For the full year ended December 31, 2017, net interest income was $201.3 million, up $20.7 million, or 11.4% from the same period in 2016. Net interest income of $52.0 million for the fourth quarter of 2017 increased by $5.6 million, or 12.1% compared to the same period in 2016.
Growth in net interest income was largely driven by an 11.2% increase in average total loans during 2017, up $444.0 million over average loans in 2016. The loan growth was supported, in part, by a $249.4 million increase in average total deposits over the same period. The net interest margin was 3.42% in the fourth quarter of 2017, up from 3.40% for the most recent prior quarter, and 3.30% for the same quarter last year.
For the full year, noninterest income of $69.2 million is up slightly from $68.8 million reported for 2016. Noninterest income was $17.3 million for the fourth quarter of 2017, and was up $996,000 compared to the same period in 2016. Fee income business related to cards services and investment and management services contributed to the improvement. Insurance revenue and services charges on deposit accounts were down, partially offsetting those improvements. Results for 2017 included realized losses on available-for-sale securities in the amount of $407,000, compared to realized gains of $926,000 in 2016.
For the full year, noninterest expenses were $171.1 million in 2017, up 7.9% over 2016. Noninterest expense was $46.3 million for the fourth quarter of 2017, up 17.5% when compared to that same quarter in 2016. During 2017, the Company invested $2.7 million in a historic preservation tax credit which yielded Federal and NYS tax credits. The project was placed in service in the fourth quarter, and accordingly, the fourth quarter results include the required write-off of this investment as operating expense and recognition of the related $3.3 million of tax credits generated from the investment as a reduction of income tax expense. 2017 expenses also included $731,000 of deconversion expenses related to system conversions (including a core system conversion completed in the second quarter of 2017); compared to deconversion expenses of $546,000 recognized in 2016.
INCOME TAX EXPENSE
During 2017, the Company’s effective tax rate was 44.8%, compared to 31.3% in 2016. The increase is mainly due to the $14.9 million one-time write-down of net deferred tax assets discussed above. Tax expense for 2017 benefited from the $3.3 million historic tax credit described above, which was recognized in the fourth quarter of 2017. As previously mentioned, the Tax Cut and Jobs Act of 2017 will reduce the federal statutory tax rate from 35% in 2017, to 21% in 2018.