PR Newswire
SHORT HILLS, N.J., Jan. 27, 2021
SHORT HILLS, N.J., Jan. 27, 2021 /PRNewswire/ -- Investors Bancorp, Inc. (NASDAQ: ISBC) ("Company"), the holding company for Investors Bank ("Bank"), reported net income of $75.1 million, or $0.32 per diluted share, for the three months ended December 31, 2020 as compared to $64.3 million, or $0.27 per diluted share, for the three months ended September 30, 2020 and $48.7 million, or $0.19 per diluted share, for the three months ended December 31, 2019.
For the year ended December 31, 2020, net income totaled $221.6 million, or $0.94 per diluted share, compared to $195.5 million, or $0.74 per diluted share, for the year ended December 31, 2019.
Net income for the three months and year ended December 31, 2020 included costs of approximately $9 million, after-tax, or $0.04 per diluted share, associated with the Company's consolidation of ten branches announced in December 2020.
The Company also announced today that its Board of Directors declared a cash dividend of $0.14 per share to be paid on February 25, 2021 for stockholders of record as of February 10, 2021, representing a 17% increase from the prior quarter.
Kevin Cummings, Chairman and CEO, commented, "Despite a challenging 2020, we were pleased with our strong operating results. Our net interest margin expanded 19 basis points quarter over quarter while our return on assets and return on tangible equity for the fourth quarter improved to 1.14% and 11.60%, respectively."
Mr. Cummings also commented, "Deferred loan balances remained relatively stable with the majority of our deferred borrowers making interest payments. We remain cautiously optimistic on credit for 2021."
Performance Highlights
Financial Performance Overview
Fourth Quarter 2020 compared to Third Quarter 2020
For the fourth quarter of 2020, net income totaled $75.1 million, an increase of $10.8 million as compared to $64.3 million for the third quarter of 2020. The changes in net income on a sequential quarter basis are highlighted below.
Net interest income increased by $7.2 million, or 3.9%, as compared to the third quarter of 2020. Changes within interest income and expense categories were as follows:
Net interest margin increased 19 basis points to 2.98% for the three months ended December 31, 2020 compared to the three months ended September 30, 2020, driven primarily by the lower cost of interest-bearing liabilities, the decline in lower yielding average cash balances and the increase in prepayment penalties.
Total non-interest income was $45.8 million for the three months ended December 31, 2020, an increase of $25.9 million, as compared to $19.9 million for the third quarter of 2020. The increase in non-interest income was due primarily to a gain of $23.1 million on the sale-leaseback of 15 branch locations and one corporate location during the three months ended December 31, 2020.
Total non-interest expenses were $142.9 million for the three months ended December 31, 2020, an increase of $38.8 million compared to the three months ended September 30, 2020. Excluding $22.8 million of costs from the early extinguishment of $1.00 billion of wholesale funding during the three months ended December 31, 2020, $11.7 million of costs associated with the Company's branch rationalization announcement in December 2020 and a $1.0 million tax credit investment, non-interest expenses for the three months ended December 31, 2020 were $107.4 million, an increase of $3.3 million compared to the three months ended September 30, 2020. The increase was primarily driven by incentive compensation.
Income tax expense was $19.3 million for the three months ended December 31, 2020 and $24.8 million for the three months ended September 30, 2020. The effective tax rate was 20.4% for the three months ended December 31, 2020 and 27.9% for the three months ended September 30, 2020. The effective tax rate was positively impacted in the fourth quarter primarily by tax credit investments, as well as state income apportionment.
Fourth Quarter 2020 compared to Fourth Quarter 2019
For the fourth quarter of 2020, net income totaled $75.1 million, an increase of $26.4 million as compared to $48.7 million in the fourth quarter of 2019. The changes in net income on a year over year quarter basis are highlighted below.
On a year over year basis, fourth quarter of 2020 net interest income increased by $20.0 million, or 11.9%, as compared to the fourth quarter of 2019 due to:
Net interest margin increased 37 basis points year over year to 2.98% for the three months ended December 31, 2020 from 2.61% for the three months ended December 31, 2019, driven primarily by the lower cost of interest-bearing liabilities and an increase in prepayment penalties, partially offset by the lower yields on interest-earnings assets.
Total non-interest income was $45.8 million for the three months ended December 31, 2020, an increase of $25.3 million year over year. The increase in non-interest income was due primarily to a gain of $23.1 million on the sale-leaseback of 15 branch locations and one corporate location during the three months ended December 31, 2020. In addition, gain on loans increased $3.3 million due to a higher volume of mortgage banking loan sales to third parties.
Total non-interest expenses were $142.9 million for the three months ended December 31, 2020, an increase of $36.0 million compared to the three months ended December 31, 2019. Excluding $22.8 million of costs from the early extinguishment of $1.00 billion of wholesale funding during the three months ended December 31, 2020, $11.7 million of costs associated with the Company's branch rationalization announcement in December 2020 and a $1.0 million tax credit investment, non-interest expenses for the three months ended December 31, 2020 were $107.4 million, an increase of $579,000 compared to the three months ended December 31, 2019.
Income tax expense was $19.3 million for the three months ended December 31, 2020 and $32.2 million for the three months ended December 31, 2019. The effective tax rate was 20.4% for the three months ended December 31, 2020 and 39.8% for the three months ended December 31, 2019. The effective tax rate for the fourth quarter of 2019 was negatively impacted when the Company revalued its net deferred tax asset as the State of New Jersey provided clarification in December 2019 in regard to previously enacted tax law changes.
Year Ended December 31, 2020 compared to Year Ended December 31, 2019
Net income increased by $26.1 million year over year to $221.6 million for the year ended December 31, 2020. The change in net income year over year is the result of the following:
Net interest income increased by $70.6 million as compared to the year ended December 31, 2019 due to:
Net interest margin increased 26 basis points to 2.80% for the year ended December 31, 2020 from 2.54% for the year ended December 31, 2019, primarily driven by the lower cost of interest-bearing liabilities, partially offset by the lower yield on interest-earning assets.
Total non-interest income was $90.5 million for the year ended December 31, 2020, an increase of $37.1 million as compared to the year ended December 31, 2019. The increase in non-interest income was due primarily to a gain of $23.1 million on the sale-leaseback of 15 branch locations and one corporate location during the three months ended December 31, 2020. In addition, gain on loans increased $10.9 million as a result of a higher volume of mortgage banking loan sales to third parties and the Company recognized a $5.7 million loss on the sale of securities during the second quarter of 2019.
Total non-interest expenses were $449.5 million for the year ended December 31, 2020, an increase of $26.8 million compared to the year ended December 31, 2019. Excluding $24.1 million of costs from the early extinguishment of $1.40 billion of wholesale funding during the year ended December 31, 2020, $11.7 million of costs associated with the Company's branch rationalization announcement in December 2020, $3.6 million of Gold Coast acquisition-related expenses and a $1.0 million tax credit investment, non-interest expenses for the year ended December 31, 2020 were $409.1 million, a decrease of $13.6 million compared to the year ended December 31, 2019. This decrease was driven by a decrease of $8.6 million in other non-interest expense, a decrease of $4.5 million in advertising and promotional expense and a decrease of $3.5 million in compensation and fringe benefit expense.
Income tax expense was $75.0 million for the year ended December 31, 2020 compared to $91.2 million for the year ended December 31, 2019. The effective tax rate was 25.3% for the year ended December 31, 2020 and 31.8% for the year ended December 31, 2019.
Asset Quality
On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL"). CECL requires the measurement of all expected credit losses over the life of financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. CECL replaced the incurred loss methodology and therefore, the allowance and provision for credit losses is based upon estimated expected credit losses rather than incurred losses.
Our provision for credit losses is primarily a result of the expected credit losses on our loans, unfunded commitments and held-to-maturity debt securities over the life of these financial instruments, including the inherent credit risk in these financial instruments, the composition of and changes in our portfolios of these financial instruments, and the level of charge-offs. At December 31, 2020, our allowance for credit losses continues to be affected by the impact of COVID-19 on the current and forecasted economic conditions. For the three months ended December 31, 2020, our provision for credit losses was a negative $2.7 million, compared to $8.3 million for the three months ended September 30, 2020 and $1.5 million for the three months ended December 31, 2019. For the three months ended December 31, 2020, net recoveries were $2.1 million compared to net charge-offs of $667,000 for the three months ended September 30, 2020 and net charge-offs of $1.4 million for the three months ended December 31, 2019. Our provision was $70.2 million for the year ended December 31, 2020 compared to a negative provision of $1.0 million for the year ended December 31, 2019. For the year ended December 31, 2020, net charge-offs were $10.7 million compared to $6.7 million for the year ended December 31, 2019.
Total non-accrual loans were $107.1 million, or 0.51% of total loans, at December 31, 2020 compared to $132.0 million, or 0.63% of total loans, at September 30, 2020 and $95.2 million, or 0.44% of total loans, at December 31, 2019. We continue to proactively and diligently work to resolve our troubled loans.
At December 31, 2020, there were $34.5 million of loans deemed as troubled debt restructured loans ("TDRs"), of which $25.3 million were residential and consumer loans, $5.7 million were commercial real estate loans and $3.5 million were commercial and industrial loans. TDRs of $9.2 million were classified as accruing and $25.3 million were classified as non-accrual at December 31, 2020.
The following table sets forth non-accrual loans and accruing past due loans (excluding loans held for sale) on the dates indicated as well as certain asset quality ratios.
| December 31, 2020 | | September 30, 2020 | | June 30, 2020 | | March 31, 2020 | | December 31, 2019 | |||||||||||||||||||||||||
| # of loans | | amount | | # of loans | | amount | | # of loans | | amount | | # of loans | | amount | | # of loans | | amount | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||
Accruing past due loans: | | | | | | | | | | | | | | | | | | | | |||||||||||||||
30 to 59 days past due: | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Residential and consumer | 84 | | | $ | 18.5 | | | 78 | | | $ | 17.2 | | | 79 | | | $ | 19.9 | | | 106 | | | $ | 24.6 | | | 111 | | | $ | 23.4 | |
Construction | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |||||
Multi-family | 5 | | | 7.3 | | | 5 | | | 5.3 | | | 9 | | | 24.6 | | | 10 | | | 57.9 | | | 5 | | | 45.6 | | |||||
Commercial real estate | 8 | | | 9.5 | | | 7 | | | 4.6 | | | 9 | | | 10.6 Werbung Mehr Nachrichten zur INVESTORS BANCORP Aktie kostenlos abonnieren
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