Profile: Investors Bancorp, Inc. (ISBC.O)

Investors Bancorp, Inc. is the holding company of Investors Savings Bank (the Bank), a New Jersey chartered savings bank. The Bank is in the business of attracting deposits from the public through its branch network and borrowing funds in the wholesale markets to originate loans and to invest in securities. It originates mortgage loans secured by one- to four-family residential real estate and consumer loans, the majority of which are home equity loans and home equity lines of credit. The Bank expanded its lending activities to include commercial real estate, construction, multi-family loans, and commercial and industrial loans. It offers a variety of deposit accounts. The Bank has 58 branch offices located in the communities of Essex, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Union and Warren Counties, New Jersey. Investors Bancorp, Inc. has two direct subsidiaries: ASB Investment Corp and Investors Savings Bank. On May 31, 2009, the Company completed the acquisition of American Bancorp of New Jersey, Inc. (American Bancorp).

Lending Activities

The Bank’s principal lending activity is the origination and purchase of mortgage loans collateralized by residential real estate. During the fiscal year ended June 30, 2009 (fiscal 2009), residential mortgage loans represented 76.3% of its total loans, commercial real estate and multi-family loans totaled 14.84% of its total loan portfolio and construction loans totaled 5.62%. The Bank offers consumer loans, which consist primarily of home equity loans and home equity lines of credit. It also offers commercial and industrial (C&I) loans.

Residential Mortgage Loans is the primary lending activity, which are secured by properties located in its primary market area. During 2009, 76.30% of the Bank’s loan portfolio consisted of residential mortgage loans. Residential mortgage loans are originated by its mortgage subsidiary, ISB Mortgage Company LLC. The Bank held 56.2% as fixed-rate residential mortgage loans, of its total residential mortgage loan portfolio. The Bank offers mortgages on multi-family and commercial real estate properties. Commercial real estate and multi-family loans are secured by office buildings, apartment buildings, mixed-use properties and other commercial properties. The multi-family and commercial real estate loans in its portfolio consist of both fixed rate and adjustable rate loans, which were originated at prevailing market rates.

Construction Loans are offered directly to builders and developers on income properties and residential for-sale housing units. The Bank also offers commercial and industrial loans, and consumer loans.

Investment Activities

During 2009, the Bank’s securities portfolio totaled 14.8% of its total assets. Securities are classified as held-to-maturity or available-for-sale when purchased. During 2009, $846 million of its securities were classified as held-to-maturity. The Bank purchases mortgage-backed pass through and collateralized mortgage obligation (CMO) securities insured or guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. During 2009, agency-issued mortgage-backed securities including CMOs, totaled 80.3%, of its total securities portfolio. Mortgage-backed pass through securities represent a participation interest in a pool of single-family or multi-family mortgages. The Bank also invests in securities issued by non-agency or private mortgage originators. During 2009, it held 28 securities issued by private mortgage originators. Its corporate and other debt securities portfolio consists of collateralize debt obligations (CDOs) backed by pooled trust preferred securities (TruPS), principally issued by banks (81%) and to a lesser extent insurance companies (18%) and real estate investment trusts (1%).

Sources of Funds

Deposits, primarily certificates of deposit, have been the primary source of funds used for the Bank’s lending and investment activities. Additional sources of funds include principal and interest payments from loans and securities, loan and security prepayments and maturities, brokered certificates of deposit, income on other earning assets and retained earnings. The Bank introduced a suite of commercial deposit products, designed for small business owners and non-profit organizations. It borrows funds under repurchase agreements with the Federal Home Loan Bank (FHLB) and financial institutions.

Subsidiary Activities

Investors Bancorp, Inc. has two direct subsidiaries, namely ASB Investment Corp and Investors Savings Bank. ASB Investment Corp. focused on selling insurance and investment products, including annuities, to customers and the general public through a third party networking arrangement. Investors Savings Bank’s subsidiaries include ISB Mortgage Company LLC, ISB Asset Corporation, ISB Holdings, Inc. and American Savings Investment Corp. ISB Mortgage Company LLC was formed for originating loans for sale to both Investors Savings Bank and third parties. ISB Asset Corporation is engaged in acquiring mortgage loans and mortgage-backed securities from Investors Savings Bank. ISB Holdings, Inc. is a 100% owner of ISB Asset Corporation. American Savings Investment Corp. is an investment company subsidiary, which invests in stocks, bonds, notes and all types of equity, mortgages, debentures and other investment securities.