bearing demand deposits in 2020, increasing by $187.4 million , or 35.8 percent, over 2019, while certificates of deposit decreased by $350.7 million.

Total assets were $6.62 billion at the end of 2020, up from $6.34 billion at the end of 2019. Net loans were $5.44 billion in 2020 down 4.5 percent from 2019. The net decrease in loans in 2020 was primarily due to decreases of $197 million in commercial real estate loans, $122.9 million in multifamily loans and $95.2 million in one- to four-family ome loans, the bank said. The decreases were partially offset by increases of $160.3 million in commercial and industrial loans and $24.1 million in construction loans. The increase in commercial and industrial loans includes $123.7 million in PPP loans.

After deciding to delay adopting the current expected credit losses (CECL) accounting method earlier this year, as allowed by the CARES Act, East Boston Savings Bank adopted CECL at the end of the fourth quarter.

The bank’s provision for credit losses was $8.9 million in the fourth quarter, compared to $7.2 million in the third quarter and a reversal of $504,000 for the fourth quarter of 2019. The provision for credit losses for the full-year 2020 was $26.5 million compared to a reversal of $2.6 million in 2019.

The allowance for credit losses on loans was $68.8 million or 1.25 percent of total loans on Dec. 31 compared to $67.6 million or 1.20 percent of total loans on Sept. 30 and $50.3 million or 0.87 percent of total loans on Dec. 31, 2019.

Gavegnano said the bank has seen a sharp decrease in the COVID-19-related modifications, with most remaining modifications having interest-only payments over a temporary period.

“Management has been very successful in sustaining the company’s historically low levels of non-performing assets and substandard loans,” Gavegnano said. “Our asset quality, despite the COVID-19 related modifications, has the Company well-positioned as we approach the latter stages of the pandemic response and look to the resumption of economic activity, even in the hardest hit industries. We are confident that the work we have put in to strengthening our loan relationships has not only protected these relationships during the pandemic but also reinforces our position as reliable business partners when executing their post-pandemic strategies.”