SHORT HILLS, N.J., April 28, 2011 /PRNewswire/ -- Investors Bancorp, Inc. (NASDAQ:ISBC) ("Company"), the holding company for Investors Savings Bank ("Bank"), reported net income of $18.2 million for the three months ended March 31, 2011 compared to net income of $13.3 million for the three months ended March 31, 2010. Basic and diluted earnings per share were $0.17 for the three months ended March 31, 2011 compared to $0.12 for the three months ended March 31, 2010.

Kevin Cummings, President and CEO commented on the quarter's results, "This was a solid quarter as earnings increased to $18.2 million or 17 cents per share. Credit also improved this quarter as non performing loans fell to 1.87% of total loans."

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

• Net interest margin for the three months ended March 31, 2011 was 3.37%, This represents an increase of 31 basis points compared to prior year quarter and a increase of 18 basis points compared to linked quarter.
• The return on average equity improved to 8.0% for the three months ended March 31, 2011, compared to 6.23% for the three months March 31, 2010.
• Net loans increased $234.0 million, or 3.0%, to $8.15 billion at March 31, 2011 from $7.92 billion at December 31, 2010.
• Efficiency ratio remained strong at 45.46%.
• Common stock repurchased during the three months ended March 31, 2011 totaled 184,277 shares.
• During the quarter, the Board of Directors approved the Company's fourth share repurchase program which authorizes the repurchase of an additional 10% of the Company's outstanding shares of common stock or approximately 3.9 million shares.  The new repurchase program will commence immediately upon completion of the third repurchase plan of approximately 4.3 million shares of which 601,567 remain available as of March 31, 2011.  Common stock repurchased since announcing the our first share repurchase program on September 25, 2006, totaled 13,809,102 shares.
• The Company maintains a strong tangible capital ratio of 8.99%, and is considered well capitalized under regulatory guidelines.

Comparison of Operating Results

Interest and Dividend Income

Total interest and dividend income increased by $10.6 million, or 10.3%, to $113.7 million for the three months ended March 31, 2011 from $103.1 million for the three months ended March 31, 2010. This increase is attributed to the average balance of interest-earning assets increasing $1.13 billion, or 13.9%, to $9.23 billion for the three months ended March 31, 2011 from $8.10 billion for the three months ended March 31, 2010. This was partially offset by the weighted average yield on interest-earning assets decreasing 16 basis points to 4.93% for the three months ended March 31, 2011 compared to 5.09% for the three months ended March 31, 2010.

Interest income on loans increased by $12.5 million, or 13.7%, to $103.5 million for the three months ended March 31, 2011 from $91.0 million for the three months March 31, 2010, reflecting a $1.33 billion, or 19.8%, increase in the average balance of net loans to $8.04 billion for the three months ended March 31, 2011 from $6.72 billion for the three months ended March 31, 2010. The increase is primarily attributed to the average balance of multi-family loans and commercial real estate loans increasing $577.9 million and $508.0 million, respectively. This activity is consistent with our strategy to diversify our loan portfolio by adding more multi-family loans and commercial real estate loans. This was partially offset by a 27 basis point decrease in the average yield on loans to 5.15% for the three months ended March 31, 2011 from 5.42% for the three months ended March 31, 2010.

Interest income on all other interest-earning assets, excluding loans, decreased by $1.8 million, or 15.3%, to $10.2 million for the three months ended March 31, 2011 from $12.0 million for the three months ended March 31, 2010. This decrease reflected a $202.5 million decrease in the average balance of all other interest-earning assets, excluding loans, to $1.19 billion for the three months ended March 31, 2011 from $1.39 billion for the three months ended March 31, 2010. In addition, the weighted average yield on interest-earning assets, excluding loans, decreased by 3 basis points to 3.44% for the three months ended March 31, 2011 compared to 3.47% for the three months ended March 31, 2010.

Interest Expense

Total interest expense decreased by $5.2 million, or 12.6%, to $35.9 million for the three months ended March 31, 2011 from $41.1 million for the three months ended March 31, 2010. This decrease is attributed to the weighted average cost of total interest-bearing liabilities decreasing 48 basis points to 1.74% for the three months ended March 31, 2011 compared to 2.22% for the three months ended March 31, 2010. This was partially offset by the average balance of total interest-bearing liabilities increasing by $875.2 million, or 11.8%, to $8.27 billion for the three months ended March 31, 2011 from $7.40 billion for the three months ended March 31, 2010.

Interest expense on interest-bearing deposits decreased $3.8 million, or 15.9% to $20.0 million for the three months ended March 31, 2011 from $23.8 million for the three months ended March 31, 2010. This decrease is attributed to a 45 basis point decrease in the average cost of interest-bearing deposits to 1.24% for the three months ended March 31, 2011 from 1.69% for the three months ended March 31, 2010 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 $828.0 million, or 14.7% to $6.45 billion for the three months ended March 31, 2011 from $5.62 billion for the three months ended March 31, 2010. Core deposit growth represented 91.7%, or $759.2 million of the increase in the average balance of total interest-bearing deposits.

Interest expense on borrowed funds decreased by $1.4 million, or 8.2%, to $16.0 million for the three months ended March 31, 2011 from $17.4 million for the three months ended March 31, 2010. This decrease is attributed to the average cost of borrowed funds decreasing 41 basis points to 3.49% for the three months ended March 31, 2011 from 3.90% for the three months ended March 31, 2010 as some of our borrowed funds repriced at lower rates. This was partially offset by the average balance of borrowed funds increasing by $47.2 million or 2.7%, to $1.83 billion for the three months ended March 31, 2011 from $1.78 billion for the three months ended March 31, 2010.

Net Interest Income

Net interest income increased by $15.8 million, or 25.5%, to $77.7 million for the three months ended March 31, 2011 from $61.9 million for the three months ended March 31, 2010. The increase was primarily due to a 48 basis point decrease in our cost of interest-bearing liabilities to 1.74% for the three months ended March 31, 2011 from 2.22% for the three months ended March 31, 2010. This was partially offset by the yield on our interest-earning assets decreasing 16 basis points to 4.93% for the three months ended March 31, 2011 from 5.09% for the three months ended March 31, 2010. Short term interest rates remaining at historically low levels resulted in many of our deposits and borrowed funds repricing downward. This had a positive impact on our net interest margin which improved by 31 basis points from 3.06% for the three months ended March 31, 2010 to 3.37% for the three months ended March 31, 2011.

Provision for Loan Losses

Our provision for loan losses was $17.0 million for the three months ended March 31, 2011 compared to $13.1 million for the three months ended March 31, 2010. For the three months ended March 31, 2011, net charge-offs were $9.0 million compared to $5.2 million for the three months ended March 31, 2010. The increase in our provision is due to continued growth in the loan portfolio, specifically the multi-family and commercial real estate portfolios; the increased inherent credit risk in our overall portfolio, particularly the credit risk associated with commercial real estate lending; the level of non-performing loans; and an increase in loan delinquency caused by 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:

Total non-performing loans, defined as non-accruing loans, were $154.4 million at March 31, 2011 compared to $124.7 million at March 31, 2010. At March 31, 2011, there is one construction loan totaling $2.9 million, one commercial real estate loan totaling $2.3 million and 13 residential loans totaling $4.8 million which are deemed troubled debt restructurings. These loans are performing under the restructured terms.

The allowance for loan losses increased by $8.0 million to $98.9 million at March 31, 2011 from $90.9 million at December 31, 2010. 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 $6.5 million for the three months ended March 31, 2011 compared to $3.9 million for the three months ended March 31, 2010. The increase is attributed to a $1.9 million increase in fees and service charges to $3.5 million for the three months ended March 31, 2011. This increase is partially attributed to fees from commercial deposit and loan accounts as well as fees generated from the servicing of third party loan portfolios. In addition, there was an increase in gain on loan sales of $508,000 million to $2.3 million for the three months ended March 31, 2011 as refinancing activity during the current quarter resulted in more loans being sold into the secondary market than the prior year quarter.

Non-Interest Expenses

Total non-interest expenses increased by $7.9 million, or 25.9%, to $38.3 million for the three months ended March 31, 2011 from $30.4 million for the three months ended March 31, 2010. Compensation and fringe benefits increased $4.9 million as a result of staff additions primarily from the acquisition of Millennium bcpbank deposit franchise. Additionally we increased our staff in our retail banking areas, our mortgage company and commercial real estate lending department. There was also normal merit increases and approximately $1.5 million in severance related expenses. Occupancy expense increased $1.9 million as a result of the costs associated with expanding our branch network, and increased costs due to weather related expenses. Advertising increased $505,000 due to our marketing efforts in relation to our expansion and data processing expenses increased $501,000 primarily due to increased volume of accounts.

Income Taxes

Income tax expense was $10.7 million for the three months ended March 31, 2011, representing a 37.07% effective tax rate compared to income tax expense of $9.1 million for the three months ended March 31, 2010 representing a 40.55% effective tax rate. The decrease in the effective tax rate is due to more revenue generated in states other than New Jersey.

Balance Sheet Summary

Total assets increased by $222.7 million, or 2.3%, to $9.82 billion at March 31, 2011 from $9.60 billion at December 31, 2010. This increase was largely the result of a $214.6 million increase in our net loans, including loans held for sale, to $8.17 billion at March 31, 2011 from $7.95 billion at December 31, 2010.

Net loans, including loans held for sale, increased by $214.6 million, or 2.7%, to $8.17 billion at March 31, 2011 from $7.95 billion at December 31, 2010. This increase in loans reflects our continued focus on generating multi-family and commercial real estate loans, which was partially offset by paydowns and payoffs of loans. The loans we originate and purchase are on properties primarily in New Jersey and New York.

We originate residential mortgage loans through our mortgage subsidiary, ISB Mortgage Co. For the three months ended March 31, 2011, ISB Mortgage Co. originated $337.8 million in residential mortgage loans of which $104.3 million were sold to third party investors and $233.5 million remained in our portfolio. We also purchased mortgage loans from correspondent entities including other banks and mortgage bankers. Our agreements with these correspondent entities require them to originate loans that adhere to our underwriting standards. During the three months ended March 31, 2011, we purchased loans totaling $205.8 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 three months ended March 31, 2011, we purchased $4.8 million of residential mortgage loans on a "bulk purchase" basis.

Additionally, for the three month period ended March 31, 2011, we originated $153.7 million in multi-family loans, $91.7 million in commercial real estate loans, $31.2 million in commercial and industrial loans, $26.4 million in construction loans, and $23.5 million in consumer and other loans.

At March 31, 2011, total loans were $8.24 billion and included $5.0 billion in residential loans, $1.29 billion in commercial real estate loans, $1.29 billion in multi-family loans, $335.3 million in construction loans, $252.5 million in consumer and other loans, and $83.0 million in commercial and industrial loans.

Securities, in the aggregate, decreased by $376,000, or 0.04%, to $1.08 billion at March 31, 2011, from $1.08 billion at December 31, 2010. The decrease in the portfolio was due to paydowns, calls or maturities and was partially offset by the purchase of $106.6 million of agency issued mortgage backed securities during the three months ended March 31, 2011.

The amount of stock we ownin the Federal Home Loan Bank (FHLB) increased by $11.4 million from $80.4 million at December 31, 2010 to $91.7 million at March 31, 2011 as a result of an increase in our level of borrowings at March 31, 2011. Other assets decreased $2.5 million due to prepaid amortizing FDIC insurance premiums.

Deposits decreased by $47.4 million, or 0.7%, to $6.73 billion at March 31, 2011 from $6.77 billion at December 31, 2010.. While overall deposits decreased, this was attributed to the run off of higher priced certificates of deposit which were partially offset by an increase in core deposits of $58.1 million or 1.7%.

Borrowed funds increased $240.5 million, or 13.2%, to $2.07 billion at March 31, 2011 from $1.83 billion at December 31, 2010 in order to fund our asset growth.

Stockholders' equity increased $17.8 million to $919.1 million at March 31, 2011 from $901.3 million at December 31, 2010. The increase is primarily attributed to the $18.2 million net income for three months ended March 31, 2011, $2.6 million of compensation cost related to equity incentive plans, partially offset by $2.5 million in purchases of treasury stock.

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 March 31, 2011 had and eighty three branch offices located throughout northern and central New Jersey, New York and Massachusetts.

Earnings Conference Call April 29, 2011 at 11:00 a.m. (ET)

The Company, as previously announced, will host an earnings conference call Friday, April 29, 2011 at 11:00 a.m. (ET). The toll-free dial-in number is: (877) 317-6789. A telephone replay will be available on April 29, 2011 from 1:00 p.m. (ET) through July 29, 2011, 9:00 a.m. (ET). The replay number is (877) 344-7529 password 449626. 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.

CONTACT: Domenick Cama ISBC, +1-973-924-5105, dcama@isbnj.com