Fueled by strong loan growth and improved expense control, Investors Bancorp Inc. in Short Hills, N.J., reported a profit of $19.6 million in the second quarter, up 28% from the same period last year.

Earnings per share at the $10.2 billion-asset company rose 29%, to 18 cents, beating consensus estimates of analysts by a penny, according to Thomson Reuters.

The company, which released its earnings late Thursday, attributed the gains to a surge of new loan activity, particularly in its multi-family and commercial real estate loan portfolios. Interest income on loans increased 15.4% year over year, to $108.8 million, as the company added more than $1.1 billion of multi-family and CRE loans.

Meanwhile, interest income from securities fell 15% as the company continued to shift its assets away from securities and into loans. At June 30, only 12% of its assets were in securities, down from nearly 50% just five years ago, according to an analysis from Sandler O'Neill & Partners LP.

The shift into higher-yielding loans, combined with decreases in both interest and noninterest expense, helped to widen Investors' net interest margin by 36% basis points year over year, to 3.46%.

Credit quality has weakened some, however, as Investors has beefed up its lending. With the percentage of nonaccrual loans to total loans ticking up slightly, the company boosted its provision for loan losses by 19% year over year, to $18.5 million.

In a news release, the company said that 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, increasing loan delinquency and the impact of the deterioration of the real estate and economic environments in our lending area."

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