Investors Bancorp in Short Hills, N.J., reported a steep drop in second-quarter profits from last year, as operating expenses far outpaced returns from loans and other business lines.

The $17.5 billion-asset bank's net income was $15.2 million, down 46% from the same period last year. Diluted earnings were four cents per share, missing an estimate of analysts polled by Bloomberg by six cents.

A sharp rise in expenses drove the double-digit drop. Noninterest expenses increased 97%, to $112.2 million. The bank attributed the change to accelerated vesting of all stock options and restricted stock plans, following its conversion to a 100% stock-owned company in May. It also pointed to staff additions from its acquisitions of the $1.5 billion-asset Roma Financial in December and the $289 million-asset GCF Bank in January.

Gains from multi-family and commercial real estate lending helped offset expenses. Net income from interest-bearing assets was $135 million, up 29%. The net interest margin dipped six basis points, to 3.28%.

Asset quality improved, as the bank slashed its provision for bad loans by 42%, to $8 million. Net charge-offs were down 71%, to $2.6 million.

Income from fees and service charges climbed 7%, to $10.1 million.

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