##### 



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: December 31, 2005
 Commission file number: 0-51557
 Investors Bancorp, Inc.
  Delaware
    
    22-3493930(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 101 JFK Parkway, Short Hills, New Jersey 07078
 (973) 924-5100
 þ o
 o þ o þ þ o
 o þ




---



##### 



Investors Bancorp, Inc.
FORM 10-Q
 Index
 Part I. Financial Information
 PageItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of December 31, 2005
(unaudited) and June 30, 2005
    
    
    1Consolidated Statements of Operations for the Three and
Six Months Ended December 31, 2005 and 2004 (unaudited)
    
    
    2Consolidated Statements of Stockholders Equity for
the Six Months Ended December 31, 2005 and 2004 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Six Months
Ended December 31, 2005 and 2004 (unaudited)
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    8Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    27Part II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    27Item 1A.
    
    Risk Factors
    
    
    27Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3.
    
    Defaults upon Senior Securities
    
    
    28Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    28Item 5.
    
    Other Information
    
    
    29Item 6.
    
    Exhibits
    
    
    29Signature Page
    
    
    30




---



##### 



Part I. Financial Information
 Item 1. Financial Statements
 INVESTORS BANCORP, INC. AND SUBSIDIARY
 December 31,
    
    
    June 30,2005
    
    
    2005(In thousands)AssetsCash and cash equivalents
    
    $
    35,926
    
    
    
    81,329Securities available-for-sale, at estimated fair value
    
    
    588,510
    
    
    
    673,951Securities held-to-maturity, net (estimated fair value of
$1,838,929 and $2,032,939 at December 31, 2005
and June 30, 2005, respectively)
    
    
    1,878,821
    
    
    
    2,040,882Loans receivable, net
    
    
    2,423,582
    
    
    
    1,993,904Loans held-for-sale
    
    
    1,401
    
    
    
    3,412Stock in the Federal Home Loan Bank
    
    
    52,279
    
    
    
    60,688Accrued interest receivable
    
    
    19,474
    
    
    
    18,263Office properties and equipment, net
    
    
    28,561
    
    
    
    29,544Net deferred tax asset
    
    
    19,287
    
    
    
    13,128Bank owned life insurance contract
    
    
    77,359
    
    
    
    76,229Other assets
    
    
    1,080
    
    
    
    1,423Total assets
    
    $
    5,126,280
    
    
    
    4,992,753Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    3,270,046
    
    
    
    3,240,420Borrowed funds
    
    
    940,255
    
    
    
    1,313,769Advance payments by borrowers for taxes and insurance
    
    
    10,931
    
    
    
    10,817Other liabilities
    
    
    17,662
    
    
    
    19,920Total liabilities
    
    
    4,238,894
    
    
    
    4,584,926Stockholders equity:Preferred stock, $0.01 par value, 500,000 authorized shares;
none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 200,000,000 shares authorized;
116,275,688 issued and outstanding at December 31, 2005,
and $0.10 par value, 3,000 shares authorized; 50 issued
and outstanding at June 30, 2005
    
    
    532
    
    
    
    Additional paid-in capital
    
    
    524,751
    
    
    
    25Unallocated common stock held by the employee stock
ownership plan
    
    
    (41,123
    )
    
    
    Retained earnings
    
    
    412,241
    
    
    
    411,219Accumulated other comprehensive loss:Net unrealized loss on securities available for sale, net of tax
    
    
    (7,914
    )
    
    
    (2,316
    )Minimum pension liability, net of tax
    
    
    (1,101
    )
    
    
    (1,101
    )(9,015
    )
    
    
    (3,417
    )Total stockholders equity
    
    
    887,386
    
    
    
    407,827Total liabilities and stockholders equity
    
    $
    5,126,280
    
    
    
    4,992,753
  1




---



##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For the Three Months
    
    
    For the Six MonthsEnded December 31,
    
    
    Ended December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands, except per share data)Interest and dividend income:Loans receivable and loans held-for-sale
    
    $
    29,827
    
    
    
    18,118
    
    
    
    56,377
    
    
    
    33,920Securities:Government-sponsored enterprise obligations
    
    
    2,490
    
    
    
    1,279
    
    
    
    4,164
    
    
    
    2,689Mortgage-backed securities
    
    
    24,680
    
    
    
    35,928
    
    
    
    50,664
    
    
    
    73,965Equity securities available-for-sale
    
    
    455
    
    
    
    436
    
    
    
    910
    
    
    
    838Municipal bonds and other debt
    
    
    1,701
    
    
    
    322
    
    
    
    2,415
    
    
    
    650Interest-bearing deposits
    
    
    1,658
    
    
    
    118
    
    
    
    2,491
    
    
    
    194Repurchase agreements
    
    
    351
    
    
    
    
    
    
    
    613
    
    
    
    Federal Home Loan Bank stock
    
    
    763
    
    
    
    452
    
    
    
    1,491
    
    
    
    886Total interest and dividend income
    
    
    61,925
    
    
    
    56,653
    
    
    
    119,125
    
    
    
    113,142Interest expense:Deposits
    
    
    23,055
    
    
    
    17,033
    
    
    
    44,771
    
    
    
    33,280Secured borrowings
    
    
    11,141
    
    
    
    15,346
    
    
    
    22,059
    
    
    
    30,701Total interest expense
    
    
    34,196
    
    
    
    32,379
    
    
    
    66,830
    
    
    
    63,981Net interest income
    
    
    27,729
    
    
    
    24,274
    
    
    
    52,295
    
    
    
    49,161Provision for loan losses
    
    
    100
    
    
    
    100
    
    
    
    200
    
    
    
    200Net interest income after provision
for loan losses
    
    
    27,629
    
    
    
    24,174
    
    
    
    52,095
    
    
    
    48,961Other income:Fees and service charges
    
    
    690
    
    
    
    663
    
    
    
    1,329
    
    
    
    1,336Increase in and death benefits on bank owned
life insurance contract
    
    
    1,257
    
    
    
    3,661
    
    
    
    1,130
    
    
    
    4,694Gain on sales of mortgage loans, net
    
    
    62
    
    
    
    137
    
    
    
    139
    
    
    
    246Gain on securities transactions, net
    
    
    
    
    
    
    602
    
    
    
    
    
    
    
    602Gain on sale of other real estate owned, net
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    5Total other income
    
    
    2,014
    
    
    
    5,068
    
    
    
    2,603
    
    
    
    6,883Operating expenses:Compensation and fringe benefits
    
    
    10,987
    
    
    
    8,995
    
    
    
    20,627
    
    
    
    17,411Advertising and promotional expense
    
    
    483
    
    
    
    780
    
    
    
    1,086
    
    
    
    1,460Office occupancy and equipment expense
    
    
    2,625
    
    
    
    2,068
    
    
    
    5,269
    
    
    
    4,727Federal insurance premiums
    
    
    109
    
    
    
    118
    
    
    
    218
    
    
    
    237Stationery, printing, supplies and telephone
    
    
    416
    
    
    
    492
    
    
    
    908
    
    
    
    962Legal, audit, accounting, and supervisory examination fees
    
    
    450
    
    
    
    302
    
    
    
    799
    
    
    
    672Data processing service fees
    
    
    929
    
    
    
    844
    
    
    
    1,816
    
    
    
    1,732Amortization of premium on deposit acquisition
    
    
    
    
    
    
    486
    
    
    
    
    
    
    
    972Contribution to charitable foundation
    
    
    20,651
    
    
    
    
    
    
    
    20,651
    
    
    
    Other operating expenses
    
    
    912
    
    
    
    703
    
    
    
    1,787
    
    
    
    1,385Total operating expenses
    
    
    37,562
    
    
    
    14,788
    
    
    
    53,161
    
    
    
    29,558(Loss) income before income tax (benefit) expense
    
    
    (7,919
    )
    
    
    14,454
    
    
    
    1,537
    
    
    
    26,286Income tax (benefit) expense
    
    
    (2,980
    )
    
    
    3,681
    
    
    
    515
    
    
    
    7,471Net (loss) income
    
    $
    (4,939
    )
    
    
    10,773
    
    
    
    1,022
    
    
    
    18,815Basic loss per common share, from date of initial stock offering
    
    $
    (0.06
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
  2




---



##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 Accumulated othercomprehensive lossAdditional
    
    
    Unallocated
    
    
    
    
    
    
    Unrealized
    
    
    Minimum
    
    
    TotalCommon
    
    
    paid-in
    
    
    common stock
    
    
    Retained
    
    
    losses on
    
    
    pension
    
    
    stockholdersstock
    
    
    capital
    
    
    held by ESOP
    
    
    earnings
    
    
    securities
    
    
    liability
    
    
    equityBalance at June 30, 2004
    
    $
    
    
    
    
    25
    
    
    
    
    
    
    
    414,361
    
    
    
    (11,968
    )
    
    
    (755
    )
    
    
    401,663Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,815
    
    
    
    
    
    
    
    
    
    
    
    18,815Unrealized gain on securities available-
for-sale, net of tax expense of $4,530
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,775
    
    
    
    
    
    
    
    7,775Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,590Balance at December 31, 2004
    
    $
    
    
    
    
    25
    
    
    
    
    
    
    
    433,176
    
    
    
    (4,193
    )
    
    
    (755
    )
    
    
    428,253Balance at June 30, 2005
    
    $
    
    
    
    
    25
    
    
    
    
    
    
    
    411,219
    
    
    
    (2,316
    )
    
    
    (1,101
    )
    
    
    407,827Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,022
    
    
    
    
    
    
    
    
    
    
    
    1,022Unrealized loss on securities available-
for-sale, net of tax benefit of $3,675
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,598
    )
    
    
    
    
    
    
    (5,598
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,576
    )Issuance of 53,175,907 shares of common
stock in the initial public offering
and of 63,099,781 shares to
the mutual holding company
    
    
    532
    
    
    
    524,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    525,174Purchase of common stock by the ESOP
    
    
    
    
    
    
    
    
    
    
    (42,541
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,541
    )Allocation of ESOP stock
    
    
    
    
    
    
    84
    
    
    
    1,418
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,502Balance at December 31, 2005
    
    $
    532
    
    
    
    524,751
    
    
    
    (41,123
    )
    
    
    412,241
    
    
    
    (7,914
    )
    
    
    (1,101
    )
    
    
    887,386
  3




---



##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For the Six MonthsEnded December 31,2005
    
    
    2004(In thousands)Cash flows from operating activities:Net income
    
    $
    1,022
    
    
    
    18,815Adjustments to reconcile net income to net cash provided by operating activities:Contribution of stock to charitable foundation
    
    
    15,488
    
    
    
    ESOP expense
    
    
    1,502
    
    
    
    Amortization of premiums and accretion of discounts on securities, net
    
    
    395
    
    
    
    3,272Amortization of premium on deposit acquisition
    
    
    
    
    
    
    972Provision for loan losses
    
    
    200
    
    
    
    200Depreciation and amortization of office properties and equipment
    
    
    1,555
    
    
    
    1,020Gain on securities transactions, net
    
    
    
    
    
    
    (602
    )Mortgage loans originated for sale
    
    
    (13,270
    )
    
    
    (24,947
    )Proceeds from mortgage loan sales
    
    
    15,420
    
    
    
    25,482Gain on sales of mortgage loans, net
    
    
    (139
    )
    
    
    (246
    )Proceed from sales of other real estate owned
    
    
    5
    
    
    
    159Net gain on sales of other real estate owned
    
    
    (5
    )
    
    
    (5
    )Death benefits on bank owned life insurance contract
    
    
    
    
    
    
    (2,800
    )Increase in bank owned life insurance contract
    
    
    (1,130
    )
    
    
    (1,894
    )(Increase) decrease in accrued interest
    
    
    (1,211
    )
    
    
    2,305Deferred tax benefit
    
    
    (2,484
    )
    
    
    (1,720
    )Decrease in other assets
    
    
    343
    
    
    
    1,695(Decrease) increase in other liabilities
    
    
    (2,258
    )
    
    
    9,216Total adjustments
    
    
    14,411
    
    
    
    12,107Net cash provided by operating activities
    
    
    15,433
    
    
    
    30,922Cash flows from investing activities:Net increase in loans receivable
    
    
    (429,878
    )
    
    
    (375,683
    )Purchases of mortgage-backed securities held-to-maturity
    
    
    (24,865
    )
    
    
    (224,477
    )Proceeds from calls/maturities on debt securities held-to-maturity
    
    
    225,167
    
    
    
    227Purchases of debt securities held-to-maturity
    
    
    (333,406
    )
    
    
    (15,000
    )Purchases of mortgage-backed securities available-for-sale
    
    
    
    
    
    
    (62,175
    )Proceeds from paydowns/maturities on mortgage-backed
securities held-to-maturity
    
    
    294,856
    
    
    
    346,748Proceeds from paydowns/maturities on mortgage-backed
securities available-for-sale
    
    
    76,082
    
    
    
    145,216Proceeds from sales of mortgage-backed securities held-to-maturity
    
    
    
    
    
    
    46,942Proceeds from redemptions of Federal Home Loan Bank stock
    
    
    51,836
    
    
    
    28,076Purchases of Federal Home Loan Bank stock
    
    
    (43,427
    )
    
    
    (27,100
    )Purchases of office properties and equipment
    
    
    (572
    )
    
    
    (4,304
    )Proceeds from death benefits on bank owned life insurance contract
    
    
    
    
    
    
    3,291Net cash used in investing activities
    
    
    (184,207
    )
    
    
    (138,239
    )Cash flows from financing activities:Net increase in deposits
    
    
    29,626
    
    
    
    17,824Net proceeds from sale of common stock
    
    
    509,686
    
    
    
    Loan to ESOP
    
    
    (42,541
    )
    
    
    Net increase in funds borrowed under short-term repurchase agreements
    
    
    40,000
    
    
    
    255,000Repayments of funds borrowed under other repurchase agreements
    
    
    (515,000
    )
    
    
    (206,000
    )Proceeds from Federal Home Loan Bank advances
    
    
    101,486
    
    
    
    36,486Net increase in advance payments by borrowers for taxes and insurance
    
    
    114
    
    
    
    1,127Net cash provided by financing activities
    
    
    123,371
    
    
    
    104,437Net decrease in cash and cash equivalents
    
    
    (45,403
    )
    
    
    (2,880
    )Cash and cash equivalents at beginning of period
    
    
    81,329
    
    
    
    37,653Cash and cash equivalents at end of period
    
    $
    35,926
    
    
    
    34,773Supplemental cash flow information:Noncash investing activities:Real estate acquired through foreclosure
    
    $
    
    
    
    
    123Cash paid during the period for:Interest
    
    
    69,560
    
    
    
    64,138Income taxes
    
    
    400
    
    
    
    
  4




---



##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 1.
    
    Basis of PresentationThe consolidated financial statements are composed of the accounts of Investors Bancorp, Inc.
and its wholly owned subsidiary, Investors Savings Bank (Bank) (collectively, the Company) and
the Banks wholly-owned significant subsidiaries, ISB Mortgage Company LLC and ISB Asset
Corporation.In the opinion of management, all the adjustments (consisting of normal and recurring
adjustments) necessary for the fair presentation of the consolidated financial condition and
the consolidated results of operations for the unaudited periods presented have been included.
The results of operations and other data presented for the three and six-month periods ended
December 31, 2005 are not necessarily indicative of the results of operations that may be
expected for the fiscal year ending June 30, 2006.Certain information and note disclosures usually included in financial statements prepared in
accordance with U.S. generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission for the
preparation of the Form 10-Q. The consolidated financial statements presented should be read
in conjunction with Companys audited consolidated financial statements and notes to
consolidated financial statements included in Companys June 30, 2005 Special Financial Report
on Form 10-K.2.
    
    Stock OfferingThe Company completed its initial public stock offering on October 11, 2005. The Company
sold 51,627,094 shares, or 44.40% of its outstanding common stock, to subscribers in the
offering, including 4,254,072 shares purchased by Investors Savings Bank Employee Stock
Ownership Plan. Investors Bancorp, MHC, the Companys New Jersey chartered mutual holding
company parent holds 63,099,781 shares, or 54.27% of the Companys outstanding common stock.
Additionally, the Company contributed $5,163,000 in cash and issued 1,548,813 shares of common
stock, or 1.33% of its outstanding shares, to the Investors Savings Bank Charitable Foundation
resulting in a pre-tax expense charge of $20.7 million recorded in the quarter ended December
31, 2005. Net proceeds from the initial offering were $509.7 million. Investors Bancorp,
Inc. contributed $255.0 million of the net proceeds to Investors Savings Bank. Stock
subscription proceeds of $557.9 million were returned to subscribers.3.
    
    Recent Accounting PronouncementsFASB Staff Position No. FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments (the FSP), was issued on November 3,
2005 and addresses the determination of when an investment is considered impaired; whether the
impairment is other than temporary; and how to measure an impairment loss. The FSP also
addresses accounting considerations subsequent to the recognition of an other-than-temporary
impairment on a debt security, and requires certain disclosures about unrealized losses that
have not been recognized as other-than-temporary impairments. The FSP replaces the impairment
guidance in EITF Issue No. 03-1 with references to existing authoritative literature
concerning other-than-temporary
 5




---



##### 



determinations (principally Statement of Financial Accounting Standards No. 115 and SEC Staff
Accounting Bulletin 59). Under the FSP, impairment losses must be recognized in earnings
equal to the entire difference between the securitys cost and its fair value at the financial
statement date, without considering partial recoveries subsequent to that date. The FSP also
requires that an investor recognize an other-than-temporary impairment loss when a decision to
sell a security has been made and the investor does not expect the fair value of the security
to fully recover prior to the expected time of sale. The FSP is effective for reporting
periods beginning after December 15, 2005. The Company does not expect that the application
of the FSP will have a material impact on its financial condition, results of operations or
financial statement disclosures.4.
    
    Earnings Per ShareThe Company completed its initial public stock offering on October 11, 2005. Basic loss
per common share has been calculated based on the net loss of $6.6 million from October 11,
2005 to December 31, 2005, the period during which common stock was outstanding, and weighted
average common shares of 112,024,104 for the period. The number of shares for this purpose
includes shares issued to Investors Bancorp, MHC but excludes unallocated ESOP shares.5.
    
    Loans Receivable, NetLoans receivable, net are summarized as follows:
 December 31,
    
    
    June 30,2005
    
    
    2005(In thousands)Residential mortgage loans
    
    $
    2,239,270
    
    
    
    1,881,079Multi-family and commercial
    
    
    40,472
    
    
    
    17,181Construction loans
    
    
    21,886
    
    
    
    6,465Consumer and other loans
    
    
    112,101
    
    
    
    81,641Total loans
    
    
    2,413,729
    
    
    
    1,986,366Premiums on purchased loans
    
    
    17,070
    
    
    
    14,113Deferred loan fees, net
    
    
    (1,198
    )
    
    
    (881
    )Allowance for loan losses
    
    
    (6,019
    )
    
    
    (5,694
    )$
    2,423,582
    
    
    
    1,993,904
 6




---



##### 



6.
    
    DepositsDeposits are summarized as follows:
 December 31,
    
    
    June 30,2005
    
    
    2005(In thousands)Savings accounts
    
    $
    246,225
    
    
    
    271,071Checking accounts
    
    
    352,484
    
    
    
    277,317Money Market accounts
    
    
    251,993
    
    
    
    318,432Total core deposits
    
    
    850,702
    
    
    
    866,820Certificates of deposit
    
    
    2,419,344
    
    
    
    2,373,600$
    3,270,046
    
    
    
    3,240,420
 7




---



##### 



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
   Executive Summary
  8




---



##### 



9




---



##### 



Comparison of Financial Condition at December 31, 2005 and June 30, 2005
 Total Assets .
 Cash and Cash Equivalents.
 Securities.
 Net Loans.
  10




---



##### 



Stock in the Federal Home Loan Bank and Other Assets.
 Deposits .
 11




---



##### 



Borrowed Funds .
 Other Liabilities.
 Stockholders Equity .
 Average Balance Sheets for the Three and Six Months ended December 31, 2005 and 2004
  12




---



##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For Three Months EndedDecember 31, 2005
    
    

December 31, 2004Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    Earned/Paid
    
    Yield/Rate
    
    Balance
    
    Earned/Paid
    
    Yield/Rate(Dollars in thousands)Interest-earning Assets:Due from Banks
    
    $
    176,800
    
    
    
    1,658
    
    
    
    3.75
    %
    
    $
    21,275
    
    
    
    118
    
    
    
    2.22
    %Repurchase Agreements
    
    
    34,810
    
    
    
    351
    
    
    
    4.03
    %
    
    
    
    
    
    
    
    
    
    
    Securities Available-for-Sale
    
    
    620,622
    
    
    
    6,554
    
    
    
    4.22
    %
    
    
    1,347,203
    
    
    
    13,214
    
    
    
    3.92
    %Securities Held-to-Maturity
    
    
    2,042,733
    
    
    
    22,772
    
    
    
    4.46
    %
    
    
    2,282,495
    
    
    
    24,751
    
    
    
    4.34
    %Net Loans
    
    
    2,309,963
    
    
    
    29,827
    
    
    
    5.16
    %
    
    
    1,411,805
    
    
    
    18,118
    
    
    
    5.13
    %Stock in FHLB
    
    
    58,729
    
    
    
    763
    
    
    
    5.20
    %
    
    
    75,489
    
    
    
    452
    
    
    
    2.40
    %Total Interest-earning Assets
    
    
    5,243,657
    
    
    
    61,925
    
    
    
    4.72
    %
    
    
    5,138,267
    
    
    
    56,653
    
    
    
    4.41
    %Non-interest Earning Assets
    
    
    135,011
    
    
    
    
    
    
    
    
    
    
    
    140,602Total Assets
    
    $
    5,378,668
    
    
    
    
    
    
    
    
    
    
    $
    5,278,869Interest-bearing Liabilities:Savings
    
    $
    374,737
    
    
    
    830
    
    
    
    0.89
    %
    
    $
    279,804
    
    
    
    592
    
    
    
    0.85
    %Interest-bearing Checking
    
    
    312,438
    
    
    
    1,484
    
    
    
    1.90
    %
    
    
    216,097
    
    
    
    612
    
    
    
    1.13
    %Money Market
    
    
    268,122
    
    
    
    897
    
    
    
    1.34
    %
    
    
    397,824
    
    
    
    1,337
    
    
    
    1.34
    %Time Deposits
    
    
    2,397,206
    
    
    
    19,844
    
    
    
    3.31
    %
    
    
    2,362,928
    
    
    
    14,492
    
    
    
    2.45
    %Borrowed Funds
    
    
    1,141,045
    
    
    
    11,141
    
    
    
    3.91
    %
    
    
    1,531,466
    
    
    
    15,346
    
    
    
    4.01
    %Total interest-bearing liabilities
    
    
    4,493,548
    
    
    
    34,196
    
    
    
    3.04
    %
    
    
    4,788,119
    
    
    
    32,379
    
    
    
    2.70
    %Non-interest Bearing Liabilities
    
    
    59,747
    
    
    
    
    
    
    
    
    
    
    
    76,369Total Liabilities
    
    
    4,553,295
    
    
    
    
    
    
    
    
    
    
    
    4,864,488Stockholders Equity
    
    
    825,373
    
    
    
    
    
    
    
    
    
    
    
    414,381Total Liabilities and Stockholders Equity
    
    $
    5,378,668
    
    
    
    
    
    
    
    
    
    
    $
    5,278,869Net Interest Income
    
    
    
    
    
    
    27,729
    
    
    
    
    
    
    
    
    
    
    
    24,274Net Interest Rate Spread
    
    
    
    
    
    
    
    
    
    
    1.68
    %
    
    
    
    
    
    
    
    
    
    
    1.71
    %Net Interest Earning Assets
    
    $
    750,109
    
    
    
    
    
    
    
    
    
    
    $
    350,148Net Interest Margin
    
    
    
    
    
    
    
    
    
    
    2.12
    %
    
    
    
    
    
    
    
    
    
    
    1.89
    %Ratio of interest-earning assets to total interest-bearing liabilities
    
    
    1.17
    X
    
    
    
    
    
    
    
    
    
    
    1.07
    X
 13




---



##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For Six Months EndedDecember 31, 2005
    
    
    December 31, 2004Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest-earning Assets:Due from Banks
    
    $
    144,479
    
    
    
    2,491
    
    
    
    3.45
    %
    
    $
    22,941
    
    
    
    194
    
    
    
    1.69
    %Repurchase Agreements
    
    
    32,773
    
    
    
    613
    
    
    
    3.74
    %
    
    
    
    
    
    
    
    
    
    
    Securities Available-for-Sale
    
    
    641,141
    
    
    
    13,499
    
    
    
    4.21
    %
    
    
    1,378,296
    
    
    
    26,850
    
    
    
    3.90
    %Securities Held-to-Maturity
    
    
    2,033,956
    
    
    
    44,654
    
    
    
    4.39
    %
    
    
    2,360,389
    
    
    
    51,292
    
    
    
    4.35
    %Net Loans
    
    
    2,202,165
    
    
    
    56,377
    
    
    
    5.12
    %
    
    
    1,324,988
    
    
    
    33,920
    
    
    
    5.12
    %Stock in FHLB
    
    
    58,228
    
    
    
    1,491
    
    
    
    5.12
    %
    
    
    78,264
    
    
    
    886
    
    
    
    2.26
    %Total Interest-earning Assets
    
    
    5,112,742
    
    
    
    119,125
    
    
    
    4.66
    %
    
    
    5,164,878
    
    
    
    113,142
    
    
    
    4.38
    %Non-interest Earning Assets
    
    
    135,726
    
    
    
    
    
    
    
    
    
    
    
    139,406Total Assets
    
    $
    5,248,468
    
    
    
    
    
    
    
    
    
    
    $
    5,304,284Interest-bearing Liabilities:Savings
    
    $
    424,205
    
    
    
    1,835
    
    
    
    0.87
    %
    
    $
    283,199
    
    
    
    1,198
    
    
    
    0.85
    %Interest-bearing Checking
    
    
    297,582
    
    
    
    2,644
    
    
    
    1.78
    %
    
    
    214,713
    
    
    
    1,211
    
    
    
    1.13
    %Money Market
    
    
    287,510
    
    
    
    1,927
    
    
    
    1.34
    %
    
    
    405,791
    
    
    
    2,728
    
    
    
    1.34
    %Time Deposits
    
    
    2,402,719
    
    
    
    38,365
    
    
    
    3.19
    %
    
    
    2,346,541
    
    
    
    28,143
    
    
    
    2.40
    %Borrowed Funds
    
    
    1,161,966
    
    
    
    22,059
    
    
    
    3.80
    %
    
    
    1,570,673
    
    
    
    30,701
    
    
    
    3.91
    %Total interest-bearing liabilities
    
    
    4,573,982
    
    
    
    66,830
    
    
    
    2.92
    %
    
    
    4,820,917
    
    
    
    63,981
    
    
    
    2.65
    %Non-interest Bearing Liabilities
    
    
    59,813
    
    
    
    
    
    
    
    
    
    
    
    73,972Total Liabilities
    
    
    4,633,795
    
    
    
    
    
    
    
    
    
    
    
    4,894,889Stockholders Equity
    
    
    614,673
    
    
    
    
    
    
    
    
    
    
    
    409,395Total Liabilities and
Stockholders Equity
    
    $
    5,248,468
    
    
    
    
    
    
    
    
    
    
    $
    5,304,284Net Interest Income
    
    
    
    
    
    
    52,295
    
    
    
    
    
    
    
    
    
    
    
    49,161Net Interest Rate Spread
    
    
    
    
    
    
    
    
    
    
    1.74
    %
    
    
    
    
    
    
    
    
    
    
    1.73
    %Net Interest Earning Assets
    
    $
    538,760
    
    
    
    
    
    
    
    
    
    
    $
    343,961Net Interest Margin
    
    
    
    
    
    
    
    
    
    
    2.05
    %
    
    
    
    
    
    
    
    
    
    
    1.90
    %Ratio of interest-earning assets to total interest-bearing liabilities
    
    
    1.12
    X
    
    
    
    
    
    
    
    
    
    
    1.07
    X
 14




---



##### 



Comparison of Operating Results for the Three Months Ended December 31, 2005 and 2004
 Net Income .
 Net Interest Income .
 Interest and Dividend Income .
   15




---



##### 



Interest Expense.
   16




---



##### 



Provision for Loan Losses. Comparison of Financial Condition at December 31, 2005 and June 30, 2005
 Other Income .
 Operating Expenses .
 Income Taxes.
 17




---



##### 



Comparison of Operating Results for the Six Months Ended December 31, 2005 and 2004
 Net Income .
 Net Interest Income .
 Interest and Dividend Income.
   Interest Expense.
 18




---



##### 



19




---



##### 



Provision for Loan Losses Comparison of
Financial Condition at December 31, 2005 and June 30, 2005
 Other Income.
 Operating Expenses
 Income Taxes.
 Liquidity and Capital Resources
  20




---



##### 



As of December 31, 2005Actual
    
    RequiredAmount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital (to risk-weighted assets)
    
    $
    650,866
    
    
    
    29.5
    %
    
    $
    176,485
    
    
    
    8.0
    %Tier I capital (to risk-weighted assets)
    
    
    644,847
    
    
    
    29.2
    
    
    
    88,243
    
    
    
    4.0Tier I capital (to average assets)
    
    
    644,847
    
    
    
    12.0
    
    
    
    215,674
    
    
    
    4.0
 Critical Accounting Policies
  21




---



##### 



Allowance for Loan Losses.
    22




---



##### 



Deferred Income Taxes.
 23




---



##### 



Asset Impairment Judgments.
  Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Qualitative Analysis
 24




---



##### 



25




---



##### 



Quantitative Analysis
 Net Portfolio Value (2)
    
    Net Interest IncomeChange in
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimated Net
    
    Increase (Decrease) in EstimatedInterest Rates
    
    Estimated
    
    Estimated Increase (Decrease)
    
    Interest
    
    Net Interest Income(basis points)
    
    NPV(1)
    
    Amount
    
    Percent
    
    Income(3)
    
    Amount
    
    Percent(Dollars in thousands)+200bp
    
    $
    724,779
    
    
    $
    (237.355
    )
    
    
    (24.7
    )%
    
    $
    99,195
    
    
    
    (9,666
    )
    
    
    (8.88
    )%0bp
    
    
    962,134
    
    
    
    
    
    
    
    
    
    
    
    108,861
    
    
    
    
    
    
    
    -200bp
    
    
    1,017,742
    
    
    
    55,608
    
    
    
    5.8
    %
    
    
    120,128
    
    
    
    11,267
    
    
    
    10.35
    %
 
 (1)
    
    Assumes an instantaneous uniform change in interest rates at all maturities.(2)
    
    NPV is the discounted present value of expected cash flows from assets, liabilities and
off-balance sheet contracts.(3)
    
    Assumes a gradual change in interest rates over a one year period at all maturities.   26




---



##### 



Item 4. Controls and Procedures
   Part II  Other Information
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   27




---



##### 



Item 3. Defaults Upon Senior Securities
  Item 4. Submission of Matters to a Vote of Security Holders
  28




---



##### 



Item 5. Other Information
  Item 6. Exhibits
  3.1
    
    Certificate of Incorporation of Investors Bancorp, Inc.*3.2
    
    Bylaws of Investors Bancorp, Inc.*4
    
    Form of Common Stock Certificate of Investors Bancorp, Inc.*10.1
    
    Form of Employment Agreement between Investors Bancorp, Inc.
and certain executive officers*10.2
    
    Form of Change in Control Agreement between Investors Bancorp,
Inc. and certain executive officers *10.3
    
    Investors Savings Bank Director Retirement Plan*10.4
    
    Investors Savings Bank Supplemental Retirement Plan*10.5
    
    Investors Bancorp, Inc. Supplemental Wage Replacement Plan*31.1
    
    Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 200232
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Filed as exhibits to the Companys Registration Statement on Form S-1, and any amendments
thereto, with the Securities and Exchange Commission (Registration No. 333-125703) 29




---



##### 



SIGNATURES
  Investors Bancorp, Inc.Dated:      February 14, 2006
    /s/ Robert M. CashillRobert M. CashillPresident and Chief Executive OfficerDated:      February 14, 2006
    /s/ Domenick A. CamaDomenick A. CamaExecutive Vice President and Chief Financial Officer 30