EXHIBIT 99.1 - PRESS RELEASE	FOR IMMEDIATE RELEASE
First South Bancorp, Inc.	For more information contact:
April 20, 2017	Bruce Elder (CEO)	(252) 940-4936
	Scott McLean (CFO)	(252) 940-5016
	Website: www.firstsouthnc.com

  

First South Bancorp, Inc. Reports Increased March 31, 2017 Quarterly Operating Results,

Total Assets in Excess of $1.0 Billion

 

Washington, North Carolina - First South Bancorp, Inc. (NASDAQ: FSBK) (the “Company”), the parent holding company of First South Bank (the “Bank”), reports its unaudited financial results for the quarter ended March 31, 2017.

 

The Company continues to achieve strong earnings and margin expansion through robust loan and deposit growth. The Company generated net income for the first quarter of 2017 of $1.9 million, which represented a $411,000 or 28.2% increase when compared to the $1.5 million of net income generated in the first quarter of 2016. As a result, the Company’s diluted earnings per common share (EPS) for the first quarter of 2017 increased 33.3% to $0.20 per share, from $0.15 per share for the first quarter of 2016. The net interest margin for the quarter ended March 31, 2017 was 3.74%, an eight basis point increase above the 3.66% posted for the first quarter of 2016. Over the past twelve months, loans and leases held for investment (HFI) and total deposits have grown $88.1 million and $101.2 million, respectively, bringing total assets to in excess of $1.0 billion.

 

Chief Executive Officer Bruce Elder said, “We are pleased to announce another quarter of solid financial results. We have again demonstrated our ability to grow the balance sheet in a profitable fashion while driving efficiencies by continuing to analyze how we deliver You First banking to our customer base. Our growth of loans and deposits over the last twelve months has generated increases in net interest income and core, non-interest income. Coupled with controlled non-interest expenses, our growth has translated into improved earnings, higher margins and dividend levels, greater efficiency and improved returns on average assets and equity from the prior year first quarter.”

 

HIGHLIGHTS

·

Strong quarterly earnings performance with net income of $1.9 million, diluted EPS of $0.20 per share, return on average assets (ROA) of 0.75%, return on average equity (ROE) of 8.52% and return on average tangible common equity* (ROTCE) of 9.32%.

·

Pre-tax, pre-provision operating earnings* for the quarter of $3.0 million are 48% higher than the $2.0 million reported for the prior year first quarter.

·

Total assets grew to $1.04 billion at March 31, 2017, the Company’s first quarter-end reporting period to surpass the billion dollar threshold.

·

Loans and leases HFI grew $88.1 million or 13.8% during the past twelve months to $727.1 million.

·

Deposits grew $101.2 million or 12.4% during the past twelve months to $919.9 million.

·

Total non-interest bearing deposits grew 24.6% to $204.6 million on a year-over-year basis.

·

Net interest margin expanded to 3.74% for the quarter, compared to 3.66% for the first quarter of 2016.

·

Asset quality metrics continue to improve.

·

Continued to maintain a strong capital position.

·

The consolidation of two branches into nearby locations should improve future efficiency.

·

Increased quarterly dividend payment rate to $0.035 per share, a 16.7% increase.

 

The Company’s loan and deposit growth continues to support revenue increases, allowing for net interest margin expansion despite the prevailing low interest rate environment. As a result, our net interest income (NII) grew to $8.7 million for the first quarter of 2017 from $7.8 million for the comparative first quarter of 2016.

 

Total non-interest income was $3.3 million, or 27.6% of total revenue (net interest income plus noninterest income) in the first quarter of 2017, compared to $3.6 million, or 31.5% of total revenue in the comparative 2016 first quarter. Non-interest income for the first quarter of 2016 included a $284,000 gain on the sale of securities as well as the receipt of a $230,000 non-recurring fee. The sale of other real estate owned (OREO) during the first quarter of 2017 resulted in $82,000 of net gains, compared to a $12,000 net loss posted during the first quarter of 2016.

 

 

The Company’s efficiency ratio for the first quarter of 2017 improved to 74.92%, from 80.74% in the first quarter of 2016. Non-interest expenses in the first quarter of 2017 declined to $9.0 million, from $9.1 million in the first quarter of 2016.

 

Income tax expense was $778,000 for the 2017 first quarter, compared to $574,000 for the 2016 first quarter. The effective income tax rates were 29.36% and 28.20% for these reporting periods, respectively.

 

BALANCE SHEET GROWTH

Loans and leases HFI totaled $727.1 million at March 31, 2017, increasing $26.5 million, over the $700.6 million held at December 31, 2016 and increasing $88.1 million from March 31, 2016. Loans held for sale declined to $2.5 million at March 31, 2017, from the $5.1 million held at the end of fiscal year 2016. Investment securities and interest-bearing deposits with other banks increased by $27.7 million to $244.1 million at March 31, 2017, from $216.4 million at year-end 2016, resulting primarily from strong deposit growth during the quarter.

 

Deposits totaled $919.9 million at March 31, 2017, increasing $49.3 million, or 5.7%, from $870.6 million at December 31, 2016, and increasing $101.2 million, or 12.4% from March 31, 2016. Non-maturity deposits (personal and business checking, money market, and savings accounts) grew by $37.2 million, or 6.1%, to $651.3 million at March 31, 2017, from $614.1 million at December 31, 2016. Certificates of deposit (CDs) increased to $268.6 million at March 31, 2017, from $256.6 million at December 31, 2016. CDs represented 29.2% and 29.5% of total deposits at March 31, 2017, and December 31, 2016, respectively.

 

Stockholders' equity increased by $2.1 million to $89.3 million at March 31, 2017, from $87.2 million at December 31, 2016. This increase reflects the $1.9 million of net income earned for the 2017 first quarter and a $535,000 increase in accumulated other comprehensive income resulting from the mark-to-market adjustment of the available-for-sale securities portfolio, and is net of $332,000 dividends declared.

 

The tangible equity to assets ratio* was 8.03% at March 31, 2017, compared to 8.21% at December 31, 2016. The tangible book value per common share* increased to $8.79 at March 31, 2017, from $8.57 at December 31, 2016.

 

ASSET QUALITY

Solid asset quality metrics in the first quarter of 2017 continue to reflect the Company’s disciplined credit culture. Non-performing assets (NPAs) declined to $5.9 million at March 31, 2017, or 0.57% of total assets, from $6.3 million, or 0.63% of total assets, at December 31, 2016. NPAs at March 31, 2017 included $3.1 million of OREO, which declined by $115,000, from $3.2 million at December 31, 2016. Nonaccrual loans and leases were $2.8 million at March 31, 2017, or 0.38% of loans and leases HFI, compared to $3.1 million, or 0.44%, at December 31, 2016.

 

The provision for credit losses in the 2017 first quarter was $265,000 versus $225,000 for the 2016 first quarter. The allowance for loan losses represented 1.23% of loans and leases HFI at March 31, 2017, compared to 1.24% at December 31, 2016.

 

REGULATORY CAPITAL STRENGTH

As of March 31, 2017, reported regulatory capital ratios at the Bank were 12.79% for total risk-based capital, 11.59% for tier 1 risk-based capital and common equity tier 1 risk-based capital and 8.89% for tier 1 leverage, compared to 13.01% for total risk-based capital, 11.80% for tier 1 risk-based capital and common equity tier 1 risk-based capital and 8.89% for tier 1 leverage at December 31, 2016.

 

CORPORATE AND INVESTOR INFORMATION

The Bank has been serving the citizens of eastern and central North Carolina since 1902 and offers a variety of financial products and services to business and individual customers. The Bank operates through its main office headquartered in Washington, North Carolina, and has 28 full-service branch offices located throughout eastern and central North Carolina. The Bank also provides a full menu of leasing services through its wholly-owned subsidiary, First South Leasing, LLC. In addition, under its First South Wealth Management division, the Bank makes securities brokerage services available through an affiliation with an independent broker/dealer.

 

Additional investor information for the Company and the Bank may be accessed on our website at www.firstsouthnc.com.

 

The Company’s common stock symbol as traded on the NASDAQ Global Select Market is “FSBK”.

 

 

FORWARD-LOOKING STATEMENTS

Statements contained in this release, which are not historical facts, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors which include the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates, the effects of competition, and including without limitation other factors that could cause actual results to differ materially as discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

 

*NON-GAAP FINANCIAL MEASURES

Important disclosures about and reconciliations of non-GAAP measures to the corresponding GAAP measures, are provided below and attached to this press release.

 

This press release and the accompanying Supplemental Financial Data contain financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP) in the United States. Management uses these "non-GAAP" measures in their analysis of the Company's performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant gains and charges. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures are provided within the accompanying tables to this press release.

 

(More)

(NASDAQ: FSBK)

 

 

First South Bancorp, Inc. and Subsidiary

Consolidated Statements of Financial Condition

 

		March 31,				December 31,				March 31,
		2017				2016				2016
Assets		(Unaudited)								(Unaudited)
Cash and due from banks		$	21,650,045			$	22,854,712			$	17,729,075
Interest-bearing deposits with banks			49,062,514				23,320,968				18,385,994
Investment securities available for sale, at fair value			194,538,513				192,606,119				213,011,148
Investment securities held to maturity			509,912				509,617				508,746
Mortgage loans held for sale			2,506,883				5,098,518				2,489,873
Loans and leases held for investment			727,142,668				700,642,291				639,044,574
Allowance for loan and lease losses			(8,940,879	)			(8,673,172	)			(8,135,054	)
Net loans and leases held for investment			718,201,789				691,969,119				630,909,520
Premises and equipment, net			11,572,036				11,291,596				12,143,734
Assets held for sale			192,720				192,720				1,083,320
Other real estate owned			3,114,760				3,229,423				5,956,092
Federal Home Loan Bank stock, at cost			1,528,900				1,573,700				1,828,700
Accrued interest receivable			2,973,712				3,525,684				2,845,975
Goodwill			4,218,576				4,218,576				4,218,576
Mortgage servicing rights			2,140,105				2,148,905				1,247,005
Identifiable intangible assets			1,550,768				1,611,187				1,824,432
Bank-owned life insurance			18,219,320				18,080,183				17,653,186
Prepaid expenses and other assets			7,443,786				8,470,887				8,272,379
Total assets		$	1,039,424,339			$	990,701,914			$	940,107,755
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing demand		$	204,575,610			$	196,917,165			$	164,244,311
Interest bearing demand			298,983,678				272,098,903				244,323,710
Savings			147,718,357				145,031,981				146,254,503
Large denomination certificates of deposit			135,765,040				122,819,510				119,229,985
Other time			132,823,471				133,732,804				144,614,799
Total deposits			919,866,156				870,600,363				818,667,308
Borrowed money			15,000,000				17,000,000				21,500,000
Junior subordinated debentures			10,310,000				10,310,000				10,310,000
Other liabilities			4,966,400				5,607,832				5,451,329
Total liabilities			950,142,556				903,518,195				855,928,637
Common stock, $.01 par value, 25,000,000 shares authorized;
9,500,266; 9,494,935; and 9,493,776 shares outstanding, respectively			95,003				94,949				94,938
Additional paid-in capital			36,042,028				36,018,743				35,957,524
Retained earnings			51,100,449				49,560,595				44,914,635
Accumulated other comprehensive income			2,044,303				1,509,432				3,212,021
Total stockholders' equity			89,281,783				87,183,719				84,179,118
Total liabilities and stockholders' equity		$	1,039,424,339			$	990,701,914			$	940,107,755

 

 

First South Bancorp, Inc. and Subsidiary

Consolidated Statements of Operations

Three Months Ended March 31, 2017 and 2016

(Unaudited)

 

		Three Months Ended
		March 31,
		2017				2016
Interest income:
Interest and fees on loans		$	8,213,288			$	7,191,595
Interest on investments and deposits			1,390,679				1,480,252
Total interest income			9,603,967				8,671,847
Interest expense:
Interest on deposits			753,989				669,276
Interest on borrowings			61,959				73,086
Interest on junior subordinated notes			124,250				140,039
Total interest expense			940,198				882,401
Net interest income			8,663,769				7,789,446
Provision for credit losses			265,000				225,000
Net interest income after provision for credit losses			8,398,769				7,564,446
Non-interest income:
Deposit fees and service charges			1,856,220				1,907,407
Loan fees and charges			86,044				56,985
Mortgage loan servicing fees			321,838				234,001
Gain on sale and other fees on mortgage loans			473,562				413,861
Gain (loss) on sale of other real estate, net			81,651				(12,168	)
Gain on sale of investment securities			0				283,514
Other  income			478,787				692,285
Total non-interest income			3,298,102				3,575,885
Non-interest expense:
Compensation and fringe benefits			5,113,553				5,039,954
Federal deposit insurance premiums			147,374				161,609
Premises and equipment			1,398,550				1,373,809
Marketing			63,739				187,818
Data processing			793,368				796,487
Amortization of intangible assets			149,197				131,527
Other real estate owned expense			164,767				93,674
Other			1,216,002				1,321,048
Total non-interest expense			9,046,550				9,105,926
Income before income tax expense			2,650,321				2,034,405
Income tax expense			778,124				573,611
NET INCOME		$	1,872,197			$	1,460,794
Per share data:
Basic earnings per share		$	0.20			$	0.15
Diluted earnings per share		$	0.20			$	0.15
Dividends per share		$	0.035			$	0.025
Average basic shares outstanding			9,497,601				9,491,201
Average diluted shares outstanding			9,541,548				9,514,797

 

 

 

First South Bancorp, Inc.		Supplemental Financial Data (Unaudited)
		Quarter to Date
		3/31/2017				12/31/2016				9/30/2016				6/30/2016				3/31/2016
		(dollars in thousands except per share data)
Consolidated balance sheet data:
Total assets		$	1,039,424			$	990,702			$	985,795			$	961,479			$	940,108
Loans held for sale:		$	2,507			$	5,099			$	7,313			$	5,252			$	2,490
Loans and leases held for investment (HFI):
Mortgage		$	73,107			$	74,905			$	74,710			$	73,100			$	73,412
Commercial			558,578				535,047				518,265				510,678				482,779
Consumer			73,188				69,454				69,039				66,138				64,521
Leases			22,270				21,236				20,452				18,927				18,333
Total loans and leases HFI			727,143				700,642				682,466				668,843				639,045
Allowance for loan and lease losses			(8,941	)			(8,673	)			(8,498	)			(8,338	)			(8,135	)
Net loans and leases HFI		$	718,202			$	691,969			$	673,968			$	660,505			$	630,910
Cash & interest bearing deposits		$	70,713			$	46,176			$	57,209			$	40,734			$	36,115
Investment securities			195,048				193,116				193,765				200,364				213,520
Bank-owned life insurance			18,219				18,080				17,937				17,795				17,653
Premises and equipment			11,572				11,292				11,609				11,671				12,144
Goodwill			4,219				4,219				4,219				4,219				4,219
Mortgage servicing rights			2,140				2,149				2,091				1,273				1,247
Identifiable intangible assets			1,551				1,611				1,682				1,753				1,824
Deposits:
Non-interest checking		$	204,576			$	196,917			$	189,873			$	177,281			$	164,244
Interest checking			212,386				189,401				176,034				170,153				171,323
Money market			86,598				82,698				88,081				72,054				73,000
Savings			147,718				145,032				141,701				142,151				146,255
Certificates			268,588				256,552				264,142				263,823				263,845
Total deposits		$	919,866			$	870,600			$	859,831			$	825,462			$	818,667
Borrowings		$	15,000			$	17,000			$	20,000			$	32,500			$	21,500
Junior subordinated debentures			10,310				10,310				10,310				10,310				10,310
Stockholders' equity			89,282				87,184				88,294				87,327				84,179
Consolidated earnings summary:
Interest income		$	9,604			$	9,336			$	9,210			$	8,998			$	8,672
Interest expense			940				920				911				898				882
Net interest income			8,664				8,416				8,299				8,100				7,790
Provision for credit losses			265				200				220				325				225
Noninterest income			3,298				3,372				3,691				3,548				3,576
Noninterest expense			9,047				8,819				8,929				9,046				9,106
Income before taxes			2,650				2,769				2,841				2,277				2,035
Income tax expense			778				775				947				665				574
Net income		$	1,872			$	1,994			$	1,894			$	1,612			$	1,461
Per Share Data:
Basic earnings per share		$	0.20			$	0.21			$	0.20			$	0.17			$	0.15
Diluted earnings per share		$	0.20			$	0.21			$	0.20			$	0.17			$	0.15
Dividends per share		$	0.035			$	0.03			$	0.03			$	0.03			$	0.025
Book value per share		$	9.40			$	9.18			$	9.30			$	9.20			$	8.87
Shares outstanding			9,500,266				9,494,935				9,494,935				9,493,776				9,493,776
Average basic shares			9,497,601				9,494,935				9,494,861				9,493,776				9,491,201
Average diluted shares			9,541,548				9,529,753				9,525,302				9,519,565				9,514,797
Performance ratios (tax equivalent):
Yield on average earning assets			4.15	%			4.07	%			4.13	%			4.17	%			4.07	%
Cost of interest bearing liabilities			0.52	%			0.52	%			0.52	%			0.52	%			0.52	%
Net interest spread			3.62	%			3.55	%			3.61	%			3.64	%			3.55	%
Net interest margin			3.74	%			3.68	%			3.73	%			3.76	%			3.66	%
Average earning assets to total average assets			93.32	%			92.92	%			92.42	%			92.38	%			92.20	%
Return on average assets (annualized)			0.75	%			0.80	%			0.78	%			0.68	%			0.63	%
Return on average equity (annualized)			8.52	%			8.94	%			8.52	%			7.55	%			6.97	%
Efficiency ratio			74.92	%			74.16	%			73.84	%			77.59	%			80.74	%
Average assets		$	1,014,310			$	992,192			$	968,729			$	947,761			$	938,702
Average earning assets		$	946,578			$	921,984			$	895,290			$	875,529			$	865,463
Average equity		$	89,143			$	88,694			$	88,481			$	85,927			$	84,265
Equity/Assets			8.59	%			8.80	%			8.96	%			9.08	%			8.95	%

 

 

First South Bancorp, Inc.		Supplemental Financial Data (Unaudited)
		Quarter to Date
		3/31/2017				12/31/2016				9/30/2016				6/30/2016				3/31/2016
		(dollars in thousands except per share data)
Asset quality data and ratios:
Nonaccrual loans and leases:
Non-TDR nonaccrual loans and leases
Earning		$	576			$	410			$	569			$	555			$	945
Non-Earning			1,479				1,257				1,289				1,075				895
Total Non-TDR nonaccrual loans and leases		$	2,055			$	1,667			$	1,858			$	1,630			$	1,840
TDR nonaccrual loans and leases
Current TDRs		$	720			$	422			$	792			$	706			$	847
Past Due TDRs			0				962				248				250				154
Total TDR nonaccrual loans and leases		$	720			$	1,384			$	1,040			$	956			$	1,001
Total nonaccrual loans and leases		$	2,775			$	3,051			$	2,898			$	2,586			$	2,841
Loans and leases >90 days past due, still accruing			0				0				0				218				153
Other real estate owned			3,115				3,229				4,810				5,541				5,956
Total nonperforming assets		$	5,890			$	6,280			$	7,708			$	8,345			$	8,950
Allowance for loan and lease losses to
loans and leases HFI			1.23	%			1.24	%			1.25	%			1.25	%			1.27	%
Net charge-offs (recoveries)		$	(3	)		$	25			$	60			$	122			$	(44	)
Net charge-offs (recoveries) to total loans and leases			0.00	%			0.00	%			0.01	%			0.02	%			-0.01	%
Total nonaccrual loans and leases to total loans
and leases HFI			0.38	%			0.44	%			0.42	%			0.39	%			0.44	%
Total nonperforming assets to total assets			0.57	%			0.63	%			0.78	%			0.87	%			0.95	%
Total loans and leases to total deposits			79.32	%			81.06	%			80.22	%			81.66	%			78.36	%
Total loans and leases to total assets			70.20	%			71.24	%			69.97	%			70.11	%			68.24	%
Loans serviced for others		$	368,617			$	371,956			$	370,606			$	292,222			$	293,548
Reconciliation of Non-GAAP Measures:
Pre-tax pre-provision operating earnings (non-GAAP):
Income before taxes (GAAP)		$	2,650			$	2,769			$	2,841			$	2,277			$	2,035
Provision for credit losses			265				200				220				325				225
Pre-tax pre-provision net income			2,915				2,969				3,061				2,602				2,260
Securities (gains) losses, net			0				0				0				(184	)			(284	)
OREO valuations			119				140				0				103				7
OREO (gains) losses, (net)			(82	)			(80	)			(77	)			14				12
Pre-tax pre-provision operating
earnings (non-GAAP)		$	2,952			$	3,029			$	2,984			$	2,535			$	1,995
Total core non-interest income (non-GAAP):
Non-interest income (GAAP)		$	3,298			$	3,372			$	3,691			$	3,548			$	3,576
Securities (gains) losses, net			0				0				0				(184	)			(284	)
OREO (gains) losses, (net)			(82	)			(80	)			(77	)			14				12
Total core non-interest income (non-GAAP)		$	3,216			$	3,292			$	3,614			$	3,378			$	3,304
Tangible equity (non-GAAP):
Total equity (GAAP)		$	89,282			$	87,184			$	88,294			$	87,327			$	84,179
Intangible assets (a)			5,770				5,830				5,901				5,972				6,043
Tangible equity (non-GAAP)		$	83,512			$	81,354			$	82,393			$	81,355			$	78,136
Tangible Equity/Assets (non-GAAP)			8.03	%			8.21	%			8.36	%			8.46	%			8.31	%
Tangible book value per share (non-GAAP)		$	8.79			$	8.57			$	8.68			$	8.57			$	8.23
Return on average tangible common equity (non-GAAP):
Net income (GAAP)		$	1,872			$	1,994			$	1,894			$	1,612			$	1,461
Amortization of intangibles, net of tax			43				51				47				50				51
Tangible net income available to shareholders (non-GAAP)		$	1,915			$	2,045			$	1,941			$	1,662			$	1,512
Average equity			89,143				88,694				88,481				85,927				84,265
Average intangible assets (a)			5,809				5,876				5,946				6,018				6,088
Average tangible common equity (non-GAAP)		$	83,334			$	82,818			$	82,535			$	79,909			$	78,177
Return on average tangible common equity (non-GAAP)			9.32	%			9.82	%			9.36	%			8.37	%			7.78	%

 

(a) Excludes mortgage servicing rights

                                       

 

Average Balances – Yield/Cost Analysis		Three Months Ended March 31,
		2017												2016
		Average Balance				Interest				Average Yield/Cost				Average Balance				Interest				Average Yield/Cost
Interest earning assets:		(Dollars in thousands)
Loans receivable		$	708,822			$	8,213				4.64	%		$	621,345			$	7,192				4.59	%
Investments and deposits			237,756				1,391				2.67	(1)			244,118				1,480				2.73	(1)
Total earning assets			946,578				9,604				4.15	(1)			865,463				8,672				4.07	(1)
Nonearning assets			67,732												73,239
Total assets		$	1,014,310											$	938,702
Interest bearing liabilities:
Deposits		$	691,992				754				0.44			$	641,460				669				0.42
Borrowings			22,161				62				1.12				33,313				73				0.87
Junior subordinated debentures			10,310				124				4.82				10,310				140				5.37
Total interest bearing liabilities			724,463				940				0.52				685,083				882				0.52
Noninterest bearing demand deposits			195,183				-				-				163,269				-				-
Total sources of funds			919,646				940				0.41				848,352				882				0.42
Other liabilities			5,521												6,085
Stockholders’ equity			89,143												84,265
Total liabilities and equity		$	1,014,310											$	938,702
Net interest income						$	8,664											$	7,790
Interest rate spread (1)(2)											3.62	%											3.55	%
Net interest margin (1)(3)											3.74	%											3.66	%
Ratio of earning assets to interest bearing liabilities											130.66	%											126.33	%

 

 

(1)

Shown as a tax-adjusted yield.

(2)

Represents the difference between the average yield on earning assets and the average cost of funds.

(3)

Represents net interest income divided by average earning assets.