The parent company of East Boston Savings Bank had another year of explosive growth, but experienced a lower net interest margin due to changes in the country’s tax code and a higher cost of funds as deposit competition and interest rates increase.

The company reported net income of $12 million, or $0.23 per diluted share, for the first quarter, compared to $9.2 million, or $0.18 per diluted share, for the first quarter of 2017. Net interest income for the quarter was $39.8 million, up $6.5 million or 19.5 percent from the first quarter of 2017. The margin lost four basis points year-over-year, coming in at 3.16 percent.

“As expected, the decline in our net interest margin on a tax-equivalent basis to 3.16 percent for the first quarter of 2018 resulted from the reduction in our federal income tax rate under the Tax Act,” Richard J. Gavegnano, chairman, president and CEO, said in a statement. “Without this change in our tax rate, our yields on loans and interest earning assets, the interest rate spread and the net interest margin on a tax-equivalent basis would have been five basis points higher than reported for the first quarter of 2018.”

Despite the impact from tax reform on the margin, Gavegnano said in a statement that “our net income for the first quarter of 2018 was also significantly enhanced due to the decline in income tax expense of 29 percent from the first quarter of 2017 reflecting the Tax Act’s lower federal income tax rate. We believe the lower federal tax rate will provide strong support for our long-term growth plans.”

The company grew total assets year-over-year by over $820 million, reaching about $5.5 billion. Total loans reached $4.9 billion, up about $880 million year-over-year, driven by increases in every loan category, notably commercial real estate.

Total deposits reached about $4.2 billion, up over $500 million year-over-year, leaving the company with a very high loan-to-deposit ratio. The company’s total cost of funds was 1.06 percent for the quarter, up four basis points from the linked quarter and 18 basis points from the prior year quarter.

The bank opened its 34th full service location in Cleveland Circle in March and is preparing for the opening of new branches in Boston’s Brigham Circle, Lynnfield, Burlington and West Peabody later in the year. The bank said previously that it would open six new branches in 2018.

“As we have demonstrated in the past, we believe investments such as these in our team and toward expansion of our footprint will enhance our market share and future financial performance,” said Gavegnano.

The company recognized a provision for loan losses of $2.2 million for the first quarter, compared to a credit of $715,000 for the linked quarter and a provision of $1.6 million for the quarter ended March 31. 2017.

Non-performing assets at the bank remained extremely low at .15 percent of total assets for the quarter, compared to .30 percent of total assets in the prior year quarter.