Investors Bancorp, Inc. Announces Third Quarter Financial Results

Oct 25, 2010, 19:41 ET from Investors Bancorp, Inc.

SHORT HILLS, N.J., Oct. 25 /PRNewswire-FirstCall/ -- Investors Bancorp, Inc. (Nasdaq: ISBC) ("Company"), the holding company for Investors Savings Bank ("Bank"), reported net income of $16.6 million for the three months ended September 30, 2010 compared to net income of $10.5 million for the three months ended September 30, 2009. Net income for the nine months ended September 30, 2010 was $45.1 million compared to net income of $23.0 million for the nine months ended September 30, 2009. Basic and diluted earnings per share were $0.15 for the three months ended September 30, 2010 compared to $0.10 for the three months ended September 30, 2009. Basic and diluted earnings per share were $0.41 for the nine months ended September 30, 2010 compared to $0.22 for the nine months ended September 30, 2009.

Kevin Cummings, President and Chief Executive Officer commented, "We are pleased to report net income of $16.6 million or $0.15 per share for the 2010 third quarter. We continue to grow our loan portfolio with high quality commercial real estate and residential mortgage loans funded primarily with growth in lower cost core deposits which has resulted in net interest margin expansion to 3.31% for the quarter."

Regarding credit quality Mr. Cummings commented, "We do not anticipate a marked improvement in our non-performing loans in the near term as the economy continues to struggle with high unemployment rates."

"We completed our acquisition of approximately $600 million in deposits and 17 branch locations from Millennium bcpbank in October and concurrently entered into an agreement to sell Millennium's four Massachusetts branches. This acquisition, while enhancing our existing footprint in New Jersey, expands our branch network into New York and complements our loan production office in New York City. We will remain focused on expanding our branch network into new markets with acquisitions which enhance shareholder value and through de novo branches."

The following represents performance highlights and significant events that occurred during the three and nine month periods ended September 30, 2010:

  • Net interest margin for the three months ended September 30, 2010 increased 69 basis points to 3.31% compared to prior year quarter and an increase of 21 basis points compared to linked quarter.
  • The efficiency ratio improved to 40.87% for the three months ended September 30, 2010 compared to 46.84% for the three months ended September 30, 2009 and improved to 43.67% for the nine months ended September 30, 2010 compared to 53.85% for the nine months ended September 30, 2009.
  • The return on average equity improved to 7.32% for the three months ended September 30, 2010 compared to 5.12% for the three months ended September 30, 2009 and improved to 6.80% for the nine months ended September 30, 2010 compared to 3.88% for the nine months ended September 30, 2009.
  • Deposits increased $271.0 million, or 4.6%, to $6.11 billion at September 30, 2010 from $5.84 billion at December 31, 2009.
  • Core deposits, which exclude time deposits, increased $322.1 million, or 12.6%, to $2.87 billion at September 30, 2010 from $2.55 billion at December 31, 2009.
  • Net loans increased $800.7 million, or 12.1%, to $7.42 billion at September 30, 2010 from $6.62 billion at December 31, 2009.
  • The allowance for loan losses increased to $84.6 million or 1.13% of total loans at September 30, 2010 from $55.1 million or 0.83% at December 31, 2009 as the provision for loan loss totaled $19.0 million for the quarter ended September 30, 2010.
  • The Company maintains a strong tangible capital ratio of 9.68%, and is considered well capitalized under regulatory guidelines.
  • Stock buybacks during the quarter totaled 1,178,322 shares at an average cost per share of $11.29.

Comparison of Operating Results

Interest and Dividend Income

Total interest and dividend income increased by $10.8 million, or 10.9%, to $109.4 million for the three months ended September 30, 2010 from $98.6 million for the three months ended September 30, 2009.  This increase is attributed to the average balance of interest-earning assets increasing $657.5 million, or 8.4%, to $8.50 billion for the three months ended September 30, 2010 from $7.85 billion for the three months ended September 30, 2009.  In addition, the weighted average yield on interest-earning assets increased 12 basis points to 5.15% for the three months ended September 30, 2010 compared to 5.03% for the three months ended September 30, 2009.  

Interest income on loans increased by $13.6 million, or 16.0%, to $98.7 million for the three months ended September 30, 2010 from $85.1 million for the three months September 30, 2009, reflecting a $1.09 billion, or 17.4%, increase in the average balance of net loans to $7.34 billion for the three months ended September 30, 2010 from $6.25 billion for the three months ended September 30, 2009.  The increase is primarily attributed to the average balance of commercial real estate loans and multi-family loans increasing $462.1 million and $341.4 million, respectively. This activity is consistent with our strategy to diversify our loan portfolio by adding more commercial real estate and multi-family loans. In addition, the yield was favorably impacted by two commercial real estate prepayment penalties totaling $957,000.  These were partially offset by a 7 basis point decrease in the average yield on loans to 5.38% for the three months ended September 30, 2010 from 5.45% for the three months ended September 30, 2009.

Interest income on all other interest-earning assets, excluding loans, decreased by $2.8 million, or 20.8%, to $10.7 million for the three months ended September 30, 2010 from $13.5 million for the three months ended September 30, 2009.  This decrease reflected a $427.6 million decrease in the average balance of all other interest-earning assets, excluding loans, to $1.17 billion for the three months ended September 30, 2010 from $1.59 billion for the three months ended September 30, 2009.  

Total interest and dividend income increased by $33.6 million, or 11.8%, to $318.4 million for the nine months ended September 30, 2010 from $284.7 million for the nine months ended September 30, 2009.  This increase is attributed to the average balance of interest-earning assets increasing $892.2 million, or 12.0%, to $8.34 billion for the nine months ended September 30, 2010 from $7.44 billion for the nine months ended September 30, 2009.  This was partially offset by a 1 basis point decrease in the weighted average yield on interest-earning assets to 5.09% for the nine months ended September 30, 2010 compared to 5.10% for the nine months ended September 30, 2009.  

Interest income on loans increased by $43.0 million, or 17.9%, to $284.0 million for the nine months ended September 30, 2010 from $241.0 million for the nine months ended September 30, 2009, reflecting a $1.11 billion, or 18.7%, increase in the average balance of net loans to $7.01 billion for the nine months ended September 30, 2010 from $5.90 billion for the nine months ended September 30, 2009.  The increase is primarily attributed to the average balance of commercial real estate loans and multi-family loans increasing by $513.9 million and $351.8 million, respectively. This activity is consistent with our strategy to diversify our loan portfolio by adding more commercial real estate and multi-family loans. In addition, the yield was favorably impacted by two commercial real estate prepayment penalties totaling $957,000. These increases were partially offset by a 5 basis point decrease in the average yield on loans to 5.40% for the nine months ended September 30, 2010 from 5.45% for the nine months ended September 30, 2009.  

Interest income on all other interest-earning assets, excluding loans, decreased by $9.4 million, or 21.5%, to $34.3 million for the nine months ended September 30, 2010 from $43.7 million for the nine months ended September 30, 2009.  This decrease reflected a 34 basis point decrease in the average yield on all other interest-earning assets, excluding loans, to 3.44% for the nine months ended September 30, 2010 from 3.78% for the nine months ended September 30, 2009. The decrease in yield is primarily attributed to the purchase of additional securities at lower yields and the repricing of our adjustable rate securities.

Interest Expense

Total interest expense decreased by $8.2 million, or 17.4%, to $39.0 million for the three months ended September 30, 2010 from $47.2 million for the three months ended September 30, 2009.  This decrease is attributed to the weighted average cost of total interest-bearing liabilities decreasing 62 basis points to 2.02% for the three months ended September 30, 2010 compared to 2.64% for the three months ended September 30, 2009.  This was partially offset by the average balance of total interest-bearing liabilities increasing by $567.7 million, or 8.0%, to $7.71 billion for the three months ended September 30, 2010 from $7.14 billion for the three months ended September 30, 2009.  

Interest expense on interest-bearing deposits decreased $7.9 million, or 26.6% to $21.9 million for the three months ended September 30, 2010 from $29.8 million for the three months ended September 30, 2009.  This decrease is attributed to a 70 basis point decrease in the average cost of interest-bearing deposits to 1.49% for the three months ended September 30, 2010 from 2.19% for the three months ended September 30, 2009 as deposit rates decreased to reflect the current interest rate environment. This was partially offset by the average balance of total interest-bearing deposits increasing $415.5 million, or 7.6% to $5.86 billion for the three months ended September 30, 2010 from $5.44 billion for the three months ended September 30, 2009. Core deposit growth represented 118.4%, or $492.1 million of the increase in the average balance of total interest-bearing deposits.

Interest expense on borrowed funds decreased by $275,000, or 1.6%, to $17.1 million for the three months ended September 30, 2010 from $17.4 million for the three months ended September 30, 2009. This decrease is attributed to the average cost of borrowed funds decreasing 40 basis points to 3.70% for the three months ended September 30, 2010 from 4.10% for the three months ended September 30, 2009 due to the lower interest rate environment. This was partially offset by the average balance of borrowed funds increasing by $152.2 million or 9.0%, to $1.85 billion for the three months ended September 30, 2010 from $1.70 billion for the three months ended September 30, 2009.

Total interest expense decreased by $28.0 million, or 18.8%, to $120.8 million for the nine months ended September 30, 2010 from $148.8 million for the nine months ended September 30, 2009.  This decrease is attributed to the weighted average cost of total interest-bearing liabilities decreasing 81 basis points to 2.12% for the nine months ended September 30, 2010 compared to 2.93% for the nine months ended September 30, 2009.  This was partially offset by the average balance of total interest-bearing liabilities increasing by $807.9 million, or 11.9%, to $7.59 billion for the nine months ended September 30, 2010 from $6.78 billion for the nine months ended September 30, 2009.  

Interest expense on interest-bearing deposits decreased $27.7 million, or 28.8% to $68.5 million for the nine months ended September 30, 2010 from $96.2 million for the nine months ended September 30, 2009.  This decrease is attributed to a 98 basis point decrease in the average cost of interest-bearing deposits to 1.58% for the nine months ended September 30, 2010 from 2.56% for the nine months ended September 30, 2009 as deposit rates decreased to reflect the current interest rate environment. This was partially offset by the average balance of total interest-bearing deposits increasing $761.1 million, or 15.2% to $5.78 billion for the nine months ended September 30, 2010 from $5.02 billion for the nine months ended September 30, 2009. Core deposits growth represented 82.8%, or $630.2 million of the increase in the average balance of total interest-bearing deposits.

Interest expense on borrowed funds decreased by $279,000, or 0.5%, to $52.3 million for the nine months ended September 30, 2010 from $52.6 million for the nine months ended September 30, 2009. This decrease is attributed to the average cost of borrowed funds decreasing 12 basis points to 3.86% for the nine months ended September 30, 2010 from 3.98% for the nine months ended September 30, 2009 due to the lower interest rate environment. This was partially offset by the average balance of borrowed funds increasing by $46.8 million or 2.7%, to $1.81 billion for the nine months ended September 30, 2010 from $1.76 billion for the nine months ended September 30, 2009.

Net Interest Income

Net interest income increased by $19.0 million, or 36.9%, to $70.4 million for the three months ended September 30, 2010 from $51.5 million for the three months ended September 30, 2009.  The increase was primarily due to a 62 basis point decrease in our cost of interest-bearing liabilities to 2.02% for the three months ended September 30, 2010 from 2.64% for the three months ended September 30, 2009. In addition, the yield on our interest-earning assets increased 12 basis points to 5.15% for the three months ended September 30, 2010 from 5.03% for the three months ended September 30, 2009. Short term interest rates remaining at historically low levels resulted in many of our deposits repricing downward. This had a positive impact on our net interest margin which improved by 69 basis points from 2.62% for the three months ended September 30, 2009 to 3.31% for the three months ended September 30, 2010.

Net interest income increased by $61.6 million, or 45.3%, to $197.5 million for the nine months ended September 30, 2010 from $135.9 million for the nine months ended September 30, 2009.  The increase was primarily due to an 81 basis point decrease in our cost of interest-bearing liabilities to 2.12% for the nine months ended September 30, 2010 from 2.93% for the nine months ended September 30, 2009. This was partially offset by a 1 basis point decrease in our yield on interest-earning assets to 5.09% for the nine months ended September 30, 2010 from 5.10% for the nine months ended September 30, 2009. Short term interest rates remaining at historically low levels resulted in many of our deposits repricing downward. This had a positive impact on our net interest margin which improved by 72 basis points from 2.44% for the nine months ended September 30, 2009 to 3.16% for the nine months ended September 30, 2010.

Provision for Loan Losses

Our provision for loan losses was $19.0 million for the three months ended September 30, 2010 compared to $12.4 million for the three months ended September 30, 2009. For the three months ended September 30, 2010, net charge-offs were $6.7 million compared to $5.4 million for the three months ended September 30, 2009. For the nine month period ended September 30, 2010, our provision for loan losses was $47.5 million compared to $28.4 million for the nine months ended September 30, 2009. Net charge-offs totaled $17.9 million for the nine months ended September 30, 2010 compared to net charge-offs of $5.4 million for the nine months ended September 30, 2009. The increase in our provision is due to continued growth in the loan portfolio; the increased inherent credit risk in our overall portfolio, particularly the credit risk associated with commercial real estate lending; an increase in loan delinquency and non-performing loans; and the adverse economic conditions in our lending area.

The following table sets forth non-performing assets and accruing past due loans on the dates indicated in conjunction with our quality ratios:

September 30,

June 30,

March 31,

December 31,

September 30,

2010

2010

2010

2009

2009

# 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

83

$20.5

65

$19.0

84

$18.2

69

$15.9

80

$22.5

Construction

3

25.4

-

-

1

1.9

3

8.2

-

-

Multi-family

-

-

3

11.7

2

3.9

1

0.4

3

3.6

Commercial

2

1.9

2

0.8

4

4.5

5

3.4

2

2.4

Commercial and industrial

2

1.3

3

0.6

4

0.9

6

1.2

2

0.2

      Total 30 to 59 days          past due

90

49.1

73

32.1

95

29.4

84

29.1

87

28.7

60 to 89 days past due:

Residential and consumer

30

5.6

40

8.0

39

10.0

63

13.8

56

15.4

Construction

1

1.4

1

2.4

6

23.6

2

7.6

-

-

Multi-family

2

11.9

3

0.9

-

-

-

-

-

-

Commercial

-

-

-

-

1

0.6

-

-

1

3.0

Commercial and industrial

2

1.1

3

0.4

-

-

3

0.7

1

0.2

      Total 60 to 89 days          past due

35

20.0

47

11.7

46

34.2

68

22.1

58

18.6

Total accruing past due loans

125

$69.1

120

$43.8

141

$63.6

152

$51.2

145

$47.3

Non-performing (non-accruing):

Residential and consumer

239

$68.7

210

$60.4

199

$57.1

185

$51.2

164

$41.0

Construction

21

67.1

21

67.6

22

61.6

22

65.0

22

70.5

Multi-family

6

3.5

3

2.7

2

2.5

4

0.6

4

0.6

Commercial

8

4.6

8

4.6

9

3.5

10

3.4

9

3.4

Commercial and industrial

2

1.0

2

0.6

-

-

-

-

-

-

Total Non-Performing Loans

276

$144.9

244

$135.9

232

$124.7

221

$120.2

199

$115.5

Non-performing loans to total loans

1.94%

1.88%

1.82%

1.81%

1.82%

Allowance for loan loss as a

percent of non-performing loans

58.39%

53.23%

50.47%

45.80%

46.35%

Allowance for loan losses as

a percent of total loans

1.13%

1.00%

0.92%

0.83%

0.84%

Total non-performing loans, defined as non-accruing loans, were $144.9 million at September 30, 2010 compared to $120.2 million at December 31, 2009. At September 30, 2010 there are 9 residential loans totaling $2.6 million which are deemed troubled debt restructurings. These loans are performing under the restructured terms and are accruing interest.

The allowance for loan losses increased by $29.5 million to $84.6 million at September 30, 2010 from $55.1 million at December 31, 2009.  Future increases in the allowance for loan losses may be necessary based on growth of the loan portfolio, change in composition of the loan portfolio, increasing 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 was $7.0 million for the three months ended September 30, 2010 compared to $5.4 million for the three months ended September 30, 2009.  The increase is attributed to an increase in gain on loan sales of $912,000 to $3.9 million for the three months ended September 30, 2010. Increased refinancing activity during the current quarter resulted in more loans being sold into the secondary market. In addition, there was an $814,000 increase in fees and service charges to $2.3 million for the three months ended September 30, 2010.  This is partially attributed to the servicing of Millennium bcpbank's loan portfolio. In addition, the increase in the loan and deposit portfolios resulted in higher volume of fee generating activity.

Total non-interest income was $15.1 million for the nine months ended September 30, 2010 compared to $11.2 million for the nine months ended September 30, 2009.  The increase is primarily attributed to a $2.3 million increase in fees and service charges to $5.5 million. In addition, the nine months ended September 30, 2009 included a $1.8 million gain from the sale of our largest non-performing loan and a $1.3 million pre-tax other-than-temporary impairment ("OTTI") non-cash charge on certain pooled trust preferred securities ("TruPS").

Non-Interest Expenses

Total non-interest expenses increased by $5.0 million, or 19.0%, to $31.7 million for the three months ended September 30, 2010 from $26.6 million for the three months ended September 30, 2009. Compensation and fringe benefits increased $2.1 million as a result of staff additions in our retail banking areas due to the Banco Popular branch acquisition in October 2009, staff additions in our mortgage company and commercial real estate lending department, particularly our New York lending office, as well as normal merit increases.  Occupancy expense increased $822,000 as a result of the costs associated with expanding our branch network. Professional fees increased $623,000 as a result of outsourcing certain professional services and the Bank's internal audit function, as well as, other projects involving the use of consultants.  

Total non-interest expenses increased by $13.6 million, or 17.2%, to $92.9 million for the nine months ended September 30, 2010 from $79.2 million for the nine months ended September 30, 2009. Compensation and fringe benefits increased $6.3 million as a result of staff additions in our retail banking areas due to the acquisition of American Bancorp of New Jersey in May 2009 and the Banco Popular branch acquisition in October 2009, staff additions in our mortgage company and commercial real estate lending department, particularly our New York lending office, as well as normal merit increases.  Occupancy expense increased $3.4 million as a result of the costs associated with expanding our branch network. Professional fees increased $1.7 million as a result of outsourcing certain professional services and the Bank's internal audit function, as well as, other projects involving the use of consultants.  This was partially offset by a reduction of $1.4 million in FDIC insurance premiums as the nine months ended September 30, 2009 included a $3.6 million special assessment on insured financial institutions to rebuild the Deposit Insurance Fund.

Income Taxes

Income tax expense was $10.2 million for the three months ended September 30, 2010, representing a 38.22% effective tax rate. For the three months ended September 30, 2009, there was an income tax expense of $7.4 million representing a 41.26% effective tax rate. The decrease in the effective tax rate is due to more revenue being generated in states other than New Jersey.

Income tax expense was $27.1 million for the nine months ended September 30, 2010, representing a 37.52% effective tax rate. For the nine months ended September 30, 2009, there was an income tax expense of $16.5 million representing a 41.72% effective tax rate. The decrease in the effective tax rate is due to more revenue being generated in states other than New Jersey.

Balance Sheet Summary

Total assets increased by $593.5 million, or 7.1%, to $8.95 billion at September 30, 2010 from $8.36 billion at December 31, 2009.  This increase was largely the result of an $797.3 million increase in our net loans, including loans held for sale, to $7.44 billion at September 30, 2010 from $6.64 billion at December 31, 2009. This was partially offset by a $216.3 million, or 18.2%, decrease in securities to $972.4 million at September 30, 2010 from $1.19 billion at December 31, 2009.

Net loans, including loans held for sale, increased by $797.3 million, or 12.0%, to $7.44 billion at September 30, 2010 from $6.64 billion at December 31, 2009.  This increase in loans reflects our continued focus on loan originations and purchases, which was partially offset by paydowns and payoffs of loans. 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.  

At September 30, 2010, total loans were $7.48 billion and included $4.98 billion in residential loans, $922.1 million in commercial real estate loans, $951.0 million in multi-family loans, $405.7 million in construction loans, $179.0 million in consumer and other loans, and $39.4 million in commercial and industrial loans.

We originate residential mortgage loans through our mortgage subsidiary, ISB Mortgage Co. During the nine month period ended September 30, 2010, ISB Mortgage Co. originated $1.03 billion in residential mortgage loans of which $460.7 million were sold to third party investors and $571.6 million remained in our portfolio. 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 nine month period ended September 30, 2010, we purchased loans totaling $613.8 million from these entities. We also purchase, on a "bulk purchase" basis, pools of mortgage loans that meet our underwriting criteria from several well-established financial institutions in the secondary market. During the nine month period ended September 30, 2010, we purchased $30.8 million of residential mortgage loans on a "bulk purchase" basis.  Additionally, for the nine month period ended September 30, 2010, we originated $258.0 million in commercial real estate loans, $300.6 million in multi-family loans, $169.4 million in construction loans, $59.4 million in consumer and other loans, and $27.1 million in commercial and industrial loans. This activity is consistent with our strategy to diversify our loan portfolio by adding more multi-family and commercial real estate loans.

Securities, in the aggregate, decreased by $216.3 million, or 18.2%, to $972.4 million at September 30, 2010, from $1.19 billion at December 31, 2009. The decrease in the portfolio was due to paydowns, calls or maturities and was partially offset by the purchase of $104.6 million of agency issued mortgage backed securities during the nine months ended September 30, 2010.

The amount of stock we own in the Federal Home Loan Bank (FHLB) increased by $14.3 million from $66.2 million at December 31, 2009 to $80.5 million at September 30, 2010 as a result of an increase in our level of borrowings at September 30, 2010. Other assets decreased $8.5 million as prepaid FDIC insurance premiums amortized.

Deposits increased by $271.0 million, or 4.6%, to $6.11 billion at September 30, 2010 from $5.84 billion at December 31, 2009. Core deposits increased by $322.1 million, or 12.6% and certificates of deposit decreased $51.1 million, or 1.6%. Our deposit gathering efforts continue to be successful in our markets.

Borrowed funds increased $249.0 million, or 15.6%, to $1.85 billion at September 30, 2010 from $1.60 billion at December 31, 2009 as new loan originations have outpaced the core deposit growth and principal run-off from the securities portfolio.

Stockholders' equity increased $46.3 million to $896.5 million at September 30, 2010 from $850.2 million at December 31, 2009. The increase is primarily attributed to the $45.1 million net income for the nine month period.

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 as of September 30, 2010 had sixty-seven branch offices located in New Jersey.  

Earnings Conference Call October 26, 2010 at 2:00 p.m. (ET)

The Company, as previously announced, will host an earnings conference call Tuesday, October 26, 2010 at 2:00 p.m. (ET). The toll-free dial-in number is: (877) 317-6789. A telephone replay will be available on October 26, 2010 from 4:00 p.m. (ET) through January 26, 2011, 9:00 a.m. (ET). The replay number is (877) 344-7529 password 445290. 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 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 SUBSIDIARY Consolidated Balance Sheets September 30, 2010 (unaudited) and December 31, 2009

September 30,

December 31,

Assets

2010

2009

(In thousands)

Cash and cash equivalents

$

62,449

73,606

Securities available-for-sale, at estimated fair value

426,034

471,243

Securities held-to-maturity, net (estimated fair value of   $584,297 and $753,405 at September 30, 2010   and December 31, 2009, respectively)

546,320

717,441

Loans receivable, net

7,416,126

6,615,459

Loans held-for-sale

23,658

27,043

Stock in the Federal Home Loan Bank

80,549

66,202

Accrued interest receivable

40,360

36,942

Other Real Estate Owned

751

Office properties and equipment, net

54,130

49,384

Net deferred tax asset

122,578

117,143

Bank owned life insurance  

116,441

114,542

Intangible assets

33,262

31,668

Other assets

28,628

37,143

            Total assets

$

8,951,286

8,357,816

Liabilities and Stockholders' Equity

Liabilities:

   Deposits

$

6,111,659

5,840,643

   Borrowed funds

1,849,522

1,600,542

Advance payments by borrowers for taxes and insurance

37,076

29,675

Other liabilities

56,551

36,743

           Total liabilities

8,054,808

7,507,603

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;  113,715,265 and 114,448,888 outstanding   at September 30, 2010 and December 31, 2009, respectively

532

532

Additional paid-in capital

531,416

530,133

Retained earnings

466,394

422,211

Treasury stock, at cost; 4,305,015 and 3,571,392 shares at   September 30, 2010 and December 31, 2009

(51,523)

(44,810)

Unallocated common stock held by the employee stock   ownership plan

(34,387)

(35,451)

Accumulated other comprehensive loss

(15,954)

(22,402)

           Total stockholders' equity

896,478

850,213

           Total liabilities and stockholders' equity

$

8,951,286

8,357,816

INVESTORS BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Operations (Unaudited)

For the Three Months

For the Nine Months

Ended September 30

Ended September 30

2010

2009

2010

2009

(Dollars in thousands, except per share data)

Interest and dividend income:

 Loans receivable and loans held-for-sale   Securities:

$

98,720

85,117

284,048

241,024

 Government-sponsored enterprise obligations

169

247

541

843

 Mortgage-backed securities

8,315

11,046

27,854

34,304

 Municipal bonds and other debt

1,320

988

3,124

5,305

Interest-bearing deposits

15

208

205

562

Federal Home Loan Bank stock

879

1,025

2,585

2,705

 Total interest and dividend income

109,418

98,631

318,357

284,743

Interest expense:

Deposits

21,851

29,774

68,517

96,199

Secured borrowings

17,127

17,402

52,323

52,602

 Total interest expense

38,978

47,176

120,840

148,801

 Net interest income

70,440

51,455

197,517

135,942

Provision for loan losses

19,000

12,375

47,500

28,400

Net interest income after provision for loan losses

51,440

39,080

150,017

107,542

Non-interest income

Fees and service charges

2,252

1,438

5,452

3,160

Income on bank owned life insurance  

719

592

1,899

1,518

Gain on sales of loans, net

3,899

2,987

7,383

7,264

Gain (loss) on securities transactions

55

(20)

44

(1,315)

Other income

89

362

308

560

Total non-interest income

7,014

5,359

15,086

11,187

Non-interest expense

Compensation and fringe benefits

17,724

15,586

52,231

45,928

Advertising and promotional expense

1,641

930

3,988

2,805

Office occupancy and equipment expense

4,462

3,640

13,197

9,762

Federal insurance premiums

2,475

2,340

8,175

9,540

Stationery, printing, supplies and telephone

692

647

1,972

1,700

Professional fees

1,274

651

3,451

1,780

Data processing service fees

1,512

1,347

4,418

3,700

Other operating expenses

1,874

1,470

5,421

4,013

Total non-interest expenses

31,654

26,611

92,853

79,228

Income before income tax expense

26,800

17,828

72,250

39,501

Income tax expense

10,242

7,355

27,106

16,478

Net income

$

16,558

10,473

45,144

23,023

Basic and diluted earnings per share

$

0.15

0.10

0.41

0.22

Weighted average shares outstanding

Basic

109,867,995

109,803,171

110,057,576

106,750,699

Diluted

110,146,113

109,898,606

110,223,154

106,784,458

INVESTORS BANCORP, INC. AND SUBSIDIARY

Average Balance Sheet and Yield/Rate Information

For Three Months Ended

September 30, 2010

September 30, 2009

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

$      60,728

$           15

0.10%

$    350,091

$         208

0.24%

Securities available-for-sale

447,282

2,744

2.45%

362,672

2,949

3.25%

Securities held-to-maturity

578,417

7,060

4.88%

811,273

9,332

4.60%

Net loans

7,336,001

98,720

5.38%

6,250,896

85,117

5.45%

Stock in FHLB

80,550

879

4.36%

70,546

1,025

5.81%

Total interest-earning assets

8,502,978

109,418

5.15%

7,845,478

98,631

5.03%

Non-interest earning assets

395,379

321,748

Total assets

$ 8,898,357

$ 8,167,226

Interest-bearing liabilities:

Savings

$    925,236

$      3,387

1.46%

$    806,530

3,816

1.89%

Interest-bearing checking

933,163

1,479

0.63%

803,226

2,281

1.14%

Money market accounts

764,712

1,824

0.95%

521,288

2,043

1.57%

Certificates of deposit

3,234,186

15,161

1.88%

3,310,766

21,634

2.61%

Borrowed funds

1,849,236

17,127

3.70%

1,697,073

17,402

4.10%

Total interest-bearing liabilities

7,706,533

38,978

2.02%

7,138,883

47,176

2.64%

Non-interest bearing liabilities

287,556

209,766

Total liabilities

7,994,089

7,348,649

Stockholders' equity

904,268

818,577

Total liabilities and stockholders' equity

$ 8,898,357

$ 8,167,226

Net interest income

$    70,440

$    51,455

Net interest rate spread

3.13%

2.39%

Net interest earning assets

$    796,445

$    706,595

Net interest margin

3.31%

2.62%

Ratio of interest-earning assets to total interest- bearing liabilities

1.10 X

1.10 X

INVESTORS BANCORP, INC. AND SUBSIDIARY

Average Balance Sheet and Yield/Rate Information

For Nine Months Ended

September 30, 2010

September 30, 2009

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

$    148,575

$         205

0.18%

$    315,622

$         562

0.24%

Securities available-for-sale

468,915

9,282

2.64%

254,271

7,427

3.89%

Securities held-to-maturity

633,621

22,237

4.68%

899,984

33,025

4.89%

Net loans

7,007,536

284,048

5.40%

5,901,913

241,024

5.45%

Stock in FHLB

77,171

2,585

4.47%

71,791

2,705

5.02%

Total interest-earning assets

8,335,818

318,357

5.09%

7,443,581

284,743

5.10%

Non-interest earning assets

390,511

288,247

Total assets

$ 8,726,329

$ 7,731,828

Interest-bearing liabilities:

Savings

$    900,469

$    10,265

1.52%

$    682,614

$    10,734

2.10%

Interest-bearing checking

878,806

4,889

0.74%

773,266

11,107

1.92%

Money market accounts

718,785

5,432

1.01%

412,016

5,485

1.78%

Certificates of deposit

3,278,615

47,931

1.95%

3,147,723

68,873

2.92%

Borrowed funds

1,808,485

52,323

3.86%

1,761,673

52,602

3.98%

Total interest-bearing liabilities

7,585,160

120,840

2.12%

6,777,292

148,801

2.93%

Non-interest bearing liabilities

256,387

163,850

Total liabilities

7,841,547

6,941,142

Stockholders' equity

884,782

790,686

Total liabilities and stockholders' equity

$ 8,726,329

$ 7,731,828

Net interest income

$  197,517

$  135,942

Net interest rate spread

2.97%

2.17%

Net interest earning assets

$    750,658

$    666,289

Net interest margin

3.16%

2.44%

Ratio of interest-earning assets to total interest-bearing liabilities

1.10 X

1.10 X

INVESTORS BANCORP, INC. AND SUBSIDIARY

Selected Performance Ratios

For the Three Months Ended

September 30,

2010

2009

Return on average assets

0.74%

0.51%

Return on average equity

7.32%

5.12%

Interest rate spread

3.13%

2.39%

Net interest margin

3.31%

2.62%

Efficiency ratio

40.87%

46.84%

Non-interest expense to average total assets  

1.42%

1.30%

Average interest-earning assets to average

  interest-bearing liabilities

1.10

1.10

For the Nine Months Ended

September 30,

2010

2009

Return on average assets

0.69%

0.40%

Return on average equity

6.80%

3.88%

Interest rate spread

2.97%

2.17%

Net interest margin

3.16%

2.44%

Efficiency ratio

43.67%

53.85%

Efficiency ratio (excluding OTTI and FDIC special assessment) (1)

43.67%

50.95%

Non-interest expense to average total assets  

1.42%

1.37%

Average interest-earning assets to average

  interest-bearing liabilities

1.10

1.10

(1) For the nine months ended September 30, 2009,  OTTI was $1.3 million and FDIC Special Assessment was $3.6 million.

INVESTORS BANCORP, INC. AND SUBSIDIARY

Selected Financial Ratios and Other Data

September 30,

At December 31,

2010

2009

Asset Quality Ratios:

Non-performing assets as a percent of total assets

1.63%

1.44%

Non-performing loans as a percent of total loans

1.94%

1.81%

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

58.39%

45.80%

Allowance for loan losses as a percent of total loans

1.13%

0.83%

Capital Ratios:

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

15.05%

15.78%

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

13.79%

14.70%

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

9.08%

9.03%

Equity to total assets (period end)

10.02%

10.17%

Average equity to average assets

10.14%

9.99%

Tangible capital (to tangible assets)

9.68%

9.83%

Book value per common share

$                8.06

$7.67

Other Data:

Number of full service offices

67

65

Full time equivalent employees

739

704

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

SOURCE Investors Bancorp, Inc.



RELATED LINKS

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