Document
false0001594012 0001594012 2020-01-29 2020-01-29


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 29, 2020

INVESTORS BANCORP, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
001-36441
 
46-4702118
(State or other jurisdiction of incorporation)
 
(Commission File No.)
 
(IRS Employer
 
 
 
 
Identification No.)

101 JFK Parkway,
Short Hills,
New Jersey
 
07078
(Address of principal executive offices)
 
(Zip Code)


Registrant's telephone number, including area code:  (973) 924-5100


Not Applicable
_________________________________
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common
 
ISBC
 
The NASDAQ Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐







Item 2.02
Results of Operation and Financial Condition.
On January 29, 2020, the Company issued a press release reporting its financial results for the fourth quarter ended December 31, 2019. A copy of the press release is attached as Exhibit 99.1 to this report and is being furnished to the SEC and shall not be deemed “filed” for any purpose.
Item 7.01
Regulation FD Disclosure.
On January 29, 2020, the Company announced its Board of Directors declared its quarterly cash dividend of $0.12 per share. This announcement was included as part of the press release announcing financial results for the quarter ended December 31, 2019 issued by the Company on January 29, 2020. A copy of the press release is attached as Exhibit 99.1 to this report and is being furnished to the SEC and shall not be deemed “filed” for any purpose.
Item 9.01
Financial Statements and Exhibits
 
 
(a)
Not Applicable.
 
 
(b)
Not Applicable.
 
 
(c)
Not Applicable
 
 
(d)
Exhibits.

 
Exhibit No.
Description
 
 
 
 
 
 
 
 
104
Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL)
 
 
 
  


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 
INVESTORS BANCORP, INC.
 
 
 
 
 
 
 
 
 
DATE: January 30, 2020
By:
/s/ Sean Burke
 
 
Sean Burke
 
 
Executive Vice President and
Chief Financial Officer
 
 
 


Exhibit
Exhibit 99.1



101 JFK Parkway, Short Hills, NJ 07078
news release
         Contact: Marianne Wade
(973) 924-5100
investorrelations@investorsbank.com


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

Short Hills, N.J. - (PR NEWSWIRE) - January 29, 2020 - Investors Bancorp, Inc. (NASDAQ:ISBC) (“Company”), the holding company for Investors Bank (“Bank”), reported net income of $48.7 million, or $0.19 per diluted share, for the three months ended December 31, 2019 as compared to $52.0 million, or $0.20 per diluted share, for the three months ended September 30, 2019 and $33.3 million, or $0.12 per diluted share, for the three months ended December 31, 2018. Included for the three months ended December 31, 2019 is $7.8 million, or $0.03 per diluted share, of additional income tax expense resulting from the revaluation of the Company’s net deferred tax asset as the State of New Jersey provided clarification in December 2019 relating to previously enacted tax law changes.

For the year ended December 31, 2019, net income totaled $195.5 million, or $0.74 per diluted share, compared to $202.6 million, or $0.72 per diluted share, for the year ended December 31, 2018. Included for the year ended December 31, 2019 is $7.8 million, or $0.03 per diluted share, of additional income tax expense resulting from the revaluation of the Company’s net deferred tax asset as the State of New Jersey provided clarification in December 2019 relating to previously enacted tax law changes.

The Company also announced today that its Board of Directors declared a cash dividend of $0.12 per share to be paid on February 25, 2020 for stockholders of record as of February 10, 2020, representing a 9% increase from the prior quarter.

Kevin Cummings, Chairman and CEO, commented, “Increased net interest income and fee income, in addition to lower expenses, contributed to our strong fourth quarter results. Our net interest margin expanded eight basis points this quarter as our deposit costs declined and we continued our focus on higher yielding commercial and industrial loans.”

Performance Highlights
Net interest margin increased 8 basis points to 2.61% for the three months ended December 31, 2019 compared to the three months ended September 30, 2019.

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The cost of interest-bearing deposits decreased 18 basis points to 1.59% for the three months ended December 31, 2019 compared to the three months ended September 30, 2019.
Total deposits increased $187.6 million, or 1.1%, to $17.86 billion at December 31, 2019 from $17.67 billion at September 30, 2019.
Net loans decreased $40.2 million, or 0.2%, to $21.48 billion at December 31, 2019 from $21.52 billion at September 30, 2019. Commercial and industrial loans increased $269.7 million, or 10.1%, during the three months ended December 31, 2019.
Total non-interest income was $20.5 million for the three months ended December 31, 2019, an increase of $5.7 million compared to the three months ended September 30, 2019.
Total non-interest expenses were $106.8 million for the three months ended December 31, 2019, a decrease of $1.9 million, or 1.7%, compared to the three months ended September 30, 2019.
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 that is expected to lower the Company’s state tax rate going forward. As a result, income tax expense for the three months ended December 31, 2019 included $7.8 million, or $0.03 per diluted share, of additional income tax expense related to the write down of the Company’s net deferred tax asset.
During December 2019, the Company entered into a purchase and sale agreement with Blue Harbour Group, L.P. (“Blue Harbour”), pursuant to which the Company repurchased from Blue Harbour the 27,318,628 shares of the Company’s common stock beneficially owned by Blue Harbour, at a purchase price of $12.29 per share, representing aggregate consideration of approximately $335.7 million.

Financial Performance Overview
Fourth Quarter 2019 compared to Third Quarter 2019
For the fourth quarter of 2019, net income totaled $48.7 million, a decrease of $3.2 million as compared to $52.0 million for the third quarter of 2019. The changes in net income on a sequential quarter basis are highlighted below.
Net interest income increased by $4.3 million, or 2.6%, as compared to the third quarter of 2019. Changes within interest income and expense categories are as follows:
Interest expense decreased $8.5 million, primarily attributed to the weighted average cost of interest-bearing liabilities, which decreased 16 basis points to 1.74% for the three months ended December 31, 2019. The average balance of interest-bearing deposits decreased $66.8 million, or 0.4%, to $15.29 billion and the average balance of total borrowed funds decreased $11.7 million, or 0.2%, to $5.74 billion for the three months ended December 31, 2019.
A decrease in interest and dividend income of $4.2 million, or 1.6%, to $260.4 million as compared to the third quarter of 2019, primarily attributed to the average balance of net loans, which decreased $202.8 million, mainly from paydowns and payoffs, partially offset by loan originations. The weighted average yield on net loans decreased 3 basis points to 4.24%.
Prepayment penalties, which are included in interest income, totaled $5.4 million for the three months ended December 31, 2019 as compared to $5.2 million for the three months ended September 30, 2019.

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Net interest margin increased 8 basis points to 2.61% for the three months ended December 31, 2019 compared to the three months ended September 30, 2019, driven primarily by the lower cost of interest-bearing liabilities, partially offset by the lower yield on interest-earning assets.
Total non-interest income was $20.5 million for the three months ended December 31, 2019, an increase of $5.7 million, as compared to $14.8 million for the third quarter of 2019. The increase in non-interest income was primarily due to a $2.6 million increase in net gains on our equipment finance portfolio, a $1.5 million increase in customer swap fee income and a $1.0 million increase in fees and service charges.
Total non-interest expenses were $106.8 million for the three months ended December 31, 2019, a decrease of $1.9 million, or 1.7%, as compared to the third quarter of 2019. The change was primarily due to a decrease in compensation and benefit expense of $4.3 million, driven mainly by accelerated stock compensation expense related to the settlement of our shareholder litigation and employee severance expense related to a workforce reduction recorded during the three months ended September 30, 2019. Partially offsetting this decrease, other non-interest expense increased $2.9 million driven by overdraft losses and customer swap expense.
Income tax expense was $32.2 million for the three months ended December 31, 2019 and $21.0 million for the three months ended September 30, 2019. The effective tax rate was 39.8% for the three months ended December 31, 2019 and 28.8% for the three months ended September 30, 2019. The increase in the effective tax rate was primarily related to a clarification of the change in New Jersey state tax law.

Fourth Quarter 2019 compared to Fourth Quarter 2018
For the fourth quarter of 2019, net income totaled $48.7 million, an increase of $15.4 million as compared to $33.3 million in the fourth quarter of 2018. The changes in net income on a year over year quarter basis are highlighted below.
On a year over year basis, fourth quarter of 2019 net interest income decreased by $531,000, or 0.3%, as compared to the fourth quarter of 2018 due to:
Interest expense increased $6.5 million, or 7.6%, primarily attributed to the average balance of total borrowed funds, which increased $777.4 million, or 15.7%, to $5.74 billion, and the average balance of interest-bearing deposits, which increased $112.8 million, or 0.7%, to $15.29 billion for the three months ended December 31, 2019. The weighted average cost of interest-bearing liabilities increased 5 basis points to 1.74% for the three months ended December 31, 2019.
An increase in interest and dividend income of $6.0 million, or 2.3%, to $260.4 million, primarily as a result of a $541.6 million increase in the average balance of net loans, mainly from loan originations, partially offset by paydowns and payoffs. The weighted average yield on net loans increased 2 basis points to 4.24%.
Prepayment penalties, which are included in interest income, totaled $5.4 million for the three months ended December 31, 2019 as compared to $5.2 million for the three months ended December 31, 2018.
Net interest margin decreased 8 basis points year over year to 2.61% for the three months ended December 31, 2019 from 2.69% for the three months ended December 31, 2018, primarily driven by the higher cost of interest-bearing liabilities.
Total non-interest income was $20.5 million for the three months ended December 31, 2019, an increase of $41.3 million year over year. Excluding the $32.8 million loss on the sale of securities in the fourth quarter of 2018, total non-interest income increased $8.4 million as compared with the three months ended December 31, 2018. This increase was primarily due to an increase of $3.9 million in customer swap fee income, an

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increase of $2.1 million in net gains on our equipment finance portfolio and an increase of $1.5 million in gain on loans.
Total non-interest expenses were $106.8 million for the three months ended December 31, 2019, an increase of $4.6 million, or 4.5%, year over year. The increase was due to an increase of $2.5 million in compensation and benefit expense and other non-interest expense which increased $2.2 million.
Income tax expense was $32.2 million for the three months ended December 31, 2019 and $9.5 million for the three months ended December 31, 2018. The effective tax rate was 39.8% for the three months ended December 31, 2019 and 22.1% for the three months ended December 31, 2018. The increase in the effective tax rate was primarily related to a clarification of the change in New Jersey state tax law. In addition, the effective tax rate for the three months ended December 31, 2018 was positively impacted by a charitable contribution to the State of New Jersey’s Neighborhood Revitalization Tax Credit Program, which provided a $1.0 million tax credit.

Year Ended December 31, 2019 compared to Year Ended December 31, 2018
Net income decreased by $7.1 million year over year to $195.5 million for the year ended December 31, 2019. The change in net income year over year is the result of the following:
Net interest income decreased by $24.9 million as compared to the year ended December 31, 2018 due to:
Interest expense increased by $96.7 million, or 33.5%, to $385.1 million for the year ended December 31, 2019, as compared to $288.4 million for the year ended December 31, 2018, primarily attributed to an increase in the weighted average cost of interest-bearing liabilities of 38 basis points to 1.84% for the year ended December 31, 2019. The average balance of total borrowed funds increased $712.3 million, or 14.5%, to $5.61 billion for the year ended December 31, 2019 and the average balance of interest-bearing deposits increased $510.4 million, or 3.5%, to $15.32 billion.
Total interest and dividend income increased by $71.8 million, or 7.4%, to $1.04 billion for the year ended December 31, 2019 as compared to the year ended December 31, 2018, primarily attributed to a $1.08 billion increase in the average balance of net loans mainly from loan originations, offset by paydowns and payoffs. The weighted average yield on net loans increased 6 basis points to 4.23% primarily driven by higher average yields on new loan origination volume, partially offset by a decrease in prepayment penalties. In addition, the weighted average yield on securities increased 34 basis points to 2.90%.
Prepayment penalties, which are included in interest income, totaled $16.8 million for the year ended December 31, 2019, as compared to $20.6 million for the year ended December 31, 2018.
Net interest margin decreased 22 basis points to 2.54% for the year ended December 31, 2019 from 2.76% for the year ended December 31, 2018, primarily driven by the higher cost of interest-bearing liabilities, partially offset by the higher yield on interest-earning assets.
Total non-interest income was $53.4 million for the year ended December 31, 2019, an increase of $43.3 million as compared to the year ended December 31, 2018. The increase was primarily due to an increase of $26.1 million in non-interest income on securities predominately resulting from a $5.7 million loss on the sale of securities during 2019 as compared to a $32.8 million loss on the sale of securities during 2018. In addition, other income increased $11.8 million primarily attributed to customer swap fee income, gains on our equipment finance portfolio, non-depository investment products and a sale-leaseback transaction.
Total non-interest expenses were $422.8 million for the year ended December 31, 2019, an increase of $15.1 million, or 3.7%, as compared to the year ended December 31, 2018. This increase was due to an increase of $7.9 million in compensation and fringe benefit expense, an increase of $4.8 million in other non-interest

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expense, an increase of $4.2 million in data processing and communication expense, and an increase of $2.0 million in professional fees. These increases were partially offset by a decrease of $4.6 million in federal insurance premiums.
Income tax expense was $91.2 million for the year ended December 31, 2019 compared to $67.8 million for the year ended December 31, 2018. The effective tax rate was 31.8% for the year ended December 31, 2019 and 25.1% for the year ended December 31, 2018. The increase in the tax rate was primarily related to a clarification of the change in New Jersey state tax law.

Asset Quality
Our provision for loan losses is primarily a result of the inherent credit risk in our overall portfolio, the growth and composition of the loan portfolio, and the level of non-accrual loans and charge-offs. At December 31, 2019, our allowance for loan losses and related year-ended provision were impacted by improved credit quality, including the level of non-accrual loans and charge-offs/recoveries, and modest loan growth. For the three months ended December 31, 2019, our provision for loan losses was a $1.5 million addition to the allowance for loan losses, compared to a reduction to the allowance for loan losses of $2.5 million for the three months ended September 30, 2019 and an addition to the allowance for loan losses of $3.5 million for the three months ended December 31, 2018. For the three months ended December 31, 2019, net charge-offs were $1.4 million compared to net charge-offs of $1.5 million for the three months ended September 30, 2019 and net recoveries of $1.5 million for the three months ended December 31, 2018. Our provision was a $1.0 million reduction to the allowance for loan losses for the year ended December 31, 2019 and a $12.0 million addition to the allowance for the year ended December 31, 2018. For the year ended December 31, 2019, net charge-offs were $6.7 million compared to $7.2 million for the year ended December 31, 2018.
Our accruing past due loans and non-accrual loans discussed below exclude certain purchased credit impaired (“PCI”) loans, primarily consisting of loans recorded in the Company’s acquisitions. Under U.S. GAAP, the PCI loans (acquired at a discount that is due, in part, to credit quality) are not subject to delinquency classification in the same manner as loans originated by the Bank.
Total non-accrual loans were $95.2 million, or 0.44% of total loans, at December 31, 2019 compared to $92.1 million, or 0.42% of total loans, at September 30, 2019 and $124.9 million, or 0.58% of total loans, at December 31, 2018. We continue to proactively and diligently work to resolve our troubled loans.
At December 31, 2019, there were $36.6 million of loans deemed as troubled debt restructured loans (“TDRs”), of which $27.0 million were residential and consumer loans, $7.2 million were commercial and industrial loans and $2.4 million were commercial real estate loans. TDRs of $13.1 million were classified as accruing and $23.5 million were classified as non-accrual at December 31, 2019.
The following table sets forth non-accrual loans and accruing past due loans (excluding PCI loans and loans held for sale) on the dates indicated as well as certain asset quality ratios.

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December 31, 2019
 
September 30, 2019
 
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
# 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
111

 
$
23.4

 
89

 
$
17.6

 
104

 
$
20.9

 
113

 
$
24.8

 
97

 
$
20.2

Construction

 

 

 

 

 

 

 

 
3

 
9.2

Multi-family
5

 
45.6

 
9

 
16.0

 
7

 
12.0

 
11

 
29.6

 
6

 
23.1

Commercial real estate
9

 
6.8

 
7

 
17.8

 
5

 
26.6

 
4

 
4.5

 
7

 
5.5

Commercial and industrial
16

 
7.8

 
9

 
5.9

 
5

 
1.1

 
15

 
11.3

 
9

 
2.1

Total 30 to 59 days past due
141

 
83.6

 
114

 
57.3

 
121

 
60.6

 
143

 
70.2

 
122

 
60.1

60 to 89 days past due:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential and consumer
33

 
6.5

 
46

 
11.6

 
30

 
5.5

 
37

 
7.1

 
37

 
9.2

Construction

 

 

 

 

 

 

 

 

 

Multi-family
1

 
1.9

 
2

 
3.5

 
2

 
17.2

 
1

 
1.1

 
1

 
2.6

Commercial real estate

 

 
3

 
3.2

 
4

 
6.9

 

 

 
1

 
3.4

Commercial and industrial
6

 
2.0

 
5

 
4.7

 
4

 
4.1

 
7

 
3.8

 
5

 
0.9

Total 60 to 89 days past due
40


10.4

 
56

 
23.0

 
40

 
33.7

 
45

 
12.0

 
44

 
16.1

Total accruing past due loans
181

 
$
94.0

 
170

 
$
80.3

 
161

 
$
94.3

 
188

 
$
82.2

 
166

 
$
76.2

Non-accrual:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential and consumer
255

 
$
47.4

 
261

 
$
48.2

 
275

 
$
51.2

 
296

 
$
56.4

 
320

 
$
59.0

Construction

 

 

 

 
1

 
0.2

 
1

 
0.2

 
1

 
0.2

Multi-family
8

 
23.3

 
6

 
19.6

 
14

 
34.1

 
14

 
34.1

 
15

 
33.9

Commercial real estate
22

 
12.0

 
30

 
12.3

 
27

 
8.1

 
32

 
9.8

 
35

 
12.4

Commercial and industrial
18

 
12.5

 
16

 
12.0

 
13

 
18.0

 
14

 
17.2

 
14

 
19.4

Total non-accrual loans
303

 
$
95.2

 
313

 
$
92.1

 
330

 
$
111.6

 
357

 
$
117.7

 
385

 
$
124.9

Accruing troubled debt restructured loans
57

 
$
13.1

 
58

 
$
12.5

 
56

 
$
12.2

 
54

 
$
13.6

 
54

 
$
13.6

Non-accrual loans to total loans
 
 
0.44
%
 
 
 
0.42
%
 
 
 
0.51
%
 
 
 
0.54
%
 
 
 
0.58
%
Allowance for loan losses as a percent of non-accrual loans
 
 
239.66
%
 
 
 
247.62
%
 
 
 
207.83
%
 
 
 
199.44
%
 
 
 
188.78
%
Allowance for loan losses as a percent of total loans
 
 
1.05
%
 
 
 
1.05
%
 
 
 
1.05
%
 
 
 
1.08
%
 
 
 
1.09
%

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Balance Sheet Summary

Total assets increased $469.8 million, or 1.8%, to $26.70 billion at December 31, 2019 from December 31, 2018. Net loans increased $97.9 million, or 0.5%, to $21.48 billion at December 31, 2019. Securities increased $167.2 million, or 4.5%, to $3.85 billion at December 31, 2019.

Effective January 1, 2019, the Company adopted new accounting guidance that requires leases to be recognized on our Consolidated Balance Sheet as a right-of-use asset and a lease liability. Our operating lease right-of-use assets and operating lease liabilities were $175.1 million and $185.8 million, respectively, at December 31, 2019.

The detail of the loan portfolio (including PCI loans) is below:
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
(In thousands)
Commercial Loans:
 
 
 
 
 
Multi-family loans
$
7,813,236

 
7,995,095

 
8,165,187

Commercial real estate loans
4,831,347

 
4,771,928

 
4,786,825

Commercial and industrial loans
2,951,306

 
2,681,577

 
2,389,756

Construction loans
262,866

 
289,857

 
227,015

Total commercial loans
15,858,755

 
15,738,457

 
15,568,783

Residential mortgage loans
5,144,718

 
5,307,412

 
5,351,115

Consumer and other
699,796

 
700,341

 
707,866

Total Loans
21,703,269

 
21,746,210

 
21,627,764

Deferred fees, premiums and other, net
907

 
(1,991
)
 
(13,811
)
Allowance for loan losses
(228,120
)
 
(227,985
)
 
(235,817
)
Net loans
$
21,476,056

 
21,516,234

 
21,378,136


During the year ended December 31, 2019, we originated $1.27 billion in commercial and industrial loans, $861.0 million in commercial real estate loans, $793.6 million in multi-family loans, $462.6 million in residential loans, $76.2 million in consumer and other loans and $69.8 million in construction loans. The growth in the loan portfolio reflects our continued focus on growing and diversifying our loan portfolio. Our loans are primarily on properties and businesses located in New Jersey and New York.

We also purchase mortgage loans from correspondent entities including other banks and mortgage bankers. Our agreements with these correspondent entities require them to originate loans that adhere to our underwriting standards. During the year ended December 31, 2019, we purchased loans totaling $294.1 million from these entities. In addition to the loans originated for our portfolio, we originated residential mortgage loans for sale to third parties totaling $269.8 million during the year ended December 31, 2019.

The allowance for loan losses decreased by $7.7 million to $228.1 million at December 31, 2019 from $235.8 million at December 31, 2018. Our allowance for loan losses was positively impacted by improved credit quality, including the level of non-accrual loans and charge-offs/recoveries, and modest loan growth. 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 economic conditions in our lending area. At December 31, 2019, our allowance for loan losses as a percent of total loans was 1.05%, a decrease from 1.09% at December 31, 2018 which was driven by the factors noted above.


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Securities increased by $167.2 million, or 4.5%, to $3.85 billion at December 31, 2019 from $3.68 billion at December 31, 2018. This increase was primarily a result of purchases, partially offset by sales and paydowns.

Deposits increased by $280.1 million, or 1.6%, from $17.58 billion at December 31, 2018 to $17.86 billion at December 31, 2019 primarily driven by increases in interest-bearing checking and money market accounts, partially offset by decreases in time deposit and non-interest checking accounts. Checking accounts increased $665.8 million to $7.99 billion at December 31, 2019 from $7.32 billion at December 31, 2018. Core deposits (savings, checking and money market) represented approximately 78% of our total deposit portfolio at December 31, 2019 compared to 74% at December 31, 2018.

Borrowed funds increased by $391.4 million, or 7.2%, to $5.83 billion at December 31, 2019 from $5.44 billion at December 31, 2018 to help fund the growth of the security and loan portfolios and our share repurchases.

Stockholders’ equity decreased by $383.4 million to $2.62 billion at December 31, 2019 from $3.01 billion at December 31, 2018, primarily attributed to the repurchase of 39.4 million shares of common stock for $475.9 million and cash dividends of $0.44 per share totaling $122.2 million during the year ended December 31, 2019. As previously noted, during December 2019, the Company repurchased 27,318,628 shares beneficially owned by Blue Harbour for approximately $335.7 million. These decreases were partially offset by net income of $195.5 million and share-based plan activity of $26.3 million for the year ended December 31, 2019. The Bank remains above the FDIC’s “well capitalized” standards, with a Tier 1 Leverage Ratio of 8.27% at December 31, 2019.

About the Company

Investors Bancorp, Inc. is the holding company for Investors Bank, which as of December 31, 2019 operated from its corporate headquarters in Short Hills, New Jersey and 147 branches located throughout New Jersey and New York.

Earnings Conference Call January 30, 2020 at 11:00 a.m. (ET)

The Company, as previously announced, will host an earnings conference call on Thursday, January 30, 2020 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/10137873

A telephone replay will be available beginning on January 30, 2020 from 1:00 p.m. (ET) through 9:00 a.m. (ET) on April 30, 2020. The replay number is (877) 344-7529, password 10137873. The conference call will also be simultaneously webcast on the Company’s website www.investorsbank.com and archived for one year.


8



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.

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.

9




INVESTORS BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
 
 
 
 
 
 
 
December 31,
2019
 
September 30,
2019
 
December 31, 2018
 
(unaudited)
 
(unaudited)
 
(audited)
Assets
(Dollars in thousands)
 
 
 
 
 
 
Cash and cash equivalents
$
174,915

 
195,400

 
196,891

Equity securities
6,039

 
6,030

 
5,793

Debt securities available-for-sale, at estimated fair value
2,695,390

 
2,644,024

 
2,122,162

Debt securities held-to-maturity, net (estimated fair value of $1,190,104, $1,158,769 and $1,558,564 at December 31, 2019, September 30, 2019 and December 31, 2018, respectively)
1,148,815

 
1,117,699

 
1,555,137

Loans receivable, net
21,476,056

 
21,516,234

 
21,378,136

Loans held-for-sale
29,797

 
31,373

 
4,074

Federal Home Loan Bank stock
267,219

 
273,996

 
260,234

Accrued interest receivable
79,313

 
83,951

 
77,501

Other real estate owned and other repossessed assets
13,538

 
12,675

 
6,911

Office properties and equipment, net
169,614

 
171,266

 
177,432

Operating lease right-of-use assets
175,143

 
179,632

 

Net deferred tax asset
64,220

 
108,634

 
104,411

Bank owned life insurance
218,517

 
216,925

 
211,914

Goodwill and intangible assets
97,869

 
97,566

 
99,063

Other assets
82,321

 
69,758

 
29,349

Total assets
$
26,698,766

 
26,725,163

 
26,229,008

Liabilities and Stockholders’ Equity
 
 
 
 
 
Liabilities:
 
 
 
 
 
Deposits
$
17,860,338

 
17,672,756

 
17,580,269

Borrowed funds
5,827,111

 
5,694,553

 
5,435,681

Advance payments by borrowers for taxes and insurance
121,719

 
147,359

 
129,891

Operating lease liabilities
185,827

 
189,927

 

Other liabilities
81,821

 
89,201

 
77,837

Total liabilities
24,076,816

 
23,793,796

 
23,223,678

Stockholders’ equity
2,621,950

 
2,931,367

 
3,005,330

Total liabilities and stockholders’ equity
$
26,698,766

 
26,725,163

 
26,229,008



10



INVESTORS BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Year Ended
 
 
 
 
 
 
December 31,
2019
 
September 30,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
 
 
 
 
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(audited)
 
 
 
 
 
 
(Dollars in thousands, except per share data)
Interest and dividend income:
 
 
 
 
 
 
 
 
 
 
Loans receivable and loans held-for-sale
$
228,005

 
231,734

 
221,566

 
912,091

 
854,595

 
Securities:
 
 
 
 
 
 
 
 
 
 
 
GSE obligations
336

 
343

 
267

 
1,212

 
1,080

 
 
Mortgage-backed securities
23,642

 
23,978

 
21,627

 
95,133

 
80,906

 
 
Equity
35

 
36

 
34

 
143

 
134

 
 
Municipal bonds and other debt
3,052

 
3,186

 
5,755

 
11,494

 
13,060

 
Interest-bearing deposits
840

 
821

 
894

 
2,805

 
2,435

 
Federal Home Loan Bank stock
4,470

 
4,456

 
4,278

 
17,341

 
16,206

 
 
Total interest and dividend income
260,380

 
264,554

 
254,421

 
1,040,219

 
968,416

Interest expense:
 
 
 
 
 
 
 
 
 
 
Deposits
 
60,635

 
67,972

 
58,279

 
261,857

 
188,645

 
Borrowed funds
30,970

 
32,130

 
26,836

 
123,289

 
99,754

 
 
Total interest expense
91,605

 
100,102

 
85,115

 
385,146

 
288,399

 
 
Net interest income
168,775

 
164,452

 
169,306

 
655,073

 
680,017

Provision for loan losses
1,500

 
(2,500
)
 
3,500

 
(1,000
)
 
12,000

 
 
Net interest income after provision for loan losses
167,275

 
166,952

 
165,806

 
656,073

 
668,017

Non-interest income:
 
 
 
 
 
 
 
 
 
 
Fees and service charges
6,819

 
5,796

 
5,948

 
23,604

 
22,142

 
Income on bank owned life insurance
1,593

 
1,832

 
1,501

 
6,542

 
5,926

 
Gain on loans, net
2,218

 
1,679

 
746

 
5,345

 
2,144

 
(Loss) gain on securities, net
(13
)
 
30

 
(32,802
)
 
(5,536
)
 
(31,604
)
 
Gain on sales of other real estate owned, net
282

 
358

 
573

 
1,145

 
923

 
Other income
9,559

 
5,085

 
3,240

 
22,313

 
10,550

 
 
Total non-interest income
20,458

 
14,780

 
(20,794
)
 
53,413

 
10,081

Non-interest expense:
 
 
 
 
 
 
 
 
 
 
Compensation and fringe benefits
59,327

 
63,603

 
56,789

 
243,782

 
235,928

 
Advertising and promotional expense
3,005

 
2,994

 
3,931

 
13,893

 
13,054

 
Office occupancy and equipment expense
16,700

 
15,702

 
17,093

 
63,996

 
63,539

 
Federal insurance premiums
3,300

 
3,300

 
3,800

 
13,200

 
17,760

 
General and administrative
559

 
487

 
626

 
2,222

 
2,328

 
Professional fees
4,897

 
6,010

 
3,497

 
17,308

 
15,278

 
Data processing and communication
7,998

 
8,348

 
7,491

 
31,987

 
27,810

 
Other operating expenses
11,037

 
8,274

 
8,996

 
36,366

 
31,983

 
 
Total non-interest expenses
106,823

 
108,718

 
102,223

 
422,754

 
407,680

 
 
Income before income tax expense
80,910

 
73,014

 
42,789

 
286,732

 
270,418

Income tax expense
32,180

 
21,042

 
9,459

 
91,248

 
67,842

 
 
Net income
$
48,730

 
51,972

 
33,330

 
195,484

 
202,576

Basic earnings per share
$0.19
 
0.20

 
0.12

 
0.75

 
0.72

Diluted earnings per share
$0.19
 
0.20

 
0.12

 
0.74

 
0.72

 
 
 
 
 
 
 
 
 
 
 
Basic weighted average shares outstanding
256,559,205

 
261,678,994

 
274,909,840

 
262,202,598

 
281,925,219

 
Diluted weighted average shares outstanding
257,006,084

 
261,812,970

 
275,249,994

 
262,519,788

 
282,791,859


11



INVESTORS BANCORP, INC. AND SUBSIDIARY
Average Balance Sheet and Yield/Rate Information
 
 
 
For the Three Months Ended
 
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
 
 
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
$
280,790

840

1.20
%
 
$
224,882

821

1.46
%
 
$
246,322

894

1.45
%
 
Equity securities
6,036

35

2.32
%
 
6,001

36

2.40
%
 
5,796

34

2.35
%
 
Debt securities available-for-sale
2,624,612

18,021

2.75
%
 
2,591,055

18,167

2.80
%
 
2,141,255

13,254

2.48
%
 
Debt securities held-to-maturity
1,131,386

9,009

3.19
%
 
1,131,194

9,340

3.30
%
 
1,583,201

14,395

3.64
%
 
Net loans
21,519,941

228,005

4.24
%
 
21,722,751

231,734

4.27
%
 
20,978,370

221,566

4.22
%
 
Federal Home Loan Bank stock
276,965

4,470

6.46
%
 
279,356

4,456

6.38
%
 
249,454

4,278

6.86
%
 
Total interest-earning assets
25,839,730

260,380

4.03
%
 
25,955,239

264,554

4.08
%
 
25,204,398

254,421

4.04
%
Non-interest earning assets
1,009,868

 
 
 
992,118

 
 
 
681,282

 
 
 
Total assets
 
$
26,849,598

 
 
 
$
26,947,357

 
 
 
$
25,885,680

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Savings
$
2,040,678

4,592

0.90
%
 
$
1,958,748

4,377

0.89
%
 
$
2,064,286

3,535

0.68
%
 
Interest-bearing checking
5,344,156

19,403

1.45
%
 
4,894,643

21,094

1.72
%
 
4,857,070

19,075

1.57
%
 
Money market accounts
3,739,126

14,770

1.58
%
 
3,750,846

16,065

1.71
%
 
3,657,772

13,562

1.48
%
 
Certificates of deposit
4,169,591

21,870

2.10
%
 
4,756,086

26,436

2.22
%
 
4,601,607

22,107

1.92
%
 
 Total interest-bearing deposits
15,293,551

60,635

1.59
%
 
15,360,323

67,972

1.77
%
 
15,180,735

58,279

1.54
%
 
Borrowed funds
5,744,538

30,970

2.16
%
 
5,756,197

32,130

2.23
%
 
4,967,147

26,836

2.16
%
 
Total interest-bearing liabilities
21,038,089

91,605

1.74
%
 
21,116,520

100,102

1.90
%
 
20,147,882

85,115

1.69
%
Non-interest-bearing liabilities
2,906,473

 
 
 
2,892,067

 
 
 
2,706,262

 
 
 
Total liabilities
23,944,562

 
 
 
24,008,587

 
 
 
22,854,144

 
 
Stockholders’ equity
2,905,036

 
 
 
2,938,770

 
 
 
3,031,536

 
 
 
Total liabilities and stockholders’ equity
$
26,849,598

 
 
 
$
26,947,357

 
 
 
$
25,885,680

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
168,775

 
 
 
$
164,452

 
 
 
$
169,306

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread
 
 
2.29
%
 
 
 
2.18
%
 
 
 
2.35
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest earning assets
$
4,801,641

 
 
 
$
4,838,719

 
 
 
$
5,056,516

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
 
 
2.61
%
 
 
 
2.53
%
 
 
 
2.69
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ratio of interest-earning assets to total interest-bearing liabilities
1.23

X
 
 
1.23

X
 
 
1.25

X
 

12



INVESTORS BANCORP, INC. AND SUBSIDIARY
Average Balance Sheet and Yield/Rate Information
 
 
 
 
For the Year Ended
 
 
 
December 31, 2019
 
December 31, 2018
 
 
 
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
$
215,447

2,805

1.30
%
 
$
212,980

2,435

1.14
%
 
Equity securities
5,938

143

2.41
%
 
5,754

134

2.33
%
 
Debt securities available-for-sale
2,395,047

67,822

2.83
%
 
2,042,129

46,057

2.26
%
 
Debt securities held-to-maturity
1,317,322

40,017

3.04
%
 
1,668,106

48,989

2.94
%
 
Net loans
21,576,829

912,091

4.23
%
 
20,498,857

854,595

4.17
%
 
Federal Home Loan Bank stock
274,661

17,341

6.31
%
 
247,513

16,206

6.55
%
 
 
Total interest-earning assets
25,785,244

1,040,219

4.03
%
 
24,675,339

968,416

3.92
%
Non-interest earning assets
975,585

 
 
 
707,370

 
 
 
 
Total assets
$
26,760,829

 
 
 
$
25,382,709

 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
Savings
$
1,985,142

17,148

0.86
%
 
$
2,170,510

13,240

0.61
%
 
Interest-bearing checking
5,020,991

84,698

1.69
%
 
4,651,313

62,447

1.34
%
 
Money market accounts
3,703,413

60,896

1.64
%
 
3,837,174

46,394

1.21
%
 
Certificates of deposit
4,609,274

99,115

2.15
%
 
4,149,438

66,564

1.60
%
 
 Total interest bearing deposits
15,318,820

261,857

1.71
%
 
14,808,435

188,645

1.27
%
 
Borrowed funds
5,611,206

123,289

2.20
%
 
4,898,867

99,754

2.04
%
 
 
Total interest-bearing liabilities
20,930,026

385,146

1.84
%
 
19,707,302

288,399

1.46
%
Non-interest-bearing liabilities
2,887,601

 
 
 
2,590,675

 
 
 
 
Total liabilities
23,817,627

 
 
 
22,297,977

 
 
Stockholders’ equity
2,943,202

 
 
 
3,084,732

 
 
 
 
Total liabilities and stockholders’ equity
$
26,760,829

 
 
 
$
25,382,709

 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
655,073

 
 
 
$
680,017

 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread
 
 
2.19
%
 
 
 
2.46
%
 
 
 
 
 
 
 
 
 
 
Net interest earning assets
$
4,855,218

 
 
 
$
4,968,037

 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
 
 
2.54
%
 
 
 
2.76
%
 
 
 
 
 
 
 
 
 
 
Ratio of interest-earning assets to total interest-bearing liabilities
1.23

X
 
 
1.25

X
 




13



INVESTORS BANCORP, INC. AND SUBSIDIARY
Selected Performance Ratios
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Year Ended
 
December 31,
2019
 
September 30,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
Return on average assets
0.73
%
 
0.77
%
 
0.52
%
 
0.73
%
 
0.80
%
Return on average equity
6.71
%
 
7.07
%
 
4.40
%
 
6.64
%
 
6.57
%
Return on average tangible equity
6.94
%
 
7.32
%
 
4.55
%
 
6.87
%
 
6.79
%
Interest rate spread
2.29
%
 
2.18
%
 
2.35
%
 
2.19
%
 
2.46
%
Net interest margin
2.61
%
 
2.53
%
 
2.69
%
 
2.54
%
 
2.76
%
Efficiency ratio
56.45
%
 
60.66
%
 
68.83
%
 
59.67
%
 
59.08
%
Non-interest expense to average total assets
1.59
%
 
1.61
%
 
1.58
%
 
1.58
%
 
1.61
%
Average interest-earning assets to average interest-bearing liabilities
1.23

 
1.23

 
1.25

 
1.23

 
1.25

 
INVESTORS BANCORP, INC. AND SUBSIDIARY
Selected Financial Ratios and Other Data
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
2019
 
September 30,
2019
 
December 31,
2018
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
Non-performing assets as a percent of total assets
 
0.46
%
 
0.44
%
 
0.55
%
 
 
Non-performing loans as a percent of total loans
 
0.50
%
 
0.48
%
 
0.64
%
 
 
Allowance for loan losses as a percent of non-accrual loans
 
239.66
%
 
247.62
%
 
188.78
%
 
 
Allowance for loan losses as a percent of total loans
 
1.05
%
 
1.05
%
 
1.09
%
 
 
 
 
 
 
 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
 
 
 
 
Tier 1 Leverage Ratio (1)
 
 
8.27
%
 
9.68
%
 
10.28
%
 
 
Common equity tier 1 risk-based (1)
 
 
11.03
%
 
12.95
%
 
13.41
%
 
 
Tier 1 Risk-Based Capital (1)
 
 
11.03
%
 
12.95
%
 
13.41
%
 
 
Total Risk-Based Capital (1)
 
 
12.18
%
 
14.10
%
 
14.60
%
 
 
Equity to total assets (period end)
 
 
9.82
%
 
10.97
%
 
11.46
%
 
 
Average equity to average assets
 
 
10.82
%
 
10.91
%
 
11.71
%
 
 
Tangible capital to tangible assets (2)
 
 
9.49
%
 
10.64
%
 
11.12
%
 
 
Book value per common share (2)
 
 
$
11.11

 
$
11.13

 
$
10.95

 
 
Tangible book value per common share (2)
 
 
$
10.69

 
$
10.76

 
$
10.59

 
 
 
 
 
 
 
 
 
 
 
 
Other Data:
 
 
 
 
 
 
 
 
 
Number of full service offices
 
 
147

 
147

 
151

 
 
Full time equivalent employees
 
 
1,761

 
1,887

 
1,928

 
 
 
 
 
 
 
(1) Ratios are for Investors Bank and do not include capital retained at the holding company level.
 
 
(2) See Non-GAAP Reconciliation.
 
 

14



Investors Bancorp, Inc.
Non-GAAP Reconciliation
(Dollars in thousands, except share data)
 
 
 
 
 
 
Book Value and Tangible Book Value per Share Computation
 
 
 
 
 
 
 
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
 
 
 
 
 
Total stockholders’ equity
$
2,621,950

 
2,931,367

 
3,005,330

Goodwill and intangible assets
97,869

 
97,566

 
99,063

Tangible stockholders’ equity
$
2,524,081

 
2,833,801

 
2,906,267

 
 
 
 
 
 
Book Value per Share Computation
 
 
 
 
 
Common stock issued
359,070,852

 
359,070,852

 
359,070,852

Treasury shares
(111,630,950
)
 
(84,314,431
)
 
(72,797,738
)
Shares outstanding
247,439,902

 
274,756,421

 
286,273,114

Unallocated ESOP shares
(11,368,750
)
 
(11,487,175
)
 
(11,842,448
)
Book value shares
236,071,152

 
263,269,246

 
274,430,666

 
 
 
 
 
 
Book Value per Share
$
11.11

 
$
11.13

 
$
10.95

Tangible Book Value per Share
$
10.69

 
$
10.76

 
$
10.59

 
 
 
 
 
 
Total assets
$
26,698,766

 
26,725,163

 
26,229,008

Goodwill and intangible assets
97,869

 
97,566

 
99,063

Tangible assets
$
26,600,897

 
26,627,597

 
26,129,945

 
 
 
 
 
 
Tangible capital to tangible assets
9.49
%
 
10.64
%
 
11.12
%
 
 
 
 
 
 
 
 
 

15
v3.19.3.a.u2
Cover
Jan. 29, 2020
Cover page.  
Document Type 8-K
Document Period End Date Jan. 29, 2020
Entity Registrant Name INVESTORS BANCORP, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-36441
Entity Tax Identification Number 46-4702118
Entity Address, Address Line One 101 JFK Parkway,
Entity Address, City or Town Short Hills,
Entity Address, State or Province NJ
Entity Address, Postal Zip Code 07078
City Area Code 973
Local Phone Number 924-5100
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common
Trading Symbol ISBC
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001594012
Amendment Flag false