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

• Net interest margin increased six basis points to 2.79% for the three months ended September 30, 2020 compared to the three months ended June 30, 2020.  Net interest margin continued to be negatively impacted by an elevated cash position during the quarter.
• Cash and cash equivalents were $557.7 million at September 30, 2020 as compared to $735.2 million at June 30, 2020.  Average interest-earning cash and cash equivalents were $978.0 million for the three months ended September 30, 2020 compared with $1.29 billion for the three months ended June 30, 2020.
• Non-interest-bearing deposits increased $304.6 million, or 10.0%, during the three months ended September 30, 2020.  The cost of interest-bearing deposits decreased 9 basis points to 0.84% for the three months ended September 30, 2020 compared to the three months ended June 30, 2020. 
• Total loans decreased $364.2 million, or 1.7%, to $21.00 billion at September 30, 2020 from $21.36 billion at June 30, 2020. 
• The provision for credit losses was $8.3 million for the three months ended September 30, 2020 compared with $33.3 million for the three months ended June 30, 2020.
• Total non-interest income was $19.9 million for the three months ended September 30, 2020, an increase of $9.8 million compared to the three months ended June 30, 2020.
• Total non-interest expenses were $104.1 million for the three months ended September 30, 2020, an increase of $4.0 million, or 4.0%, compared to the three months ended June 30, 2020.  Included in total non-interest expenses were $965,000 of costs from the early extinguishment of $200 million of borrowings during the three months ended September 30, 2020.  The efficiency ratio declined to 51.63% for the three months ended September 30, 2020 from 52.06% for the three months ended June 30, 2020.
• As of October 20, 2020, COVID-19 related loan deferrals totaled $730 million, or 3% of loans, compared to $2.7 billion, or 13% of loans, as of July 22, 2020.
• Non-accrual loans were $132.0 million, or 0.63% of total loans, at September 30, 2020 as compared to $126.8 million, or 0.59% of total loans, at June 30, 2020 and $92.1 million, or 0.42% of total loans, at September 30, 2019.
• Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were 9.76%, 13.24%, 13.24% and 14.49%, respectively, at September 30, 2020.

Financial Performance Overview

Third Quarter 2020 compared to Second Quarter 2020

For the third quarter of 2020, net income totaled $64.3 million, an increase of $21.7 million as compared to $42.6 million for the second quarter of 2020.  The changes in net income on a sequential quarter basis are highlighted below.

Net interest income decreased by $365,000, or 0.2%, as compared to the second quarter of 2020.  Changes within interest income and expense categories were as follows:

• Interest and dividend income decreased $5.5 million, or 2.2%, to $240.7 million as compared to the second quarter of 2020, primarily attributed to the average balance of net loans, which decreased $487.7 million, mainly as a result of paydowns and payoffs, offset by loan originations. Offsetting this decline was a 4 basis point increase in the weighted average yield on net loans to 4.12%.
• Prepayment penalties, which are included in interest income, totaled $7.4 million for the three months ended September 30, 2020 as compared to $8.1 million for the three months ended June 30, 2020.
• Interest expense decreased $5.1 million, primarily attributed to the average balance of total borrowed funds, which decreased $536.5 million, or 10.7%, to $4.49 billion for the three months ended September 30, 2020 and the average balance of interest-bearing deposits, which decreased $486.9 million, or 2.9%, to $16.21 billion for the three months ended September 30, 2020.  In addition, the weighted average cost of interest-bearing liabilities decreased 4 basis points to 1.14% for the three months ended September 30, 2020.

Net interest margin increased six basis points to 2.79% for the three months ended September 30, 2020 compared to the three months ended June 30, 2020, driven primarily by the lower cost of interest-bearing liabilities and the decline in lower yielding average cash balances.

Total non-interest income was $19.9 million for the three months ended September 30, 2020, an increase of $9.8 million, as compared to $10.1 million for the second quarter of 2020.  The increase in non-interest income was due in part to a $4.2 million increase in fees and service charge income stemming primarily from a $2.6 million charge against our mortgage servicing asset during the second quarter.  In addition, customer swap fee income increased $3.1 million, gain on loans from mortgage banking activity increased $1.7 million and income from wealth and investment products increased $1.3 million.

Total non-interest expenses were $104.1 million for the three months ended September 30, 2020, an increase of $4.0 million, or 4.0%, as compared to the second quarter of 2020.  The change was primarily due to an increase of $4.1 million in compensation and benefit expenses primarily driven by higher incentive compensation expense and medical expense. Included in total non-interest expenses were $965,000 of costs from the early extinguishment of $200 million of borrowings during the three months ended September 30, 2020.

Income tax expense was $24.8 million for the three months ended September 30, 2020 and $16.2 million for the three months ended June 30, 2020.  The effective tax rate was 27.9% for the three months ended September 30, 2020 and 27.6% for the three months ended June 30, 2020. 

Third Quarter 2020 compared to Third Quarter 2019

For the third quarter of 2020, net income totaled $64.3 million, an increase of $12.3 million as compared to $52.0 million in the third quarter of 2019.  The changes in net income on a year over year quarter basis are highlighted below.

On a year over year basis, third quarter of 2020 net interest income increased by $17.2 million, or 10.4%, as compared to the third quarter of 2019 due to:

• Interest expense decreased $41.0 million, or 41.0%, primarily attributed to the weighted average cost of interest-bearing liabilities, which decreased 76 basis points to 1.14% for the three months ended September 30, 2020.  In addition, the average balance of total borrowed funds decreased $1.26 billion, or 21.9%, to $4.49 billion, while the average balance of interest-bearing deposits increased $848.1 million, or 5.5%, to $16.21 billion for the three months ended September 30, 2020. 
• Interest and dividend income decreased $23.9 million, or 9.0%, to $240.7 million, primarily attributed to the weighted average yield on net loans, which decreased 15 basis points to 4.12%. In addition, the average balance of net loans decreased $843.1 million, mainly as a result of paydowns and payoffs, offset by loan originations, including $334.7 million of PPP loans, and $453.3 million of loans acquired from Gold Coast.
• Prepayment penalties, which are included in interest income, totaled $7.4 million for the three months ended September 30, 2020 as compared to $5.2 million for the three months ended September 30, 2019.

Net interest margin increased 26 basis points year over year to 2.79% for the three months ended September 30, 2020 from 2.53% for the three months ended September 30, 2019, driven primarily by the lower cost of interest-bearing liabilities and an increase in prepayment penalties, partially offset by the growth in lower yielding average cash balances. 

Total non-interest income was $19.9 million for the three months ended September 30, 2020, an increase of $5.1 million year over year.  This increase was primarily due to gain on loans, which increased $3.6 million due to a higher volume of mortgage banking loan sales to third parties. 

Total non-interest expenses were $104.1 million for the three months ended September 30, 2020, a decrease of $4.7 million, or 4.3%, year over year.  The decrease was due to a decrease of $3.7 million in compensation and benefit expense driven by lower headcount, stock-based compensation expense and benefits expense.

Income tax expense was $24.8 million for the three months ended September 30, 2020 and $21.0 million for the three months ended September 30, 2019.  The effective tax rate was 27.9% for the three months ended September 30, 2020 and 28.8% for the three months ended September 30, 2019. 

Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30, 2019

Net income decreased by $319,000 year over year to $146.4 million for the nine months ended September 30, 2020.  The change in net income year over year is the result of the following:

Net interest income increased by $50.6 million as compared to the nine months ended September 30, 2019 due to:

• Interest expense decreased by $87.4 million, or 29.8%, to $206.1 million for the nine months ended September 30, 2020, as compared to $293.5 million for the nine months ended September 30, 2019, primarily attributed to a decrease in the weighted average cost of interest-bearing liabilities of 57 basis points to 1.30% for the nine months ended September 30, 2020.  In addition, the average balance of total borrowed funds decreased $500.0 million, or 9.0%, to $5.07 billion for the nine months ended September 30, 2020. These decreases were partially offset by the average balance of interest-bearing deposits, which increased $753.2 million, or 4.9%, to $16.08 billion for the nine months ended September 30, 2020.
• Total interest and dividend income decreased by $36.8 million, or 4.7%, to $743.0 million for the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily attributed to the weighted average yield on net loans, which decreased 8 basis points to 4.14% primarily driven by lower average yields on new loan origination volume, partially offset by an increase in prepayment penalties. In addition, the average balance of net loans decreased $438.9 million, mainly from paydowns and payoffs, partially offset by loan originations, including $334.7 million of PPP loans, and $453.3 million of loans acquired from Gold Coast. 
• Prepayment penalties, which are included in interest income, totaled $23.2 million for the nine months ended September 30, 2020, as compared to $11.4 million for the nine months ended September 30, 2019.

Net interest margin increased 22 basis points to 2.74% for the nine months ended September 30, 2020 from 2.52% for the nine months ended September 30, 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 $44.7 million for the nine months ended September 30, 2020, an increase of $11.8 million as compared to the nine months ended September 30, 2019.  The increase was primarily due to gain on loans, which increased $7.6 million as a result of a higher volume of mortgage banking loan sales to third parties.  In addition, the Company recognized a $5.7 million loss on the sale of securities during the second quarter of 2019.

Total non-interest expenses were $306.6 million for the nine months ended September 30, 2020, a decrease of $9.3 million, or 2.9%, as compared to the nine months ended September 30, 2019.  This decrease was due to a decrease of $8.4 million in compensation and fringe benefit expense, a decrease of $4.0 million in advertising and promotional expense and a decrease of $2.5 million in other non-interest expense.  These decreases were partially offset by an increase of $2.7 million in data processing and communication expense and an increase of $2.0 million in occupancy expense.  Included in non-interest expenses for the nine months ended September 30, 2020 was $3.6 million of Gold Coast acquisition-related expenses.

Income tax expense was $55.7 million for the nine months ended September 30, 2020 compared to $59.1 million for the nine months ended September 30, 2019.  The effective tax rate was 27.6% for the nine months ended September 30, 2020 and 28.7% for the nine months ended September 30, 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 September 30, 2020, our allowance for credit losses and related quarterly provision continue to be affected by the impact of COVID-19 on the current and forecasted economic conditions.  For the three months ended September 30, 2020, our provision for credit losses was $8.3 million, compared to $33.3 million for the three months ended June 30, 2020 and a negative provision of $2.5 million for the three months ended September 30, 2019.  For the three months ended September 30, 2020, net charge-offs were $667,000 compared to net charge-offs of $4.1 million for the three months ended June 30, 2020 and net charge-offs of $1.5 million for the three months ended September 30, 2019.  Our provision was $72.8 million for the nine months ended September 30, 2020 compared to a negative provision of $2.5 million for the nine months ended September 30, 2019.  For the nine months ended September 30, 2020, net charge-offs were $12.8 million compared to $5.3 million for the nine months ended September 30, 2019.

Total non-accrual loans were $132.0 million, or 0.63% of total loans, at September 30, 2020 compared to $126.8 million, or 0.59% of total loans, at June 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 September 30, 2020, there were $35.7 million of loans deemed as troubled debt restructured loans ("TDRs"), of which $26.5 million were residential and consumer loans, $3.8 million were commercial and industrial loans and $5.4 million were commercial real estate loans.  TDRs of $9.8 million were classified as accruing and $25.9 million were classified as non-accrual at September 30, 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.

	September 30, 2020							June 30, 2020							March 31, 2020							December 31, 2019							September 30, 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	78			$	17.2			79			$	19.9			106			$	24.6			111			$	23.4			89			$	17.6
Construction	—			—				—			—				—			—				—			—				—			—
Multi-family	5			5.3				9			24.6				10			57.9				5			45.6				9			16.0
Commercial real estate	7			4.6				9			10.6				6			23.5 Werbung Mehr Nachrichten zur INVESTORS BANCORP Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 17:06 - ARIVA.DE Redaktion Zweite Reihe: MDAX verliert 0,70 Prozent (25.549 Pkt.) 14:20 - ARIVA.DE Redaktion Minimaler Kursabschlag bei der SAP-Aktie (189,06 €) 14:16 - ARIVA.DE Redaktion Bayer-Aktie leicht im Plus (26,285 €)