SHORT HILLS, N.J., Jan. 29, 2015 /PRNewswire/ -- Investors Bancorp, Inc. (NASDAQ: ISBC) ("Company"), the holding company for Investors Bank ("Bank"), reported net income of $43.1 million for the three months ended December 31, 2014 compared to net income of $27.5 million for the three months ended December 31, 2013. Basic and diluted earnings per share were $0.13 and $0.12 for the three months ended December 31, 2014 compared to basic and diluted earnings per share of $0.09 for the three months ended December 31, 2013.
Net income for the year ended December 31, 2014 was $131.7 million compared to net income of $112.0 million for the year ended December 31, 2013. Basic and diluted earnings per share were $0.38 for the year ended December 31, 2014 compared to $0.40 for the year ended December 31, 2013. Net income for the year ended December 31, 2014 includes one-time items related to the Company's recent acquisitions, certain expenses related to the second step capital offering and a tax benefit related to changes in New York state tax law. Excluding these one-time items, net income for the year ended December 31, 2014 would have been $148.6 million.((1))
Kevin Cummings, President and CEO commented, "2014 was a historic year for Investors Bank. Our successful second step capital raise allows us to continue our strategic plans to grow and transition to a commercial bank. 2015 will also be an exciting year as we prepare for our core processing conversion which will enable us to efficiently service our customers and offer more products."
Mr. Cummings also said, "I want to thank our staff for their hard work and dedication. The successes achieved this year would not have been possible without them."
The Company announced today that the Board of Directors increased its quarterly cash dividend to $0.05 per share. In addition, in an effort to return excess capital to our shareholders, a special cash dividend of $0.05 per share was announced. The cumulative $0.10 dividend will be paid to shareholders on February 24, 2015 with a record date of February 9, 2015.
The following represents performance highlights and significant events that occurred during the period:
-- Stockholders' equity increased $2.24 billion from December 31, 2013
primarily as a result of the completion of the second step capital
offering in May 2014 in which the Company raised net proceeds of $2.15
billion.
-- Net loans increased $2.01 billion, or 15.6%, to $14.89 billion at
December 31, 2014 from $12.88 billion at December 31, 2013. On a linked
quarter basis, loans increased by $718 million or 5.1%. During the year
ended December 31, 2014, we originated $1.67 billion in multi-family
loans, $869.7 million in commercial real estate loans, $445.4 million in
commercial and industrial loans, $124.3 million in consumer and other
loans and $44.8 million in construction loans.
-- Deposits increased by $1.45 billion from $10.72 billion at December 31,
2013 to $12.17 billion at December 31, 2014. On a linked quarter basis,
deposits increased $700 million or 6.1%. During the fourth quarter, we
ran a successful deposit campaign, raising over $460 million in new
deposits. Core deposit accounts- savings, checking and money market-
increased $2.27 billion or 30.9% from December 31, 2013 and represent
approximately 79% of total deposits as of December 31, 2014.
-- Net interest margin for the three months ended December 31, 2014 was
3.17%. This represents a ten basis point decrease compared to the
quarter ended September 30, 2014 and a decrease of 24 basis points
compared to the quarter ended December 31, 2013. Prepayment penalties
were lower for the quarter ended December 31, 2014 compared to the
quarters ended September 30, 2014 and December 31, 2013 and cash
balances were higher due to the successful deposit campaign.
As a result of the completion of the second step capital offering, all historical share information has been revised to reflect the 2.55-to-one exchange ratio.
Comparison of Operating Results
Interest and Dividend Income
Total interest and dividend income increased by $25.0 million, or 17.2%, to $171.1 million for the three months ended December 31, 2014 from $146.0 million for the three months ended December 31, 2013. This increase is attributed to the average balance of interest-earning assets increasing $3.80 billion, or 27.4%, to $17.67 billion for the three months ended December 31, 2014 from $13.88 billion for the three months ended December 31, 2013 as a result of the second step capital offering, organic growth and acquisitions. This was partially offset by the weighted average yield on interest-earning assets decreasing 34 basis points to 3.87% for the three months ended December 31, 2014 compared to 4.21% for the three months ended December 31, 2013.
Interest income on loans increased by $20.6 million, or 15.3%, to $155.5 million for the three months ended December 31, 2014 from $134.9 million for the three months ended December 31, 2013, reflecting a $2.49 billion, or 20.9%, increase in the average balance of net loans to $14.45 billion for the three months ended December 31, 2014 from $11.96 billion for the three months ended December 31, 2013. The increase is primarily attributed to the average balance of multi-family loans, commercial real estate loans, residential loans and commercial and industrial loans increasing $1.05 billion, $660.7 million, $462.8 million and $248.4 million, respectively, as we continue to grow our loan portfolio. This was partially offset by a decrease of 20 basis points in the weighted average yield on net loans to 4.31% for the three months ended December 31, 2014 from 4.51% for the three months ended December 31, 2013. The decrease in the weighted average yield on net loans reflects lower rates on new and refinanced loans due to the current interest rate environment. In addition, prepayment penalties, which are included in interest income, decreased to $3.1 million for the three months ended December 31, 2014 from $5.2 million for the three months ended December 31, 2013.
Interest income on all other interest-earning assets, excluding loans, increased by $4.4 million, or 40.0%, to $15.6 million for the three months ended December 31, 2014 from $11.1 million for the three months ended December 31, 2013. The increase is attributed to the $1.30 billion increase in the average balance of all other interest-earning assets, excluding loans, to $3.22 billion for the three months ended December 31, 2014 from $1.92 billion for the three months ended December 31, 2013. A portion of the second step capital offering proceeds was initially used to purchase investment securities. In addition, average cash balances for the three months ended December 31, 2014 include the proceeds from the deposit campaign which was not fully utilized until late in the fourth quarter. This increase was partially offset by a 38 basis point decrease in the weighted average yield on interest-earning assets, excluding loans, to 1.93% for the three months ended December 31, 2014 compared to 2.31% for the three months ended December 31, 2013.
Total interest and dividend income increased by $115.8 million, or 21.2%, to $660.9 million for the year ended December 31, 2014 from $545.1 million for the year ended December 31, 2013. This increase is attributed to the average balance of interest-earning assets increasing $3.67 billion, or 28.4%, to $16.58 billion for the year ended December 31, 2014 from $12.91 billion for the year ended December 31, 2013. This was partially offset by the weighted average yield on interest-earning assets decreasing 23 basis points to 3.99% for the year ended December 31, 2014 compared to 4.22% for the year ended December 31, 2013.
Interest income on loans increased by $98.8 million, or 19.6%, to $603.4 million for the year ended December 31, 2014 from $504.6 million for the year ended December 31, 2013, reflecting a $2.71 billion, or 24.5%, increase in the average balance of net loans to $13.78 billion for the year ended December 31, 2014 from $11.07 billion for the year ended December 31, 2013. The increase is primarily attributed to the average balance of multi-family loans, residential loans, commercial real estate loans and commercial and industrial loans increasing $1.04 billion, $794.1 million,$611.6 million and $152.3 million, respectively, as we continue to grow our loan portfolio. These increases were partially offset by a 18 basis point decrease in the weighted average yield on net loans to 4.38% for the year ended December 31, 2014 from 4.56% for the year ended December 31, 2013. The decrease in the weighted average yield on net loans reflects lower rates on new and refinanced loans due to the current interest rate environment. Prepayment penalties, which are included in interest income, increased to $16.3 million for the year ended December 31, 2014 from $15.9 million for the year ended December 31, 2013.
Interest income on all other interest-earning assets, excluding loans, increased by $17.0 million, or 42.0%, to $57.4 million for the year ended December 31, 2014 from $40.4 million for the year ended December 31, 2013. The average balance of all other interest-earning assets, excluding loans, increased by $958.6 million to $2.81 billion for the year ended December 31, 2014 from $1.85 billion for the year ended December 31, 2013. A portion of second step capital offering proceeds was initially used to purchase investment securities. This was partially offset by the weighted average yield on interest-earning assets, excluding loans, decreasing by 14 basis points to 2.05% for the year ended December 31, 2014 compared to 2.19% for the year ended December 31, 2013.
Interest Expense
Total interest expense increased by $3.1 million, or 11.3%, to $30.9 million for the three months ended December 31, 2014 from $27.8 million for the three months ended December 31, 2013. This increase is due to the average balance of total interest-bearing liabilities increasing by $1.26 billion, or 10.4%, to $13.36 billion for the three months ended December 31, 2014 from $12.10 billion for the three months ended December 31, 2013. In addition, the weighted average cost of total interest-bearing liabilities increased 1 basis point to 0.93% for the three months ended December 31, 2014 compared to 0.92% for the three months ended December 31, 2013 which is partially attributable to paying off lower cost, short term borrowings.
Interest expense on interest-bearing deposits increased $2.7 million, or 20.0% to $16.0 million for the three months ended December 31, 2014 from $13.3 million for the three months ended December 31, 2013. This increase is attributed to the average balance of total interest-bearing deposits increasing $2.14 billion, or 24.7% to $10.83 billion for the three months ended December 31, 2014 from $8.68 billion for the three months ended December 31, 2013. This increase was partially offset by a 2 basis point decrease in the weighted average cost of interest-bearing deposits to 0.59% for the three months ended December 31, 2014 from 0.61% for the three months ended December 31, 2013 as deposit rates declined due to the current interest rate environment.
Interest expense on borrowed funds increased by $469,000, or 3.2%, to $15.0 million for the three months ended December 31, 2014 from $14.5 million for the three months ended December 31, 2013. The weighted average cost of borrowings increased to 2.36% for the three months ended December 31, 2014 from 1.70% for the three months ended December 31, 2013 as maturing lower rate short-term borrowings were paid off. This increase was offset by the average balance of borrowed funds decreasing $881.4 million or 25.8%, to $2.53 billion for the three months ended December 31, 2014 from $3.41 billion for the three months ended December 31, 2013. Approximately half of the proceeds from the second step capital offering was used to pay down maturing, short-term borrowings.
Total interest expense increased by $9.2 million, or 8.4%, to $118.9 million for the year ended December 31, 2014 from $109.6 million for the year ended December 31, 2013. This increase is attributed to the average balance of total interest-bearing liabilities increasing by $1.75 billion, or 15.6%, to $13.00 billion for the year ended December 31, 2014 from $11.24 billion for the year ended December 31, 2013. This increase was partially offset by the weighted average cost of total interest-bearing liabilities decreasing 7 basis points to 0.91% for the year ended December 31, 2014 compared to 0.98% for the year ended December 31, 2013 which is partially attributable to lower deposit costs.
Interest expense on interest-bearing deposits increased $9.2 million, or 18.5%, to $59.2 million for the year ended December 31, 2014 from $50.0 million for the year ended December 31, 2013. This increase is attributed to the average balance of total interest-bearing deposits increasing $2.19 billion, or 27.2% to $10.26 billion for the year ended December 31, 2014 from $8.06 billion for the year ended December 31, 2013. This increase was partially offset by a 4 basis point decrease in the average cost of interest-bearing deposits to 0.58% for the year ended December 31, 2014 from 0.62% for the year ended December 31, 2013 as deposit rates declined due to the lower interest rate environment.
Interest expense on borrowed funds was $59.7 million for the year ended December 31, 2014 and December 31, 2013. Although the average balance of borrowed funds decreased by $438.9 million or 13.8%, to $2.74 billion for the year ended December 31, 2014 from $3.18 billion for the year ended December 31, 2013, the average cost of borrowed funds increased 30 basis points to 2.18% for the year ended December 31, 2014 from 1.88% for the year ended December 31, 2013, as maturing lower rate short-term borrowings were paid off.
Net Interest Income
Net interest income increased by $21.9 million, or 18.5%, to $140.2 million for the three months ended December 31, 2014 from $118.3 million for the three months ended December 31, 2013. The increase was primarily due to the average balance of interest earning assets increasing $3.80 billion to $17.67 billion at December 31, 2014 compared to $13.88 billion at December 31, 2013. This was partially offset by the average balance of our interest bearing liabilities increasing $1.26 billion to $13.36 billion at December 31, 2014 compared to $12.10 billion at December 31, 2013, as well as the weighted average cost of interest bearing liabilities increasing 1 basis point. In addition, the weighted average yield on our interest-earning assets decreased 34 basis points to 3.87% for the three months ended December 31, 2014 from 4.21% for the three months ended December 31, 2013. This was partially attributed to higher average balances in securities and cash at lower weighted average yields for the three months ended December 31, 2014 compared to the three months ended December 31, 2013. The net interest spread decreased by 35 basis points to 2.94% for the three months ended December 31, 2014 from 3.29% for the three months ended December 31, 2013 as the weighted average yield on interest earning assets declined 34 basis points and the weighted average cost of interest bearing liabilities increased 1 basis point.
Net interest income increased by $106.5 million, or 24.5%, to $542.0 million for the year ended December 31, 2014 from $435.4 million for the year ended December 31, 2013. The increase was primarily due to the average balance of interest earning assets increasing $3.67 billion to $16.58 billion at December 31, 2014 compared to $12.91 billion at December 31, 2013, as well as a 7 basis point decrease in our weighted average cost of interest-bearing liabilities to 0.91% for the year ended December 31, 2014 from 0.98% for the year ended December 31, 2013. These were partially offset by the average balance of our interest bearing liabilities increasing $1.75 billion to $13.00 billion at December 31, 2014 compared to $11.24 billion at December 31, 2013, as well as the weighted average yield on our interest-earning assets decreasing 23 basis points to 3.99% for the year ended December 31, 2014 from 4.22% for the year ended December 31, 2013. This was partially attributed to higher average balances in securities and cash at lower weighted average yields for the year ended December 31, 2014 compared to the year ended December 31, 2013. The net interest spread decreased by 16 basis points to 3.08% for the year ended December 31, 2014 from 3.24% for the year ended December 31, 2013 as the weighted average yield on interest earning assets declined 23 basis points while our weighted average cost of interest bearing liabilities declined 7 basis points.
Non-Interest Income
Total non-interest income increased by $2.4 million, or 32.5% to $9.9 million for the three months ended December 31, 2014 from $7.5 million for the three months ended December 31, 2013. The higher income is mainly attributed to increases in other income of $1.3 million, primarily a result of income on non-deposit investment products. Gain on securities transactions increased $811,000 for the three months ended December 31, 2014. In December 31, 2013, the Company recorded an impairment loss on investment securities for approximately $1.0 million. These increases were partially offset by a decrease in gain on sales of other real estate owned of $687,000 for the three months ended December 31, 2014.
Total non-interest income increased by $5.3 million, or 14.5% to $41.9 million for the year ended December 31, 2014 from $36.6 million for the year ended December 31, 2013. The higher income is mainly attributed to increases in other income of $5.3 million for the year ended December 31, 2014. Included in other income for the year ended December 31, 2014 is a bargain purchase gain of $1.5 million, net of tax, relating to the acquisition of Gateway Community Financial Corp, the federally-chartered holding company for GCF Bank ("Gateway"), which was completed in January 2014. Additionally, income on bank owned life insurance, gain on securities transactions and fees and service charges increased $1.8 million, $774,000 and $595,000, respectively, for the year ended December 31, 2014. These increases were partially offset by a $3.5 million decrease in gain on the sale of loans to $5.3 million for the year ended December 31, 2014 compared to $8.7 million for the year ended December 31, 2013 due to lower volume of sales in the secondary market.
Non-Interest Expenses
Total non-interest expenses increased by $2.1 million, or 2.9%, to $73.9 million for the three months ended December 31, 2014 from $71.9 million for the three months ended December 31, 2013. Included in non-interest expenses for the three months ended December 31, 2013 is $5.6 million of one time costs related to the acquisition of Roma Financial Corporation. Compensation and fringe benefits increased $609,000 for the three months ended December 31, 2014. Other operating expenses increased by $940,000 to $6.8 million for the three months ended December 31, 2014 from $5.8 million for the three months ended December 31, 2013. Occupancy expense and advertising expenses increased by $2.4 million and $869,000, respectively, for the three months ended December 31, 2014. These increases are offset by decreases to data processing fees and federal insurance premiums of $1.4 million and $1.1 million, respectively.
Total non-interest expenses increased by $94.1 million, or 38.3%, to $339.9 million for the year ended December 31, 2014 from $245.7 million for the year ended December 31, 2013. Compensation and fringe benefits increased $43.3 million for the year ended December 31, 2014, which includes $13.0 million related to the accelerated vesting of all stock option and restricted stock awards upon the completion of the second step capital offering in May 2014. In addition, compensation expense included approximately $1.0 million related to retention and severance payments to former Roma Financial Corporation employees and $807,000 related to retention and severance payments to former Gateway employees. The remaining increase in compensation and fringe benefits relate to staff additions to support our continued growth, including the acquisitions of Roma Financial Corporation and Gateway, as well as normal merit increases. Other operating expenses increased by $7.5 million to $27.3 million for the year ended December 31, 2014 from $19.8 million for the year ended December 31, 2013. Contribution to charitable foundation represents the Company's contribution of $20.0 million to the Investors Charitable Foundation in conjunction with the second step capital offering, comprised of 1,000,000 shares of common stock and $10.0 million in cash. Occupancy expense, data processing fees, professional fees and advertising expenses have increased by $10.4 million, $5.5 million, $3.5 million and $3.6 million, respectively, for the year ended December 31, 2014. These increases are primarily the result of our recent acquisitions and organic growth.
Income Taxes
Income tax expense was $21.5 million for the three months ended December 31, 2014, representing a 33.34% effective tax rate compared to income tax expense of $17.1 million for the three months ended December 31, 2013 representing a 38.32% effective tax rate.
Income tax expense was $74.8 million for the year ended December 31, 2014, representing a 36.20% effective tax rate compared to income tax expense of $63.8 million for the year ended December 31, 2013 representing a 36.27% effective tax rate.
For the year ended December 31, 2014, there was a change in New York state tax law. The Company analyzed the impact of this change relative to its deferred tax positions. Based on that analysis, the Company revalued the deferred tax asset, resulting in a tax benefit of $3.0 million and $3.6 million for the three months and year ended December 31, 2014, respectively. This change will likely result in the Company paying higher New York state taxes in future periods.
Provision for Loan Losses
Our provision for loan losses was $11.5 million for the three months ended December 31, 2014 compared to $9.3 million for the three months ended December 31, 2013. For the three months ended December 31, 2014, net charge-offs were $2.3 million compared to $2.1 million for the three months ended December 31, 2013. For the year ended December 31, 2014, our provision for loan losses was $37.5 million compared to $50.5 million for the year ended December 31, 2013. For the year ended December 31, 2014, net charge-offs were $11.1 million compared to $18.7 million for the year ended December 31, 2013. Our provision for the three months ended and year ended December 31, 2014 is a result of continued growth in the loan portfolio, specifically the multi-family, commercial real estate and commercial and industrial portfolios; the inherent credit risk in our overall portfolio, particularly the credit risk associated with commercial real estate lending and commercial and industrial lending; and the level of non-performing loans and delinquent loans. While the economic and real estate conditions in our lending area have improved slightly, management is cautiously optimistic and continues to be prudent in assessing the Company's credit risk.
Our past due loans and non-accrual loans discussed below exclude certain purchased credit impaired (PCI) loans, primarily consisting of loans recorded in the acquisitions of Gateway, Roma Financial Corporation and Marathon Bank. 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. 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.
December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
---- ---- ---- ---- ----
# 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 127 $23.4 113 $23.5 97 $22.9 90 $17.2 97 $17.9
Construction - - 1 0.2 - - 1 0.01 1 0.3
Multi-family 1 0.7 6 35.7 5 12.8 6 13.0 3 1.4
Commercial real estate 11 6.6 16 5.3 16 12.1 14 10.0 11 16.4
Commercial and industrial 4 0.8 5 2.2 7 3.6 6 4.4 10 5.9
--- --- --- --- --- --- --- --- --- ---
Total 30 to 59 days past due 143 $31.5 141 $66.9 125 $51.4 117 $44.6 122 $41.9
60 to 89 days past due:
Residential and consumer 53 8.7 48 10.6 50 10.0 43 8.0 40 6.6
Construction - - 1 1.3 - - - - 1 0.5
Multi-family 1 0.2 2 13.0 - - - - 2 0.2
Commercial real estate 4 0.8 3 0.4 11 2.5 5 1.0 4 10.3
Commercial and industrial 2 0.4 3 0.5 6 1.4 8 1.0 2 0.3
--- --- --- --- --- --- --- --- --- ---
Total 60 to 89 days past due 60 10.1 57 25.8 67 13.9 56 10.0 49 17.9
---- ----
Total accruing past due loans 203 $41.6 198 $92.7 192 $65.3 173 $54.6 171 $59.8
=== ===== === ===== === ===== === ===== === =====
Non-accrual:
Residential and consumer 406 84.2 383 85.9 361 79.7 348 79.4 304 74.3
Construction 7 4.4 6 12.8 6 13.0 5 13.0 18 16.2
Multi-family 2 3.0 1 1.9 1 1.9 3 0.4 5 5.9
Commercial real estate 36 13.9 29 14.6 26 12.6 15 2.9 12 2.7
Commercial and industrial 11 2.9 4 0.8 10 1.4 9 1.9 4 1.3
--- --- --- --- --- --- --- ---
Total non-accrual loans 462 $108.4 423 $116.0 404 $108.6 380 $97.6 343 $100.4
=== ====== === ====== === ====== === ===== === ======
Accruing troubled debt restructured loans 55 $35.6 55 $35.2 51 $32.3 50 $37.6 50 $39.6
Non-accrual loans to total loans 0.72% 0.81% 0.78% 0.72% 0.77%
Allowance for loan loss as a percent of non-
accrual loans 184.83% 164.68% 171.33% 185.00% 173.30%
Allowance for loan losses as a percent of total
loans 1.33% 1.33% 1.34% 1.33% 1.33%
Total non-accrual loans increased to $108.4 million at December 31, 2014 compared to $100.4 million at December 31, 2013. We continue to diligently resolve our troubled loans, however it takes a long period of time to resolve residential credits in our lending area. At December 31, 2014, our allowance for loan loss as a percent of total loans is 1.33%. At December 31, 2014, there were $47.3 million of loans deemed as troubled debt restructurings, of which $23.3 million were residential and consumer loans, $18.4 million were commercial real estate loans, $3.1 million were construction loans, $1.1 million were multi-family loans and $1.4 million were commercial and industrial loans. Troubled debt restructured loans in the amount of $35.6 million were classified as accruing and $11.7 million were classified as non-accrual at December 31, 2014.
The allowance for loan losses increased by $26.4 million to $200.3 million at December 31, 2014 from $173.9 million at December 31, 2013. The increase in our allowance for loan losses is due to the growth of the loan portfolio and the increased credit risk in our overall portfolio, particularly the inherent credit risk associated with commercial real estate lending and commercial and industrial loans. 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.
Balance Sheet Summary
Total assets increased by $3.15 billion, or 20.2%, to $18.77 billion at December 31, 2014 from $15.62 billion at December 31, 2013. On May 7, 2014, the Company raised net proceeds of $2.15 billion in its second step offering. As a result of deploying the proceeds, securities increased by $1.15 billion, or 70.9%, to $2.76 billion at December 31, 2014 from $1.62 billion at December 31, 2013. Net loans, including loans held for sale, increased $2.00 billion to $14.89 billion at December 31, 2014.
Net loans, including loans held for sale, increased by $2.00 billion, or 15.5%, to $14.89 billion at December 31, 2014 from $12.89 billion at December 31, 2013. This increase includes $195.1 million in loans acquired in conjunction with the Gateway acquisition. At December 31, 2014, total loans were $15.10 billion which included $5.77 billion in residential loans, $5.05 billion in multi-family loans, $3.15 billion in commercial real estate loans, $544.5 million in commercial and industrial loans, $441.0 million in consumer and other loans and $148.4 million in construction loans. For the year ended December 31, 2014, we originated $1.67 billion in multi-family loans, $869.7 million in commercial real estate loans, $445.4 million in commercial and industrial loans, $124.3 million in consumer and other loans and $44.8 million in construction loans. This increase in loans reflects our continued focus on generating multi-family loans, commercial real estate loans and commercial and industrial loans, which was partially offset by pay downs and payoffs of loans. Our loans are primarily on properties and businesses located in New Jersey and New York.
We originate residential mortgage loans through our mortgage subsidiary, Investors Home Mortgage Co., which originated $758.2 million in residential mortgage loans, of which $150.1 million were originated for sale to third party investors and $608.1 million were added to our portfolio for the year ended December 31, 2014. 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, 2014, we purchased loans totaling $233.9 million from these entities.
Securities, in the aggregate, increased by $1.15 billion, or 70.9%, to $2.76 billion at December 31, 2014 from $1.62 billion at December 31, 2013. This increase is attributed to using a portion of the proceeds from the Company's second step offering to purchase short duration investment securities.
Deposits increased by $1.45 billion, or 13.6%, from $10.72 billion at December 31, 2013 to $12.17 billion at December 31, 2014. This increase includes $254.7 million in deposits added in conjunction with the Gateway acquisition. Core deposits increased $2.27 billion or 30.9%, from December 31, 2013, partially offset by a $814.2 million decrease in certificates of deposit. Core deposits represent approximately 79% of our total deposit portfolio.
Borrowed funds decreased by $601.2 million, or 17.9%, to $2.77 billion at December 31, 2014 from $3.37 billion at December 31, 2013. The Company used approximately half of the proceeds from its second step capital offering to pay down maturing, short-term borrowings.
Stockholders' equity increased by $2.24 billion to $3.58 billion at December 31, 2014 from $1.33 billion at December 31, 2013. The increase is primarily related to the impact of the Company's second step capital offering, net income of $131.7 million for the year ended December 31, 2014 and a $3.3 million decrease to other comprehensive loss. Stockholders' equity was also impacted by the declaration of cash dividends totaling $0.12 per common share for the year ended December 31, 2014 which resulted in a decrease of $42.6 million.
About the Company
Investors Bancorp, Inc. is the holding company for Investors Bank, which as of December 31, 2014 operates from its corporate headquarters in Short Hills, New Jersey and 132 offices located throughout New Jersey and New York.
Earnings Conference Call January 30, 2015 at 11:00 a.m. (ET)
The Company, as previously announced, will host an earnings conference call on Friday, January 30, 2015 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/10058306
A telephone replay will be available beginning on January 30, 2015 from 1:00 p.m. (ET) through 9:00 a.m. (ET) on April 30, 2015. The replay number is (877) 344-7529 password 10058306. The conference call will also be simultaneously webcast on the Company's website www.myinvestorsbank.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 our 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, which 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.
(1) Please refer to the Non GAAP Reconciliation for details pertaining to adjustments.
INVESTORS BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2014 and December 31, 2013
December 31, 2014 December 31, 2013
----------------- -----------------
(unaudited)
Assets (In thousands)
Cash and cash equivalents $230,961 250,689
Securities available-for-sale, at estimated fair
value 1,197,924 785,032
Securities held-to-maturity, net (estimated fair
value of $1,609,365 and $839,064 at December 31,
2014 and December 31, 2013, respectively) 1,564,479 831,819
Loans receivable, net 14,887,570 12,882,544
Loans held-for-sale 6,868 8,273
Federal Home Loan Bank stock 151,287 178,126
Accrued interest receivable 55,267 47,448
Other real estate owned 7,839 8,516
Office properties and equipment, net 160,899 138,105
Net deferred tax asset 231,898 216,206
Bank owned life insurance 161,609 152,788
Goodwill and intangible assets 106,705 109,129
Other assets 10,333 14,395
------ ------
Total Assets $18,773,639 15,623,070
=========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $12,172,326 10,718,811
Borrowed funds 2,766,104 3,367,274
Advance payments by borrowers for taxes and
insurance 69,893 67,154
Other liabilities 187,461 135,504
------- -------
Total liabilities 15,195,784 14,288,743
---------- ----------
Stockholders' equity:
Preferred stock, $0.01 par value, 100,000,000
authorized shares; none issued - -
Common stock, $0.01 par value, 1,000,000,000
shares authorized; 359,070,852 issued and
358,012,895 outstanding at December 31, 2014;
367,041,688 issued and 353,046,057 outstanding at
December 31, 2013 3,591 1,519
Additional paid-in capital 2,863,108 720,766
Retained earnings 836,639 734,563
Treasury stock, at cost; 1,057,957 shares at
December 31, 2014; 13,995,631 shares at December
31, 2013 (11,131) (67,046)
Unallocated common stock held by the employee
stock ownership plan (91,948) (29,779)
Accumulated other comprehensive loss (22,404) (25,696)
Total stockholders' equity 3,577,855 1,334,327
--------- ---------
Total liabilities and stockholders' equity $18,773,639 15,623,070
=========== ==========
INVESTORS BANCORP, INC. AND SUBSIDIARIES
Consolidated Statement of Income
For the Three Months For the Year Ended
Ended December 31, December 31,
------------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
(unaudited) (unaudited) (unaudited)
(Dollars in thousands, except per share data)
Interest and dividend income:
Loans receivable $155,539 134,940 603,438 504,622
Securities:
Government-sponsored enterprise
obligations 11 5 46 9
Mortgage-backed securities 12,375 7,722 44,183 28,057
Equity 26 20 115 61
Municipal bonds and other debt 1,525 1,472 5,653 5,873
Other investments - - 14 -
Interest-bearing deposits 173 8 552 49
Federal Home Loan Bank stock 1,441 1,877 6,861 6,397
-----
Total interest and dividend
income 171,090 146,044 660,862 545,068
------- ------- ------- -------
Interest expense:
Deposits 15,961 13,301 59,206 49,969
Borrowed funds 14,958 14,489 59,685 59,673
------
Total interest expense 30,919 27,790 118,891 109,642
------ ------ ------- -------
Net interest income 140,171 118,254 541,971 435,426
Provision for loan losses 11,500 9,250 37,500 50,500
------ ----- ------ ------
Net interest income after
provision for loan losses 128,671 109,004 504,471 384,926
------- ------- ------- -------
Non-interest income
Fees and service charges 4,069 4,475 19,399 18,804
Income on bank owned life insurance 1,054 716 4,652 2,898
Gain on loan transactions, net 1,493 1,446 5,257 8,748
Gain on securities transactions 877 66 1,546 772
Impairment losses on investment securities:
Impairment losses on investment securities - (939) - (939)
Non-credit related gains recognized in
comprehensive income - (38) - (38)
---
Net impairment losses on
investment securities
recognized in earnings - (977) - (977)
Gain on sales of other real estate owned,
net 76 763 809 1,451
Other income 2,305 965 10,198 4,875
-----
Total non-interest income 9,874 7,454 41,861 36,571
----- ----- ------ ------
Non-interest expense
Compensation and fringe benefits 38,902 38,293 172,068 128,765
Advertising and promotional expense 3,237 2,368 12,238 8,602
Office occupancy and equipment expense 12,645 10,200 49,668 39,226
Federal insurance premiums 2,840 3,900 14,390 14,950
Stationery, printing, supplies and
telephone 903 951 4,238 3,395
Professional fees 2,987 3,269 14,672 11,154
Data processing service fees 5,647 7,058 25,333 19,844
Contribution to charitable foundation - - 20,000 -
Other operating expenses 6,761 5,821 27,253 19,775
Total non-interest expenses 73,922 71,860 339,860 245,711
------ ------ ------- -------
Income before income tax
expense 64,623 44,598 206,472 175,786
Income tax expense 21,547 17,089 74,751 63,755
------ ------ ------ ------
Net income $43,076 27,509 131,721 112,031
======= ====== ======= =======
Basic earnings per share $0.13 $0.09 $0.38 $0.40
Diluted earnings per share $0.12 $0.09 $0.38 $0.40
Weighted average shares outstanding:
Basic 344,075,778 294,113,919 344,389,259 279,632,558
Diluted 347,226,527 297,930,646 347,731,571 283,035,844
INVESTORS BANCORP, INC. AND SUBSIDIARIES
Average Balance Sheet and Yield/Rate Information
For Three Months Ended
----------------------
December 31, 2014 December 31, 2013
-----------------
Average Interest Earned/ Weighted Average Interest Earned/ Weighted
Outstanding Paid Average Outstanding Paid Average
Balance Yield/ Balance Yield/
Rate Rate
------------ ---------------- --------- ------------ ---------------- ---------
(Dollars in thousands)
Interest-earning assets:
Interest-earning cash accounts $433,152 173 0.16% $178,112 8 0.02%
Securities available-for-sale 1,096,120 4,910 1.79% 830,943 4,066 1.96%
Securities held-to-maturity 1,553,254 9,027 2.32% 734,278 5,153 2.81%
Net loans 14,448,895 155,539 4.31% 11,955,580 134,940 4.51%
Federal Home Loan Bank stock 140,820 1,441 4.09% 177,018 1,877 4.24%
---------------
Total interest-earning assets 17,672,241 171,090 3.87% 13,875,931 146,044 4.21%
Non-interest earning assets 734,029 610,315
Total assets $18,406,270 $14,486,246
=========== ===========
Interest-bearing liabilities:
Savings 2,264,068 1,640 0.29% 1,864,064 1,581 0.34%
Interest-bearing checking 2,726,750 2,481 0.36% 1,969,017 1,687 0.34%
Money market accounts 2,968,697 4,977 0.67% 1,886,681 2,524 0.54%
Certificates of deposit 2,868,954 6,863 0.96% 2,964,722 7,509 1.01%
---------------
Total interest bearing deposits 10,828,469 15,961 0.59% 8,684,484 13,301 0.61%
Borrowed funds 2,533,248 14,958 2.36% 3,414,634 14,489 1.70%
Total interest-bearing liabilities 13,361,717 30,919 0.93% 12,099,118 27,790 0.92%
Non-interest bearing liabilities 1,478,817 1,191,788
--------- ---------
Total liabilities 14,840,534 13,290,906
Stockholders' equity 3,565,736 1,195,340
Total liabilities and stockholders' $18,406,270 $14,486,246
equity
Net interest income $140,171 $118,254
======== ========
Net interest rate spread 2.94% 3.29%
==== ====
Net interest earning assets $4,310,524 $1,776,813
========== ==========
Net interest margin 3.17% 3.41%
==== ====
Ratio of interest-earning assets to total interest-bearing liabilities 1.32 X 1.15 X
==== ====
INVESTORS BANCORP, INC. AND SUBSIDIARIES
Average Balance Sheet and Yield/Rate Information
For the Year Ended
------------------
December 31, 2014 December 31, 2013
Average Interest Earned/ Weighted Average Interest Earned/ Weighted
Outstanding Paid Average Outstanding Paid Average
Balance Yield/ Balance Yield/
Rate Rate
------------ ---------------- --------- ------------ ---------------- ---------
(Dollars in thousands)
Interest-earning assets:
Interest-earning cash accounts $371,636 552 0.15% $136,656 49 0.04%
Securities available-for-sale 965,969 18,164 1.88% 1,092,496 18,638 1.71%
Securities held-to-maturity 1,315,604 31,847 2.42% 449,742 15,362 3.42%
Net loans 13,776,250 603,438 4.38% 11,065,190 504,622 4.56%
Federal Home Loan Bank stock 152,330 6,861 4.50% 168,028 6,397 3.81%
---------------
Total interest-earning assets 16,581,789 660,862 3.99% 12,912,112 545,068 4.22%
Non-interest earning assets 732,469 564,765
------- -------
Total assets $17,314,258 $13,476,877
=========== ===========
Interest-bearing liabilities:
Savings 2,241,747 6,638 0.30% 1,775,454 6,320 0.36%
Interest-bearing checking 2,478,047 8,755 0.35% 1,791,345 6,245 0.35%
Money market accounts 2,355,982 13,664 0.58% 1,646,235 7,537 0.46%
Certificates of deposit 3,180,032 30,149 0.95% 2,849,573 29,867 1.05%
---------------
Total interest bearing deposits 10,255,808 59,206 0.58% 8,062,607 49,969 0.62%
Borrowed funds 2,741,609 59,685 2.18% 3,180,473 59,673 1.88%
--------------
Total interest-bearing liabilities 12,997,417 118,891 0.91% 11,243,080 109,642 0.98%
Non-interest bearing liabilities 1,518,331 1,113,121
--------- ---------
Total liabilities 14,515,748 12,356,201
Stockholders' equity 2,798,510 1,120,676
--------- ---------
Total liabilities and stockholders' $17,314,258 $13,476,877
equity
Net interest income $541,971 $435,426
======== ========
Net interest rate spread 3.08% 3.24%
==== ====
Net interest earning assets $3,584,372 $1,669,032
========== ==========
Net interest margin 3.27% 3.37%
==== ====
Ratio of interest-earning assets to total interest-bearing liabilities 1.28 X 1.15 X
==== ====
INVESTORS BANCORP, INC. AND SUBSIDIARIES
Selected Performance Ratios
For the Three Months Ended
December 31,
2014 2013
---- ----
Return
on
average
assets 0.94% 0.76%
Return
on
average
equity 4.83% 9.21%
Return
on
average
tangible
equity 4.98% 10.07%
Interest
rate
spread 2.94% 3.29%
Net
interest
margin 3.17% 3.41%
Efficiency
ratio 49.27% 57.16%
Efficiency
ratio,
adjusted
(1) 49.27% 52.28%
Non-
interest
expense
to
average
total
assets 1.61% 1.98%
Average
interest-
earning
assets
to
average
interest-
bearing
liabilities 1.32 1.15
For the Year Ended
December 31,
2014 2013
---- ----
Return
on
average
assets 0.76% 0.83%
Return
on
average
equity 4.71% 10.00%
Return
on
average
tangible
equity 4.90% 10.98%
Interest
rate
spread 3.08% 3.24%
Net
interest
margin 3.27% 3.37%
Efficiency
ratio 58.21% 52.06%
Efficiency
ratio,
adjusted
(1) 52.45% 50.76%
Non-
interest
expense
to
average
total
assets 1.96% 1.82%
Average
interest-
earning
assets
to
average
interest-
bearing
liabilities 1.28 1.15
INVESTORS BANCORP, INC. AND SUBSIDIARIES
Selected Financial Ratios and Other Data
December 31, December 31,
2014 2013
------------- -------------
Asset
Quality
Ratios:
Non-
performing
assets
as
a
percent
of
total
assets 0.81% 0.95%
Non-
performing
loans
as
a
percent
of
total
loans 0.95% 1.07%
Allowance
for
loan
losses
as
a
percent
of
non-
accrual
loans 184.83% 173.30%
Allowance
for
loan
losses
as
a
percent
of
total
loans 1.33% 1.33%
Capital
Ratios:
Total
risk-
based
capital
(to
risk
weighted
assets)
(2) 18.26% 11.39%
Tier
1 (2)
risk-
based
capital
(to
risk
weighted
assets)
17.01% 10.14%
Tier
1 (2)
leverage
(core)
capital
(to
adjusted
tangible
assets)
12.79% 8.20%
Equity
to
total
assets
(period
end) 19.06% 8.54%
Average
equity
to
average
assets 16.16% 8.32%
Tangible
capital
(to
tangible
assets) 18.60% 7.90%
Book
value
per
common
share
(1)
(3) $10.39 NM
Tangible
book
value
per
common
share
(1)
(3) $10.08 NM
Other
Data:
Number
of
full
service
offices 132 129
Full
time
equivalent
employees 1,682 1,541
(1) See Non GAAP Reconciliation.
(2) Ratios are for Investors Bank and do not include capital retained
at the holding company level.
(3) Book value and tangible book value per common share are not
meaningful for periods presented prior to the completion of the
second step capital offering on May 7, 2014.
Investors Bancorp, Inc.
Non GAAP Reconciliation
(dollars in thousands, except share data)
At the period ended December 31,
--------------------------------
2014 2013
---- ----
Total stockholders' equity $3,577,855 1,334,327
Goodwill and intangible assets 106,705 109,129
------- -------
Tangible stockholders' equity $3,471,150 1,225,198
Book Value per Share Computation
Common stock Issued 359,070,852
Treasury shares (1,057,957)
----------
Shares Outstanding 358,012,895
Unallocated ESOP shares (13,737,243)
-----------
Book value shares 344,275,652
Book Value Per Share $10.39 NM (1)
------ --- ---
Tangible Book Value per Share $10.08 NM (1)
------ --- ---
(1) Book value and tangible book value per common share is not meaningful for periods presented prior to the completion of the second step capital offering on May 7, 2014.
Investors Bancorp, Inc.
Non GAAP Reconciliation
(dollars in thousands, except share data)
Net Income, Basic and Diluted EPS, as adjusted
For the Three Months Ended For the Year Ended
December 31, December 31,
2014 2013 2014 2013
---- ---- ---- ----
Net income $43,076 27,509 131,721 112,031
Compensation and fringe benefits (2) - - 13,013 -
Contribution to charitable foundation (3) - - 20,000 -
Restructure expenses (4) - 5,632 1,384 5,632
Impairment losses on investment securities (5) - 977 - 977
Total one-time items - 6,609 34,397 6,609
Effective tax rate 33.34% 38.32% 36.20% 36.27%
----- ----- ----- -----
One time items, net tax - 4,077 21,944 4,212
Net bargain purchase gain, net of tax (6) - - (1,482) -
Tax adjustment (7) (2,951) - (3,584) -
Adjusted net income $40,125 31,586 148,599 116,243
------- ------ ------- -------
Adjusted basic earnings per share $0.12 $0.11 $0.43 $0.42
Adjusted diluted earnings per share $0.12 $0.11 $0.43 $0.41
Weighted average shares outstanding:
Basic 344,075,778 294,113,919 344,389,259 279,632,558
Diluted 347,226,527 297,930,646 347,731,571 283,035,844
Investors Bancorp, Inc.
Non GAAP Reconciliation
(dollars in thousands, except share data)
Efficiency Ratio, as adjusted
For the three months ended For the Year Ended
December 31, December 31,
2014 2013 2014 2013
---- ---- ---- ----
Total non-interest expense $73,922 71,860 339,860 245,711
Net interest income 140,171 118,254 541,971 435,426
Total non-interest income 9,874 7,454 41,861 36,571
Efficiency ratio 49.27% 57.16% 58.21% 52.06%
Compensation and fringe benefits (2) - - 13,013 -
Contribution to charitable foundation (3) - - 20,000 -
Restructure expenses (4) - 5,632 1,384 5,632
--- ----- ----- -----
Adjusted non-interest expense $73,922 66,228 305,463 240,079
Impairment losses on investment securities (5) - 977 - 977
Net bargain purchase gain, net of tax (6) - - (1,482) -
--- --- ------ ---
Adjusted non-interest income $9,874 8,431 40,379 37,548
Adjusted efficiency ratio 49.27% 52.28% 52.45% 50.76%
(2) Compensation expense includes a one time item related to the accelerated vesting of all stock option and restricted stock plans upon the completion of the second step capital transaction.
(3) Represents the Company's contribution of $20.0 million to the Investors Charitable Foundation upon the completion of its second step capital transaction, comprised of 1,000,000 shares of common stock and $10.0 million in cash.
(4) Represents restructure charges included in non-interest expenses related to the acquisition of Roma Financial in December 2013 and Gateway in January 2014.
(5) Represents an impairment loss on investment securities for the three months and year ended December 31, 2013.
(6) Included in other income for the year ended December 31, 2014 is a bargain purchase gain of $1.5 million, net of tax, relating to the acquisition of Gateway, which was completed in January 2014.
(7) Represents tax benefit realized from revaluing the Company's deferred tax asset related to the increase in New York tax rate related to the change in the New York state tax law enacted in 2014.
Contact: Thomas Splaine
(973) 924-5184
tsplaine@myinvestorsbank.com
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/investors-bancorp-inc-announces-fourth-quarter-financial-results-and-cash-dividend-300028264.html
SOURCE Investors Bancorp, Inc.
