Investors Bancorp, Inc. Announces Third Quarter Financial Results

SHORT HILLS, N.J., Oct. 25, 2012 /PRNewswire/ -- Investors Bancorp, Inc. (NASDAQ: ISBC) ("Company"), the holding company for Investors Bank ("Bank"), reported net income of $24.5 million for the three months ended September 30, 2012  compared to net income of $20.0 million for the three months ended September 30, 2011. Net income for the nine months ended September 30, 2012 was $67.4 million compared to net income of $57.8 million for the nine months ended September 30, 2011. Basic and diluted earnings per share were $0.23 for the three months ended September 30, 2012 compared to $0.19 for the three months ended September 30, 2011. Basic and diluted earnings per share were $0.63  and $0.62, respectively, for the nine months ended September 30, 2012 compared to $0.53  and $0.53, respectively, for the nine months ended September 30, 2011. The results for the nine months ended September 30, 2012 include approximately $6 million in one-time pre-tax restructure expenses related to the acquisition of Brooklyn Federal Savings Bank.

"This quarter represents a milestone for our Company as we declared our first quarterly cash dividend," said Kevin Cummings, President and CEO. "In addition to the dividend we posted strong earnings, good loan growth and reduced our nonperforming loans. Our staff has worked hard to produce these results and I am very proud of their efforts."

The Company also announced the completion of Marathon Bank acquisition in October. Mr. Cummings added, "We are excited about the Marathon Bank franchise and welcome their customers and staff to the Investors family." 

The following represents performance highlights and significant events that occurred during the period:

  • Net income for the three months ended September 30, 2012 was $24.5 million, an increase of 23% compared to $19.9 million for three months ended September 30, 2011.
  • Net loans increased $509.7 million, or 5.8%, to $9.30 billion at September 30, 2012 from $8.79 billion at December 31, 2011.
  • Deposits increased by $530.3 million, or 7.2% to $7.89 billion at September 30, 2012 from $7.36 billion at December 31, 2011. Core deposits increased $975.1 million or 24.3% since year end.
  • Efficiency ratio was 46.1% for the three months ended September 30, 2012.
  • Non-accrual loans decreased $27.7 million or 18.7% compared to prior quarter.
  • Net interest margin for the three months ended September 30, 2012 was 3.35%.
  • The Company maintains a strong tangible capital ratio of 8.68% and is considered well capitalized under regulatory guidelines.

Comparison of Operating Results

Interest and Dividend Income

Total interest and dividend income increased by $1.3 million, or 1.1%, to $121.9 million for the three months ended September 30, 2012 from $120.5 million for the three months ended September 30, 2011.  This increase is attributed to the average balance of interest-earning assets increasing $1.04 billion, or 10.5%, to $10.97 billion for the three months ended September 30, 2012 from $9.93 billion for the three months ended September 30, 2011. This was partially offset by the weighted average yield on interest-earning assets decreasing 42 basis points to 4.44% for the three months ended September 30, 2012 compared to 4.86% for the three months ended September 30, 2011. 

Interest income on loans increased by $976,000, or 0.9%, to $111.9 million for the three months ended September 30, 2012 from $110.9 million for the three months ended September 30, 2011, reflecting a $595.7 million, or 6.9%, increase in the average balance of net loans to $9.27 billion for the three months ended September 30, 2012 from $8.67 billion for the three months ended September 30, 2011. The increase is primarily attributed to the average balance of multi-family loans and commercial real estate loans increasing $657.2 million and $173.9 million respectively as we continue to focus on diversifying our loan portfolio by adding more multi-family loans and commercial real estate loans. This was partially offset by the decrease in the average balance of residential loans and construction loans of $148.4 million and $80.9 million respectively for the three months ended September 30, 2012. In addition, we recorded $2.1 million in loan prepayment fees in interest income for the three months ended September 30, 2012 compared to $323,000 for the three months ended September 30, 2011. This was partially offset by a 29 basis point decrease in the average yield on net loans to 4.83% for the three months ended September 30, 2012 from 5.12% for the three months ended September 30, 2011, as lower rates on new and refinanced loans reflect the current interest rate environment.

Interest income on all other interest-earning assets, excluding loans, increased by $351,000, or 3.7%, to $10.0 million for the three months ended September 30, 2012 from $9.6 million for the three months ended September 30, 2011.  This increase reflected a $445.7 million increase in the average balance of all other interest-earning assets, excluding loans, to $1.70 billion for the three months ended September 30, 2012 from $1.26 billion for the three months ended September 30, 2011. This was partially offset by the weighted average yield on interest-earning assets, excluding loans, decreasing by 72 basis points to 2.34% for the three months ended September 30, 2012 compared to 3.06% for the three months ended September 30, 2011 reflecting the lower interest rate environment.

Total interest and dividend income increased by $13.1 million, or 3.7%, to $366.0 million for the nine months ended September 30, 2012 from $352.9 million for the nine months ended September 30, 2011.  This increase is attributed to the average balance of interest-earning assets increasing $1.20 billion, or 12.5%, to $10.76 billion for the nine months ended September 30, 2012 from $9.56 billion for the nine months ended September 30, 2011.  This was partially offset by the weighted average yield on interest-earning assets decreasing 38 basis points to 4.54% for the nine months ended September 30, 2012 compared to 4.92% for the nine months ended September 30, 2011. 

Interest income on loans increased by $11.2 million, or 3.5%, to $334.4 million for the nine months ended September 30, 2012 from $323.3 million for the nine months ended September 30, 2011, reflecting a $727.1 million, or 8.7%, increase in the average balance of net loans to $9.08 billion for the nine months ended September 30, 2012 from $8.35 billion for the nine months ended September 30, 2011. The increase is primarily attributed to the average balance of multi-family loans and commercial real estate loans increasing $643.5 million and $165.9 million, respectively as we continue to focus on diversifying our loan portfolio by adding more multi-family loans and commercial real estate loans. In addition, we recorded $5.4 million in loan prepayment fees in interest income for the nine months ended September 30, 2012 compared to $1.7 million for the nine months ended September 30, 2011. This was partially offset by the decrease in the average balance of  construction loans of $75.6 million for the nine months ended September 30, 2012 and a 25 basis point decrease in the average yield on net loans to 4.91% for the nine months ended September 30, 2012 from 5.16% for the nine months ended September 30, 2011, as lower rates on new and refinanced loans reflect the current interest rate environment.

Interest income on all other interest-earning assets, excluding loans, increased by $1.9 million, or 6.5%, to $31.6 million for the nine months ended September 30, 2012 from $29.7 million for the nine months ended September 30, 2011.  This increase reflected a $470.2 million increase in the average balance of all other interest-earning assets, excluding loans, to $1.68 billion for the nine months ended September 30, 2012 from $1.21 billion for the nine months ended September 30, 2011. This was partially offset by the weighted average yield on interest-earning assets, excluding loans, decreasing by 76 basis points to 2.50% for the nine months ended September 30, 2012 compared to 3.26% for the nine months ended September 30, 2011 reflecting the current interest rate environment.

Interest Expense

Total interest expense decreased by $6.4 million, or 17.7%, to $29.9 million for the three months ended September 30, 2012 from $36.4 million for the three months ended September 30, 2011. This decrease is attributed to the weighted average cost of total interest-bearing liabilities decreasing 40 basis points to 1.23% for the three months ended September 30, 2012 compared to 1.63% for the three months ended September 30, 2011. This was partially offset by the average balance of total interest-bearing liabilities increasing by $827.3 million, or 9.3%, to $9.75 billion for the three months ended September 30, 2012 from $8.93 billion for the three months ended September 30, 2011. 

Interest expense on interest-bearing deposits decreased $5.2 million, or 25.9% to $14.9 million for the three months ended September 30, 2012 from $20.1 million for the three months ended September 30, 2011.  This decrease is attributed to a 41 basis point decrease in the average cost of interest-bearing deposits to 0.80% for the three months ended September 30, 2012 from 1.21% for the three months ended September 30, 2011 as deposit rates reflect this lower interest rate environment.  This was partially offset by the average balance of total interest-bearing deposits increasing $787.3 million, or 11.9% to $7.42 billion for the three months ended September 30, 2012 from $6.63 billion for the three months ended September 30, 2011. Core deposit accounts- savings, checking and money market, outpaced average total interest-bearing deposit growth as average core deposits increased $1.20 billion over the past year.

Interest expense on borrowed funds decreased by $1.2 million or 7.6%, to $15.1 million for the three months ended September 30, 2012 from $16.3 million for the three months ended September 30, 2011.  This decrease is attributed to the average cost of borrowed funds decreasing 26 basis points to 2.58% for the three months ended September 30, 2012 from 2.84% for the three months ended September 30, 2011 as maturing borrowings repriced to lower interest rates.  This was partially offset by the average balance of borrowed funds increasing by $40.1 million or 1.7%, to $2.33 billion for the three months ended September 30, 2012 from $2.29 billion for the three months ended September 30, 2011.

Total interest expense decreased by $13.8 million or 12.7%, to $94.8 million for the nine months ended September 30, 2012 from $108.6 million for the nine months ended September 30, 2011.  This decrease is attributed to the weighted average cost of total interest-bearing liabilities decreasing 37 basis points to 1.32% for the nine months ended September 30, 2012 compared to 1.69% for the nine months ended September 30, 2011.  This was partially offset by the average balance of total interest-bearing liabilities increasing by $1.01 billion, or 11.7%, to $9.60 billion for the nine months ended September 30, 2012 from $8.59 billion for the nine months ended September 30, 2011. 

Interest expense on interest-bearing deposits decreased $10.3 million or 17.2% to $49.6 million for the nine months ended September 30, 2012 from $59.9 million for the nine months ended September 30, 2011.  This decrease is attributed to a 33 basis point decrease in the average cost of interest-bearing deposits to 0.90% for the nine months ended September 30, 2012 from 1.23% for the nine months ended September 30, 2011 as deposit rates reflect the lower interest rate environment.  This was partially offset by the average balance of total interest-bearing deposits increasing $861.6 million, or 13.2% to $7.38 billion for the nine months ended September 30, 2012 from $6.52 billion for the nine months ended September 30, 2011.  Core deposit accounts- savings, checking and money market, outpaced average total interest-bearing deposit growth as average core deposits increased $1.05 billion.

Interest expense on borrowed funds decreased by $3.5 million, or 7.2% to $45.2 million for the nine months ended September 30, 2012 from $48.7 million for the nine months ended September 30, 2011. This decrease is attributed to the average cost of borrowed funds decreasing 42 basis points to 2.71% for the nine months ended September 30, 2012 from 3.13% for the nine months ended September 30, 2011 as maturing borrowings repriced to lower interest rates.  This was partially offset by the average balance of borrowed funds increasing by $146.8 million or 7.1%, to $2.22 billion for the nine months ended September 30, 2012 from $2.07 billion for the nine months ended September 30, 2011.

Net Interest Income

Net interest income increased by $7.8 million, or 9.2%, to $91.9 million for the three months ended September 30, 2012 from $84.2 million for the three months ended September 30, 2011.  The increase was primarily due to the average balance of interest earning assets increasing $1.04 billion to $10.97 billion at September 30, 2012 compared to $9.93 billion at September 30, 2011, as well as a 40 basis point decrease in our cost of interest-bearing liabilities to 1.23% for the three months ended September 30, 2012 from 1.63% for the three months ended September 30, 2011. These were partially offset by the average balance of our interest earning liabilities increasing $827.3 million to $9.75 billion at September 30, 2012 compared to $8.93 billion at September 30, 2011, as well as the yield on our interest-earning assets decreasing 42 basis points to 4.44% for the three months ended September 30, 2012 from 4.86% for the three months ended September 30, 2011. While the yield on our interest earning assets declined due to the lower interest rate environment, our cost of funds also continued to fall resulting in our net interest margin decreasing by 4 basis points from 3.39% for the three months ended September 30, 2011 to 3.35% for the three months ended September 30, 2012.

Net interest income increased by $26.9 million, or 11.0%, to $271.2 million for the nine months ended September 30, 2012 from $244.3 million for the nine months ended September 30, 2011.  The increase was primarily due to the average balance of interest earning assets increasing $1.20 billion to $10.76 billion at September 30, 2012 compared to $9.56 billion at September 30, 2011, as well as a 37 basis point decrease in our cost of interest-bearing liabilities to 1.32% for the nine months ended September 30, 2012 from 1.69% for the nine months ended September 30, 2011. These were partially offset by the average balance of our interest earning liabilities increasing $1.01 billion to $9.60 billion at September 30, 2012 compared to $8.59 billion at September 30, 2011, as well as the yield on our interest-earning assets decreasing 38 basis points to 4.54% for the nine months ended September 30, 2012 from 4.92% for the nine months ended September 30, 2011. While the yield on our interest earning assets declined due to the lower interest rate environment, our cost of funds also continued to fall resulting in our net interest margin decreasing by 5 basis points from 3.41% for the nine months ended September 30, 2011 to 3.36% for the nine months ended September 30, 2012.

Provision for Loan Losses

Our provision for loan losses was $16.0 million for the three months ended September 30, 2012 compared to $20.0 million for the three months ended September 30, 2011. For the three months ended September 30, 2012, net charge-offs were $13.2 million compared to $10.5 million for the three months ended September 30, 2011. The charge-offs for the three months ended September 30, 2012 included approximately $9.0 million of residential charge-offs, of which approximately $6.2 million pertained to the additional write down of residential loans in the process of foreclosure as a result of the further deterioration in real estate values due to the extended period of time it is taking to obtain possession of the properties collateralizing these loans in our primary lending areas in New Jersey and New York. For the nine months ended September 30, 2012, our provision for loan losses was $48.0 million compared to $55.5 million for the nine months ended September 30, 2011. For the nine months ended September 30, 2012, net charge-offs were $34.0 million compared to $29.9 million for the nine months ended September 30, 2011.

The following table sets forth non-accrual loans and accruing past due loans on the dates indicated as well as certain asset quality ratios:


September 30,

2012


June 30,

2012


March 31,

2012


December 30,

2011


September 30,

2011


# 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

71



$

23.6



65



$

16.3



65



$

14.9



80



$

19.1



75



$

18.8


Construction

1



0.4











1



0.7



1



1.5


Multi-family

2



3.1



4



4.6



2



16.0



2



0.8



1



0.7


Commercial real estate

1



0.3



1



0.2



2



1.8



2



1.5



1



0.1


Commercial and industrial

















1



0.1


Total 30 to 59 days past due

75



27.4



70



21.1



69



32.7



85



22.1



79



21.2


60 to 89 days past due:




















Residential and consumer

43



11.9



40



8.4



25



4.4



33



10.0



36



9.8


Construction





1



0.2














Multi-family

1



1.2











4



6.2






Commercial real estate

















1



0.3


Commercial and industrial

1



0.10



3



3.3



1



0.7







1



0.4


Total 60 to 89 days past due

45



13.2



44



11.9



26



5.1



37



16.2



38



10.5


Total accruing past due loans

120



$

40.6



114



$

33.0



95



$

37.8



122



$

38.3



117



$

31.7


Non-accrual:




















Residential and consumer

335



$

81.2




328



$

81.7



328



$

86.1



321



$

85.0



300



$

79.5


Construction

9



26.6



15



51.4



16



57.2



15



57.1



25



75.4


Multi-family

6



12.0



6



13.3



4



6.2







2



0.7


Commercial real estate

1



0.8



1



1.2



2



0.4



1



0.1



11



5.7


Commercial and industrial

1



0.1



2



0.8











4



0.7


Total Non-accrual Loans

352



$

120.7



352



$

148.4



350



$

149.9



337



$

142.2



342



$

162.0


Accruing troubled debt restructured loans

18



$

14.8



17



$

8.9



15



$

8.4



15



$

10.5



15



$

10.5


Non-accrual loans to total loans



1.28

%




1.60

%




1.64

%




1.60

%




1.82

%

Allowance for loan loss as a percent of non-accrual loans



108.79

%




86.58

%




82.53

%




82.44

%




71.89

%

Allowance for loan losses as a percent of total loans



1.39

%




1.38

%




1.35

%




1.32

%




1.31

%





































Total non-accrual loans decreased $21.5 million to $120.7 million at September 30, 2012 compared to $142.2 million at December 31, 2011 as we continue to diligently resolve our troubled loans. At September 30, 2012, there were $27.3 million of loans deemed trouble debt restructurings, of which $14.8 million were accruing and $12.5 million were on non-accrual.

The allowance for loan losses increased by $14.0 million to $131.3 million at September 30, 2012 from $117.2 million at December 31, 2011.  The increase in our allowance for loan losses is due to the increased inherent credit risk in our overall portfolio, particularly the credit risk associated with commercial real estate lending;  and delinquent loans caused by the adverse economic conditions in our lending area and the continued growth in the multi-family and commercial real estate loan portfolios. 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 impact of the deterioration of the real estate and economic environments in our lending area. 

Non-Interest Income

Total non-interest income increased by $5.4 million, or 74.4% to $12.7 million for the three months ended September 30, 2012 from $7.3 million for the three months ended September 30, 2011.  The increase is primarily attributed to the gain on the sale of loans increasing $4.7 million to $7.2 million for the three months ended September 30, 2012. In addition, fees and service charges relating primarily to the servicing of third party loan portfolios as well as fees from commercial deposit and loan accounts increased $624,000 to $3.6 million for the three months ended September 30, 2012. 

Total non-interest income increased by $13.4 million, or 65.9% to $33.6 million for the nine months ended September 30, 2012 from $20.3 million for the nine months ended September 30, 2011.  The increase is primarily attributed to the gain on the sale of loans increasing $9.5 million to $15.9 million, and a $1.6 million increase in other non-interest income primarily from the fees associated with the sale of non-deposit investment products. In addition, fees and service charges relating primarily to the servicing of third party loan portfolios as well as fees from commercial deposit and loan accounts increased $2.2 million to $12.8 million for the nine months ended September 30, 2012. 

Non-Interest Expenses

Total non-interest expenses increased by $9.1 million, or 23.2%, to $48.2 million for the three months ended September 30, 2012 from $39.1 million for the three months ended September 30, 2011. Compensation and fringe benefits increased $3.5 million primarily as a result of the staff additions to support our continued growth, including employees from the acquisition of Brooklyn Federal, and normal merit increases. Occupancy expense increased $1.5 million due to costs associated with expanding our branch network and our new operations center. Data processing expenses increased $998,000 primarily due to the growth in the number of branches and customer accounts. In addition, our FDIC insurance premium increased $1.5 million as the FDIC reclassified Investors Bank as a large institution from a small institution which increased our assessment rate.

Total non-interest expenses increased by $29.9 million, or 25.4%, to $147.5 million for the nine months ended September 30, 2012 from $117.7 million for the nine months ended September 30, 2011. Compensation and fringe benefits increased $11.9 million primarily as a result of the staff additions to support our continued growth, including employees from the acquisition of Brooklyn Federal, as well as normal merit increases and $1.4 million in acquisition related expenses associated with Brooklyn Federal. Occupancy expense increased $5.1 million as a result of a one-time charge of $3.0 million for the early termination of certain leased facilities and the costs associated with expanding our branch network. Data processing expenses increased $4.4 million primarily due to increased volume of accounts and a one-time charge of $1.5 million for the termination of a Brooklyn Federal data processing contract. Professional fees increased $4.0 million which included $2.5 million in legal and consulting costs associated with the Brooklyn Federal acquisition. 

Income Taxes

Income tax expense was $15.9 million for the three months ended September 30, 2012, representing a 39.42% effective tax rate compared to income tax expense of $12.4 million for the three months ended September 30, 2011 representing a 38.36% effective tax rate.

Income tax expense was $41.9 million for the nine months ended September 30, 2012, representing a 38.35% effective tax rate compared to income tax expense of $33.7 million for the nine months ended September 30, 2011 representing a 36.90% effective tax rate.

Balance Sheet Summary

Total assets increased by $778.6 million, or 7.3%, to $11.5 billion  at September 30, 2012 from $10.70 billion at December 31, 2011.  This increase was largely the result of net loans, including loans held for sale, increasing $521.0 million to $9.33 billion at September 30, 2012 from $8.81 billion at December 31, 2011 and a $277.3 million increase in available for sale securities to $1.26 billion at September 30, 2012 from $983.7 million at December 31, 2011.

Net loans, including loans held for sale, increased by $521.0 million, or 5.9%, to $9.33 billion at September 30, 2012 from $8.81 billion at December 31, 2011.  This increase in loans reflects our continued focus on generating multi-family and commercial real estate loans, which was partially offset by pay downs and payoffs of loans. The loans we originate and purchase are on properties located primarily in New Jersey and New York.

We originate residential mortgage loans through our mortgage subsidiary, Investors Home Mortgage Co. For the nine months ended September 30, 2012, Investors Home Mortgage Co. originated $1.16 billion in residential mortgage loans of which $630.0 million were for sale to third party investors and $531.2 million were added to our portfolio. 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 nine months ended September 30, 2012, we purchased loans totaling $496.3 million from these entities. In addition, we acquired $177.5 million in loans from Brooklyn Federal and subsequently sold $49.4 million of commercial real estate loans and an additional $37.9 million of commercial real estate loans on a pass through basis to a third party. 

For the nine months ended September 30, 2012, we originated $678.4 million in multi-family loans, $353.4 million in commercial real estate loans, $74.7 million in commercial and industrial loans, $53.9 million in consumer and other loans and $31.8 million in construction loans.

At September 30, 2012, total loans were $9.42 billion and included $4.89 billion in residential loans, $2.30 billion in multi-family loans, $1.61 billion in commercial real estate loans, $259.7 million in construction loans, $229.9 million in consumer and other loans and $121.0 million in commercial and industrial loans.

Securities, in the aggregate, increased by $176.6 million, or 13.9%, to $1.45 billion at September 30, 2012, from $1.27 billion at December 31, 2011. The increase in the portfolio was primarily due to the purchase of $524.1 million of agency issued mortgage backed securities, and the purchase of $3.0 million in US government and agencies, partially offset by sales, normal pay downs or maturities during the nine months ended September 30, 2012. 

Goodwill increased $17.2 million primarily as a result of the Brooklyn Federal acquisition. The amount of stock we own in the Federal Home Loan Bank (FHLB) increased by $15.0 million from $116.8 million at December 31, 2011 to $131.8 million at September 30, 2012 as a result of an increase in our level of borrowings. There was a $1.3 million reduction in bank owned life insurance as a result of death benefit payouts.

Deposits increased by $530.3 million, or 7.2%, to $7.89 billion at September 30, 2012 from $7.36 billion at December 31, 2011. This was attributed to an increase in core deposits of $975.1 million or 24.3%, partially offset by a $444.8 million decrease in certificates of deposit.

Borrowed funds increased $105.5 million, or 4.7%, to $2.36 billion at September 30, 2012 from $2.26 billion at December 31, 2011 to fund our asset growth.

Stockholders' equity increased $81.2 million to $1.05 billion at September 30, 2012 from $967.4 million at December 31, 2011. The increase is primarily attributed to the $67.4 million of net income for the nine months ended September 30, 2012 and $7.6 million as a result of the acquisition of Brooklyn Federal. In addition, stockholders' equity was positively impacted by other comprehensive income of $8.2 million and $4.4 million in ESOP and stock based compensation expenses. This was partially offset by the declaration of a cash dividend of $0.05 per common share that resulted in a decrease of $5.6 million in stockholders' equity.

About the Company

Investors Bancorp, Inc. is the holding company for Investors Bank, which operates from its corporate headquarters in Short Hills, New Jersey, and as of September 30, 2012 eighty-seven branch offices located throughout northern and central New Jersey and New York.

Earnings Conference Call October 26, 2012 at 11:00 a.m. (ET)

The Company, as previously announced, will host an earnings conference call Friday, October 26, 2012 at 11:00 a.m. (ET). The toll-free dial-in number is: (877) 317-6789. A telephone replay will be available on October 26, 2012 from 1:00 p.m. (ET) through January 25, 2013, 9:00 a.m. (ET). The replay number is (877) 344-7529 password 10019465. The conference call will also be simultaneously webcast on the Company's website www.myinvestorsbank.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 and uncertainties, as described in our SEC filings, 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 SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2012 and December 31, 2011









September 30,


December 31,

Assets

2012


2011








(In thousands)

Cash and cash equivalents

$

120,403


90,139

Securities available-for-sale, at estimated fair value


1,260,977


983,715

Securities held-to-maturity, net (estimated fair value of






$206,028 and $311,860 at September 30, 2012






and December 31, 2011, respectively)


187,042


287,671

Loans receivable, net


9,303,919


8,794,211

Loans held-for-sale


30,134


18,847

Federal Home Loan Bank stock


131,799


116,813

Accrued interest receivable 


40,323


40,063

Other real estate owned


8,377


3,081

Office properties and equipment, net


79,010


60,555

Net deferred tax asset 


136,569


133,526

Bank owned life insurance  


111,678


112,990

Intangible assets


56,442


39,225

Other assets



13,456


20,749






Total assets

$

11,480,129


10,701,585

Liabilities and Stockholders' Equity




Liabilities:








Deposits


$

7,892,301


7,362,003


Borrowed funds


2,361,000


2,255,486


Advance payments by borrowers for taxes and insurance


57,772


43,434


Other liabilities


120,441


73,222






Total liabilities


10,431,514


9,734,145

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;  111,905,861 and 110,937,672 outstanding







at September 30, 2012 and December 31, 2011, respectively


532


532


Additional paid-in capital


532,886


536,408


Retained earnings


623,498


561,596


Treasury stock, at cost; 6,114,419 and 7,082,608 shares at







September 30, 2012 and December 31, 2011, respectively


(73,816)


(87,375)


Unallocated common stock held by the employee stock







ownership plan


(31,551)


(32,615)


Accumulated other comprehensive loss


(2,934)


(11,106)






Total stockholders' equity


1,048,615


967,440






Total liabilities and stockholders' equity

$

11,480,129


10,701,585

 

INVESTORS BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)











For the Three Months


For the Nine Months







Ended September 30,


Ended September 30,







2012


2011


2012


2011







(Dollars in thousands, except per share data)

Interest and dividend income:










Loans receivable and loans held-for-sale

$

111,908


110,933


334,438


323,251


Securities: 











Government-sponsored enterprise obligations


1


1


13


268



Mortgage-backed securities


7,112


7,164


23,530


22,309



Equity securities available-for-sale


4



10




Municipal bonds and other debt


1,426


1,319


3,939


3,947


Interest-bearing deposits


9


7


30


30


Federal Home Loan Bank stock


1,415


1,124


4,069


3,100




Total interest and dividend income


121,875


120,548


366,029


352,905

Interest expense:










Deposits 


14,882


20,083


49,621


59,904


Secured borrowings 


15,056


16,291


45,180


48,675




Total interest expense


29,938


36,374


94,801


108,579




Net interest income


91,937


84,174


271,228


244,326

Provision for loan losses 


16,000


20,000


48,000


55,500




Net interest income after provision













for loan losses


75,937


64,174


223,228


188,826

Non-interest income 










Fees and service charges


3,586


2,962


12,769


10,544


Income on bank owned life insurance   


678


716


1,893


2,432


Gain on loan transactions, net


7,191


2,475


15,874


6,385


Gain (loss) on securities transactions


255


24


286


(294)


Loss on sale of other real estate owned, net


(51)



(122)


(106)


Other income


1,046


1,108


2,940


1,314




Total non-interest income 


12,705


7,285


33,640


20,275

Non-interest expense










Compensation and fringe benefits


25,221


21,702


76,242


64,376


Advertising and promotional expense


1,852


1,825


5,294


4,591


Office occupancy and equipment expense 


7,733


6,274


25,206


20,140


Federal insurance premiums


3,470


1,950


7,370


7,350


Stationery, printing, supplies and telephone


968


694


3,049


2,324


Professional fees


1,707


1,473


7,591


3,632


Data processing service fees


3,093


2,095


10,603


6,159


Other operating expenses


4,173


3,127


12,193


8,995




Total non-interest expenses


48,217


39,140


147,548


117,567




Income before income tax expense 


40,425


32,319


109,320


91,534

Income tax expense 


15,936


12,398


41,924


33,730




Net income 

$

24,489


19,921


67,396


57,804

Basic earnings per share

$

0.23


0.19


0.63


0.53

Diluted earnings per share


0.23


0.19


0.62


0.53

Weighted average shares outstanding:










Basic



107,409,451


107,596,260


107,347,608


108,212,113


Diluted



108,276,407


107,913,971


107,937,805


108,414,970

 

INVESTORS BANCORP, INC. AND SUBSIDIARIES

Average Balance Sheet and Yield/Rate Information















For Three Months Ended 




September 30, 2012


September 30, 2011




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-earning cash accounts

$              92,862

$                     9

0.04%


$              71,115

$                   7

0.04%


Securities available-for-sale

1,275,615

5,413

1.70%


733,981

4,034

2.20%


Securities held-to-maturity

203,206

3,129

6.16%


334,077

4,450

5.33%


Net loans

9,270,611

111,909

4.83%


8,674,897

110,933

5.12%


Federal Home Loan Bank stock

130,243

1,415

4.35%


117,023

1,124

3.84%



Total interest-earning assets

10,972,537

121,875

4.44%


9,931,093

120,548

4.86%

Non-interest earning assets

480,614




414,458





Total assets

$       11,453,151




$       10,345,551













Interest-bearing liabilities:









Savings

$         1,592,999

$              2,049

0.51%


$         1,239,835

$            2,457

0.79%


Interest-bearing checking

1,519,683

1,616

0.43%


1,067,040

1,520

0.57%


Money market accounts

1,317,460

1,940

0.59%


924,134

1,792

0.78%


Certificates of deposit

2,990,445

9,277

1.24%


3,402,311

14,314

1.68%


Borrowed funds

2,332,309

15,056

2.58%


2,292,256

16,291

2.84%



Total interest-bearing liabilities

9,752,896

29,938

1.23%


8,925,576

36,374

1.63%

Non-interest bearing liabilities

660,110




474,563





Total liabilities

10,413,006




9,400,139



Stockholders' equity

1,040,145




945,412





Total liabilities and stockholders' equity

$       11,453,151




$       10,345,551













Net interest income


$            91,937




$          84,174












Net interest rate spread



3.22%




3.23%











Net interest earning assets

$    1,219,641.00




$    1,005,517.00













Net interest margin



3.35%




3.39%











Ratio of interest-earning assets to total interest-









bearing liabilities

1.13

X



1.11

X


 

INVESTORS BANCORP, INC. AND SUBSIDIARIES

Average Balance Sheet and Yield/Rate Information















For Nine Months Ended 




September 30, 2012


September 30, 2011




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-earning cash accounts

$            89,622

$              30

0.04%


$          69,241

$              30

0.06%


Securities available-for-sale

1,236,217

17,358

1.87%


653,721

11,212

2.29%


Securities held-to-maturity

235,236

10,134

5.74%


391,692

15,312

5.21%


Net loans

9,075,804

334,438

4.91%


8,348,747

323,251

5.16%


Federal Home Loan Bank stock

123,176

4,069

4.40%


99,390

3,100

4.16%



Total interest-earning assets

10,760,055

366,029

4.54%


9,562,791

352,905

4.92%

Non-interest earning assets

475,651




409,741





Total assets

$     11,235,706




$     9,972,532













Interest-bearing liabilities:









Savings

$       1,496,073

$         6,011

0.54%


$     1,219,757

$         7,451

0.81%


Interest-bearing checking

1,398,196

4,965

0.47%


1,023,017

4,343

0.57%


Money market accounts

1,280,361

6,099

0.64%


879,181

5,200

0.79%


Certificates of deposit

3,202,657

32,546

1.35%


3,393,706

42,910

1.69%


Borrowed funds

2,219,414

45,180

2.71%


2,072,639

48,675

3.13%



Total interest-bearing liabilities

9,596,701

94,801

1.32%


8,588,300

108,579

1.69%

Non-interest bearing liabilities

627,981




455,947





Total liabilities

10,224,682




9,044,247



Stockholders' equity

1,011,024




928,285





Total liabilities and stockholders' equity

$     11,235,706




$     9,972,532













Net interest income


$     271,228




$     244,326












Net interest rate spread



3.22%




3.23%











Net interest earning assets

$       1,163,354




$        974,491













Net interest margin



3.36%




3.41%











Ratio of interest-earning assets to total interest-









bearing liabilities

1.12

X



1.11

X


 

INVESTORS BANCORP, INC. AND SUBSIDIARIES

Selected Performance Ratios






For the Three Months Ended


September 30,


2012


2011





Return on average assets 

0.86%


0.77%

Return on average equity 

9.42%


8.43%

Return on average tangible equity

9.96%


8.79%

Interest rate spread

3.22%


3.23%

Net interest margin

3.35%


3.39%

Efficiency ratio 

46.08%


42.80%

Non-interest expense to average total assets  

1.68%


1.51%

Average interest-earning assets to average




   interest-bearing liabilities

1.13


1.11










For the Nine Months Ended


September 30,


2012


2011





Return on average assets 

0.80%


0.77%

Return on average equity 

8.89%


8.29%

Return on average tangible equity

9.41%


8.65%

Interest rate spread

3.22%


3.23%

Net interest margin

3.36%


3.41%

Efficiency ratio 

48.40%


44.48%

Non-interest expense to average total assets  

1.75%


1.57%

Average interest-earning assets to average




   interest-bearing liabilities

1.12


1.12









INVESTORS BANCORP, INC. AND SUBSIDIARIES

Selected Financial Ratios and Other Data






September 30,


December 31,


2012


2011





Asset Quality Ratios:




Non-performing assets as a percent of total assets

1.25%


1.46%

Non-performing loans as a percent of total loans

1.44%


1.72%

Allowance for loan losses as a percent of non-accrual loans

108.79%


82.44%

Allowance for loan losses as a percent of total loans

1.39%


1.32%









Capital Ratios:




Total risk-based capital (to risk weighted assets)   (1)

12.86%


13.07%

Tier 1 risk-based capital (to risk weighted assets)   (1)

11.61%


11.81%

Tier 1 leverage (core) capital (to adjusted tangible assets)   (1)

8.14%


8.21%

Equity to total assets (period end)

9.13%


9.04%

Average equity to average assets

9.00%


9.26%

Tangible capital (to tangible assets)

8.69%


8.71%

Book value per common share

$                   9.64


$                   8.98





Other Data:




Number of full service offices

87


81

Full time equivalent employees

1,058


959





(1) Ratios are for Investors Bank and do not include capital retained at the holding company level.

 

SOURCE Investors Bancorp, Inc.



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