ISBC 2017 Form 10-K & 2018 Proxy Statement

FORM 10-K represent a more stable source of low cost funds and may be less sensitive to changes in market interest rates. At December 31, 2017, we held $13.90 billion in core deposits, representing 80.1% of total deposits, of which $709.7 million are brokered money market deposits. At December 31, 2017, $3.46 billion, or 19.9%, of our total deposit balances were certificates of deposit, which included $759.5 million of brokered certificates of deposit. In addition, municipal deposits are a significant source of funds. At December 31, 2017, $4.70 billion, or 27.1%, of our total deposits consisted of public fund deposits from local government entities. We have a suite of commercial deposit products, designed to appeal to small and mid-sized business owners and non-profit organizations. The interest rates we pay, our maturity terms, service fees and withdrawal penalties are all reviewed on a periodic basis. Deposit rates and terms are based primarily on our current operating strategies, market rates, liquidity requirements, rates paid by competitors and growth goals. We also rely on personalized customer service, long-standing relationships with customers and an active marketing program to attract and retain deposits. The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition. The variety of deposit accounts we offer allows us to respond to changes in consumer demands and to be competitive in obtaining deposit funds. Our ability to attract and maintain deposits and the rates we pay on deposits will continue to be significantly affected by market conditions. We intend to continue to invest in technology platforms and branch staff training, de novo branches, and to aggressively market and advertise our core deposit products and will attempt to generate our deposits from a diverse client group within our primary market area. We remain focused on attracting and maintaining deposits from consumers, businesses and municipalities which operate in our marketplace. The following table sets forth the distribution of total deposit accounts, by account type, at the dates indicated. At December 31, 2017 2016 2015 Balance Percent of Total Deposits Weighted Average Rate Balance Percent of Total Deposits Weighted Average Rate Balance Percent of Total Deposits Weighted Average Rate (Dollars in thousands) Non-interest bearing: Checking accounts $ 2,424,608 14.0% —% $ 2,173,493 14.2% —% $ 1,890,536 13.4% —% Interest-bearing: Checking accounts 4,909,054 28.3 0.91 3,916,208 25.6 0.45 2,745,489 19.5 0.29 Money market deposits 4,243,545 24.4 0.90 4,150,583 27.2 0.65 3,861,317 27.5 0.67 Savings 2,320,228 13.4 0.48 2,092,989 13.7 0.29 2,150,004 15.3 0.29 Certificates of deposit 3,460,262 19.9 1.13 2,947,560 19.3 0.91 3,416,310 24.3 1.14 Total deposits $17,357,697 100.0% 0.77% $15,280,833 100.0% 0.51% $14,063,656 100.0% 0.56% 19