Investors Bancorp, Inc. Announces Fourth Quarter Financial Results and Cash Dividend

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SHORT HILLS, N.J. , Jan. 27, 2021 /PRNewswire/ -- Investors Bancorp, Inc. (NASDAQ: ISBC) ("Company"), the holding company for Investors Bank ("Bank"), reported net income of $75.1 million , or  $0.32 per diluted share, for the three months ended December 31, 2020 as compared to $64.3 million , or $0.27 per diluted share, for the three months ended September 30, 2020 and $48.7 million , or $0.19 per diluted share, for the three months ended December 31, 2019. 

For the year ended December 31, 2020, net income totaled $221.6 million , or $0.94 per diluted share, compared to $195.5 million , or $0.74 per diluted share, for the year ended December 31, 2019.

Net income for the three months and year ended December 31, 2020 included costs of approximately $9 million , after-tax, or $0.04 per diluted share, associated with the Company's consolidation of ten branches announced in December 2020 .

The Company also announced today that its Board of Directors declared a cash dividend of $0.14 per share to be paid on February 25, 2021 for stockholders of record as of February 10, 2021 , representing a 17% increase from the prior quarter.

Kevin Cummings , Chairman and CEO, commented, "Despite a challenging 2020, we were pleased with our strong operating results.  Our net interest margin expanded 19 basis points quarter over quarter while our return on assets and return on tangible equity for the fourth quarter improved to 1.14% and 11.60%, respectively."

Mr. Cummings also commented, "Deferred loan balances remained relatively stable with the majority of our deferred borrowers making interest payments. We remain cautiously optimistic on credit for 2021."

Performance Highlights

  • Net interest margin increased 19 basis points to 2.98% for the three months ended December 31, 2020 compared to the three months ended September 30, 2020 .

  • Return on average assets and return on average tangible equity improved to 1.14% and 11.60%, respectively, for the three months ended December 31, 2020 .

  • Non-interest-bearing deposits increased $318.1 million , or 9.5%, and borrowed funds decreased $1.01 billion , or 23.5%, during the three months ended December 31, 2020 . The cost of interest-bearing deposits decreased 11 basis points to 0.73% for the three months ended December 31, 2020 compared to the three months ended September 30, 2020 .

  • The Company sold approximately $328 million of PPP loans during the three months ended December 31, 2020 . Excluding the impact of the PPP loan sale, C&I loans increased $504.5 million , or 14.8%, during the three months ended December 31 , 2020. 

  • Provision for credit losses was a negative $2.7 million for the three months ended December 31, 2020 compared with $8.3 million for the three months ended September 30, 2020 . The Company recorded net recoveries of $2.1 million during the quarter ended December 31, 2020 compared to net charge-offs of $667,000 in the quarter ended September 30, 2020 . The allowance for loan losses as a percent of total loans was 1.36% at December 31, 2020 compared to 1.37% at September 30, 2020 .

  • Total non-interest income was $45.8 million for the three months ended December 31, 2020 , an increase of $25.9 million compared to the three months ended September 30, 2020 . Included in total non-interest income were $23.1 million of gains from sale-leaseback transactions during the three months ended December 31, 2020 .

  • Total non-interest expenses were $142.9 million for the three months ended December 31, 2020 , an increase of $38.8 million compared to the three months ended September 30, 2020 . Excluding $22.8 million of previously announced costs from the early extinguishment of $1.0 billion of wholesale funding during the three months ended December 31, 2020 , $11.7 million of costs associated with the Company's branch rationalization announcement in December 2020 and a $1.0 million tax credit investment, non-interest expenses for the three months ended December 31, 2020 were $107.4 million , an increase of $3.3 million compared to the three months ended September 30, 2020 .

  • As of January 17, 2021 , COVID-19 related loan deferrals totaled $742 million , or 3.6% of loans, compared to $730 million , or 3.5% of loans, as of October 20, 2020 . Approximately 70% of loan deferral borrowers are making interest payments.

  • Non-accrual loans were $107.1 million , or 0.51% of total loans, at December 31, 2020 as compared to $132.0 million , or 0.63% of total loans, at September 30, 2020 and $95.2 million , or 0.44% of total loans, at December 31, 2019 .

  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were 10.14%, 13.07%, 13.07% and 14.39%, respectively, at December 31, 2020 .

  • During the three months ended December 31, 2020 , the Company repurchased 2.0 million shares of its outstanding common stock for $20.5 million .

Financial Performance Overview

Fourth Quarter 2020 compared to Third Quarter 2020

For the fourth quarter of 2020, net income totaled $75.1 million , an increase of $10.8 million as compared to $64.3 million for the third quarter of 2020.  The changes in net income on a sequential quarter basis are highlighted below.

Net interest income increased by $7.2 million , or 3.9%, as compared to the third quarter of 2020.  Changes within interest income and expense categories were as follows:

  • Interest expense decreased $10.0 million , primarily attributed to the average balance of total borrowed funds, which decreased $1.02 billion , or 22.8%, to $3.47 billion for the three months ended December 31, 2020 and the average balance of interest-bearing deposits, which decreased $66.3 million , or 0.4%, to $16.14 billion for the three months ended December 31, 2020 . In addition, the weighted average cost of interest-bearing liabilities decreased 14 basis points to 1.00% for the three months ended December 31, 2020 .

  • Interest and dividend income decreased $2.8 million , or 1.2%, to $237.9 million as compared to the third quarter of 2020, primarily attributed to the average balance of net loans, which decreased $184.5 million , mainly as a result of the sale of PPP loans, paydowns and payoffs, offset by loan originations. In addition, the weighted average yield on securities decreased 10 basis points to 2.10%. Offsetting these declines was a 1 basis point increase in the weighted average yield on net loans to 4.13%.

  • Prepayment penalties, which are included in interest income, totaled $9.2 million for the three months ended December 31, 2020 as compared to $7.4 million for the three months ended September 30, 2020 .

Net interest margin increased 19 basis points to 2.98% for the three months ended December 31, 2020 compared to the three months ended September 30, 2020, driven primarily by the lower cost of interest-bearing liabilities, the decline in lower yielding average cash balances and the increase in prepayment penalties.

Total non-interest income was $45.8 million for the three months ended December 31, 2020, an increase of $25.9 million , as compared to $19.9 million for the third quarter of 2020.  The increase in non-interest income was due primarily to a gain of $23.1 million on the sale-leaseback of 15 branch locations and one corporate location during the three months ended December 31, 2020.

Total non-interest expenses were $142.9 million for the three months ended December 31, 2020, an increase of $38.8 million compared to the three months ended September 30, 2020. Excluding $22.8 million of costs from the early extinguishment of $1.00 billion of wholesale funding during the three months ended December 31, 2020, $11.7 million of costs associated with the Company's branch rationalization announcement in December 2020 and a $1.0 million tax credit investment, non-interest expenses for the three months ended December 31, 2020 were $107.4 million , an increase of $3.3 million compared to the three months ended September 30, 2020.  The increase was primarily driven by incentive compensation.

Income tax expense was $19.3 million for the three months ended December 31, 2020 and $24.8 million for the three months ended September 30, 2020.  The effective tax rate was 20.4% for the three months ended December 31, 2020 and 27.9% for the three months ended September 30, 2020.  The effective tax rate was positively impacted in the fourth quarter primarily by tax credit investments, as well as state income apportionment.

Fourth Quarter 2020 compared to Fourth Quarter 2019

For the fourth quarter of 2020, net income totaled $75.1 million , an increase of $26.4 million as compared to $48.7 million in the fourth quarter of 2019.  The changes in net income on a year over year quarter basis are highlighted below.

On a year over year basis, fourth quarter of 2020 net interest income increased by $20.0 million , or 11.9%, as compared to the fourth quarter of 2019 due to:

  • Interest expense decreased $42.5 million , or 46.4%, primarily attributed to the weighted average cost of interest-bearing liabilities, which decreased 74 basis points to 1.00% for the three months ended December 31, 2020 . In addition, the average balance of total borrowed funds decreased $2.27 billion , or 39.6%, to $3.47 billion , while the average balance of interest-bearing deposits increased $848.6 million , or 5.6%, to $16.14 billion for the three months ended December 31, 2020 .

  • Interest and dividend income decreased $22.5 million , or 8.6%, to $237.9 million , primarily attributed to the average balance of net loans, which decreased $824.8 million , mainly as a result of paydowns and payoffs, offset by loan originations and $453.3 million of loans acquired from Gold Coast . In addition, the weighted average yield on net loans decreased 11 basis points to 4.13% and the weighted average yield on securities decreased 78 basis points to 2.10%.

  • Prepayment penalties, which are included in interest income, totaled $9.2 million for the three months ended December 31, 2020 as compared to $5.4 million for the three months ended December 31, 2019 .

Net interest margin increased 37 basis points year over year to 2.98% for the three months ended December 31, 2020 from 2.61% for the three months ended December 31, 2019, driven primarily by the lower cost of interest-bearing liabilities and an increase in prepayment penalties, partially offset by the lower yields on interest-earnings assets. 

Total non-interest income was $45.8 million for the three months ended December 31, 2020, an increase of $25.3 million year over year.  The increase in non-interest income was due primarily to a gain of $23.1 million on the sale-leaseback of 15 branch locations and one corporate location during the three months ended December 31, 2020.  In addition, gain on loans increased $3.3 million due to a higher volume of mortgage banking loan sales to third parties. 

Total non-interest expenses were $142.9 million for the three months ended December 31, 2020, an increase of $36.0 million compared to the three months ended December 31, 2019. Excluding $22.8 million of costs from the early extinguishment of $1.00 billion of wholesale funding during the three months ended December 31, 2020, $11.7 million of costs associated with the Company's branch rationalization announcement in December 2020 and a $1.0 million tax credit investment, non-interest expenses for the three months ended December 31, 2020 were $107.4 million , an increase of $579,000 compared to the three months ended December 31, 2019.

Income tax expense was $19.3 million for the three months ended December 31, 2020 and $32.2 million for the three months ended December 31, 2019.  The effective tax rate was 20.4% for the three months ended December 31, 2020 and 39.8% for the three months ended December 31, 2019.  The effective tax rate for the fourth quarter of 2019 was negatively impacted when the Company revalued its net deferred tax asset as the State of New Jersey provided clarification in December 2019 in regard to previously enacted tax law changes.

Year Ended December 31, 2020 compared to Year Ended December 31, 2019

Net income increased by $26.1 million year over year to $221.6 million for the year ended December 31, 2020.  The change in net income year over year is the result of the following:

Net interest income increased by $70.6 million as compared to the year ended December 31, 2019 due to:

  • Interest expense decreased by $129.9 million , or 33.7%, to $255.2 million for the year ended December 31, 2020 , as compared to $385.1 million for the year ended December 31, 2019 , primarily attributed to a decrease in the weighted average cost of interest-bearing liabilities of 61 basis points to 1.23% for the year ended December 31, 2020 . In addition, the average balance of total borrowed funds decreased $946.1 million , or 16.9%, to $4.67 billion for the year ended December 31, 2020 . These decreases were partially offset by the average balance of interest-bearing deposits, which increased $777.2 million , or 5.1%, to $16.10 billion for the year ended December 31, 2020 .

  • Total interest and dividend income decreased by $59.3 million , or 5.7%, to $980.9 million for the year ended December 31, 2020 as compared to the year ended December 31, 2019 , primarily attributed to the average balance of net loans, which decreased $535.9 million , mainly from paydowns and payoffs, partially offset by loan originations and $453.3 million of loans acquired from Gold Coast . In addition, the weighted average yield on net loans decreased 9 basis points to 4.14% primarily driven by lower average yields on new loan origination volume and adjustable loans, partially offset by an increase in prepayment penalties, and the weighted average yield on securities decreased 49 basis points to 2.41%.

  • Prepayment penalties, which are included in interest income, totaled $32.4 million for the year ended December 31, 2020 , as compared to $16.8 million for the year ended December 31, 2019 .

Net interest margin increased 26 basis points to 2.80% for the year ended December 31, 2020 from 2.54% for the year ended December 31, 2019, primarily driven by the lower cost of interest-bearing liabilities, partially offset by the lower yield on interest-earning assets.

Total non-interest income was $90.5 million for the year ended December 31, 2020, an increase of $37.1 million as compared to the year ended December 31, 2019. The increase in non-interest income was due primarily to a gain of $23.1 million on the sale-leaseback of 15 branch locations and one corporate location during the three months ended December 31, 2020. In addition, gain on loans increased $10.9 million as a result of a higher volume of mortgage banking loan sales to third parties and the Company recognized a $5.7 million loss on the sale of securities during the second quarter of 2019.

Total non-interest expenses were $449.5 million for the year ended December 31, 2020, an increase of $26.8 million compared to the year ended December 31, 2019.  Excluding $24.1 million of costs from the early extinguishment of $1.40 billion of wholesale funding during the year ended December 31, 2020, $11.7 million of costs associated with the Company's branch rationalization announcement in December 2020 , $3.6 million of Gold Coast acquisition-related expenses and a $1.0 million tax credit investment, non-interest expenses for the year ended December 31, 2020 were $409.1 million , a decrease of $13.6 million compared to the year ended December 31, 2019.  This decrease was driven by a decrease of $8.6 million in other non-interest expense, a decrease of $4.5 million in advertising and promotional expense and a decrease of $3.5 million in compensation and fringe benefit expense. 

Income tax expense was $75.0 million for the year ended December 31, 2020 compared to $91.2 million for the year ended December 31, 2019.  The effective tax rate was 25.3% for the year ended December 31, 2020 and 31.8% for the year ended December 31, 2019. 

Asset Quality

On January 1, 2020 , the Company adopted ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL"). CECL requires the measurement of all expected credit losses over the life of financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.  CECL replaced the incurred loss methodology and therefore, the allowance and provision for credit losses is based upon estimated expected credit losses rather than incurred losses.

Our provision for credit losses is primarily a result of the expected credit losses on our loans, unfunded commitments and held-to-maturity debt securities over the life of these financial instruments, including the inherent credit risk in these financial instruments, the composition of and changes in our portfolios of these financial instruments, and the level of charge-offs.  At December 31, 2020, our allowance for credit losses continues to be affected by the impact of COVID-19 on the current and forecasted economic conditions.  For the three months ended December 31, 2020, our provision for credit losses was a negative $2.7 million , compared to $8.3 million for the three months ended September 30, 2020 and $1.5 million for the three months ended December 31, 2019.  For the three months ended December 31, 2020, net recoveries were $2.1 million compared to net charge-offs of $667,000 for the three months ended September 30, 2020 and net charge-offs of $1.4 million for the three months ended December 31, 2019.  Our provision was $70.2 million for the year ended December 31, 2020 compared to a negative provision of $1.0 million for the year ended December 31, 2019.  For the year ended December 31, 2020, net charge-offs were $10.7 million compared to $6.7 million for the year ended December 31, 2019.

Total non-accrual loans were $107.1 million , or 0.51% of total loans, at December 31, 2020 compared to $132.0 million , or 0.63% of total loans, at September 30, 2020 and $95.2 million , or 0.44% of total loans, at December 31, 2019.  We continue to proactively and diligently work to resolve our troubled loans.

At December 31, 2020, there were $34.5 million of loans deemed as troubled debt restructured loans ("TDRs"), of which $25.3 million were residential and consumer loans, $5.7 million were commercial real estate loans and $3.5 million were commercial and industrial loans.  TDRs of $9.2 million were classified as accruing and $25.3 million were classified as non-accrual at December 31, 2020.

The following table sets forth non-accrual loans and accruing past due loans (excluding loans held for sale) on the dates indicated as well as certain asset quality ratios.



December 31, 2020


September 30, 2020


June 30, 2020


March 31, 2020


December 31, 2019


# of loans


amount


# of loans


amount


# of loans


amount


# of loans


amount


# of loans


amount


(Dollars in millions)

Accruing past due loans:




















30 to 59 days past due:




















Residential and consumer

84



$

18.5



78



$

17.2



79



$

19.9



106



$

24.6



111



$

23.4


Construction




















Multi-family

5



7.3



5



5.3



9



24.6



10



57.9



5



45.6


Commercial real estate

8



9.5



7



4.6



9



10.6



6



23.5



9



6.8


Commercial and industrial

6



0.9



6



3.7



13



7.5



21



5.3



16



7.8


Total 30 to 59 days past due

103



36.2



96



30.8



110



62.6



143



111.3



141



83.6


60 to 89 days past due:




















Residential and consumer

28



5.2



20



4.8



30



7.5



32



7.5



33



6.5


Construction




















Multi-family





2



2.1



5



19.1







1



1.9


Commercial real estate

5



2.3



5



26.3



8



3.3










Commercial and industrial

8



3.1



6



2.2



5



1.2



4



5.2



6



2.0


Total 60 to 89 days past due

41



10.6



33



35.4



48



31.1



36



12.7



40



10.4


Total accruing past due loans

144



$

46.8



129



$

66.2



158



$

93.7



179



$

124.0



181



$

94.0


Non-accrual:




















Residential and consumer

246



$

46.4



250



$

52.2



255



$

50.6



258



$

46.6



255



$

47.4


Construction




















Multi-family

15



35.6



13



51.1



14



48.3



9



23.4



8



23.3


Commercial real estate

29



15.9



28



17.8



22



12.3



21



11.4



22



12.0


Commercial and industrial

21



9.2



19



10.9



29



15.6



22



17.0



18



12.5


Total non-accrual loans

311



$

107.1



310



$

132.0



320



$

126.8



310



$

98.4



303



$

95.2


Accruing troubled debt restructured loans

47



$

9.2



51



$

9.8



52



$

12.2



55



$

12.8



57



$

13.1


Non-accrual loans to total loans



0.51

%




0.63

%




0.59

%




0.46

%




0.44

%

Allowance for loan losses as a percent of non-accrual loans



264.17

%




217.75

%




215.48

%




247.54

%




239.66

%

Allowance for loan losses as a percent of total loans



1.36

%




1.37

%




1.28

%




1.14

%




1.05

%

 

Balance Sheet Summary

Total assets decreased $675.6 million , or 2.5%, to $26.02 billion at December 31, 2020 from December 31, 2019.  Net loans decreased $895.6 million , or 4.2%, to $20.58 billion at December 31, 2020.  Securities increased $192.0 million , or 5.0%, to $4.04 billion at December 31, 2020.

The detail of the loan portfolio is below:


December 31, 2020


September 30, 2020


December 31, 2019


(In thousands)

Commercial Loans:






Multi-family loans

$

7,122,840



7,256,015



7,813,236


Commercial real estate loans

4,947,212



4,912,155



4,831,347


Commercial and industrial loans

3,575,641



3,399,059



2,951,306


Construction loans

404,367



341,449



262,866


Total commercial loans

16,050,060



15,908,678



15,858,755


Residential mortgage loans

4,119,894



...

4,407,224



5,144,718


Consumer and other

702,801



681,940



699,796


Total loans

20,872,755



20,997,842



21,703,269


Deferred fees, premiums and other, net

(9,318)



(12,274)



907


Allowance for loan losses

(282,986)



(287,511)



(228,120)


Net loans

$

20,580,451



20,698,057



21,476,056


During the year ended December 31, 2020, we originated $1.08 billion in commercial and industrial loans (including $334.7 million of PPP loans), $1.03 billion in multi-family loans, $652.5 million in residential loans, $605.5 million in commercial real estate loans, $129.6 million in construction loans and $102.5 million in consumer and other loans. Our originations reflect our continued focus on diversifying our loan portfolio. In addition, we acquired $453.3 million of loans from Gold Coast on April 3, 2020. Our loans are primarily on properties and businesses located in New Jersey and New York. The Company sold approximately $328 million of PPP loans during the three months ended December 31, 2020.

In addition to the loans originated for our portfolio, we originated residential mortgage loans for sale to third parties totaling $564.5 million during the year ended December 31, 2020. As of December 31, 2020, loans held for sale were $30.4 million.

The allowance for loan losses increased by $54.9 million to $283.0 million at December 31, 2020 from $228.1 million at December 31, 2019. The increase of $54.9 million reflects an increase of $64.9 million from the provision for credit losses related to our loan portfolio and an increase of $4.2 million from acquired loans accounted for as PCD loans, partially offset by a decrease of $10.7 million resulting from net charge-offs and a decrease of $3.6 million upon CECL adoption. Our allowance for loan losses was significantly affected by the impact of COVID-19 on current and forecasted economic conditions. Future increases in the allowance for loan losses may be necessary based on the growth and composition of the loan portfolio, the level of loan delinquency and the current and forecasted economic conditions over the life of our loans. At December 31, 2020, our allowance for loan losses as a percent of total loans was 1.36%, an increase from 1.05% at December 31, 2019 which was driven by the factors noted above.

Securities increased by $192.0 million, or 5.0%, to $4.04 billion at December 31, 2020 from $3.85 billion at December 31, 2019. This increase was primarily a result of purchases, partially offset by paydowns. At December 31, 2020, our allowance for credit losses on held-to-maturity debt securities was $3.3 million.

Deposits increased by $1.67 billion, or 9.3%, to $19.53 billion at December 31, 2020 from $17.86 billion at December 31, 2019 primarily driven by increases in checking and money market deposits, offset by a decrease in time deposits. Checking accounts increased $1.72 billion to $9.71 billion at December 31, 2020 from $7.99 billion at December 31, 2019. Core deposits (savings, checking and money market) represented approximately 86% of our total deposit portfolio at December 31, 2020 compared to 78% at December 31, 2019.

Borrowed funds decreased by $2.53 billion, or 43.4%, to $3.30 billion at December 31, 2020 from $5.83 billion at December 31, 2019 primarily driven by the increase in deposits. The decrease includes the early extinguishment of $1.40 billion of wholesale funding during the year ended December 31, 2020.

Other liabilities increased by $81.8 million to $163.7 million at December 31, 2020 from $81.8 million at December 31, 2019 primarily driven by increases in income taxes payable and our allowance for credit losses on unfunded commitments. At December 31, 2020, our allowance for credit losses on unfunded commitments was $17.7 million.

Stockholders' equity increased by $88.1 million to $2.71 billion at December 31, 2020 from $2.62 billion at December 31, 2019, primarily attributed to net income of $221.6 million, common stock issued to finance the Gold Coast acquisition of $20.9 million and share-based plan activity of $19.1 million for the year ended December 31, 2020. These increases were partially offset by cash dividends of $0.48 per share totaling $119.7 million, the repurchase of 2.4 million shares of common stock for $23.9 million and other comprehensive loss of $21.4 million during the year ended December 31, 2020. In addition, stockholders' equity decreased by $8.5 million on January 1, 2020 in connection with the adoption of CECL. The Company remains above the FDIC's "well capitalized" standards, with a Common Equity Tier 1 Risk-Based Ratio of 13.07% at December 31, 2020.

About the Company

Investors Bancorp, Inc. is the holding company for Investors Bank, which as of December 31, 2020 operated from its corporate headquarters in Short Hills, New Jersey and 156 branches located throughout New Jersey and New York.

Earnings Conference Call January 28, 2021 at 11:00 a.m. (ET)

The Company, as previously announced, will host an earnings conference call on Thursday, January 28, 2021 at 11:00 a.m. (ET). The toll-free dial-in number is: (866) 218-2404. Callers who pre-register will bypass the live operator and may avoid any delays in joining the conference call. Participants will immediately receive an online confirmation, an email and a calendar invitation for the event.

Conference Call Pre-registration link: http://dpregister.com/10150819

A telephone replay will be available beginning on January 28, 2021 from 1:00 p.m. (ET) through 9:00 a.m. (ET) on April 28, 2021. The replay number is (877) 344-7529, password 10150819. The conference call will also be simultaneously webcast on the Company's website www.investorsbank.com and archived for one year.

Forward Looking Statements

Certain statements contained herein are "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements may be identified by reference to a future period or periods, or by the use of forward looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward looking statements are subject to numerous risks and uncertainties, as described in the "Risk Factors" disclosures included in our Annual Report on Form 10-K, as supplemented in quarterly reports on Form 10-Q, including, but not limited to, those related to the real estate and economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity. Further, given its ongoing and dynamic nature, it is difficult to predict what the continuing effects of the COVID-19 pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, continue to result in a material adverse change for the demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch disruptions, unavailability of personnel and increased cybersecurity risks as employees work remotely.

The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions that 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.

Non-GAAP Financial Measures

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. We utilize these measures for internal planning and forecasting purposes. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets








December 31,
2020


September 30,
2020


December 31,
2019


(unaudited)


(unaudited)


(audited)

Assets

(Dollars in thousands)







Cash and cash equivalents

$

170,432



557,749



174,915


Equity securities

36,000



8,703



6,039


Debt securities available-for-sale, at estimated fair value

2,758,437



2,828,959



2,695,390


Debt securities held-to-maturity, net (estimated fair value of $1,320,872, $1,304,693 and $1,190,104 at December 31, 2020, September 30, 2020 and December 31, 2019, respectively)

1,247,853



1,236,610



1,148,815


Loans receivable, net

20,580,451



20,698,057



21,476,056


Loans held-for-sale

30,357



19,984



29,797


Federal Home Loan Bank stock

159,829



214,255



267,219


Accrued interest receivable

79,705



84,317



79,313


Other real estate owned and other repossessed assets

7,115



8,884



13,538


Office properties and equipment, net

139,663



164,220



169,614


Operating lease right-of-use assets

199,981



171,781



175,143


Net deferred tax asset

116,805



116,347



64,220


Bank owned life insurance

223,714



223,576



218,517


Goodwill and intangible assets

109,633



110,068



97,869


Other assets

163,184



163,467



82,321


Total assets

$

26,023,159



26,606,977



26,698,766


Liabilities and Stockholders' Equity






Liabilities:






Deposits

$

19,525,419



19,103,535



17,860,338


Borrowed funds

3,295,790



4,307,523



5,827,111


Advance payments by borrowers for taxes and insurance

115,729



144,212



121,719


Operating lease liabilities

212,559



184,281



185,827


Other liabilities

163,659



197,669



81,821


Total liabilities

23,313,156



23,937,220



24,076,816


Stockholders' equity

2,710,003



2,669,757



2,621,950


Total liabilities and stockholders' equity

$

26,023,159



26,606,977



26,698,766


INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Operations
















For the Three Months Ended


For the Year Ended







December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019







(unaudited)


(unaudited)


(unaudited)


(unaudited)


(audited)







(Dollars in thousands, except per share data)

Interest and dividend income:











Loans receivable and loans held-for-sale

$

213,928



215,221



228,005



871,411



912,091



Securities:












GSE obligations

523



378



336



1,517



1,212




Mortgage-backed securities

16,674



18,095



23,642



77,925



95,133




Equity

252



45



35



362



143




Municipal bonds and other debt

3,552



3,277



3,052



13,480



11,494



Interest-bearing deposits

93



233



840



1,460



2,805



Federal Home Loan Bank stock

2,858



3,452



4,470



14,739



17,341




Total interest and dividend income

237,880



240,701



260,380



980,894



1,040,219


Interest expense:











Deposits


29,310



34,109



60,635



155,589



261,857



Borrowed funds

19,776



24,970



30,970



99,619



123,289




Total interest expense

49,086



59,079



91,605



255,208



385,146




Net interest income

188,794



181,622



168,775



725,686



655,073


Provision for credit losses

(2,682)



8,336



1,500



70,158



(1,000)




Net interest income after provision for credit losses

191,476



173,286



167,275



655,528



656,073


Non-interest income:











Fees and service charges

4,935



5,579



6,819



17,916



23,604



Income on bank owned life insurance

1,579



2,067



1,593



6,638



6,542



Gain on loans, net

5,538



5,285



2,218



16,226



5,345



Gain (loss) on securities, net

157



(8)



(13)



406



(5,536)



Gain on sales of other real estate owned, net

270



133



282



1,054



1,145



Gain on sale-leaseback transactions

23,129







23,129





Other income

10,184



6,870



9,559



25,149



22,313




Total non-interest income

45,792



19,926



20,458



90,518



53,413


Non-interest expense:











Compensation and fringe benefits

64,891



59,896



59,327



240,970



243,782



Advertising and promotional expense

2,645



2,344



3,005



9,551



13,893



Office occupancy and equipment expense

28,451



16,882



16,700



77,754



63,996



Federal insurance premiums

3,550



2,925



3,300



14,276



13,200



General and administrative

455



551



559



2,133



2,222



Professional fees

3,834



4,097



4,897



16,220



17,308



Data processing and communication

9,004



8,998



7,998



35,702



31,987



Debt extinguishment

22,807



965





24,098





Other operating expenses

7,230



7,402



11,037



28,801



36,366




Total non-interest expenses

142,867



104,060



106,823



449,505



422,754




Income before income tax expense

94,401



89,152



80,910



296,541



286,732


Income tax expense

19,256



24,840



32,180



74,961



91,248




Net income

$

75,145



64,312



48,730



221,580



195,484


Basic earnings per share

$0.32


0.27



0.19



0.94



0.75


Diluted earnings per share

$0.32


0.27



0.19



0.94



0.74













Basic weighted average shares outstanding

236,679,655



236,833,099



256,559,205



235,761,457



262,202,598



Diluted weighted average shares outstanding

236,757,361



236,872,505



257,006,084



235,838,808



262,519,788


INVESTORS BANCORP, INC. AND SUBSIDIARY

Average Balance Sheet and Yield/Rate Information





For the Three Months Ended




December 31, 2020


September 30, 2020


December 31, 2019




Average
Outstanding
Balance

Interest
Earned/Paid

Weighted
Average
Yield/Rate


Average
Outstanding
Balance

Interest
Earned/Paid

Weighted
Average
Yield/Rate


Average
Outstanding
Balance

Interest
Earned/Paid

Weighted
Average
Yield/Rate




(Dollars in thousands)

Interest-earning assets:













Interest-earning cash accounts

$

454,986


93


0.08

%


$

978,037


233


0.10

%


$

280,790


840


1.20

%


Equity securities

25,915


252


3.89

%


7,177


45


2.51

%


6,036


35


2.32

%


Debt securities available-for-sale

2,717,128


12,502


1.84

%


2,758,679


13,473


1.95

%


2,624,612


18,021


2.75

%


Debt securities held-to-maturity

1,264,286


8,247


2.61

%


1,200,933


8,277


2.76

%


1,131,386


9,009


3.19

%


Net loans

20,695,149


213,928


4.13

%


20,879,661


215,221


4.12

%


21,519,941


228,005


4.24

%


Federal Home Loan Bank stock

175,097


2,858


6.53

%


223,032


3,452


6.19

%


276,965


4,470


6.46

%


Total interest-earning assets

25,332,561


237,880


3.76

%


26,047,519


240,701


3.70

%


25,839,730


260,380


4.03

%

Non-interest earning assets

1,144,838





1,157,358





1,009,868





Total assets


$

26,477,399





$

27,204,877





$

26,849,598


















Interest-bearing liabilities:













Savings

$

2,039,954


2,551


0.50

%


$

2,033,495


2,690


0.53

%


$

2,040,678


4,592


0.90

%


Interest-bearing checking

6,117,420


7,823


0.51

%


5,901,759


8,658


0.59

%


5,344,156


19,403


1.45

%


Money market accounts

4,949,313


9,944


0.80

%


4,349,536


8,520


0.78

%


3,739,126


14,770


1.58

%


Certificates of deposit

3,035,484


8,992


1.18

%


3,923,651


14,241


1.45

%


4,169,591


21,870


2.10

%


Total interest-bearing deposits

16,142,171


29,310


0.73

%


16,208,441


34,109


0.84

%


15,293,551


60,635


1.59

%


Borrowed funds

3,470,338


19,776


2.28

%


4,493,591


24,970


2.22

%


5,744,538


30,970


2.16

%


Total interest-bearing liabilities

19,612,509


49,086


1.00

%


20,702,032


59,079


1.14

%


21,038,089


91,605


1.74

%

Non-interest-bearing liabilities

4,164,206





3,856,553





2,906,473





Total liabilities

23,776,715





24,558,585





23,944,562




Stockholders' equity

2,700,684





2,646,292





2,905,036





Total liabilities and stockholders' equity

$

26,477,399





$

27,204,877





$

26,849,598


















Net interest income


$

188,794





$

181,622





$

168,775

















Net interest rate spread



2.76

%




2.56

%




2.29

%















Net interest earning assets

$

5,720,052





$

5,345,487





$

4,801,641


















Net interest margin



2.98

%




2.79

%




2.61

%















Ratio of interest-earning assets to total interest-bearing liabilities

1.29


X



1.26


X



1.23


X































INVESTORS BANCORP, INC. AND SUBSIDIARY

Average Balance Sheet and Yield/Rate Information





For the Year Ended




December 31, 2020


December 31, 2019




Average
Outstanding
Balance

Interest
Earned/Paid

Weighted
Average
Yield/Rate


Average
Outstanding
Balance

Interest
Earned/Paid

Weighted
Average
Yield/Rate




(Dollars in thousands)

Interest-earning assets:









Interest-earning cash accounts

$

773,177


1,460


0.19

%


$

215,447


2,805


1.30

%


Equity securities

11,365


362


3.19

%


5,938


143


2.41

%


Debt securities available-for-sale

2,672,537


58,873


2.20

%


2,395,047


67,822


2.83

%


Debt securities held-to-maturity

1,184,984


34,049


2.87

%


1,317,322


40,017


3.04

%


Net loans

21,040,964


871,411


4.14

%


21,576,829


912,091


4.23

%


Federal Home Loan Bank stock

229,120


14,739


6.43

%


274,661


17,341


6.31

%



Total interest-earning assets

25,912,147


980,894


3.79

%


25,785,244


1,040,219


4.03

%

Non-interest earning assets

1,096,400





975,585






Total assets

$

27,008,547





$

26,760,829














Interest-bearing liabilities:









Savings

$

2,039,686


12,056


0.59

%


$

1,985,142


17,148


0.86

%


Interest-bearing checking

5,869,801


42,014


0.72

%


5,020,991


84,698


1.69

%


Money market accounts

4,367,498


42,568


0.97

%


3,703,413


60,896


1.64

%


Certificates of deposit

3,819,029


58,951


1.54

%


4,609,274


99,115


2.15

%


Total interest bearing deposits

16,096,014


155,589


0.97

%


15,318,820


261,857


1.71

%


Borrowed funds

4,665,094


99,619


2.14

%


5,611,206


123,289


2.20

%



Total interest-bearing liabilities

20,761,108


255,208


1.23

%


20,930,026


385,146


1.84

%

Non-interest-bearing liabilities

3,594,290





2,887,601






Total liabilities

24,355,398





23,817,627




Stockholders' equity

2,653,149





2,943,202






Total liabilities and stockholders' equity

$

27,008,547





$

26,760,829














Net interest income


$

725,686





$

655,073













Net interest rate spread



2.56

%




2.19

%











Net interest earning assets

$

5,151,039





$

4,855,218














Net interest margin



2.80

%




2.54

%











Ratio of interest-earning assets to total interest-bearing liabilities

1.25


X



1.23


X






















INVESTORS BANCORP, INC. AND SUBSIDIARY

Selected Performance Ratios












For the Three Months Ended


For the Year Ended


December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Return on average assets

1.14

%


0.95

%


0.73

%


0.82

%


0.73

%

Return on average equity

11.13

%


9.72

%


6.71

%


8.35

%


6.64

%

Return on average tangible equity

11.60

%


10.14

%


6.94

%


8.70

%


6.87

%

Interest rate spread

2.76

%


2.56

%


2.29

%


2.56

%


2.19

%

Net interest margin

2.98

%


2.79

%


2.61

%


2.80

%


2.54

%

Efficiency ratio

60.90

%


51.63

%


56.45

%


55.07

%


59.67

%

Non-interest expense to average total assets

2.16

%


1.53

%


1.59

%


1.66

%


1.58

%

Average interest-earning assets to average interest-bearing liabilities

1.29



1.26



1.23



1.25



1.23




INVESTORS BANCORP, INC. AND SUBSIDIARY

Selected Financial Ratios and Other Data














December 31,
2020


September 30,
2020


December 31,
2019



Asset Quality Ratios:










Non-performing assets as a percent of total assets


0.47

%


0.57

%


0.46

%



Non-performing loans as a percent of total loans


0.56

%


0.68

%


0.50

%



Allowance for loan losses as a percent of non-accrual loans


264.17

%


217.75

%


239.66

%



Allowance for loan losses as a percent of total loans


1.36

%


1.37

%


1.05

%



Allowance for credit losses as a percent of total loans (1)


1.44

%


1.44

%


1.05

%













Capital Ratios:










Tier 1 Leverage Ratio (2)



10.14

%


9.76

%


9.53

%



Common equity tier 1 risk-based (2)



13.07

%


13.24

%


12.78

%



Tier 1 Risk-Based Capital (2)



13.07

%


13.24

%


12.78

%



Total Risk-Based Capital (2)



14.39

%


14.49

%


13.92

%



Equity to total assets (period end)



10.41

%


10.03

%


9.82

%



Average equity to average assets



10.20

%


9.73

%


10.82

%



Tangible capital to tangible assets (3)



10.03

%


9.66

%


9.49

%



Book value per common share (3)



$

11.43



$

11.17



$

11.11




Tangible book value per common share (3)



$

10.97



$

10.71



$

10.69














Other Data:










Number of full service offices



156



155



147




Full time equivalent employees



1,806



1,818



1,761









(1) Allowance for credit losses includes allowance for loan losses and allowance for losses on unfunded commitments.

(2) Capital ratios are estimated. In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending December 31, 2024. As a result, capital ratios as of December 31, 2020 and September 30, 2020 exclude the impact of the increased allowance for credit losses on loans, unfunded commitments and held-to-maturity debt securities attributed to the adoption of CECL.

(3) See Non-GAAP Reconciliation.

Investors Bancorp, Inc.

Non-GAAP Reconciliation

(Dollars in thousands, except share data)







Book Value and Tangible Book Value per Share Computation










December 31, 2020


September 30, 2020


December 31, 2019







Total stockholders' equity

$

2,710,003



2,669,757



2,621,950


Goodwill and intangible assets

109,633



110,068



97,869


Tangible stockholders' equity

$

2,600,370



2,559,689



2,524,081








Book Value per Share Computation






Common stock issued

361,869,872



361,869,872



359,070,852


Treasury shares

(113,940,656)



(111,950,455)



(111,630,950)


Shares outstanding

247,929,216



249,919,417



247,439,902


Unallocated ESOP shares

(10,895,052)



(11,013,477)



(11,368,750)


Book value shares

237,034,164



238,905,940



236,071,152








Book Value per Share

$

11.43



$

11.17



$

11.11


Tangible Book Value per Share

$

10.97



$

10.71



$

10.69








Total assets

$

26,023,159



26,606,977



26,698,766


Goodwill and intangible assets

109,633



110,068



97,869


Tangible assets

$

25,913,526



26,496,909



26,600,897








Tangible capital to tangible assets

10.03

%


9.66

%


9.49

%

Contact: Marianne Wade
(973) 924-5100
investorrelations@investorsbank.com

Cision
Cision

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SOURCE Investors Bancorp, Inc.