Attached files
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| 8-K - FORM 8-K - OCEANFIRST FINANCIAL CORP | d8k.htm |
Exhibit 99.1
Company Contact:
Michael J. Fitzpatrick
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 7506
Fax: (732) 349-5070
Email: Mfitzpatrick@oceanfirst.com
FOR IMMEDIATE RELEASE
OCEANFIRST FINANCIAL CORP.
ANNOUNCES 16.7% QUARTERLY EARNINGS
PER SHARE GROWTH
TOMS RIVER, NEW JERSEY, April 20, 2011…OceanFirst Financial Corp. (NASDAQ:”OCFC”), the holding company for OceanFirst Bank (the “Bank”), today announced that diluted earnings per share increased 16.7%, to $0.28, for the quarter ended March 31, 2011 from $0.24, for the corresponding prior year quarter. Additional highlights for the quarter included:
| • | The net interest margin expanded on a linked quarter basis to 3.60% for the quarter ended March 31, 2011, as compared to 3.52% for the quarter ended December 31, 2010. |
| • | Non-performing loans decreased by $1.8 million, or 4.9%, at March 31, 2011 as compared to December 31, 2010 and represent 2.15% of total loans receivable. |
| • | Total revenue for the quarter ended March 31, 2011 (i.e., net interest income and total other income) increased 3.9% compared to the same prior year quarter as the balance sheet grew by 2.9% year over year. |
| • | Return on average stockholders’ equity was 10.12% for the quarter ended March 31, 2011. The Company remains well-capitalized with the tangible common equity ratio increasing to 9.10% at March 31, 2011. |
The Company also announced that the Board of Directors declared its fifty-seventh consecutive quarterly cash dividend on common stock. The dividend for the quarter ended March 31, 2011 was declared in the amount of $0.12 per share to be paid on May 13, 2011 to shareholders of record on May 2, 2011.
Chairman and CEO John R. Garbarino observed, “Our strong earnings, healthy capital position and stabilizing credit metrics continue to provide a compelling value proposition for our shareholders.”
Results of Operations
Net income for the three months ended March 31, 2011 was $5.1 million, or $0.28 per diluted share, as compared to net income of $4.4 million, or $0.24 per diluted share, for the corresponding prior year period.
Net interest income for the quarter ended March 31, 2011 increased to $19.3 million, as compared to $19.0 million in the same prior year period, reflecting greater interest-earning assets partly offset by a lower year-over-year net interest margin. Average interest-earning assets increased $128.3 million, or 6.3%, to $2,149.0 million for the quarter ended March 31, 2011, as compared to the same prior year period. The increase in average interest-earning assets was primarily due to the increase in average investment securities and mortgage-backed securities, which together increased $98.2 million, or 27.0%, for the quarter ended March 31, 2011, as compared to the same prior year period. The net interest margin decreased to 3.60% for the quarter ended March 31, 2011 from 3.76% in the same prior year period due to the investment of
strong deposit flows into interest-earning deposits and investment securities at a modest net interest spread. Additionally, high loan refinance volume caused yields on loans and mortgage-backed securities to reset downward. The yield on average interest-earning assets decreased to 4.52% for the quarter ended March 31, 2011, as compared to 4.96% in the same prior year period. The cost of average interest-bearing liabilities decreased to 1.04% for the quarter ended March 31, 2011, as compared to 1.35% in the same prior year period. The decrease in the cost of interest-bearing liabilities was partly offset by an increase of $99.6 million in average interest-bearing liabilities for the three months ended March 31, 2011, as compared to the same prior year period consisting of an increase in average interest-bearing deposits of $263.4 million and a decrease in average borrowed funds of $163.8 million. For the quarter ended March 31, 2011, the net interest margin increased from the prior linked quarter of 3.52%, primarily due to a decrease in the cost of transaction deposits.
For the quarter ended March 31, 2011, the provision for loan losses decreased to $1.7 million, as compared to $2.2 million for the corresponding prior year period. The decreased provision is primarily due to lower levels of non-performing loans and partially due to lower loan balances, as compared to December 31, 2010. Additionally, net charge-offs for the quarter ended March 31, 2011 were comparable to the fourth quarter of 2010 and lower than the corresponding prior year quarter.
Other income increased to $3.5 million for the quarter ended March 31, 2011, as compared to $3.0 million in the same prior year period. Fees and service charges increased to $2.7 million for the quarter ended March 31, 2011, as compared to $2.6 million for the corresponding prior year period due to higher fees from merchant services and investment services. The net gain on sales of loans increased to $759,000 for the quarter ended March 31, 2011, as compared to $503,000 for the corresponding prior year period due to an increase in the volume of loans sold. The net loss from other real estate operations was $366,000 for the quarter ended March 31, 2011, as compared to a loss of $335,000 in the same prior year period due to write-downs in the value of properties previously acquired.
Operating expenses increased by 3.4%, to $13.1 million for the quarter ended March 31, 2011, as compared to $12.7 million for the corresponding prior year period. The increase was primarily due to compensation and employee benefits costs, which increased by $512,000, or 7.8%, to $7.0 million for the quarter ended March 31, 2011, as compared to the corresponding prior year period. Occupancy expense decreased by $269,000 for the quarter ended March 31, 2011, as compared to the corresponding prior year period due to a $184,000 benefit from the negotiated settlement of the remaining office lease obligation at Columbia Home Loans, LLC (“Columbia”), the Company’s mortgage banking subsidiary, which was shuttered in the fourth quarter of 2007. Federal deposit insurance expense for the quarter ended March 31, 2011 increased by $107,000 from the corresponding prior year period primarily due to higher deposit balances.
The provision for income taxes was $2.9 million for the quarter ended March 31, 2011, as compared to $2.6 million for the same prior year period. The effective tax rate decreased to 35.9% for the quarter ended March 31, 2011, as compared to 37.4% in the same prior year period.
Financial Condition
Total assets increased by $12.0 million, or 0.5%, to $2,263.3 million at March 31, 2011, from $2,251.3 million at December 31, 2010. Investment securities available for sale increased by 36.3%, to $125.2 million at March 31, 2011, as compared to $91.9 million at December 31, 2010, due to purchases of government agency securities. Mortgage-backed securities available for sale increased by 2.0%, to $348.0 million at March 31, 2011, as compared to $341.2 million at December 31, 2010, due to purchases of mortgage-backed securities and collateralized
mortgage obligations issued by U.S. government sponsored enterprises. Loans receivable, net decreased by $24.5 million, or 1.5%, to $1,636.3 million at March 31, 2011, from $1,660.8 million at December 31, 2010, primarily due to sales and prepayments of one-to-four family loans.
Deposits decreased by $18.2 million, or 1.1%, to $1,645.8 million at March 31, 2011 from $1,664.0 million at December 31, 2010. The decline was concentrated in time deposits, which decreased $12.0 million, as the Bank continued to moderate its pricing for this product. Partly as a result of the decrease in deposits, Federal Home Loan Bank advances increased $25.7 million, to $290.7 million at March 31, 2011 from $265.0 million at December 31, 2010. Stockholders’ equity increased 2.4%, to $206.0 million at March 31, 2011, as compared to $201.3 million at December 31, 2010, primarily due to net income and a reduction in accumulated other comprehensive loss partly offset by the cash dividend on common stock.
Asset Quality
The Company’s non-performing loans totaled $35.7 million at March 31, 2011, a $1.8 million decrease from $37.5 million at December 31, 2010, primarily due to a decrease of $1.2 million relating to commercial real estate loans. Non-performing loans at March 31, 2011 include $661,000 of loans repurchased due to early payment default that were written down to market value on the date of repurchase and $1.3 million of loans previously held for sale that were also written down to market value. Net loan charge-offs decreased to $970,000 for the three months ended March 31, 2011, as compared to $1.3 million for the corresponding prior year period. For the quarter ended March 31, 2011 net charge-offs included $121,000 of loans originated by Columbia.
The reserve for repurchased loans, which is included in other liabilities in the Company’s consolidated statements of financial condition, was $809,000 at March 31, 2011, unchanged
from December 31, 2010. There was no provision for repurchased loans and no charge-offs during the quarter ended March 31, 2011. At March 31, 2011, there were two outstanding loan repurchase requests on loans with a total principal balance of $302,000 which the Company is contesting.
Conference Call
As previously announced, the Company will host an earnings conference call on Thursday, April 21, 2011 at 11:00 a.m. Eastern time. The direct dial number for the call is (877) 317-6789. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877) 344-7529, Replay Conference Number 449666, from one hour after the end of the call until May 3, 2011. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.
* * *
OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank, founded in 1902, is a federally-chartered savings bank with $2.3 billion in assets and twenty-three branches located in Ocean, Monmouth and Middlesex Counties, New Jersey. The Bank is the largest and oldest community-based financial institution headquartered in Ocean County, New Jersey.
OceanFirst Financial Corp.’s press releases are available by visiting us at www.oceanfirst.com.
Forward-Looking Statements
This news release contains certain forward-looking statements within the meaning of the Private Securities Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and the subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, levels of unemployment in the Bank’s lending area, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area and accounting principles and guidelines. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake – and specifically disclaims any obligation – to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
| March 31, 2011 |
December 31, 2010 |
March 31, 2010 |
||||||||||
| (unaudited) | (unaudited) | |||||||||||
|
|
||||||||||||
| Cash and due from banks |
$ | 31,362 | $ | 31,455 | $ | 20,884 | ||||||
| Investment securities available for sale |
125,240 | 91,918 | 39,177 | |||||||||
| Federal Home Loan Bank of New York stock, at cost |
18,370 | 16,928 | 27,906 | |||||||||
| Mortgage-backed securities available for sale |
347,966 | 341,175 | 367,189 | |||||||||
| Loans receivable, net |
1,636,251 | 1,660,788 | 1,640,149 | |||||||||
| Mortgage loans held for sale |
2,926 | 6,674 | 1,668 | |||||||||
| Interest and dividends receivable |
6,760 | 6,446 | 6,818 | |||||||||
| Real estate owned, net |
1,914 | 2,295 | 2,864 | |||||||||
| Premises and equipment, net |
22,449 | 22,488 | 21,862 | |||||||||
| Servicing asset |
5,466 | 5,653 | 6,147 | |||||||||
| Bank Owned Life Insurance |
41,062 | 40,815 | 40,166 | |||||||||
| Other assets |
23,517 | 24,695 | 24,403 | |||||||||
| Total assets |
$ | 2,263,283 | $ | 2,251,330 | $ | 2,199,233 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
| Deposits |
$ | 1,645,788 | $ | 1,663,968 | $ | 1,381,108 | ||||||
| Securities sold under agreements to repurchase with retail customers |
75,514 | 67,864 | 67,969 | |||||||||
| Federal Home Loan Bank advances |
290,700 | 265,000 | 521,100 | |||||||||
| Other borrowings |
27,500 | 27,500 | 27,500 | |||||||||
| Advances by borrowers for taxes and insurance |
7,855 | 6,947 | 8,047 | |||||||||
| Other liabilities |
9,940 | 18,800 | 6,328 | |||||||||
| Total liabilities |
2,057,297 | 2,050,079 | 2,012,052 | |||||||||
| Stockholders’ equity: |
||||||||||||
| Common stock, $.01 par value, 55,000,000 shares authorized, 33,566,772 shares issued and 18,844,232, 18,822,556 and 18,821,956 shares outstanding at March 31, 2011, December 31, 2010 and March 31, 2010, respectively |
336 | 336 | 336 | |||||||||
| Additional paid-in capital |
260,760 | 260,739 | 259,837 | |||||||||
| Retained earnings |
177,624 | 174,677 | 165,277 | |||||||||
| Accumulated other comprehensive loss |
(4,124 | ) | (5,560 | ) | (9,102 | ) | ||||||
| Less: Unallocated common stock held by Employee Stock Ownership Plan |
(4,411 | ) | (4,484 | ) | (4,703 | ) | ||||||
| Treasury stock, 14,722,540, 14,744,216 and 14,744,816 shares at March 31, 2011, December 31, 2010 and March 31, 2010, respectively |
(224,199 | ) | (224,457 | ) | (224,464 | ) | ||||||
| Common stock acquired by Deferred Compensation Plan |
950 | 946 | 943 | |||||||||
| Deferred Compensation Plan Liability |
(950 | ) | (946 | ) | (943 | ) | ||||||
| Total stockholders’ equity |
205,986 | 201,251 | 187,181 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 2,263,283 | $ | 2,251,330 | $ | 2,199,233 | ||||||
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
| For the three months ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| (unaudited) | ||||||||
| Interest income: |
||||||||
| Loans |
$ | 21,164 | $ | 21,984 | ||||
| Mortgage-backed securities |
2,563 | 2,762 | ||||||
| Investment securities and other |
564 | 330 | ||||||
| Total interest income |
24,291 | 25,076 | ||||||
| Interest expense: |
||||||||
| Deposits |
2,909 | 3,432 | ||||||
| Borrowed funds |
2,045 | 2,674 | ||||||
| Total interest expense |
4,954 | 6,106 | ||||||
| Net interest income |
19,337 | 18,970 | ||||||
| Provision for loan losses |
1,700 | 2,200 | ||||||
| Net interest income after provision for loan losses |
17,637 | 16,770 | ||||||
| Other income: |
||||||||
| Loan servicing income |
96 | 46 | ||||||
| Fees and service charges |
2,722 | 2,557 | ||||||
| Net gain on sales of loans available for sale |
759 | 503 | ||||||
| Net loss from other real estate operations |
(366 | ) | (335 | ) | ||||
| Income from Bank Owned Life Insurance |
248 | 196 | ||||||
| Other |
— | 1 | ||||||
| Total other income |
3,459 | 2,968 | ||||||
| Operating expenses: |
||||||||
| Compensation and employee benefits |
7,042 | 6,530 | ||||||
| Occupancy |
1,195 | 1,464 | ||||||
| Equipment |
647 | 476 | ||||||
| Marketing |
336 | 304 | ||||||
| Federal deposit insurance |
741 | 634 | ||||||
| Data processing |
883 | 830 | ||||||
| Legal |
256 | 296 | ||||||
| Check card processing |
320 | 317 | ||||||
| Accounting and audit |
140 | 143 | ||||||
| General and administrative |
1,568 | 1,708 | ||||||
| Total operating expenses |
13,128 | 12,702 | ||||||
| Income before provision for income taxes |
7,968 | 7,036 | ||||||
| Provision for income taxes |
2,862 | 2,632 | ||||||
| Net income |
$ | 5,106 | $ | 4,404 | ||||
| Basic earnings per share |
$ | 0.28 | $ | 0.24 | ||||
| Diluted earnings per share |
$ | 0.28 | $ | 0.24 | ||||
| Average basic shares outstanding |
18,162 | 18,132 | ||||||
| Average diluted shares outstanding |
18,211 | 18,180 | ||||||
OceanFirst Financial Corp.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
| At March 31, 2011 | At December 31, 2010 | At March 31,2010 | ||||||||||
| STOCKHOLDERS’ EQUITY |
||||||||||||
| Stockholders’ equity to total assets |
9.10 | % | 8.94 | % | 8.51 | % | ||||||
| Common shares outstanding (in thousands) |
18,844 | 18,823 | 18,822 | |||||||||
| Stockholders’ equity per common share |
$ | 10.93 | $ | 10.69 | $ | 9.94 | ||||||
| Tangible stockholders’ equity per common share |
10.93 | 10.69 | 9.94 | |||||||||
| ASSET QUALITY |
||||||||||||
| Non-performing loans: |
||||||||||||
| Real estate – one-to-four family |
$ | 26,278 | $ | 26,577 | $ | 22,633 | ||||||
| Commercial real estate |
4,651 | 5,849 | 4,844 | |||||||||
| Construction |
368 | 368 | 368 | |||||||||
| Consumer |
4,272 | 4,626 | 3,992 | |||||||||
| Commercial |
117 | 117 | 466 | |||||||||
| Total non-performing loans |
35,686 | 37,537 | 32,303 | |||||||||
| REO, net |
1,914 | 2,295 | 2,864 | |||||||||
| Total non-performing assets |
$ | 37,600 | $ | 39,832 | $ | 35,167 | ||||||
| Delinquent loans 30 to 89 days |
$ | 18,191 | $ | 14,421 | $ | 11,478 | ||||||
| Allowance for loan losses |
$ | 20,430 | $ | 19,700 | $ | 15,632 | ||||||
| Allowance for loan losses as a percent of total loans receivable |
1.23 | % | 1.17 | % | 0.94 | % | ||||||
| Allowance for loan losses as a percent of non-performing loans |
57.25 | 52.48 | 48.39 | |||||||||
| Non-performing loans as a percent of total loans receivable |
2.15 | 2.23 | 1.95 | |||||||||
| Non-performing assets as a percent of total assets |
1.66 | 1.77 | 1.60 | |||||||||
| For the three months ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| PERFORMANCE RATIOS (ANNUALIZED) |
||||||||
| Return on average assets |
0.90 | % | 0.83 | % | ||||
| Return on average stockholders’ equity |
10.12 | 9.61 | ||||||
| Interest rate spread |
3.48 | 3.61 | ||||||
| Interest rate margin |
3.60 | 3.76 | ||||||
| Operating expenses to average assets |
2.32 | 2.39 | ||||||
| Efficiency ratio |
57.59 | 57.90 | ||||||
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
LOANS RECEIVABLE
| At March 31, 2011 | At December 31, 2010 | |||||||
| Real estate: |
||||||||
| One-to-four family |
$ | 933,261 | $ | 955,063 | ||||
| Commercial real estate, multi-family and land |
434,888 | 435,127 | ||||||
| Construction |
11,318 | 13,748 | ||||||
| Consumer |
202,608 | 205,725 | ||||||
| Commercial |
75,951 | 76,692 | ||||||
| Total loans |
1,658,026 | 1,686,355 | ||||||
| Loans in process |
(3,187 | ) | (4,055 | ) | ||||
| Deferred origination costs, net |
4,768 | 4,862 | ||||||
| Allowance for loan losses |
(20,430 | ) | (19,700 | ) | ||||
| Total loans, net |
1,639,177 | 1,667,462 | ||||||
| Less: mortgage loans held for sale |
2,926 | 6,674 | ||||||
| Loans receivable, net |
$ | 1,636,251 | $ | 1,660,788 | ||||
| Mortgage loans serviced for others |
$ | 905,163 | $ | 913,778 | ||||
| Loan pipeline |
73,464 | 84,113 | ||||||
| For the three months
ended March 31, |
||||||||
| 2011 | 2010 | |||||||
| Loan originations |
$ | 102,949 | $ | 107,668 | ||||
| Loans sold |
40,218 | 29,283 | ||||||
| Net charge-offs |
970 | 1,291 | ||||||
DEPOSITS
| At March 31, 2011 | At December 31, 2010 | |||||||
| Type of Account |
||||||||
| Non-interest-bearing |
$ | 137,545 | $ | 126,429 | ||||
| Interest-bearing-checking |
904,658 | 920,324 | ||||||
| Money market deposit |
111,203 | 108,421 | ||||||
| Savings |
219,274 | 223,650 | ||||||
| Time deposits |
273,108 | 285,144 | ||||||
| $ | 1,645,788 | $ | 1,663,968 | |||||
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
| FOR THE THREE MONTHS ENDED MARCH 31, | ||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||
| AVERAGE BALANCE |
INTEREST | AVERAGE YIELD/ COST |
AVERAGE BALANCE |
INTEREST | AVERAGE YIELD/ COST |
|||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Assets |
||||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||
| Interest-earning deposits and short-term investments |
$ | 21,996 | $ | 15 | .27 | % | $ | — | $ | — | — | % | ||||||||||||
| Investment securities (1) |
126,090 | 299 | .95 | 55,971 | 126 | .90 | ||||||||||||||||||
| FHLB stock |
17,534 | 250 | 5.70 | 24,284 | 204 | 3.36 | ||||||||||||||||||
| Mortgage-backed securities (1) |
335,602 | 2,563 | 3.05 | 307,528 | 2,762 | 3.59 | ||||||||||||||||||
| Loans receivable, net (2) |
1,647,750 | 21,164 | 5.14 | 1,632,904 | 21,984 | 5.39 | ||||||||||||||||||
| Total interest-earning assets |
2,148,972 | 24,291 | 4.52 | 2,020,687 | 25,076 | 4.96 | ||||||||||||||||||
| Non-interest-earning assets |
112,969 | 107,697 | ||||||||||||||||||||||
| Total assets |
$ | 2,261,941 | $ | 2,128,384 | ||||||||||||||||||||
| Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Transaction deposits |
$ | 1,255,244 | 1,665 | .53 | $ | 965,181 | 1,984 | .82 | ||||||||||||||||
| Time deposits |
279,566 | 1,244 | 1.78 | 306,230 | 1,448 | 1.89 | ||||||||||||||||||
| Total |
1,534,810 | 2,909 | .76 | 1,271,411 | 3,432 | 1.08 | ||||||||||||||||||
| Borrowed funds |
373,792 | 2,045 | 2.19 | 537,561 | 2,674 | 1.99 | ||||||||||||||||||
| Total interest-bearing liabilities |
1,908,602 | 4,954 | 1.04 | 1,808,972 | 6,106 | 1.35 | ||||||||||||||||||
| Non-interest-bearing deposits |
130,227 | 113,518 | ||||||||||||||||||||||
| Non-interest-bearing liabilities |
21,358 | 22,540 | ||||||||||||||||||||||
| Total liabilities |
2,060,187 | 1,945,030 | ||||||||||||||||||||||
| Stockholders’ equity |
201,754 | 183,354 | ||||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 2,261,941 | $ | 2,128,384 | ||||||||||||||||||||
| Net interest income |
$ | 19,337 | $ | 18,970 | ||||||||||||||||||||
| Net interest rate spread (3) |
3.48 | % | 3.61 | % | ||||||||||||||||||||
| Net interest margin (4) |
3.60 | % | 3.76 | % | ||||||||||||||||||||
| (1) | Amounts are recorded at average amortized cost. |
| (2) | Amount is net of deferred loan fees, undisbursed loan funds, discounts and premiums and estimated loss allowances and includes loans held for sale and non-performing loans. |
| (3) | Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. |
| (4) | Net interest margin represents net interest income divided by average interest-earning assets. |