ISBC 2017 Form 10-K & 2018 Proxy Statement

FORM 10-K For the Year Ended December 31, 2017 2016 2015 Average Outstanding Balance Interest Earned/ Paid Average Yield/ Rate Average Outstanding Balance Interest Earned/ Paid Average Yield/ Rate Average Outstanding Balance Interest Earned/ Paid Average Yield/ Rate (Dollars in thousands) Interest-earning assets: Interest-bearing deposits $ 272,382 $ 2,164 0.79% $ 144,610 $ 342 0.24% 207,331 $ 225 0.11% Securities available-for- sale 1,850,586 37,291 2.02 1,398,373 25,515 1.82 1,245,745 22,646 1.82 Securities held-to-maturity 1,704,333 44,923 2.64 1,836,692 42,643 2.32 1,708,176 38,547 2.26 Net loans 19,414,842 783,938 4.04 17,479,932 715,901 4.10 15,716,010 663,424 4.22 Stock in FHLB 243,409 13,367 5.49 204,735 9,120 4.45 172,367 6,881 3.99 Total interest-earning assets 23,485,552 881,683 3.75 21,064,342 793,521 3.77 19,049,629 731,723 3.84 Non-interest-earning assets 758,134 779,138 770,262 Total assets $24,243,686 $21,843,480 $19,819,891 Interest-bearing liabilities: Savings deposits $ 2,107,363 $ 8,395 0.40% $ 2,096,769 $ 6,304 0.30% $ 2,235,703 $ 6,402 0.29% Interest-bearing checking 4,383,110 37,091 0.85 3,381,909 16,268 0.48 2,735,513 9,642 0.35 Money market accounts 4,240,775 34,366 0.81 3,925,095 25,621 0.65 3,564,311 24,136 0.68 Certificates of deposit 3,202,312 33,691 1.05 3,161,843 33,864 1.07 2,972,611 31,234 1.05 Total interest-bearing deposits 13,933,560 113,543 0.81 12,565,616 82,057 0.65 11,508,138 71,414 0.62 Borrowed funds 4,675,626 88,364 1.89 3,816,087 71,279 1.87 3,157,311 65,225 2.07 Total interest-bearing liabilities 18,609,186 201,907 1.08 16,381,703 153,336 0.94 14,665,449 136,639 0.93 Non-interest-bearing liabilities 2,468,005 2,289,036 1,702,945 Total liabilities 21,077,191 18,670,739 16,368,394 Stockholders’ equity 3,166,495 3,172,741 3,451,497 Total liabilities and stockholders’ equity $24,243,686 $21,843,480 $19,819,891 Net interest income $679,776 $640,185 $595,084 Net interest rate spread (1) 2.67% 2.83% 2.91% Net interest-earning assets (2) $ 4,876,366 $ 4,682,639 $ 4,384,180 Net interest margin (3) 2.89% 3.04% 3.12% Ratio of interest-earning assets to total interest- bearing liabilities 1.26 1.29 1.30 (1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average total interest-earning assets. Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume 61