ISBC 2017 Form 10-K & 2018 Proxy Statement

FORM 10-K At or for the Year Ended December 31, 2017 2016 2015 2014 2013 Selected Financial Ratios and Other Data: Performance Ratios: Return on assets (ratio of net income to average total assets) 0.52% 0.88% 0.92% 0.76% 0.83% Return on assets — Adjusted (1) 0.73% 0.88% 0.92% 0.76% 0.83% Return on equity (ratio of net income to average equity) 4.00% 6.06% 5.26% 4.71% 10.00% Return on equity — Adjusted (1) 5.56% 6.06% 5.26% 4.71% 10.00% Net interest rate spread (2) 2.67% 2.83% 2.91% 3.08% 3.24% Net interest margin (3) 2.89% 3.04% 3.12% 3.27% 3.37% Efficiency ratio (4) 58.51% 52.93% 51.69% 58.21% 52.06% Non-interest expenses to average total assets 1.73% 1.64% 1.66% 1.96% 1.82% Average interest-earning assets to average interest- bearing liabilities 1.26x 1.29x 1.30x 1.28x 1.15x Dividend payout ratio (5) 75.00% 40.00% 45.45% 31.58% 19.61% Asset Quality Ratios: Non-performing assets to total assets 0.61% 0.47% 0.69% 0.81% 0.95% Non-accrual loans to total loans 0.68% 0.50% 0.68% 0.72% 0.77% Allowance for loan losses to non-performing loans (6) 157.46% 220.18% 158.43% 139.10% 124.30% Allowance for loan losses to total loans 1.15% 1.21% 1.29% 1.33% 1.33% Capital Ratios: Tier 1 leverage ratio (7) 11.00% 12.03% 12.41% 12.79% 8.20% Common equity tier 1 risk-based (7) 13.94% 14.75% 15.87% n/a n/a Tier 1 risk-based capital (7) 13.94% 14.75% 15.87% 17.01% 10.14% Total-risk-based capital (7) 15.13% 15.99% 17.12% 18.26% 11.39% Equity to total assets 12.44% 13.48% 15.85% 19.06% 8.54% Tangible equity to tangible assets (8) 12.10% 13.10% 15.43% 18.60% 7.90% Average equity to average assets 13.06% 14.52% 17.41% 16.16% 8.32% Other Data: Book value per common share (8) $ 10.64 $ 10.53 $ 10.30 $ 10.39 $ 9.85 Tangible book value per common share (8) $ 10.31 $ 10.18 $ 9.97 $ 10.08 $ 9.04 Number of full service offices 156 151 140 132 129 Full time equivalent employees 1,931 1,829 1,734 1,682 1,541 (1) The adjusted return on assets and adjusted return on equity ratios for the year ended December 31, 2017 exclude $49.2 million of income tax expense related to the enactment of the Tax Act in December 2017. (2) The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted- average cost of interest-bearing liabilities for the period. (3) The net interest margin represents net interest income as a percent of average interest-earning assets for the period. (4) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income. (5) The dividend payout ratio represents dividends paid per share divided by net income per share. (6) Non-performing loans include non-accrual loans and performing troubled debt restructured loans. (7) Ratios are for Investors Bank and do not include capital retained at the holding company level. The information presented prior to December 31, 2015 reflect the requirements in effect at that time, as the Basel III requirements became effective on January 1, 2015, see “Item 1. Business — Supervision and Regulation”. (8) Excludes goodwill and intangible assets for the calculation of tangible book value and tangible equity. For common share calculation, excludes treasury shares and unallocated ESOP shares. 52