record an impairment charge based on that difference. At March 31, 2021, we evaluated whether any events occurred or circumstances changed that would more likely than not reduce the Company's fair value below its carrying value. We noted no such matters. There is no assurance that changes in events or circumstances in the future will not result in impairment.
Review of Financial Position:
Total assets increased $111,667, or 15.7% annualized, to $2,995,469 at March 31, 2021, from $2,883,802 at December 31, 2020. Total loans increased slightly to $2,179,534 at March 31, 2021, compared to $2,177,982 at December 31, 2020, an increase of $1,552. Excluding $11,075 of PPP net loan growth during the first quarter of 2021, total loans decreased $9,523, or 1.8% annualized, since December 31, 2020. Investments increased $37,804 or 12.5% due to the purchase of higher yielding investment securities with a portion of our lower earning excess cash position. Strong growth of deposits resulted in an increase to our overnight federal funds sold position of $81,100 since December 31, 2020. Deposits increased by $113,303 or 18.9% annualized, the result of demand for liquid accounts due to low interest rates and economic uncertainty, strong organic growth of core deposits from new and existing relationships, inflows of public fund deposits, and federal government stimulus payments. Interest-bearing deposits increased $74,516 while noninterest-bearing deposits increased $38,787. Total stockholders’ equity increased $454 or 0.1%, from $316,877 at year-end 2020 to $317,331 at March 31, 2021 due to net income, partially offset by a decrease to accumulated other comprehensive income (“AOCI”) resulting from a decrease to the unrealized gain on investment securities and dividends paid to shareholders. For the three months ended March 31, 2021, total assets averaged $2,914,045, an increase of $430,335 from $2,483,710 for the same period of 2020.
Investment Portfolio:
The majority of the investment portfolio is classified as available-for-sale, which allows for greater flexibility in using the investment portfolio for liquidity purposes by allowing securities to be sold when market opportunities occur. Investment securities available-for-sale totaled $333,753 at March 31, 2021, an increase of $37,842, or 12.8% from $295,911 at December 31, 2020. The increase was due to the purchase of taxable and tax-exempt municipal bonds and mortgage-backed securities as we deployed a portion of excess cash into higher earning assets. A decrease in the market value of the available-for-sale portfolio of $7,750 since December 31, 2020, due to higher market rates and principal received from mortgage-backed securities and maturing bonds partially offset the increases. Investment securities held-to-maturity totaled $7,166 at March 31, 2021, a decrease of $59 or 0.8% from $7,225 at December 31, 2020 due to payments received on mortgage backed securities.
For the three months ended March 31, 2021, the investment portfolio averaged $332,415, an increase of $16,190 or 5.1% compared to $316,225 for the same period last year. Average tax-exempt municipal bonds have increased $23,131 or 47.2% to $72,177 for the three months ended March 31, 2020 from $49,046 during the comparable period of 2020. The increase in tax-exempt municipal bonds is due to the aforementioned purchases during the last twelve months. The tax-equivalent yield on the investment portfolio decreased 33 basis points to 2.15% for the three months ended March 31, 2021, from 2.48% for the comparable period of 2020. The decrease in yield is due to lower reinvestment rates for cash flow from matured and called bonds.
Securities available-for-sale are carried at fair value, with unrealized gains or losses net of deferred income taxes reported in the AOCI component of stockholders’ equity. We reported net unrealized gains, included as a separate component of stockholders’ equity of $1,538, net of deferred income taxes of $408 at March 31, 2021, and net unrealized gains of $7,660, net of deferred income taxes of $2,036, at December 31, 2020.
Management, from a credit risk perspective, has taken action to identify and assess its COVID-19 related credit exposures based on asset class. No specific COVID-19 related credit impairment was identified within our investment securities portfolio, including our municipal securities, during the first three months of 2021
Our Asset/Liability Committee (“ALCO”) reviews the performance and risk elements of the investment portfolio quarterly. Through active balance sheet management and analysis of the securities portfolio, we endeavor to maintain sufficient liquidity to satisfy depositor requirements and meet the credit needs of our customers.