Astoria Financial Corporation Announces First Quarter EPS of $0.69
Board Increases Quarterly Cash Dividend 10% to $0.22 Per Common Share
LAKE SUCCESS, N.Y., April 17 /PRNewswire-FirstCall/ -- Astoria Financial
Corporation (NYSE: AF) ("Astoria"), the holding company for Astoria Federal
Savings and Loan Association ("Astoria Federal"), today reported net income of
$56.4 million, or $0.69 diluted earnings per common share, for the quarter
ended March 31, 2003, compared to net income of $61.2 million, or $0.69
diluted earnings per common share, for the 2002 first quarter.
First Quarter 2003 Highlights:
Financial:
* Diluted EPS: $0.69
* Return on average assets: 1.01%
* Return on average equity: 14.58%
* Return on average tangible equity: 16.56%
* Efficiency ratio: 38.52%
* Non-performing assets to total assets ratio: 0.18%
* Shares repurchased: 2.1 million
Retail Banking:
* Total checking account deposits increased at an annualized rate
of 26%; 20,000 new checking accounts opened
* Business deposits increased at an annualized rate of 12%
* Total deposits increased at an annualized rate of 7%
* Customer service fees increased 6% from first quarter last year
Mortgage Lending:
* 1-4 family loan volume of $1.2 billion
* Multifamily/commercial real estate ("CRE") loan volume of
$235.3 million
* Multifamily/CRE portfolios increased at an annualized rate of 19% and
represent 21% of total loans
* Home equity and other loan portfolios increased at an annualized rate
of 16% and represent 3% of total loans
Commenting on the first quarter results, George L. Engelke, Jr., Chairman,
President and Chief Executive Officer of Astoria, noted, "Even with interest
rates lower than anticipated and abnormally high levels of cash flow from
refinancing activity continuing, we were able to post solid financial results
in line with our expectations. We also experienced strong growth in
substantially all of our core businesses, particularly with respect to
checking accounts, business deposits and multifamily and CRE lending."
Board Increases Quarterly Cash Dividend 10%
The Board of Directors of the Company, at their April 16, 2003 meeting,
declared a quarterly cash dividend of $0.22 per common share, an increase of
10%. The dividend is payable on June 2, 2003 to shareholders of record as of
May 15, 2003. This is the thirty-second consecutive quarterly cash dividend
declared by the Company.
Ninth Stock Repurchase Program Continues
During the first quarter, Astoria repurchased 2.1 million shares of its
common stock at an average cost of $25.42 per share. To date, under the ninth
program that commenced November 2002, Astoria has repurchased 2.7 million
shares of the 10 million shares authorized.
Balance Sheet Summary
Key balance sheet highlights including the cumulative effect of the
Company's balance sheet repositioning since December 31, 1999 follow:
Change
(Dollars in millions) 12/31/99-
12/31/99 12/31/00 12/31/01 12/31/02 3/31/03 3/31/03
Assets $22,697 $22,337 $22,668 $21,698 22,491 - 1%
Loans $10,286 $11,422 $12,167 $12,059 $11,873 + 15%
MBS $ 9,287 $ 7,875 $ 7,074 $ 7,380 $ 8,817 - 5%
Deposits $ 9,555 $10,072 $10,904 $11,067 $11,258 + 18%
Core
Deposits(1) $ 4,625 $ 4,922 $ 5,743 $ 5,914 $ 5,842 + 26%
Checking $ 878 $ 1,005 $ 1,200 $ 1,383 $ 1,472 + 68%
Borrowings $11,524 $10,320 $ 9,822 $ 8,821 $ 9,385 - 19%
(1) Excludes time deposits
Mortgage loan originations and purchases for the quarter ended March 31,
2003 totaled $1.5 billion compared to $1.6 billion for the 2002 first quarter.
Included in the first quarter 2003 mortgage loan production were one-to-four
family loans totaling $1.2 billion, predominantly 3/1 and 5/1 adjustable rate
loans. Mortgage loan prepayments for the quarter ended March 31, 2003 totaled
$1.3 billion compared to $1.0 billion for the 2002 first quarter.
Importantly, for the quarter ended March 31, 2003, multifamily and CRE
loan originations increased to $235.3 million, or 23% over the 2002 first
quarter. The multifamily and CRE loan portfolios grew during the first
quarter at an annualized rate of 19% to $2.5 billion, or 21% of total loans at
March 31, 2003. The average loan-to-value ratio of the multifamily and CRE
loans continues to be less than 65%, based on current principal balance and
original appraised value, and the average loan balance is less than
$1 million. The portfolios are expected to approximate 25% of total loans by
the end of 2003.
The Company's strong multifamily and CRE lending capabilities are
reflected in the growth of this portfolio since 1999:
Change
(Dollars in millions) 12/31/99-
12/31/99 12/31/00 12/31/01 12/31/02 3/31/03 3/31/03
Multifamily/CRE
Loans $1,014 $1,282 $1,693 $2,345 2,458 +142%
% of Total Loans 10% 11% 14% 20% 21% +110%
At March 31, 2003, non-performing loans totaled $39.0 million, or 0.17% of
total assets compared to $34.5 million, or 0.16% of total assets, at December
31, 2002. Subsequent to the close of the first quarter of 2003, a
$3.2 million loan, just classified non-performing at March 31, 2003, became
current. Net charge-offs for the 2003 first quarter totaled only $92,000, or
an annualized rate of less than one basis point of the average total loans
outstanding. The ratio of the allowance for loan losses to non-performing
loans at March 31, 2003 was 214%.
Mortgage-backed securities ("MBS") totaled $8.8 billion at March 31, 2003,
an increase of $1.4 billion from December 31, 2002. This increase reflects
the deployment of cash flows that are currently exceeding loan production
levels into MBS purchased at little, if any, premiums and with projected
average lives of approximately 31/2 years. Importantly, the mortgage loan
pipeline at the end of the first quarter totaled $2.8 billion compared to
$1.8 billion at the end of the previous quarter.
Deposits for the quarter ended March 31, 2003 increased $190.9 million to
$11.3 billion. Importantly, checking account deposits at March 31, 2003
increased at an annualized rate of 26% on a linked quarter basis and 19% year
over year. Checking account balances totaled $1.5 billion, or 25% of core
deposits at March 31, 2003. During the first quarter 20,000 new checking
accounts were opened. Complementing the strong growth in the number of
accounts, the average checking account balance has grown from $3,700 at March
31, 2002 to $4,200 at March 31, 2003. Additionally, the success of our small
business banking initiatives was reflected in the strong growth of business
deposits, including business savings and checking accounts. At March 31,
2003, business deposits totaled $226.8 million, representing an increase at an
annualized rate of 12% on a linked quarter basis and 21% from a year ago.
Commenting on the Company's checking account and business deposit growth,
Mr. Engelke stated, "The superior demographics of our retail banking
franchise, in conjunction with concerted sales and marketing efforts, have
enabled us to grow deposits, particularly checking account deposits, the
linchpin for building long-term customer relationships. The double-digit
growth in checking accounts is impressive considering that our checking
accounts pay, on average, 0.14% interest compared to interest rates of between
2% and 3% offered by several major competitors over the past year."
Borrowings totaled $9.4 billion at March 31, 2003, an increase of
$563.6 million from the prior quarter end. While we have made significant
strides over the past several years to reduce our borrowing to deposit ratio
as well as to reduce our overall level of borrowings, during the first quarter
low interest rate environment we borrowed $500 million with medium-term
maturities at rates averaging approximately 21/2% to provide protection
against future interest rate increases.
The following table details borrowing maturities:
Contractual Total Amount Weighted
Maturity Maturing Average Rate
2Q03 $ 1.1 Billion 2.24%
3Q03 $ 350 Million 5.30%
4Q03 $ 800 Million 5.81%
1Q04 $ 2.8 Billion 4.97%
Total next 12 months $ 5.1 Billion 4.53%
Beyond 1Q04 $ 4.3 Billion 5.29%
Total(1) $ 9.4 Billion 4.88%
(1) Included are $2.6 billion of borrowings that have a maturity greater
than one year but can be called prior to March 31, 2004.
In addition to the above maturities, over the next twelve months
approximately $2.6 billion of CDs with an average rate of 2.75% will mature.
During the first quarter of 2003, $907.3 million of CDs, with an average rate
of 2.46% and an average maturity of 12 months, matured and $1.1 billion of CDs
were issued or repriced at an average rate of 2.18% and an average maturity of
17 months.
Stockholders' equity was $1.5 billion, or 6.87% of total assets at
March 31, 2003. Astoria Federal continues to maintain capital ratios in
excess of regulatory requirements with core, tangible and risk-based capital
ratios of 7.25%, 7.25% and 15.71%, respectively, at March 31, 2003.
First Quarter 2003 Earnings Summary
Net interest income for the quarter ended March 31, 2003 totaled
$109.0 million compared to $114.9 million for the 2002 first quarter.
Astoria's net interest margin for the quarter ended March 31, 2003 was
2.09% compared to 2.16% for both the prior quarter and the quarter ended March
31, 2002. The decline in the net interest margin was due to the repurchase of
8.2 million shares over the past twelve months and the more rapid decline in
the yield on interest earning assets than the cost of interest bearing
liabilities due to the high level of mortgage loan and MBS repayments.
Non-interest income for the quarter ended March 31, 2003 totaled
$25.9 million compared to $27.0 million for the comparable 2002 quarter. The
decrease is primarily due to a decrease in mortgage banking income, net, as
described below, partially offset by a net gain on sales of securities and
increased customer service fees. Customer service fees for the quarter ended
March 31, 2003 totaled $14.8 million compared to $13.9 million for the
comparable 2002 quarter.
The components of mortgage banking income, net, which is included in
non-interest income, are detailed below:
(Dollars in millions) 1Q03 1Q02
Loan servicing fees $2.3 $3.2
Amortization of MSR* (3.8) (2.1)
MSR valuation adjustments (0.9) 0.8
Net gain on sale of loans 2.8 1.5
Mortgage banking income, net $0.4 $3.4
*Mortgage servicing rights ("MSR")
During the 2003 first quarter, a net gain on sales of securities of
$2.1 million was recognized in order to offset an anticipated increase in the
mortgage servicing valuation allowance. No gain on sales of securities was
recognized in the 2002 first quarter.
General and administrative expense ("G&A") for the quarter ended March 31,
2003 totaled $52.0 million compared to $48.1 million for the comparable 2002
period. The increase is primarily due to increased compensation and benefit
expense, particularly pension expense, and occupancy, equipment and systems
expense, due, among other things, to increased depreciation as a result of
facilities and systems enhancements over the past year.
Future Outlook
Commenting on the outlook for 2003, Mr. Engelke stated, "The current
operating environment remains challenging due to sustained low interest rates
and continued economic uncertainties. We now anticipate the continuation of
the existing low interest rate environment and the extraordinarily high levels
of cash flow to persist throughout most of 2003, which will result in some
margin compression and modest downward pressure on earnings. Clearly, if
interest rates increase and cash flows recede, positive earnings momentum
should resume. We will remain focused on building our core businesses, with
particular emphasis on growing checking account and business deposits and our
multifamily and CRE loan portfolios."
Earnings Conference Call April 17, 2003 at 3:30 p.m. (ET)
The Company, as previously announced, indicated that Mr. Engelke will host
an earnings conference call Thursday afternoon, April 17th at 3:30 p.m. (ET).
The toll-free dial-in number is (877) 692-2086. A replay will be available on
April 17, 2003 from 6:00 p.m. (ET) through April 24, 2003, 11:59 p.m. (ET).
The replay number is (877) 519-4471, passcode: 3839624. The conference call
will also be simultaneously webcast on the Company's website
www.astoriafederal.com and archived through May 2, 2003.
Astoria Financial Corporation, the holding company for Astoria Federal
Savings and Loan Association, with assets of $22.5 billion, is the largest
thrift institution headquartered in New York and fourth largest in the United
States. Astoria Federal embraces its philosophy of Putting people first by
providing its 700,000 customers and the local communities it serves with
quality financial products and services through 86 convenient banking office
locations and multiple delivery channels, including its enhanced website,
www.astoriafederal.com. Astoria commands the third largest deposit market
share in the attractive Long Island market, which includes Brooklyn, Queens,
Nassau and Suffolk counties with a population exceeding that of 38 individual
states. Astoria originates mortgage loans through its banking offices and
loan production offices in New York, an extensive broker network in fifteen
states, primarily the East Coast, and through correspondent relationships in
forty-four states.
Forward-Looking Statements
This document contains a number of forward-looking statements within the
meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
statements may be identified by the use of such words as "anticipate,"
"believe," "could," "estimate," "expect," "intend," "outlook," "plan,"
"potential," "predict," "project," "should," "will," "would" and similar terms
and phrases, including references to assumptions.
Forward-looking statements are based on various assumptions and analyses
made by us in light of our management's experience and its perception of
historical trends, current conditions and expected future developments, as
well as other factors we believe are appropriate under the circumstances.
These statements are not guarantees of future performance and are subject to
risks, uncertainties and other factors (many of which are beyond our control)
that could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. These factors
include, without limitation, the following: the timing and occurrence or
non-occurrence of events may be subject to circumstances beyond our control;
there may be increases in competitive pressure among financial institutions or
from non-financial institutions; changes in the interest rate environment may
reduce interest margins; changes in deposit flows, loan demand or real estate
values may adversely affect our business; changes in accounting principles,
policies or guidelines may cause our financial condition to be perceived
differently; general economic conditions, either nationally or locally in some
or all of the areas in which we do business, or conditions in the securities
markets or the banking industry may be less favorable than we currently
anticipate; legislative or regulatory changes may adversely affect our
business; applicable technological changes may be more difficult or expensive
than we anticipate; success or consummation of new business initiatives may be
more difficult or expensive than we anticipate; or litigation or matters
before regulatory agencies, whether currently existing or commencing in the
future, may delay the occurrence or non-occurrence of events longer than we
anticipate. We assume no obligation to update any forward-looking statements
to reflect events or circumstances after the date of this document.
Tables Follow
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, Except Share Data)
At At
March 31, December 31,
2003 2002
ASSETS
Cash and due from banks $128,425 $167,605
Federal funds sold and
repurchase agreements 205,657 510,252
Mortgage-backed securities
available-for-sale 2,303,087 2,453,633
Other securities available-for-sale 244,834 338,948
Mortgage-backed securities
held-to-maturity
(fair value of $6,605,141 and
$4,985,562, respectively) 6,513,522 4,925,891
Other securities held-to-maturity
(fair value of $48,604
and $115,003, respectively) 48,928 115,366
Federal Home Loan Bank of New York stock 296,600 247,550
Loans held-for-sale 49,439 62,669
Loans receivable:
Mortgage loans, net 11,478,063 11,680,160
Consumer and other loans, net 394,720 379,201
11,872,783 12,059,361
Allowance for loan losses (83,454) (83,546)
Total loans receivable, net 11,789,329 11,975,815
Mortgage servicing rights, net 17,624 20,411
Accrued interest receivable 92,946 88,908
Premises and equipment, net 159,899 157,297
Goodwill 185,151 185,151
Bank owned life insurance 364,097 358,898
Other assets 91,250 89,435
TOTAL ASSETS $22,490,788 $21,697,829
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $11,258,117 $11,067,196
Reverse repurchase agreements 6,435,000 6,285,000
Federal Home Loan Bank of
New York advances 2,474,000 2,064,000
Other borrowings, net 475,739 472,180
Mortgage escrow funds 144,880 104,353
Accrued expenses and other
liabilities 158,456 151,102
TOTAL LIABILITIES 20,946,192 20,143,831
Stockholders' equity:
Preferred stock, $1.00 par value;
5,000,000 shares authorized:
Series A (1,225,000 shares
authorized and - 0 - shares issued
and outstanding) -- --
Series B (2,000,000 shares
authorized, issued and outstanding) 2,000 2,000
Common stock, $.01 par value;
(200,000,000 shares authorized;
110,996,592 shares issued; and
82,855,757 and 84,805,817 shares
outstanding, respectively) 1,110 1,110
Additional paid-in capital 842,837 840,186
Retained earnings 1,404,570 1,368,062
Treasury stock (28,140,835 and
26,190,775 shares,
at cost, respectively) (689,310) (639,579)
Accumulated other
comprehensive income 10,463 9,800
Unallocated common stock held by ESOP
(4,926,258 and 5,018,500 shares,
respectively) (27,074) (27,581)
TOTAL STOCKHOLDERS' EQUITY 1,544,596 1,553,998
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $22,490,788 $21,697,829
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Share Data)
For the Three Months Ended
March 31,
2003 2002
Interest income:
Mortgage loans $173,145 $202,798
Consumer and other loans 4,772 3,802
Mortgage-backed securities 94,048 100,496
Other securities 9,849 19,656
Federal funds sold and repurchase
agreements 752 4,138
Total interest income 282,566 330,890
Interest expense:
Deposits 58,241 78,227
Borrowed funds 115,317 137,736
Total interest expense 173,558 215,963
Net interest income 109,008 114,927
Provision for loan losses -- 1,004
Net interest income after provision
for loan losses 109,008 113,923
Non-interest income:
Customer service fees 14,833 13,931
Other loan fees 1,826 2,122
Net gain on sales of securities 2,136 -
Mortgage banking income, net 436 3,428
Income from bank owned life
insurance 5,199 4,262
Other 1,465 3,217
Total non-interest income 25,895 26,960
Non-interest expense:
General and administrative:
Compensation and benefits 28,764 26,068
Occupancy, equipment and
systems 14,615 13,175
Federal deposit insurance
premiums 492 505
Advertising 1,498 1,027
Other 6,597 7,354
Total non-interest expense 51,966 48,129
Income before income tax expense 82,937 92,754
Income tax expense 26,540 31,536
Net income 56,397 61,218
Preferred dividends declared (1,500) (1,500)
Net income available to common
shareholders $54,897 $59,718
Basic earnings per common share $0.69 $0.70
Diluted earnings per common share $0.69 $0.69
Basic weighted average common shares 79,041,158 85,478,138
Diluted weighted average common and
common equivalent shares 79,781,388 87,041,932
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS AND OTHER DATA
At or For the
Three Months Ended
March 31,
2003 2002
Selected Returns and Financial
Ratios (annualized)
Return on average stockholders' equity 14.58 % 15.72 %
Return on average tangible
stockholders' equity (1) 16.56 17.85
Return on average assets 1.01 1.09
General and administrative
expense to average assets 0.93 0.86
Efficiency ratio (2) 38.52 33.92
Net interest rate spread (3) 2.02 2.02
Net interest margin (4) 2.09 2.16
Asset Quality Data (dollars in thousands)
Non-performing loans/total loans 0.33 % 0.27 %
Non-performing loans/total assets 0.17 0.15
Non-performing assets/total assets 0.18 0.16
Allowance for loan losses/
non-performing loans 213.73 250.00
Allowance for loan losses/
non-accrual loans 218.64 260.11
Allowance for loan losses/
total loans 0.70 0.67
Net charge-offs to average loans
outstanding (annualized) 0.00 0.01
Non-performing assets $39,980 $35,728
Non-performing loans 39,047 33,179
Loans 90 days past maturity but
still accruing 878 1,290
Non-accrual loans 38,169 31,889
Net charge-offs 92 342
Capital Ratios (Astoria Federal)
Tangible 7.25 % 6.34 %
Core 7.25 6.34
Risk-based 15.71 14.31
Other Data
Cash dividends paid per common share $0.20 $0.17
Dividend payout ratio 28.99 % 24.64 %
Stockholders' equity (in thousands) $1,544,596 $1,555,359
Common stockholders' equity
(in thousands) 1,494,596 1,505,359
Book value per common share (5) 19.18 17.75
Tangible book value per
common share (6) 16.80 15.57
Average equity/average assets 6.93 % 6.93 %
Mortgage loans serviced for
others (in thousands) $2,479,592 $3,201,176
Full time equivalent employees 1,975 1,926
(1) Average tangible stockholders' equity represents average
stockholders' equity less average goodwill.
(2) The efficiency ratio represents general and administrative expense
divided by the sum of net interest income plus non-interest income.
(3) Net interest rate spread represents the difference between the yield
on average interest-earning assets and the average cost of average
interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average
interest-earning assets.
(5) Book value per common share represents common stockholders' equity
divided by outstanding common shares, excluding unallocated Employee
Stock Ownership Plan, or ESOP, shares.
(6) Tangible book value per common share represents common stockholders'
equity less goodwill divided by outstanding common shares, excluding
unallocated ESOP shares.
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Dollars in Thousands)
For the Three Months Ended March 31,
2003
Average
Average Yield/
Balance Interest Cost
Assets: (Annualized)
Interest-earning assets:
Mortgage loans (1):
One-to-four family $9,073,408 $126,929 5.60 %
Multi-family, commercial
real estate and
construction 2,438,692 46,216 7.58
Consumer and other loans (1) 390,502 4,772 4.89
Total loans 11,902,602 177,917 5.98
Mortgage-backed securities (2) 8,137,721 94,048 4.62
Other securities (2) (3) 613,094 9,849 6.43
Federal funds sold and
repurchase agreements 254,406 752 1.18
Total interest-earning assets 20,907,823 282,566 5.41
Goodwill 185,151
Other non-interest-earning assets 1,223,593
Total assets $22,316,567
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings $2,836,124 3,489 0.49
Money market 1,570,874 3,476 0.89
NOW and demand deposit 1,385,620 490 0.14
Certificates of deposit 5,331,200 50,786 3.81
Total deposits 11,123,818 58,241 2.09
Borrowed funds 9,359,600 115,317 4.93
Total interest-bearing liabilities 20,483,418 173,558 3.39
Non-interest-bearing liabilities 286,081
Total liabilities 20,769,499
Stockholders' equity 1,547,068
Total liabilities and
stockholders' equity $22,316,567
Net interest income/net interest
rate spread (4) $109,008 2.02 %
Net interest-earning assets/net
interest margin (5) $424,405 2.09 %
Ratio of interest-earning assets
to interest-bearing
liabilities 1.02x
For the Three Months Ended March 31,
2002
Average
Average Yield/
Balance Interest Cost
Assets: (Annualized)
Interest-earning assets:
Mortgage loans (1):
One-to-four family $10,397,683 $166,509 6.41 %
Multi-family, commercial
real estate and
construction 1,810,016 36,289 8.02
Consumer and other loans (1) 255,055 3,802 5.96
Total loans 12,462,754 206,600 6.63
Mortgage-backed securities (2) 6,627,950 100,496 6.06
Other securities (2) (3) 1,188,237 19,656 6.62
Federal funds sold and
repurchase agreements 993,080 4,138 1.67
Total interest-earning assets 21,272,021 330,890 6.22
Goodwill 185,151
Other non-interest-earning assets 1,021,331
Total assets $22,478,503
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings $2,633,088 8,103 1.23
Money market 1,956,641 10,360 2.12
NOW and demand deposit 1,192,758 825 0.28
Certificates of deposit 5,149,262 58,939 4.58
Total deposits 10,931,749 78,227 2.86
Borrowed funds 9,615,354 137,736 5.73
Total interest-bearing liabilities 20,547,103 215,963 4.20
Non-interest-bearing liabilities 374,039
Total liabilities 20,921,142
Stockholders' equity 1,557,361
Total liabilities and
stockholders' equity $22,478,503
Net interest income/net interest
rate spread (4) $114,927 2.02 %
Net interest-earning assets/net
interest margin (5) $724,918 2.16 %
Ratio of interest-earning assets
to interest-bearing liabilities 1.04x
(1) Mortgage and consumer and other loans include loans held-for-sale and
non-performing loans and exclude the allowance for loan losses.
(2) Securities available-for-sale are reported at average amortized cost.
(3) Other securities include Federal Home Loan Bank of New York
stock.
(4) Net interest rate spread represents the difference between
the average yield on average interest-earning assets and the
average cost of average interest-bearing liabilities.
(5) Net interest margin represents net interest income divided
by average interest-earning assets.