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| 8-K - 8-K - Investors Bancorp, Inc. | a8kq42017earningsrelease.htm |
Exhibit 99.1
101 JFK Parkway, Short Hills, NJ 07078
news release
Contact: Marianne Wade
(973) 924-5100
investorrelations@myinvestorsbank.com
Investors Bancorp, Inc. Announces Fourth Quarter Financial Results and Cash Dividend
Short Hills, N.J. - (PR NEWSWIRE) - January 25, 2018 - Investors Bancorp, Inc. (NASDAQ:ISBC) (“Company”), the holding company for Investors Bank (“Bank”), reported a net loss of $4.8 million, or $0.02 per share, for the three months ended December 31, 2017. The net loss for the three months ended December 31, 2017 includes a $49.2 million increase to income tax expense related to the enactment of the Tax Cuts and Jobs Act (“Tax Act”) in December 2017 and $5.9 million of severance benefits and branch closure costs resulting from our plan to reduce operating expenses announced in December 2017. Adjusted for the aforementioned items, net income totaled $48.2 million, or $0.17 per diluted share, for the three months ended December 31, 2017, compared to net income of $45.8 million, or $0.16 per diluted share, for the three months ended September 30, 2017, and net income of $52.5 million, or $0.18 per diluted share, for the three months ended December 31, 2016. (1)
For the year ended December 31, 2017, net income totaled $126.7 million, or $0.43 per diluted share. Net income adjusted for items above totaled $179.6 million, or $0.62 per diluted share, for the year ended December 31, 2017, compared to $192.1 million, or $0.64 per diluted share, for the year ended December 31, 2016. (1)
The Company also announced today that its Board of Directors declared a cash dividend of $0.09 per share to be paid on February 23, 2018 for stockholders of record as of February 9, 2018.
Kevin Cummings, President and CEO commented, “Net interest margin expansion, expense control, strong deposit growth and asset quality metrics highlight our strong fourth quarter results.”
Mr. Cummings also commented on this quarter’s significant items, “Although our fourth quarter results were impacted by tax reform and expenses related to our plan to reduce operating expenses, the lower corporate tax rate and our expense control efforts will benefit our shareholders going forward.”
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Performance Highlights
• | Total assets increased $347.2 million, or 1.4%, to $25.13 billion at December 31, 2017 from $24.78 billion at September 30, 2017. |
• | Total deposits increased $481.2 million, or 2.9%, from $16.88 billion at September 30, 2017 to $17.36 billion at December 31, 2017. Loan to deposit ratio declined to 116% at December 31, 2017 from 118% at September 30, 2017 and 123% at December 31, 2016. |
• | Net interest income for the three months ended December 31, 2017 was $174.7 million, a 2.2% increase compared to the three months ended September 30, 2017 and a 3.5% increase compared to the three months ended December 31, 2016. |
• | Net interest margin for the three months ended December 31, 2017 was 2.90%, a 3 basis point increase compared to the three months ended September 30, 2017. |
• | Excluding severance benefits and branch closure costs of $5.9 million, non-interest expenses were $103.6 million for the three months ended December 31, 2017 compared to $103.3 million for the three months ended September 30, 2017. The efficiency ratio adjusted for the items mentioned above declined to 56.62% for the three months ended December 31, 2017 from 57.60% for the three months ended September 30, 2017.(1) |
• | For the three months and year ended December 31, 2017, income tax expense includes a $49.2 million estimated impact from the Tax Act due to the revaluation of our net deferred tax asset. The final impact of the Tax Act may differ from this estimate due to, among other things, changes in interpretations and assumptions made by the Company, additional guidance that may be issued and actions that the Company may take. |
Financial Performance Overview
Fourth Quarter 2017 compared to Third Quarter 2017
For the fourth quarter of 2017, net loss totaled $4.8 million, a decrease of $50.6 million as compared to net income of $45.8 million in the third quarter of 2017. Income before income tax expense decreased $5.3 million over the same periods. The changes in net income on a sequential quarter basis are highlighted below.
Net interest income increased by $3.8 million, or 2.2%, as compared to the third quarter of 2017. Changes within interest income and expense categories are as follows:
• | An increase in interest and dividend income of $4.6 million, or 2.0%, to $230.3 million as compared to the third quarter of 2017 primarily attributed to a $146.2 million increase in the average balance of net loans from continued loan origination growth and a 3 basis point increase in the weighted average loan yield to 4.13%, predominately driven by higher average yields on new loan originations. |
• | Prepayment penalties, which are included in interest income, totaled $5.7 million for the three months ended December 31, 2017 as compared to $5.4 million for the three months ended September 30, 2017. |
• | Interest expense increased $774,000, primarily attributable to an increase in the average balance of total interest-bearing liabilities of $224.8 million, or 1.2%, to $19.16 billion. The weighted average cost of interest-bearing liabilities for the three months ended December 31, 2017 remained consistent at 1.16%. |
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The net interest margin increased 3 basis points to 2.90% for the three months ended December 31, 2017 compared to the three months ended September 30, 2017, primarily driven by higher loan yields.
Total non-interest expenses were $109.5 million for the three months ended December 31, 2017, an increase of $6.2 million, or 6.0%, as compared to the third quarter of 2017. In December 2017, we announced a plan to reduce operating expenses including a workforce reduction and the closure of branches. This plan resulted in the recognition of $5.9 million of expenses during the three months ended December 31, 2017 attributed to $3.4 million of severance benefits and $2.5 million related to the branch closures.
In December 2017, the Tax Act was enacted and resulted in the Company recognizing a $49.2 million increase to income tax expense during the three months ended December 31, 2017. Income tax expense was $73.7 million for the three months ended December 31, 2017 and $28.4 million for the three months ended September 30, 2017. The effective tax rate was 106.9% for the three months ended December 31, 2017 and 38.3% for the three months ended September 30, 2017. Additionally, income tax expense includes the excess tax benefits related to the Company’s stock plans of $144,000 for the three months ended December 31, 2017 and $127,000 for the three months ended September 30, 2017.
Fourth Quarter 2017 compared to Fourth Quarter 2016
For the fourth quarter of 2017, net loss totaled $4.8 million, a decrease of $57.2 million as compared to net income of $52.5 million in the fourth quarter of 2016. Income before income tax expense decreased $14.5 million over the same periods. The changes in net income on a year over year quarter basis are highlighted below.
On a year over year basis, fourth quarter of 2017 net interest income increased by $6.0 million, or 3.5%, as compared to the fourth quarter of 2016 due to:
• | An increase in interest and dividend income of $22.2 million, or 10.7%, to $230.3 million primarily as a result of a $1.52 billion increase in the average balance of net loans from continued loan origination growth. The weighted average yield on net loans increased 1 basis point to 4.13% primarily driven by higher average yields on new loan origination volume, offset by a decrease in prepayment penalties. |
• | Prepayment penalties, which are included in interest income, totaled $5.7 million for the three months ended December 31, 2017 as compared to $7.4 million for the three months ended December 31, 2016. |
• | Interest expense increased $16.3 million, primarily attributed to an increase in the weighted average cost of interest-bearing liabilities of 25 basis points to 1.16% for the three months ended December 31, 2017. Additionally, the average balance of interest-bearing deposits increased $1.73 billion, or 13.4%, to $14.69 billion for the three months ended December 31, 2017 and the average balance of total borrowed funds increased $212.0 million, or 5.0%, to $4.47 billion. |
The net interest margin decreased 17 basis points year over year to 2.90% for the three months ended December 31, 2017 from 3.07% for the three months ended December 31, 2016, primarily driven by higher costs of interest-bearing liabilities.
Total non-interest expenses increased $20.5 million, or 23.0%, year over year. In December 2017, we announced a plan to reduce operating expenses including a workforce reduction and the closure of branches. This plan resulted in the recognition of $5.9 million of expenses during the three months ended December 31, 2017 attributed to $3.4 million of severance benefits and $2.5 million related to the branch closures. For the three months ended December 31, 2017, compensation and fringe benefits increased $7.3 million, excluding
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the workforce reduction severance benefits, due to additions to our staff to support continued growth and continued build out of our risk management and operating infrastructure. Additionally, professional fees increased $3.1 million largely attributable to our bank secrecy act and anti-money laundering (“BSA”) remediation efforts. Data processing and communication expense increased $1.6 million and federal insurance premiums increased $1.1 million for the three months ended December 31, 2017.
In December 2017, the Tax Act was enacted and resulted in the Company recognizing a $49.2 million increase to income tax expense during the three months ended December 31, 2017. Income tax expense was $73.7 million for the three months ended December 31, 2017 and $31.0 million for the three months ended December 31, 2016. The effective tax rate was 106.9% for the three months ended December 31, 2017 and 37.1% for the three months ended December 31, 2016. Additionally, income tax expense includes the excess tax benefits related to the Company’s stock plans of $144,000 for the three months ended December 31, 2017 and $2.2 million for the three months ended December 31, 2016.
Year Ended December 31, 2017 compared to Year Ended December 31, 2016
Net income decreased by $65.4 million year over year to $126.7 million for the year ended December 31, 2017. Income before income tax expense decreased $18.5 million over the same periods. The change in net income year over year is the result of the following:
Net interest income increased by $39.6 million, or 6.2%, as compared to the year ended December 31, 2016 due to:
• | Total interest and dividend income increased by $88.2 million, or 11.1%, to $881.7 million for the year ended December 31, 2017 as compared to the year ended December 31, 2016, primarily attributed to a $1.93 billion increase in the average balance of net loans from continued loan origination growth in the commercial loan portfolio. This increase was partially offset by a 6 basis point decrease in the weighted average loan yield to 4.04% including the impact of a decrease in prepayment penalties. |
• | Prepayment penalties, which are included in interest income, totaled $17.3 million for the year ended December 31, 2017, as compared to $22.0 million for the year ended December 31, 2016. |
• | Total interest expense increased by $48.6 million, or 31.7%, to $201.9 million for the year ended December 31, 2017, as compared to the year ended December 31, 2016. The increase was primarily attributed to an increase in the average balance of total interest-bearing liabilities of $2.23 billion, or 13.6%, to $18.61 billion for the year ended December 31, 2017. In addition, the weighted average cost of interest-bearing liabilities increased 14 basis points to 1.08% for the year ended December 31, 2017. |
The net interest margin decreased 15 basis points to 2.89% for the year ended December 31, 2017 from 3.04% for the year ended December 31, 2016, primarily driven by higher costs of interest-bearing liabilities.
Total non-interest income was $35.6 million for the year ended December 31, 2017, a decrease of $1.6 million, or 4.2%, as compared to the year ended December 31, 2016. The decrease was driven by a $1.8 million decrease in gain on securities transactions, a $1.6 million decrease in gain on loans and a $1.1 million decrease in other income attributed to non-depository investment products. These decreases were partially offset by an increase of $3.2 million in fees and service charges.
Total non-interest expenses were $418.6 million for the year ended December 31, 2017, an increase of $60.0 million, or 16.7%, as compared to the year of 2016. In December 2017, we announced a plan to reduce operating expenses including a workforce reduction and the closure of branches. This plan resulted in the
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recognition of $5.9 million of expenses during the three months ended December 31, 2017 attributed to $3.4 million of severance benefits and $2.5 million related to the branch closures. In addition, professional fees increased $18.7 million for the year ended December 31, 2017 as compared to the year ended December 31, 2016, largely attributable to BSA remediation efforts and the continued risk management infrastructure enhancements. Compensation and fringe benefits increased $17.1 million, excluding the workforce reduction severance benefits, for the year ended December 31, 2017 as a result of additions to our staff to support continued growth and continued build out of our risk management and operating infrastructure, as well as normal merit increases, partially offset by lower pension costs. Advertising and promotional expenses increased $5.8 million due to our current advertising campaigns and federal insurance premiums increased $4.4 million for the year ended December 31, 2017.
In December 2017, the Tax Act was enacted and resulted in the Company recognizing a $49.2 million increase to income tax expense during the year ended December 31, 2017. Income tax expense was $153.8 million for the year ended December 31, 2017 compared to $106.9 million for the year ended December 31, 2016. The effective tax rate was 54.8% for the year ended December 31, 2017 and 35.8% for the year ended December 31, 2016. Additionally, income tax expense includes the excess tax benefits related to the Company’s stock plans of $1.7 million for the year ended December 31, 2017 and $10.4 million for the year ended December 31, 2016.
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. For the three months ended December 31, 2017, our provision for loan losses was $4.5 million, compared to $1.8 million for the three months ended September 30, 2017 and $4.8 million for the three months ended December 31, 2016. For the three months ended December 31, 2017, net charge-offs were $3.6 million compared to net charge-offs of $1.7 million for the three months ended September 30, 2017 and net recoveries of $73,000 for the three months ended December 31, 2016. Our provision for loan losses was $16.3 million for the year ended December 31, 2017 compared with $19.8 million for the year ended December 31, 2016. For the year ended December 31, 2017, net charge-offs were $13.7 million compared to $9.9 million for the year ended December 31, 2016.
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 $135.7 million, or 0.68% of total loans, at December 31, 2017 compared to $125.7 million, or 0.63% of total loans, at September 30, 2017 and $94.3 million, or 0.50% of total loans, at December 31, 2016. We continue to proactively and diligently work to resolve our troubled loans.
At December 31, 2017, there were $43.9 million of loans deemed as troubled debt restructured loans (“TDRs”), of which $27.3 million were residential and consumer loans, $14.5 million were commercial real estate loans and $1.3 million were commercial and industrial loans and $918,000 were multi-family loans. TDRs of $11.0 million were classified as accruing and $33.0 million were classified as non-accrual at December 31, 2017.
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, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||
# 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 | 126 | $ | 20.0 | 108 | $ | 21.5 | 86 | $ | 14.2 | 103 | $ | 29.2 | 116 | $ | 27.1 | |||||||||||||||||||
Construction | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Multi-family | 5 | 6.3 | 10 | 15.8 | 4 | 10.4 | 6 | 14.7 | 2 | 5.3 | ||||||||||||||||||||||||
Commercial real estate | 5 | 4.6 | 6 | 32.3 | 2 | 1.9 | 13 | 38.8 | 3 | 6.4 | ||||||||||||||||||||||||
Commercial and industrial | 11 | 4.3 | 8 | 0.6 | 6 | 0.6 | 6 | 1.1 | 4 | 0.8 | ||||||||||||||||||||||||
Total 30 to 59 days past due | 147 | 35.2 | 132 | 70.2 | 98 | 27.1 | 128 | 83.8 | 125 | 39.6 | ||||||||||||||||||||||||
60 to 89 days past due: | ||||||||||||||||||||||||||||||||||
Residential and consumer | 50 | 8.2 | 47 | 7.7 | 35 | 5.8 | 51 | 8.3 | 57 | 10.8 | ||||||||||||||||||||||||
Construction | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Multi-family | 2 | 7.7 | — | — | — | — | — | — | 1 | 1.1 | ||||||||||||||||||||||||
Commercial real estate | 2 | 0.8 | 2 | 1.0 | — | — | 7 | 8.4 | 8 | 32.0 | ||||||||||||||||||||||||
Commercial and industrial | — | — | 2 | 1.4 | 1 | 0.3 | 1 | 0.6 | 4 | 0.9 | ||||||||||||||||||||||||
Total 60 to 89 days past due | 54 | 16.7 | 51 | 10.1 | 36 | 6.1 | 59 | 17.3 | 70 | 44.8 | ||||||||||||||||||||||||
Total accruing past due loans | 201 | $ | 51.9 | 183 | $ | 80.3 | 134 | $ | 33.2 | 187 | $ | 101.1 | 195 | $ | 84.4 | |||||||||||||||||||
Non-accrual: | ||||||||||||||||||||||||||||||||||
Residential and consumer | 427 | $ | 76.4 | 417 | $ | 74.3 | 447 | $ | 81.0 | 470 | $ | 76.2 | 478 | $ | 79.9 | |||||||||||||||||||
Construction | 1 | 0.3 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Multi-family | 5 | 15.0 | 4 | 14.2 | 6 | 19.0 | 2 | 0.5 | 2 | 0.5 | ||||||||||||||||||||||||
Commercial real estate | 37 | 34.0 | 31 | 35.3 | 36 | 75.6 | 24 | 8.2 | 24 | 9.2 | ||||||||||||||||||||||||
Commercial and industrial | 11 | 10.0 | 6 | 1.9 | 5 | 1.8 | 4 | 2.2 | 8 | 4.7 | ||||||||||||||||||||||||
Total non-accrual loans | 481 | $ | 135.7 | 458 | $ | 125.7 | 494 | $ | 177.4 | 500 | $ | 87.1 | 512 | $ | 94.3 | |||||||||||||||||||
Accruing troubled debt restructured loans | 49 | $ | 11.0 | 58 | $ | 13.4 | 45 | $ | 11.7 | 47 | $ | 12.2 | 42 | $ | 9.4 | |||||||||||||||||||
Non-accrual loans to total loans | 0.68 | % | 0.63 | % | 0.89 | % | 0.45 | % | 0.50 | % | ||||||||||||||||||||||||
Allowance for loan losses as a percent of non-accrual loans | 170.17 | % | 183.09 | % | 129.68 | % | 265.16 | % | 242.24 | % | ||||||||||||||||||||||||
Allowance for loan losses as a percent of total loans | 1.15 | % | 1.15 | % | 1.16 | % | 1.18 | % | 1.21 | % | ||||||||||||||||||||||||
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Balance Sheet Summary
Total assets increased $1.95 billion, or 8.4%, to $25.13 billion at December 31, 2017 from December 31, 2016. Net loans increased $1.28 billion, or 6.9%, to $19.85 billion at December 31, 2017, securities increased $368.4 million, or 10.8%, to $3.78 billion at December 31, 2017, and cash increased $454.2 million to $618.4 million at December 31, 2017 from December 31, 2016.
The detail of the loan portfolio (including PCI loans) is below:
December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||
(In thousands) | |||||||||
Commercial Loans: | |||||||||
Multi-family loans | $ | 7,802,835 | 7,854,759 | 7,459,131 | |||||
Commercial real estate loans | 4,548,101 | 4,667,113 | 4,452,300 | ||||||
Commercial and industrial loans | 1,625,375 | 1,501,235 | 1,275,283 | ||||||
Construction loans | 416,883 | 397,929 | 314,843 | ||||||
Total commercial loans | 14,393,194 | 14,421,036 | 13,501,557 | ||||||
Residential mortgage loans | 5,026,517 | 4,872,872 | 4,711,880 | ||||||
Consumer and other | 671,137 | 655,021 | 597,265 | ||||||
Total Loans | 20,090,848 | 19,948,929 | 18,810,702 | ||||||
Deferred fees and premiums on purchased loans, net | (7,778 | ) | (11,701 | ) | (12,474 | ) | |||
Allowance for loan losses | (230,969 | ) | (230,071 | ) | (228,373 | ) | |||
Net loans | $ | 19,852,101 | 19,707,157 | 18,569,855 | |||||
During the year ended December 31, 2017, we originated $1.16 billion in multi-family loans, $705.1 million in commercial real estate loans, $663.4 million in commercial and industrial loans, $516.5 million in residential loans, $414.2 million in construction loans and $133.0 million in consumer and other 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 also purchased 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, 2017, we purchased loans totaling $442.2 million from these entities. In addition to the loans originated for our portfolio, our mortgage subsidiary, Investors Home Mortgage Co., originated residential mortgage loans for sale to third parties totaling $140.2 million during the year ended December 31, 2017.
The allowance for loan losses increased by $2.6 million to $231.0 million at December 31, 2017 from $228.4 million at December 31, 2016. The increase in our allowance for loan losses from December 31, 2016 is due to 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. 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, 2017, our allowance for loan losses as a percent of total loans was 1.15%.
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Securities increased by $368.4 million, or 10.8%, to $3.78 billion at December 31, 2017 from $3.42 billion at December 31, 2016. This increase was a result of purchases partially offset by paydowns and sales.
Deposits increased by $2.08 billion, or 13.6%, from $15.28 billion at December 31, 2016 to $17.36 billion at December 31, 2017. Checking accounts increased $1.24 billion to $7.33 billion at December 31, 2017 from $6.09 billion at December 31, 2016. Core deposits (savings, checking and money market) represented approximately 80% of our total deposit portfolio at both December 31, 2017 and December 31, 2016.
Borrowed funds decreased by $84.7 million, or 1.9%, to $4.46 billion at December 31, 2017 from $4.55 billion at December 31, 2016. Borrowings were reduced as a result of our deposit gathering efforts during 2017.
Stockholders’ equity increased by $2.2 million to $3.13 billion at December 31, 2017 from $3.12 billion at December 31, 2016, primarily attributed to net income of $126.7 million and share-based plan activity of $36.2 million for the year ended December 31, 2017. These increases were partially offset by cash dividends of $0.33 per share totaling $101.6 million and the repurchase of 4.5 million shares of common stock for $59.1 million during the year ended December 31, 2017. The Bank remains significantly above FDIC “well capitalized” standards, with a Tier 1 Leverage Ratio of 11.00% at December 31, 2017.
About the Company
Investors Bancorp, Inc. is the holding company for Investors Bank, which as of December 31, 2017 operated from its corporate headquarters in Short Hills, New Jersey and 156 branches located throughout New Jersey and New York.
Earnings Conference Call January 26, 2018 at 11:00 a.m. (ET)
The Company, as previously announced, will host an earnings conference call on Friday, January 26, 2018 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/10115533
A telephone replay will be available beginning on January 26, 2018 from 1:00 p.m. (ET) through 9:00 a.m. (ET) on April 26, 2018. The replay number is (877) 344-7529, password 10115533. The conference call will also be simultaneously webcast on the Company’s website www.myinvestorsbank.com and archived for one year.
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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.
(1) 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.
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INVESTORS BANCORP, INC. AND SUBSIDIARIES | |||||||||
Consolidated Balance Sheets | |||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||
(unaudited) | (unaudited) | ||||||||
Assets | (Dollars in thousands) | ||||||||
Cash and cash equivalents | $ | 618,394 | 413,322 | 164,178 | |||||
Securities available-for-sale, at estimated fair value | 1,987,727 | 1,949,429 | 1,660,433 | ||||||
Securities held-to-maturity, net (estimated fair value of $1,820,125, $1,769,179 and $1,782,801 at December 31, 2017, September 30, 2017 and December 31, 2016, respectively) | 1,796,621 | 1,733,751 | 1,755,556 | ||||||
Loans receivable, net | 19,852,101 | 19,707,157 | 18,569,855 | ||||||
Loans held-for-sale | 5,185 | 6,975 | 38,298 | ||||||
Federal Home Loan Bank stock | 231,544 | 232,814 | 237,878 | ||||||
Accrued interest receivable | 72,855 | 73,203 | 65,969 | ||||||
Other real estate owned | 5,830 | 4,336 | 4,492 | ||||||
Office properties and equipment, net | 180,231 | 177,569 | 177,417 | ||||||
Net deferred tax asset | 121,663 | 222,573 | 222,277 | ||||||
Bank owned life insurance | 155,635 | 154,719 | 161,940 | ||||||
Goodwill and intangible assets | 97,665 | 99,567 | 101,839 | ||||||
Other assets | 3,793 | 6,588 | 14,543 | ||||||
Total assets | $ | 25,129,244 | 24,782,003 | 23,174,675 | |||||
Liabilities and Stockholders’ Equity | |||||||||
Liabilities: | |||||||||
Deposits | $ | 17,357,697 | 16,876,469 | 15,280,833 | |||||
Borrowed funds | 4,461,533 | 4,484,869 | 4,546,251 | ||||||
Advance payments by borrowers for taxes and insurance | 104,308 | 125,505 | 105,851 | ||||||
Other liabilities | 80,255 | 140,028 | 118,495 | ||||||
Total liabilities | 22,003,793 | 21,626,871 | 20,051,430 | ||||||
Stockholders’ equity | 3,125,451 | 3,155,132 | 3,123,245 | ||||||
Total liabilities and stockholders’ equity | $ | 25,129,244 | 24,782,003 | 23,174,675 | |||||
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INVESTORS BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||
For the Three Months Ended | Year Ended | |||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (audited) | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Interest and dividend income: | ||||||||||||||||||||
Loans receivable and loans held-for-sale | $ | 204,017 | 201,069 | 187,912 | 783,938 | 715,901 | ||||||||||||||
Securities: | ||||||||||||||||||||
GSE obligations | 275 | 175 | 8 | 486 | 36 | |||||||||||||||
Mortgage-backed securities | 19,015 | 17,829 | 15,631 | 70,827 | 60,211 | |||||||||||||||
Equity | 31 | 30 | 51 | 139 | 198 | |||||||||||||||
Municipal bonds and other debt | 2,329 | 2,229 | 1,665 | 10,762 | 7,713 | |||||||||||||||
Interest-bearing deposits | 1,005 | 875 | 88 | 2,164 | 342 | |||||||||||||||
Federal Home Loan Bank stock | 3,645 | 3,557 | 2,724 | 13,367 | 9,120 | |||||||||||||||
Total interest and dividend income | 230,317 | 225,764 | 208,079 | 881,683 | 793,521 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 33,723 | 32,300 | 20,418 | 113,543 | 82,057 | |||||||||||||||
Borrowed funds | 21,904 | 22,553 | 18,951 | 88,364 | 71,279 | |||||||||||||||
Total interest expense | 55,627 | 54,853 | 39,369 | 201,907 | 153,336 | |||||||||||||||
Net interest income | 174,690 | 170,911 | 168,710 | 679,776 | 640,185 | |||||||||||||||
Provision for loan losses | 4,500 | 1,750 | 4,750 | 16,250 | 19,750 | |||||||||||||||
Net interest income after provision for loan losses | 170,190 | 169,161 | 163,960 | 663,526 | 620,435 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Fees and service charges | 5,360 | 5,076 | 4,223 | 20,326 | 17,148 | |||||||||||||||
Income on bank owned life insurance | 916 | 935 | 1,156 | 3,742 | 4,423 | |||||||||||||||
Gain on loans, net | 263 | 726 | 1,271 | 3,187 | 4,787 | |||||||||||||||
Gain on securities transactions | — | — | — | 1,275 | 3,100 | |||||||||||||||
(Loss) gain on sales of other real estate owned, net | (280 | ) | 446 | 163 | 591 | 96 | ||||||||||||||
Other income | 1,960 | 1,212 | 1,691 | 6,516 | 7,647 | |||||||||||||||
Total non-interest income | 8,219 | 8,395 | 8,504 | 35,637 | 37,201 | |||||||||||||||
Non-interest expense: | ||||||||||||||||||||
Compensation and fringe benefits | 58,970 | 57,052 | 48,223 | 227,177 | 206,698 | |||||||||||||||
Advertising and promotional expense | 3,455 | 4,355 | 3,004 | 14,411 | 8,644 | |||||||||||||||
Office occupancy and equipment expense | 17,740 | 14,589 | 14,608 | 61,509 | 56,220 | |||||||||||||||
Federal insurance premiums | 4,500 | 4,500 | 3,383 | 16,610 | 12,183 | |||||||||||||||
General and administrative | 763 | 691 | 724 | 3,030 | 3,131 | |||||||||||||||
Professional fees | 8,712 | 8,140 | 5,611 | 38,853 | 20,104 | |||||||||||||||
Data processing and communication | 6,871 | 5,719 | 5,222 | 24,364 | 21,043 | |||||||||||||||
Other operating expenses | 8,463 | 8,228 | 8,235 | 32,620 | 30,541 | |||||||||||||||
Total non-interest expenses | 109,474 | 103,274 | 89,010 | 418,574 | 358,564 | |||||||||||||||
Income before income tax expense | 68,935 | 74,282 | 83,454 | 280,589 | 299,072 | |||||||||||||||
Income tax expense | 73,689 | 28,437 | 30,989 | 153,845 | 106,947 | |||||||||||||||
Net (loss) income | $ | (4,754 | ) | 45,845 | 52,465 | 126,744 | 192,125 | |||||||||||||
Basic (loss) earnings per share | $(0.02) | 0.16 | 0.18 | 0.44 | 0.65 | |||||||||||||||
Diluted (loss) earnings per share | $(0.02) | 0.16 | 0.18 | 0.43 | 0.64 | |||||||||||||||
Basic weighted average shares outstanding | 288,739,899 | 289,715,414 | 290,751,171 | 290,183,952 | 297,580,834 | |||||||||||||||
Diluted weighted average shares outstanding | 288,739,899 | 290,890,307 | 292,623,922 | 291,966,475 | 300,954,885 | |||||||||||||||
11
INVESTORS BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||
Average Balance Sheet and Yield/Rate Information | ||||||||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||||||
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 | $ | 398,950 | 1,005 | 1.01 | % | $ | 379,670 | 875 | 0.92 | % | $ | 154,678 | 88 | 0.23 | % | |||||||||||||
Securities available-for-sale | 1,977,066 | 10,332 | 2.09 | % | 1,901,626 | 9,674 | 2.03 | % | 1,574,840 | 7,165 | 1.82 | % | ||||||||||||||||
Securities held-to-maturity | 1,747,492 | 11,318 | 2.59 | % | 1,672,675 | 10,589 | 2.53 | % | 1,778,239 | 10,190 | 2.29 | % | ||||||||||||||||
Net loans | 19,779,541 | 204,017 | 4.13 | % | 19,633,388 | 201,069 | 4.10 | % | 18,258,406 | 187,912 | 4.12 | % | ||||||||||||||||
Federal Home Loan Bank stock | 232,077 | 3,645 | 6.28 | % | 241,033 | 3,557 | 5.90 | % | 224,917 | 2,724 | 4.84 | % | ||||||||||||||||
Total interest-earning assets | 24,135,126 | 230,317 | 3.82 | % | 23,828,392 | 225,764 | 3.79 | % | 21,991,080 | 208,079 | 3.78 | % | ||||||||||||||||
Non-interest earning assets | 756,703 | 759,203 | 794,131 | |||||||||||||||||||||||||
Total assets | $ | 24,891,829 | $ | 24,587,595 | $ | 22,785,211 | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||
Savings | $ | 2,126,490 | 2,342 | 0.44 | % | $ | 2,076,769 | 2,174 | 0.42 | % | $ | 2,087,267 | 1,620 | 0.31 | % | |||||||||||||
Interest-bearing checking | 4,731,338 | 11,379 | 0.96 | % | 4,422,930 | 10,883 | 0.98 | % | 3,901,601 | 5,070 | 0.52 | % | ||||||||||||||||
Money market accounts | 4,286,045 | 9,594 | 0.90 | % | 4,320,547 | 9,478 | 0.88 | % | 4,094,678 | 6,737 | 0.66 | % | ||||||||||||||||
Certificates of deposit | 3,545,263 | 10,408 | 1.17 | % | 3,481,135 | 9,765 | 1.12 | % | 2,873,374 | 6,991 | 0.97 | % | ||||||||||||||||
Total interest-bearing deposits | 14,689,136 | 33,723 | 0.92 | % | 14,301,381 | 32,300 | 0.90 | % | 12,956,920 | 20,418 | 0.63 | % | ||||||||||||||||
Borrowed funds | 4,470,651 | 21,904 | 1.96 | % | 4,633,628 | 22,553 | 1.95 | % | 4,258,697 | 18,951 | 1.78 | % | ||||||||||||||||
Total interest-bearing liabilities | 19,159,787 | 55,627 | 1.16 | % | 18,935,009 | 54,853 | 1.16 | % | 17,215,617 | 39,369 | 0.91 | % | ||||||||||||||||
Non-interest-bearing liabilities | 2,560,328 | 2,485,667 | 2,450,879 | |||||||||||||||||||||||||
Total liabilities | 21,720,115 | 21,420,676 | 19,666,496 | |||||||||||||||||||||||||
Stockholders’ equity | 3,171,714 | 3,166,919 | 3,118,715 | |||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 24,891,829 | $ | 24,587,595 | $ | 22,785,211 | ||||||||||||||||||||||
Net interest income | $ | 174,690 | $ | 170,911 | $ | 168,710 | ||||||||||||||||||||||
Net interest rate spread | 2.66 | % | 2.63 | % | 2.87 | % | ||||||||||||||||||||||
Net interest earning assets | $ | 4,975,339 | $ | 4,893,383 | $ | 4,775,463 | ||||||||||||||||||||||
Net interest margin | 2.90 | % | 2.87 | % | 3.07 | % | ||||||||||||||||||||||
Ratio of interest-earning assets to total interest-bearing liabilities | 1.26 | X | 1.26 | X | 1.28 | X | ||||||||||||||||||||||
12
INVESTORS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||
Average Balance Sheet and Yield/Rate Information | |||||||||||||||||||
Year Ended | |||||||||||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||||||||||
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 | $ | 272,382 | 2,164 | 0.79 | % | $ | 144,610 | 342 | 0.24 | % | |||||||||
Securities available-for-sale | 1,850,586 | 37,291 | 2.02 | % | 1,398,373 | 25,515 | 1.82 | % | |||||||||||
Securities held-to-maturity | 1,704,333 | 44,923 | 2.64 | % | 1,836,692 | 42,643 | 2.32 | % | |||||||||||
Net loans | 19,414,842 | 783,938 | 4.04 | % | 17,479,932 | 715,901 | 4.10 | % | |||||||||||
Federal Home Loan Bank stock | 243,409 | 13,367 | 5.49 | % | 204,735 | 9,120 | 4.45 | % | |||||||||||
Total interest-earning assets | 23,485,552 | 881,683 | 3.75 | % | 21,064,342 | 793,521 | 3.77 | % | |||||||||||
Non-interest earning assets | 758,134 | 779,138 | |||||||||||||||||
Total assets | $ | 24,243,686 | $ | 21,843,480 | |||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||
Savings | $ | 2,107,363 | 8,395 | 0.40 | % | $ | 2,096,769 | 6,304 | 0.30 | % | |||||||||
Interest-bearing checking | 4,383,110 | 37,091 | 0.85 | % | 3,381,909 | 16,268 | 0.48 | % | |||||||||||
Money market accounts | 4,240,775 | 34,366 | 0.81 | % | 3,925,095 | 25,621 | 0.65 | % | |||||||||||
Certificates of deposit | 3,202,312 | 33,691 | 1.05 | % | 3,161,843 | 33,864 | 1.07 | % | |||||||||||
Total interest bearing deposits | 13,933,560 | 113,543 | 0.81 | % | 12,565,616 | 82,057 | 0.65 | % | |||||||||||
Borrowed funds | 4,675,626 | 88,364 | 1.89 | % | 3,816,087 | 71,279 | 1.87 | % | |||||||||||
Total interest-bearing liabilities | 18,609,186 | 201,907 | 1.08 | % | 16,381,703 | 153,336 | 0.94 | % | |||||||||||
Non-interest bearing liabilities | 2,468,005 | 2,289,036 | |||||||||||||||||
Total liabilities | 21,077,191 | 18,670,739 | |||||||||||||||||
Stockholders’ equity | 3,166,495 | 3,172,741 | |||||||||||||||||
Total liabilities and stockholders’ equity | $ | 24,243,686 | $ | 21,843,480 | |||||||||||||||
Net interest income | $ | 679,776 | $ | 640,185 | |||||||||||||||
Net interest rate spread | 2.67 | % | 2.83 | % | |||||||||||||||
Net interest earning assets | $ | 4,876,366 | $ | 4,682,639 | |||||||||||||||
Net interest margin | 2.89 | % | 3.04 | % | |||||||||||||||
Ratio of interest-earning assets to total interest-bearing liabilities | 1.26 | X | 1.29 | X | |||||||||||||||
13
INVESTORS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||
Selected Performance Ratios | |||||||||||||||||
For the Three Months Ended | Year Ended | ||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||
Return on average assets | (0.08 | )% | 0.75 | % | 0.92 | % | 0.52 | % | 0.88 | % | |||||||
Return on average assets, adjusted (2) | 0.77 | % | 0.75 | % | 0.92 | % | 0.74 | % | 0.88 | % | |||||||
Return on average equity | (0.60 | )% | 5.79 | % | 6.73 | % | 4.00 | % | 6.06 | % | |||||||
Return on average equity, adjusted (2) | 6.08 | % | 5.79 | % | 6.73 | % | 5.67 | % | 6.06 | % | |||||||
Return on average tangible equity | (0.62 | )% | 5.98 | % | 6.96 | % | 4.13 | % | 6.26 | % | |||||||
Return on average tangible equity, adjusted (2) | 6.28 | % | 5.98 | % | 6.96 | % | 5.86 | % | 6.26 | % | |||||||
Interest rate spread | 2.66 | % | 2.63 | % | 2.87 | % | 2.67 | % | 2.83 | % | |||||||
Net interest margin | 2.90 | % | 2.87 | % | 3.07 | % | 2.89 | % | 3.04 | % | |||||||
Efficiency ratio | 59.85 | % | 57.60 | % | 50.23 | % | 58.51 | % | 52.93 | % | |||||||
Efficiency ratio, adjusted (2) | 56.62 | % | 57.60 | % | 50.23 | % | 57.68 | % | 52.93 | % | |||||||
Non-interest expense to average total assets | 1.76 | % | 1.68 | % | 1.56 | % | 1.73 | % | 1.64 | % | |||||||
Average interest-earning assets to average interest-bearing liabilities | 1.26 | 1.26 | 1.28 | 1.26 | 1.29 | ||||||||||||
INVESTORS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||
Selected Financial Ratios and Other Data | |||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||||||||||
Asset Quality Ratios: | |||||||||||||||||
Non-performing assets as a percent of total assets | 0.61 | % | 0.58 | % | 0.47 | % | |||||||||||
Non-performing loans as a percent of total loans | 0.73 | % | 0.70 | % | 0.55 | % | |||||||||||
Allowance for loan losses as a percent of non-accrual loans | 170.17 | % | 183.09 | % | 242.24 | % | |||||||||||
Allowance for loan losses as a percent of total loans | 1.15 | % | 1.15 | % | 1.21 | % | |||||||||||
Capital Ratios: | |||||||||||||||||
Tier 1 Leverage Ratio (1) | 11.00 | % | 11.38 | % | 12.03 | % | |||||||||||
Common equity tier 1 risk-based (1) | 13.94 | % | 14.29 | % | 14.75 | % | |||||||||||
Tier 1 Risk-Based Capital (1) | 13.94 | % | 14.29 | % | 14.75 | % | |||||||||||
Total Risk-Based Capital (1) | 15.13 | % | 15.47 | % | 15.99 | % | |||||||||||
Equity to total assets (period end) | 12.44 | % | 12.73 | % | 13.48 | % | |||||||||||
Average equity to average assets | 12.74 | % | 12.88 | % | 13.69 | % | |||||||||||
Tangible capital to tangible assets (2) | 12.10 | % | 12.38 | % | 13.10 | % | |||||||||||
Book value per common share (2) | $ | 10.64 | $ | 10.74 | $ | 10.53 | |||||||||||
Tangible book value per common share (2) | $ | 10.31 | $ | 10.40 | $ | 10.18 | |||||||||||
Other Data: | |||||||||||||||||
Number of full service offices | 156 | 155 | 151 | ||||||||||||||
Full time equivalent employees | 1,931 | 1,973 | 1,829 | ||||||||||||||
(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, 2017 | September 30, 2017 | December 31, 2016 | |||||||||
Total stockholders’ equity | $ | 3,125,451 | 3,155,132 | 3,123,245 | |||||||
Goodwill and intangible assets | 97,665 | 99,567 | 101,839 | ||||||||
Tangible stockholders’ equity | $ | 3,027,786 | 3,055,565 | 3,021,406 | |||||||
Book Value per Share Computation | |||||||||||
Common stock issued | 359,070,852 | 359,070,852 | 359,070,852 | ||||||||
Treasury shares | (52,944,765 | ) | (52,894,393 | ) | (49,621,464 | ) | |||||
Shares outstanding | 306,126,087 | 306,176,459 | 309,449,388 | ||||||||
Unallocated ESOP shares | (12,316,149 | ) | (12,434,574 | ) | (12,789,847 | ) | |||||
Book value shares | 293,809,938 | 293,741,885 | 296,659,541 | ||||||||
Book Value Per Share | $ | 10.64 | $ | 10.74 | $ | 10.53 | |||||
Tangible Book Value per Share | $ | 10.31 | $ | 10.40 | $ | 10.18 | |||||
15
Investors Bancorp, Inc. | |||||||||||||||
Non-GAAP Reconciliation | |||||||||||||||
(dollars in thousands, except share data) | |||||||||||||||
Net (Loss) Income and Diluted EPS, as adjusted | |||||||||||||||
For the Three Months Ended | Year Ended | ||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||
Income before income tax expense | $ | 68,935 | 74,282 | 83,454 | 280,589 | 299,072 | |||||||||
Income tax expense | 73,689 | 28,437 | 30,989 | 153,845 | 106,947 | ||||||||||
Net (loss) income | $ | (4,754 | ) | 45,845 | 52,465 | 126,744 | 192,125 | ||||||||
Effective tax rate | 106.9 | % | 38.3 | % | 37.1 | % | 54.8 | % | 35.8 | % | |||||
Compensation and fringe benefits (1) | $ | 3,409 | — | — | 3,409 | — | |||||||||
Office occupancy and equipment expense (2) | 2,496 | — | — | 2,496 | — | ||||||||||
Total non-interest expense adjustments | 5,905 | — | — | 5,905 | — | ||||||||||
Non-interest expense adjustments, net of tax | 3,804 | — | — | 3,702 | — | ||||||||||
Tax reform impact (3) | 49,164 | — | — | 49,164 | — | ||||||||||
Adjusted net income | $ | 48,214 | 45,845 | 52,465 | 179,610 | 192,125 | |||||||||
Adjusted tax rate | 35.6 | % | 38.3 | % | 37.1 | % | 37.3 | % | 35.8 | % | |||||
Adjusted diluted earnings per share | $ | 0.17 | 0.16 | 0.18 | 0.62 | 0.64 | |||||||||
Weighted average diluted shares (4) | 290,419,182 | 290,890,307 | 292,623,922 | 291,966,475 | 300,954,885 | ||||||||||
Performance Ratios, as adjusted | |||||||||||||||
For the Three Months Ended | Year Ended | ||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||
Total non-interest expense | $ | 109,474 | 103,274 | 89,010 | 418,574 | 358,564 | |||||||||
Net interest income | 174,690 | 170,911 | 168,710 | 679,776 | 640,185 | ||||||||||
Total non-interest income | 8,219 | 8,395 | 8,504 | 35,637 | 37,201 | ||||||||||
Efficiency ratio | 59.85 | % | 57.60 | % | 50.23 | % | 58.51 | % | 52.93 | % | |||||
Compensation and fringe benefits (1) | 3,409 | — | — | 3,409 | — | ||||||||||
Office occupancy and equipment expense (2) | 2,496 | — | — | 2,496 | — | ||||||||||
Adjusted non-interest expense | $ | 103,569 | 103,274 | 89,010 | 412,669 | 358,564 | |||||||||
Adjusted efficiency ratio | 56.62 | % | 57.60 | % | 50.23 | % | 57.68 | % | 52.93 | % | |||||
Average tangible equity | $ | 3,073,035 | 3,066,752 | 3,016,484 | 3,066,073 | 3,068,885 | |||||||||
Average equity | $ | 3,171,714 | 3,166,919 | 3,118,715 | 3,166,495 | 3,172,741 | |||||||||
Average assets | $ | 24,891,829 | 24,587,595 | 22,785,211 | 24,243,686 | 21,843,480 | |||||||||
Adjusted return on average assets | 0.77 | % | 0.75 | % | 0.92 | % | 0.74 | % | 0.88 | % | |||||
Adjusted return on average equity | 6.08 | % | 5.79 | % | 6.73 | % | 5.67 | % | 6.06 | % | |||||
Adjusted return on average tangible equity | 6.28 | % | 5.98 | % | 6.96 | % | 5.86 | % | 6.26 | % | |||||
(1) Compensation and fringe benefits includes severance benefits related to the workforce reduction announced in December 2017. | |||||||||||||||
(2) Office occupancy and equipment expense includes costs related to the branch closures announced in December 2017. | |||||||||||||||
(3) Increase to income tax expense related to the enactment of the Tax Act. | |||||||||||||||
(4) Adjusted diluted earnings per share for the three months ended December 31, 2017 includes the effects of dilutive common stock equivalents. | |||||||||||||||
16