SHORT HILLS, N.J., July 29 NJ-ISBC-Q4-earnings
SHORT HILLS, N.J., July 29 /PRNewswire-FirstCall/ -- Investors Bancorp,
Inc. (Nasdaq: ISBC) ("Company"), the holding company for Investors Savings
Bank ("Bank"), reported today the results of its operations for the three
months and year ended June 30, 2008.
Net income was $5.5 million for the three months ended June 30, 2008
compared to net income of $2.9 million for the three months ended June 30,
2007. Net income for the year ended June 30, 2008 was $16.0 million compared
to net income of $22.3 million for the year ended June 30, 2007. Net income
for the year ended June 30, 2007 included a $9.9 million tax benefit,
partially offset by a $3.7 million pre-tax loss from a balance sheet
restructuring.
Basic and diluted earnings were $0.05 per share for the three months ended
June 30, 2008, compared to basic and diluted earnings of $0.03 per share for
the three months ended June 30, 2007. Basic and diluted earnings were $0.15
per share for the year ended June 30, 2008, compared to basic and diluted
earnings of $0.20 per share for the year ended June 30, 2007.
Net interest margin increased by 47 basis points to 2.09% for the quarter
ended June 30, 2008 compared to 1.62% for the quarter ended June 30, 2007. For
the year ended June 30, 2008, the net interest margin increased by 16 basis
points to 1.81% compared to 1.65% for the year ended June 30, 2007.
Net loans increased by $1.05 billion, or 28.8%, to $4.67 billion at June
30, 2008 from $3.62 billion at June 30, 2007 while securities decreased $378.8
million, or 20.6%, to $1.46 billion at June 30, 2008 from $1.84 billion at
June 30, 2007.
Deposits increased $202.1 million, or 5.4%, to $3.97 billion at June 30,
2008 from $3.77 billion at June 30, 2007. Borrowings also increased by $524.9
million, or 50.5%, to $1.56 billion at June 30, 2008 from $1.04 billion at
June 30, 2007 as the Company took advantage of lower rates for longer term
wholesale borrowings to fund new loan growth.
Common stock repurchased for the year ended June 30, 2008 was 4,339,530
shares including 869,501 shares repurchased during the three months ended June
30, 2008. Since announcing our first share repurchase program on September 25,
2006, the Company has repurchased a total of 10,813,225 shares. Under the
approved stock repurchase program an additional 3,726,944 shares may be
purchased.
Kevin Cummings, the Company's president and CEO said he was pleased with
the year and the quarter's results, "despite the adverse economic and credit
environments, we have made great progress toward our transformation to a more
retail like bank with loan growth over $1 billion and deposit growth over $200
million. We are well positioned with a strong 12.91% capital ratio to take
advantage of growth opportunities."
Mr. Cummings added, "This recent credit cycle has had a severe impact on
many financial institutions, forcing many of them to shed quality assets in an
attempt to maintain higher capital ratios or withdraw from lending businesses
they once dominated. This has created an opportunity for us to grow assets."
Total assets of the Company grew over 12% during the year ended June 30, 2008.
On June 6, 2008, the Company completed its acquisition of Summit Federal
Bankshares, Inc. ("Summit Federal"), which operated five branches in Union,
Middlesex, Hunterdon and Warren counties, New Jersey and as of March 31, 2008,
had assets of $112.2 million, deposits of $95.8 million and equity of $15.2
million. This transaction involved the combination of mutual enterprises and,
therefore, was accounted for as a pooling of interests. All financial
information has been restated to include amounts for Summit Federal, based on
historical costs, for all periods presented.
There was no consideration paid to Summit Federal as a mutual entity,
however, in connection with the acquisition, the Company issued 1,744,592
additional shares of its common stock to Investors Bancorp, MHC ("Investors
MHC"), based on the pro forma market value of $25.0 million for Summit Federal
and the average closing price of a share of the Company's common stock, as
reported on NASDAQ, for twenty (20) consecutive trading days ending on June
4th.
Commenting on the acquisition, Mr. Cummings said, "We are pleased to
welcome the employees and customers of Summit Federal to the Investors family.
We look forward to working with the employees and serving our new customers
with the expanded suite of products we offer. This unique and creative
acquisition of a mutual institution complements our franchise while building
value for shareholders."
Mr. Cummings summed up his comments, "Overall we were pleased with the
quarter and year end results including the growth in net interest margin, and
despite an increase in non-performing assets, the continued solid performance
of the loan portfolio. We remain focused on navigating through this difficult
environment emphasizing credit quality and expense control while cautiously
growing total assets and managing capital."
Comparison of Operating Results
Interest and Dividend Income
Total interest and dividend income increased by $6.7 million, or 9.3%, to
$79.5 million for the three months ended June 30, 2008 from $72.7 million for
the three months ended June 30, 2007. This increase is primarily due to a
$563.7 million, or 10.4%, increase in the average balance of interest-earning
assets to $6.00 billion for the three months ended June 30, 2008 from $5.44
billion for the three months ended June 30, 2007, as we took advantage of
several opportunities to purchase high quality residential loans from other
financial institutions. This was partially offset by a 5 basis point decrease
in the weighted average yield on interest-earning assets to 5.30% for the
three months ended June 30, 2008 compared to 5.35% for the three months ended
June 30, 2007.
Interest income on loans increased by $11.9 million, or 24.0%, to $61.4
million for the three months ended June 30, 2008 from $49.5 million for the
three months ended June 30, 2007, reflecting an $891.1 million, or 25.5%,
increase in the average balance of net loans to $4.39 billion for the three
months ended June 30, 2008 from $3.50 billion for the three months ended June
30, 2007, consistent with our strategic plan to change our mix of assets by
increasing the size of our loan portfolio while reducing the size of our
securities portfolio. This was partially offset by a 6 basis point decrease in
the average yield on loans to 5.59% for the three months ended June 30, 2008
from 5.65% for the three months ended June 30, 2007 as a number of our
adjustable rate commercial and construction loans re-priced downward
reflecting reductions in market indices.
Interest income on all other interest-earning assets, excluding loans,
decreased by $5.2 million, or 22.2%, to $18.1 million for the three months
ended June 30, 2008 from $23.2 million for the three months ended June 30,
2007. This decrease reflected a $327.4 million decrease in the average balance
of securities and other interest-earning assets, consistent with our strategic
plan to change our mix of assets by reducing the size of our securities
portfolio and increasing the size of our loan portfolio. In addition, there
was a 30 basis point decrease in the average yield on securities and other
interest-earning assets to 4.50% for the three months ended June 30, 2008 from
4.80% for the three months ended June 30, 2007 as some of our adjustable rate
securities re-priced in relation to current market rates.
Total interest and dividend income increased by $27.6 million, or 9.7%, to
$312.8 million for the year ended June 30, 2008 from $285.2 million for the
year ended June 30, 2007. This increase was primarily due to a $333.3 million,
or 6.1%, increase in the average balance of interest-earning assets to $5.80
billion for the year ended June 30, 2008 from $5.47 billion for the year ended
June 30, 2007. We took advantage of several opportunities to grow assets by
purchasing high quality residential mortgage loans, particularly over the last
quarter. In addition, there was a 17 basis point increase in the weighted
average yield on interest-earning assets to 5.39% for the year ended June 30,
2008 compared to 5.22% for the year ended June 30, 2007.
Interest income on loans increased by $46.6 million, or 25.5%, to $229.6
million for the year ended June 30, 2008 from $183.0 million for the year
ended June 30, 2007, reflecting a $737.6 million, or 22.3%, increase in the
average balance of net loans to $4.04 billion for the year ended June 30, 2008
from $3.31 billion for the year ended June 30, 2007. In addition, the average
yield on loans increased to 5.68% for the year ended June 30, 2008 from 5.54%
for the year ended June 30, 2007.
Interest income on all other interest-earning assets, excluding loans,
decreased by $19.1 million, or 18.6%, to $83.2 million for the year ended June
30, 2008 from $102.2 million for the year ended June 30, 2007. This decrease
reflected a $404.3 million decrease in the average balance of securities and
other interest-earning assets, which is consistent with our strategic plan to
change our mix of assets by reducing the size of our securities portfolio and
increasing the size of our loan portfolio. In addition, the average yield on
securities and other interest-earning assets remained consistent at 4.73% for
the years ended June 30, 2008 and 2007.
Interest Expense
Total interest expense decreased by $2.6 million, or 5.1%, to $48.1
million for the three months ended June 30, 2008 from $50.6 million for the
three months ended June 30, 2007. This decrease was primarily due to a 68
basis point decrease in the weighted average cost of total interest-bearing
liabilities to 3.67% for the three months ended June 30, 2008 compared to
4.35% for the three months ended June 30, 2007. This was partially offset by a
$585.8 million, or 12.6% increase in the average balance of total interest-
bearing liabilities to $5.25 billion for the three months ended June 30, 2008
from $4.66 billion for the three months ended June 30, 2007.
Interest expense on interest-bearing deposits decreased $3.7 million, or
9.7% to $34.5 million for the three months ended June 30, 2008 from $38.3
million for the three months ended June 30, 2007. This decrease was due to a
65 basis point decrease in the average cost of interest-bearing deposits to
3.52% for the three months ended June 30, 2008 compared to 4.17% for the three
months ended June 30, 2007, as lower short term interest rates allowed us to
lower our deposit rates. This was partially offset by a $252.0 million
increase in the average balance of interest-bearing deposits.
Interest expense on borrowed funds increased by $1.2 million, or 9.3%, to
$13.5 million for the three months ended June 30, 2008 from $12.4 million for
the three months ended June 30, 2007. This increase was caused by a $333.9
million, or 33.7%, increase in the average balance of borrowed funds to $1.32
billion for the three months ended June 30, 2008 from $989.3 million for the
three months ended June 30, 2007, partially offset by a 92 basis point
decrease in the average cost of borrowed funds to 4.09% for the three months
ended June 30, 2008 from 5.01% for the three months ended June 30, 2007. We
increased our use of longer term borrowed funds to help fund loan growth for
the quarter.
Total interest expense increased by $12.4 million, or 6.4%, to $207.7
million for the year ended June 30, 2008 from $195.3 million for the year
ended June 30, 2007. This increase was primarily due to a $399.1 million, or
8.6%, increase in the average balance of total interest-bearing liabilities to
$5.05 billion for the year ended June 30, 2008 from $4.65 billion for the year
ended June 30, 2007 partially offset by 9 basis point decrease in the weighted
average cost of total interest-bearing liabilities to 4.11% for the year ended
June 30, 2008 compared to 4.20% for the year ended June 30, 2007.
Interest expense on interest-bearing deposits increased $12.6 million, or
9.0%, to $152.7 million for the year ended June 30, 2008 from $140.1 million
for the year ended June 30, 2007. This increase was due to a $312.3 million
increase in the average balance of interest-bearing deposits and a 1 basis
point increase in the average cost of interest-bearing deposits to 3.98% at
June 30, 2008.
Interest expense on borrowed funds decreased by $177,000, or 0.3%, to
$55.0 million for the year ended June 30, 2008 from $55.1 million for the year
ended June 30, 2007. This decrease was primarily due to a 36 basis point
decrease in the average cost of borrowed funds to 4.55% for the year ended
June 30, 2008 from 4.91% for the year ended June 30, 2007 as lower short term
interest rates allowed us to obtain funding at lower interest rates. This was
partially offset by an $86.8 million, or 7.7%, increase in the average balance
of borrowed funds to $1.21 billion for the year ended June 30, 2008 from $1.12
billion for the year ended June 30, 2007.
Net Interest Income
Net interest income increased by $9.3 million, or 42.2%, to $31.4 million
for the three months ended June 30, 2008 from $22.1 million for the three
months ended June 30, 2007. Our net interest margin increased by 47 basis
points from 1.62% for the three months ended June 30, 2007 to 2.09% for the
three months ended June 30, 2008.
Net interest income increased by $15.2 million, or 16.8%, to $105.1
million for the year ended June 30, 2008 from $90.0 million for the year ended
June 30, 2007. Our net interest margin also increased by 16 basis points from
1.65% for the year ended June 30, 2007 to 1.81% for the year ended June 30,
2008.
The increase in net interest income for the three months and year ended
June 30, 2008, can partially be attributed to lower short term interest rates
and more stable longer term rates. The effect of this steeper yield curve
allowed us to lower deposit rates while keeping mortgage rates relatively
stable. In addition, we were able to take advantage of several opportunities
to purchase high quality residential loans at favorable prices to grow our
loan portfolio. The increase was partially offset by the average balance of
interest-bearing liabilities increasing for the three months and year ended
June 30, 2008.
Provision for Loan Losses
The provision for loan losses was $3.7 million for the three months ended
June 30, 2008 compared to $203,000 for the three months ended June 30, 2007.
Net charge-offs were $2,000 for the three months ended June 30, 2008 compared
to $21,000 for the three months ended June 30, 2007.
The provision for loan losses was $6.6 million for the year ended June 30,
2008 compared to $729,000 for the year ended June 30, 2007. There were net
charge-offs of $31,000 for the year ended June 30, 2008 compared to net
charge-offs of $29,000 for the year ended June 30, 2007.
The allowance for loan losses increased by $6.6 million to $13.6 million
at June 30, 2008 from $7.0 million at June 30, 2007. The increase in the
allowance is primarily attributable to the higher current year loan loss
provision which reflects the overall growth in the loan portfolio,
particularly residential and commercial real estate loans; the increased
inherent credit risk in our overall portfolio, particularly the credit risk
associated with commercial real estate lending; an internal downgrade of the
risk ratings on two construction loans; the increase in non-performing loans;
and the adverse economic environment.
Total non-performing loans, defined as non-accruing loans, increased by
$14.2 million to $19.4 million at June 30, 2008 from $5.1 million at June 30,
2007. This increase is primarily the result of a previously downgraded $11.0
million construction loan which was placed on non-accrual status during the
three months ended June 30, 2008. The loan was 60 days delinquent at June 30
and while the borrower continues to work with the Company to bring the loan
current, we can not be assured at this time the borrower will be successful. A
$1.5 million specific reserve has been established for this loan in the
allowance for loan losses. The ratio of non-performing loans to total loans
was 0.42% at June 30, 2008 compared to 0.14% at June 30, 2007. The allowance
for loan losses as a percentage of non-performing loans was 70.03% at June 30,
2008 compared with 135.00% at June 30, 2007. At June 30, 2008 our allowance
for loan losses as a percentage of total loans was 0.29% compared with 0.19%
at June 30, 2007. Future increases in the allowance for loan losses may be
necessary based on the growth of the loan portfolio, the change in composition
of the loan portfolio, possible future increases in non-performing loans and
charge-offs, and the possible continuation of the current adverse economic
environment.
Non-Interest Income
Total non-interest income decreased by $459,000 to $1.4 million for the
three months ended June 30, 2008 from $1.9 million for the three months ended
June 30, 2007. This decrease was primarily due to a $441,000 loss on security
transactions, which reflected a $409,000 other-than-temporary impairment
charge recorded on a $6.0 million mutual fund investment acquired in the
merger of Summit Federal.
Total non-interest income increased by $4.2 million to $7.4 million for
the year ended June 30, 2008 from $3.2 million for the year ended June 30,
2007. This increase was largely the result of a $682,000 loss on securities
transactions in the year ended June 30, 2008 primarily attributed to a
$651,000 other-than-temporary impairment charge recorded on the above-
mentioned mutual fund investment, compared to a $3.8 million loss on the sale
of securities recorded during the year ended June 30, 2007 primarily
attributed to a balance sheet restructuring. Additionally, the gain on loan
sales increased by $361,000 to $605,000 for the year ended June 30, 2008 from
$244,000 for the year ended June 30, 2007 and income associated with our bank
owned life insurance increased $223,000. Other non-interest income also
increased $246,000 partially due to a $105,000 gain realized on the redemption
of the Visa stock received in connection with Visa's initial public offering.
Non-Interest Expenses
Total non-interest expenses increased by $567,000, or 2.8%, to $20.7
million for the three months ended June 30, 2008 from $20.1 million for the
three months ended June 30, 2007. This increase was due primarily to $723,000
in non-recurring compensation expense recorded as a result of the merger of
Summit Federal for a retirement plan payout and employee retention bonuses, as
well as a $237,000 increase in data processing expense which included merger
conversion costs. Additionally, occupancy expense increased by $155,000, due
in part to the opening of a new branch in Red Bank during the quarter, and
there were higher compensation costs associated with staff additions and
normal merit increases. These increases were partially offset by a
compensation expense reduction of $1.1 million for employee benefit plans.
Total non-interest expenses increased by $3.2 million, or 4.1%, to $80.8
million for the year ended June 30, 2008 from $77.6 million for the year ended
June 30, 2007. This increase was primarily the result of compensation and
fringe benefits increasing by $2.7 million, or 5.2%, to $53.9 million for the
year ended June 30, 2008. The year ended June 30, 2008 included a $3.9 million
increase in expense for the equity incentive plan compared to the prior fiscal
year as the plan was in effect for only a portion of fiscal 2007. In addition,
there was approximately $1.5 million in non-recurring compensation expense
recorded as a result of the merger of Summit Federal for a retirement plan
payout and employee retention bonuses. Additionally, the increase reflects
staff additions in our commercial real estate, retail banking areas and our
mortgage company as well as normal merit increases and increases in employee
benefit costs. These increases were partially offset by a $2.3 million gain
related to the curtailment and settlement of our postretirement benefit
obligation and a $1.1 million compensation expense reduction for employee
benefit plans during the year.
Income Taxes
Income tax expense was $2.9 million for the three months ended June 30,
2008, as compared to $712,000 for the three months ended June 30, 2007. Our
effective tax expense rates were 34.91% and 19.59% for the three months ended
June 30, 2008 and 2007, respectively.
Income tax expense was $9.0 million for the year ended June 30, 2008, as
compared to an income tax benefit of $7.5 million for the year ended June 30,
2007. The tax benefit in fiscal 2007 was largely attributable to an $8.7
million reduction in the deferred tax asset valuation allowance. The reduction
was primarily the result of the reversal of a substantial portion of the
previously-established deferred tax asset valuation allowance, as management
determined that it is more likely than not that the deferred tax asset will be
recognized.
Balance Sheet Summary
Total assets increased by $697.1 million, or 12.2%, to $6.42 billion at
June 30, 2008 from $5.72 billion at June 30, 2007. This increase was largely
the result of the growth in our loan portfolio partially offset by the
decrease in our securities portfolio. The cash flow from our securities
portfolio is being used to help fund our loan growth, consistent with our
strategic plan.
Net loans, including loans held for sale, increased by $1.05 billion, or
29.0%, to $4.68 billion at June 30, 2008 from $3.63 billion at June 30, 2007.
This increase in loans reflects our continued focus on loan originations and
purchases. The loans we originate and purchase are made primarily on
properties in New Jersey. To a lesser degree, we originate and purchase loans
in states in close proximity to New Jersey as a way to geographically
diversify our residential loan portfolio. We do not originate or purchase and
our loan portfolio does not include any sub-prime loans or option ARMs.
We originate residential mortgage loans directly and through our mortgage
subsidiary, ISB Mortgage Co. During the year ended June 30, 2008 we originated
$284.9 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 year
ended June 30, 2008, we purchased loans totaling $563.6 million from these
entities. We also purchase pools of mortgage loans in the secondary market on
a "bulk purchase" basis from several well-established financial institutions.
During the year ended June 30, 2008, we took advantage of several
opportunities to purchase $436.5 million of residential mortgage loans that
met our underwriting criteria on a "bulk purchase" basis.
Additionally, for the year ended June 30, 2008, we originated $139.9
million in multi-family and commercial real estate loans and $174.1 million in
construction loans. This is consistent with our strategy of originating
multi-family, commercial real estate and construction loans to diversify our
loan portfolio.
Securities, in the aggregate, decreased by $378.8 million, or 20.6%, to
$1.46 billion at June 30, 2008, from $1.84 billion at June 30, 2007. The cash
flows from our securities portfolio are being used to help fund our loan
growth. This is consistent with our strategic plan to change our mix of assets
by reducing the size of our securities portfolio and increasing the size of
our loan portfolio.
As part of the merger with Summit Federal, we acquired a $6.0 million
mutual fund investment which was deemed other-than-temporarily impaired and
written down to fair value through pre-tax charges totaling $651,000 for the
year ended June 30, 2008. Management has begun liquidating this investment and
future decreases in value will be recorded as incurred.
Securities include pooled trust preferred securities, principally issued
by banks, with an amortized cost of $178.7 million and a fair value of $135.5
million at June 30, 2008. These securities have been classified in the held to
maturity portfolio since their purchase and are performing in accordance with
contractual terms. The Company has the ability and intent to hold these
securities until maturity. Given the challenging environment for most banks in
the U.S., there has been an increase in payment deferrals by issuers and a
steady decline in the fair value of these securities. At June 30, 2008, this
portfolio contained securities with an amortized cost of $13.1 million which
had an investment grade rating of AAA and $165.6 million with an investment
grade rating of A. The Fitch rating agency has recently placed a number of
these securities on negative credit watch while they evaluate the current
rating for possible downgrade. We own 16 securities with an amortized cost of
$89.8 million and a fair value of $67.9 million currently being reviewed by
Fitch. At June 30, 2008, all of these securities have projected cash flows in
excess of future contractual principal and interest payments. In the event
these securities are downgraded below investment grade (BBB) or the projected
cash flows are not adequate to meet contractual obligations, the Company will
evaluate them for other-than-temporary impairment at that time.
The securities portfolio also includes AAA rated private label mortgage
backed securities with an amortized cost of $206.6 million and a fair value of
$196.4 million. These securities were originated in the period 2002-2004 and
are performing in accordance with contractual terms. The decrease in fair
value for these securities is attributed to changes in market interest rates.
The securities portfolio does not include any FNMA or Freddie Mac common or
preferred stock.
The amount of stock we own in the Federal Home Loan Bank (FHLB) increased
by $26.9 million from $34.1 million at June 30, 2007 to $60.9 million at June
30, 2008 as a result of an increase in our level of borrowings at June 30,
2008. Bank owned life insurance increased by $4.0 million from $92.2 million
at June 30, 2007 to $96.2 million at June 30, 2008. There was also an increase
in accrued interest receivable of $2.9 million resulting from an increase in
the average balance and yield of our interest-earning assets.
Deposits increased by $202.1 million, or 5.4%, to $3.97 billion at June
30, 2008 from $3.77 billion at June 30, 2007. Certificates of deposits,
savings account deposits and money market account deposits increased by $102.1
million, $58.3 million and $46.7 million, respectively. These increases were
partially offset by a $5.1 million decrease in checking account deposits.
Borrowed funds increased $524.9 million, or 50.5%, to $1.56 billion at
June 30, 2008 from $1.04 billion at June 30, 2007. We utilized wholesale
borrowings to fund a portion of our loan growth because of the lower rates
available in the wholesale markets for longer term borrowings. Using longer
term borrowings to fund mortgage loans helps to reduce interest rate risk of
longer term assets.
Stockholders' equity decreased $30.3 million to $828.5 million at June 30,
2008 from $858.9 million at June 30, 2007. The decrease is primarily
attributed to the repurchase of our common stock totaling $58.0 million
partially offset by net income of $16.0 million for the year ended June 30,
2008. Other factors impacting stockholders' equity were compensation costs
associated with stock options and restricted stock, the change in the
accumulated other comprehensive loss, and the allocation of ESOP shares.
About the Company
Investors Bancorp, Inc. is the holding company for Investors Savings Bank,
which operates from its corporate headquarters in Short Hills, New Jersey, and
fifty-two branch offices located in Essex, Hunterdon, Middlesex, Monmouth,
Morris, Ocean, Somerset, Union and Warren Counties, New Jersey.
Forward Looking Statements
Certain statements contained herein are "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such forward looking statements
may be identified by reference to a future period or periods, or by the use of
forward looking terminology, such as "may," "will," "believe," "expect,"
"estimate," "anticipate," "continue," or similar terms or variations on those
terms, or the negative of those terms. Forward looking statements are subject
to numerous risks, as described in our SEC filings, and uncertainties,
including, but not limited to, those related to the real estate and economic
environment, particularly in the market areas in which the Company operates,
competitive products and pricing, fiscal and monetary policies of the U.S.
Government, changes in government regulations affecting financial
institutions, including regulatory fees and capital requirements, changes in
prevailing interest rates, acquisitions and the integration of acquired
businesses, credit risk management, asset-liability management, the financial
and securities markets and the availability of and costs associated with
sources of liquidity.
The Company wishes to caution readers not to place undue reliance on any
such forward looking statements, which speak only as of the date made. The
Company wishes to advise readers that the factors listed above could affect
the Company's financial performance and could cause the Company's actual
results for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current statements.
The Company does not undertake and specifically declines any obligation to
publicly release the results of any revisions, which may be made to any
forward looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or
unanticipated events.
INVESTORS BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 2008 (Unaudited) and June 30, 2007
June 30, June 30,
Assets 2008 2007
(In thousands)
Cash and cash equivalents $22,82335,582
Securities available-for-sale, at
estimated fair value 203,032 257,939
Securities held-to-maturity, net
(estimated fair value of
$1,198,053 and $1,515,181 at June 30,
2008 and June 30, 2007, respectively) 1,255,054 1,578,922
Loans receivable, net 4,670,150 3,624,998
Loans held-for-sale 9,814 3,410
Stock in the Federal Home Loan Bank60,93534,069
Accrued interest receivable27,71624,818
Office properties and equipment, net 29,71028,652
Net deferred tax asset 40,70240,144
Bank owned life insurance contract 96,17092,198
Other assets3,036 1,294
Total assets $6,419,142 5,722,026
Liabilities and Stockholders' Equity
Liabilities:
Deposits $3,970,275 3,768,188
Borrowed funds1,563,583 1,038,710
Advance payments by borrowers for
taxes and insurance 21,82918,062
Other liabilities34,91738,207
Total liabilities 5,590,604 4,863,167
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; 104,355,135 and
107,647,019 outstanding
at June 30, 2008 and June 30, 2007,
respectively. 532 532
Additional paid-in capital 514,613 506,026
Unallocated common stock held by the
employee stock ownership plan (37,578) (38,996)
Treasury stock, at cost; 9,009,524
and 4,806,736 shares at June 30, 2008
and June 30, 2007, respectively (128,977) (70,973)
Retained earnings 486,244 470,205
Accumulated other comprehensive loss:
Net unrealized loss on securities
available for sale, net of tax(3,504) (3,975)
Minimum pension liability, net of tax (2,792) (3,960)
(6,296) (7,935)
Total stockholders' equity 828,538 858,859
Total liabilities and
stockholders' equity$6,419,142 5,722,026
INVESTORS BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
For the Three Months For the Years
Ended June 30,Ended June 30,
2008 2007 2008 2007
(Dollars in thousands, except per share data)
Interest and dividend
income:
Loans receivable and
loans held-for-sale $61,372 49,484 229,634 182,996
Securities:
Government-sponsored
enterprise
obligations 6381,4624,6625,851
Mortgage-backed
securities 14,202 18,047 62,919 80,712
Equity securities
available-for-sale 63 91 2871,786
Municipal bonds and
other debt2,1622,739 10,9359,967
Interest-bearing
deposits 160 238 974 993
Repurchase agreements -- 162 -
Federal Home Loan
Bank stock 859 6613,2342,918
Total interest and
dividend income 79,456 72,722 312,807 285,223
Interest expense:
Deposits 34,539 38,264 152,745 140,136
Secured borrowings 13,536 12,383 54,950 55,127
Total interest
expense 48,075 50,647 207,695 195,263
Net interest income 31,381 22,075 105,112 89,960
Provision for loan
losses 3,700 2036,646 729
Net interest income
after provision
for loan losses 27,681 21,872 98,466 89,231
Non-interest income:
Fees and service
charges 674 6803,0222,762
Income on bank owned
life insurance
contract 955 9773,9723,749
Gain on sales of
mortgage loans, net 139 155 605 244
Loss on securities
transactions, net (441) - (682) (3,790)
Other income 91 65 456 210
Total non-interest
income 1,4181,8777,3733,175
Non-interest expenses:
Compensation and
fringe benefits 13,618 13,666 53,886 51,221
Advertising and
promotional expense 846 7582,7363,310
Office occupancy and
equipment expense 2,8362,681 10,888 10,470
Federal insurance
premiums 110 114 445 451
Stationery, printing,
supplies and
telephone481 4321,8691,688
Legal, audit,
accounting, and
supervisory
examination fees 392 4402,0082,094
Data processing
service fees 1,3551,1184,7304,315
Other operating
expenses 1,043 9054,2184,068
Total non-interest
expenses20,681 20,114 80,780 77,617
Income before
income tax expense
(benefit)8,4183,635 25,059 14,789
Income tax expense
(benefit) 2,939 7129,030 (7,477)
Net income $5,4792,923 16,029 22,266
Earnings per share -
basic and diluted $0.05$0.03$0.15$0.20
Weighted average
shares outstanding
Basic 104,355,135 108,475,727 105,447,910 111,730,234
Diluted 104,540,544 108,579,434 105,601,764 112,012,064
INVESTORS BANCORP, INC. AND SUBSIDIARY
Average Balance Sheet and Yield/Rate Information
For Three Months Ended
June 30, 2008 June 30, 2007
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
(Dollars in thousands)
Interest-earning
assets:
Due from banks $37,567 $160 1.70% $24,564 $238 3.88%
Securities
available-for-
sale215,521 2,472 4.59% 275,299 3,140 4.56%
Securities
held-to-
maturity 1,305,03314,593 4.47% 1,603,53619,199 4.79%
Net loans 4,391,48261,372 5.59%
3,500,39549,484 5.65%
Stock in FHLB 49,797 859 6.90% 31,891 661 8.29%
Total
interest-
earning
assets 5,999,40079,456 5.30% 5,435,68572,722 5.35%
Non-interest
earning
assets 187,606 182,830
Total
assets $6,187,006$5,618,515
Interest-bearing
liabilities:
Savings $406,120 2,056 2.03%$343,668 1,734 2.02%
Interest-
bearing
checking352,366 1,370 1.56% 331,683 1,980 2.39%
Money market
accounts216,077 1,116 2.07% 171,829 938 2.18%
Certificates
of deposit2,948,46329,997 4.07%
2,823,88533,612 4.76%
Borrowed funds 1,323,18413,536 4.09% 989,33412,383 5.01%
Total
interest-
bearing
liabilities 5,246,21048,075 3.67% 4,660,39950,647 4.35%
Non-interest
bearing
liabilities 104,92892,595
Total
liabilities 5,351,138
4,752,994
Stockholders'
equity835,868 865,521
Total
liabilities
and
stockholders'
equity $6,187,006$5,618,515
Net interest
income $31,381 $22,075
Net interest
rate spread 1.63% 1.00%
Net interest
earning
assets
$753,190
$775,286
Net interest
margin2.09% 1.62%
Ratio of
interest-
earning
assets to
total
interest-
bearing
liabilities 1.14X 1.17X
INVESTORS BANCORP, INC. AND SUBSIDIARY
Average Balance Sheet and Yield/Rate Information
For the Years Ended June 30,
2008 2007
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid RateBalance Paid Rate
(Dollars in thousands)
Interest-earning
assets:
Due from
banks $32,948 $974 2.96% $25,701 $993 3.86%
Repurchase
agreements5,798 162 2.79% - - -
Securities
available-
for-sale235,38510,826 4.60% 406,27418,006 4.43%
Securities
held-to-
maturity 1,438,80467,977 4.72% 1,689,89080,310 4.75%
Net loans 4,043,398 229,634 5.68% 3,305,807 182,996 5.54%
Stock in
FHLB 44,939 3,234 7.20% 40,304 2,918 7.24%
Total
interest-
earning
assets 5,801,272 312,807 5.39% 5,467,976 285,223 5.22%
Non-interest
earning
assets185,705 170,671
Total
assets $5,986,977$5,638,647
Interest-bearing
liabilities:
Savings $372,846 7,718 2.07%$302,331 4,685 1.55%
Interest-bearing
checking353,564 7,329 2.07% 321,155 7,473 2.33%
Money market
accounts204,952 5,005 2.44% 185,849 3,596 1.93%
Certificates of
deposit 2,909,550 132,693 4.56% 2,719,327 124,382 4.57%
Borrowed funds 1,208,52954,950 4.55% 1,121,69755,127 4.91%
Total interest-
bearing
liabilities 5,049,441 207,695 4.11% 4,650,359 195,263 4.20%
Non-interest
bearing
liabilities 102,82887,946
Total
liabilities 5,152,269 4,738,305
Stockholders'
equity834,708 900,342
Total
liabilities
and
stockholders'
equity $5,986,977$5,638,647
Net interest
income $105,112 $89,960
Net interest
rate spread 1.28% 1.02%
Net interest
earning assets $751,831$817,617
Net interest
margin1.81% 1.65%
Ratio of
interest-
earning
assets to
total
interest-
bearing
liabilities1.15X 1.18X
INVESTORS BANCORP, INC. AND SUBSIDIARY
Selected Performance Ratios
For the Three Months Ended
June 30,
2008 2007
Return on average assets 0.35% 0.21%
Return on average equity 2.62% 1.35%
Interest rate spread 1.63% 1.00%
Net interest margin 2.09% 1.62%
Efficiency ratio63.05% 83.98%
Non-interest expense to average total
assets 1.34% 1.43%
Average interest-earning assets to
average interest-bearing liabilities1.14 1.17
For the Year Ended June 30,
2008 2007
Return on average assets 0.27% 0.39%
Return on average equity 1.92% 2.47%
Interest rate spread 1.28% 1.02%
Net interest margin 1.81% 1.65%
Efficiency ratio71.81% 83.34%
Non-interest expense to average total
assets 1.35% 1.38%
Average interest-earning assets to
average interest-bearing liabilities1.15 1.18
INVESTORS BANCORP, INC. AND SUBSIDIARY
Selected Financial Ratios and Other Data
At June 30,
2008 2007
Asset Quality Ratios:
Non-performing assets as a percent of
total assets0.30% 0.09%
Non-performing loans as a percent of
total loans 0.42% 0.14%
Allowance for loan losses as a
percent of total loans 0.29% 0.19%
Allowance for loan losses as a
percent of non-performing loans70.03%135.00%
Capital Ratios:
Total risk-based capital (to risk
weighted assets) (1) 21.77% 25.18%
Tier 1 risk-based capital (to risk
weighted assets) (1) 21.37% 24.93%
Tier 1 leverage (core) capital (to
adjusted tangible assets) (1)11.93% 12.52%
Equity to total assets (period end) 12.91% 15.01%
Average equity to average assets13.94% 15.97%
Tangible capital (to tangible assets) 12.89% 15.01%
Book value per common share $7.87 $7.86
Other Data:
Number of full service offices 52 51
Full time equivalent employees519509
(1) Ratios are for Investors Savings Bank and do not include capital
retained at the holding company level.
SOURCE Investors Bancorp, Inc.
