##### 



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: March 31, 2006
 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 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, 2006
(unaudited) and June 30, 2005
    
    
    1Consolidated Statements of Operations for the Three and
Nine Months Ended March 31, 2006 and 2005 (unaudited)
    
    
    2Consolidated Statements of Stockholders Equity for
the Nine Months Ended March 31, 2006 and 2005 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Nine Months
Ended March 31, 2006 and 2005 (unaudited)
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    7Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4.
    
    Controls and Procedures
    
    
    26Part II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    26Item 1A.
    
    Risk Factors
    
    
    26Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3.
    
    Defaults upon Senior Securities
    
    
    27Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    27Item 5.
    
    Other Information
    
    
    27Item 6.
    
    Exhibits
    
    
    27Signature Page
    
    
    29




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##### 



Part I. Financial Information
 Item 1. Financial Statements
 INVESTORS BANCORP, INC. AND SUBSIDIARY
 March 31,
    
    
    June 30,2006
    
    
    2005(In thousands)AssetsCash and cash equivalents
    
    $
    24,539
    
    
    
    81,329Securities available-for-sale, at estimated fair value
    
    
    559,128
    
    
    
    673,951Securities held-to-maturity, net (estimated fair value of
$1,769,073 and $2,032,939 at March 31, 2006
and June 30, 2005, respectively)
    
    
    1,824,780
    
    
    
    2,040,882Loans receivable, net
    
    
    2,616,825
    
    
    
    1,993,904Loans held-for-sale
    
    
    2,607
    
    
    
    3,412Stock in the Federal Home Loan Bank
    
    
    55,834
    
    
    
    60,688Accrued interest receivable
    
    
    21,150
    
    
    
    18,263Office properties and equipment, net
    
    
    28,272
    
    
    
    29,544Net deferred tax asset
    
    
    20,765
    
    
    
    13,128Bank owned life insurance contract
    
    
    78,005
    
    
    
    76,229Other assets
    
    
    956
    
    
    
    1,423Total assets
    
    $
    5,232,861
    
    
    
    4,992,753Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    3,291,215
    
    
    
    3,240,420Borrowed funds
    
    
    1,019,247
    
    
    
    1,313,769Advance payments by borrowers for taxes and insurance
    
    
    12,896
    
    
    
    10,817Other liabilities
    
    
    16,527
    
    
    
    19,920Total liabilities
    
    
    4,339,885
    
    
    
    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 March 31, 2006,
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
    
    
    419,953
    
    
    
    411,219Accumulated other comprehensive loss:Net unrealized loss on securities available for sale, net of tax
    
    
    (10,036
    )
    
    
    (2,316
    )Minimum pension liability, net of tax
    
    
    (1,101
    )
    
    
    (1,101
    )(11,137
    )
    
    
    (3,417
    )Total stockholders equity
    
    
    892,976
    
    
    
    407,827Total liabilities and stockholders equity
    
    $
    5,232,861
    
    
    
    4,992,753
  1




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##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For the Three Months
    
    
    For the Nine MonthsEnded March 31,
    
    
    Ended March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands, except per share data)Interest and dividend income:Loans receivable and loans held-for-sale
    
    $
    33,177
    
    
    
    19,604
    
    
    
    89,554
    
    
    
    53,524Securities:Government-sponsored enterprise obligations
    
    
    1,341
    
    
    
    1,466
    
    
    
    5,505
    
    
    
    4,155Mortgage-backed securities
    
    
    23,878
    
    
    
    35,120
    
    
    
    74,542
    
    
    
    109,085Equity securities available-for-sale
    
    
    460
    
    
    
    464
    
    
    
    1,370
    
    
    
    1,302Municipal bonds and other debt
    
    
    2,105
    
    
    
    344
    
    
    
    4,520
    
    
    
    994Interest-bearing deposits
    
    
    184
    
    
    
    149
    
    
    
    2,675
    
    
    
    343Repurchase agreements
    
    
    
    
    
    
    
    
    
    
    613
    
    
    
    Federal Home Loan Bank stock
    
    
    756
    
    
    
    577
    
    
    
    2,247
    
    
    
    1,463Total interest and dividend income
    
    
    61,901
    
    
    
    57,724
    
    
    
    181,026
    
    
    
    170,866Interest expense:Deposits
    
    
    24,343
    
    
    
    17,551
    
    
    
    69,114
    
    
    
    50,831Secured borrowings
    
    
    10,187
    
    
    
    14,982
    
    
    
    32,246
    
    
    
    45,683Total interest expense
    
    
    34,530
    
    
    
    32,533
    
    
    
    101,360
    
    
    
    96,514Net interest income
    
    
    27,371
    
    
    
    25,191
    
    
    
    79,666
    
    
    
    74,352Provision for loan losses
    
    
    200
    
    
    
    200
    
    
    
    400
    
    
    
    400Net interest income after provision
for loan losses
    
    
    27,171
    
    
    
    24,991
    
    
    
    79,266
    
    
    
    73,952Other income (loss):Fees and service charges
    
    
    598
    
    
    
    559
    
    
    
    1,886
    
    
    
    1,778Increase (decrease) in and death benefits on bank owned
life insurance contract
    
    
    646
    
    
    
    (361
    )
    
    
    1,776
    
    
    
    4,333Gain on sales of mortgage loans, net
    
    
    93
    
    
    
    136
    
    
    
    232
    
    
    
    382Loss on securities transactions, net
    
    
    
    
    
    
    (10,352
    )
    
    
    
    
    
    
    (9,750
    )Gain on sale of other real estate owned, net
    
    
    
    
    
    
    7
    
    
    
    5
    
    
    
    12Other income
    
    
    21
    
    
    
    59
    
    
    
    62
    
    
    
    176Total other income (loss)
    
    
    1,358
    
    
    
    (9,952
    )
    
    
    3,961
    
    
    
    (3,069
    )Operating expenses:Compensation and fringe benefits
    
    
    10,696
    
    
    
    9,282
    
    
    
    31,323
    
    
    
    26,693Advertising and promotional expense
    
    
    666
    
    
    
    701
    
    
    
    1,752
    
    
    
    2,161Office occupancy and equipment expense
    
    
    2,528
    
    
    
    2,605
    
    
    
    7,797
    
    
    
    7,332Federal insurance premiums
    
    
    141
    
    
    
    117
    
    
    
    359
    
    
    
    354Stationery, printing, supplies and telephone
    
    
    419
    
    
    
    361
    
    
    
    1,327
    
    
    
    1,323Legal, audit, accounting, and supervisory examination fees
    
    
    384
    
    
    
    309
    
    
    
    1,183
    
    
    
    981Data processing service fees
    
    
    910
    
    
    
    852
    
    
    
    2,726
    
    
    
    2,584Amortization of premium on deposit acquisition
    
    
    
    
    
    
    130
    
    
    
    
    
    
    
    1,102Loss on early extinguishment of debt
    
    
    
    
    
    
    43,616
    
    
    
    
    
    
    
    43,616Contribution to charitable foundation
    
    
    
    
    
    
    
    
    
    
    20,651
    
    
    
    Other operating expenses
    
    
    1,113
    
    
    
    792
    
    
    
    2,900
    
    
    
    2,177Total operating expenses
    
    
    16,857
    
    
    
    58,765
    
    
    
    70,018
    
    
    
    88,323Income (loss) before income tax expense (benefit)
    
    
    11,672
    
    
    
    (43,726
    )
    
    
    13,209
    
    
    
    (17,440
    )Income tax expense (benefit)
    
    
    3,960
    
    
    
    (14,770
    )
    
    
    4,475
    
    
    
    (7,299
    )Net income (loss)
    
    $
    7,712
    
    
    
    (28,956
    )
    
    
    8,734
    
    
    
    (10,141
    )Earnings per share  basic and diluted
    
    $
    0.07
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aWeighted average shares outstanding  basic and diluted
    
    
    112,163,418
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
  2




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##### 



INVESTORS BANCORP, INC.
 Accumulated othercomprehensive lossAdditional
    
    
    Unallocated
    
    
    
    
    
    
    Unrealized
    
    
    Minimum
    
    
    TotalCommon
    
    
    paid-in
    
    
    common stock
    
    
    Retained
    
    
    losses on
    
    
    pension
    
    
    stockholdersstock
    
    
    capital
    
    
    Held by ESOP
    
    
    earnings
    
    
    securities
    
    
    liability
    
    
    equity(In thousands)Balance at June 30, 2004
    
    $
    
    
    
    
    25
    
    
    
    
    
    
    
    414,361
    
    
    
    (11,968
    )
    
    
    (755
    )
    
    
    401,663Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,141
    )
    
    
    
    
    
    
    
    
    
    
    (10,141
    )Unrealized loss on securities available-
for-sale, net of tax benefit of $214
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (383
    )
    
    
    
    
    
    
    (383
    )Reclassification adjustment for losses
included in net income, net of tax
of $3,885
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,778
    
    
    
    
    
    
    
    6,778Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,746
    )Balance at March 31, 2005
    
    $
    
    
    
    
    25
    
    
    
    
    
    
    
    404,220
    
    
    
    (5,573
    )
    
    
    (755
    )
    
    
    397,917Balance 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
    )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
    )
    
    
    892,976
  3




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##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For the Nine MonthsEnded March 31,2006
    
    
    2005(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    8,734
    
    
    
    (10,141
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Contribution of stock to charitable foundation
    
    
    15,488
    
    
    
    Allocation of ESOP shares
    
    
    1,502
    
    
    
    Amortization of premiums and accretion of discounts on securities, net
    
    
    888
    
    
    
    10,160Amortization of premium on deposit acquisition
    
    
    
    
    
    
    1,102Provision for loan losses
    
    
    400
    
    
    
    400Depreciation and amortization of office properties and equipment
    
    
    2,199
    
    
    
    2,279Loss on securities transactions, net
    
    
    
    
    
    
    9,750Loss on early extinguishment of debt
    
    
    
    
    
    
    43,616Mortgage loans originated for sale
    
    
    (21,323
    )
    
    
    (44,923
    )Proceeds from mortgage loan sales
    
    
    22,360
    
    
    
    42,862Gain on sales of mortgage loans, net
    
    
    (232
    )
    
    
    (382
    )Proceed from sales of other real estate ownd
    
    
    5
    
    
    
    166Net gain on sales of other real estate owned
    
    
    (5
    )
    
    
    (12
    )Death benefits on bank owned life insurance contract
    
    
    
    
    
    
    (2,732
    )Increase in bank owned life insurance contract
    
    
    (1,776
    )
    
    
    (1,601
    )(Increase) decrease in accrued interest
    
    
    (2,887
    )
    
    
    4,018Deferred tax benefit
    
    
    (2,280
    )
    
    
    (2,201
    )Decrease (increase) in other assets
    
    
    467
    
    
    
    (3,264
    )Decrease in other liabilities
    
    
    (3,393
    )
    
    
    (21,281
    )Total adjustments
    
    
    11,413
    
    
    
    37,957Net cash provided by operating activities
    
    
    20,147
    
    
    
    27,816Cash flows from investing activities:Net increase in loans receivable
    
    
    (623,321
    )
    
    
    (558,743
    )Purchases of mortgage-backed securities held-to-maturity
    
    
    (39,458
    )
    
    
    (260,782
    )Purchases of debt securities held-to-maturity
    
    
    (344,484
    )
    
    
    (17,000
    )Purchases of mortgage-backed securities available-for-sale
    
    
    
    
    
    
    (62,175
    )Proceeds from paydowns/maturities on mortgage-backed
securities held-to-maturity
    
    
    373,839
    
    
    
    515,154Proceeds from calls/maturities on debt securities held-to-maturity
    
    
    225,397
    
    
    
    25,328Proceeds from paydowns/maturities on mortgage-backed
securities available-for-sale
    
    
    101,666
    
    
    
    204,539Proceeds from sales of mortgage-backed securities held-to-maturity
    
    
    
    
    
    
    46,942Proceeds from sales of mortgage-backed securities available-for-sale
    
    
    
    
    
    
    470,828Proceeds from sale of equity securities available-for-sale
    
    
    
    
    
    
    20,729Proceeds from redemptions of Federal Home Loan Bank stock
    
    
    62,807
    
    
    
    74,776Purchases of Federal Home Loan Bank stock
    
    
    (57,953
    )
    
    
    (47,500
    )Purchases of office properties and equipment
    
    
    (927
    )
    
    
    (5,980
    )Proceeds from death benefits on bank owned life insurance contract
    
    
    
    
    
    
    3,291Net cash (used in) provided by investing activities
    
    
    (302,434
    )
    
    
    409,407Cash flows from financing activities:Net increase in deposits
    
    
    50,795
    
    
    
    6,502Net proceeds from sale of common stock
    
    
    509,686
    
    
    
    Loan to ESOP
    
    
    (42,541
    )
    
    
    Net increase in funds borrowed under short-term repurchase agreements
    
    
    250,000
    
    
    
    55,000Proceeds from funds borrowed under other repurchase agreements
    
    
    
    
    
    
    420,000Repayments of funds borrowed under other repurchase agreements
    
    
    (515,000
    )
    
    
    (947,616
    )(Repayments of) proceeds from Federal Home Loan Bank advances
    
    
    (29,522
    )
    
    
    18,478Net increase in advance payments by borrowers for taxes and insurance
    
    
    2,079
    
    
    
    2,004Net cash provided by (used in) financing activities
    
    
    225,497
    
    
    
    (445,632
    )Net decrease in cash and cash equivalents
    
    
    (56,790
    )
    
    
    (8,409
    )Cash and cash equivalents at beginning of period
    
    
    81,329
    
    
    
    37,653Cash and cash equivalents at end of period
    
    $
    24,539
    
    
    
    29,244Supplemental cash flow information:Noncash investing activities:Real estate acquired through foreclosure
    
    $
    
    
    
    
    123Cash paid during the period for:Interest
    
    
    104,437
    
    
    
    96,514Income taxes
    
    
    5,022
    
    
    
    15,700
  4




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##### 



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 nine-month
periods ended March 31, 2006 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 its
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 PronouncementsFinancial Accounting Standards Board (FASB) 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
 5




---



##### 



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 determinations
(principally Statement of Financial Accounting Standards (SFAS) 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 application of the FSP did not have a material
impact on our financial condition or results of operations.In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instruments-an amendment of FASB statements No. 133 and 140. This statement permits fair
value remeasurement of certain hybrid financial instruments, clarifies the scope of SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities regarding interest-only
and principal-only strips, and provides further guidance on certain issues regarding
beneficial interests in securitized financial assets, concentrations of credit risk and
qualifying special purpose entities. SFAS No. 155 is effective as of the beginning of the
fiscal year that begins after September 15, 2006. The application of SFAS No. 155 is not
expected to have an impact on our financial condition or results of operations.In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets-an
amendment of FASB Statement No. 140. This statement requires an entity to recognize a
servicing asset or servicing liability each time it undertakes an obligation to service a
financial asset, and that the servicing assets and servicing liabilities be initially measured
at fair value. The statement also permits an entity to choose a subsequent measurement method
for each class of separately recognized servicing assets and servicing liabilities. SFAS No.
156 is effective as of the beginning of the fiscal year that begins after September 15, 2006.
The application of SFAS No. 156 is not expected to have a material impact on our financial
condition or results of operations.4.
    
    Earnings Per ShareThe Company completed its initial public stock offering on October 11, 2005. Basic and
diluted earnings per common share for the three months ended March 31, 2006 were $0.07,
calculated using the weighted average common shares of 112,163,418 for the period. The number
of shares for this purpose includes shares issued to Investors Bancorp, MHC but excludes
unallocated ESOP shares.
 6




---



##### 



5.
    
    Loans Receivable, NetLoans receivable, net are summarized as follows:
 March 31,
    
    
    June 30,2006
    
    
    2005(In thousands)Residential mortgage loans
    
    $
    2,400,234
    
    
    
    1,881,079Multi-family and commercial
    
    
    42,366
    
    
    
    17,181Construction loans
    
    
    41,692
    
    
    
    6,465Consumer and other loans
    
    
    121,673
    
    
    
    81,641Total loans
    
    
    2,605,965
    
    
    
    1,986,366Premiums on purchased loans
    
    
    18,460
    
    
    
    14,113Deferred loan fees, net
    
    
    (1,429
    )
    
    
    (881
    )Allowance for loan losses
    
    
    (6,171
    )
    
    
    (5,694
    )$
    2,616,825
    
    
    
    1,993,904
 6.
    
    DepositsDeposits are summarized as follows:
 March 31,
    
    
    June 30,2006
    
    
    2005(In thousands)Savings acounts
    
    $
    239,285
    
    
    
    271,071Checking accounts
    
    
    343,480
    
    
    
    277,317Money market accounts
    
    
    219,191
    
    
    
    318,432Total core deposits
    
    
    801,956
    
    
    
    866,820Certificates of deposit
    
    
    2,489,259
    
    
    
    2,373,600$
    3,291,215
    
    
    
    3,240,420
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
  7




---



##### 



Executive Summary
    8




---



##### 



Comparison of Financial Condition at March 31, 2006 and June 30, 2005
 Total Assets .
 Cash and Cash Equivalents.
 9




---



##### 



Securities.
 Net Loans.
    10




---



##### 



Stock in the Federal Home Loan Bank and Other Assets.
 Deposits .
 Borrowed Funds .
 Other Liabilities.
 Stockholders Equity .
 Average Balance Sheets for the Three and Nine Months ended March 31, 2006 and 2005
  11




---



##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For Three Months EndedMarch 31, 2006
    
    
    March 31, 2005Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest-earning assets:Due from banks
    
    $
    21,399
    
    
    $
    184
    
    
    
    3.44
    %
    
    $
    16,850
    
    
    $
    149
    
    
    
    3.54
    %Securities available-for-sale
    
    
    590,557
    
    
    
    6,309
    
    
    
    4.27
    %
    
    
    1,232,448
    
    
    
    12,310
    
    
    
    4.00
    %Securities held-to-maturity
    
    
    1,855,879
    
    
    
    21,475
    
    
    
    4.63
    %
    
    
    2,307,974
    
    
    
    25,084
    
    
    
    4.35
    %Net loans
    
    
    2,526,027
    
    
    
    33,177
    
    
    
    5.25
    %
    
    
    1,554,336
    
    
    
    19,604
    
    
    
    5.04
    %Stock in FHLB
    
    
    54,265
    
    
    
    756
    
    
    
    5.57
    %
    
    
    74,592
    
    
    
    577
    
    
    
    3.09
    %Total interest-earning assets
    
    
    5,048,127
    
    
    
    61,901
    
    
    
    4.90
    %
    
    
    5,186,200
    
    
    
    57,724
    
    
    
    4.45
    %Non-interest earning assets
    
    
    136,258
    
    
    
    
    
    
    
    
    
    
    
    139,669Total assets
    
    $
    5,184,385
    
    
    
    
    
    
    
    
    
    
    $
    5,325,869Interest-bearing liabilities:Savings
    
    $
    242,607
    
    
    
    500
    
    
    
    0.82
    %
    
    $
    277,876
    
    
    
    575
    
    
    
    0.83
    %Interest-bearing checking
    
    
    310,379
    
    
    
    1,562
    
    
    
    2.01
    %
    
    
    212,009
    
    
    
    588
    
    
    
    1.11
    %Money market accounts
    
    
    234,939
    
    
    
    770
    
    
    
    1.31
    %
    
    
    371,839
    
    
    
    1,221
    
    
    
    1.31
    %Certificates of deposit
    
    
    2,449,034
    
    
    
    21,511
    
    
    
    3.51
    %
    
    
    2,384,017
    
    
    
    15,167
    
    
    
    2.54
    %Borrowed funds
    
    
    1,000,433
    
    
    
    10,187
    
    
    
    4.07
    %
    
    
    1,595,646
    
    
    
    14,982
    
    
    
    3.76
    %Total interest-bearing liabilities
    
    
    4,237,392
    
    
    
    34,530
    
    
    
    3.26
    %
    
    
    4,841,387
    
    
    
    32,533
    
    
    
    2.69
    %Non-interest bearing liabilities
    
    
    62,264
    
    
    
    
    
    
    
    
    
    
    
    79,111Total liabilities
    
    
    4,299,656
    
    
    
    
    
    
    
    
    
    
    
    4,920,498Stockholders equity
    
    
    884,729
    
    
    
    
    
    
    
    
    
    
    
    405,371Total liabilities and stockholders equity
    
    $
    5,184,385
    
    
    
    
    
    
    
    
    
    
    $
    5,325,869Net interest income
    
    
    
    
    
    $
    27,371
    
    
    
    
    
    
    
    
    
    
    $
    25,191Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    1.64
    %
    
    
    
    
    
    
    
    
    
    
    1.76
    %Net interest earning assets
    
    $
    810,735
    
    
    
    
    
    
    
    
    
    
    $
    344,813Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.17
    %
    
    
    
    
    
    
    
    
    
    
    1.94
    %Ratio of interest-earning assets to total interest-
bearing liabilities
    
    
    1.19
    X
    
    
    
    
    
    
    
    
    
    
    1.07
    X
 12




---



##### 



INVESTORS BANCORP, INC. AND SUBSIDIARY
 For Nine Months EndedMarch 31, 2006
    
    
    March 31, 2005Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest-earning assets:Due from banks
    
    $
    103,433
    
    
    $
    2,675
    
    
    
    3.45
    %
    
    $
    20,916
    
    
    $
    343
    
    
    
    2.19
    %Repurchase agreements
    
    
    21,849
    
    
    
    613
    
    
    
    3.74
    %
    
    
    
    
    
    
    
    
    
    
    Securities available-for-sale
    
    
    624,285
    
    
    
    19,809
    
    
    
    4.23
    %
    
    
    1,326,722
    
    
    
    39,160
    
    
    
    3.94
    %Securities held-to-maturity
    
    
    1,974,576
    
    
    
    66,129
    
    
    
    4.47
    %
    
    
    2,344,685
    
    
    
    76,376
    
    
    
    4.34
    %Net loans
    
    
    2,310,207
    
    
    
    89,553
    
    
    
    5.17
    %
    
    
    1,401,132
    
    
    
    53,524
    
    
    
    5.09
    %Stock in FHLB
    
    
    56,909
    
    
    
    2,247
    
    
    
    5.26
    %
    
    
    77,057
    
    
    
    1,463
    
    
    
    2.53
    %Total interest-earning assets
    
    
    5,091,259
    
    
    
    181,026
    
    
    
    4.74
    %
    
    
    5,170,512
    
    
    
    170,866
    
    
    
    4.41
    %Non-interest earning assets
    
    
    135,903
    
    
    
    
    
    
    
    
    
    
    
    142,084Total assets
    
    $
    5,227,162
    
    
    
    
    
    
    
    
    
    
    $
    5,312,596Interest-bearing liabilities:Savings
    
    $
    363,670
    
    
    
    2,335
    
    
    
    0.86
    %
    
    $
    281,437
    
    
    
    1,773
    
    
    
    0.84
    %Interest-bearing checking
    
    
    301,786
    
    
    
    4,206
    
    
    
    1.86
    %
    
    
    213,820
    
    
    
    1,799
    
    
    
    1.12
    %Money market accounts
    
    
    269,985
    
    
    
    2,697
    
    
    
    1.33
    %
    
    
    394,484
    
    
    
    3,949
    
    
    
    1.33
    %Certificates of deposit
    
    
    2,418,144
    
    
    
    59,876
    
    
    
    3.30
    %
    
    
    2,358,996
    
    
    
    43,310
    
    
    
    2.45
    %Borrowed funds
    
    
    1,108,272
    
    
    
    32,246
    
    
    
    3.88
    %
    
    
    1,579,222
    
    
    
    45,683
    
    
    
    3.86
    %Total interest-bearing liabilities
    
    
    4,461,857
    
    
    
    101,360
    
    
    
    3.03
    %
    
    
    4,827,959
    
    
    
    96,514
    
    
    
    2.67
    %Non-interest bearing liabilities
    
    
    60,610
    
    
    
    
    
    
    
    
    
    
    
    75,674Total liabilities
    
    
    4,522,467
    
    
    
    
    
    
    
    
    
    
    
    4,903,633Stockholders equity
    
    
    704,695
    
    
    
    
    
    
    
    
    
    
    
    408,963Total liabilities and stockholders equity
    
    $
    5,227,162
    
    
    
    
    
    
    
    
    
    
    $
    5,312,596Net interest income
    
    
    
    
    
    $
    79,666
    
    
    
    
    
    
    
    
    
    
    $
    74,352Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    1.71
    %
    
    
    
    
    
    
    
    
    
    
    1.74
    %Net interest earning assets
    
    $
    629,402
    
    
    
    
    
    
    
    
    
    
    $
    342,553Net interest margin
    
    
    
    
    
    
    
    
    
    
    2.09
    %
    
    
    
    
    
    
    
    
    
    
    1.92
    %Ratio of interest-earning assets to total interest-
bearing liabilities
    
    
    1.14
    X
    
    
    
    
    
    
    
    
    
    
    1.07
    X
 13




---



##### 



Comparison of Operating Results for the Three Months Ended March 31, 2006 and 2005
 Net Income .
 Net Interest Income .
 Interest and Dividend Income .
   14




---



##### 



Interest Expense.
   15




---



##### 



Provision for Loan Losses.
 Other Income (Loss) .
 Operating Expenses .
 Income Taxes.
 Comparison of Operating Results for the Nine Months Ended March 31, 2006 and 2005
 Net Income .
 16




---



##### 



Net Interest Income .
 Interest and Dividend Income.
   Interest Expense.
 17




---



##### 



Provision for Loan Losses
 18




---



##### 



Other Income (Loss) .
 Operating Expenses.
 Income Taxes.
 Liquidity and Capital Resources
  19




---



##### 



As of March 31, 2006Actual
    
    RequiredAmount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital (to risk-weighted assets)
    
    $
    658,008
    
    
    
    28.5
    %
    
    $
    184,783
    
    
    
    8.0
    %Tier I capital (to risk-weighted assets)
    
    
    651,837
    
    
    
    28.2
    
    
    
    92,392
    
    
    
    4.0Tier I capital (to average assets)
    
    
    651,837
    
    
    
    12.5
    
    
    
    207,950
    
    
    
    4.0
 Critical Accounting Policies
  20




---



##### 



Allowance for Loan Losses.
     21




---



##### 



Deferred Income Taxes.
 22




---



##### 



Asset Impairment Judgments.
  Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Qualitative Analysis
  23




---



##### 



24




---



##### 



Quantitative Analysis
 Net Portfolio Value (2)
    
    Net Interest IncomeIncrease (Decrease) in EstimatedEstimated Increase (Decrease)
    
    
    
    
    
    Net Interest IncomeChange in
    
    
    
    
    
    
    
    
    
    
    
    
    
    Estimated NetInterest Rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest(basis points) (1)
    
    Estimated NPV
    
    Amount
    
    Percent
    
    Income(3)
    
    Amount
    
    Percent(Dollars in thousands)+200bp
    
    $
    603,528
    
    
    
    282,431
    
    
    
    -31.88
    %
    
    $
    85,564
    
    
    
    -13,244
    
    
    
    -13.36
    %0bp
    
    
    885,959
    
    
    
    
    
    
    
    
    
    
    
    98,808
    
    
    
    
    
    
    
    -200bp
    
    
    1,030,453
    
    
    
    144,494
    
    
    
    16.31
    %
    
    
    112,006
    
    
    
    13,198
    
    
    
    13.40
    %
 
 (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.   25




---



##### 



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
 (a)
    
    There were no sales of unregistered securities during the period covered by the Report.(b)
    
    In connection with its plan of stock issuance, the Company registered 53,175,907 shares of
common stock, par value $0.01 per share, on a Registration Statement on Form S-1 (File Number
333-125703). The registration statement was declared effective by the Securities and Exchange
Commission on August 12, 2005. The stock offering commenced on August 19, 2005 and was
completed on September 12, 2005. On October 12, 2005, the Common stock began trading on the
Nasdaq National Market under the symbol ISBC.The stock offering resulted in gross proceeds of $516,270,940, with the sale of 51,627,094
shares at a price of $10.00 per share. Expenses related to the offering were $6,584,000,
including the fee paid to Sandler ONeill & Partners, L.P.
 26




---



##### 



Net proceeds of the offering were $509.7 million. Approximately $254.7 million of the net
proceeds of the offering were retained by the Company and $255.0 million were contributed to
the Bank. The Company loaned $42.5 million to the Banks employee stock ownership plan to
enable it to purchase 4,254,072 shares of common stock in the stock offering. The remainder
of the net proceeds were temporarily invested in short term liquid investments and
interest-bearing accounts.(c)
    
    There were no issuer repurchases of securities during the past three years.
 Item 3. Defaults Upon Senior Securities
 Not applicable.
 Item 4. Submission of Matters to a Vote of Security Holders
  Item 5. Other Information
 Not applicable
 Item 6. Exhibits
 The following exhibits are either filed as part of this report or are incorporated herein by
reference:
 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*
 27




---



##### 



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) 28




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##### 



SIGNATURES
  Investors Bancorp, Inc.
 Dated: May 12, 2006
    
    /s/ Robert M. CashillRobert M. CashillPresident and Chief Executive OfficerDated: May 12, 2006
    
    /s/ Domenick A. CamaDomenick A. CamaExecutive Vice President and Chief Financial Officer
 29