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Investors Bancorp, Inc. Announces Fourth Quarter and Year-End Financial Results
SHORT HILLS, N.J., Aug. 4 /PRNewswire-FirstCall/ -- Investors Bancorp, Inc. (Nasdaq: ISBC) ("Company"), the holding company for Investors Savings Bank ("Bank"), reported net income of $5.5 million for the three months ended June 30, 2009 compared to net income of $5.5 million for the three months ended June 30, 2008. Basic and diluted earnings were $0.05 per share for the three months ended June 30, 2009, compared to basic and diluted earnings of $0.05 per share for the three months ended June 30, 2008.
The results of the current quarter reflect several notable events. Most significantly, the Company completed its acquisition of American Bancorp of New Jersey, Inc. ("American") effective May 31, 2009, in which 6.5 million of its common shares were issued. In addition during the quarter, the Federal Deposit Insurance Corporation ("FDIC") finalized the special assessment on insured financial institutions to rebuild the Deposit Insurance Fund. The Company recorded a $3.6 million pre-tax charge related to this special assessment. Also reflected in the recent quarter's results was a $1.3 million pre-tax other-than-temporary impairment ("OTTI") non-cash charge on certain pooled trust preferred securities. This charge reduced net income and diluted earnings per common share by $2.8 million and $0.03, respectively. Excluding these items, earnings for the quarter ended June 30, 2009 were $8.3 million compared to earnings of $5.7 for the quarter ended June 30, 2008.
Reflecting on the Company's fourth quarter performance, Kevin Cummings, President and Chief Executive Officer, commented, "This past quarter was a time of significant accomplishment. We completed the acquisition of American, including the successful conversion of customer accounts to the Company's systems. We are also pleased to welcome former American employees to the Company and look forward to serving our new customers by providing them with a wide range of products and exceptional customer service."
The net loss for the year ended June 30, 2009 was $64.9 million compared to net income of $16.0 million for the year ended June 30, 2008. Basic loss per share was $0.62 for the year ended June 30, 2009, compared to basic and diluted earnings of $0.15 per share for the year ended June 30, 2008. Excluding the FDIC special assessment and the OTTI charges taken during the fiscal year of $3.6 million and $158.5 million, respectively, the fiscal year ended June 30, 2009, earnings were $31.5 million compared to earnings of $16.3 for the year ended June 30, 2008.
The following represents other performance highlights and significant events for the year ended June 30, 2009:
- Net interest margin increased 24 basis points to 2.33% compared to prior year quarter and a decrease of 1 basis point compared to linked quarter.
- The American acquisition increased the Company's total assets by $670 million, loans by $480 million and deposits by $500 million.
- Deposits increased $1.54 billion, or 38.7%, to $5.51 billion at June 30, 2009 from $3.97 billion at June 30, 2008.
- Core deposits increased by $1.15 billion, or 110.0%, to $2.20 billion at June 30, 2009 from $1.05 billion at June 30, 2008.
- Net loans increased by $1.47 billion, or 31.5%, to $6.14 billion at June 30, 2009 from $4.67 billion at June 30, 2008.
- Non performing loans as a percentage of total loans increased to 1.97% from 1.44% in the March 2009 quarter.
- The allowance for loan losses increased to $46.6 million or 0.76% of total loans at June 30, 2009 from $13.6 million or 0.29% of total loans at June 30, 2008. The increase is attributed to strong growth in the loan portfolio, increased credit risk associated with commercial real estate lending, continued deterioration in the economic conditions in our local markets and an increase in loan delinquencies and non-performing loans.
- Common stock repurchased for the year ended June 30, 2009 was 470,508 shares including 387,681 shares repurchased during the three months ended June 30, 2009.
- The Company maintains a strong tangible capital ratio of 10.02%, and is considered well capitalized under regulatory guidelines.
Mr. Cummings commented on the Company's balance sheet expansion, "We are extremely pleased with our impressive core deposit and loan growth and I am particularly proud of our staff's efforts in achieving such significant results. The Company has made great strides over the past few years in strategically transforming its balance sheet and changing its culture to become a full service bank."
He also commented on the increase in non-performing loans. "Although non-performing loans increased this quarter, we expect them to remain at a manageable level while we actively address their resolution and continue to build our allowance for loan losses."
Comparison of Operating Results
Interest and Dividend Income
Total interest and dividend income increased by $13.9 million, or 17.5%, to $93.4 million for the three months ended June 30, 2009 from $79.5 million for the three months ended June 30, 2008. This increase is primarily due to a $1.42 billion, or 23.6%, increase in the average balance of interest-earning assets to $7.42 billion for the three months ended June 30, 2009 from $6.00 billion for the three months ended June 30, 2008, as we took advantage of several opportunities to purchase high quality residential loans from other financial institutions and continued our focus on growing our multifamily loan portfolio. This was partially offset by a 27 basis point decrease in the weighted average yield on interest-earning assets to 5.03% for the three months ended June 30, 2009 compared to 5.30% for the three months ended June 30, 2008.
Interest income on loans increased by $17.8 million, or 29.0%, to $79.2 million for the three months ended June 30, 2009 from $61.4 million for the three months ended June 30, 2008, resulting from a $1.42 billion, or 32.4%, increase in the average balance of net loans to $5.82 billion for the three months ended June 30, 2009 from $4.39 billion for the three months ended June 30, 2008, consistent with our strategic plan to change our mix of assets by increasing the size of our loan portfolio while reducing the size of our securities portfolio. This was partially offset by a 14 basis point decrease in the average yield on loans to 5.45% for the three months ended June 30, 2009 from 5.59% for the three months ended June 30, 2008 reflecting increased refinancing activity on residential mortgage loans as consumers took advantage of historically low mortgage rates and the impact of non accrual loans.
Interest income on all other interest-earning assets, excluding loans, decreased by $3.9 million, or 21.6%, to $14.2 million for the three months ended June 30, 2009 from $18.1 million for the three months ended June 30, 2008. This decrease reflected a 98 basis point decrease in the average yield on securities and other interest-earning assets to 3.52% for the three months ended June 30, 2009 from 4.50% for the three months ended June 30, 2008 as some of our adjustable rate securities re-priced downward consistent with the decline in market rates. In addition yields were negatively impacted by deferrals of interest payments related to certain pooled trust preferred securities and higher than historically normal average balances of our cash account
Total interest and dividend income increased by $55.3 million, or 17.7%, to $368.1 million for the year ended June 30, 2009 from $312.8 million for the year ended June 30, 2008. This increase was primarily due to a $1.19 billion, or 20.4%, increase in the average balance of interest-earning assets to $6.99 billion for the year ended June 30, 2009 from $5.80 billion for the year ended June 30, 2008. We took advantage of several opportunities to grow assets by purchasing high quality mortgage loans and continued our focus on growing our multifamily loan portfolio. This increase was partially offset by a 12 basis point decrease in the weighted average yield on interest-earning assets to 5.27% for the year ended June 30, 2009 compared to 5.39% for the year ended June 30, 2008.
Interest income on loans increased by $75.0 million, or 32.7%, to $304.7 million for the year ended June 30, 2009 from $229.6 million for the year ended June 30, 2008, reflecting a $1.44 billion, or 35.6%, increase in the average balance of net loans to $5.48 billion for the year ended June 30, 2009 from $4.04 billion for the year ended June 30, 2008. This increase was partially offset by a 12 basis point decrease in the average yield on loans to 5.56% for the year ended June 30, 2009 from 5.68% for the year ended June 30, 2008.
Interest income on all other interest-earning assets, excluding loans, decreased by $19.8 million, or 23.8%, to $63.4 million for the year ended June 30, 2009 from $83.2 million for the year ended June 30, 2008. This decrease reflected a $251.1 million decrease in the average balance of securities and other interest-earning assets, which is consistent with our strategic plan to change our mix of assets by reducing the size of our securities portfolio and increasing the size of our loan portfolio. In addition, the average yield on securities and other interest-earning assets decreased 52 basis points to 4.21% for the year ended June 30, 2009 from 4.73% for the year ended June 30, 2008.
Interest Expense
Total interest expense increased by $2.0 million, or 4.1%, to $50.0 million for the three months ended June 30, 2009 from $48.1 million for the three months ended June 30, 2008. This increase was primarily due to a $1.50 billion, or 28.6% increase in the average balance of total interest-bearing liabilities to $6.76 billion for the three months ended June 30, 2009 from $5.26 billion for the three months ended June 30, 2008. This was partially offset by a 70 basis point decrease in the weighted average cost of total interest-bearing liabilities to 2.96% for the three months ended June 30, 2009 compared to 3.66% for the three months ended June 30, 2008.
Interest expense on interest-bearing deposits decreased $2.0 million, or 5.8% to $32.5 million for the three months ended June 30, 2009 from $34.5 million for the three months ended June 30, 2008. This decrease was due to a 91 basis point decrease in the average cost of interest-bearing deposits to 2.60% for the three months ended June 30, 2009 compared to 3.51% for the three months ended June 30, 2008, as lower short term market interest rates allowed us to reduce rates paid on deposit accounts. This was partially offset by a $1.08 billion increase in the average balance of interest-bearing deposits as efforts to increase deposits continues to be successful and customers preferred the safety of bank deposits versus other investment vehicles.
Interest expense on borrowed funds increased by $4.0 million, or 29.4%, to $17.5 million for the three months ended June 30, 2009 from $13.5 million for the three months ended June 30, 2008. This increase was caused by a $429.4 million, or 32.4%, increase in the average balance of borrowed funds to $1.75 billion for the three months ended June 30, 2009 from $1.32 billion for the three months ended June 30, 2008, partially offset by a 9 basis point decrease in the average cost of borrowed funds to 4.00% for the three months ended June 30, 2009 from 4.09% for the three months ended June 30, 2008. We increased our use of longer term borrowed funds to help fund loan growth for the quarter.
Total interest expense decreased by $5.8 million, or 2.8%, to $201.9 million for the year ended June 30, 2009 from $207.7 million for the year ended June 30, 2008. This decrease was primarily due to a 90 basis point decrease in the weighted average cost of total interest-bearing liabilities to 3.21% for the year ended June 30, 2009 compared to 4.11% for the year ended June 30, 2008 partially offset by a $1.24 billion, or 24.6%, increase in the average balance of total interest-bearing liabilities to $6.29 billion for the year ended June 30, 2009 from $5.05 billion for the year ended June 30, 2008.
Interest expense on interest-bearing deposits decreased $23.3 million, or 15.3%, to $129.4 million for the year ended June 30, 2009 from $152.7 million for the year ended June 30, 2008. This decrease was due to a 104 basis point decrease in the average cost of interest-bearing deposits to 2.94% at June 30, 2009 partially offset by a $558.1 million increase in the average balance of interest-bearing deposits.
Interest expense on borrowed funds increased by $17.6 million, or 32.0%, to $72.6 million for the year ended June 30, 2009 from $55.0 million for the year ended June 30, 2008. This increase was primarily due to a $683.7 million, or 56.6%, increase in the average balance of borrowed funds to $1.89 billion for the year ended June 30, 2009 from $1.21 billion for the year ended June 30, 2008. This was partially offset by a 72 basis point decrease in the average cost of borrowed funds to 3.83% for the year ended June 30, 2009 from 4.55% for the year ended June 30, 2009 as lower short term interest rates allowed us to obtain funding at lower interest rates.
Net Interest Income
Net interest income increased by $11.9 million, or 38.1%, to $43.3 million for the three months ended June 30, 2009 from $31.4 million for the three months ended June 30, 2008. Our net interest margin increased by 24 basis points from 2.09% for the three months ended June 30, 2008 to 2.33% for the three months ended June 30, 2009.
Net interest income increased by $61.0 million, or 58.1%, to $166.1 million for the year ended June 30, 2009 from $105.1 million for the year ended June 30, 2008. Our net interest margin also increased by 57 basis points from 1.81% for the year ended June 30, 2008 to 2.38% for the year ended June 30, 2009.
The increase in net interest income for the three months and year ended June 30, 2009, can partially be attributed to lower short term interest rates and more stable longer term rates. The effect of this steeper yield curve allowed us to lower deposit rates while keeping mortgage rates relatively stable. The increase was partially offset by the average balance of interest-bearing liabilities increasing for the three months and year ended June 30, 2009.
Provision for Loan Losses
The provision for loan losses was $8.0 million for the three months ended June 30, 2009 compared to $3.7 million for the three months ended June 30, 2008. There were no net charge-offs for the three months ended June 30, 2009 compared to $2,000 for the three months ended June 30, 2008.
The provision for loan losses was $29.0 million for the year ended June 30, 2009 compared to $6.6 million for the year ended June 30, 2008. There were net charge-offs of $25,000 for the year ended June 30, 2009 compared to net charge-offs of $31,000 for the year ended June 30, 2008.
The allowance for loan losses increased by $33.0 million to $46.6 million at June 30, 2009 from $13.6 million at June 30, 2008. The increase in the allowance is primarily attributable to the higher current year loan loss provision which reflects the overall growth in the loan portfolio, particularly residential and commercial real estate loans; the increased inherent credit risk in our overall portfolio, particularly the credit risk associated with commercial real estate lending; an internal downgrade of the risk ratings on certain commercial real estate loans; the increase in non-performing loans; and the adverse economic environment. In addition, the allowance for loan loss increased by $4.0 million as American Bancorp's allowance was transferred as part of the acquisition.
Total non-performing loans, defined as non-accruing loans, increased by $102.2 million to $121.6 million at June 30, 2009 which are comprised of construction loans of $69.3 million, residential loans of $29.9 million, multifamily loans of $19.6 million and commercial loans of $2.8 million. Several large construction loans have experienced financial difficulty in this economic environment as consumers scaled back from purchasing new homes and real estate values declined. Residential loan delinquency has risen as unemployment in our lending area has risen steadily over the past year. The Company acquired $10.5 million of nonaccrual loans in the American Bancorp acquisition. At June 30, 2009, the Company's commercial real estate portfolio has $16.4 million in loans 30-89 days delinquent, all of which were acquired in the American Bancorp acquisition.
The ratio of non-performing loans to total loans was 1.97% at June 30, 2009 compared to 0.42% at June 30, 2008. The allowance for loan losses as a percentage of non-performing loans was 38.34% at June 30, 2009 compared with 70.03% at June 30, 2008. At June 30, 2009 our allowance for loan losses as a percentage of total loans was 0.76% compared with 0.29% at June 30, 2008. Future increases in the allowance for loan losses may be necessary based on the growth of the loan portfolio, the change in composition of the loan portfolio, possible future increases in non-performing loans and charge-offs, and the possible continuation of the current adverse economic environment.
Non-Interest Income
Total non-interest income increased by $1.0 million to $2.4 million for the three months ended June 30, 2009 from $1.4 million for the three months ended June 30, 2008. This increase was primarily due to a $2.0 million increase on gain on residential mortgage loan sales to the secondary market offset by the $1.3 million credit related OTTI charge on our pooled bank trust preferred securities.
Total non-interest income decreased by $155.8 million to a loss of $148.4 million for the year ended June 30, 2009 from income of $7.4 million for the year ended June 30, 2008. This decrease was largely the result of a $159.3 million loss on securities transactions in the year ended June 30, 2009 primarily attributed to a $158.5 million OTTI charge mentioned above. Gain on loan sales increased by $3.7 million to $4.3 million for the year ended June 30, 2009 as management decided to sell lower yielding refinanced residential mortgage loans in the secondary market. Additionally, income associated with our bank owned life insurance decreased $1.1 million resulting from lower market interest rates.
Non-Interest Expenses
Total non-interest expenses increased by $7.5 million, or 36.2%, to $28.2 million for the three months ended June 30, 2009 from $20.7 million for the three months ended June 30, 2008. This increase was due primarily to $5.3 million increase in FDIC insurance premium expense which includes the special assessment charge of $3.6 million. In addition, compensation expense for the quarter ended June 30, 2008 reflected a non-recurring $1.1 million reduction in expense related to the employee benefit plans.
Total non-interest expenses increased by $17.0 million, or 21.1%, to $97.8 million for the year ended June 30, 2009 from $80.8 million for the year ended June 30, 2008. This increase was primarily the result of FDIC insurance premiums increasing $8.1 million to $8.6 million for the year ended June 30, 2009. In addition, compensation and fringe benefits increasing by $6.2 million, or 11.5%, to $60.1 million for the year ended June 30, 2009. This increase was due to the accelerated vesting of two participants in the equity incentive plan; additional equity incentive plan expense for grants made during 2008; staff additions in our commercial real estate, retail banking areas and our mortgage company. The year ended June 30, 2008 included a $2.3 million gain related to the curtailment and settlement of our postretirement benefit obligation and a $1.1 million compensation expense reduction for employee benefit plans and a $1.5 million non-recurring compensation expense recorded as a result of the merger of Summit Federal for a retirement plan payout and employee retention bonuses.
Income Taxes
Income tax expense was $4.1 million for the three months ended June 30, 2009, as compared to $2.9 million for the three months ended June 30, 2008. Our effective tax expense rates were 42.72% and 34.91% for the three months ended June 30, 2009 and 2008, respectively.
Income tax benefit was $44.2 million for the year ended June 30, 2009 representing a 40.51% effective tax benefit rate for the period. The benefit is primarily the result of the OTTI charge taken on our pooled trust preferred securities. For the year ended June 30, 2008 there was an income tax expense of $9.0 million representing an effective tax expense rate of 36.03% for the period.
Balance Sheet Summary
Total assets increased by $1.72 billion, or 26.8%, to $8.14 billion at June 30, 2009 from $6.42 billion at June 30, 2008. This increase was largely the result of the growth in our loan portfolio and the acquisition of American Bancorp which was completed on May 31, 2009.
Net loans, including loans held for sale, increased by $1.52 billion, or 32.6%, to $6.20 billion at June 30, 2009 from $4.68 billion at June 30, 2008. This increase in loans reflects our continued focus on loan originations and purchases. The loans we originate and purchase are on properties in New Jersey and states in close proximity to New Jersey. We do not originate or purchase and our loan portfolio does not include any sub-prime loans or option ARMs.
We originate residential mortgage loans directly and through our mortgage subsidiary, ISB Mortgage Co. During the year ended June 30, 2009 we originated $407.6 million in residential mortgage loans. In addition, we purchase 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 June 30, 2009, we purchased loans totaling $720.5 million from these entities. We also purchase pools of mortgage loans in the secondary market on a "bulk purchase" basis from several well-established financial institutions. During the year ended June 30, 2009, we took advantage of several opportunities to purchase $343.4 million of residential mortgage loans that met our underwriting criteria on a "bulk purchase" basis.
Additionally, for the year ended June 30, 2009, we originated $145.5 million in multi-family loans, $222.0 million commercial real estate loans and $127.6 million in construction loans. We also purchased $200.9 million of multi-family loans from another financial institution. This activity is consistent with our strategy to diversify our loan portfolio by adding more multi-family, commercial real estate and construction loans.
Securities, in the aggregate, decreased by $257.0 million, or 17.6%, to $1.20 billion at June 30, 2009, from $1.46 billion at June 30, 2008. This decrease was the result of cash flows from our securities portfolio being used to help fund our loan growth and the OTTI charge. This decrease was partially offset by the purchase of $104.3 million of agency issued mortgage backed securities as a way to utilize excess liquidity during the quarter ended June 30, 2009.
Securities include pooled trust preferred securities, principally issued by banks. Given the challenging environment for most banks in the U.S.; the dramatic increase in payment deferrals by issuers; and downgrades by credit rating agencies, the fair value of these securities has steadily declined over the past year. The Company recorded pre-tax OTTI charges totaling $158.0 million on these securities during the year ended June 30, 2009.
During the quarter the Company adopted the new accounting standard, FSP 115-2 "Recognition and Presentation of Other-Than-Temporary Impairments." This FSP required us to determine which portion of the previously recorded OTTI charges pertained to credit losses and which portion of the charges were attributed to lack liquidity and other non-credit related matters. The FSP also required us to remove the portion of the loss pertaining to lack of liquidity and other non-credit related matters from retained earnings and record it in accumulated other comprehensive income. The Company determined that $21.1 million after tax ($35.7 million pre tax) was related to lack of liquidity and other non-credit related matters and therefore increased retained earnings by that amount and decreased accumulated other comprehensive income by the same amount. The adoption of this FSP did not change total stockholders' equity.
The securities portfolio also includes non-agency, private label mortgage backed securities with an amortized cost of $162.0 million and a fair value of $150.7 million. These securities were originated in the period 2002-2004 and are performing in accordance with contractual terms. The decrease in fair value for these securities is primarily attributed to changes in market interest rates. All securities are rated AAA except one security with an amortized cost of $7.8 million and a fair value of $5.8 million which was downgraded to BBB in April 2009. Management will continue to monitor these securities for possible OTTI.
The amount of stock we own in the Federal Home Loan Bank (FHLB) increased by $11.1 million from $60.9 million at June 30, 2008 to $72.1 million at June 30, 2009 as a result of an increase in our level of borrowings at June 30, 2009. Bank owned life insurance increased by $17.0 million from $96.2 million at June 30, 2008 to $113.2 million at June 30, 2009 as a result of acquiring the American policies. Intangible assets from the acquisition of American totaled $21.6 million at June 30, 2009. There was also an increase in net deferred tax asset of $77.8 million resulting primarily from the net operating loss for the year.
Deposits increased by $1.54 billion, or 38.7%, to $5.51 billion at June 30, 2009 from $3.97 billion at June 30, 2008. Checking accounts, certificates of deposits, savings deposits, and money market account deposits increased by $497.7 million, $382.9 million, $362.5 million, and $292.4 million, respectively. Deposits increased as we were successful in attracting new municipal deposit accounts, opened a de novo branch, added business from existing customer relationships, and integrated the branches from our acquisitions.
Borrowed funds increased $167.0 million, or 10.7%, to $1.73 billion at June 30, 2009 from $1.56 billion at June 30, 2008. We utilized wholesale borrowings to fund a portion of our loan growth because of the lower rates available in the wholesale markets for longer term borrowings. Using longer term borrowings to fund mortgage loans helps to reduce interest rate risk of longer term assets.
Stockholders' equity decreased $9.3 million to $819.3 million at June 30, 2009 from $828.5 million at June 30, 2008. The decrease is primarily attributed to the $64.9 million net loss for the year and accumulated other comprehensive income decreasing $21.1 million as a result of adopting FSP 115-2; offset by an $86.5 million increase in treasury stock as shares were issued in the acquisition of American Bancorp.
About the Company
Investors Bancorp, Inc. is the holding company for Investors Savings Bank, which operates from its corporate headquarters in Short Hills, New Jersey, and fifty eight branch offices located in Essex, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Union and Warren Counties, New Jersey.
Earnings Conference Call August 5, 2009 at 10:30 a.m. (ET)
The Company, as previously announced, indicated that it will host an earnings conference call Wednesday morning, August 5, 2009 at 10:30 a.m. (ET). The toll-free dial-in number is (800) 860-2442. A telephone replay will be available on August 5, 2009 from 1:00 p.m. (ET) through November 5, 2009, 9:00 a.m. (ET). The replay number is (877) 344-7529 password 432848. The conference call will also be simultaneously webcast on the Company's website www.isbnj.com and archived for one year.
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, as described in our SEC filings, and uncertainties, 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, which 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.
INVESTORS BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 2009 (Unaudited) and June 30, 2008
June 30, June 30,
Assets 2009 2008
---- ----
(In thousands)
Cash and cash equivalents $317,757 22,823
Securities available-for-
sale, at estimated fair value 355,016 203,032
Securities held-to-maturity, net
(estimated fair value of
$861,302 and $1,198,053
at June 30, 2009
and June 30, 2008,
respectively) 846,043 1,255,054
Loans receivable, net 6,143,169 4,670,150
Loans held-for-sale 61,691 9,814
Stock in the Federal Home
Loan Bank 72,053 60,935
Accrued interest
receivable 37,291 27,716
Office properties and
equipment, net 44,142 29,710
Net deferred tax asset 118,455 40,702
Bank owned life
insurance 113,191 96,170
Intangible assets 21,832 -
Other assets 5,792 3,036
----- -------
Total assets $8,136,432 6,419,142
============ ===========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $5,505,747 3,970,275
Borrowed funds 1,730,555 1,563,583
Advance payments by borrowers for taxes
and insurance 26,839 21,829
Other liabilities 54,008 34,917
------ --------
Total liabilities 7,317,149 5,590,604
----------- -----------
Stockholders' equity:
Preferred stock, $0.01 par value,
50,000,000 authorized shares;
none issued - -
Common stock, $0.01 par value,
200,000,000 shares authorized;
118,020,280 issued; 114,692,020
and 109,010,756 outstanding
at June 30, 2009 and June 30, 2008,
respectively. 532 532
Additional paid-in capital 524,463 514,613
Unallocated common stock held
by the employee stock
ownership plan (36,160) (37,578)
Treasury stock, at cost; 3,328,260 and
9,009,524 shares at
June 30, 2009 and June 30, 2008,
respectively (42,447) (128,977)
Retained earnings 399,672 486,244
Accumulated other comprehensive loss:
Net unrealized loss on securities
available for sale, net of tax (23,347) (3,504)
Minimum pension liability, net of tax (3,430) (2,792)
------ --------
(26,777) (6,296)
--------- --------
Total stockholders' equity 819,283 828,538
-------- --------
Total liabilities and
stockholders' equity $8,136,432 6,419,142
=========== ==========
INVESTORS BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the Three Months For the Year
Ended June 30, Ended June 30,
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in thousands, except per share data)
Interest and
dividend
income:
Loans
receivable
and loans
held-for-sale $79,184 61,372 304,678 229,634
Securities:
Government-
sponsored
enterprise
obligations 292 638 1,587 4,662
Mortgage-
backed
securities 11,312 14,202 49,531 62,919
Equity
securities
available-for-
sale - 63 64 287
Municipal
bonds and
other debt 1,331 2,162 8,703 10,935
Interest-
bearing
deposits 235 160 393 974
Repurchase
agreements - - - 162
Federal Home
Loan Bank
stock 1,010 859 3,104 3,234
----- ---- ------ ------
Total
interest
and
dividend
income 93,364 79,456 368,060 312,807
------- ------- -------- --------
Interest
expense:
Deposits 32,525 34,539 129,362 152,745
Borrowed funds 17,509 13,536 72,562 54,950
------ ------- ------- -------
Total
interest
expense 50,034 48,075 201,924 207,695
------- ------- -------- --------
Net interest
income 43,330 31,381 166,136 105,112
Provision
for loan
losses 8,025 3,700 29,025 6,646
------ ------ ------- ------
Net interest
income after
provision
for loan
losses 35,305 27,681 137,111 98,466
------- ------- -------- -------
Non-
interest
income:
Fees and
service
charges 816 674 3,174 3,022
Income on bank
owned life
insurance 670 955 2,910 3,972
Gain on
sales of
mortgage
loans, net 2,114 139 4,343 605
Loss on securities
transactions, net
(1) (1,297) (441) (159,266) (682)
Other income 108 91 409 456
--- --- ---- ----
Total non-
interest
income
(loss) 2,411 1,418 (148,430) 7,373
------ ------ -------- ------
Non-
interest
expenses:
Compensation and
fringe benefits 14,672 13,618 60,085 53,886
Advertising and
promotional
expense 1,235 846 3,635 2,736
Office
occupancy
and
equipment
expense 3,124 2,836 11,664 10,888
Federal
insurance
premiums 5,400 110 8,557 445
Stationery,
printing,
supplies and
telephone 565 481 2,088 1,869
Legal, audit,
accounting, and
supervisory
examination fees 530 392 2,319 2,008
Data processing
service fees 1,240 1,355 4,588 4,730
Other operating
expenses 1,397 1,043 4,863 4,218
----- ------ ------ ------
Total non-
interest
expenses 28,163 20,681 97,799 80,780
------- ------- ------- -------
Income before
income tax
expense
(benefit) 9,553 8,418 (109,118) 25,059
Income tax
expense
(benefit) 4,081 2,939 (44,200) 9,030
----- ------ ------- ------
Net income
(loss) $5,472 5,479 (64,918) 16,029
======= ====== ======= =======
Basic
earnings
(loss) per
share $0.05 0.05 (0.62) 0.15
Diluted
earnings per
share $0.05 0.05 n/a 0.15
Weighted
average
shares
outstanding
Basic 106,194,322 104,355,135 104,530,402 105,447,910
Diluted 106,224,400 104,540,544 104,611,642 105,601,764
(1) $35.7 million of the fiscal year ended June 30, 2009 loss was
determined to be non-credit related upon the adoption of FSP 115-2.
INVESTORS BANCORP, INC. AND SUBSIDIARY
Average Balance Sheet and Yield/Rate Information
For Three Months Ended
June 30, 2009
-------------
Average
Outstanding Interest Average
Balance Earned/Paid Yield/Rate
------------ ------------ -----------
(Dollars in thousands)
Interest-earning assets:
Due
from
banks $390,098 $235 0.24%
Securities
available-for-
sale 218,827 2,394 4.38%
Securities
held-to-
maturity 929,379 10,541 4.54%
Net loans 5,816,205 79,184 5.45%
Stock in FHLB 71,794 1,010 5.63%
------ -----
Total interest-
earning assets 7,426,303 93,364 5.03%
------
Non-interest
earning assets 283,562
-------
Total assets $7,709,865
==========
Interest-
bearing
liabilities:
Savings $683,232 3,676 2.15%
Interest-
bearing
checking 804,485 4,744 2.36%
Money
market
accounts 417,344 1,884 1.81%
Certificates of
deposit 3,104,165 22,221 2.86%
--------- ------
Borrowed funds 1,752,551 17,509 4.00%
--------- ------
Total interest-
bearing
liabilities 6,761,777 50,034 2.96%
------
Non-interest
bearing
liabilities 162,178
-------
Total liabilities 6,923,955
Stockholders' equity 785,910
-------
Total liabilities
and
stockholders'
equity $7,709,865
==========
Net interest income $43,330
=======
Net interest rate spread 2.07%
====
Net interest
earning assets $664,526
========
Net interest margin 2.33%
====
Ratio of interest-earning
assets to total interest-
bearing liabilities 1.10 X
====
For Three Months Ended
June 30, 2008
-------------
Average
Outstanding Interest Average
Balance Earned/Paid Yield/Rate
------------ ------------ -----------
(Dollars in thousands)
Interest-earning assets:
Due
from
banks $37,567 $160 1.70%
Securities
available-for-
sale 215,521 2,472 4.59%
Securities
held-to-
maturity 1,305,033 14,593 4.47%
Net loans 4,391,482 61,372 5.59%
Stock in FHLB 49,797 859 6.90%
------ ---
Total interest-
earning assets 5,999,400 79,456 5.30%
------
Non-interest
earning assets 187,606
-------
Total assets $6,187,006
==========
Interest-
bearing
liabilities:
Savings $406,229 2,056 2.02%
Interest-
bearing
checking 352,366 1,370 1.56%
Money
market
accounts 216,077 1,116 2.07%
Certificates of
deposit 2,959,052 29,997 4.05%
--------- ------
Borrowed funds 1,323,184 13,536 4.09%
--------- ------
Total interest-
bearing
liabilities 5,256,908 48,075 3.66%
------
Non-interest
bearing
liabilities 104,928
-------
Total liabilities 5,361,836
Stockholders' equity 825,170
-------
Total liabilities
and
stockholders'
equity $6,187,006
==========
Net interest income $31,381
=======
Net interest rate spread 1.64%
====
Net interest
earning assets $742,492
========
Net interest margin 2.09%
====
Ratio of interest-earning
assets to total interest-
bearing liabilities 1.14 X
====
INVESTORS BANCORP, INC. AND SUBSIDIARY
Average Balance Sheet and Yield/Rate Information
For the Year Ended June 30,
----------------------------
2009
Average
Outstanding Interest Average
Balance Earned/Paid Yield/Rate
------------ ------------ -----------
(Dollars in thousands)
Interest-earning assets:
Due from banks $158,743 $393 0.25%
Repurchase agreements - - -
Securities available-
for-sale 197,824 8,968 4.53%
Securities held-to-
maturity 1,074,279 50,917 4.74%
Net loans 5,482,009 304,678 5.56%
Stock in FHLB 75,938 3,104 4.09%
------ -----
Total interest-
earning assets 6,988,793 368,060 5.27%
-------
Non-interest earning
assets 231,122
-------
Total assets $7,219,915
==========
Interest-bearing liabilities:
Savings $507,132 10,568 2.08%
Interest-bearing
checking 565,278 11,668 2.06%
Money market accounts 310,656 6,466 2.08%
Certificates of
deposit 3,015,955 100,660 3.34%
--------- -------
Borrowed funds 1,892,181 72,562 3.83%
--------- ------
Total interest-
bearing
liabilities 6,291,202 201,924 3.21%
-------
Non-interest bearing
liabilities 131,219
-------
Total liabilities 6,422,421
Stockholders' equity 797,494
-------
Total liabilities
and stockholders'
equity $7,219,915
==========
Net interest income $166,136
========
Net interest rate spread 2.06%
====
Net interest earning
assets $697,591
========
Net interest margin 2.38%
====
Ratio of interest-earning
assets to total interest-
bearing liabilities 1.11 X
====
For the Year Ended June 30,
----------------------------
2008
----
Average
Outstanding Interest Average
Balance Earned/Paid Yield/Rate
------------ ------------ -----------
(Dollars in thousands)
Interest-earning assets:
Due from banks $32,948 $974 2.96%
Repurchase agreements 5,798 162 2.79%
Securities available-
for-sale 235,385 10,826 4.60%
Securities held-to-
maturity 1,438,804 67,977 4.72%
Net loans 4,043,398 229,634 5.68%
Stock in FHLB 44,939 3,234 7.20%
------ -----
Total interest-
earning assets 5,801,272 312,807 5.39%
-------
Non-interest earning
assets 185,705
-------
Total assets $5,986,977
==========
Interest-bearing liabilities:
Savings $372,846 7,718 2.07%
Interest-bearing
checking 353,564 7,329 2.07%
Money market accounts 204,952 5,005 2.44%
Certificates of
deposit 2,909,550 132,693 4.56%
--------- -------
Borrowed funds 1,208,529 54,950 4.55%
--------- ------
Total interest-
bearing
liabilities 5,049,441 207,695 4.11%
-------
Non-interest bearing
liabilities 102,828
-------
Total liabilities 5,152,269
Stockholders' equity 834,708
-------
Total liabilities
and stockholders'
equity $5,986,977
==========
Net interest income $105,112
========
Net interest rate spread 1.28%
====
Net interest earning
assets $751,831
========
Net interest margin 1.81%
====
Ratio of interest-earning
assets to total interest-
bearing liabilities 1.15 X
====
INVESTORS BANCORP, INC. AND SUBSIDIARY
Selected Performance Ratios
For the Three Months Ended
June 30,
---------
2009 2008
---- ----
Return on average assets 0.28% 0.35%
Return on average equity 2.79% 2.62%
Interest rate spread 2.07% 1.63%
Net interest margin 2.33% 2.09%
Efficiency ratio 61.57% 63.05%
Efficiency ratio (excluding OTTI and FDIC
special assessment) 55.61% 62.28%
Non-interest expense to average total
assets 1.46% 1.34%
Average interest-earning assets to average
interest-bearing liabilities 1.10 1.14
For the Year Ended
June 30,
---------
2009 2008
---- ----
Return on average assets -0.90% 0.27%
Return on average equity -8.14% 1.92%
Interest rate spread 2.06% 1.28%
Net interest margin 2.38% 1.81%
Efficiency ratio 552.35% 71.81%
Efficiency ratio (excluding OTTI and FDIC
special assessment) 54.39% 71.55%
Non-interest expense to average total
assets 1.35% 1.35%
Average interest-earning assets to average
interest-bearing liabilities 1.11 1.15
INVESTORS BANCORP, INC. AND SUBSIDIARY
Selected Financial Ratios and Other Data
At June 30,
------------
2009 2008
---- ----
Asset Quality Ratios:
Non-performing assets as a percent of
total assets 1.49% 0.30%
Non-performing loans as a percent of total
loans 1.97% 0.42%
Allowance for loan losses as a percent of
total loans 0.76% 0.29%
Allowance for loan losses as a percent of
non-performing loans 38.34% 70.03%
Capital Ratios:
Total risk-based capital (to risk weighted
assets) (1) 16.88% 21.77%
Tier 1 risk-based capital (to risk
weighted assets) (1) 15.86% 21.37%
Tier 1 leverage (core) capital (to
adjusted tangible assets) (1) 9.52% 11.93%
Equity to total assets (period end) 10.07% 12.91%
Average equity to average assets 11.05% 13.94%
Tangible capital (to tangible assets) 10.02% 12.89%
Book value per common share $7.38 $7.87
Other Data:
Number of full service offices 58 52
Full time equivalent employees 647 519
(1) Ratios are for Investors Savings Bank and do not
include capital retained at the holding company level.
SOURCE Investors Bancorp, Inc.