##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: December 31, 2008
 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
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



Investors Bancorp, Inc.
FORM 10-Q
 Index
 Part I. Financial Information
 PageItem 1. Financial StatementsConsolidated Balance Sheets as of December 31, 2008
(unaudited) and June 30, 2008
    
    
    1Consolidated Statements of Operations for the Three and Six
Months Ended December 31, 2008 and 2007 (unaudited)
    
    
    2Consolidated Statements of Stockholders Equity for the
Three and Six Months Ended December 31, 2008 and 2007 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Three and Six Months
Ended December 31, 2008 and 2007 (unaudited)
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    31Part II. Other InformationItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 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
    
    
    34Item 6. Exhibits
    
    
    34Signature PageEX-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
 
 
 December 31,
    
    
    June 30,2008
    
    
    2008(In thousands)AssetsCash and cash equivalents
    
    $
    26,692
    
    
    
    22,823Securities available-for-sale, at estimated fair value
    
    
    176,351
    
    
    
    203,032Securities held-to-maturity, net (estimated fair value of
$988,286 and $1,198,053 at December 31, 2008
and June 30, 2008, respectively)
    
    
    982,952
    
    
    
    1,255,054Loans receivable, net
    
    
    5,618,185
    
    
    
    4,670,150Loans held-for-sale
    
    
    16,935
    
    
    
    9,814Stock in the Federal Home Loan Bank
    
    
    86,585
    
    
    
    60,935Accrued interest receivable
    
    
    32,931
    
    
    
    27,716Office properties and equipment, net
    
    
    33,510
    
    
    
    29,710Net deferred tax asset
    
    
    108,707
    
    
    
    40,702Bank owned life insurance contract
    
    
    98,153
    
    
    
    96,170Other assets
    
    
    2,785
    
    
    
    3,036Total assets
    
    $
    7,183,786
    
    
    
    6,419,142Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    4,232,638
    
    
    
    3,970,275Borrowed funds
    
    
    2,133,569
    
    
    
    1,563,583Advance payments by borrowers for taxes and insurance
    
    
    22,085
    
    
    
    21,829Other liabilities
    
    
    41,695
    
    
    
    34,917Total liabilities
    
    
    6,429,987
    
    
    
    5,590,604Stockholders equity:Preferred stock, $0.01 par value, 50,000,000 authorized shares;
none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 200,000,000 shares authorized;
118,020,280 issued; 109,052,929 and 109,010,756 outstanding
at December 31, 2008 and June 30, 2008, respectively
    
    
    532
    
    
    
    532Additional paid-in capital
    
    
    518,457
    
    
    
    514,613Retained earnings
    
    
    408,534
    
    
    
    486,244Treasury stock, at cost; 8,967,351 shares at
December 31, 2008 and June 30, 2008
    
    
    (128,121
    )
    
    
    (128,977
    )Unallocated common stock held by the employee stock
ownership plan
    
    
    (36,869
    )
    
    
    (37,578
    )Accumulated other comprehensive loss
    
    
    (8,734
    )
    
    
    (6,296
    )Total
stockholders equity
    
    
    753,799
    
    
    
    828,538Total liabilities and
stockholders equity
    
    $
    7,183,786
    
    
    
    6,419,142
  1




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 
   For the Three Months
    
    
    For the Six MonthsEnded December 31,
    
    
    Ended December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in thousands, except per share data)Interest and dividend income:Loans receivable and loans held-for-sale
    
    $
    78,291
    
    
    
    57,185
    
    
    
    148,771
    
    
    
    110,657Securities:Government-sponsored enterprise obligations
    
    
    491
    
    
    
    1,443
    
    
    
    991
    
    
    
    2,905Mortgage-backed securities
    
    
    12,834
    
    
    
    16,238
    
    
    
    26,273
    
    
    
    33,371Equity securities available-for-sale
    
    
    8
    
    
    
    76
    
    
    
    63
    
    
    
    156Municipal bonds and other debt
    
    
    2,249
    
    
    
    3,050
    
    
    
    4,386
    
    
    
    6,146Interest-bearing deposits
    
    
    7
    
    
    
    275
    
    
    
    39
    
    
    
    556Federal Home Loan Bank stock
    
    
    619
    
    
    
    804
    
    
    
    1,424
    
    
    
    1,400Total interest and dividend income
    
    
    94,499
    
    
    
    79,071
    
    
    
    181,947
    
    
    
    155,191Interest expense:Deposits
    
    
    31,928
    
    
    
    40,058
    
    
    
    62,937
    
    
    
    79,811Secured borrowings
    
    
    19,663
    
    
    
    14,424
    
    
    
    37,362
    
    
    
    28,527Total interest expense
    
    
    51,591
    
    
    
    54,482
    
    
    
    100,299
    
    
    
    108,338Net interest income
    
    
    42,908
    
    
    
    24,589
    
    
    
    81,648
    
    
    
    46,853Provision for loan losses
    
    
    8,000
    
    
    
    1,750
    
    
    
    13,000
    
    
    
    1,949Net interest income after provision
for loan losses
    
    
    34,908
    
    
    
    22,839
    
    
    
    68,648
    
    
    
    44,904Non-interest (loss) income:Fees and service charges
    
    
    609
    
    
    
    813
    
    
    
    1,452
    
    
    
    1,568Income on bank owned life insurance contract
    
    
    971
    
    
    
    1,083
    
    
    
    1,984
    
    
    
    2,066(Loss) gain on sales of mortgage loans, net
    
    
    (118
    )
    
    
    151
    
    
    
    66
    
    
    
    232(Loss) gain on securities transactions, net
    
    
    (153,605
    )
    
    
    18
    
    
    
    (157,971
    )
    
    
    (224
    )Other income
    
    
    117
    
    
    
    93
    
    
    
    211
    
    
    
    178Total non-interest (loss) income
    
    
    (152,026
    )
    
    
    2,158
    
    
    
    (154,258
    )
    
    
    3,820Non-interest expenses:Compensation and fringe benefits
    
    
    15,061
    
    
    
    12,441
    
    
    
    29,743
    
    
    
    26,270Advertising and promotional expense
    
    
    955
    
    
    
    737
    
    
    
    1,760
    
    
    
    1,247Office occupancy and equipment expense
    
    
    2,797
    
    
    
    2,703
    
    
    
    5,542
    
    
    
    5,367Federal insurance premiums
    
    
    676
    
    
    
    112
    
    
    
    1,357
    
    
    
    220Stationery, printing, supplies and telephone
    
    
    496
    
    
    
    464
    
    
    
    1,035
    
    
    
    894Legal, audit, accounting, and supervisory examination fees
    
    
    641
    
    
    
    576
    
    
    
    1,190
    
    
    
    1,036Data processing service fees
    
    
    1,078
    
    
    
    1,069
    
    
    
    2,235
    
    
    
    2,178Other operating expenses
    
    
    1,116
    
    
    
    1,200
    
    
    
    2,319
    
    
    
    2,253Total non-interest expenses
    
    
    22,820
    
    
    
    19,302
    
    
    
    45,181
    
    
    
    39,465(Loss) income before income tax (benefit)
expense
    
    
    (139,938
    )
    
    
    5,695
    
    
    
    (130,791
    )
    
    
    9,259Income tax (benefit) expense
    
    
    (56,979
    )
    
    
    2,112
    
    
    
    (53,323
    )
    
    
    3,244Net (loss) income
    
    $
    (82,959
    )
    
    
    3,583
    
    
    
    (77,468
    )
    
    
    6,015Basic (loss) earnings per share
    
    $
    (0.80
    )
    
    
    0.03
    
    
    
    (0.75
    )
    
    
    0.06Diluted earnings per share
    
    $
    n/a
    
    
    
    0.03
    
    
    
    n/a
    
    
    
    0.06Weighted average shares outstandingBasic
    
    
    103,950,667
    
    
    
    105,909,100
    
    
    
    103,872,522
    
    
    
    106,359,599Diluted
    
    
    103,950,667
    
    
    
    106,080,292
    
    
    
    103,872,522
    
    
    
    106,532,592
  2




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 
    AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    Unallocated
    
    
    other
    
    
    TotalCommon
    
    
    paid-in
    
    
    Retained
    
    
    Treasury
    
    
    Common Stock
    
    
    comprehensive
    
    
    stockholdersstock
    
    
    capital
    
    
    earnings
    
    
    stock
    
    
    Held by ESOP
    
    
    loss
    
    
    equity(In thousands)Balance at June 30, 2007
    
    $
    532
    
    
    
    506,026
    
    
    
    470,205
    
    
    
    (70,973
    )
    
    
    (38,996
    )
    
    
    (7,935
    )
    
    
    858,859Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    6,015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,015Change in funded status of postretirement
plan due to plan curtailment and
settlement, net of tax expense of $969
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,450
    
    
    
    1,450Change in funded status of retirement
obligations, net of tax expense of $47
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    69Unrealized gain on securities available-
for-sale, net of tax expense of $1,716
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,476
    
    
    
    2,476Reclassification adjustment for losses
included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242
    
    
    
    242Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,252Cumulative effect adjustment
upon adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300Purchase of treasury stock (3,069,029 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,376
    )
    
    
    
    
    
    
    
    
    
    
    (42,376
    )Compensation cost for stock
options and restricted stock
    
    
    
    
    
    
    4,725
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,725ESOP shares allocated or committed
to be released
    
    
    
    
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    709
    
    
    
    
    
    
    
    994Balance at December 31, 2007
    
    $
    532
    
    
    
    511,036
    
    
    
    476,520
    
    
    
    (113,349
    )
    
    
    (38,287
    )
    
    
    (3,698
    )
    
    
    832,754Balance at June 30, 2008
    
    $
    532
    
    
    
    514,613
    
    
    
    486,244
    
    
    
    (128,977
    )
    
    
    (37,578
    )
    
    
    (6,296
    )
    
    
    828,538Comprehensive
loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (77,468
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,468
    )Change in funded status of retirement
obligations, net of tax benefit of $120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (174
    )
    
    
    (174
    )Unrealized gain on securities available-
for-sale, net of tax expense of $1,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,721
    )
    
    
    (2,721
    )Reclassification adjustment for losses
included in net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    457
    
    
    
    457Total comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,906
    )Purchase of treasury stock (82,827 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,097
    )
    
    
    
    
    
    
    
    
    
    
    (1,097
    )Treasury stock allocated to
restricted stock plan
    
    
    
    
    
    
    (1,711
    )
    
    
    (242
    )
    
    
    1,953
    
    
    
    
    
    
    
    
    
    
    
    Compensation cost for stock
options and restricted stock
    
    
    
    
    
    
    5,269
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,269ESOP shares allocated or committed
to be released
    
    
    
    
    
    
    286
    
    
    
    
    
    
    
    
    
    
    
    709
    
    
    
    
    
    
    
    995Balance at December 31, 2008
    
    $
    532
    
    
    
    518,457
    
    
    
    408,534
    
    
    
    (128,121
    )
    
    
    (36,869
    )
    
    
    (8,734
    )
    
    
    753,799
  3




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 
   For the Six Months EndedDecember 31,2008
    
    
    2007(In thousands)Cash flows from operating activities:Net (loss) income
    
    $
    (77,468
    )
    
    
    6,015Adjustments to reconcile net income to net cash used in operating activities:ESOP and stock-based compensation expense
    
    
    6,264
    
    
    
    5,719Amortization of premiums and accretion of discounts on securities, net
    
    
    258
    
    
    
    575Amortization of premium and accretion of fees and costs on loans, net
    
    
    1,249
    
    
    
    777Provision for loan losses
    
    
    13,000
    
    
    
    1,949Depreciation and amortization of office properties and equipment
    
    
    1,005
    
    
    
    1,453Loss on securities, net
    
    
    157,971
    
    
    
    224Mortgage loans originated for sale
    
    
    (203,728
    )
    
    
    (34,116
    )Proceeds from mortgage loan sales
    
    
    196,673
    
    
    
    30,615Gain on sales of mortgage loans, net
    
    
    (66
    )
    
    
    (232
    )Increase in bank owned life insurance contract
    
    
    (1,984
    )
    
    
    (2,066
    )Increase in accrued interest
    
    
    (5,215
    )
    
    
    (2,003
    )Deferred tax benefit
    
    
    (66,203
    )
    
    
    (389
    )Decrease (increase) in other assets
    
    
    251
    
    
    
    (430
    )Increase (decrease) in other liabilities
    
    
    6,485
    
    
    
    (712
    )Total adjustments
    
    
    105,960
    
    
    
    1,364Net cash provided by operating activities
    
    
    28,492
    
    
    
    7,379Cash flows from investing activities:Purchases of loans receivable
    
    
    (822,110
    )
    
    
    (346,336
    )Net originations of loans receivable
    
    
    (140,174
    )
    
    
    (62,116
    )Purchases of debt securities held-to-maturity
    
    
    
    
    
    
    (10,000
    )Mortgage-backed securities available-for-sale received in like-kind exchange
    
    
    (3,911
    )
    
    
    Purchases of other investments available-for-sale
    
    
    (100
    )
    
    
    Proceeds from paydowns/maturities on mortgage-backed
securities held-to-maturity
    
    
    95,436
    
    
    
    121,515Proceeds from calls/maturities on debt securities held-to-maturity
    
    
    19,612
    
    
    
    12,570Proceeds from paydowns/maturities on mortgage-backed
securities available-for-sale
    
    
    20,797
    
    
    
    31,468Redemption of equity securities available-for-sale
    
    
    4,774
    
    
    
    Proceeds from redemptions of Federal Home Loan Bank stock
    
    
    30,578
    
    
    
    11,036Purchases of Federal Home Loan Bank stock
    
    
    (56,228
    )
    
    
    (23,297
    )Purchases of office properties and equipment
    
    
    (4,805
    )
    
    
    (2,174
    )Net cash used in investing activities
    
    
    (856,131
    )
    
    
    (267,334
    )Cash flows from financing activities:Net increase in deposits
    
    
    262,363
    
    
    
    123,486Net decrease in funds borrowed under short-term repurchase agreements
    
    
    (25,000
    )
    
    
    (28,500
    )Proceeds from funds borrowed under other repurchase agreements
    
    
    55,000
    
    
    
    395,000Repayments of funds borrowed under other repurchase agreements
    
    
    (120,000
    )
    
    
    (50,000
    )Net increase (decrease) in other borrowings
    
    
    659,986
    
    
    
    (144,015
    )Net increase in advance payments by borrowers for taxes and insurance
    
    
    256
    
    
    
    141Purchase of treasury stock
    
    
    (1,097
    )
    
    
    (42,376
    )Net cash provided by financing activities
    
    
    831,508
    
    
    
    253,736Net increase (decrease) in cash and cash
equivalents
    
    
    3,869
    
    
    
    (6,219
    )Cash and cash equivalents at beginning of the period
    
    
    22,823
    
    
    
    35,582Cash and cash equivalents at end of the period
    
    $
    26,692
    
    
    
    29,363Supplemental cash flow information:Cash paid during the year for:Interest
    
    $
    98,126
    
    
    
    105,341Income taxes
    
    
    8,815
    
    
    
    2,194
  4




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##### Table of Contents



INVESTORS BANCORP, INC. AND SUBSIDIARY
 
  1. Basis of Presentation
     2. Mergers and Acquisitions
  3. Earnings Per Share
  5




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##### Table of Contents



For the Three Months Ended December 31,2008
    
    
    2007Per
    
    
    
    
    
    
    
    
    
    
    PerShare
    
    
    
    
    
    
    
    
    
    
    ShareLoss
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net (Loss) Income
    
    $
    (82,959
    )
    
    
    
    
    
    
    
    
    
    $
    3,583Basic (loss) earnings per share:(Loss) income available to common
stockholders
    
    $
    (82,959
    )
    
    
    103,950,667
    
    
    $
    (0.80
    )
    
    $
    3,583
    
    
    
    105,909,100
    
    
    $
    0.03Effect of dilutive common stock
equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,192Diluted earnings per share:(Loss) income available to common
stockholders
    
    $
    (82,959
    )
    
    
    103,950,667
    
    
    
    n/a
    
    
    $
    3,583
    
    
    
    106,080,292
    
    
    $
    0.03
 For the Six Months Ended December 31,2008
    
    
    2007Per
    
    
    
    
    
    
    
    
    
    
    PerShare
    
    
    
    
    
    
    
    
    
    
    ShareLoss
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net (Loss) Income
    
    $
    (77,468
    )
    
    
    
    
    
    
    
    
    
    $
    6,015Basic earnings per share:(Loss) income available to common
stockholders
    
    $
    (77,468
    )
    
    
    103,872,522
    
    
    $
    (0.75
    )
    
    $
    6,015
    
    
    
    106,359,599
    
    
    $
    0.06Effect of dilutive common stock
equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172,993Diluted earnings per share:(Loss) income available to common
stockholders
    
    $
    (77,468
    )
    
    
    103,872,522
    
    
    
    n/a
    
    
    $
    6,015
    
    
    
    106,532,592
    
    
    $
    0.06
 6




---



##### Table of Contents



4. Securities Impairment
  5. Loans Receivable, Net
  December 31,
    
    
    June 30,2008
    
    
    2008(In thousands)Residential mortgage loans
    
    $
    4,699,758
    
    
    
    4,009,563Multi-family and commercial
    
    
    455,468
    
    
    
    225,154Construction loans
    
    
    301,915
    
    
    
    260,177Consumer and other loans
    
    
    166,422
    
    
    
    168,819Total loans
    
    
    5,623,563
    
    
    
    4,663,713Premiums on purchased loans, net
    
    
    23,795
    
    
    
    22,622Deferred loan fees, net
    
    
    (2,624
    )
    
    
    (2,620
    )Allowance for loan losses
    
    
    (26,549
    )
    
    
    (13,565
    )Net loans
    
    $
    5,618,185
    
    
    
    4,670,150
 6. Deposits
  December 31,
    
    
    June 30,2008
    
    
    2008(In thousands)Savings accounts
    
    $
    393,053
    
    
    
    417,196Checking accounts
    
    
    493,845
    
    
    
    401,100Money market accounts
    
    
    279,305
    
    
    
    229,018Total core deposits
    
    
    1,166,203
    
    
    
    1,047,314Certificates of deposit
    
    
    3,066,435
    
    
    
    2,922,961$
    4,232,638
    
    
    
    3,970,275
 7. Equity Incentive Plan
    7




---



##### Table of Contents



8. Net Periodic Benefit Plans Expense
    Three months ended December 31,SERP and Directors Plan
    
    
    Other Benefits2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Service cost
    
    $
    112
    
    
    
    114
    
    
    $
    
    
    
    
    12Interest cost
    
    
    257
    
    
    
    239
    
    
    
    11
    
    
    
    61Amortization of:Transition obligation
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    19Prior service cost
    
    
    25
    
    
    
    25
    
    
    
    
    
    
    
    Net loss
    
    
    32
    
    
    
    29
    
    
    
    (3
    )
    
    
    (3
    )Total net periodic
benefit expense
    
    $
    426
    
    
    
    407
    
    
    $
    16
    
    
    
    89
 Six months ended December 31,SERP and Directors Plan
    
    
    Other Benefits2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Service cost
    
    $
    225
    
    
    
    228
    
    
    $
    
    
    
    
    23Interest cost
    
    
    513
    
    
    
    479
    
    
    
    22
    
    
    
    122Amortization of:Transition obligation
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    38Prior service cost
    
    
    49
    
    
    
    49
    
    
    
    
    
    
    
    Net loss
    
    
    64
    
    
    
    57
    
    
    
    (7
    )
    
    
    (5
    )Total net periodic
benefit expense
    
    $
    851
    
    
    
    813
    
    
    $
    32
    
    
    
    178
 8




---



##### Table of Contents



9. Income Taxes
   10. Fair Value Measurements
  9




---



##### Table of Contents




    
    Level 1  Valuation is based upon quoted prices for identical
instruments traded in active markets.
    
    Level 2  Valuation is based upon quoted prices for similar
instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active and model-based valuation
techniques for which all significant assumptions are observable in the
market.
    
    Level 3  Valuation is generated from model-based techniques that use
significant assumptions not observable in the market. These
unobservable assumptions reflect our own estimates of assumptions that
market participants would use in pricing the asset or liability.
Valuation techniques include the use of option pricing models,
discounted cash flow models and similar techniques. The results cannot
be determined with precision and may not be realized in an actual sale
or immediate settlement of the asset or liability.
   Securities available-for-sale
  10




---



##### Table of Contents



Carrying
Value at December 31, 2008Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Securities available for sale:Mortgage-backed securities
    
    $
    174,843
    
    
    
    
    
    
    
    174,843
    
    
    $
    Equity securities
    
    
    1,508
    
    
    
    
    
    
    
    1,508
    
    
    
    $
    176,351
    
    
    $
    
    
    
    $
    176,351
    
    
    $
    
  Securities held-to-maturity
  Mortgage Servicing Rights, net
  Loans Receivable
  11




---



##### Table of Contents



Carrying
Value at December 31, 2008Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Securities held-to-maturity
    
    $
    20,800
    
    
    $
    
    
    
    $
    20,800
    
    
    $
    MSR, net
    
    
    961
    
    
    
    
    
    
    
    
    
    
    
    961Impaired loans
    
    
    6,618
    
    
    
    
    
    
    
    
    
    
    
    6,618$
    28,379
    
    
    $
    
    
    
    $
    20,800
    
    
    $
    7,579
 11. Recent Accounting Pronouncements
 Business Combinations.
 Noncontrolling Interests in Consolidated Financial
Statements.
  12




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward Looking Statements
   Executive Summary
      th
     Comparison of Financial Condition at December 31, 2008 and June 30, 2008
 Total Assets .
 Net Loans.
 13




---



##### Table of Contents



14




---



##### Table of Contents



Securities.
   15




---



##### Table of Contents



Net Deferred Tax Asset .
 Stock in the Federal Home Loan Bank, Bank Owned Life Insurance and Other Assets.
 Deposits .
 Borrowed Funds .
 Stockholders Equity .
 Average Balance Sheets for the Three Months ended December 31, 2008 and 2007
  16




---



##### Table of Contents



For the three months endedDecember 31, 2008
    
    
    December 31, 2007Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest-earning assets:Interest-bearing deposits
    
    $
    19,933
    
    
    $
    7
    
    
    
    0.14
    %
    
    $
    26,501
    
    
    $
    275
    
    
    
    4.15
    %Securities available-for-sale(1)
    
    
    191,193
    
    
    
    2,177
    
    
    
    4.55
    %
    
    
    240,958
    
    
    
    2,769
    
    
    
    4.60
    %Securities held-to-maturity
    
    
    1,175,931
    
    
    
    13,405
    
    
    
    4.56
    %
    
    
    1,488,856
    
    
    
    18,038
    
    
    
    4.85
    %Net loans
    
    
    5,540,867
    
    
    
    78,291
    
    
    
    5.65
    %
    
    
    3,974,934
    
    
    
    57,185
    
    
    
    5.75
    %Stock in FHLB
    
    
    88,496
    
    
    
    619
    
    
    
    2.80
    %
    
    
    46,032
    
    
    
    804
    
    
    
    6.99
    %Total interest-earning assets
    
    
    7,016,420
    
    
    
    94,499
    
    
    
    5.39
    %
    
    
    5,777,281
    
    
    
    79,071
    
    
    
    5.47
    %Non-interest earning assets
    
    
    195,093
    
    
    
    
    
    
    
    
    
    
    
    187,257Total assets
    
    $
    7,211,513
    
    
    
    
    
    
    
    
    
    
    $
    5,964,538Interest-bearing Liabilities:Savings
    
    $
    389,446
    
    
    $
    1,778
    
    
    
    1.83
    %
    
    $
    343,742
    
    
    $
    1,703
    
    
    
    1.98
    %Interest-bearing checking
    
    
    379,846
    
    
    
    1,469
    
    
    
    1.55
    %
    
    
    346,898
    
    
    
    1,890
    
    
    
    2.18
    %Money market accounts
    
    
    298,300
    
    
    
    1,805
    
    
    
    2.42
    %
    
    
    207,385
    
    
    
    1,425
    
    
    
    2.75
    %Certificates of deposit
    
    
    3,023,602
    
    
    
    26,876
    
    
    
    3.56
    %
    
    
    2,925,555
    
    
    
    35,040
    
    
    
    4.79
    %Borrowed funds
    
    
    2,174,374
    
    
    
    19,663
    
    
    
    3.62
    %
    
    
    1,201,523
    
    
    
    14,424
    
    
    
    4.80
    %Total interest-bearing liabilities
    
    
    6,265,568
    
    
    
    51,591
    
    
    
    3.29
    %
    
    
    5,025,103
    
    
    
    54,482
    
    
    
    4.34
    %Non-interest bearing liabilities
    
    
    117,845
    
    
    
    
    
    
    
    
    
    
    
    103,950Total liabilities
    
    
    6,383,413
    
    
    
    
    
    
    
    
    
    
    
    5,129,053Stockholders equity
    
    
    828,100
    
    
    
    
    
    
    
    
    
    
    
    835,485Total liabilities and
stockholders equity
    
    $
    7,211,513
    
    
    
    
    
    
    
    
    
    
    $
    5,964,538Net interest income
    
    
    
    
    
    $
    42,908
    
    
    
    
    
    
    
    
    
    
    $
    24,589Net interest rate spread(2)
    
    
    
    
    
    
    
    
    
    
    2.10
    %
    
    
    
    
    
    
    
    
    
    
    1.13
    %Net interest earning assets(3)
    
    $
    750,852
    
    
    
    
    
    
    
    
    
    
    $
    752,178Net interest margin(4)
    
    
    
    
    
    
    
    
    
    
    2.45
    %
    
    
    
    
    
    
    
    
    
    
    1.70
    %Ratio of interest-earning assets to total interest-
bearing liabilities
    
    
    1.12
    X
    
    
    
    
    
    
    
    
    
    
    1.15
    X
 17




---



##### Table of Contents



For Six Months EndedDecember 31, 2008
    
    
    December 31, 2007Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    Interest
    
    
    Average
    
    
    Outstanding
    
    
    Interest
    
    
    AverageBalance
    
    
    Earned/Paid
    
    
    Yield/Rate
    
    
    Balance
    
    
    Earned/Paid
    
    
    Yield/Rate(Dollars in thousands)Interest-earning assets:Interest-bearing deposits
    
    $
    19,221
    
    
    $
    39
    
    
    
    0.41
    %
    
    $
    26,361
    
    
    $
    556
    
    
    
    4.22
    %Securities available-for-sale (1)
    
    
    196,848
    
    
    
    4,491
    
    
    
    4.56
    %
    
    
    249,060
    
    
    
    5,729
    
    
    
    4.60
    %Securities held-to-maturity
    
    
    1,203,268
    
    
    
    27,222
    
    
    
    4.52
    %
    
    
    1,521,984
    
    
    
    36,849
    
    
    
    4.84
    %Net loans
    
    
    5,241,754
    
    
    
    148,771
    
    
    
    5.68
    %
    
    
    3,864,190
    
    
    
    110,657
    
    
    
    5.73
    %Stock in FHLB
    
    
    79,496
    
    
    
    1,424
    
    
    
    3.58
    %
    
    
    42,856
    
    
    
    1,400
    
    
    
    6.53
    %Total interest-earning assets
    
    
    6,740,587
    
    
    
    181,947
    
    
    
    5.40
    %
    
    
    5,704,451
    
    
    
    155,191
    
    
    
    5.44
    %Non-interest-earning assets
    
    
    191,168
    
    
    
    
    
    
    
    
    
    
    
    184,999Total assets
    
    $
    6,931,755
    
    
    
    
    
    
    
    
    
    
    $
    5,889,450Interest-bearing liabilities:Savings
    
    $
    395,448
    
    
    $
    3,650
    
    
    
    1.85
    %
    
    $
    347,864
    
    
    $
    3,587
    
    
    
    2.06
    %Interest-bearing checking
    
    
    371,200
    
    
    
    2,842
    
    
    
    1.53
    %
    
    
    358,039
    
    
    
    4,351
    
    
    
    2.43
    %Money market accounts
    
    
    265,074
    
    
    
    3,024
    
    
    
    2.28
    %
    
    
    197,475
    
    
    
    2,664
    
    
    
    2.70
    %Certificates of deposit
    
    
    2,968,288
    
    
    
    53,421
    
    
    
    3.60
    %
    
    
    2,883,144
    
    
    
    69,209
    
    
    
    4.80
    %Borrowed funds
    
    
    1,990,807
    
    
    
    37,362
    
    
    
    3.75
    %
    
    
    1,160,360
    
    
    
    28,527
    
    
    
    4.92
    %Total interest-bearing liabilities
    
    
    5,990,817
    
    
    
    100,299
    
    
    
    3.35
    %
    
    
    4,946,882
    
    
    
    108,338
    
    
    
    4.38
    %Non-interest-bearing liabilities
    
    
    114,409
    
    
    
    
    
    
    
    
    
    
    
    104,371Total liabilities
    
    
    6,105,226
    
    
    
    
    
    
    
    
    
    
    
    5,051,253Stockholders equity
    
    
    826,529
    
    
    
    
    
    
    
    
    
    
    
    838,197Total liabilities and stockholders
equity
    
    $
    6,931,755
    
    
    
    
    
    
    
    
    
    
    $
    5,889,450Net interest income
    
    
    
    
    
    $
    81,648
    
    
    
    
    
    
    
    
    
    
    $
    46,853Net interest rate spread (2)
    
    
    
    
    
    
    
    
    
    
    2.05
    %
    
    
    
    
    
    
    
    
    
    
    1.06
    %Net interest-earning assets (3)
    
    $
    749,770
    
    
    
    
    
    
    
    
    
    
    $
    757,569Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    2.42
    %
    
    
    
    
    
    
    
    
    
    
    1.64
    %Ratio of interest-earning assets to total interest-
bearing liabilities
    
    
    1.13
    X
    
    
    
    
    
    
    
    
    
    
    1.15
    X
 
 (1)
    
    Securities available-for-sale are stated at amortized cost, adjusted for unamortized
purchased premiums and discounts.(2)
    
    Net interest rate spread represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing liabilities.(3)
    
    Net interest-earning assets represent total interest-earning assets less total
interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income divided by average total interest-earning
assets. 18




---



##### Table of Contents



Comparison of Operating Results for the Three Months Ended December 31, 2008 and 2007
 Net Income .
   Net Interest Income .
  Interest and Dividend Income .
 19




---



##### Table of Contents



Interest Expense.
   Provision for Loan Losses.
 20




---



##### Table of Contents



Comparison of Financial Condition at December 31, 2008 and June 30, 2008.
 Non-interest Income.
 Non-interest Expenses .
 Income Taxes.
 Comparison of Operating Results for the Six Months Ended December 31, 2008 and 2007
 Net Income . Comparison of Financial Condition at December 31, 2008 and
June 30, 2008.
 Net Interest Income.
 21




---



##### Table of Contents



Interest and Dividend Income .
   Interest Expense
  22




---



##### Table of Contents



Provision for Loan Losses Comparison of
Financial Condition at December 31, 2008 and June 30, 2008.
 Non-interest Income.
 Non-interest Expenses.
 Income Taxes.
 23




---



##### Table of Contents



Liquidity and Capital Resources
       24




---



##### Table of Contents



As of December 31, 2008Actual
    
    RequiredAmount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Total capital (to risk-weighted assets)
    
    $
    677,938
    
    
    
    17.4
    %
    
    $
    312,635
    
    
    
    8.0
    %Tier I capital (to risk-weighted assets)
    
    
    651,389
    
    
    
    16.7
    
    
    
    156,317
    
    
    
    4.0Tier I capital (to average assets)
    
    
    651,389
    
    
    
    9.0
    
    
    
    288,285
    
    
    
    4.0
  Off-Balance Sheet Arrangements and Contractual Obligations
   Less than
    
    One-Two
    
    Two-Three
    
    More thanContractual Obligations
    
    Total
    
    One Year
    
    Years
    
    Years
    
    Three YearsDebt obligations
(excluding capitalized
leases)
    
    $
    2,133,569
    
    
    
    613,000
    
    
    
    355,000
    
    
    
    520,000
    
    
    
    645,569Commitments to originate
and purchase loans
    
    $
    187,538
    
    
    
    187,538
    
    
    
    
    
    
    
    
    
    
    
    Commitments to sell loans
    
    $
    59,645
    
    
    
    59,645
    
    
    
    
    
    
    
    
    
    
    
    
      25




---



##### Table of Contents



Critical Accounting Policies
  Allowance for Loan Losses.
    26




---



##### Table of Contents



Deferred Income Taxes. Accounting for Income Taxes
 27




---



##### Table of Contents



Asset Impairment Judgments.
     28




---



##### Table of Contents



Stock-Based Compensation.
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Qualitative Analysis
   29




---



##### Table of Contents



Quantitative Analysis
 30




---



##### Table of Contents



Net Portfolio Value (1),(2)
    
    Net Interest Income (3)Change in
    
    
    
    
    
    
    
    
    
    
    
    Increase (Decrease) in EstimatedInterest Rates
    
    
    
    
    
    Estimated Increase (Decrease)
    
    Estimated Net
    
    Net Interest Income(basis points)
    
    Estimated NPV
    
    Amount
    
    Percent
    
    Interest Income
    
    Amount
    
    Percent(Dollars in thousands)+200bp
    
    $
    445,790
    
    
    $
    (264,989
    )
    
    
    (37.3
    )%
    
    $
    167,548
    
    
    $
    (10,573
    )
    
    
    (5.9
    )%0bp
    
    $
    710,779
    
    
    
    
    
    
    
    
    
    
    $
    178,121
    
    
    
    
    
    
    
    -100bp
    
    $
    751,563
    
    
    $
    40,784
    
    
    
    5.7
    %
    
    $
    182,112
    
    
    $
    3,991
    
    
    
    2.2
    %
 
 (1)
    
    NPV is the discounted present value of expected cash flows from assets, liabilities and
off-balance sheet contracts.(2)
    
    Assumes an instantaneous uniform change in interest rates at all maturities.(3)
    
    Assumes a gradual change in interest rates over a one year period at all maturities   
 Item 4. Controls and Procedures
  31




---



##### Table of Contents



Part II  Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Our Expenses Will Increase as a Result of Increases in FDIC Insurance Premiums
   32




---



##### Table of Contents



If Our Investment in the Federal Home Loan Bank of New York is Classified as
Other-Than-Temporarily Impaired or as Permanently Impaired, Our Earnings and Stockholders Equity
Could Decrease
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    Maximum NumberShares Purchased as
    
    of Shares that MayTotal Number
    
    
    
    
    
    Part of Publicly
    
    Yet Be Purchasedof Shares
    
    Average price
    
    Announced Plans or
    
    Under the Plans orPeriod
    
    Purchased
    
    Paid per Share
    
    Programs
    
    Programs (1)October 1, 2008
through October
31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    3,597,444November 1, 2008
through November
30, 2008
    
    
    40,927
    
    
    
    12.48
    
    
    
    40,927
    
    
    
    3,556,517December 1, 2008
through December
31, 2008
    
    
    41,900
    
    
    
    14.00
    
    
    
    41,900
    
    
    
    3,514,617Total
    
    
    82,827
    
    
    $
    13.25
    
    
    
    82,827
 
 (1)
    
    On January 22, 2008, the Company announced its third Share Repurchase Program, which authorized the
purchase of an additional 10% of its publicly-held outstanding shares of common stock, or 4,307,248 shares.
This stock repurchase program commenced upon the completion of the second program on May 7, 2008. This
program has no expiration date and has 3,514,617 shares yet to be purchased as of December 31, 2008. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
 33




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##### Table of Contents



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*10.6
    
    Executive Officer Annual Incentive 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)**
    
    Filed as Appendix A to the Companys definitive proxy statement with the Securities and Exchange Commission of September 26, 2008. 34




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SIGNATURES
  Investors Bancorp, Inc.Dated:      February 9, 2009
    /s/ Kevin CummingsKevin CummingsPresident and Chief Executive Officer
(Principal Executive Officer)Dated:      February 9, 2009
    /s/ Thomas F. Splaine, Jr.Thomas F. Splaine, Jr.Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 35