AMTBB - Amerant Bancorp Inc. Reports Fourth Quarter and Full-Year Results

2019 Full-Year Net Income Up 12.0% Compared to 2018

 Fourth Quarter Net Income Down 6.6% Compared to Last Year

CORAL GABLES, Fla., Jan. 30, 2020 (GLOBE NEWSWIRE) -- Amerant Bancorp Inc. (NASDAQ: AMTB and AMTBB) (the “Company” or “Amerant”) today reported full-year 2019 net income of $51.3 million, or $1.20 per diluted share, compared to $45.8 million, or $1.08 per diluted share, for the full-year 2018. Net income in the fourth quarter of 2019 was $13.5 million, 6.6% lower than the $14.4 million reported in the fourth quarter of 2018. Net income per diluted share was $0.31 in the fourth quarter of 2019, down 8.8% compared to $0.34 per diluted share in the fourth quarter of 2018.

Return on assets (“ROA”) and return on equity (“ROE”) were 0.65% and 6.43% for the full-year 2019, respectively, compared to 0.55% and 6.29%, respectively, for the full-year 2018.  Annualized ROA and ROE were 0.68% and 6.44%, respectively, in the fourth quarter of 2019, compared to 0.70% and 7.88%, respectively, in the fourth quarter of 2018.

Millar Wilson, Vice Chairman and Chief Executive Officer, remarked, “2019 was a milestone year as Amerant completed its first full year as a publicly-traded company. We began the year focused on carrying out a number of initiatives, including a broad transformation, rebranding, workforce realignment, and profitability and efficiency improvements, which I am proud to say have been successful. Our team also did a fantastic job this year in expanding Amerant’s footprint in South Florida, opening three new banking centers in vibrant communities, and readying the opening of another during the first quarter of 2020, adding to our stronghold in South Florida.”           

Mr. Wilson added, “The fourth quarter capped off a solid year for Amerant. We saw strong credit quality and a double-digit increase in noninterest income in the fourth quarter of 2019 compared to the same period a year ago. Our business focus underwent a number of meaningful changes in 2019, notably the run-off of low-yielding foreign financial institution and non-relationship Shared National Credits, the phase out of Amerant’s legacy credit card product and introduction of credit card referral programs, and the streamlining of important processes such as account openings at our banking centers, commercial loan origination and online capture of certificate of deposits. Finally, we embarked on our digital evolution and started taking actions related to the use of technologies to support our business strategies, including preparing for the adoption of a new customer relationship management system and a more integrated loan origination solution. All of these realignments were made with the future of Amerant in mind. Our strong close in 2019 positions us well for 2020, as we continue to focus on growing domestic loans, improving profitability and efficiency, and navigating a low interest rate environment and strong competition.”

Summary Results

The summary results of the fourth quarter and full-year 2019 include:

• Net income of $13.5 million, down 6.6% from $14.4 million in the fourth quarter of 2018. Net income for the full-year 2019 was $51.3 million, up 12.0% compared to $45.8 million in full-year 2018.
   
• Net interest income was $51.3 million, down 9.7% compared to $56.8 million in the fourth quarter of 2018 mainly due to lower market rates and a spread compression environment, affecting our earnings assets, coupled with higher deposit costs, mainly due to the repricing of lower cost deposits throughout the first three quarters of 2019 at higher rates. Net interest income for the full-year 2019 was $213.1 million, down 2.7% compared to $219.0 million in 2018. The net interest margin (“NIM”) for full-year 2019 improved to 2.85% from 2.78%, primarily attributed to an improved loan portfolio mix, including the planned strategic run-off of foreign financial institution (“FI”) loans and non-relationship Shared National Credits (“SNCs”), partially offset by higher costs of deposits.
  
  
• Credit quality remained strong during the fourth quarter of 2019. The Company released $0.3 million from the allowance for loan losses (“ALL”) during the fourth quarter of 2019, compared to a $1.4 million release in the fourth quarter of 2018. The ratio of ALL to total loans was 0.91% as of December 31, 2019, down from 1.04% at the end of 2018. The ratio of net charge-offs to average total loans in the fourth quarter of 2019 was 0.08%, down from 0.43% in the fourth quarter of 2018.
   
• Noninterest income was $16.0 million, up 33.3% compared to $12.0 million in the fourth quarter of 2018, and $57.1 million in the full-year 2019, up 6.0% from $53.9 million in 2018, driven by the gain on sale of vacant land adjacent to our Beacon operations center (“vacant Beacon land”), and a significant increase in fees from derivative contracts sold to loan customers. Also included in the quarter was a $0.7 million benefit from the adoption of a new Accounting Standard Update (“ASU”) applicable to marketable equity securities.
   
• Noninterest expense was $51.7 million, down 5.3% compared to $54.6 million in the fourth quarter of 2018. Noninterest expense was $209.3 million in the full-year 2019, down 2.6% from $215.0 million in 2018. Fourth quarter 2019 noninterest expense, compared to the fourth quarter of 2018, includes an additional compensation expense of $1.5 million ($5.9 million year-to-date) related to the amortization of restricted stock awards granted in connection with the Company’s initial public offering (“IPO”) in 2018. Adjusted noninterest expense was $51.6 million in the fourth quarter of 2019, up 7.8% from $47.9 million in the fourth quarter of 2018, primarily due to the compensation expense associated with the 2018 IPO, an adjustment to the cost of our Long-Term Incentive Plan (“LTIP”) and the increase of salaries due to cost of living adjustment, partially offset by the significant staff reductions during the year. Adjusted noninterest expense primarily excludes expenses associated with restructuring activities, including rebranding and staff reduction expenses. In the fourth quarter of 2019, these expenses were only $0.1 million of staff reduction costs compared to total restructuring costs of $6.4 million in the fourth quarter of 2018. Fourth quarter 2018 also included $0.4 million of spin-off costs. Adjusted noninterest expense for the full-year 2019 was $204.3 million, up 1.2% compared to $201.9 million for 2018.
   
• The effective tax rate for the fourth quarter of 2019 was 14.73% and 19.83% for the full-year. The effective tax rate is lower than the statutory tax rate mainly as a result of fourth quarter true-up adjustments after completion of the 2018 tax return filings and a tax windfall benefit associated to the vesting of stock-based compensation in 2019.
   
• The efficiency ratio was 77.5% (76.4% adjusted for restructuring costs and a one-time gain on sale of land) for the full-year 2019, compared to 78.8% (74.0% adjusted for restructuring costs and spin-off costs) for 2018.
   
• Stockholders’ book value per common share increased to $19.35 for the full-year 2019, representing an 11.8% improvement compared to $17.31 for 2018. Tangible book value per common share rose to $18.84, a 12.0% improvement compared to $16.82 at year-end 2018.

Loans and Deposits

In the fourth quarter of 2019, we continued to focus on providing quality banking products and services and fostering stronger relationships with customers and communities across our growing footprint.

Total loans at December 31, 2019 were $5.7 billion, down 3.0% compared to 2018. As we have explained in previous periods, the net decline in our loan balance was mainly driven by the completion of our strategic run-off of foreign FI loans and sales of non-relationship SNCs. This strategic decline and higher loan prepayments during the year were partially offset by a $117 million increase in owner occupied loans. Excluding the run-off of non-relationship SNCs, domestic loans grew by 3.7% during the year, primarily from relationship loans. While we successfully exited from non-strategic loans more rapidly than originally anticipated, we remained focused on capturing a larger share of relationship loans with their added potential to generate customer deposits as well as wealth management business.

Total deposits at December 31, 2019 were $5.8 billion, down 4.6% compared to 2018. Foreign deposits declined 13.1% from 2018 to 2019, and 8.6% annualized during the fourth quarter. Foreign deposits remained pressured mainly by the high level of deposit utilization from our Venezuelan customers to fund everyday expenses, as the dollarization of the Venezuelan economy continued, and other activities such as buying homes abroad.  In an effort to offset this run-off in foreign deposits, Amerant rolled out certificate of deposit (“CD”) campaigns designed to target our Venezuelan customers and capture greater share of wallet as well as a number of strategies to capture  more domestic deposits and provide a better banking experience for all our customers. For example, we started providing access to Zelle®, a popular digital-payment platform that makes it easier for our personal banking clients to send and receive small sums of money, typically within minutes. We also ramped up our online CD offering outside of our natural footprint. Domestic deposits increased $120.5 million this year, from which $86.3 million were in online deposits. Also, we increased our brokered deposits by $116.0 million during the quarter and $38.2 million compared to year-end 2018. As we continue to expand our out-of-footprint deposit gathering, we expect to reduce our brokered deposits. Importantly, we remain focused on improving the customer journey and increasing share of wallet of our core customers through expanded customer contact efforts.

During the fourth quarter of 2019, we expanded our footprint across South Florida with the opening of two new banking centers, one in Miami Lakes (Miami-Dade County) and another in Boca Raton (Palm Beach County). We are also nearing completion of our third banking center in Palm Beach County. These new locations reflect Amerant’s vision of the “banking centers of the future,” featuring smaller square footage, enhanced technology and a more focused customer service approach.

Net Interest Income and Net Interest Margin

Fourth quarter 2019 net interest income was $51.3 million, down 9.7% compared to $56.8 million in the fourth quarter of 2018. This was primarily due to the planned strategic run-off of foreign FI and non-relationship SNC loans throughout the first three quarters of 2019, as well as lower market rates and an increasingly more competitive rate spread environment. Furthermore, Amerant’s cost of money market deposits as well as time deposits was higher in the fourth quarter of 2019 than in the fourth quarter of 2018, primarily driven by the replacement of less expensive foreign deposits with higher-cost domestic deposits, including brokered CDs, and the recomposition of money market deposits to promotional products within the existing portfolio. Notwithstanding this, our relationship money market accounts had a lower average rate this quarter than in the year-ago period. The net interest margin for the fourth quarter of 2019 was 2.74%, a decrease of 21 basis points compared to the fourth quarter of 2018, driven primarily by earning assets repricing at lower rates, the replacement of the foreign deposits with higher cost domestic deposits and higher money market and time deposit costs.

Compared to third quarter 2019, net interest income declined by $1.3 million or 2.5% mainly due to lower yields on average interest-earning assets. This decline was partially offset by $1.1 million earned in loan prepayment penalties, lower cost of professional funding and lower deposit costs, especially in relationship money market and tiered products. During the fourth quarter of 2019, the Company continued taking measures to counteract the pressure on NIM.

Net interest income for the full-year 2019 was $213.1 million, down 2.7% compared to $219.0 million in full-year 2018. The decline was mainly due to higher deposit costs, mostly related to time and money market deposits, as an increasing amount of foreign deposits were replaced by more expensive domestic deposits throughout the year. The net interest margin for the full-year 2019 was 2.85%, an increase of 7 basis points from full-year 2018, driven by higher average rates on interest-earning assets in the first half of 2019 as well as Amerant’s focus on growing higher-yielding domestic relationship-based loans.

Our net interest income and net interest margin were pressured in the fourth quarter of 2019 as the full effect of interest rate cuts was felt. Against a reduced rate backdrop and trade uncertainty, Amerant and the entire banking industry faced a number of headwinds such as heightened competition for commercial and industrial loans (C&I), increases in earning-assets prepayments and the repricing of the floating-rate securities and loans at lower rates. To counteract the effect of lower rates, in the fourth quarter of 2019 the Company more actively sought interest rate floors in loan production. On the funding side, the Company reduced its rates for time deposits and relationship money market accounts and focused on relationship transactional accounts to enhance demand deposit account ("DDA") balances. We also continued to take advantage of the yield curve by taking fixed-rate, longer-term, Federal Home Loan Bank (“FHLB”) advances with callable features resulting in a 34 basis point interest margin savings compared to the third quarter of 2019, and 54 basis point savings compared to the fourth quarter of 2018. Moreover, as previously announced, today the Company will redeem its remaining fixed-rate trust preferred securities (TruPs) and related junior subordinated debt, which will further reduce our annual interest expense by approximately $2.4 million, adding to the $2.6 million annual cost savings from the two previous redemptions.

Noninterest income

In the fourth quarter of 2019, noninterest income was $16.0 million, up $4.0 million or 33.3% compared to the fourth quarter of 2018. This improvement was driven by a $2.8 million gain on sale of the vacant Beacon land and $2.5 million in income from derivative contracts sold to loan customers. Noninterest income also included an approximately $0.7 million gain from the adoption of the ASU applicable to marketable equity securities in the most recent quarter. These improvements in the fourth quarter of 2019 were partially offset by a $1.4 loss on the early termination of FHLB advances, $0.5 million lower income from our legacy credit card products as we phase them out and $0.5 million lower income from the discontinuation of services to the Company’s former parent and its affiliates.

The increase in noninterest income of $3.2 million, or 6.0%, in the full-year 2019 compared to full-year 2018, is mainly due to the aforementioned increase in income from derivative contracts sold, the gain on sale of the vacant Beacon land, the benefit from the recently-adopted ASU applicable to marketable equity securities, as well as a $1.9 million gain from the sale of municipal bonds and floating-rate corporate securities earlier this year. This increase was partially offset by the decline in brokerage fees as a result of lower fixed income trading volume by our customers, primarily resulting from the increased domestic sanctions against trading on Venezuelan government securities, lower income from the discontinuation of services to the Company’s former parent and its affiliates, lower wire transfer and credit card fees, and a net loss on the early termination of FHLB advances in 2019 compared to a net gain in 2018. These early FHLB terminations allowed the Company to significantly lower its funding cost.

The Company’s assets under management and custody, or AUMs, increased $223.6 million, or 14.0%, to $1.8 billion at December 31, 2019 compared to $1.6 billion at December 31, 2018. This increase was mainly due to a positive market effect resulting in the appreciation of the AUM portfolio, when compared to year-end 2018, and the completion, in the fourth quarter of 2019, of the previously announced acquisition of Grand Cayman-based Mercantil Bank and Trust Limited (Cayman) from Mercantil Holding Financiero Internacional (Mercantil), a former affiliate, now rebranded “Elant Bank and Trust Ltd.” and wholly owned by Amerant Bank, N.A. (“Amerant Bank”).

Noninterest expense  

Fourth quarter 2019 noninterest expense was $51.7 million, down $2.9 million or 5.3%, compared to $54.6 million in the fourth quarter of 2018, driven primarily by: (i) lower salaries and employee benefits due to staff reductions made throughout the year, partially offset by cost of living adjustments of 1.8% in 2019 (compared to 3.2% in 2018); (ii) $4.6 million lower severance costs and $1.2 million lower legal and strategy advisory costs in connection with the restructuring process; (iii) a favorable adjustment of depreciation expense of $0.7 million related to our Beacon operations center, and (v) a reduction of FDIC-related costs of $0.7 million mainly due to credits received. Partially offsetting the decreasing expenses were: (i) $2.0 million in additional costs of the Company’s LTIP tied to performance against strategic targets established for the year 2016-2019 period; (ii) $0.8 million of stock-based compensation to directors, and (iii) $0.4 million higher operational charge-offs in the fourth quarter of 2019 related to customer accounts. In addition, total compensation expense in the fourth quarter of 2019 includes $1.5 million in amortization of restricted stock awards granted in December 2018.

Noninterest expense for the year ended December 31, 2019 decreased 2.6%, or $5.7 million, compared to full-year 2018, largely due to: (i) lower salaries and employee benefits and severance costs previously discussed; (ii) lower legal, accounting and consulting fees incurred in 2019 compared to the previous year when the Company completed its spin-off and began its restructuring activities; (iii) lower FDIC-related costs, and (iv) the favorable depreciation adjustment in connection with our Beacon operations center. Partially offsetting these declines were: (i) higher long-term incentive compensation as described above; (ii) stock-based compensation to directors in 2019; (iii) $3.2 million higher rebranding costs in 2019, and (iv) expenses connected with the redemption earlier this year of trust preferred securities and related subordinated debt. Total compensation expense for the full-year 2019 includes a $5.9 million amortization of restricted stock awards granted in December 2018 as a result of the IPO.

Restructuring expenses in 2019 were $5.0 million, consisting of $3.6 million of rebranding costs and $1.5 million of staff realignment expenses, decreasing 21.1% from $6.4 million in 2018.  This decrease was primarily due to lower staff reductions costs and no professional or other costs incurred, partially offset by higher rebranding expenses. Restructuring expenses in 2019 represented 2.4% of total noninterest expenses compared to 3.0% of total noninterest expenses in 2018.

Credit Quality

Credit quality remained strong. The ratio of non-performing assets to total assets increased to 0.41% at the end of the fourth quarter of 2019, compared to 0.22% at the end of the fourth quarter of 2018, mainly attributed to the deterioration of an $11.9 million non-performing multi-loan relationship with a South Florida food wholesale borrower whose sales in Puerto Rico were affected by the 2017 hurricanes. These loans were placed in non-accrual status in June 2019 and approximately $9.8 million of these loans were restructured in a troubled debt restructuring (“TDR”) in July 2019. During the fourth quarter of 2019, this TDR loan relationship did not perform in accordance with the restructured terms. As a result, the Company downgraded from substandard to doubtful three loans within the relationship totaling $5.0 million and increased specific reserves by $0.9 million to $2.4 million, or approximately 20% of the $11.9 million outstanding balance at the close of 2019. Specific reserves on this TDR multiple loan relationship represent the potential shortfall from a liquidation of collateral scenario. These loans are secured with a combination of commercial and residential real estate properties and equipment located in South Florida covering 71% of the outstanding balance; as well as receivables and inventory. Adding to the increase in non-performing loans were three owner-occupied loans totaling $4.3 million, and one commercial loan for $2.4 million. These increases were partially offset by the upgrade of one single-family loan for $0.7 million, the charge-off of one commercial loan for $0.6 million, and pay downs of one commercial loan for $0.9 million, one single-family residential loan for $0.6 million and credit cards totaling $0.9 million.

Special mention loans increased by $13.5 million at December 31, 2019, compared to December 31, 2018. The increase included a $10.0 million condo construction relationship SNC loan in New York City, three commercial loan relationships totaling $4.4 million, four owner occupied loans totaling $7.7 million, and two commercial real estate (“CRE”) loans totaling $5.7 million downgraded to special mention during the period. This was partially offset by the downgrades from special mention, including $9.4 million of loans related to the food wholesale borrower previously mentioned, one CRE loan for $0.8 million, one owner-occupied loan relationship for $2.0 million, and the upgrade of one owner occupied loan for $2.2 million. We continue to closely monitor the performance and status of these loans.

The Company released $0.3 million from the ALL during the fourth quarter of 2019, compared to a $1.4 million release during the same period last year. The release was primarily driven by a lower loan balance and a commercial loan recovery of $0.9 million, partially offset by loss factor adjustments and the increase of $0.9 million in specific reserves for the $11.9 million multiple loan relationship to the food wholesale borrower previously mentioned.

As we announced during 2019, we are in the process of phasing out our legacy credit card products. We have stopped charge privileges to all cardholders, reimbursed unearned annual membership fees, and required repayment of all remaining balances by the end of January 2020. In order to continue providing quality products and services to our foreign and domestic customers, and better manage credit risk, Amerant entered into referral arrangements with recognized U.S. credit card issuers. Charge-offs related to credit cards for the full-year 2019 were $5.3 million. At December 31, 2019, the outstanding balance and ALL, after these charge-offs, were $11.1 million and $1.8 million, respectively. We continue to monitor this portfolio closely and will re-assess the level of required reserves until balances are completely repaid.

Capital

Stockholders’ equity was $834.7 million at December 31, 2019, up 11.7% compared to $747.4 million at December 31, 2018 mainly driven by net income and other comprehensive income stemming from higher market valuations in the Company’s available for sale investment portfolio.

The Company’s capital continues to be strong and well in excess of the minimum regulatory requirements to be considered “well-capitalized.”

Fourth Quarter 2019 Earnings Conference Call

As previously announced, the Company will hold an earnings conference call on Thursday, January 30th, 2020 at 9:30 a.m. (Eastern Time) to discuss its fourth quarter and full-year 2019 results. The conference call and presentation materials can be accessed via webcast by logging on to the Investor Relations section of the company’s website at https://investor.amerantbank.com. The online replay will remain available for approximately one month following the call through the above link.

About Amerant Bancorp Inc.

The Company is a bank holding company headquartered in Coral Gables, Florida. The Company operates through its subsidiaries, Amerant Bank, N.A. (the “Bank”), Amerant Investments, Inc., Amerant Trust, N.A. and Elant Bank and Trust Ltd. The Company provides individuals and businesses in the U.S., as well as select international clients, with deposit, credit and wealth management services. The Bank, which has operated for over 40 years, is the largest community bank headquartered in Florida. The Bank operates 26 banking centers—18 in South Florida and 8 in the Houston, Texas area—and loan production offices in Dallas, Texas and New York, New York.

Zelle® is a registered trademark of Early Warning Services LLC, used in accordance with contractual terms.

Visit our investor relations page at https://investor.amerantbank.com for additional information.

Cautionary Notice Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including, without limitation, future financial and operating results; costs and revenues; economic conditions generally and in our markets and among our customer base; loan demand; mortgage lending activity; changes in the mix of our earning assets and our deposit and wholesale liabilities; net interest margin; yields on earning assets; interest rates and yield curves (generally and those applicable to our assets and liabilities); credit quality, including loan performance, non-performing assets, provisions for loan losses, charge-offs, other-than-temporary impairments and collateral values; market trends; rebranding and staff realignment costs and expected savings; and customer preferences, as well as statements with respect to our objectives, expectations and intentions and other statements that are not historical facts. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “could,” “intend,” “target,” “goals,” “outlooks,” “modeled,” and other similar words and expressions of the future.

Forward-looking statements, including those as to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the Company’s actual results, performance, achievements, or financial condition to be materially different from future results, performance, achievements, or financial condition expressed or implied by such forward-looking statements. You should not rely on any forward-looking statements as predictions of future events. You should not expect us to update any forward-looking statements. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, together with those risks and uncertainties described in “Risk factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2018 and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website www.sec.gov.

Explanation of Certain Non-GAAP Financial Measures

Certain financial measures and ratios contained in this press release including “adjusted noninterest income”, “adjusted noninterest   expense,” “adjusted net income,” “adjusted basic and diluted earnings per common share (basic and diluted),”  “adjusted ROA,” “adjusted ROE,” “adjusted efficiency ratio,” and other ratios appearing in Exhibits 1 and 2 are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). The Company refers to these financial measures and ratios as “non-GAAP financial measures.”

We use certain non-GAAP financial measures, including those mentioned above, both to explain our results to shareholders and the investment community and in the internal evaluation and management of our businesses. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our past performance and prospects for future performance, especially in light of the additional costs we incurred in 2018 in connection with the Spin-off and related transactions, the rebranding and restructuring expenses which began in 2018 and continued in 2019, and the one-time gain on sale of the vacant Beacon land in the fourth quarter of 2019. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.

Exhibit 2 reconciles these non-GAAP financial measures to reported results.

Exhibit 1- Selected Financial Information

The following table sets forth selected financial information derived from our unaudited and audited consolidated financial statements.

Exhibit 2- Non-GAAP Financial Measures Reconciliation

The following table sets forth selected financial information derived from the Company’s interim unaudited and annual audited consolidated financial statements, adjusted for certain costs incurred by the Company in the periods presented related to tax deductible restructuring and non-deductible spin-off costs. These adjustments also reflect the after-tax gain of $2.2 million on the sale of vacant Beacon land in the fourth quarter of 2019.The Company believes these adjusted numbers are useful to understand the Company’s performance absent these transactions and events.

Exhibit 3 - Average Balance Sheet, Interest and Yield/Rate Analysis

The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the periods presented.  The average balances for loans include both performing and nonperforming balances.  Interest income on loans includes the effects of discount accretion and the amortization of net deferred loan origination costs accounted for as yield adjustments.  Average balances represent the daily average balances for the periods presented.