SHORT HILLS, N.J., April 29 /PRNewswire-FirstCall/ -- Investors Bancorp, Inc. ("Company"), the holding company for Investors Savings Bank ("Bank"), reported net income of $13.3 million for the three months ended March 31, 2010 compared to a net income of $7.1 million for the three months ended March 31, 2009. Basic and diluted earnings per share were $0.12 for the three months ended March 31, 2010 compared to basic earnings per share of $0.07 for the three months ended March 31, 2009.
Commenting on the Company's first quarter performance, Kevin Cummings, President and Chief Executive Officer, said, "Investors' net income of $13.3 million reflected a strong quarter marked by continued growth in earning assets and an increase in net interest margin to 3.06%. Investors continues to build its loan portfolio with high quality commercial real estate and residential mortgage loans. This growth was primarily funded by lower cost core deposits."
Regarding credit quality Mr. Cummings commented, "While the economy shows signs of stabilization we remain cautious due to the high level of unemployment and its potential impact on our loan portfolio. We are encouraged as non-performing loans have remained flat with last quarter at 1.82% of total loans which compares favorably to our peers. Combined with our healthy tangible capital ratio of 9.6%, we believe we are uniquely positioned to take advantage of opportunities in this economic environment."
"During the quarter we announced the acquisition of $575 million in deposits and 17 branch locations from Millennium bcp Bank, which is expected to close during the quarter ending September 2010. We are excited to continue to expand our branch network into new markets with an acquisition which enhances shareholder value."
The following represents other performance highlights and significant events that occurred during the three month period ended March 31, 2010:
-- Net interest margin increased 72 basis points to 3.06% compared to prior year quarter and an increase of 25 basis points compared to linked quarter. -- Deposits increased $172.3 million, or 3.0%, to $6.01 billion at March 31, 2010 from $5.84 billion at December 31, 2009. -- Core deposits increased $123.3 million, or 4.8%, to $2.67 billion at March 31, 2010 from $2.55 billion at December 31, 2009. -- Net loans increased $185.0 million, or 2.8%, to $6.80 billion at March 31, 2010 from $6.62 billion at December 31, 2009. -- Non performing loans as a percentage of total loans were 1.82% at March 31, 2010, compared to 1.81% at December 31, 2009. -- The allowance for loan losses increased to $62.9 million or 0.92% of total loans at March 31, 2010 from $55.1 million or 0.83% at December 31, 2009. -- During the three months ended March 31, 2010 the Company charged-off $5.2 million in loans. -- The efficiency ratio improved to 46.2% for the quarter ended March 31, 2010 compared to 54.86% for quarter ended March 31, 2009 -- The Company maintains a strong tangible capital ratio of 9.6%, and is considered well capitalized under regulatory guidelines. -- On March 30, 2010 the Company announced it will acquire approximately $575 million of deposits and seventeen (17) branch offices in New Jersey, New York and Massachusetts of Millennium bcp Bank for a deposit premium of 0.11%. Comparison of Operating Results Interest and Dividend Income
Total interest and dividend income increased by $10.3 million, or 11.1%, to $103.1 million for the three months ended March 31, 2010 from $92.7 million for the three months ended March 31, 2009. This increase is attributed to the average balance of interest-earning assets increasing $1.05 billion, or 14.9%, to $8.10 billion for the three months ended March 31, 2010 from $7.05 billion for the three months ended March 31, 2009. This was partially offset by a 17 basis point decrease in the weighted average yield on interest-earning assets to 5.09% for the three months ended March 31, 2010 compared to 5.26% for the three months ended March 31, 2009.
Interest income on loans increased by $14.3 million, or 18.6%, to $91.0 million for the three months ended March 31, 2010 from $76.7 million for the three months ended March 31, 2009, reflecting a $1.08 billion, or 19.2%, increase in the average balance of net loans to $6.72 billion for the three months ended March 31, 2010 from $5.63 billion for the three months ended March 31, 2009. The increase is primarily attributed to an increase of $533.7 million and $378.9 million in the average balance of commercial real estate loans and multi-family loans, respectively, which is consistent with our strategic plan to diversify the loan portfolio. This was partially offset by a 3 basis point decrease in the average yield on loans to 5.42% for the three months ended March 31, 2010 from 5.45% for the three months ended March 31, 2009.
Interest income on all other interest-earning assets, excluding loans, decreased by $4.0 million, or 24.9%, to $12.0 million for the three months ended March 31, 2010 from $16.0 million for the three months ended March 31, 2009. This decrease reflected a 105 basis point decrease in the average yield on all other interest-earning assets, excluding loans, to 3.47% for the three months ended March 31, 2010 from 4.52% for the three months ended March 31, 2009. The decrease in yield is primarily attributed to the repricing of our adjustable rate securities and the purchase of additional securities at lower yields.
Interest Expense
Total interest expense decreased by $10.5 million, or 20.3%, to $41.1 million for the three months ended March 31, 2010 from $51.6 million for the three months ended March 31, 2009. This decrease is attributed to the weighted average cost of total interest-bearing liabilities decreasing 99 basis points to 2.22% for the three months ended March 31, 2010 compared to 3.21% for the three months ended March 31, 2009. This was partially offset by the average balance of total interest-bearing liabilities increasing by $975.9 million, or 15.2%, to $7.40 billion for the three months ended March 31, 2010 from $6.42 billion for the three months ended March 31, 2009.
Interest expense on interest-bearing deposits decreased $10.1 million, or 29.9% to $23.8 million for the three months ended March 31, 2010 from $33.9 million for the three months ended March 31, 2009. This decrease is attributed to a 127 basis point decrease in the average cost of interest-bearing deposits to 1.69% for the three months ended March 31, 2010 from 2.96% for the three months ended March 31, 2009 as we were able to reduce the rates paid on deposits. This was partially offset by the average balance of total interest-bearing deposits increasing $1.03 billion, or 22.5% to $5.62 billion for the three months ended March 31, 2010 from $4.59 billion for the three months ended March 31, 2009. Core deposits growth represented 72.5%, or $747.4 million of the increase in the average balance of total interest-bearing deposits.
Interest expense on borrowed funds decreased by $313,000, or 1.8%, to $17.4 million for the three months ended March 31, 2010 from $17.7 million for the three months ended March 31, 2009. This decrease is attributed to the average balance of borrowed funds decreasing by $55.7 million or 3.0%, to $1.78 billion for the three months ended March 31, 2010 from $1.84 billion for the three months ended March 31, 2009. This was partially offset by the average cost of borrowed funds increasing 5 basis points to 3.90% for the three months ended March 31, 2010 from 3.85% for the three months ended March 31, 2009 as we extended some of our borrowings.
Net Interest Income
Net interest income increased by $20.8 million, or 50.5%, to $61.9 million for the three months ended March 31, 2010 from $41.2 million for the three months ended March 31, 2009. The increase was caused primarily by a 99 basis point decrease in our cost of interest-bearing liabilities to 2.22% for the three months ended March 31, 2010 from 3.21% for the three months ended March 31, 2009. This was partially offset by a 17 basis point decrease in our yield on interest-earning assets to 5.09% for the three months ended March 31, 2010 from 5.26% for the three months ended March 31, 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 2.34% for the three months ended March 31, 2009 to 3.06% for the three months ended March 31, 2010.
Provision for Loan Losses
Our provision for loan losses was $13.1 million for the three month period ended March 31, 2010 compared to $8.0 million for the three month period ended March 31, 2009. For the three months ended March 31, 2010, net charge-offs totaled $5.2 million compared to net charge-offs of eight thousand dollars for the three months ended March 31, 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 comparative table below details non-performing loans and allowance for loan loss coverage ratios over the last four quarters.
March 31, December 31, 2010 2009 ---- # of # of loans Amount loans Amount ----- ------ ----- ------ (Dollars in millions) Residential and consumer 199 $57.1 185 $51.2 Multi-family 2 2.5 4 0.6 Commercial 9 3.5 10 3.4 Construction 22 61.6 22 65.0 Total Non-Performing Loans 232 $124.7 221 $120.2 === ====== === ====== Non-performing loans to total loans 1.82% 1.81% Allowance for loan loss as a percent of non- performing loans 50.47% 45.80% Allowance for loan losses as a percent of total loans 0.92% 0.83% September 30, June 30, 2009 2009 # of # of loans Amount loans Amount ----- ------ ----- ------ (Dollars in millions) Residential and consumer 164 $41.0 112 $30.0 Multi-family 4 0.6 4 20.1 Commercial 9 3.4 8 2.8 Construction 22 70.5 19 68.8 Total Non-Performing Loans 199 $115.5 143 $121.7 === ====== === ====== Non-performing loans to total loans 1.82% 1.97% Allowance for loan loss as a percent of non- performing loans 46.35% 38.30% Allowance for loan losses as a percent of total loans 0.84% 0.76%
The allowance for loan losses increased by $7.9 million to $62.9 million at March 31, 2010 from $55.1 million at December 31, 2009. Total non-performing loans, defined as non-accruing loans, were $124.7 million at March 31, 2010 compared to $120.2 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, 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 $3.9 million for the three months ended March 31, 2010 compared to $3.4 million for the three months ended March 31, 2009. The increase is primarily attributed to a $684,000 increase in fees and service charges to $1.6 million and a $265,000 increase in the cash surrender value of bank owned life insurance to $521,000 for the three months ended March 31, 2010. This was partially offset by a $416,000 decrease on gain on loan sales to $1.7 million for the three months ended March 31, 2010, attributed to less refinancing activity during the current quarter compared to the prior year quarter, resulting in fewer sales to the secondary market.
Non-Interest Expenses
Total non-interest expenses increased by $6.0 million, or 24.4%, to $30.4 million for the three months ended March 31, 2010 from $24.5 million for the three months ended March 31, 2009. Compensation and fringe benefits increased $1.5 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, as well as normal merit increases. The FDIC insurance premiums increased $1.4 million as a result of an increase in our deposits and an increase in the FDIC premium rate. Occupancy expense increased $1.4 million as a result of the costs associated with expanding our branch network.
Income Taxes
Income tax expense was $9.1 million for the three months ended March 31, 2010, representing a 40.55% effective tax rate. For the three months ended March 31, 2009, there was an income tax expense of $5.0 million representing a 41.6% effective tax rate.
Balance Sheet Summary
Total assets increased by $390.9 million, or 4.7%, to $8.75 billion at March 31, 2010 from $8.36 billion at December 31, 2009. This increase was largely the result of a $210.9 million increase in our cash and cash equivalents at March 31, 2010 and a $180.5 million increase in net loans, including loans held for sale.
Net loans, including loans held for sale, increased by $180.5 million, or 2.7%, to $6.82 billion at March 31, 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.
We originate residential mortgage loans directly and through our mortgage subsidiary, ISB Mortgage Co. During the three month period ended March 31, 2010 we originated $144.9 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 three month period ended March 31, 2010, we purchased loans totaling $231.1 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 three month period ended March 31, 2010, we purchased $14.8 million of residential mortgage loans on a "bulk purchase" basis.
Additionally, for the three month period ended March 31, 2010, we originated $40.4 million in multi-family loans, $86.9 million in commercial real estate loans, $27.0 million in construction loans, $14.5 in consumer and other loans, and $2.0 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 $7.6 million, or 0.6%, to $1.18 billion at March 31, 2010, from $1.19 billion at December 31, 2009 as pay downs were partially offset by the purchase of $98.9 million of agency issued mortgage backed securities during the three months ended March 31, 2010.
The amount of stock we own in the Federal Home Loan Bank (FHLB) increased by $7.9 million from $66.2 million at December 31, 2009 to $74.1 million at March 31, 2010 as a result of an increase in our level of borrowings at March 31, 2010. Other assets decreased $3.6 million as prepaid FDIC insurance decreased in relation to our FDIC insurance expense.
Deposits increased by $172.3 million, or 3.0%, to $6.01 billion at March 31, 2010 from $5.84 billion at December 31, 2009. Core deposits increased by $123.3 million, or 4.8% and certificate of deposits increased $49.0 million, or 1.5%. Our deposit gathering efforts continue to be successful in our markets.
Borrowed funds increased $175.0 million, or 10.9%, to $1.78 billion at March 31, 2010 from $1.60 billion at December 31, 2009.
Stockholders' equity increased $18.0 million to $868.2 million at March 31, 2010 from $850.2 million at December 31, 2009. The increase is primarily attributed to the $13.3 million net income for the 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 sixty five branch offices located in Essex, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Union and Warren Counties, New Jersey.
Earnings Conference Call April 30, 2010 at 11:00 a.m. (ET)
The Company, as previously announced, indicated that it will host an earnings conference call Friday morning, April 30, 2010 at 11:00 a.m. (ET). The toll-free dial-in number is (800) 860-2442. A telephone replay will be available on April 30, 2010 from 1:00 p.m. (ET) through July 31, 2010, 9:00 a.m. (ET). The replay number is (877) 344-7529 password 437004. The conference call will also be simultaneously webcast on the Company's website http://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 March 31, 2010 (unaudited) and December 31, 2009 March 31, December 31, Assets 2010 2009 ---- ---- (In thousands) Cash and cash equivalents $284,540 73,606 Securities available-for-sale, at estimated fair value 522,346 471,243 Securities held-to-maturity, net (estimated fair value of 658,706 717,441 $696,512 and $753,405 at March 31, 2010 and December 31, 2009, respectively) Loans receivable, net 6,800,429 6,615,459 Loans held-for-sale 22,616 27,043 Stock in the Federal Home Loan Bank 74,077 66,202 Accrued interest receivable 37,594 36,942 Office properties and equipment, net 50,746 49,384 Net deferred tax asset 117,736 117,143 Bank owned life insurance 115,063 114,542 Intangible assets 31,400 31,668 Other assets 33,512 37,143 ------ ------ Total assets $8,748,765 8,357,816 ========== ========= Liabilities and Stockholders' Equity Liabilities: Deposits $6,012,964 5,840,643 Borrowed funds 1,775,535 1,600,542 Advance payments by borrowers for taxes and insurance 33,494 29,675 Other liabilities 58,543 36,743 ------ ------ Total liabilities 7,880,536 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 532 532 authorized; 118,020,280 issued; 114,893,587 and 114,448,888 outstanding at March 31, 2010 and December 31, 2009, respectively Additional paid-in capital 526,275 530,133 Retained earnings 434,560 422,211 Treasury stock, at cost; 3,126,693 and 3,571,392 shares (38,183) (44,810) at March 31, 2010 and December 31, 2009 Unallocated common stock held by the employee stock (35,096) (35,451) ownership plan Accumulated other comprehensive loss (19,859) (22,402) ------- ------- Total stockholders' equity 868,229 850,213 ------- ------- Total liabilities and stockholders' equity $8,748,765 8,357,816 ========== ========= INVESTORS BANCORP, INC. AND SUBSIDIARY Consolidated Statements of Operations (Unaudited) For the Three Months Ended March 31, 2010 2009 ---- ---- (Dollars in thousands, except per share data) Interest and dividend income: Loans receivable and loans held- for-sale $91,028 76,723 Securities: Government-sponsored enterprise obligations 198 304 Mortgage-backed securities 10,046 11,946 Equity securities available-for- sale - 1 Municipal bonds and other debt 795 2,986 Interest-bearing deposits 73 119 Federal Home Loan Bank stock 928 670 --- --- Total interest and dividend income 103,068 92,749 ------- ------ Interest expense: Deposits 23,760 33,900 Secured borrowings 17,378 17,691 ------ ------ Total interest expense 41,138 51,591 ------ ------ Net interest income 61,930 41,158 Provision for loan losses 13,050 8,000 ------ ----- Net interest income after provision 48,880 33,158 for loan losses Non-interest income Fees and service charges 1,590 906 Income on bank owned life insurance 521 256 Gain on sales of mortgage loans, net 1,747 2,163 (Loss) gain on securities transactions (48) 2 Other income 123 90 --- --- Total non-interest income 3,933 3,417 ----- ----- Non-interest expense Compensation and fringe benefits 17,136 15,670 Advertising and promotional expense 872 640 Office occupancy and equipment expense 4,356 2,998 Federal insurance premiums 3,225 1,800 Stationery, printing, supplies and telephone 635 488 Professional fees 1,082 599 Data processing service fees 1,431 1,113 Other operating expenses 1,689 1,147 ----- ----- Total non-interest expenses 30,426 24,455 ------ ------ Income before income tax expense 22,387 12,120 Income tax expense 9,077 5,042 ----- ----- Net income $13,310 7,078 ======= ===== Basic and diluted (loss) earnings per share $0.12 0.07 Weighted average shares outstanding Basic 110,146,888 104,192,971 Diluted 110,201,851 104,228,891 INVESTORS BANCORP, INC. AND SUBSIDIARY Average Balance Sheet and Yield/Rate Information For Three Months Ended ---------------------- March 31, 2010 -------------- Average Interest Average Outstanding Earned/ Yield/ Balance Paid Rate ------------ --------- -------- (Dollars in thousands) Interest-earning assets: Interest-earning cash accounts $159,194 $73 0.18% Securities available-for-sale 464,673 3,203 2.76% Securities held-to-maturity 690,495 7,836 4.54% Net loans 6,715,435 91,028 5.42% Stock in FHLB 74,254 928 5.00% ------ --- Total interest-earning assets 8,104,051 103,068 5.09% ------- Non-interest earning assets 386,967 ------- Total assets $8,491,018 ========== Interest-bearing Liabilities: Savings $876,737 $3,429 1.56% Interest-bearing checking 729,200 1,672 0.92% Money market accounts 702,781 1,962 1.12% Certificates of deposit 3,309,288 16,697 2.02% Borrowed funds 1,781,260 17,378 3.90% --------- ------ Total interest-bearing liabilities 7,399,266 41,138 2.22% ------ Non-interest bearing liabilities 237,332 ------- Total liabilities 7,636,598 Stockholders' equity 854,420 ------- Total liabilities and stockholders' equity $8,491,018 ========== Net interest income $61,930 ======= Net interest rate spread 2.87% ==== Net interest earning assets $704,785 ======== Net interest margin 3.06% ==== Ratio of interest-earning assets to total interest- bearing liabilities 1.10 X ==== For Three Months Ended ---------------------- March 31, 2009 -------------- Average Interest Average Outstanding Earned/ Yield/ Balance Paid Rate ------------ --------- -------- (Dollars in thousands) Interest-earning assets: Interest-earning cash accounts $205,083 $119 0.23% Securities available-for-sale 179,298 2,083 4.65% Securities held-to-maturity 960,946 13,154 5.48% Net loans 5,631,836 76,723 5.45% Stock in FHLB 73,062 670 3.67% ------ --- Total interest-earning assets 7,050,225 92,749 5.26% ------ Non-interest earning assets 258,737 ------- Total assets $7,308,962 ========== Interest-bearing Liabilities: Savings $555,319 $3,242 2.34% Interest-bearing checking 711,075 4,082 2.30% Money market accounts 294,927 1,558 2.11% Certificates of deposit 3,025,100 25,018 3.31% Borrowed funds 1,836,931 17,691 3.85% --------- ------ Total interest-bearing liabilities 6,423,352 51,591 3.21% ------ Non-interest bearing liabilities 134,248 ------- Total liabilities 6,557,600 Stockholders' equity 751,362 ------- Total liabilities and stockholders' equity $7,308,962 ========== Net interest income $41,158 ======= Net interest rate spread 2.05% ==== Net interest earning assets $626,873 ======== Net interest margin 2.34% ==== Ratio of interest-earning assets to total interest- bearing liabilities 1.10 X ==== INVESTORS BANCORP, INC. AND SUBSIDIARY Selected Performance Ratios For the Three Months Ended March 31, --------- 2010 2009 ---- ---- Return on average assets 0.63% 0.39% Return on average equity 6.23% 3.77% Interest rate spread 2.87% 2.05% Net interest margin 3.06% 2.34% Efficiency ratio 46.20% 54.86% Non-interest expense to average total assets 1.43% 1.34% Average interest-earning assets to average 1.10x 1.10x interest-bearing liabilities INVESTORS BANCORP, INC. AND SUBSIDIARY Selected Financial Ratios and Other Data At December At March 31, 31, 2010 2009 ---- ---- Asset Quality Ratios: Non-performing assets as a percent of total assets 1.43% 1.44% Non-performing loans as a percent of total loans 1.82% 1.81% Allowance for loan losses as a percent of non-performing loans 50.47% 45.80% Allowance for loan losses as a percent of total loans 0.92% 0.83% Capital Ratios: Total risk-based capital (to risk weighted assets) (1) 15.82% 15.78% Tier 1 risk-based capital (to risk weighted assets) (1) 14.62% 14.70% Tier 1 leverage (core) capital (to adjusted tangible assets) (1) 9.08% 9.03% Equity to total assets (period end) 9.92% 10.17% Average equity to average assets 10.06% 9.99% Tangible capital (to tangible assets) 9.60% 9.83% Book value per common share $7.79 $7.67 Other Data: Number of full service offices 65 65 Full time equivalent employees 725 704 (1) Ratios are for Investors Savings Bank and do not include capital retained at the holding company level.
Investors Bancorp, Inc.
CONTACT: Domenick Cama ISBC, +1-973-924-5105, dcama@isbnj.com
Web Site: http://www.isbnj.com/
