##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: September 30, 2009
 Commission file number: 0-51557
 Investors Bancorp, Inc.
  Delaware
(State or other jurisdiction of incorporation or organization)
    
    22-3493930
(I.R.S. Employer Identification No.)
 101 JFK Parkway, Short Hills, New Jersey 07078
 (973) 924-5100
 þ o
  Large  accelerated  filer þ
Accelerated  filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ
 o o




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##### 



Investors Bancorp, Inc.
FORM 10-Q
 Index
 PagePart I. Financial InformationItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of September 30, 2009
(unaudited) and June 30, 2009
    
    
    3Consolidated Statements of Income for the Three
Months Ended September 30, 2009 and 2008 (unaudited)
    
    
    4Consolidated Statements of Stockholders Equity for
the Three Months Ended September 30, 2009 and 2008 (unaudited)
    
    
    5Consolidated Statements of Cash Flows for the Three Months
Ended September 30, 2009 and 2008 (unaudited)
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4.
    
    Controls and Procedures
    
    
    37Part II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    37Item 1A.
    
    Risk Factors
    
    
    37Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 3.
    
    Defaults upon Senior Securities
    
    
    38Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    39Item 5.
    
    Other Information
    
    
    39Item 6.
    
    Exhibits
    
    
    39Signature Page
    
    
    40EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 September 30,
    
    
    June 30,2009
    
    
    2009(In thousands)AssetsCash and cash equivalents
    
    $
    308,120
    
    
    
    317,757Securities available-for-sale, at estimated fair value
    
    
    376,194
    
    
    
    355,016Securities held-to-maturity, net (estimated fair value of
$791,615 and $861,302 at September 30, 2009
and June 30, 2009, respectively)
    
    
    772,492
    
    
    
    846,043Loans receivable, net
    
    
    6,323,727
    
    
    
    6,143,169Loans held-for-sale
    
    
    19,189
    
    
    
    61,691Stock in the Federal Home Loan Bank
    
    
    68,902
    
    
    
    72,053Accrued interest receivable
    
    
    37,455
    
    
    
    37,291Office properties and equipment, net
    
    
    45,773
    
    
    
    44,142Net deferred tax asset
    
    
    119,624
    
    
    
    118,455Bank owned life insurance contract
    
    
    113,834
    
    
    
    113,191Intangible assets
    
    
    26,516
    
    
    
    26,365Other assets
    
    
    3,862
    
    
    
    1,259Total assets
    
    $
    8,215,688
    
    
    
    8,136,432Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    5,629,314
    
    
    
    5,505,747Borrowed funds
    
    
    1,660,549
    
    
    
    1,730,555Advance payments by borrowers for taxes and insurance
    
    
    30,036
    
    
    
    26,839Other liabilities
    
    
    62,370
    
    
    
    54,008Total liabilities
    
    
    7,382,269
    
    
    
    7,317,149Stockholders equity:Preferred stock, $0.01 par value, 50,000,000 authorized shares;
none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 200,000,000 shares authorized;
118,020,280 issued; 114,498,520 and 114,692,020 outstanding
at September 30, 2009 and June 30, 2009, respectively
    
    
    532
    
    
    
    532Additional paid-in capital
    
    
    526,778
    
    
    
    524,463Retained earnings
    
    
    410,122
    
    
    
    399,672Treasury
stock, at cost; 3,521,760 and 3,328,260 shares at
September 30, 2009 and June 30, 2009, respectively
    
    
    (44,274
    )
    
    
    (42,447
    )Unallocated common stock held by the employee stock
ownership plan
    
    
    (35,805
    )
    
    
    (36,160
    )Accumulated other comprehensive loss
    
    
    (23,934
    )
    
    
    (26,777
    )Total stockholders equity
    
    
    833,419
    
    
    
    819,283Total liabilities and
stockholders equity
    
    $
    8,215,688
    
    
    
    8,136,432
  3




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For the Three MonthsEnded September 30,2009
    
    
    2008(Dollars in thousands, except per share data)Interest and dividend income:Loans receivable and loans held-for-sale
    
    $
    85,117
    
    
    
    70,480Securities:Government-sponsored enterprise obligations
    
    
    247
    
    
    
    500Mortgage-backed securities
    
    
    11,046
    
    
    
    13,439Equity securities available-for-sale
    
    
    
    
    
    
    55Municipal bonds and other debt
    
    
    988
    
    
    
    2,137Interest-bearing deposits
    
    
    208
    
    
    
    32Federal Home Loan Bank stock
    
    
    1,025
    
    
    
    805Total interest and dividend income
    
    
    98,631
    
    
    
    87,448Interest expense:Deposits
    
    
    29,774
    
    
    
    31,009Secured borrowings
    
    
    17,402
    
    
    
    17,699Total interest expense
    
    
    47,176
    
    
    
    48,708Net interest income
    
    
    51,455
    
    
    
    38,740Provision for loan losses
    
    
    12,375
    
    
    
    5,000Net interest income after provision
for loan losses
    
    
    39,080
    
    
    
    33,740Non-interest income (loss):Fees and service charges
    
    
    1,438
    
    
    
    843Income on bank owned life insurance contract
    
    
    592
    
    
    
    1,013Gain on sales of loans, net
    
    
    2,987
    
    
    
    184Loss on securities transactions, net
    
    
    (20
    )
    
    
    (4,366
    )Other income
    
    
    362
    
    
    
    94Total non-interest income (loss)
    
    
    5,359
    
    
    
    (2,232
    )Non-interest expenses:Compensation and fringe benefits
    
    
    15,586
    
    
    
    14,682Advertising and promotional expense
    
    
    930
    
    
    
    805Office occupancy and equipment expense
    
    
    3,640
    
    
    
    2,745Federal deposit insurance premiums
    
    
    2,340
    
    
    
    681Stationery, printing, supplies and telephone
    
    
    647
    
    
    
    539Legal, audit, accounting, and supervisory examination fees
    
    
    651
    
    
    
    549Data processing service fees
    
    
    1,347
    
    
    
    1,157Amortization of deposit premiums
    
    
    183
    
    
    
    Other operating expenses
    
    
    1,287
    
    
    
    1,203Total non-interest expenses
    
    
    26,611
    
    
    
    22,361Income before income tax expense
    
    
    17,828
    
    
    
    9,147Income tax expense
    
    
    7,355
    
    
    
    3,656Net income
    
    $
    10,473
    
    
    
    5,491Earnings per share  basic and diluted
    
    $
    0.10
    
    
    
    0.05Weighted average shares outstandingBasic
    
    
    109,803,171
    
    
    
    103,794,369Diluted
    
    
    109,898,606
    
    
    
    104,092,853
  4




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##### Table of Contents



INVESTORS BANCORP, INC.
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    Unallocated
    
    
    other
    
    
    TotalCommon
    
    
    paid-in
    
    
    Retained
    
    
    Treasury
    
    
    Common Stock
    
    
    comprehensive
    
    
    stockholdersstock
    
    
    capital
    
    
    earnings
    
    
    stock
    
    
    Held by ESOP
    
    
    loss
    
    
    equity(In thousands)Balance at June 30, 2008
    
    $
    532
    
    
    
    514,613
    
    
    
    486,244
    
    
    
    (128,977
    )
    
    
    (37,578
    )
    
    
    (6,296
    )
    
    
    828,538Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    5,491
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,491Change in funded status of retirement
obligations, net of tax benefit of $152
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (231
    )
    
    
    (231
    )Unrealized loss on securities available-for-sale, net of tax benefit of $453
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (898
    )
    
    
    (898
    )Reclassification adjustment for losses
included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    457
    
    
    
    457Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,819Compensation cost for stock
options and restricted stock
    
    
    
    
    
    
    2,598
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,598ESOP shares allocated or committed to be released
    
    
    
    
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    355
    
    
    
    
    
    
    
    516Balance at September 30, 2008
    
    $
    532
    
    
    
    517,372
    
    
    
    491,735
    
    
    
    (128,977
    )
    
    
    (37,223
    )
    
    
    (6,968
    )
    
    
    836,471Balance at June 30, 2009
    
    $
    532
    
    
    
    524,463
    
    
    
    399,672
    
    
    
    (42,447
    )
    
    
    (36,160
    )
    
    
    (26,777
    )
    
    
    819,283Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    10,473
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,473Change in funded status of retirement
obligations, net of tax benefit of $62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95
    )
    
    
    (95
    )Unrealized gain on securities available-for-sale, net of tax expense of $1,916
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,938
    
    
    
    2,938Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,316Purchase of treasury stock (198,500 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,900
    )
    
    
    
    
    
    
    
    
    
    
    (1,900
    )Treasury stock allocated to
restricted stock plan
    
    
    
    
    
    
    (50
    )
    
    
    (23
    )
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    Compensation cost for stock
options and restricted stock
    
    
    
    
    
    
    2,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,380ESOP shares allocated or committed to be released
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    355
    
    
    
    
    
    
    
    340Balance at September 30, 2009
    
    $
    532
    
    
    
    526,778
    
    
    
    410,122
    
    
    
    (44,274
    )
    
    
    (35,805
    )
    
    
    (23,934
    )
    
    
    833,419
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INVESTORS BANCORP, INC. AND SUBSIDIARY
 For the Three Months EndedSeptember 30,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net income
    
    $
    10,473
    
    
    
    5,491Adjustments to reconcile net income to net cash provided by operating activities:ESOP and stock-based compensation expense
    
    
    2,720
    
    
    
    3,114Amortization of premiums and accretion of discounts on securities, net
    
    
    1,223
    
    
    
    123Amortization of premium and accretion of fees and costs on loans, net
    
    
    1,624
    
    
    
    641Amortization of intangible assets
    
    
    183Provision for loan losses
    
    
    12,375
    
    
    
    5,000Depreciation and amortization of office properties and equipment
    
    
    911
    
    
    
    621Loss on securities transactions
    
    
    20
    
    
    
    4,366Mortgage loans originated for sale
    
    
    (129,365
    )
    
    
    (77,090
    )Proceeds from mortgage loan sales
    
    
    174,853
    
    
    
    66,392Gain on sales of loans, net
    
    
    (1,168
    )
    
    
    (184
    )Income on bank owned life insurance contract
    
    
    (592
    )
    
    
    (1,013
    )Increase in accrued interest
    
    
    (164
    )
    
    
    (3,970
    )Deferred tax benefit
    
    
    (3,074
    )
    
    
    (2,584
    )Increase in other assets
    
    
    (2,869
    )
    
    
    (325
    )Decrease in other liabilities
    
    
    8,205
    
    
    
    9,429Total adjustments
    
    
    64,882
    
    
    
    4,520Net cash provided by operating activities
    
    
    75,355
    
    
    
    10,011Cash flows from investing activities:Purchases of loans receivable
    
    
    (235,767
    )
    
    
    (563,326
    )Net repayments (originations) of loans receivable
    
    
    19,964
    
    
    
    (83,665
    )Proceeds from sale of non performing loan
    
    
    21,178
    
    
    
    Gain on sale
of loan
    
    
    (1,819
    )
    
    
    Purchases of mortgage-backed securities available-for-sale
    
    
    (52,761
    )
    
    
    Purchases of other investments available-for-sale
    
    
    (250
    )
    
    
    (100
    )Proceeds from paydowns/maturities on mortgage-backed
securities held-to-maturity
    
    
    70,284
    
    
    
    50,362Proceeds from calls/maturities on debt securities held-to-maturity
    
    
    2,883
    
    
    
    1,177Proceeds from paydowns/maturities on mortgage-backed
securities available-for-sale
    
    
    30,829
    
    
    
    11,073Proceeds from maturities of US Government and Agency Obligations available-for-sale
    
    
    5,000
    
    
    
    Proceeds from sale of equity securities available-for-sale
    
    
    
    
    
    
    250Proceeds from redemptions of Federal Home Loan Bank stock
    
    
    3,151
    
    
    
    13,118Purchases of Federal Home Loan Bank stock
    
    
    
    
    
    
    (38,633
    )Purchases of office properties and equipment
    
    
    (2,542
    )
    
    
    (2,722
    )Net cash used in investing activities
    
    
    (139,850
    )
    
    
    (612,466
    )Cash flows from financing activities:Net increase in deposits
    
    
    123,567
    
    
    
    31,730Net decrease in funds borrowed under short-term repurchase agreements
    
    
    
    
    
    
    (25,000
    )Repayments of funds borrowed under other repurchase agreements
    
    
    
    
    
    
    (70,000
    )Net (decrease) increase in other borrowings
    
    
    (70,006
    )
    
    
    661,993Net increase in advance payments by borrowers for taxes and insurance
    
    
    3,197
    
    
    
    1,409Purchase of treasury stock
    
    
    (1,900
    )
    
    
    Net cash provided by financing activities
    
    
    54,858
    
    
    
    600,132Net decrease in cash and cash equivalents
    
    
    (9,637
    )
    
    
    (2,323
    )Cash and cash equivalents at beginning of the period
    
    
    317,757
    
    
    
    22,823Cash and cash equivalents at end of the period
    
    $
    308,120
    
    
    
    20,500Supplemental cash flow information:Noncash investing activities:Transfer of loans to other real estate owned
    
    $
    68
    
    
    
    Cash paid during the year for:Interest
    
    
    47,565
    
    
    
    46,673Income taxes
    
    
    6,130
    
    
    
    2,858
  6




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INVESTORS BANCORP, INC. AND SUBSIDIARY
 1. Basis of Presentation
    2. Earnings Per Share
  For the Three Months Ended September 30,2009
    
    
    2008Income
    
    
    Shares
    
    
    Per Share Amount
    
    
    Income
    
    
    Shares
    
    
    Per Share Amount(In thousands, except per share data)Net Income
    
    $
    10,473
    
    
    
    
    
    
    
    
    
    
    $
    5,491Basic earnings per share:Income available to common stockholders
    
    $
    10,473
    
    
    
    109,803,171
    
    
    $
    0.10
    
    
    $
    5,491
    
    
    
    103,794,369
    
    
    $
    0.05Effect of dilutive common stock equivalents
    
    
    
    
    
    
    95,435
    
    
    
    
    
    
    
    
    
    
    
    298,484Diluted earnings per share:Income available to common stockholders
    
    $
    10,473
    
    
    
    109,898,606
    
    
    $
    0.10
    
    
    $
    5,491
    
    
    
    104,092,853
    
    
    $
    0.05
  7




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##### Table of Contents



3. Securities
  September 30, 2009Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    Estimatedcost
    
    
    gains
    
    
    losses
    
    
    fair value(In thousands)Available-for-sale:Equity securities
    
    $
    1,812
    
    
    
    173
    
    
    
    
    
    
    
    1,985Government-sponsored enterprises
    
    
    25,032
    
    
    
    34
    
    
    
    
    
    
    
    25,066Mortgage-backed securities:Federal Home Loan Mortgage Corporation
    
    $
    157,479
    
    
    
    2,503
    
    
    
    
    
    
    
    159,982Federal National Mortgage Association
    
    
    117,932
    
    
    
    2,680
    
    
    
    2
    
    
    
    120,610Government National Mortgage Association
    
    
    265
    
    
    
    26
    
    
    
    
    
    
    
    291Non-agency securities
    
    
    72,652
    
    
    
    346
    
    
    
    4,738
    
    
    
    68,260348,328
    
    
    
    5,555
    
    
    
    4,740
    
    
    
    349,143Total securities available-for-sale
    
    $
    375,172
    
    
    
    5,762
    
    
    
    4,740
    
    
    
    376,194Held-to-maturity:Debt securities:Government-sponsored enterprises
    
    $
    15,232
    
    
    
    896
    
    
    
    1
    
    
    
    16,127Municipal bonds
    
    
    10,419
    
    
    
    197
    
    
    
    6
    
    
    
    10,610Corporate and other debt securities
    
    
    20,695
    
    
    
    1,449
    
    
    
    6,159
    
    
    
    15,98546,346
    
    
    
    2,542
    
    
    
    6,166
    
    
    
    42,722Mortgage-backed securities:Federal Home Loan Mortgage Corporation
    
    
    391,162
    
    
    
    13,230
    
    
    
    113
    
    
    
    404,279Government National Mortgage Association
    
    
    4,147
    
    
    
    314
    
    
    
    
    
    
    
    4,461Federal National Mortgage Association
    
    
    254,393
    
    
    
    11,065
    
    
    
    70
    
    
    
    265,388Federal housing authorities
    
    
    2,602
    
    
    
    254
    
    
    
    
    
    
    
    2,856Non-agency securities
    
    
    73,842
    
    
    
    3
    
    
    
    1,936
    
    
    
    71,909726,146
    
    
    
    24,866
    
    
    
    2,119
    
    
    
    748,893Total securities held-to-maturity
    
    $
    772,492
    
    
    
    27,408
    
    
    
    8,285
    
    
    
    791,615Total securities
    
    $
    1,147,664
    
    
    
    33,170
    
    
    
    13,025
    
    
    
    1,167,809
 8




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##### Table of Contents



June 30, 2009Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    Estimatedcost
    
    
    gains
    
    
    losses
    
    
    fair value(In thousands)Available-for-sale:Equity securities
    
    $
    1,583
    
    
    
    15
    
    
    
    
    
    
    
    1,598Government-sponsored enterprises
    
    
    30,051
    
    
    
    28
    
    
    
    
    
    
    
    30,079Mortgage-backed securities:Federal Home Loan Mortgage Corporation
    
    $
    151,450
    
    
    
    1,276
    
    
    
    8
    
    
    
    152,718Federal National Mortgage Association
    
    
    94,967
    
    
    
    1,661
    
    
    
    11
    
    
    
    96,617Government National Mortgage Association
    
    
    275
    
    
    
    25
    
    
    
    
    
    
    
    300Non-agency securities
    
    
    80,523
    
    
    
    137
    
    
    
    6,956
    
    
    
    73,704327,215
    
    
    
    3,099
    
    
    
    6,975
    
    
    
    323,339Total securities available-for-sale
    
    $
    358,849
    
    
    
    3,142
    
    
    
    6,975
    
    
    
    355,016Held-to-maturity:Debt securities:Government-sponsored enterprises
    
    $
    18,238
    
    
    
    924
    
    
    
    1
    
    
    
    19,161Municipal bonds
    
    
    10,420
    
    
    
    211
    
    
    
    7
    
    
    
    10,624Corporate and other debt securities
    
    
    20,727
    
    
    
    2,332
    
    
    
    2,930
    
    
    
    20,12949,385
    
    
    
    3,467
    
    
    
    2,938
    
    
    
    49,914Mortgage-backed securities:Federal Home Loan Mortgage Corporation
    
    
    429,969
    
    
    
    10,426
    
    
    
    307
    
    
    
    440,088Federal National Mortgage Association
    
    
    278,272
    
    
    
    8,682
    
    
    
    134
    
    
    
    286,820Government National Mortgage Association
    
    
    4,269
    
    
    
    348
    
    
    
    
    
    
    
    4,617Federal housing authorities
    
    
    2,654
    
    
    
    254
    
    
    
    
    
    
    
    2,908Non-agency securities
    
    
    81,494
    
    
    
    
    
    
    
    4,539
    
    
    
    76,955796,658
    
    
    
    19,710
    
    
    
    4,980
    
    
    
    811,388Total securities held-to-maturity
    
    $
    846,043
    
    
    
    23,177
    
    
    
    7,918
    
    
    
    861,302Total securities
    
    $
    1,204,892
    
    
    
    26,319
    
    
    
    14,893
    
    
    
    1,216,318
 9




---



##### Table of Contents



September 30, 2009Less than 12 months
    
    
    12 months or more
    
    
    TotalEstimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealizedfair value
    
    
    losses
    
    
    fair value
    
    
    losses
    
    
    fair value
    
    
    losses(In thousands)Available-for-sale:Mortgage-backed securities:Federal National Mortgage Association
    
    $
    194
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    194
    
    
    
    2Non-agency securities
    
    
    4,971
    
    
    
    327
    
    
    
    34,199
    
    
    
    4,411
    
    
    
    39,170
    
    
    
    4,7385,165
    
    
    
    329
    
    
    
    34,199
    
    
    
    4,411
    
    
    
    39,364
    
    
    
    4,740Total available-for-sale:
    
    $
    5,165
    
    
    
    329
    
    
    
    34,199
    
    
    
    4,411
    
    
    
    39,364
    
    
    
    4,740Held-to-maturity:Debt securities:Government-sponsored enterprises
    
    $
    231
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    231
    
    
    
    1Municipal bonds
    
    
    
    
    
    
    
    
    
    
    1,193
    
    
    
    6
    
    
    
    1,193
    
    
    
    6Corporate and other debt securities
    
    
    7,266
    
    
    
    6,159
    
    
    
    
    
    
    
    
    
    
    
    7,266
    
    
    
    6,1597,497
    
    
    
    6,160
    
    
    
    1,193
    
    
    
    6
    
    
    
    8,690
    
    
    
    6,166Mortgage-backed securities:Federal Home Loan Mortgage
Corporation
    
    
    18,967
    
    
    
    64
    
    
    
    5,385
    
    
    
    49
    
    
    
    24,352
    
    
    
    113Federal National Mortgage Association
    
    
    5,143
    
    
    
    26
    
    
    
    5,643
    
    
    
    44
    
    
    
    10,786
    
    
    
    70Non-agency securities
    
    
    
    
    
    
    
    
    
    
    68,452
    
    
    
    1,936
    
    
    
    68,452
    
    
    
    1,93624,110
    
    
    
    90
    
    
    
    79,480
    
    
    
    2,029
    
    
    
    103,590
    
    
    
    2,119Total held-to-maturity
    
    $
    31,607
    
    
    
    6,250
    
    
    
    80,673
    
    
    
    2,035
    
    
    
    112,280
    
    
    
    8,285Total
    
    $
    36,772
    
    
    
    6,579
    
    
    
    114,872
    
    
    
    6,446
    
    
    
    151,644
    
    
    
    13,025
 10




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##### Table of Contents



June 30, 2009Less than 12 months
    
    
    12 months or more
    
    
    TotalEstimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealizedfair value
    
    
    losses
    
    
    fair value
    
    
    losses
    
    
    fair value
    
    
    losses(In thousands)Available-for-sale:Mortgage-backed securities:Federal Home Loan Mortgage
Corporation
    
    $
    947
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    947
    
    
    
    8Federal National Mortgage Association
    
    
    8,587
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    8,587
    
    
    
    11Non-agency securities
    
    
    359
    
    
    
    109
    
    
    
    67,149
    
    
    
    6,847
    
    
    
    67,508
    
    
    
    6,9569,893
    
    
    
    128
    
    
    
    67,149
    
    
    
    6,847
    
    
    
    77,042
    
    
    
    6,975Total available-for-sale:
    
    $
    9,893
    
    
    
    128
    
    
    
    67,149
    
    
    
    6,847
    
    
    
    77,042
    
    
    
    6,975Held-to-maturity:Debt securities:Government-sponsored enterprises
    
    $
    237
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    237
    
    
    
    1Municipal bonds
    
    
    
    
    
    
    
    
    
    
    1,193
    
    
    
    7
    
    
    
    1,193
    
    
    
    7Corporate and other debt securities
    
    
    9,238
    
    
    
    2,930
    
    
    
    
    
    
    
    
    
    
    
    9,238
    
    
    
    2,9309,475
    
    
    
    2,931
    
    
    
    1,193
    
    
    
    7
    
    
    
    10,668
    
    
    
    2,938Mortgage-backed securities:Federal Home Loan Mortgage
Corporation
    
    
    19,968
    
    
    
    171
    
    
    
    7,980
    
    
    
    136
    
    
    
    27,948
    
    
    
    307Federal National Mortgage Association
    
    
    14,170
    
    
    
    28
    
    
    
    13,841
    
    
    
    106
    
    
    
    28,011
    
    
    
    134Non-agency securities
    
    
    
    
    
    
    
    
    
    
    76,955
    
    
    
    4,539
    
    
    
    76,955
    
    
    
    4,53934,138
    
    
    
    199
    
    
    
    98,776
    
    
    
    4,781
    
    
    
    132,914
    
    
    
    4,980Total held-to-maturity:
    
    $
    43,613
    
    
    
    3,130
    
    
    
    99,969
    
    
    
    4,788
    
    
    
    143,582
    
    
    
    7,918Total
    
    
    53,506
    
    
    
    3,258
    
    
    
    167,118
    
    
    
    11,635
    
    
    
    220,624
    
    
    
    14,893
    11




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##### Table of Contents



September 30, 2009Amortized
    
    
    Estimatedcost
    
    
    fair value(In thousands)Due in one year or less
    
    $
    
    
    
    
    Due after one year through five years
    
    
    19,070
    
    
    
    20,062Due after five years through ten
years
    
    
    1,451
    
    
    
    1,444Due after ten years
    
    
    25,825
    
    
    
    21,216Total
    
    $
    46,346
    
    
    
    42,722
 12




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##### Table of Contents



4. Loans Receivable, Net
  September 30,
    
    
    June 30,2009
    
    
    2009(In thousands)Residential mortgage loans
    
    $
    4,739,097
    
    
    
    4,708,899Multi-family loans
    
    
    552,475
    
    
    
    482,783Commercial real estate loans
    
    
    530,423
    
    
    
    433,204Construction loans
    
    
    338,681
    
    
    
    346,967Commercial & industrial loans
    
    
    16,801
    
    
    
    15,665Consumer and other loans
    
    
    181,502
    
    
    
    184,198Total loans
    
    
    6,358,979
    
    
    
    6,171,716Premiums on purchased loans
    
    
    21,915
    
    
    
    21,313Deferred loan fees, net
    
    
    (3,616
    )
    
    
    (3,252
    )Allowance for loan losses
    
    
    (53,551
    )
    
    
    (46,608
    )Net loans
    
    $
    6,323,727
    
    
    
    6,143,169
 An analysis of the allowance for loan losses is summarized as follows:
 September 30,2009(In thousands)Balance at June 30, 2009
    
    $
    46,608Loans charged off
    
    
    (5,476
    )Recoveries
    
    
    44Net charge-offs
    
    
    (5,432
    )Provision for loan losses
    
    
    12,375Balance at September 30, 2009
    
    $
    53,551
 5. Deposits
  September 30,
    
    
    June 30,2009
    
    
    2009(In thousands)Savings accounts
    
    $
    835,874
    
    
    
    779,678Checking accounts
    
    
    957,241
    
    
    
    898,816Money market accounts
    
    
    572,577
    
    
    
    521,425Total core deposits
    
    
    2,365,692
    
    
    
    2,199,919Certificates of deposit
    
    
    3,263,622
    
    
    
    3,305,828Total deposits
    
    $
    5,629,314
    
    
    
    5,505,747
 6. Equity Incentive Plan
    13




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##### Table of Contents



7. Net Periodic Benefit Plans Expense
   Three months ended September 30,SERP and Directors' Plan2009
    
    
    2008(In thousands)Service cost
    
    $
    112
    
    
    
    136Interest cost
    
    
    257
    
    
    
    263Amortization of:Transition obligation
    
    
    
    
    
    
    Prior service cost
    
    
    25
    
    
    
    24Net loss
    
    
    32
    
    
    
    35Total net
periodic benefit
expense
    
    $
    426
    
    
    
    458
    14




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##### Table of Contents



8. Fair Value Measurements
   
    
    Level 1  Valuation is based upon quoted prices for identical
instruments traded in active markets.
    
    Level 2  Valuation is based upon quoted prices for similar
instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active and model-based valuation
techniques for which all significant assumptions are observable in the
market.
    
    Level 3  Valuation is generated from model-based techniques that use
significant assumptions not observable in the market. These
unobservable assumptions reflect our own estimates of assumptions that
market participants would use in pricing the asset or liability.
Valuation techniques include the use of option pricing models,
discounted cash flow models and similar techniques. The results cannot
be determined with precision and may not be realized in an actual sale
or immediate settlement of the asset or liability.
   15




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##### Table of Contents



Securities available-for-sale
   Carrying Value at September 30, 2009Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Securities available for sale:Mortgage-backed securities
    
    $
    349,143
    
    
    
    
    
    
    
    349,143
    
    
    $
    Government-sponsored
enterprises
    
    $
    25,066
    
    
    
    
    
    
    
    25,066
    
    
    
    Equity securities
    
    
    1,985
    
    
    
    
    
    
    
    1,985
    
    
    
    $
    376,194
    
    
    $
    
    
    
    $
    376,194
    
    
    $
    
  Securities held-to-maturity
  16




---



##### Table of Contents



Mortgage Servicing Rights, net
  Loans Receivable
   Carrying Value at September 30, 2009Total
    
    Level 1
    
    Level 2
    
    Level 3(In thousands)MSR, net
    
    
    5,011
    
    
    
    
    
    
    
    
    
    
    
    5,011
 9. Fair Value of Financial Instruments
   Cash and Cash Equivalents
  Securities
  17




---



##### Table of Contents



FHLB Stock
  Loans
   Deposit Liabilities
  Borrowings
  Commitments to Extend Credit
  18




---



##### Table of Contents



September 30, 2009
    
    June 30, 2009Carrying
    
    
    
    
    
    Carryingamount
    
    Fair value
    
    amount
    
    Fair value(In thousands)Financial assets:Cash and cash equivalents
    
    $
    308,120
    
    
    $
    308,120
    
    
    $
    317,757
    
    
    $
    317,757Securities available-for-sale
    
    
    376,194
    
    
    
    376,194
    
    
    
    355,016
    
    
    
    355,016Securities held-to-maturity
    
    
    772,492
    
    
    
    791,614
    
    
    
    846,043
    
    
    
    861,302Stock in FHLB
    
    
    68,902
    
    
    
    68,902
    
    
    
    72,053
    
    
    
    72,053Loans
    
    
    6,342,916
    
    
    
    6,532,231
    
    
    
    6,204,860
    
    
    
    6,351,544Financial liabilities:Deposits
    
    
    5,629,314
    
    
    
    5,672,298
    
    
    
    5,505,747
    
    
    
    5,547,871Borrowed funds
    
    
    1,660,549
    
    
    
    1,735,499
    
    
    
    1,730,555
    
    
    
    1,799,840
 Limitations
   10. Recent Accounting Pronouncements
  19




---



##### Table of Contents



Business Combinations.
 20




---



##### Table of Contents



11. Subsequent Events
    
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
  21




---



##### Table of Contents



Executive Summary
      22




---



##### Table of Contents



23




---



##### Table of Contents



Comparison of Financial Condition at September 30, 2009 and June 30, 2009
 Total Assets .
 Net Loans.
     24




---



##### Table of Contents



Securities.
 Stock in the Federal Home Loan Bank, Bank Owned Life Insurance and Other Assets.
 25




---



##### Table of Contents



Deposits .
 Borrowed Funds .
 Stockholders Equity .
 Average Balance Sheets for the Three Months ended September 30, 2009 and 2008
  26




---



##### Table of Contents



For the three months endedSeptember 30, 2009
    
    
    September 30, 2008Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest-earning assets:Interest-bearing deposits
    
    $
    350,091
    
    
    $
    208
    
    
    
    0.24
    %
    
    $
    18,321
    
    
    $
    32
    
    
    
    0.70
    %Securities available-for-sale(1)
    
    
    362,672
    
    
    
    2,949
    
    
    
    3.25
    %
    
    
    202,533
    
    
    
    2,314
    
    
    
    4.57
    %Securities held-to-maturity
    
    
    811,273
    
    
    
    9,332
    
    
    
    4.60
    %
    
    
    1,230,798
    
    
    
    13,817
    
    
    
    4.49
    %Net loans
    
    
    6,250,896
    
    
    
    85,117
    
    
    
    5.45
    %
    
    
    4,940,058
    
    
    
    70,480
    
    
    
    5.71
    %Stock in FHLB
    
    
    70,546
    
    
    
    1,025
    
    
    
    5.81
    %
    
    
    70,374
    
    
    
    805
    
    
    
    4.58
    %Total interest-earning assets
    
    
    7,845,478
    
    
    
    98,631
    
    
    
    5.03
    %
    
    
    6,462,084
    
    
    
    87,448
    
    
    
    5.41
    %Non-interest earning assets
    
    
    321,748
    
    
    
    
    
    
    
    
    
    
    
    187,218Total assets
    
    $
    8,167,226
    
    
    
    
    
    
    
    
    
    
    $
    6,649,302Interest-bearing Liabilities:Savings
    
    $
    806,530
    
    
    
    3,816
    
    
    
    1.89
    %
    
    $
    401,532
    
    
    
    1,872
    
    
    
    1.86
    %Interest-bearing checking
    
    
    803,226
    
    
    
    2,281
    
    
    
    1.14
    %
    
    
    362,575
    
    
    
    1,373
    
    
    
    1.51
    %Money market accounts
    
    
    521,288
    
    
    
    2,043
    
    
    
    1.57
    %
    
    
    231,650
    
    
    
    1,219
    
    
    
    2.10
    %Certificates of deposit
    
    
    3,310,766
    
    
    
    21,634
    
    
    
    2.61
    %
    
    
    2,912,856
    
    
    
    26,545
    
    
    
    3.65
    %Borrowed funds
    
    
    1,697,073
    
    
    
    17,402
    
    
    
    4.10
    %
    
    
    1,804,823
    
    
    
    17,699
    
    
    
    3.92
    %Total interest-bearing liabilities
    
    
    7,138,883
    
    
    
    47,176
    
    
    
    2.64
    %
    
    
    5,713,436
    
    
    
    48,708
    
    
    
    3.41
    %Non-interest bearing liabilities
    
    
    209,766
    
    
    
    
    
    
    
    
    
    
    
    110,969Total liabilities
    
    
    7,348,649
    
    
    
    
    
    
    
    
    
    
    
    5,824,405Stockholders equity
    
    
    818,577
    
    
    
    
    
    
    
    
    
    
    
    824,897Total liabilities and stockholders equity
    
    $
    8,167,226
    
    
    
    
    
    
    
    
    
    
    $
    6,649,302Net interest income
    
    
    
    
    
    $
    51,455
    
    
    
    
    
    
    
    
    
    
    $
    38,740Net interest rate spread(2)
    
    
    
    
    
    
    
    
    
    
    2.39
    %
    
    
    
    
    
    
    
    
    
    
    2.00
    %Net interest earning assets(3)
    
    $
    706,595
    
    
    
    
    
    
    
    
    
    
    $
    748,648Net interest margin(4)
    
    
    
    
    
    
    
    
    
    
    2.62
    %
    
    
    
    
    
    
    
    
    
    
    2.40
    %Ratio of interest-earning assets to total
interest-bearing liabilities
    
    
    1.10
    X
    
    
    
    
    
    
    
    
    
    
    1.13
    X
 
 (1)
    
    Securities available-for-sale are stated at amortized cost, adjusted for unamortized
purchased premiums and discounts.(2)
    
    Net interest rate spread represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing liabilities.(3)
    
    Net interest-earning assets represent total interest-earning assets less total
interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income divided by average total interest-earning
assets. 27




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##### Table of Contents



Comparison of Operating Results for the Three Months Ended September 30, 2009 and 2008
 Net Income .
 Net Interest Income .
  Interest and Dividend Income .
   Interest Expense.
 28




---



##### Table of Contents



Provision for Loan Losses. Comparison of Financial Condition at September 30, 2009 and June
30, 2009.
 Non-interest Income.
 Non-interest Expenses .
 Income Taxes.
 Liquidity and Capital Resources
  29




---



##### Table of Contents



As of September 30, 2009Actual
    
    RequiredAmount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital (to risk-weighted assets)
    
    $
    797,769
    
    
    
    16.8
    %
    
    $
    380,550
    
    
    
    8.0
    %Tier I capital (to risk-weighted assets)
    
    
    744,218
    
    
    
    15.7
    
    
    
    190,275
    
    
    
    4.0Tier I capital (to average assets)
    
    
    744,218
    
    
    
    9.2
    
    
    
    324,848
    
    
    
    4.0
 30




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##### Table of Contents



Off-Balance Sheet Arrangements and Contractual Obligations
   Less than
    
    One-Two
    
    Two-Three
    
    More thanContractual Obligations
    
    Total
    
    One Year
    
    Years
    
    Years
    
    Three YearsDebt obligations (excluding capitalized
leases)
    
    $
    1,660,549
    
    
    
    415,000
    
    
    
    570,000
    
    
    
    275,549
    
    
    
    400,000Commitments to originate and purchase loans
    
    $
    454,273
    
    
    
    454,273
    
    
    
    
    
    
    
    
    
    
    
    Commitments to sell loans
    
    $
    56,225
    
    
    
    56,225
    
    
    
    
    
    
    
    
    
    
    
    
      Critical Accounting Policies
  Allowance for Loan Losses.
 31




---



##### Table of Contents



32




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##### Table of Contents



Deferred Income Taxes. Income
Taxes
 Asset Impairment Judgments.
  33




---



##### Table of Contents



Stock-Based Compensation.
   34




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Qualitative Analysis
     35




---



##### Table of Contents



Quantitative Analysis
 Net Portfolio Value (1),(2)
    
    Net Interest Income (3)Change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase (Decrease) in EstimatedInterest Rates
    
    
    
    
    
    Estimated Increase (Decrease)
    
    Estimated Net
    
    Net Interest Income(basis points)
    
    Estimated NPV
    
    Amount
    
    Percent
    
    Interest Income
    
    Amount
    
    Percent(Dollars in thousands)+200bp
    
    $
    689,437
    
    
    $
    (303,396
    )
    
    
    (30.6
    )%
    
    $
    226,403
    
    
    $
    (10,637
    )
    
    
    (4.5
    )%0bp
    
    $
    992,833
    
    
    
    
    
    
    
    
    
    
    $
    237,040
    
    
    
    
    
    
    
    -100bp
    
    $
    979,346
    
    
    $
    (13,487
    )
    
    
    (1.4
    )%
    
    $
    239,988
    
    
    $
    2,948
    
    
    
    1.2
    %
 
 (1)
    
    NPV is the discounted present value of expected cash flows from assets, liabilities and
off-balance sheet contracts.(2)
    
    Assumes an instantaneous uniform change in interest rates at all maturities.(3)
    
    Assumes a gradual change in interest rates over a one year period at all maturities   36




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##### Table of Contents



Item 4. Controls and Procedures
   
 Part II  Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  37




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##### Table of Contents



The FDIC Has Proposed A Rule That Would Require Us To Prepay Insurance Premiums
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    Maximum NumberShares Purchased as
    
    of Shares that MayTotal Number
    
    
    
    
    
    Part of Publicly
    
    Yet Be Purchasedof Shares
    
    Average price
    
    Announced Plans or
    
    Under the Plans orPeriod
    
    Purchased
    
    Paid per Share
    
    Programs
    
    Programs (1)July 1, 2009 through July 31, 2009
    
    
    155,000
    
    
    $
    9.61
    
    
    
    155,000
    
    
    
    2,971,936August 1, 2009 through August 31, 2009
    
    
    43,500
    
    
    
    9.43
    
    
    
    43,500
    
    
    
    2,928,436September 1, 2009 through September 30, 2009
    
    
    0
    
    
    
    0.00
    
    
    
    
    
    
    
    2,928,436Total
    
    
    198,500
    
    
    $
    9.57
    
    
    
    198,500
 
 (1)
    
    On January 22, 2008, the Company announced its third Share Repurchase Program, which authorized
the purchase of an additional 10% of its publicly-held outstanding shares of common stock, or
4,307,248 shares. This stock repurchase program commenced upon the completion of the second program
on May 7, 2008. This program has no expiration date and has 2,928,436 shares yet to be purchased as
of September 30, 2009. 
 Item 3. Defaults Upon Senior Securities
  38




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  Proposal 1:
 Patrick J. Grant
    
    For: 107,703,571
    
    Withheld: 1,116,242Kevin Cummings
    
    For: 107,775,114
    
    Withheld: 1,044,669Joseph H. Shepard
    
    For: 107,704,289
    
    Withheld: 1,115,524
 Proposal 2:
 For:
    
    
    108,134,366Against:
    
    
    620,026Abstain:
    
    
    65,421
 
 Item 5. Other Information
  
 Item 6. Exhibits
  39




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##### Table of Contents



31.1
    
    Certification of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Principal Financial and Accounting Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 200232
    
    Certification of Principal Executive Officer and Principal Financial and
Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 40




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##### Table of Contents



SIGNATURES
  Investors Bancorp, Inc.Dated:      November 9, 2009
    /s/ Kevin CummingsKevin CummingsPresident and Chief Executive Officer
(Principal Executive Officer)Dated:      November 9, 2009
    /s/ Thomas F. Splaine, Jr.Thomas F. Splaine, Jr.Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 41