##### 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 THESECURITIES EXCHANGE ACT OF 1934
 March 31, 2007
 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
 o o
 o o þ o
 o þ




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##### 



Investors Bancorp, Inc.
FORM 10-Q
 Index
  
 PagePart I. Financial InformationItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of March 31, 2007
(unaudited) and June 30, 2006
    
    
    1Consolidated Statements of Operations for the Three and Nine
Months Ended March 31, 2007 and 2006 (unaudited)
    
    
    2Consolidated Statements of Stockholders Equity for
the Nine Months Ended March 31, 2007 and 2006 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Nine Months
Ended March 31, 2007 and 2006 (unaudited)
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    32Part II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    33Item 1A.
    
    Risk Factors
    
    
    33Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3.
    
    Defaults upon Senior Securities
    
    
    33Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    33Item 5.
    
    Other Information
    
    
    33Item 6.
    
    Exhibits
    
    
    33Signature Page
    
    
    35EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32: CERTIFICATION




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 
 INVESTORS BANCORP, INC. AND SUBSIDIARY
 March 31,
    
    
    June 30,2007
    
    
    2006(In thousands)AssetsCash and cash equivalents
    
    $
    24,751
    
    
    
    39,824Securities available-for-sale, at estimated fair value
    
    
    297,234
    
    
    
    528,876Securities held-to-maturity, net (estimated fair value of
$1,527,779 and $1,695,975 at March 31, 2007
and June 30, 2006, respectively)
    
    
    1,557,373
    
    
    
    1,763,032Loans receivable, net
    
    
    3,388,746
    
    
    
    2,960,583Loans held-for-sale
    
    
    6,056
    
    
    
    974Stock in the Federal Home Loan Bank
    
    
    33,524
    
    
    
    46,125Accrued interest receivable
    
    
    23,872
    
    
    
    21,053Office properties and equipment, net
    
    
    27,201
    
    
    
    27,911Net deferred tax asset
    
    
    36,821
    
    
    
    28,176Bank owned life insurance contract
    
    
    87,096
    
    
    
    78,903Other assets
    
    
    1,642
    
    
    
    1,789Total assets
    
    $
    5,484,316
    
    
    
    5,497,246Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    3,584,109
    
    
    
    3,302,043Borrowed funds
    
    
    990,717
    
    
    
    1,245,740Advance payments by borrowers for taxes and insurance
    
    
    16,026
    
    
    
    15,337Other liabilities
    
    
    29,230
    
    
    
    33,939Total liabilities
    
    
    4,620,082
    
    
    
    4,597,059Stockholders 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;
116,275,688 issued; 113,086,352 and 116,275,688 outstanding
at March 31, 2007 and June 30, 2006, respectively
    
    
    532
    
    
    
    532Additional paid-in capital
    
    
    503,511
    
    
    
    524,962Unallocated common stock held by the employee stock
ownership plan
    
    
    (39,350
    )
    
    
    (40,414
    )Treasury stock, at cost; 3,189,336 shares at March 31, 2007
    
    
    (48,349
    )
    
    
    Retained earnings
    
    
    450,850
    
    
    
    426,233Accumulated other comprehensive loss:Net unrealized loss on securities available for sale, net of tax
    
    
    (2,592
    )
    
    
    (10,758
    )Minimum pension liability, net of tax
    
    
    (368
    )
    
    
    (368
    )(2,960
    )
    
    
    (11,126
    )Total stockholders equity
    
    
    864,234
    
    
    
    900,187Total liabilities and
stockholders equity
    
    $
    5,484,316
    
    
    
    5,497,246
  1




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For the Three Months
    
    
    For the Nine MonthsEnded March 31,
    
    
    Ended March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(Dollars in thousands, except per share data)Interest and dividend income:Loans receivable and loans held-for-sale
    
    $
    45,868
    
    
    
    33,177
    
    
    
    131,906
    
    
    
    89,554Securities:Government-sponsored enterprise obligations
    
    
    1,339
    
    
    
    1,341
    
    
    
    4,017
    
    
    
    5,505Mortgage-backed securities
    
    
    18,286
    
    
    
    23,878
    
    
    
    60,988
    
    
    
    74,542Equity securities available-for-sale
    
    
    443
    
    
    
    460
    
    
    
    1,370
    
    
    
    1,370Municipal bonds and other debt
    
    
    2,410
    
    
    
    2,105
    
    
    
    7,228
    
    
    
    4,520Interest-bearing deposits
    
    
    154
    
    
    
    184
    
    
    
    545
    
    
    
    2,675Repurchase agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    613Federal Home Loan Bank stock
    
    
    798
    
    
    
    756
    
    
    
    2,248
    
    
    
    2,247Total interest and dividend income
    
    
    69,298
    
    
    
    61,901
    
    
    
    208,302
    
    
    
    181,026Interest expense:Deposits
    
    
    35,673
    
    
    
    24,343
    
    
    
    100,467
    
    
    
    69,114Secured borrowings
    
    
    11,995
    
    
    
    10,187
    
    
    
    42,744
    
    
    
    32,246Total interest expense
    
    
    47,668
    
    
    
    34,530
    
    
    
    143,211
    
    
    
    101,360Net interest income
    
    
    21,630
    
    
    
    27,371
    
    
    
    65,091
    
    
    
    79,666Provision for loan losses
    
    
    200
    
    
    
    200
    
    
    
    525
    
    
    
    400Net interest income after provision
for loan losses
    
    
    21,430
    
    
    
    27,171
    
    
    
    64,566
    
    
    
    79,266Non-interest income:Fees and service charges
    
    
    642
    
    
    
    598
    
    
    
    1,961
    
    
    
    1,886Income on bank owned life insurance contract
    
    
    910
    
    
    
    646
    
    
    
    2,629
    
    
    
    1,776Gain on sales of mortgage loans, net
    
    
    135
    
    
    
    93
    
    
    
    89
    
    
    
    232Loss on securities transactions, net
    
    
    
    
    
    
    
    
    
    
    (3,666
    )
    
    
    Other income
    
    
    23
    
    
    
    21
    
    
    
    65
    
    
    
    67Total non-interest income
    
    
    1,710
    
    
    
    1,358
    
    
    
    1,078
    
    
    
    3,961Non-interest expenses:Compensation and fringe benefits
    
    
    12,962
    
    
    
    10,696
    
    
    
    35,663
    
    
    
    31,323Advertising and promotional expense
    
    
    767
    
    
    
    666
    
    
    
    2,525
    
    
    
    1,752Office occupancy and equipment expense
    
    
    2,469
    
    
    
    2,528
    
    
    
    7,407
    
    
    
    7,797Federal insurance premiums
    
    
    108
    
    
    
    141
    
    
    
    326
    
    
    
    359Stationery, printing, supplies and telephone
    
    
    399
    
    
    
    419
    
    
    
    1,172
    
    
    
    1,327Legal, audit, accounting, and supervisory examination fees
    
    
    504
    
    
    
    384
    
    
    
    1,536
    
    
    
    1,183Data processing service fees
    
    
    1,004
    
    
    
    910
    
    
    
    2,912
    
    
    
    2,726Contribution to charitable foundation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,651Other operating expenses
    
    
    891
    
    
    
    1,113
    
    
    
    2,897
    
    
    
    2,900Total non-interest expenses
    
    
    19,104
    
    
    
    16,857
    
    
    
    54,438
    
    
    
    70,018Income before income tax expense (benefit)
    
    
    4,036
    
    
    
    11,672
    
    
    
    11,206
    
    
    
    13,209Income tax expense (benefit)
    
    
    1,042
    
    
    
    3,960
    
    
    
    (8,159
    )
    
    
    4,475Net income
    
    $
    2,994
    
    
    
    7,712
    
    
    
    19,365
    
    
    
    8,734Earnings per share  basic and diluted
    
    $
    0.03
    
    
    $
    0.07
    
    
    $
    0.17
    
    
    
    n/aWeighted average shares outstandingBasic
    
    
    111,138,908
    
    
    
    112,163,418
    
    
    
    111,401,956
    
    
    
    n/aDiluted
    
    
    111,218,374
    
    
    
    112,163,418
    
    
    
    111,406,925
    
    
    
    n/a
  2




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##### Table of Contents



INVESTORS BANCORP, INC.
 Accumulated othercomprehensive lossAdditional
    
    
    Unallocated
    
    
    
    
    
    
    
    
    
    
    Unrealized
    
    
    Minimum
    
    
    TotalCommon
    
    
    paid-in
    
    
    Common Stock
    
    
    Treasury
    
    
    Retained
    
    
    gain (loss) on
    
    
    pension
    
    
    stockholders'stock
    
    
    capital
    
    
    Held by ESOP
    
    
    stock
    
    
    earnings
    
    
    securities
    
    
    liability
    
    
    equity(In thousands)Balance at June 30, 2005
    
    $
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    411,219
    
    
    
    (2,316
    )
    
    
    (1,101
    )
    
    
    407,827Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,734
    
    
    
    
    
    
    
    
    
    
    
    8,734Unrealized loss on securities available-
for-sale, net of tax benefit of $5,356
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,720
    )
    
    
    
    
    
    
    (7,720
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,014Sale of 53,175,907 shares of common
stock in the initial public offering
and issuance 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 March 31, 2006
    
    $
    532
    
    
    
    524,751
    
    
    
    (41,123
    )
    
    
    
    
    
    
    419,953
    
    
    
    (10,036
    )
    
    
    (1,101
    )
    
    
    892,976Balance at June 30, 2006
    
    $
    532
    
    
    
    524,962
    
    
    
    (40,414
    )
    
    
    
    
    
    
    426,233
    
    
    
    (10,758
    )
    
    
    (368
    )
    
    
    900,187Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,365
    
    
    
    
    
    
    
    
    
    
    
    19,365Unrealized gain on securities available-
for-sale, net of tax expense of $6,760
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,117
    
    
    
    
    
    
    
    10,117Reclassification adjustment for losses
included in net income, net of tax benefit
of $1,347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,951
    )
    
    
    
    
    
    
    (1,951
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,531Cummulative effect of change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,564
    
    
    
    
    
    
    
    
    
    
    
    5,564Purchase of treasury stock (4,856,295 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74,082
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74,082
    )Treasury stock allocated to
restricted stock plan
    
    
    
    
    
    
    (25,421
    )
    
    
    
    
    
    
    25,733
    
    
    
    (312
    )
    
    
    
    
    
    
    
    
    
    
    Compensation cost for stock
options and restricted stock
    
    
    
    
    
    
    3,458
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,458Allocation of ESOP stock
    
    
    
    
    
    
    512
    
    
    
    1,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,576Balance at March 31, 2007
    
    $
    532
    
    
    
    503,511
    
    
    
    (39,350
    )
    
    
    (48,349
    )
    
    
    450,850
    
    
    
    (2,592
    )
    
    
    (368
    )
    
    
    864,234
  3




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For the Nine Months EndedMarch 31,2007
    
    
    2006(In thousands)Cash flows from operating activities:Net income
    
    $
    19,365
    
    
    
    8,734Adjustments to reconcile net income to net cash provided by operating activities:Contribution of stock to charitable foundation
    
    
    
    
    
    
    15,488ESOP and stock-based compensation expense
    
    
    5,034
    
    
    
    1,502Amortization of premiums and accretion of discounts on securities, net
    
    
    1,228
    
    
    
    888Provision for loan losses
    
    
    525
    
    
    
    400Depreciation and amortization of office properties and equipment
    
    
    2,106
    
    
    
    2,199Loss on securities transactions, net
    
    
    3,666
    
    
    
    Mortgage loans originated for sale
    
    
    (35,225
    )
    
    
    (21,323
    )Proceeds from mortgage loan sales
    
    
    30,471
    
    
    
    22,360Gain on sales of mortgage loans, net
    
    
    (89
    )
    
    
    (232
    )Income on bank owned life insurance contract
    
    
    (2,629
    )
    
    
    (1,776
    )Increase in accrued interest receivable
    
    
    (2,819
    )
    
    
    (2,887
    )Deferred tax benefit
    
    
    (14,058
    )
    
    
    (2,280
    )Decrease in other assets
    
    
    147
    
    
    
    467Decrease in other liabilities
    
    
    (4,709
    )
    
    
    (3,393
    )Total adjustments
    
    
    (16,352
    )
    
    
    11,413Net cash provided by operating activities
    
    
    3,013
    
    
    
    20,147Cash flows from investing activities:Originations of loans
    
    
    (236,452
    )
    
    
    (317,936
    )Purchases of loans
    
    
    (499,061
    )
    
    
    (565,293
    )Principal payments on loans
    
    
    306,586
    
    
    
    259,908Purchases of mortgage-backed securities held-to-maturity
    
    
    (22,701
    )
    
    
    (39,458
    )Purchases of debt securities held-to-maturity
    
    
    (13,000
    )
    
    
    (344,484
    )Proceeds from paydowns/maturities on mortgage-backed
securities held-to-maturity
    
    
    214,761
    
    
    
    373,839Proceeds from calls/maturities on debt securities held-to-maturity
    
    
    2,063
    
    
    
    225,397Proceeds from paydowns/maturities on mortgage-backed
securities available-for-sale
    
    
    70,809
    
    
    
    101,666Proceeds from call of equity securities available-for-sale
    
    
    10,000
    
    
    
    Proceeds from sale of mortgage-backed securities held-to-maturity
    
    
    22,942
    
    
    
    Proceeds from sale of mortgage-backed securities available-for-sale
    
    
    161,112
    
    
    
    Proceeds from redemptions of Federal Home Loan Bank stock
    
    
    29,251
    
    
    
    62,807Purchases of Federal Home Loan Bank stock
    
    
    (16,650
    )
    
    
    (57,953
    )Purchases of office properties and equipment
    
    
    (1,396
    )
    
    
    (927
    )Net cash provided by (used in) investing
activities
    
    
    28,264
    
    
    
    (302,434
    )Cash flows from financing activities:Net increase in deposits
    
    
    282,066
    
    
    
    50,795Net proceeds from sale of common stock
    
    
    
    
    
    
    509,686Loan to ESOP
    
    
    
    
    
    
    (42,541
    )Net (decrease) increase in funds borrowed under short-term repurchase agreements
    
    
    (125,000
    )
    
    
    250,000Proceeds from funds borrowed under other repurchase agreements
    
    
    310,000
    
    
    
    Repayments of funds borrowed under other repurchase agreements
    
    
    (475,000
    )
    
    
    (515,000
    )Net increase (decrease) in Federal Home Loan Bank advances
    
    
    34,977
    
    
    
    (29,522
    )Net increase in advance payments by borrowers for taxes and insurance
    
    
    689
    
    
    
    2,079Purchase of treasury stock
    
    
    (74,082
    )
    
    
    Net cash (used in) provided by financing
activities
    
    
    (46,350
    )
    
    
    225,497Net decrease in cash and cash equivalents
    
    
    (15,073
    )
    
    
    (56,790
    )Cash and cash equivalents at beginning of period
    
    
    39,824
    
    
    
    81,329Cash and cash equivalents at end of period
    
    $
    24,751
    
    
    
    24,539Supplemental cash flow information:Cash paid during the period for:Interest
    
    
    143,168
    
    
    
    104,437Income taxes
    
    
    7,615
    
    
    
    5,022
  4




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 1. Basis of Presentation
    2. Bank Owned Life Insurance
    5




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##### Table of Contents



3. Earnings Per Share
  For the Three Months Ended March 31,2007
    
    2006Income
    
    
    Shares
    
    
    Per Share Amount
    
    
    Income
    
    
    Shares
    
    
    Per Share Amount(Dollars in thousands, except per share data)Net Income
    
    $
    2,994
    
    
    
    
    
    
    
    
    
    
    $
    7,712Basic earnings per share:Income attributable to common
stockholders
    
    $
    2,994
    
    
    
    111,138,908
    
    
    $
    0.03
    
    
    $
    7,712
    
    
    
    112,163,418
    
    
    $
    0.07Effect of dilutive common stock
equivalents
    
    
    
    
    
    
    79,466
    
    
    
    
    
    
    
    
    
    
    
    Diluted earnings per share:Income attributable to common
stockholders
    
    $
    2,994
    
    
    
    111,218,374
    
    
    $
    0.03
    
    
    $
    7,712
    
    
    
    112,163,418
    
    
    $
    0.07
 6




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##### Table of Contents



For the Nine Months Ended March 31,2007Income
    
    
    Shares
    
    
    Per Share Amount(Dollars in thousands, except per share data)Net Income
    
    $
    19,365Basic earnings per share:Income attributable to common
stockholders
    
    $
    19,365
    
    
    
    111,401,956
    
    
    $
    0.17Effect of dilutive common stock
equivalents
    
    
    
    
    
    
    4,969Diluted earnings per share:Income attributable to common
stockholders
    
    $
    19,365
    
    
    
    111,406,925
    
    
    $
    0.17
 4. Loans Receivable, Net
  March 31,
    
    
    June 30,2007
    
    
    2006(In thousands)Residential mortgage loans
    
    $
    3,008,022
    
    
    
    2,666,559Multi-family and commercial
    
    
    97,486
    
    
    
    76,976Construction loans
    
    
    114,816
    
    
    
    65,459Consumer and other loans
    
    
    154,337
    
    
    
    139,336Total loans
    
    
    3,374,661
    
    
    
    2,948,330Premiums on purchased loans
    
    
    22,647
    
    
    
    20,327Deferred loan fees, net
    
    
    (1,836
    )
    
    
    (1,734
    )Allowance for loan losses
    
    
    (6,726
    )
    
    
    (6,340
    )$
    3,388,746
    
    
    
    2,960,583
 5. Deposits
  March 31,
    
    
    June 30,2007
    
    
    2006(In thousands)Savings accounts
    
    $
    295,244
    
    
    
    226,245Checking accounts
    
    
    350,864
    
    
    
    349,014Money market accounts
    
    
    168,265
    
    
    
    212,200Total core deposits
    
    
    814,373
    
    
    
    787,459Certificates of deposit
    
    
    2,769,736
    
    
    
    2,514,584$
    3,584,109
    
    
    
    3,302,043
 7




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##### Table of Contents



6. Equity Incentive Plan
      8




---



##### Table of Contents



WeightedWeighted
    
    
    AverageNumber of
    
    
    Average
    
    
    Remaining
    
    
    AggregateStock
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Life
    
    
    ValueOutstanding at June 30, 2006
    
    
    
    
    
    
    Granted
    
    
    4,447,401
    
    
    $
    15.26Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at March 31, 2007
    
    
    4,447,401
    
    
    $
    15.26
    
    
    9.7 years
    
    $
    Exercisable at March 31, 2007
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A
  WeightedNumber of
    
    
    AverageStock
    
    
    Grant DateOptions
    
    
    Fair ValueNon-vested at June 30, 2006
    
    
    
    
    
    
    Granted
    
    
    4,447,401
    
    
    $
    4.17Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested at March 31, 2007
    
    
    4,447,401
    
    
    $
    4.17
   9




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##### Table of Contents



WeightedNumber of
    
    
    AverageShares
    
    
    Grant DateAwarded
    
    
    Fair ValueNon-vested at June 30, 2006
    
    
    
    
    
    
    Granted
    
    
    1,666,959
    
    
    $
    15.25Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested at March 31, 2007
    
    
    1,666,959
    
    
    $
    15.25
  7. Income Taxes
  10




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##### Table of Contents



For the NineMonths endedMarch 31, 2007(In thousands)Expected federal income tax
expense
    
    $
    3,922Change in valuation allowance for
deferred tax assets  Federal and State
    
    
    (10,717
    )Other State tax benefit, net
    
    
    (378
    )Bank owned life insurance
    
    
    (920
    )Dividend received deduction
    
    
    (336
    )Other
    
    
    270Total income tax benefit
    
    $
    (8,159
    )
 8. Net Periodic Benefit Plans Expense
    Three months ended March 31,SERP and Directors' Plan
    
    
    Other Benefits2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Service cost
    
    
    313
    
    
    
    345
    
    
    
    44
    
    
    
    49Interest cost
    
    
    240
    
    
    
    200
    
    
    
    132
    
    
    
    124Amortization of:Transition obligation
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    50Prior service cost
    
    
    47
    
    
    
    47
    
    
    
    
    
    
    
    Net loss
    
    
    40
    
    
    
    81
    
    
    
    
    
    
    
    24Total net periodic benefit expense
    
    $
    640
    
    
    
    673
    
    
    $
    226
    
    
    
    247
 11




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##### Table of Contents



Nine months ended March 31,SERP and Directors Plan
    
    
    Other Benefits2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Service cost
    
    
    940
    
    
    
    1,035
    
    
    
    131
    
    
    
    147Interest cost
    
    
    719
    
    
    
    601
    
    
    
    396
    
    
    
    373Amortization of:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Prior service cost
    
    
    141
    
    
    
    140
    
    
    
    151
    
    
    
    151Net loss
    
    
    119
    
    
    
    244
    
    
    
    
    
    
    
    70Total net periodic benefit expense
    
    $
    1,919
    
    
    
    2,020
    
    
    $
    678
    
    
    
    741
    9. Stock Repurchase Program
   10. Recent Accounting Pronouncements
  12




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##### Table of Contents



13




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
   Executive Summary
  14




---



##### Table of Contents



15




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##### Table of Contents



Net Loans Comparison of Financial Condition at March
31, 2007 and June 30, 2006.
 Comparison of Financial Condition at March 31, 2007 and June 30, 2006
 Total Assets .
 Securities.
     16




---



##### Table of Contents



Net Loans.
     17




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##### Table of Contents



Deferred Tax Asset.
 18




---



##### Table of Contents



Bank Owned Life Insurance, Stock in the Federal Home Loan Bank and Other Assets
 Deposits .
 Borrowed Funds .
 19




---



##### Table of Contents



Stockholders Equity .
  Average Balance Sheets for the Three and Nine Months ended March 31, 2007 and 2006
  20




---



##### Table of Contents



For Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest-earning assets:Due from banks
    
    $
    18,317
    
    
    $
    154
    
    
    
    3.36
    %
    
    $
    21,399
    
    
    $
    184
    
    
    
    3.44
    %Securities available-for-sale
    
    
    318,611
    
    
    
    3,643
    
    
    
    4.57
    %
    
    
    590,557
    
    
    
    6,309
    
    
    
    4.27
    %Securities held-to-maturity
    
    
    1,573,901
    
    
    
    18,835
    
    
    
    4.79
    %
    
    
    1,855,879
    
    
    
    21,475
    
    
    
    4.63
    %Net loans
    
    
    3,313,269
    
    
    
    45,868
    
    
    
    5.54
    %
    
    
    2,526,027
    
    
    
    33,177
    
    
    
    5.25
    %Stock in FHLB
    
    
    35,541
    
    
    
    798
    
    
    
    8.98
    %
    
    
    54,265
    
    
    
    756
    
    
    
    5.57
    %Total interest-earning assets
    
    
    5,259,639
    
    
    
    69,298
    
    
    
    5.27
    %
    
    
    5,048,127
    
    
    
    61,901
    
    
    
    4.90
    %Non-interest earning assets
    
    
    173,157
    
    
    
    
    
    
    
    
    
    
    
    136,258Total assets
    
    $
    5,432,796
    
    
    
    
    
    
    
    
    
    
    $
    5,184,385Interest-bearing liabilities:Savings
    
    $
    275,530
    
    
    
    1,306
    
    
    
    1.90
    %
    
    $
    242,607
    
    
    
    500
    
    
    
    0.82
    %Interest-bearing checking
    
    
    303,904
    
    
    
    1,817
    
    
    
    2.39
    %
    
    
    310,379
    
    
    
    1,562
    
    
    
    2.01
    %Money market accounts
    
    
    174,671
    
    
    
    856
    
    
    
    1.96
    %
    
    
    234,939
    
    
    
    770
    
    
    
    1.31
    %Certificates of deposit
    
    
    2,711,528
    
    
    
    31,694
    
    
    
    4.68
    %
    
    
    2,449,034
    
    
    
    21,511
    
    
    
    3.51
    %Borrowed funds
    
    
    1,003,698
    
    
    
    11,995
    
    
    
    4.78
    %
    
    
    1,000,433
    
    
    
    10,187
    
    
    
    4.07
    %Total interest-bearing liabilities
    
    
    4,469,331
    
    
    
    47,668
    
    
    
    4.27
    %
    
    
    4,237,392
    
    
    
    34,530
    
    
    
    3.26
    %Non-interest bearing liabilities
    
    
    83,284
    
    
    
    
    
    
    
    
    
    
    
    62,264Total liabilities
    
    
    4,552,615
    
    
    
    
    
    
    
    
    
    
    
    4,299,656Stockholders equity
    
    
    880,181
    
    
    
    
    
    
    
    
    
    
    
    884,729Total liabilities and stockholders equity
    
    $
    5,432,796
    
    
    
    
    
    
    
    
    
    
    $
    5,184,385Net interest income
    
    
    
    
    
    $
    21,630
    
    
    
    
    
    
    
    
    
    
    $
    27,371Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    1.00
    %
    
    
    
    
    
    
    
    
    
    
    1.64
    %Net interest earning assets
    
    $
    790,308
    
    
    
    
    
    
    
    
    
    
    $
    810,735Net interest margin
    
    
    
    
    
    
    
    
    
    
    1.64
    %
    
    
    
    
    
    
    
    
    
    
    2.17
    %Ratio of interest-earning assets to total interest-
bearing liabilities
    
    
    1.18X
    
    
    
    
    
    
    
    
    
    
    
    1.19X
 21




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##### Table of Contents



For Nine Months EndedMarch 31, 2007
    
    
    March 31, 2006Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest-earning assets:Due from banks
    
    $
    20,346
    
    
    $
    545
    
    
    
    3.57
    %
    
    $
    103,433
    
    
    $
    2,675
    
    
    
    3.45
    %Repurchase agreements
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    21,849
    
    
    
    613
    
    
    
    3.74
    %Securities available-for-sale
    
    
    441,337
    
    
    
    14,541
    
    
    
    4.39
    %
    
    
    624,285
    
    
    
    19,809
    
    
    
    4.23
    %Securities held-to-maturity
    
    
    1,650,542
    
    
    
    59,062
    
    
    
    4.77
    %
    
    
    1,974,576
    
    
    
    66,129
    
    
    
    4.47
    %Net loans
    
    
    3,204,120
    
    
    
    131,906
    
    
    
    5.49
    %
    
    
    2,310,207
    
    
    
    89,553
    
    
    
    5.17
    %Stock in FHLB
    
    
    42,903
    
    
    
    2,248
    
    
    
    6.99
    %
    
    
    56,909
    
    
    
    2,247
    
    
    
    5.26
    %Total interest-earning assets
    
    
    5,359,248
    
    
    
    208,302
    
    
    
    5.18
    %
    
    
    5,091,259
    
    
    
    181,026
    
    
    
    4.74
    %Non-interest earning assets
    
    
    159,065
    
    
    
    
    
    
    
    
    
    
    
    135,903Total assets
    
    $
    5,518,313
    
    
    
    
    
    
    
    
    
    
    $
    5,227,162Interest-bearing liabilities:Savings
    
    $
    247,467
    
    
    $
    2,740
    
    
    
    1.48
    %
    
    $
    363,670
    
    
    
    2,335
    
    
    
    0.86
    %Interest-bearing checking
    
    
    303,209
    
    
    
    5,452
    
    
    
    2.40
    %
    
    
    301,786
    
    
    
    4,206
    
    
    
    1.86
    %Money market accounts
    
    
    189,401
    
    
    
    2,658
    
    
    
    1.87
    %
    
    
    269,985
    
    
    
    2,697
    
    
    
    1.33
    %Certificates of deposit
    
    
    2,633,313
    
    
    
    89,617
    
    
    
    4.54
    %
    
    
    2,418,144
    
    
    
    59,876
    
    
    
    3.30
    %Borrowed funds
    
    
    1,165,815
    
    
    
    42,744
    
    
    
    4.89
    %
    
    
    1,108,272
    
    
    
    32,246
    
    
    
    3.88
    %Total interest-bearing liabilities
    
    
    4,539,205
    
    
    
    143,211
    
    
    
    4.21
    %
    
    
    4,461,857
    
    
    
    101,360
    
    
    
    3.03
    %Non-interest bearing liabilities
    
    
    83,321
    
    
    
    
    
    
    
    
    
    
    
    60,610Total liabilities
    
    
    4,622,526
    
    
    
    
    
    
    
    
    
    
    
    4,522,467Stockholders equity
    
    
    895,787
    
    
    
    
    
    
    
    
    
    
    
    704,695Total liabilities and stockholders equity
    
    $
    5,518,313
    
    
    
    
    
    
    
    
    
    
    $
    5,227,162Net interest income
    
    
    
    
    
    $
    65,091
    
    
    
    
    
    
    
    
    
    
    $
    79,666Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    0.97
    %
    
    
    
    
    
    
    
    
    
    
    1.71
    %Net interest earning assets
    
    $
    820,043
    
    
    
    
    
    
    
    
    
    
    $
    629,402Net interest margin
    
    
    
    
    
    
    
    
    
    
    1.62
    %
    
    
    
    
    
    
    
    
    
    
    2.09
    %Ratio of interest-earning assets to total interest-
bearing liabilities
    
    
    1.18X
    
    
    
    
    
    
    
    
    
    
    
    1.14X
 Comparison of Operating Results for the Three Months Ended March 31, 2007 and 2006
 Net Income .
 Net Interest Income .
 22




---



##### Table of Contents



Interest and Dividend Income .
   Interest Expense.
   23




---



##### Table of Contents



Provision for Loan Losses. Comparison of Financial
Condition at March 31, 2007 and June 30, 2006.
 Non-Interest Income . Notes to Consolidated Financial Statements, Note 2 Bank Owned Life Insurance
 Non-Interest Expense .
 Income Taxes.
 Comparison of Operating Results for the Nine Months Ended March 31, 2007 and 2006
 Net Income .
 Net Interest Income .
 24




---



##### Table of Contents



Interest and Dividend Income.
   Interest Expense.
   Provision for Loan Losses.
 25




---



##### Table of Contents



Comparison of Financial Condition at March 31, 2007 and June 30,
2006
 Non-Interest Income. Comparison of Financial
Condition at March 31, 2007 and June 30, 2006
 Non-Interest Expense .
 Income Taxes. Comparison of Financial
Condition at March 31, 2007 and June 30, 2006.
 Liquidity and Capital Resources
   26




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##### Table of Contents



As of March 31, 2007Actual
    
    RequiredAmount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital (to risk-weighted assets)
    
    $
    689,816
    
    
    
    25.9
    %
    
    $
    213,123
    
    
    
    8.0
    %Tier I capital (to risk-weighted assets)
    
    
    683,090
    
    
    
    25.6
    
    
    
    106,562
    
    
    
    4.0Tier I capital (to average assets)
    
    
    683,090
    
    
    
    12.6
    
    
    
    217,138
    
    
    
    4.0
 Critical Accounting Policies
  Allowance for Loan Losses.
 27




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##### Table of Contents



28




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##### Table of Contents



Deferred Income Taxes.
 Asset Impairment Judgments.
 29




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Qualitative Analysis
   30




---



##### Table of Contents



Quantitative Analysis
 Net Portfolio Value (1),(2)
    
    
    Net Interest Income (3)Increase (Decrease) in EstimatedEstimated Increase (Decrease)
    
    
    
    
    
    
    Net Interest IncomeChange inInterest Rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimated Net(basis points)
    
    Estimated NPV
    
    
    Amount
    
    
    Percent
    
    
    Interest Income
    
    
    Amount
    
    
    Percent(Dollars in thousands)+200bp
    
    
    612,194
    
    
    
    (240,706
    )
    
    
    (28.22
    )%
    
    
    76,854
    
    
    
    (5,732
    )
    
    
    (6.94
    )%0bp
    
    
    852,900
    
    
    
    
    
    
    
    
    
    
    
    82,586
    
    
    
    
    
    
    
    -200bp
    
    
    873,093
    
    
    
    20,196
    
    
    
    2.37
    %
    
    
    89,050
    
    
    
    6,464
    
    
    
    7.83
    %
 (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
  31




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##### Table of Contents



Item 4. Controls and Procedures
   
 Part II  Other Information
 
 Item 1. Legal Proceedings
  32




---



##### Table of Contents



Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    
    Maximum NumberShares Purchased as
    
    
    of Shares that MayTotal Number of
    
    
    
    
    
    
    Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Average price
    
    
    Announced Plans or
    
    
    Under the Plans orPeriod
    
    Purchased (1)
    
    
    Paid per Share
    
    
    Programs
    
    
    ProgramsJanuary 1, 2007 through January 31, 2007
    
    
    745,000
    
    
    
    15.61
    
    
    
    745,000
    
    
    
    2,600,002February 1, 2007 through February 28, 2007
    
    
    586,307
    
    
    
    15.55
    
    
    
    586,307
    
    
    
    2,013,695March 1, 2007 through March 31, 2007
    
    
    1,552,400
    
    
    
    14.71
    
    
    
    1,552,400
    
    
    
    461,295Total
    
    
    2,883,707
    
    
    
    15.11
    
    
    
    2,883,707
   
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  3.1
    
    
    Certificate of Incorporation of Investors Bancorp, Inc.*
 33




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##### Table of Contents



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 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
 
 *
    
    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) 34




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##### Table of Contents



SIGNATURES
  Investors Bancorp, Inc.Dated:           May 10, 2007
    /s/ Robert M. CashillRobert M. CashillPresident and Chief Executive Officer
(Principal Executive Officer)Dated: May 10, 2007
    /s/ Domenick A. CamaDomenick A. CamaExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 35