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, 2006

Investors Bancorp, Inc.

(Exact name of registrant as specified in its charter)

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
(Address of principal executive offices)

(973) 924-5100
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all the reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. YES þ  NO o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer Yes o  No o   Accelerated Filer Yes o  No o   Non-Accelerated Filer Yes þ  No o

     Indicate by check mark whether the registration is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o  No þ

     As of January 31, 2007 there were 115,225,059 shares of the Registrant’s common stock, par value $0.01 per share, outstanding, of which 63,099,781 shares, or 54.76% of the Registrant’s outstanding common stock, were held by Investors Bancorp, MHC, the Registrant’s mutual holding company.

 

 

Investors Bancorp, Inc.
FORM 10-Q

Index

				Page
		Part I. Financial Information
Item 1.		Financial Statements
		Consolidated Balance Sheets as of December 31, 2006 (unaudited) and June 30, 2006			1
		Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2006 and 2005 (unaudited)			2
		Consolidated Statements of Stockholders’ Equity for the Six Months Ended December 31, 2006 and 2005 (unaudited)			3
		Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2006 and 2005 (unaudited)			4
		Notes to Consolidated Financial Statements			5
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			28
Item 4.		Controls and Procedures			30
		Part II. Other Information
Item 1.		Legal Proceedings			31
Item 1A.		Risk Factors			31
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 3.		Defaults upon Senior Securities			31
Item 4.		Submission of Matters to a Vote of Security Holders			32
Item 5.		Other Information			32
Item 6.		Exhibits			33
		Signature Page			34
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32: CERTIFICATIONS

Part I. Financial Information

Item 1. Financial Statements

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

December 31, 2006 (Unaudited) and June 30, 2006

		December 31,				June 30,
		2006				2006
		(In thousands)
Assets
Cash and cash equivalents		$	36,382				39,824
Securities available-for-sale, at estimated fair value			323,719				528,876
Securities held-to-maturity, net (estimated fair value of $1,558,560 and $1,695,975 at December 31, 2006 and June 30, 2006, respectively)			1,595,238				1,763,032
Loans receivable, net			3,274,207				2,960,583
Loans held-for-sale			3,589				974
Stock in the Federal Home Loan Bank			40,545				46,125
Accrued interest receivable			22,435				21,053
Office properties and equipment, net			27,310				27,911
Net deferred tax asset			35,448				28,176
Bank owned life insurance contract			86,186				78,903
Other assets			1,960				1,789
Total assets		$	5,447,019				5,497,246
Liabilities and Stockholders’ Equity
Liabilities:
Deposits		$	3,451,066				3,302,043
Borrowed funds			1,046,725				1,245,740
Advance payments by borrowers for taxes and insurance			14,591				15,337
Other liabilities			33,342				33,939
Total liabilities			4,545,724				4,597,059
Stockholders’ 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; 115,970,059 and 116,275,688 outstanding at December 31, 2006 and June 30, 2006, respectively			532				532
Additional paid-in capital			500,962				524,962
Unallocated common stock held by the employee stock ownership plan			(39,705	)			(40,414	)
Treasury stock, at cost; 305,629 shares at December 31, 2006			(4,769	)			—
Retained earnings			447,856				426,233
Accumulated other comprehensive loss:
Net unrealized loss on securities available for sale, net of tax			(3,213	)			(10,758	)
Minimum pension liability, net of tax			(368	)			(368	)
			(3,581	)			(11,126	)
Total stockholders’ equity			901,295				900,187
Total liabilities and stockholders’ equity		$	5,447,019				5,497,246

See accompanying notes to consolidated financial statements.

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Operations

(Unaudited)

		For the Three Months								For the Six Months
		Ended December 31,								Ended December 31,
		2006				2005				2006				2005
		(Dollars in thousands, except per share data)
Interest and dividend income:
Loans receivable and loans held-for-sale		$	44,126				29,827				86,038				56,377
Securities:
Government-sponsored enterprise obligations			1,339				2,490				2,678				4,164
Mortgage-backed securities			20,649				24,680				42,702				50,664
Equity securities available-for-sale			472				455				927				910
Municipal bonds and other debt			2,412				1,701				4,818				2,415
Interest-bearing deposits			222				1,658				391				2,491
Repurchase agreements			—				351				—				613
Federal Home Loan Bank stock			753				763				1,450				1,491
Total interest and dividend income			69,973				61,925				139,004				119,125
Interest expense:
Deposits			34,044				23,055				64,794				44,771
Secured borrowings			14,935				11,141				30,749				22,059
Total interest expense			48,979				34,196				95,543				66,830
Net interest income			20,994				27,729				43,461				52,295
Provision for loan losses			100				100				325				200
Net interest income after provision for loan losses			20,894				27,629				43,136				52,095
Non-interest (loss) income:
Fees and service charges			659				669				1,319				1,288
Income on bank owned life insurance contract			924				1,257				1,719				1,130
(Loss) gain on sales of mortgage loans, net			(129	)			62				(46	)			139
Loss on securities transactions			(3,666	)			—				(3,666	)			—
Gain on sale of other real estate owned, net			—				5				—				5
Other non-interest income			21				21				42				41
Total non-interest (loss) income			(2,191	)			2,014				(632	)			2,603
Non-interest expense:
Compensation and fringe benefits			12,258				10,987				22,701				20,627
Advertising and promotional expense			858				483				1,758				1,086
Office occupancy and equipment expense			2,515				2,625				4,938				5,269
Federal insurance premiums			108				109				218				218
Stationery, printing, supplies and telephone			380				416				773				908
Legal, audit, accounting, and supervisory examination fees			257				450				1,032				799
Data processing service fees			972				929				1,908				1,816
Contribution to charitable foundation			—				20,651				—				20,651
Other operating expenses			899				912				2,006				1,787
Total non-interest expense			18,247				37,562				35,334				53,161
Income (loss) before income tax (benefit) expense			456				(7,919	)			7,170				1,537
Income tax (benefit) expense			(11,564	)			(2,980	)			(9,201	)			515
Net income (loss)		$	12,020				(4,939	)			16,371				1,022
Earnings (loss) per share — basic and diluted (1)		$	0.11				(0.06	)			0.15				N/A
Weighted average shares outstanding (1):
Basic			111,746,704				112,024,104				111,783,846				N/A
Diluted			111,748,993				112,024,104				111,783,846				N/A

See accompanying notes to consolidated financial statements.

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders’ Equity

Six months ended December 31, 2006 and 2005

(Unaudited)

																						Accumulated other
																						comprehensive loss
						Additional				Unallocated												Unrealized				Minimum				Total
		Common				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	)			407,827
Comprehensive loss:
Net income			—				—				—				—				1,022				—				—				1,022
Unrealized loss on securities available- for-sale, net of tax benefit of $3,675			—				—				—				—				—				(5,598	)			—				(5,598	)
Total comprehensive loss																															(4,576	)
Sale 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				—				—				—				—				—				525,174
Purchase of common stock by the ESOP			—				—				(42,541	)			—				—				—				—				(42,541	)
Allocation of ESOP stock			—				84				1,418				—				—				—				—				1,502
Balance at December 31, 2005		$	532				524,751				(41,123	)			—				412,241				(7,914	)			(1,101	)			887,386
Balance at June 30, 2006		$	532				524,962				(40,414	)			—				426,233				(10,758	)			(368	)			900,187
Comprehensive income:
Net income			—				—				—				—				16,371				—				—				16,371
Unrealized gain on securities available- for-sale, net of tax expense of $6,210			—				—				—				—				—				9,496				—				9,496
Reclassification adjustment for losses on securities transactions included in net income, net of tax benefit of $1,347			—				—				—				—				—				(1,951	)			—				(1,951	)
Total comprehensive income																															23,916
Cummulative effect of change in accounting principle			—				—				—				—				5,564				—				—				5,564
Purchase of treasury stock (1,972,588 shares)			—				—				—				(30,502	)			—				—				—				(30,502	)
Treasury stock allocated to restricted stock plan							(25,421	)							25,733				(312	)											—
Compensation cost for stock options and restricted stock			—				1,096				—				—				—				—				—				1,096
Allocation of ESOP stock			—				325				709				—				—				—				—				1,034
Balance at December 31, 2006		$	532				500,962				(39,705	)			(4,769	)			447,856				(3,213	)			(368	)			901,295

See accompanying notes to consolidated financial statements.

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

		For the Six Months Ended
		December 31,
		2006				2005
		(In thousands)
Cash flows from operating activities:
Net income		$	16,371				1,022
Adjustments to reconcile net income to net cash provided by operating activities:
Contribution of stock to charitable foundation			—				15,488
ESOP and stock-based compensation expense			2,130				1,502
Amortization of premiums and accretion of discounts on securities, net			891				395
Provision for loan losses			325				200
Depreciation and amortization of office properties and equipment			1,453				1,555
Loss on securities transactions			3,666				—
Mortgage loans originated for sale			(21,833	)			(13,270	)
Proceeds from mortgage loan sales			19,411				15,420
Loss (gain) on sales of mortgage loans, net			46				(139	)
Increase in bank owned life insurance contract			(1,719	)			(1,130	)
Increase in accrued interest receivable			(1,382	)			(1,211	)
Deferred tax benefit			(12,135	)			(2,484	)
(Increase) decrease in other assets			(171	)			343
Decrease in other liabilities			(597	)			(2,258	)
Total adjustments			(9,915	)			14,411
Net cash provided by operating activities			6,456				15,433
Cash flows from investing activities:
Originations of loans			(132,025	)			(229,908	)
Purchases of loans			(371,575	)			(388,650	)
Payments on loans			189,412				188,680
Purchases of mortgage-backed securities held-to-maturity			(8,933	)			(24,865	)
Purchases of debt securities held-to-maturity			(3,500	)			(333,406	)
Proceeds from paydowns/maturities on mortgage-backed securities held-to-maturity			154,410				294,856
Proceeds from calls/maturities on debt securities held-to-maturity			1,639				225,167
Proceeds from paydowns/maturities on mortgage-backed securities available-for-sale			53,132				76,082
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			22,230				51,836
Purchases of Federal Home Loan Bank stock			(16,650	)			(43,427	)
Purchases of office properties and equipment			(852	)			(572	)
Net cash provided by investing activities			71,342				(184,207	)
Cash flows from financing activities:
Net increase in deposits			149,023				29,626
Net proceeds from sale of common stock			—				509,686
Loan to ESOP			—				(42,541	)
Net (decrease) increase in funds borrowed under short-term repurchase agreements			(250,000	)			40,000
Proceeds from funds borrowed under other repurchase agreements			260,000				—
Repayments of funds borrowed under other repurchase agreements			(235,000	)			(515,000	)
Net increase in Federal Home Loan Bank advances			25,985				101,486
Net (decrease) increase in advance payments by borrowers for taxes and insurance			(746	)			114
Purchase of treasury stock			(30,502	)			—
Net cash (used in) provided by financing activities			(81,240	)			123,371
Net (decrease) increase in cash and cash equivalents			(3,442	)			(45,403	)
Cash and cash equivalents at beginning of period			39,824				81,329
Cash and cash equivalents at end of period		$	36,382				35,926
Supplemental cash flow information:
Cash paid during the period for:
Interest			96,104				69,560
Income taxes			7,615				400

See accompanying notes to consolidated financial statements.

INVESTORS BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

1. Basis of Presentation

The consolidated financial statements are composed of the accounts of Investors Bancorp, Inc. and its wholly owned subsidiary, Investors Savings Bank (Bank) (collectively, the Company) and the Bank’s wholly-owned significant subsidiaries, ISB Mortgage Company LLC and ISB Asset Corporation.

In the opinion of management, all the adjustments (consisting of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the unaudited periods presented have been included. The results of operations and other data presented for the three and six month periods ended December 31, 2006 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending June 30, 2007.

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 (“SEC”) 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 the Company’s June 30, 2006 Annual Report on Form 10-K.

2. Bank Owned Life Insurance

In September 2006, the Financial Accounting Standards Board (“FASB”) Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-5, “Accounting for Purchases of Life Insurance — Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4” to address diversity in practice with respect to the calculation of the amount that could be realized. The EITF reached a consensus that a policyholder should consider any additional amounts, such as deferred acquisition costs (“DAC”) and claims stabilization reserves (“CSR”), in determining the amount that could be realized under the insurance contract and therefore recognized as an asset. The EITF also agreed that fixed amounts that are recoverable by the policyholder in future periods in excess of one year from the surrender of the policy should be recognized at their present value. The consensus is effective for fiscal years beginning after December 15, 2006. Earlier adoption is permitted as of the beginning of a fiscal year for periods in which interim or annual financial statements have not yet been issued. The Company elected early adoption of the new accounting standard as of July 1, 2006.

The Company’s guaranteed DAC and CSR balances represent amounts that could be realized under its group insurance contract, in accordance with the EITF consensus. Accordingly, the Company recorded an asset of $5.6 million for the guaranteed DAC and CSR balances, through a cumulative effect adjustment to retained earnings due to a change in accounting principle, in the quarter ended September 30, 2006.

The Company’s insurance contract provides that, upon full and complete surrender of all outstanding certificates under the group policy held by the Company, the carrier’s repayment of the DAC and CSR would be guaranteed if certain conditions are met at the time of surrender. The conditions that must be met at the time of surrender to obtain repayment of the DAC and CSR are as follows: (i) the Company must hold harmless and absolve the carrier from payment

of all incurred but not reported claims; (ii) the Company must be a “well capitalized” institution under the regulatory capital rules; (iii) the Company cannot be transacting a non-taxable policy exchange as defined in the Internal Revenue Code; and (iv) the Company cannot have undergone a “change in control” (as defined) within 30 months prior to payment of the CSR. If these conditions have been met, the terms of the guarantee provide that (i) the CSR will be paid in full six months after full surrender of the policy, and (ii) future payments of the DAC will continue to be made in accordance with the terms of the insurance contract (generally based on a predetermined payment schedule over a period of 11 years from the date of original purchase). The Company has continuously satisfied the conditions of the guarantee, and management believes it is probable that the conditions will continue to be satisfied for the foreseeable future. Absent a full surrender of the policy, the guaranteed amounts are expected to be realized through the passage of time (in the case of the DAC) or the collection of future death benefit claims (in the case of the CSR).

3. Earnings (Loss) Per Share

The following is a summary of our earnings (loss) per share calculations and reconciliation of basic to diluted earnings per share.

		For the Three Months Ended December 31,
		2006												2005 (1)
										Per Share												Per Share
		Income				Shares				Amount				Loss				Shares				Amount
		(Dollars in thousands, except per share data)
Net Income (loss)		$	12,020											$	(4,939	)
Basic earnings per share:
Income (loss) attributable to common stockholders		$	12,020				111,746,704			$	0.11			$	(6,625	)			112,024,104			$	(0.06	)
Effect of dilutive common stock equivalents			—				2,289								—				—
Diluted earnings per share:
Income attributable to common stockholders		$	12,020				111,748,993			$	0.11			$	—				112,024,104			$	—

		For the Six Months Ended December 31,
		2006
										Per Share
		Income				Shares				Amount
		(Dollars in thousands, except per share data)
Net Income		$	16,371
Basic earnings per share:
Income attributable to common stockholders		$	16,371				111,783,846			$	0.15
Effect of dilutive common stock equivalents			—				—
Diluted earnings per share:
Income attributable to common stockholders		$	16,371				111,783,846			$	0.15

4. Loans Receivable, Net

Loans receivable, net are summarized as follows:

		December 31,				June 30,
		2006				2006
		(In thousands)
Residential mortgage loans		$	2,938,307				2,666,559
Multi-family and commercial			83,161				76,976
Construction loans			83,793				65,459
Consumer and other loans			154,854				139,336
Total loans			3,260,115				2,948,330
Premiums on purchased loans			22,416				20,327
Deferred loan fees, net			(1,798	)			(1,734	)
Allowance for loan losses			(6,526	)			(6,340	)
		$	3,274,207				2,960,583

5. Deposits

Deposits are summarized as follows:

		December 31,				June 30,
		2006				2006
		(In thousands)
Savings accounts		$	257,994				226,245
Checking accounts			340,308				349,014
Money market accounts			178,321				212,200
Total core deposits			776,623				787,459
Certificates of deposit			2,674,443				2,514,584
		$	3,451,066				3,302,043

6. Equity Incentive Plan

At the annual meeting held on October 24, 2006, stockholders of the Company approved the Investors Bancorp, Inc. 2006 Equity Incentive Plan. On November 20, 2006, certain officers and employees and a service vendor of the Company were granted in aggregate 2,790,000 stock options and 1,120,000 shares of restricted stock, and non-employee directors received in aggregate 1,367,401 stock options and 546,959 shares of restricted stock. On December 1, 2006, certain officers and employees of the Company were granted a total of 290,000 options. The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payments”, upon approval of the Plan, and began to expense the fair value of all share-based compensation granted over the requisite service periods.

SFAS No. 123R also requires the Company to realize as a financing cash flow rather than an operating cash flow, as previously required, the benefits of realized tax deductions in excess of previously recognized tax benefits on compensation expense. In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 107, the Company classified share-based compensation for employees and outside directors within “compensation and fringe benefits” in the consolidated statement of operations to correspond with the same line item as the cash compensation paid.

Stock options generally vest over a five-year service period. Management recognizes compensation expense for all option grants over the awards’ respective requisite service periods. Management estimated the fair values of all option grants using the Black-Scholes option-pricing model. Since there is limited historical information on the volatility of the Company’s stock, management also considered the average volatilities of similar entities for an appropriate period in determining the assumed volatility rate used in the estimation of fair value. Management estimated the expected life of the options using the simplified method allowed under SAB 107. The 7-year Treasury yield in effect at the time of the grant provides the risk-free rate for periods within the contractual life of the option. Management recognizes compensation expense for the fair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards.

Restricted shares generally vest over a five- year service period. The product of the number of shares granted and the grant date market price of the Company’s common stock determine the fair value of restricted shares under the Company’s restricted stock plans. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period.

During the three and six months ended December 31, 2006, the Company recorded $1.1 million of share-based compensation expense, comprised of stock option expense of $462,000 and restricted stock expense of $634,000. The Company estimates it will record an additional $4.7 million of share-based compensation expense during the remainder of fiscal 2007.

The following is a summary of the Company’s stock option activity and related information for its option plans for the six months ended December 31, 2006:

										Weighted
						Weighted				Average				Aggregate
		Number of				Average				Remaining				Intrinsic
		Stock Options				Exercise Price				Contractual Life				Value
Outstanding at June 30, 2006			—				—
Granted			4,447,401			$	15.26
Exercised			—				—
Forfeited			—				—
Outstanding at December 31, 2006			4,447,401			$	15.26			9.9 years				$	2,090,278
Exercisable at December 31, 2006			—				—				N/A				N/A

The following is a summary of the status of the Company’s non-vested options as of December 31, 2006 and changes during the six months ended December 31, 2006:

						Weighted
		Number of				Average
		Stock				Grant Date
		Options				Fair Value
Non-vested at June 30, 2006			—				—
Granted			4,447,401			$	4.17
Exercised			—				—
Forfeited			—				—
Non-vested at December 31, 2006			4,447,401			$	4.17

Expected future compensation expense relating to the 4.4 million non-vested options outstanding as of December 31, 2006 is $18.1 million over a weighted average period of 4.9 years.

Upon exercise of vested options, management expects to draw on treasury stock as the source of the shares. In September 2006, the Company announced a stock repurchase plan to acquire up to 5,317,590 shares, commencing on October 12, 2006.

The following is a summary of the status of the Company’s restricted shares as of December 31, 2006 and changes during the six months ended December 31, 2006:

		Number of				Weighted
		Stock				Average
		Awards				Grant Date
		Shares				Fair Value
Non-vested at June 30, 2006			—				—
Granted			1,666,959			$	15.25
Vested			—				—
Forfeited			—				—
Non-vested at December 31, 2006			1,666,959			$	15.25

Expected future compensation expense relating to the 1.7 million restricted shares at December 31, 2006 is $24.8 million over a weighted average period of 4.9 years.

7. Income Taxes

A deferred tax asset is recognized for the estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred tax assets is reduced by the amount of any tax benefits that, based on available evidence, are more likely than not to be realized. On a quarterly basis the Company assesses the realizability of its deferred tax assets. During the three months ended December 31, 2006, the Company performed an assessment of its ability to realize certain deferred tax assets and concluded that, based on current facts and circumstances a portion of the associated valuation allowance was no longer required. Those facts and circumstances included but were not limited to the projected amount of taxable income the Company and its subsidiaries are expected to generate in future years, the Company’s ability to generate capital gains, and the discontinuation of the Company’s REIT’s operations. As a result, the Company recognized a deferred tax benefit of $10.7 million during the second fiscal quarter primarily related to the reversal of the previously established deferred tax asset valuation allowance. The reversal includes the recognition of tax benefits associated with state net operating loss carry forwards and minimum tax assessment ($11.8 million) and a portion of the Company’s capital losses related to the sale of equity securities ($163,000). This benefit was partially offset by an additional valuation allowance established for the contribution to the foundation ($1.2 million).

The following table presents a reconciliation between the actual income tax expense (benefit) and the “expected” amount computed using the applicable statutory federal income tax rate of 35% as follows:

		For the Three				For the Six
		Months ended				Months ended
		December 31, 2006				December 31, 2006
		(In thousands)
“Expected” federal income tax expense		$	160			$	2,510
Change in valuation allowance for deferred tax assets — Federal and State			(10,717	)			(10,717	)
Other State tax benefit, net			(663	)			(315	)
Bank owned life insurance			(323	)			(602	)
Dividend received deduction			(116	)			(227	)
Other			95				150
Total income tax benefit		$	(11,564	)		$	(9,201	)

8. Net Periodic Benefit Plans Expense

The Company has a Supplemental Employee Retirement Plan (SERP). The SERP is a nonqualified, defined benefit plan which provides benefits to all employees of the Company if their benefits and/or contributions under the pension plan are limited by the Internal Revenue Code. The Company also has a nonqualified, defined benefit plan which provides benefits to its directors. The SERP and the directors’ plan are unfunded and the costs of the plans are recognized over the period that services are provided.

The Company also provides (i) health care benefits to retired employees hired prior to April 1, 1991 who attained at least ten years of service and (ii) certain life insurance benefits to all retired employees. Accordingly, the Company accrues the cost of retiree health care and other benefits during the employee’s period of active service.

The components of net periodic benefit expense are as follows:

		Three months ended December 31,
		SERP and Directors’ Plan								Other Benefits
		2006				2005				2006				2005
		(In thousands)
Service cost			313				345				44				49
Interest cost			240				200				132				124
Amortization of:			—				—				—				—
Transition obligation			—				—				50				50
Prior service cost			47				47				—				—
Net loss			40				81				—				24
Total net periodic benefit expense		$	640				673			$	226				247

		Six months ended December 31,
		SERP and Directors’ Plan								Other Benefits
		2006				2005				2006				2005
		(In thousands)
Service cost			627				691				88				98
Interest cost			479				400				264				249
Amortization of:			—				—				—				—
Transition obligation			—				—				100				100
Prior service cost			94				93				—				—
Net loss			79				163				—				47
Total net periodic benefit expense		$	1,279				1,347			$	452				494

Due to the unfunded nature of these plans, no contributions are expected to be made to the SERP and Directors’ plans and Other Benefits plan in fiscal year 2007.

The Company also maintains a defined benefit pension plan. Since it is a multiemployer plan, costs of the pension plan are based on contributions required to be made to the pension plan. We did not contribute to the defined benefit pension plan during the first six months of fiscal year 2007. We anticipate contributing funds to the plan during fiscal 2007 to meet any minimum funding requirements.

9. Stock Repurchase Program

On September 25, 2006, the Company announced that its Board of Directors authorized a stock repurchase plan to acquire up to 10% of its publicly-held outstanding shares of common stock, or 5,317,590 shares, commencing October 12, 2006. During the quarter ended December 31, 2006, the Company purchased 1,972,588 shares at a cost of $30,502,000, or approximately $15.46 per share. Under our stock repurchase program, shares of Investors Bancorp, Inc. common stock may be purchased in the open market and through other privately negotiated transactions, from time to time, depending on market conditions. Of the 1,972,588 shares purchased, 1,669,959 shares were allocated to fund the restricted stock portion of the Company’s 2006 Equity Incentive Plan. The remaining shares are held for general corporate use.

10. Recent Accounting Pronouncements

In February 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140.” SFAS No. 155 allows an entity to re-measure at fair value a hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation from the host, if the holder irrevocably elects to account for the whole instrument on a fair value basis. Subsequent changes in the fair value would be recognized in earnings. Statement 155 is effective for financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006, with earlier adoption permitted. The Company does not expect the adoption of Statement No. 155 to have a material impact on its financial statements.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” The Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” This Interpretation presents a recognition threshold and measurement attribute for the

financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation is effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of Interpretation No. 48 to have a material impact on its financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies to other accounting pronouncements that require or permit fair value measurements, but does not require any new fair value measurements. The Statement is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company does not expect the adoption of SFAS No. 157 to have a material impact on its financial statements.

In September 2006, FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” which requires employers to recognize on their balance sheets the funded status of pension and other postretirement benefit plans. For public companies, this requirement is effective as of the end of the first fiscal year ending after December 15, 2006 (as of June 30, 2007 for the Company). Statement 158 will also require fiscal-year-end measurements of plan assets and benefit obligations, eliminating the use of earlier measurement dates currently permissible. The new measurement-date requirement will not be effective until fiscal years ending after December 15, 2008. The Statement amends Statements 87, 88, 106 and 132R, but retains most of their measurement and disclosure guidance and will not change the amounts recognized in the statement of operations as net periodic benefit cost. The Company is evaluating the effect of SFAS No. 158 on its financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB 108), to address diversity in practice in quantifying financial statement misstatements. SAB 108 requires that registrants use a dual approach in quantifying misstatements based on their impact on the financial statements and related disclosures. SAB 108 is effective as of the end of the Company’s 2007 fiscal year, allowing a one-time transitional cumulative effect adjustment to retained earnings as of July 1, 2006 for misstatements (if any) that were not previously deemed material, but are material under the guidance in SAB 108. The Company does not expect the application of SAB 108 to have a material impact on its financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

Certain statements contained herein are not based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which Investors Bancorp, Inc. (the Company)

operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations or interpretations of regulations affecting financial institutions, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Executive Summary

Investors Bancorp, Inc. is a Delaware-chartered mid-tier stock holding company whose most significant business activity is operating Investors Savings Bank. Investors Savings Bank’s principal business is attracting retail deposits from the general public and investing those deposits, together with funds generated from operations, principal repayments on loans and securities and borrowed funds, primarily in one-to-four family, multi-family and commercial real estate mortgage loans and construction loans. Our results of operations depend primarily on our net interest income which is the difference between the interest we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our net interest income is primarily affected by the market interest rate environment, the shape of the U.S. Treasury yield curve, the timing of the placement of interest-earning assets and interest-bearing liabilities, and the prepayment rate on our mortgage-related assets. Other factors which may affect our results of operations are general and local economic and competitive conditions, government policies and actions of regulatory authorities.

Our business strategy is to operate a well-capitalized and profitable full service community bank dedicated to providing high quality customer service and competitive products to the communities we serve. In October 2003 our Board of Directors approved a change in our strategic direction from one focused on investing in securities, wholesale borrowings and high cost certificates of deposits, to one more focused on originating loans and attracting core deposits. We remain committed to this task of originating more loans and attracting more core deposits and expect to continue to change our asset composition by increasing residential and commercial real estate mortgage loans and building on the significant loan portfolio growth we have experienced since the latter part of 2003. We believe this strategy will enhance shareholder value while building a strong retail banking franchise.

There were a number of significant events in the second quarter of fiscal 2007 that impacted both our statement of operations and our balance sheet. The current interest rate environment has been a difficult one for most financial institutions and has had a significant impact on both our net interest spread and our net interest margin. Our net interest margin decreased to 1.55% and 1.61% for the three and six month periods ended December 31, 2006, respectively, compared to 2.12% and 2.05% for the three and six month periods ended December 31, 2005, respectively. Our net interest spread fell to 0.89% and 0.96% for the three and six month periods ended December 31, 2006, respectively, compared to 1.68% and 1.74% for the three and six month periods ended December 31, 2005, respectively.

During the quarter we sold approximately $187.7 million in low yielding mortgage backed securities and used the proceeds to pay off higher rate wholesale borrowings which resulted in a pretax loss of $3.7 million. Given the flatness of the yield curve, management determined this was a prudent transaction which will help to increase both net interest rate spread and net interest margin going forward. For more information please refer to the Securities section in “Comparison of Financial Condition at December 31, 2006 and June 30, 2006”. We also recognized $10.7 million in deferred tax benefits during the second quarter of fiscal 2007. On a quarterly basis we evaluate our tax positions, valuation allowances and strategies to determine their appropriateness. This evaluation coupled with changes enacted by the New Jersey State legislature on the tax treatment of REITs and other events resulted in the current recognition of additional deferred tax benefits. For a more detailed discussion see the Deferred Tax Asset section in “Comparison of Financial Condition at December 31, 2006 and June 30, 2006.”

The Company also repurchased approximately 2.0 million shares of its common stock at an average price per share of $15.46 pursuant to its publicly announced repurchase plan of September 25, 2006. We believe stock repurchases are a prudent use of capital.

At our first annual meeting, our stockholders approved the Company’s 2006 Equity Incentive Plan. During the current quarter, the Company awarded 1,666,959 shares of restricted stock and 4,447,401 share options representing 73% and 78%, respectively, of the total shares authorized for these purposes under the plan.

Two non performing loans made to a New Jersey based developer caused an increase in non performing loans for the quarter. Both properties are under contract to be sold and we believe will result in our loans being paid in full. While we are confident of a favorable resolution, we can not ensure a successful outcome and therefore placed these loans on non accrual status during the quarter. For a more detailed discussion see the Net Loans section in “Comparison of Financial Condition at December 31, 2006 and June 30, 2006.”

We expect our strategy of adding more retail assets and liabilities to our balance sheet will help improve earnings when and if the yield curve assumes a more positive slope. In addition, we will continue to repurchase shares under our board authorized share repurchase program as a means to manage our capital position.

Comparison of Financial Condition at December 31, 2006 and June 30, 2006

Total Assets. Total assets decreased by $50.2 million, or 0.9%, to $5.45 billion at December 31, 2006 from $5.50 billion at June 30, 2006. This decrease was largely the result of a decrease in the securities portfolio partially offset by the increase in our loan portfolio.

Securities. Securities, in aggregate, decreased by $373.0 million, or 16.3%, to $1.92 billion at December 31, 2006, from $2.29 billion at June 30, 2006. This decrease was primarily due to the sale of securities. During the quarter ended December 31, 2006, the Company sold approximately $187.7 million in bonds yielding 3.90%, representing 9% of its mortgage-backed securities portfolio, at a pretax loss of $3.7 million. The proceeds from the sale of these securities were used to reduce wholesale borrowings costing 5.35%. The majority of the securities ($164.4 million) sold were classified as available-for-sale with the remaining securities ($23.3 million) being sold from the held-to-maturity portion of the portfolio. The securities sold

from the held-to-maturity portfolio qualified to be sold under SFAS No. 115 because more than 85% of the securities’ original face amounts were paid down.

Net Loans. Net loans, including loans held for sale, increased by $316.2 million, or 10.7%, to $3.28 billion at December 31, 2006 from $2.96 billion at June 30, 2006. This increase in loans reflects our continued focus on loan originations and purchases. The loans we originate and purchase are made primarily on properties in New Jersey. To a lesser degree we originate and purchase loans in states contiguous to New Jersey as a way to geographically diversify our residential loan portfolio.

We originate residential mortgage loans directly and through our mortgage subsidiary, ISB Mortgage Co. During the six months ended December 31, 2006 we originated $55.1 million in residential mortgage loans. In addition, we purchase mortgage loans from correspondent entities including other banks and mortgage bankers. Our agreements with these correspondent entities require them to originate loans that adhere to our underwriting standards. During the six months ended December 31, 2006 we purchased loans totaling $307.2 million from these entities. We also purchase pools of mortgage loans in the secondary market on a “bulk purchase” basis from several well-established financial institutions. During the six months ended December 31, 2006, we purchased loans totaling $64.4 million on a “bulk purchase” basis.

Additionally, for the six months ended December 31, 2006, we originated $5.9 million in multi-family and commercial real estate loans and $30.6 million in construction loans. This is consistent with our strategy of originating multi-family, commercial real estate and construction loans to diversify our loan portfolio.

The Company also originates interest-only one- to four-family mortgage loans in which the borrower makes only interest payments for the first five, seven or ten years of the mortgage loan term. This feature will result in future increases in the borrower’s loan repayment when the contractually required repayments increase due to the required amortization of the principal amount. These payment increases could affect the borrower’s ability to repay the loan. The amount of interest-only one-to four-family mortgage loans at December 31, 2006 was $298.4 million compared to $266.5 million at June 30, 2006. The ability of borrowers’ to repay their obligations are dependent upon various factors including the borrowers’ income and net worth, cash flows generated by the underlying collateral, value of the underlying collateral and priority of the Company’s lien on the property. Such factors are dependent upon various economic conditions and individual circumstances beyond the Company’s control; the Company is, therefore, subject to risk of loss.

The Company maintains stricter underwriting criteria for these interest-only loans than it does for its amortizing loans. The Company believes these criteria adequately address the increased exposure to such risks and that adequate provisions for loan losses are provided for all known and inherent risks.

Total non-performing loans, defined as non-accruing loans, increased by $8.5 million to $11.8 million at December 31, 2006 from $3.3 million at June 30, 2006. This increase is primarily attributable to two residential construction loans to a New Jersey based developer. Contracts for sale of the properties are pending. While management is confident of a favorable resolution, it cannot ensure a successful outcome and therefore placed these loans on non accrual status during the quarter.

The ratio of non-performing loans to total loans was 0.36% at December 31, 2006 compared with 0.11% at June 30, 2006. The allowance for loan losses as a percentage of non-performing loans was 55.49% at December 31, 2006 compared with 192.18% at June 30, 2006. At December 31, 2006 our allowance for loan losses as a percentage of total loans was 0.20% compared to 0.22% at June 30, 2006.

We believe our allowance for loan losses is adequate based on the overall growth in our loan portfolio, the current level of loan charge-offs, the stability of the New Jersey real estate market in general, and the performance and stability of our loan portfolio.

Although we believe we have established and maintained an adequate level of allowance for loan losses, additions may be necessary if future economic conditions differ substantially from the current operating environment. Although we use the best information available, the level of allowance for loan losses remains an estimate that is subject to significant judgment and short-term change. See “Critical Accounting Policies.”

Deferred Tax Asset. The Company’s net deferred tax asset increased by $7.3 million to $35.4 million at December 31, 2006 from $28.2 million at June 30, 2006. This increase is primarily the result of the reversal of $11.9 million in valuation allowances partially offset by the $1.2 million additional valuation allowance on the contribution to the foundation.

The Company recognizes deferred tax assets equal to the amount of tax benefits that management believes is more likely than not to be realized. A valuation allowance is recorded when it is more likely than not that some portion or all or the Company’s deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient future taxable income of the appropriate character in the appropriate corporate entity and taxing jurisdiction. Quarterly the Company evaluates its tax posture and strategies to determine the appropriateness of the valuation allowance.

At June 30, 2006, the Company had a valuation allowance related to the deferred tax assets recorded for: state net operating loss carryforwards; the state minimum tax assessment; capital loss carry forwards; and the charitable contribution made to the Investors Savings Bank Charitable Foundation. The state net operating loss carry forwards and minimum tax assessment arose as a result of our Real Estate Investment Trust (“REIT”) which was formed in 1997. Due to recently passed legislation in the state of New Jersey, the operations of the REIT will be discontinued. There was also a valuation allowance on our deferred tax assets relating to the capital losses incurred and carried forward on the sale of certain equity securities in March 2005. Additionally, we had a valuation allowance for the deferred tax asset relating to our contribution to the Investors Savings Bank Charitable Foundation.

During the three months ended December 31, 2006, the Company performed an assessment of its ability to realize the deferred tax assets and concluded that, based on current facts and circumstances, a portion of the associated valuation allowances were no longer necessary. Those facts and circumstances include but are not limited to the projected amount of taxable income the Company and its subsidiaries are expected to generate in future years, the Company’s ability to generate capital gains, and the discontinuation of our REIT’s operations. As a result, the Company recognized a deferred tax benefit of $10.7 million during the second fiscal quarter. The benefit includes the recognition of the benefits from state net operating loss carry forwards and minimum tax assessment ($11.8 million) and a portion of the capital losses on equity securities

($163,000). This was partially offset by an additional valuation allowance on the contribution to the foundation ($1.2 million).

Bank Owned Life Insurance, Stock in the Federal Home Loan Bank and Other Assets. Bank owned life insurance increased by $7.3 million from $78.9 million at June 30, 2006 to $86.2 million at December 31, 2006. This increase was primarily due to adoption of a new accounting principle related to bank owned life insurance. There was also an increase in accrued interest receivable of $1.4 million resulting from an increase in the yield on interest-earning assets and the timing of certain cash flows resulting from the change in the mix of our assets. The amount of stock we own in the Federal Home Loan Bank (FHLB) decreased by $5.6 million from $46.1 million at June 30, 2006 to $40.5 million at December 31, 2006 as a result of a decrease in our level of borrowings at December 31, 2006.

Deposits. Deposits increased by $149.0 million, or 4.5%, to $3.45 billion at December 31, 2006 from $3.30 billion at June 30, 2006. The increase was due primarily to an increase in certificates of deposits and to a lesser extent, the increase in our savings deposits. This was partially offset by the decrease in money market accounts and checking accounts. We attribute the increase and shift in deposits to new products being offered and higher rates on our CD’s in response to consumer demands.

Borrowed Funds. Borrowed funds decreased $199.0 million, or 16.0%, to $1.05 billion at December 31, 2006 from $1.25 billion at June 30, 2006. This decrease in borrowed funds is the result of utilizing the proceeds from the securities sale to repay higher costing borrowed funds.

Stockholders’ Equity. Stockholders’ equity increased $1.1 million to $901.3 million at December 31, 2006 from $900.2 million at June 30, 2006. A number of significant transactions impacted our stockholders’ equity: a decrease from the repurchase of our common stock totaling $30.5 million; a $5.6 million increase in retained earnings due to adoption of the new accounting principle related to bank owned life insurance; a decrease of $7.5 million in the accumulated other comprehensive loss; and net income of $16.4 million for the six months ended December 31, 2006. Our book value per common share increased from $8.02 per share at June 30, 2006 to $8.17 per share at December 31, 2006.

On September 25, 2006 the Company announced its first stock repurchase program and authorized the repurchase of up to 10% of its publicly-held outstanding shares of common stock, or approximately 5.3 million shares, commencing October 12, 2006. The Company completed its initial public offering on October 11, 2005, and applicable regulatory restrictions prohibited the repurchase of shares during the one-year period following the completion of its initial public offering. During the three month period ended December 31, 2006, the Company repurchased 2.0 million shares of its common stock at an average cost of $15.46 per share. Under the current stock repurchase program, 3.3 million shares of the 5.3 million shares authorized remain available for repurchase.

Average Balance Sheets for the Three and Six Months ended December 31, 2006 and 2005

The following tables present certain information regarding Investors Bancorp, Inc.’s financial condition and net interest income for the three and six months ended December 31, 2006 and 2005. The tables present the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and

interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated. Interest income includes fees that we consider adjustments to yields.

		For Three Months Ended
		December 31, 2006												December 31, 2005
		Average												Average
		Outstanding				Interest				Average				Outstanding				Interest				Average
		Balance				Earned/Paid				Yield/Rate				Balance				Earned/Paid				Yield/Rate
		(Dollars in thousands)
Interest-earning assets:
Due from banks		$	22,758			$	222				3.90	%		$	176,800			$	1,658				3.75	%
Repurchase agreements			—				—				—				34,810				351				4.03	%
Securities available-for-sale			470,134				5,175				4.40	%			620,622				6,554				4.22	%
Securities held-to-maturity			1,648,891				19,697				4.78	%			2,042,733				22,772				4.46	%
Net loans			3,217,045				44,126				5.49	%			2,309,963				29,827				5.16	%
Stock in FHLB			45,252				753				6.66	%			58,729				763				5.20	%
Total interest-earning assets			5,404,080				69,973				5.18	%			5,243,657				61,925				4.72	%
Non-interest earning assets			154,837												135,011
Total assets		$	5,558,917											$	5,378,668
Interest-bearing Liabilities:
Savings		$	243,693				907				1.49	%		$	374,737				830				0.89	%
Interest-bearing checking			298,288				1,790				2.40	%			312,438				1,484				1.90	%
Money market accounts			186,335				929				1.99	%			268,122				897				1.34	%
Certificates of deposit			2,633,188				30,418				4.62	%			2,397,206				19,844				3.31	%
Borrowed funds			1,210,038				14,935				4.94	%			1,141,045				11,141				3.91	%
Total interest-bearing liabilities			4,571,542				48,979				4.29	%			4,493,548				34,196				3.04	%
Non-interest bearing liabilities			83,732												59,747
Total liabilities			4,655,274												4,553,295
Stockholders’ equity			903,643												825,373
Total liabilities and stockholders’ equity		$	5,558,917											$	5,378,668
Net interest income						$	20,994											$	27,729
Net interest rate spread											0.89	%											1.68	%
Net interest earning assets		$	832,538											$	750,109
Net interest margin											1.55	%											2.12	%
Ratio of interest-earning assets to total interest- bearing liabilities			1.18	X											1.17	X

		For Six Months Ended
		December 31, 2006												December 31, 2005
		Average												Average
		Outstanding				Interest				Average				Outstanding				Interest				Average
		Balance				Earned/Paid				Yield/Rate				Balance				Earned/Paid				Yield/Rate
		(Dollars in thousands)
Interest-earning assets:
Due from banks		$	21,398			$	391				3.65	%		$	144,479			$	2,491				3.45	%
Repurchase agreements			—				—				—				32,773				613				3.74	%
Securities available-for-sale			502,636				10,897				4.34	%			641,141				13,499				4.21	%
Securities held-to-maturity			1,688,919				40,228				4.76	%			2,033,956				44,654				4.39	%
Net loans			3,149,672				86,038				5.46	%			2,202,165				56,377				5.12	%
Stock in FHLB			46,531				1,450				6.23	%			58,228				1,491				5.12	%
Total interest-earning assets			5,409,156				139,004				5.14	%			5,112,742				119,125				4.66	%
Non-interest earning assets			152,013												135,726
Total assets		$	5,561,169											$	5,248,468
Interest-bearing Liabilities:
Savings		$	233,447				1,433				1.23	%		$	424,205				1,835				0.87	%
Interest-bearing checking			302,959				3,635				2.40	%			297,582				2,644				1.78	%
Money market accounts			196,799				1,802				1.83	%			287,510				1,927				1.34	%
Certificates of deposit			2,594,289				57,924				4.47	%			2,402,719				38,365				3.19	%
Borrowed funds			1,246,699				30,749				4.93	%			1,161,966				22,059				3.80	%
Total interest-bearing liabilities			4,574,193				95,543				4.18	%			4,573,982				66,830				2.92	%
Non-interest bearing liabilities			83,478												59,813
Total liabilities			4,657,671												4,633,795
Stockholders’ equity			903,498												614,673
Total liabilities and stockholders’ equity		$	5,561,169											$	5,248,468
Net interest income						$	43,461											$	52,295
Net interest rate spread											0.96	%											1.74	%
Net interest earning assets		$	834,963											$	538,760
Net interest margin											1.61	%											2.05	%
Ratio of interest-earning assets to total interest-bearing liabilities			1.18	X											1.12	X