Investors Bancorp in Short Hills, N.J., chased deposits in the third quarter, a move that drove up interest expenses and lowered profits.
The $25 billion-asset company’s net income fell 8% to $45.8 million from a year earlier. Earnings per share of 16 cents was 3 cents better than the mean estimate of analysts compiled by FactSet Research Systems.
Net interest income after loan-loss provisions rose 9% to $169.2 million while total interest expenses increased 42% to $54.9 million due to higher levels of costs tied to both deposits and borrowed funds.
Investors Bank ran a deposit promotion during the third quarter. As a result, average interest-bearing deposits rose 14% to $14.3 billion. The average rate paid on those deposits increased 25 basis points to 0.90%.
“Positive trends for the quarter include declining expenses, improved asset quality, deposit growth, stable margin and improved funding metrics,” CEO Kevin Cummings said in a news release.
Cummings also emphasized the improvement from the second quarter of this year.
"After a challenging second quarter, we are pleased to report strong third quarter results, highlighted by robust earnings per share growth of 14% over the prior quarter," he said.
Compared with a year earlier, noninterest income fell 1% to $8.4 million on lower gains from the sale of loans and reduced income from bank-owned life insurance.
Noninterest expense climbed 13% to $103.3 million. The total included $5 million for professional fees related to the company’s remediation of its anti-money-laundering program. Advertising expenses also increased, nearly tripling to $4.4 million. FDIC insurance premiums increased by $900,000 during the quarter.