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.