Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2017March 31, 2019
Commission file number: 001-36441
 
Investors Bancorp, Inc.
(Exact name of registrant as specified in its charter)
   
Delaware 46-4702118
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
  
101 JFK Parkway, Short Hills, New Jersey 07078
(Address of Principal Executive Offices) Zip Code
(973) 924-5100
(Registrant’s telephone number)
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
         
Large accelerated filer þ    Accelerated filero 
Non-accelerated filer o (Do not check if a smaller reporting company)  Smaller reporting companyo 
      Emerging growth companyo 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
CommonISBCThe NASDAQ Stock Market
As of NovemberMay 3, 2017,2019, the registrant had 359,070,852 shares of common stock, par value $0.01 per share, issued and 306,157,554278,715,537 outstanding. 

INVESTORS BANCORP, INC.
FORM 10-Q

Index

Part I. Financial Information
  Page
Item 1.Financial Statements 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
Part II. Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 


Part I Financial Information
ITEM 1.FINANCIAL STATEMENTS

INVESTORS BANCORP, INC. AND SUBSIDIARIESSUBSIDIARY
Consolidated Balance Sheets
September 30, 2017March 31, 2019 (Unaudited) and December 31, 20162018  
September 30,
2017
 December 31,
2016
March 31,
2019
 December 31,
2018
(In thousands)(In thousands)
ASSETS      
Cash and cash equivalents$413,322
 164,178
$186,083
 196,891
Securities available-for-sale, at estimated fair value1,949,429
 1,660,433
Securities held-to-maturity, net (estimated fair value of $1,769,179 and $1,782,801 at September 30, 2017 and December 31, 2016, respectively)1,733,751
 1,755,556
Equity securities5,880
 5,793
Debt securities available-for-sale, at estimated fair value2,156,340
 2,122,162
Debt securities held-to-maturity, net (estimated fair value of $1,536,684 and $1,558,564 at March 31, 2019 and December 31, 2018, respectively)1,516,600
 1,555,137
Loans receivable, net19,707,157
 18,569,855
21,503,110
 21,378,136
Loans held-for-sale6,975
 38,298
6,827
 4,074
Federal Home Loan Bank stock232,814
 237,878
258,949
 260,234
Accrued interest receivable73,203
 65,969
82,417
 77,501
Other real estate owned4,336
 4,492
6,989
 6,911
Office properties and equipment, net177,569
 177,417
177,465
 177,432
Operating lease right-of-use assets187,560
 
Net deferred tax asset222,573
 222,277
101,499
 104,411
Bank owned life insurance154,719
 161,940
213,491
 211,914
Goodwill and intangible assets99,567
 101,839
98,551
 99,063
Other assets6,588
 14,543
43,879
 29,349
Total assets$24,782,003
 23,174,675
$26,545,640
 26,229,008
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Liabilities:      
Deposits$16,876,469
 15,280,833
$17,629,999
 17,580,269
Borrowed funds4,484,869
 4,546,251
5,549,587
 5,435,681
Advance payments by borrowers for taxes and insurance125,505
 105,851
148,277
 129,891
Operating lease liabilities197,281
 
Other liabilities140,028
 118,495
64,666
 77,837
Total liabilities21,626,871
 20,051,430
23,589,810
 23,223,678
Commitments and contingencies
 

 
Stockholders’ equity:      
Preferred stock, $0.01 par value, 100,000,000 authorized shares; none issued
 

 
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 359,070,852 issued at September 30, 2017 and December 31, 2016; 306,176,459 and 309,449,388 outstanding at September 30, 2017 and December 31, 2016, respectively3,591
 3,591
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 359,070,852 issued at March 31, 2019 and December 31, 2018; 280,066,465 and 286,273,114 outstanding at March 31, 2019 and December 31, 2018, respectively3,591
 3,591
Additional paid-in capital2,776,971
 2,765,732
2,810,832
 2,805,423
Retained earnings1,111,856
 1,053,750
1,191,020
 1,173,897
Treasury stock, at cost; 52,894,393 and 49,621,464 shares at September 30, 2017 and December 31, 2016, respectively(632,394) (587,974)
Treasury stock, at cost; 79,004,387 and 72,797,738 shares at March 31, 2019 and December 31, 2018, respectively(958,425) (884,750)
Unallocated common stock held by the employee stock ownership plan(85,007) (87,254)(80,513) (81,262)
Accumulated other comprehensive loss(19,885) (24,600)(10,675) (11,569)
Total stockholders’ equity3,155,132
 3,123,245
2,955,830
 3,005,330
Total liabilities and stockholders’ equity$24,782,003
 23,174,675
$26,545,640
 26,229,008
See accompanying notes to consolidated financial statements.

INVESTORS BANCORP, INC. AND SUBSIDIARIESSUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2017 2016 2017 20162019 2018
(Dollars in thousands, except per share data)(Dollars in thousands, except per share data)
Interest and dividend income:          
Loans receivable and loans held-for-sale$201,069
 179,234
 579,921
 527,989
$224,890
 204,722
Securities:          
Equity30
 49
 108
 147
37
 35
Government-sponsored enterprise obligations175
 8
 211
 27
266
 274
Mortgage-backed securities17,829
 14,653
 51,812
 44,581
23,630
 20,022
Municipal bonds and other debt2,229
 2,039
 8,433
 6,048
2,522
 2,258
Interest-bearing deposits875
 76
 1,159
 253
535
 455
Federal Home Loan Bank stock3,557
 2,315
 9,722
 6,396
4,337
 3,801
Total interest and dividend income225,764
 198,374
 651,366
 585,441
256,217
 231,567
Interest expense:          
Deposits32,300
 20,326
 79,820
 61,639
65,422
 36,376
Borrowed funds22,553
 18,442
 66,460
 52,328
28,117
 22,707
Total interest expense54,853
 38,768
 146,280
 113,967
93,539
 59,083
Net interest income170,911
 159,606
 505,086
 471,474
162,678
 172,484
Provision for loan losses1,750
 5,000
 11,750
 15,000
3,000
 2,500
Net interest income after provision for loan losses169,161
 154,606
 493,336
 456,474
159,678
 169,984
Non-interest income          
Fees and service charges5,076
 4,108
 14,966
 12,925
6,176
 5,458
Income on bank owned life insurance935
 1,006
 2,826
 3,267
1,577
 1,286
Gain on loans, net726
 1,401
 2,924
 3,516
433
 257
Gain on securities transactions, net
 72
 1,275
 3,100
Gain (loss) on sale of other real estate owned, net446
 35
 871
 (67)
Gain (loss) on securities, net64
 (46)
Gain on sale of other real estate owned, net224
 153
Other income1,212
 1,898
 4,556
 5,956
2,720
 2,002
Total non-interest income8,395
 8,520
 27,418
 28,697
11,194
 9,110
Non-interest expense          
Compensation and fringe benefits57,052
 53,051
 168,207
 158,475
60,998
 59,061
Advertising and promotional expense4,355
 1,495
 10,956
 5,640
3,612
 2,087
Office occupancy and equipment expense14,589
 14,099
 43,769
 41,612
16,171
 16,578
Federal deposit insurance premiums4,500
 3,600
 12,110
 8,800
3,300
 4,500
General and administrative691
 641
 2,267
 2,407
484
 500
Professional fees8,140
 5,673
 30,141
 14,493
2,940
 4,402
Data processing and communication5,719
 5,299
 17,493
 15,821
7,999
 6,123
Other operating expenses8,228
 7,540
 24,157
 22,304
7,905
 7,834
Total non-interest expenses103,274
 91,398
 309,100
 269,552
103,409
 101,085
Income before income tax expense74,282
 71,728
 211,654
 215,619
67,463
 78,009
Income tax expense28,437
 21,878
 80,156
 75,958
19,305
 20,084
Net income$45,845
 49,850
 131,498
 139,661
$48,158
 57,925
Basic earnings per share$0.16
 0.17
 0.45
 0.47
$0.18
 0.20
Diluted earnings per share$0.16
 0.17
 0.45
 0.46
$0.18
 0.20
Weighted average shares outstanding
      
  
Basic289,715,414
 292,000,061
 290,670,601
 299,873,985
267,664,063
 287,685,531
Diluted290,890,307
 294,673,452
 292,489,906
 303,297,117
268,269,730
 289,131,916
See accompanying notes to consolidated financial statements.

INVESTORS BANCORP, INC. AND SUBSIDIARIESSUBSIDIARY
Consolidated Statements of Comprehensive Income
(Unaudited)
For the Three Months Ended September 30, For the Nine Months Ended September 30,For the Three Months Ended March 31,
2017 2016 2017 20162019 2018
(In thousands)(In thousands)
Net income$45,845
 49,850
 131,498
 139,661
$48,158
 57,925
Other comprehensive income (loss), net of tax:          
Change in funded status of retirement obligations82
 318
 249
 952
13
 103
Unrealized gains (losses) on securities available-for-sale525
 (1,655) 5,205
 11,966
Accretion of loss on securities reclassified to held to maturity180
 279
 580
 847
Reclassification adjustment for security gains included in net income
 (43) (765) (1,358)
Unrealized gains (losses) on debt securities available-for-sale16,239
 (22,723)
Accretion of loss on debt securities reclassified to held to maturity113
 167
Other-than-temporary impairment accretion on debt securities186
 315
 770
 698
180
 216
Net gains (losses) on derivatives arising during the period560
 (631) (1,324) (631)
Net (losses) gains on derivatives arising during the period(15,651) 12,442
Total other comprehensive income (loss)1,533
 (1,417) 4,715
 12,474
894
 (9,795)
Total comprehensive income$47,378
 48,433
 136,213
 152,135
$49,052
 48,130


See accompanying notes to consolidated financial statements.

INVESTORS BANCORP, INC. & SUBSIDIARIESAND SUBSIDIARY
Consolidated Statements of Stockholders’ Equity
NineThree Months Ended September 30, 2017March 31, 2019 and 20162018
(Unaudited)
 
Common
stock
 
Additional
paid-in
capital
 
Retained
earnings
 
Treasury
stock
 
Unallocated
common stock
held by ESOP
 
Accumulated
other
comprehensive
loss
 
Total
stockholders’
equity
 (In thousands)
Balance at December 31, 2015$3,591
 2,785,503
 936,040
 (295,412) (90,250) (27,825) 3,311,647
Cumulative effect of adopting ASU No. 2016-09
 (8,051) 8,051
 
 
 
 
Net income
 
 139,661
 
 
 
 139,661
Other comprehensive income, net of tax
 
 
 
 
 12,474
 12,474
Purchase of treasury stock (29,184,897 shares)
 
 
 (337,487) 
 
 (337,487)
Treasury stock allocated to restricted stock plan (271,890 shares)
 (3,167) (94) 3,261
 
 
 
Compensation cost for stock options and restricted stock
 15,156
 
 
 
 
 15,156
Option exercise
 (27,501) 
 54,636
 
 
 27,135
Restricted stock forfeitures (17,500 shares)
 220
 (35) (185) 
 
 
Cash dividend paid ($0.18 per common share)
 
 (57,607) 
 
 
 (57,607)
ESOP shares allocated or committed to be released
 1,863
 
 
 2,247
 
 4,110
Balance at September 30, 2016$3,591
 2,764,023
 1,026,016
 (575,187) (88,003) (15,351) 3,115,089
              
Balance at December 31, 2016$3,591
 2,765,732
 1,053,750
 (587,974) (87,254) (24,600) 3,123,245
Net income
 
 131,498
 
 
 
 131,498
Other comprehensive income, net of tax
 
 
 
 
 4,715
 4,715
Purchase of treasury stock (4,371,647 shares)
 
 
 (57,842) 
 
 (57,842)
Treasury stock allocated to restricted stock plan (430,000 shares)
 (6,186) 1,008
 5,178
 
 
 
Compensation cost for stock options and restricted stock
 14,967
 
 
 
 
 14,967
Option exercise
 (3,533) 
 11,254
 
 
 7,721
Restricted stock forfeitures (268,163 shares)
 3,352
 (342) (3,010) 
 
 
Cash dividend paid ($0.24 per common share)
 
 (74,058) 
 
 
 (74,058)
ESOP shares allocated or committed to be released
 2,639
 
 
 2,247
 
 4,886
Balance at September 30, 2017$3,591
 2,776,971
 1,111,856
 (632,394) (85,007) (19,885) 3,155,132
              
 
Common
stock
 
Additional
paid-in
capital
 
Retained
earnings
 
Treasury
stock
 
Unallocated
common stock
held by ESOP
 
Accumulated
other
comprehensive
loss
 
Total
stockholders’
equity
 (In thousands)
Balance at December 31, 2017$3,591
 2,784,390
 1,084,177
 (633,110) (84,258) (29,339) 3,125,451
Net income
 
 57,925
 
 
 
 57,925
Other comprehensive loss, net of tax
 
 
 
 
 (9,795) (9,795)
Reclassification due to the adoption of ASU No. 2016-01
 
 606
 
 
 (606) 
Purchase of treasury stock (4,525,023 shares)
 
 
 (61,859) 
 
 (61,859)
Treasury stock allocated to restricted stock plan (18,947 shares)
 (257) 27
 230
 
 
 
Compensation cost for stock options and restricted stock
 3,370
 
 
 
 
 3,370
Exercise of stock options
 (2,428) 
 5,142
 
 
 2,714
Restricted stock forfeitures (250,000 shares)
 3,135
 (216) (2,919) 
 
 
Cash dividend paid ($0.09 per common share)
 
 (27,366) 
 
 
 (27,366)
ESOP shares allocated or committed to be released
 892
 
 
 749
 
 1,641
Balance at March 31, 2018$3,591
 2,789,102
 1,115,153
 (692,516) (83,509) (39,740) 3,092,081
              
Balance at December 31, 2018$3,591
 2,805,423
 1,173,897
 (884,750) (81,262) (11,569) 3,005,330
Net income
 
 48,158
 
 
 
 48,158
Other comprehensive income, net of tax
 
 
 
 
 894
 894
Purchase of treasury stock (6,208,379 shares)
 
 
 (73,732) 
 
 (73,732)
Treasury stock allocated to restricted stock plan (119,663 shares)
 (1,511) 50
 1,461
 
 
 
Compensation cost for stock options and restricted stock
 4,573
 
 
 
 
 4,573
Exercise of stock options
 (65) 
 233
 
 
 168
Restricted stock forfeitures (137,066 shares)
 1,731
 (94) (1,637) 
 
 
Cash dividend paid ($0.11 per common share)
 
 (30,991) 
 
 
 (30,991)
ESOP shares allocated or committed to be released
 681
 
 
 749
 
 1,430
Balance at March 31, 2019$3,591
 2,810,832
 1,191,020
 (958,425) (80,513) (10,675) 2,955,830
See accompanying notes to consolidated financial statements.


INVESTORS BANCORP, INC. AND SUBSIDIARIESSUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,Three Months Ended March 31,
2017 20162019 2018
(In thousands)(In thousands)
Cash flows from operating activities:      
Net income$131,498
 139,661
$48,158
 57,925
Adjustments to reconcile net income to net cash provided by operating activities:      
ESOP and stock-based compensation expense19,853
 19,266
6,003
 5,012
Amortization of premiums and accretion of discounts on securities, net11,942
 10,372
1,822
 2,971
Amortization of premiums and accretion of fees and costs on loans, net(3,248) (3,191)(2,063) (2,126)
Amortization of other intangible assets1,854
 2,194
399
 513
Provision for loan losses11,750
 15,000
3,000
 2,500
Depreciation and amortization of office properties and equipment12,670
 11,732
4,667
 4,569
Gain on securities transactions, net(1,275) (3,100)
(Gain) loss on securities, net(64) 46
Mortgage loans originated for sale(126,792) (166,469)(27,556) (5,271)
Proceeds from mortgage loan sales160,582
 152,670
25,226
 9,690
Gain on sales of mortgage loans, net(2,467) (3,010)(423) (245)
(Gain) loss on sale of other real estate owned(871) 67
Gain on sale of other real estate owned(224) (153)
Income on bank owned life insurance(2,826) (3,267)(1,577) (1,286)
Amortization of operating lease right-of-use assets3,180
 
Increase in accrued interest receivable(7,234) (7,485)(4,916) (1,345)
Deferred tax (benefit) expense(3,092) 397
Decrease in other assets8,868
 1,353
Increase in other liabilities19,248
 2,346
Deferred tax expense (benefit)3,637
 (1,379)
Increase in other assets(11,152) (3,866)
(Decrease) increase in other liabilities(31,565) 15,994
Total adjustments98,962
 28,875
(31,606) 25,624
Net cash provided by operating activities230,460
 168,536
16,552
 83,549
Cash flows from investing activities:      
Purchases of loans receivable(345,715) (92,828)(91,265) (86,198)
Net originations of loans receivable(851,418) (1,335,186)(36,517) (83,095)
Proceeds from disposition of loans held for investment48,556
 7,583
Gain on disposition of loans held for investment(457) (506)
Net proceeds from sale of foreclosed real estate4,228
 3,395
Proceeds from principal repayments/calls/maturities of securities available for sale252,173
 216,161
Proceeds from sales of securities available for sale102,120
 57,879
Proceeds from principal repayments/calls/maturities of securities held to maturity246,373
 282,718
Proceeds from sales of securities held to maturity
 14,348
Purchases of securities available for sale(642,165) (468,168)
Purchases of securities held to maturity(227,029) (247,568)
Proceeds from disposition of loans receivable636
 12
Gain on disposition of loans receivable(10) (12)
Net proceeds from sale of other real estate owned1,308
 1,620
Proceeds from principal repayments/calls/maturities of debt securities available for sale69,023
 85,522
Proceeds from principal repayments/calls/maturities of debt securities held to maturity57,219
 85,983
Purchases of equity securities(23) (22)
Purchases of debt securities available for sale(83,282) (77,065)
Purchases of debt securities held to maturity(18,501) (4,885)
Proceeds from redemptions of Federal Home Loan Bank stock175,279
 161,772
71,276
 55,016
Purchases of Federal Home Loan Bank stock(170,215) (205,897)(69,991) (88,391)
Purchases of office properties and equipment(12,822) (17,836)(4,700) (1,706)
Death benefit proceeds from bank owned life insurance10,047
 472

 3,619
Purchases of bank owned life insurance
 (125,000)
Cash paid for acquisition
 (340,183)
Net cash used in investing activities(1,411,045) (1,623,661)(104,827) (574,785)
Cash flows from financing activities:      
Net increase in deposits1,595,636
 888,086
Net (decrease) increase in other borrowings(61,382) 940,621
Net increase (decrease) in deposits49,730
 (811,372)
Net increase in borrowed funds113,906
 899,727
Net increase in advance payments by borrowers for taxes and insurance19,654
 14,102
18,386
 24,437
Dividends paid(30,991) (27,366)
Exercise of stock options168
 2,714

Dividends paid(74,058) (57,607)
Exercise of stock options7,721
 27,135
Purchase of treasury stock(57,842) (337,487)(73,732) (61,859)
Net cash provided by financing activities1,429,729
 1,474,850
77,467
 26,281
Net increase in cash and cash equivalents249,144
 19,725
Net decrease in cash and cash equivalents(10,808) (464,955)
Cash and cash equivalents at beginning of period164,178
 148,904
196,891
 618,394
Cash and cash equivalents at end of period$413,322
 168,629
$186,083
 153,439
Supplemental cash flow information:      
Non-cash investing activities:      
Real estate acquired through foreclosure$3,230
 2,078
$1,245
 564
Cash paid during the year for:      
Interest143,054
 114,419
95,114
 57,022
Income taxes70,123
 83,876
3,921
 
Significant non-cash transactions:   
Initial recognition of operating lease right-of-use assets193,290
 
Initial recognition of operating lease liabilities200,694
 
Acquisitions:   
Non-cash assets acquired:   
Loans
 330,747
Goodwill and other intangible assets, net
 4,975
Total non-cash assets acquired
 335,722
See accompanying notes to consolidated financial statements.

INVESTORS BANCORP, INC. AND SUBSIDIARIESSUBSIDIARY
Notes to Consolidated Financial Statements
 
1.     Basis of Presentation
The consolidated financial statements are comprised of the accounts of Investors Bancorp, Inc. and its wholly owned subsidiaries, includingsubsidiary, Investors Bank (the “Bank”) and the Bank’s wholly-owned subsidiaries (collectively, the “Company”). In the opinion of management, all the adjustments (consisting of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the unaudited periods presented have been included. The results of operations and other data presented for the three and nine months ended September 30, 2017March 31, 2019 are not necessarily indicative of the results of operations that may be expected for subsequent periods or the full year results.
Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) 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 the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s December 31, 20162018 Annual Report on Form 10-K. Certain reclassifications have been made in the consolidated financial statements to conform with current year classifications.

2.     Stock Transactions
Stock Repurchase Programs
On March 16, 2015, the Company announced it had received approval from the Board of Governors of the Federal Reserve System to commence a 5% buybackits first repurchase program prior to the one-year anniversary of thesince completion of its second step conversion. Accordingly, the Board of Directors authorized the repurchase of 17,911,561 shares. The first program was completed onOn June 30, 2015.
2015, the Company’s second repurchase program began upon completion of the first program. On June 9, 2015,17, 2016, the Company’s third share repurchase program began upon completion of the second program. On October 25, 2018, the Company announced its secondfourth share repurchase program, which authorized the purchase of an additional 10% of its publicly-held outstanding shares of common stock, or 34,779,21128,886,780 shares. The second repurchasefourth program commenced immediately upon completion of the first repurchase planthird program on June 30, 2015. The secondDecember 10, 2018 and remains the Company’s current program was completed on June 17, 2016.
On April 28, 2016, the Company announced its third share repurchase program, which authorized the purchaseas of an additional 10% of its publicly-held outstanding shares of common stock, or 31,481,189 shares. The new repurchase program commenced immediately upon completion of the second repurchase plan on June 17, 2016.March 31, 2019.
During the ninethree months ended September 30, 2017,March 31, 2019, the Company purchased (including withholding of shares for payment of taxes with respect to vesting of equity transactions) 4,371,6476,208,379 shares at a cost of $57.8$73.7 million, or approximately $13.23$11.88 per share. During the three months ended March 31, 2019, shares repurchased included 128,379 shares withheld to cover income taxes related to restricted stock vesting under our 2015 Equity Incentive Plan. Shares withheld to pay income taxes are repurchased pursuant to the terms of the 2015 Equity Incentive Plan.

3.     Business Combinations
On February 2, 2018, the Company completed the acquisition of a $345.8 million equipment finance portfolio. The acquisition included a seven-person team of financing professionals to lead the Company’s Equipment Finance Group, which is a part of the Company’s business lending group and is classified within our commercial and industrial loan portfolio. The purchase price of $340.2 million was paid using available cash.
The acquisition was accounted for under the acquisition method of accounting as prescribed by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”, as amended. Under this method of accounting, the purchase price has been allocated to the respective assets acquired based on their estimated fair values, net of applicable income tax effects. The excess cost over fair value of assets acquired, or $5.0 million, has been recorded as goodwill.
The acquired portfolio was fair valued on the date of acquisition based on guidance from ASC 820-10 which defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The valuation methods utilized took into consideration adjustments for interest rate risk, funding cost, servicing cost, residual risk, credit and liquidity risk.
The calculation of goodwill is subject to change for up to one year after the closing date of the transaction as additional information relative to closing date estimates and uncertainties becomes available. The accounting for the acquisition of the equipment finance portfolio is complete and is reflected in our Consolidated Financial Statements.

3.4.     Earnings Per Share
The following is a summary of our earnings per share calculations and reconciliation of basic to diluted earnings per share.

For the Three Months Ended September 30,For the Three Months Ended March 31,
2017 20162019 2018
(Dollars in thousands, except per share data)(Dollars in thousands, except per share data)
Earnings for basic and diluted earnings per common share      
Earnings applicable to common stockholders$45,845
 $49,850
$48,158
 $57,925
      
Shares      
Weighted-average common shares outstanding - basic289,715,414
 292,000,061
267,664,063
 287,685,531
Effect of dilutive common stock equivalents (1)1,174,893
 2,673,391
605,667
 1,446,385
Weighted-average common shares outstanding - diluted290,890,307
 294,673,452
268,269,730
 289,131,916
      
Earnings per common share      
Basic$0.16
 $0.17
$0.18
 $0.20
Diluted$0.16
 $0.17
$0.18
 $0.20
(1) For the three months ended September 30, 2017March 31, 2019 and 2016,2018, there were 10,952,74410,278,975 and 16,372,5239,673,423 equity awards, respectively, that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented.

5.     Securities
Equity Securities
Equity securities are reported at fair value on the Company’s Consolidated Balance Sheets. The Company’s portfolio of equity securities had an estimated fair value of $5.9 million and $5.8 million as of March 31, 2019 and December 31, 2018, respectively. Realized gains and losses from sales of equity securities as well as changes in fair value of equity securities still held at the reporting date are recognized in the Consolidated Statements of Income.
The following table presents the disaggregated net gains (losses) on equity securities reported in the Consolidated Statements of Income:
 For the Nine Months Ended September 30,
 2017 2016
 (Dollars in thousands, except per share data)
Earnings for basic and diluted earnings per common share   
Earnings applicable to common stockholders$131,498
 $139,661
    
Shares   
Weighted-average common shares outstanding - basic290,670,601
 299,873,985
Effect of dilutive common stock equivalents (1)1,819,305
 3,423,132
Weighted-average common shares outstanding - diluted292,489,906
 303,297,117
    
Earnings per common share   
Basic$0.45
 $0.47
Diluted$0.45
 $0.46
(1) For the nine months ended September 30, 2017 and 2016, there were 11,041,315 and 11,819,014 equity awards, respectively, that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented.
 For the Three Months Ended March 31,
 2019 2018
 (In thousands)
Net gains (losses) recognized on equity securities$64
 (46)
Less: Net gains (losses) recognized on equity securities sold
 
Unrealized gains (losses) recognized on equity securities$64
 (46)


4.Debt Securities
The following tables present the carrying value, gross unrealized gains and losses and estimated fair value for available-for-sale debt securities and the amortized cost, net unrealized losses, carrying value, gross unrecognized gains and losses and estimated fair value for held-to-maturity debt securities as of the dates indicated:

 At March 31, 2019
 Carrying value 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair value
 (In thousands)
Available-for-sale:       
Mortgage-backed securities:       
Federal Home Loan Mortgage Corporation$1,009,142
 11,015
 3,639
 1,016,518
Federal National Mortgage Association974,499
 6,958
 7,027
 974,430
Government National Mortgage Association163,128
 2,264
 
 165,392
Total debt securities available-for-sale$2,146,769
 20,237
 10,666
 2,156,340
 At September 30, 2017
 Carrying value 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair value
 (In thousands)
Available-for-sale:       
Equity securities$4,889
 834
 77
 5,646
Mortgage-backed securities:       
Federal Home Loan Mortgage Corporation656,728
 1,803
 4,537
 653,994
Federal National Mortgage Association1,258,212
 2,600
 11,702
 1,249,110
Government National Mortgage Association41,642
 
 963
 40,679
Total mortgage-backed securities available-for-sale1,956,582
 4,403
 17,202
 1,943,783
Total available-for-sale securities$1,961,471
 5,237
 17,279
 1,949,429
At September 30, 2017At March 31, 2019
Amortized cost Net unrealized losses (1) Carrying value 
Gross
unrecognized
gains (2)
 
Gross
unrecognized
losses (2)
 
Estimated
fair value
Amortized cost 
Net unrealized losses (1)
 Carrying value 
Gross
unrecognized
gains (2)
 
Gross
unrecognized
losses (2)
 
Estimated
fair value
(In thousands)(In thousands)
Held-to-maturity:                      
Debt securities:                      
Government-sponsored enterprises$43,300
 
 43,300
 2
 739
 42,563
$41,262
 
 41,262
 
 405
 40,857
Municipal bonds30,907
 
 30,907
 1,415
 
 32,322
21,013
 
 21,013
 955
 
 21,968
Corporate and other debt securities67,411
 20,458
 46,953
 37,776
 
 84,729
66,402
 15,603
 50,799
 34,635
 
 85,434
Total debt securities held-to-maturity141,618
 20,458
 121,160
 39,193
 739
 159,614
128,677
 15,603
 113,074
 35,590
 405
 148,259
Mortgage-backed securities:                      
Federal Home Loan Mortgage Corporation441,464
 1,091
 440,373
 1,530
 2,397
 439,506
398,597
 526
 398,071
 322
 4,840
 393,553
Federal National Mortgage Association1,120,171
 1,289
 1,118,882
 5,968
 7,835
 1,117,015
926,662
 600
 926,062
 1,672
 11,888
 915,846
Government National Mortgage Association53,336
 
 53,336
 19
 311
 53,044
79,393
 
 79,393
 
 367
 79,026
Total mortgage-backed securities held-to-maturity1,614,971
 2,380
 1,612,591
 7,517
 10,543
 1,609,565
1,404,652
 1,126
 1,403,526
 1,994
 17,095
 1,388,425
Total held-to-maturity securities$1,756,589
 22,838
 1,733,751
 46,710
 11,282
 1,769,179
Total debt securities held-to-maturity$1,533,329
 16,729
 1,516,600
 37,584
 17,500
 1,536,684

(1) Net unrealized losses of held-to-maturity corporate and other debt securities represent the other than temporary charge related to other non-credit factors and is being amortized through accumulated other comprehensive income over the remaining life of the securities. For mortgage-backed securities, it represents the net loss on previously designated available-for sale debt securities transferred to held-to-maturity at fair value and is being amortized through accumulated other comprehensive income over the remaining life of the securities.
(2) Unrecognized gains and losses of held-to-maturity debt securities are not reflected in the financial statements, as they represent fair value fluctuations from the later of: (i) the date a security is designated as held-to-maturity; or (ii) the date that an other than temporary impairment charge is recognized on a held-to-maturity security, through the date of the balance sheet.

At December 31, 2016At December 31, 2018
Carrying value 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair value
Carrying value 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair value
(In thousands)(In thousands)
Available-for-sale:              
Equity securities$5,825
 918
 83
 6,660
Mortgage-backed securities:              
Federal Home Loan Mortgage Corporation603,774
 1,971
 7,306
 598,439
$988,348
 6,492
 8,190
 986,650
Federal National Mortgage Association1,022,383
 2,678
 16,474
 1,008,587
980,546
 3,560
 15,550
 968,556
Government National Mortgage Association47,538
 
 791
 46,747
165,211
 1,745
 
 166,956
Total mortgage-backed securities available-for-sale1,673,695
 4,649
 24,571
 1,653,773
Total available-for-sale securities$1,679,520
 5,567
 24,654
 1,660,433
Total debt securities available-for-sale$2,134,105
 11,797
 23,740
 2,122,162
At December 31, 2016At December 31, 2018
Amortized cost Net unrealized losses (1) Carrying Value 
Gross
unrecognized
gains (2)
 
Gross
unrecognized
losses (2)
 
Estimated
fair value
Amortized cost 
Net unrealized losses (1)
 
Carrying
value
 
Gross
unrecognized
gains (2)
 
Gross
unrecognized
losses (2)
 
Estimated
fair value
(In thousands)(In thousands)
Held-to-maturity:                      
Debt securities:                      
Government-sponsored enterprises$2,128
 
 2,128
 12
 
 2,140
$41,258
 
 41,258
 
 1,236
 40,022
Municipal bonds37,978
 
 37,978
 1,515
 
 39,493
25,513
 
 25,513
 942
 
 26,455
Corporate and other debt securities65,852
 21,760
 44,092
 40,153
 
 84,245
66,295
 15,854
 50,441
 36,592
 
 87,033
Total debt securities held-to-maturity105,958
 21,760
 84,198
 41,680
 
 125,878
133,066
 15,854
 117,212
 37,534
 1,236
 153,510
Mortgage-backed securities:                      
Federal Home Loan Mortgage Corporation411,692
 1,559
 410,133
 793
 3,502
 407,424
402,231
 595
 401,636
 112
 9,413
 392,335
Federal National Mortgage Association1,246,635
 1,802
 1,244,833
 3,635
 15,389
 1,233,079
955,237
 689
 954,548
 535
 22,687
 932,396
Government National Mortgage Association16,392
 
 16,392
 28
 
 16,420
81,741
 
 81,741
 
 1,418
 80,323
Total mortgage-backed securities held-to-maturity1,674,719
 3,361
 1,671,358
 4,456
 18,891
 1,656,923
1,439,209
 1,284
 1,437,925
 647
 33,518
 1,405,054
Total held-to-maturity securities$1,780,677
 25,121
 1,755,556
 46,136
 18,891
 1,782,801
Total debt securities held-to-maturity$1,572,275
 17,138
 1,555,137
 38,181
 34,754
 1,558,564

(1) Net unrealized losses of held-to-maturity corporate and other debt securities represent the other than temporary charge related to other non-credit factors and is being amortized through accumulated other comprehensive income over the remaining life of the securities. For mortgage-backed securities, it represents the net loss on previously designated available-for sale debt securities transferred to held-to-maturity at fair value and is being amortized through accumulated other comprehensive income over the remaining life of the securities.
(2) Unrecognized gains and losses of held-to-maturity debt securities are not reflected in the financial statements, as they represent fair value fluctuations from the later of: (i) the date a security is designated as held-to-maturity; or (ii) the date that an other than temporary impairment charge is recognized on a held-to-maturity security, through the date of the balance sheet.
At September 30, 2017,March 31, 2019, corporate and other debt securities include a portfolio of collateralized debt obligations backed by pooled trust preferred securities (“TruPS”), principally issued by banks and to a lesser extent insurance companies and real estate investment trusts, and collateralized debt obligations.trusts. At September 30, 2017,March 31, 2019, the TruPS had a carrying value and estimated fair value of $42.0$45.8 million and $79.6$80.4 million, respectively. While all were investment grade at purchase, securities classified as non-investment grade at September 30, 2017March 31, 2019 had an amortized costa carrying value and estimated fair value of $39.9$43.9 million and $73.2$75.7 million, respectively. Fair value is derived from considering specific assumptions, including terms of the TruPS structure, events of deferrals, defaults and liquidations, the projected cashflowcash flow for principal and interest payments, and discounted cash flow modeling.
InvestmentDebt securities with a carrying value of $1.14 billion$706.0 million and an estimated fair value of $1.13 billion$700.7 million are pledged to secure borrowings.borrowings and municipal deposits. The contractual maturities of the Bank’s mortgage-backed securities are generally less than 20 years with effective lives expected to be shorter due to prepayments. Expected maturities may differ from contractual maturities due to underlying loan prepayments or early call privileges of the issuer, therefore, mortgage-backed securities are not included in the following table. The amortized cost and estimated fair value of debt securities other than mortgage-backed securities at September 30, 2017,March 31, 2019, by contractual maturity, are shown below. 

September 30, 2017March 31, 2019
Carrying Value 
Estimated
fair value
Carrying
value
 
Estimated
fair value
(In thousands)(In thousands)
Due in one year or less$28,337
 28,339
$16,993
 16,993
Due after one year through five years75
 75

 
Due after five years through ten years46,240
 45,582
50,282
 50,850
Due after ten years46,508
 85,618
45,799
 80,416
Total$121,160
 159,614
$113,074
 148,259

Gross unrealized losses on debt securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2017March 31, 2019 and December 31, 2016, was2018, were as follows:
 March 31, 2019
 Less than 12 months 12 months or more Total
 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
 (In thousands)
Available-for-sale:           
Mortgage-backed securities:          

Federal Home Loan Mortgage Corporation$1,584
 2
 335,311
 3,637
 336,895
 3,639
Federal National Mortgage Association555
 1
 573,343
 7,026
 573,898
 7,027
Total debt securities available-for-sale2,139
 3
 908,654
 10,663
 910,793
 10,666
Held-to-maturity:           
Debt securities:           
Government-sponsored enterprises
 
 40,857
 405
 40,857
 405
Mortgage-backed securities:           
Federal Home Loan Mortgage Corporation
 
 360,580
 4,840
 360,580
 4,840
Federal National Mortgage Association
 
 744,965
 11,888
 744,965
 11,888
Government National Mortgage Association
 
 79,026
 367
 79,026
 367
Total mortgage-backed securities held-to-maturity
 
 1,184,571
 17,095
 1,184,571
 17,095
Total debt securities held-to-maturity
 
 1,225,428
 17,500
 1,225,428
 17,500
Total$2,139
 3
 2,134,082
 28,163
 2,136,221
 28,166


 September 30, 2017
 Less than 12 months 12 months or more Total
 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
 (In thousands)
Available-for-sale:           
Equity Securities$4,792
 77
 
 
 4,792
 77
Mortgage-backed securities:          

Federal Home Loan Mortgage Corporation291,595
 2,732
 56,408
 1,805
 348,003
 4,537
Federal National Mortgage Association678,795
 7,951
 150,569
 3,751
 829,364
 11,702
Government National Mortgage Association40,679
 963
 
 
 40,679
 963
Total mortgage-backed securities available-for-sale1,011,069
 11,646
 206,977
 5,556
 1,218,046
 17,202
Total available-for-sale securities1,015,861
 11,723
 206,977
 5,556
 1,222,838
 17,279
Held-to-maturity:           
Debt securities:           
Government-sponsored enterprises40,517
 739
 
 
 40,517
 739
Mortgage-backed securities:           
Federal Home Loan Mortgage Corporation243,530
 2,333
 2,820
 64
 246,350
 2,397
Federal National Mortgage Association571,368
 6,294
 43,891
 1,541
 615,259
 7,835
Government National Mortgage Association39,524
 311
 
 
 39,524
 311
Total mortgage-backed securities held-to-maturity854,422
 8,938
 46,711
 1,605
 901,133
 10,543
Total held-to-maturity securities894,939
 9,677
 46,711
 1,605
 941,650
 11,282
Total$1,910,800
 21,400
 253,688
 7,161
 2,164,488
 28,561

December 31, 2016December 31, 2018
Less than 12 months 12 months or more TotalLess than 12 months 12 months or more Total
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
 
Estimated
fair value
 
Unrealized
losses
(In thousands)(In thousands)
Available-for-sale:                      
Equity Securities$4,722
 83
 
 
 4,722
 83
Mortgage-backed securities:           
Federal Home Loan Mortgage Corporation$97,137
 994
 288,916
 7,196
 386,053
 8,190
Federal National Mortgage Association125,389
 2,098
 489,337
 13,452
 614,726
 15,550
Total debt securities available-for-sale222,526
 3,092
 778,253
 20,648
 1,000,779
 23,740
Held-to-maturity:           
Debt securities:           
Government-sponsored enterprises
 
 40,022
 1,236
 40,022
 1,236
Mortgage-backed securities:                      
Federal Home Loan Mortgage Corporation406,878
 7,220
 12,756
 86
 419,634
 7,306
51,045
 553
 339,534
 8,860
 390,579
 9,413
Federal National Mortgage Association762,272
 15,977
 25,089
 497
 787,361
 16,474
214,400
 2,449
 663,671
 20,238
 878,071
 22,687
Government National Mortgage Association46,747
 791
 
 
 46,747
 791
35,499
 492
 44,824
 926
 80,323
 1,418
Total mortgage-backed securities available-for-sale1,215,897
 23,988
 37,845
 583
 1,253,742
 24,571
Total available-for-sale securities1,220,619
 24,071
 37,845
 583
 1,258,464
 24,654
Held-to-maturity:           
Mortgage-backed securities:           
Federal Home Loan Mortgage Corporation339,666
 3,354
 3,623
 148
 343,289
 3,502
Federal National Mortgage Association970,194
 15,389
 
 
 970,194
 15,389
Total held-to-maturity securities1,309,860
 18,743
 3,623
 148
 1,313,483
 18,891
Total mortgage-backed securities held-to-maturity300,944
 3,494
 1,048,029
 30,024
 1,348,973
 33,518
Total debt securities held-to-maturity300,944
 3,494
 1,088,051
 31,260
 1,388,995
 34,754
Total$2,530,479
 42,814
 41,468
 731
 2,571,947
 43,545
$523,470
 6,586
 1,866,304
 51,908
 2,389,774
 58,494
At September 30, 2017,March 31, 2019, the majority of gross unrealized losses primarily relate to our mortgage-backed-security portfolio which is comprised of debt securities issued by U.S. Government Sponsored Enterprises. The fair values of these securities have been negatively impacted by the recent increasechanges in intermediate-term market interest rates.
Other-Than-Temporary Impairment (“OTTI”)
We conduct a quarterly review and evaluation of the securities portfolio to determine if the value of any security has declined below its cost or amortized cost, and whether such decline is other-than-temporary. If a determination is made that a debt security is other-than-temporarily impaired, the Company will estimate the amount of the unrealized loss that is attributable to credit and all other non-credit related factors. The credit related component will be recognized as an other-than-temporary impairment charge in non-interest income. The non-credit related component will be recorded as an adjustment to accumulated other comprehensive income, net of tax.
With the assistance of a valuation specialist, we evaluate the credit and performance of each issuer underlying our pooled TruPS. Cash flows for each security are forecasted using assumptions for defaults, recoveries, pre-payments and amortization. At September 30, 2017March 31, 2019 and 2016,2018, management deemed that the present value of projected cash flows for each security was greater than the book value and did not recognize any additional OTTI charges for the three and nine months ended September 30, 2017March 31, 2019 and 2016.2018. At September 30, 2017,March 31, 2019, non-credit related OTTI recorded on the previously impaired TruPS was $20.5$15.6 million ($12.111.2 million after-tax). This amount is being accreted into income over the estimated remaining life of the securities.

The following table presents the changes in the credit loss component of the impairment loss of debt securities that the Company has written down for such loss as an other-than-temporary impairment recognized in earnings.

For the Three Months Ended September 30, For the Nine Months Ended September 30,For the Three Months Ended March 31,
2017 2016 2017 20162019 2018
(In thousands)(In thousands)
Balance of credit related OTTI, beginning of period$87,921
 97,977
 95,743
 100,200
$80,595
 85,768
Additions:          
Initial credit impairments
 
 
 

 
Subsequent credit impairments
 
 
 

 
Reductions:          
Accretion of credit loss impairment due to an increase in expected cash flows(1,077) (1,112) (5,088) (3,335)(882) (923)
Reductions for securities sold or paid off during the period
 
 (3,811) 

 
Balance of credit related OTTI, end of period$86,844
 96,865
 86,844
 96,865
$79,713
 84,845

The credit loss component of the impairment loss represents the difference between the present value of expected future cash flows and the amortized cost basis of the securities prior to considering credit losses. The beginning balance represents the credit loss component for debt securities for which OTTI occurred prior to the period presented. If OTTI is recognized in earnings for credit impaired debt securities, they would be presented as additions based upon whether the current period is the first time a debt security was credit impaired (initial credit impairment) or is not the first time a debt security was credit impaired (subsequent credit impairments). The credit loss component is reduced if the Company sells, intends to sell or believes it will be required to sell previously credit impaired debt securities. Additionally, the credit loss component is reduced if (i) the Company receives cash flows in excess of what it expected to receive over the remaining life of the credit impaired debt security, (ii) the security matures or (iii) the security is fully written down.
Realized Gains and Losses
Gains and losses on the sale of all securities are determined using the specific identification method. For the three months ended September 30, 2017,March 31, 2019 and 2018, there were no proceeds from sales of securities in the available-for-sale portfolio. For the nine months ended September 30, 2017, theequity or debt securities. The Company received sale proceeds of $102.1 million on pools of mortgage-backed securities from the available-for-sale portfolio resulting in a gross realized gain of $1.3 million.
There were no proceeds from sales of securities in the held-to-maturity portfolio for the three and nine months ended September 30, 2017; however, for the nine months ended September 30, 2017, the Company received proceeds of $3.1 million from the liquidation of a TruP security. As a result, $1.9 million was recognized as interest income from securities in the Consolidated Statements of Income.
For the three and nine months ended September 30, 2016, the Company received proceeds of $122,200 and $57.9 million, respectively,unrealized gains on equity securities of $64,000 and poolsunrealized losses on equity securities of mortgage-backed securities sold from the available-for-sale portfolio resulting in a gross realized gain of $72,200 and $2.3 million, respectively. For$46,000, respectively, for the three months ended September 30, 2016, there were no sale proceeds from the held-to-maturity portfolio. For the nine months ended September 30, 2016, the Company received sale proceeds of $14.3 million on a pool of mortgage-backed securities from the held-to-maturity portfolio resulting in a gross realized gain of $836,000. These securities met the criteria of principal pay downs under 85% of the original investment amountMarch 31, 2019 and therefore did not result in a tainting of the held-to-maturity portfolio. The Company sells securities when, in management’s assessment, market pricing presents an economic benefit that outweighs holding such securities, and when securities with smaller balances become cost prohibitive to carry.2018.


5.6.    Loans Receivable, Net
The detail of the loan portfolio as of September 30, 2017March 31, 2019 and December 31, 20162018 was as follows:

September 30,
2017
 December 31,
2016
March 31,
2019
 December 31,
2018
(In thousands)(In thousands)
Multi-family loans$7,854,759
 7,459,131
$8,174,342
 8,165,187
Commercial real estate loans4,660,268
 4,445,194
4,848,729
 4,783,095
Commercial and industrial loans1,501,235
 1,275,283
2,430,540
 2,389,756
Construction loans397,929
 314,843
232,170
 227,015
Total commercial loans14,414,191
 13,494,451
15,685,781
 15,565,053
Residential mortgage loans4,871,460
 4,710,373
5,366,455
 5,350,504
Consumer and other loans654,701
 596,922
691,136
 707,746
Total loans excluding PCI loans19,940,352
 18,801,746
21,743,372
 21,623,303
PCI loans8,577
 8,956
4,281
 4,461
Net unamortized premiums and deferred loan costs (1)(11,701) (12,474)
Deferred fees, premiums and other, net (1)
(9,826) (13,811)
Allowance for loan losses(230,071) (228,373)(234,717) (235,817)
Net loans$19,707,157
 18,569,855
$21,503,110
 21,378,136
(1) Included in unamortizeddeferred fees and premiums and deferred loan costs are accretable purchase accounting adjustments in connection with loans acquired.acquired and an adjustment to the carrying amount of the residential loans hedged.

Allowance for Loan Losses
An analysis of the allowance for loan losses is summarized as follows:

Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2017 2016 2017 20162019 2018
(Dollars in thousands)    (In thousands)
Balance at beginning of the period$230,028
 220,316
 228,373
 218,505
$235,817
 230,969
Loans charged off(3,022) (2,972) (14,519) (13,379)(5,445) (7,107)
Recoveries1,315
 1,206
 4,467
 3,424
1,345
 4,782
Net charge-offs(1,707) (1,766) (10,052) (9,955)(4,100) (2,325)
Provision for loan losses1,750
 5,000
 11,750
 15,000
3,000
 2,500
Balance at end of the period$230,071
 223,550
 230,071
 223,550
$234,717
 231,144
The allowance for loan losses is the estimated amount considered necessary to cover credit losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses that is charged against income. In determining the allowance for loan losses, we make significant estimates and therefore, have identified the allowance as a critical accounting policy. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.
The allowance for loan losses has been determined in accordance with U.S. GAAP, under which we are required to maintain an allowance for probable losses at the balance sheet date. We are responsible for the timely and periodic determination of the amount of the allowance required. We believe that our allowance for loan losses is adequate to cover specifically identifiable losses, as well as estimated losses inherent in our portfolio for which certain losses are probable but not specifically identifiable. Loans acquired are marked to fair value on the date of acquisition with no valuation allowance reflected in the allowance for loan losses. In conjunction with the quarterly evaluation of the adequacy of the allowance for loan losses, the Company performs an analysis on acquired loans to determine whether or not an allowance should be ascribed to those loans. Purchased Credit-Impaired (“PCI”) loans, are loans acquired at a discount that is due, in part, to credit quality. PCI loans are accounted for in accordance with Accounting Standards Codification (“ASC”)ASC Subtopic 310-30 and are initially recorded at fair value as determined by the present value of expected future

cash flows with no valuation allowance reflected in the allowance for loan losses. For the ninethree months ended September 30, 2017,March 31, 2019 and 2018, the Company recorded charge-offs of $92,000$15,000 and $88,000, respectively, related to PCI loans acquired.
Management performs a quarterly evaluation of the adequacy of the allowance for loan losses. The analysis of the allowance for loan losses has two components: specificcollectively evaluated and general allocations.individually evaluated. Specific allocations are made for loans determined to be impaired. A loan is deemed to be impaired if it is a commercial loan with an outstanding balance greater than $1.0 million and on non-accrual status, loans modified in a troubled debt restructuring (“TDR”), and other commercial loans greater than $1.0 million if management has specific information that it is probable they will not collect all amounts due under the contractual terms of the loan agreement. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. The general allocationcollectively evaluated component is determined by segregating the remaining loans by type of loan, risk rating (if applicable) and payment history. In addition, the Company’s residential portfolio is subdivided between fixed and adjustable rate loans as adjustable rate loans are deemed to be subject to more credit risk if interest rates rise. Reserves for each loan segment or the loss factors are generally determined based on the Company’s historical loss experience over a look-back period determined to provide the appropriate amount of data to accurately estimate expected losses as of period end. Additionally, management assesses the loss emergence period for the expected losses of each loan segment and adjusts each historical loss factor accordingly. The loss emergence period is the estimated time from the date of a loss event (such as a personal bankruptcy) to the actual recognition of the loss (typically via the first full or partial loan charge-off), and is determined based upon a study of the Company’s past loss experience by loan segment. The loss factors may also be adjusted to account for qualitative or environmental factors that are likely to cause estimated credit losses inherent in the portfolio to differ from historical loss experience. This evaluation is based on among other things, loan and delinquency trends, general economic conditions, credit concentrations, industry trends and lending and credit management policies and procedures, but is inherently subjective as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions. Actual loan losses may be different than the allowance for loan losses we have established which could have a material negative effect on our financial results.

On a quarterly basis, management reviews the current status of various loan assets in order to evaluate the adequacy of the allowance for loan losses. In this evaluation process, specific loans are analyzed to determine their potential risk of loss. Loans determined to be impaired are evaluated for potential loss exposure. Any shortfall results in a recommendation of a specific allowance or charge-off if the likelihood of loss is evaluated as probable. To determine the adequacy of collateral on a particular loan, an estimate of the fair value of the collateral is based on the most current appraised value available for real property or a discounted cash flow analysis on a business. The appraised value for real property is then reduced to reflect estimated liquidation expenses.
The allowance contains reserves identified as unallocated. These reserves reflect management’s attempt to provide for the imprecision and the uncertainty that is inherent in estimates of probable credit losses.
Our lending emphasis has been the origination of multi-family loans, commercial real estate loans, commercial and industrial loans, one- to four-family residential mortgage loans secured by one- to four-family residential real estate, construction loans and consumer loans, the majority of which are home equity loans, home equity lines of credit and cash surrender value lending on life insurance contracts. These activities resulted in a concentration of loans secured by real estate property and businesses located in New Jersey and New York. Based on the composition of our loan portfolio, we believe the primary risks to our loan portfolio are increases in interest rates, a decline in the general economy, and declines in real estate market values in New Jersey, New York and surrounding states. Any one or combination of these events may adversely affect our loan portfolio resulting in increased delinquencies, loan losses and future levels of loan loss provisions. As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans are critical in determining the amount of the allowance required for specific loans. Assumptions for appraisal valuations are instrumental in determining the value of properties. Negative changes to appraisal assumptions could significantly impact the valuation of a property securing a loan and the related allowance determined. The assumptions supporting such appraisals are carefully reviewed to determine that the resulting values reasonably reflect amounts realizable on the related loans.
For commercial real estate, multi-family and construction loans, theThe Company obtains an appraisal for all commercial loans that are collateral dependent loans upon origination. An updated appraisal is obtained annually for loans rated substandard or worse with a balance of $500,000$1.0 million or greater. An updated appraisal is obtained biennially for loans rated special mention with a balance of $2.0 million or greater. This is done in order to determine the specific reserve or charge off needed. As part of the allowance for loan losses process, the Company reviews each collateral dependent commercial real estate loan classified as non-accrual and/or impaired and assesses whether there has been an adverse change in the collateral value supporting the loan. The Company utilizes information from its commercial lending officers and its credit department and special assets department’s knowledge of changes in real estate conditions in our lending area to identify if possible deterioration of collateral value has occurred. Based on the severity of the changes in market conditions, management determines if an updated appraisal is warranted or if downward adjustments to the previous appraisal are warranted. If it is determined that the deterioration of the collateral value is significant enough to warrant ordering a new appraisal, an estimate of the downward adjustments to the existing appraised value is used in assessing if additional specific reserves are necessary until the updated appraisal is received.

For homogeneous residential mortgage loans, the Company’s policy is to obtain an appraisal upon the origination of the loan and an updated appraisal in the event a loan becomes 90 days delinquent. Thereafter, the appraisal is updated every two years if the loan remains in non-performing status and the foreclosure process has not been completed. Management adjusts the appraised value of residential loans to reflect estimated selling costs and declines in the real estate market.
Management believes the potential risk for outdated appraisals for impaired and other non-performing loans has been mitigated due to the fact that the loans are individually assessed to determine that the loan’s carrying value is not in excess of the fair value of the collateral. Loans are generally charged off after an analysis is completed which indicates that collectability of the full principal balance is in doubt.
Although we believe we have established and maintained the allowance for loan losses at adequate levels, additions may be necessary ifbased on the currentgrowth and composition of the loan portfolio, the level of loan delinquency and the economic environment deteriorates.conditions in our lending area. Management uses relevant information available; however, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change. In addition, the Federal Deposit Insurance Corporation and the New Jersey Department of Banking and Insurance, as an integral part of their examination process, will periodically review our allowance for loan losses. Such agencies may require us to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination.


The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2017March 31, 2019 and December 31, 2016:2018:

September 30, 2017March 31, 2019
Multi-
Family Loans
 
Commercial
Real Estate Loans
 
Commercial
and Industrial
Loans
 
Construction
Loans
 
Residential
Mortgage Loans
 
Consumer
and Other
Loans
 Unallocated Total
Multi-
Family Loans
 
Commercial
Real Estate Loans
 
Commercial
and Industrial
Loans
 
Construction
Loans
 
Residential
Mortgage Loans
 
Consumer
and Other
Loans
 Unallocated Total
(Dollars in thousands)(Dollars in thousands)
Allowance for loan losses:                              
Beginning balance-December 31, 2016$95,561
 52,796
 43,492
 11,653
 19,831
 2,850
 2,190
 228,373
Beginning balance-December 31, 2018$82,876
 48,449
 71,084
 7,486
 20,776
 3,102
 2,044
 235,817
Charge-offs(5) (6,818) (3,242) (100) (4,205) (149) 
 (14,519)(1,463) (8) (2,946) 
 (823) (205) 
 (5,445)
Recoveries1,178
 500
 177
 
 2,492
 120
 
 4,467

 542
 331
 
 432
 40
 
 1,345
Provision(9,795) 13,205
 6,862
 (1,771) 2,913
 116
 220
 11,750
(5,841) (1,356) 10,376
 (183) 172
 54
 (222) 3,000
Ending balance-September 30, 2017$86,939
 59,683
 47,289
 9,782
 21,031
 2,937
 2,410
 230,071
Ending balance-March 31, 2019$75,572
 47,627
 78,845
 7,303
 20,557
 2,991
 1,822
 234,717
                              
Individually evaluated for impairment$
 
 
 
 1,630
 88
 
 1,718
$
 
 
 
 1,986
 72
 
 2,058
Collectively evaluated for impairment86,939
 59,683
 47,289
 9,782
 19,401
 2,849
 2,410
 228,353
75,572
 47,627
 78,845
 7,303
 18,571
 2,919
 1,822
 232,659
Loans acquired with deteriorated credit quality
 
 
 
 
 
 
 

 
 
 
 
 
 
 
Balance at September 30, 2017$86,939
 59,683
 47,289
 9,782
 21,031
 2,937
 2,410
 230,071
Balance at March 31, 2019$75,572
 47,627
 78,845
 7,303
 20,557
 2,991
 1,822
 234,717
                              
Loans:                              
Individually evaluated for impairment$13,929
 32,499
 1,317
 
 26,827
 861
 
 75,433
$32,346
 5,173
 17,152
 
 28,297
 846
 
 83,814
Collectively evaluated for impairment7,840,830
 4,627,769
 1,499,918
 397,929
 4,844,633
 653,840
 
 19,864,919
8,141,996
 4,843,556
 2,413,388
 232,170
 5,338,158
 690,290
 
 21,659,558
Loans acquired with deteriorated credit quality
 6,845
 
 
 1,412
 320
 
 8,577

 3,673
 
 
 515
 93
 
 4,281
Balance at September 30, 2017$7,854,759
 4,667,113
 1,501,235
 397,929
 4,872,872
 655,021
 
 19,948,929
Balance at March 31, 2019$8,174,342
 4,852,402
 2,430,540
 232,170
 5,366,970
 691,229
 
 21,747,653

December 31, 2016December 31, 2018
Multi-
Family Loans
 
Commercial
Real Estate Loans
 
Commercial
and Industrial
Loans
 
Construction
Loans
 
Residential
Mortgage Loans
 
Consumer
and Other
Loans
 Unallocated Total
Multi-
Family Loans
 
Commercial
Real Estate Loans
 
Commercial
and Industrial
Loans
 
Construction
Loans
 
Residential
Mortgage Loans
 
Consumer
and Other
Loans
 Unallocated Total
(Dollars in thousands)(Dollars in thousands)
Allowance for loan losses:                              
Beginning balance-December 31, 2015$88,223
 46,999
 40,585
 6,794
 31,443
 3,155
 1,306
 218,505
Beginning balance-December 31, 2017$81,469
 56,137
 54,563
 11,609
 21,835
 3,099
 2,257
 230,969
Charge-offs(161) (455) (4,485) (52) (9,425) (419) 
 (14,997)(2,603) (7,200) (7,078) 
 (5,246) (1,963) 
 (24,090)
Recoveries1,885
 689
 541
 267
 1,631
 102
 
 5,115
17
 5,213
 9,478
 
 2,193
 37
 
 16,938
Provision5,614
 5,563
 6,851
 4,644
 (3,818) 12
 884
 19,750
3,993
 (5,701) 14,121
 (4,123) 1,994
 1,929
 (213) 12,000
Ending balance-December 31, 2016$95,561
 52,796
 43,492
 11,653
 19,831

2,850
 2,190
 228,373
Ending balance-December 31, 2018$82,876
 48,449
 71,084
 7,486
 20,776

3,102
 2,044
 235,817
                              
Individually evaluated for impairment$
 
 
 
 1,581
 20
 
 1,601
$
 
 
 
 2,082
 72
 
 2,154
Collectively evaluated for impairment95,561
 52,796
 43,492
 11,653
 18,250
 2,830
 2,190
 226,772
82,876
 48,449
 71,084
 7,486
 18,694
 3,030
 2,044
 233,663
Loans acquired with deteriorated credit quality
 
 
 
 
 
 
 

 
 
 
 
 
 
 
Balance at December 31, 2016$95,561
 52,796
 43,492
 11,653
 19,831

2,850
 2,190
 228,373
Balance at December 31, 2018$82,876
 48,449
 71,084
 7,486
 20,776

3,102
 2,044
 235,817
                              
Loans:                              
Individually evaluated for impairment$248
 5,962
 3,370
 
 24,453
 371
 
 34,404
$32,046
 6,623
 19,624
 
 27,884
 570
 
 86,747
Collectively evaluated for impairment7,458,883
 4,439,232
 1,271,913
 314,843
 4,685,920
 596,551
 
 18,767,342
8,133,141
 4,776,472
 2,370,132
 227,015
 5,322,620
 707,176
 
 21,536,556
Loans acquired with deteriorated credit quality
 7,106
 
 
 1,507
 343
 
 8,956

 3,730
 
 
 611
 120
 
 4,461
Balance at December 31, 2016$7,459,131
 4,452,300
 1,275,283
 314,843
 4,711,880

597,265
 
 18,810,702
Balance at December 31, 2018$8,165,187
 4,786,825
 2,389,756
 227,015
 5,351,115

707,866
 
 21,627,764
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. For non-homogeneous loans, such as commercial and commercial real estate loans, the Company analyzes the loans individually by classifying the loans as to credit risk and assesses the probability of collection for each type of class. In assessing and classifying our commercial loan portfolio, the Company places significant emphasis on the borrower’s ability to service its debt. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:
Pass -- “Pass” assets are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.
Watch -- A “Watch” asset has all the characteristics of a Pass asset but warrants more than the normal level of supervision. These loans may require more detailed reporting to management because some aspects of underwriting may not conform to policy or adverse events may have affected or could affect the cash flow or ability to continue operating profitably, provided, however, the events do not constitute an undue credit risk. Residential and consumer loans delinquent 30-59 days are considered watch if not already identified as impaired.
Special Mention - A “Special Mention” asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit

position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to

warrant adverse classification. Residential and consumer loans delinquent 60-89 days are considered special mention if not already identified as impaired.
Substandard - A “Substandard” asset is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Residential and consumer loans delinquent 90 days or greater as well as those identified as impaired are considered substandard.
Doubtful - An asset classified “Doubtful” has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.
Loss - An asset or portion thereof, classified “Loss” is considered uncollectible and of such little value that its continuance on the institution’s books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; but rather, there is much doubt about whether, how much, or when the recovery will occur. As such, it is not practical or desirable to defer the write-off.
The following tables present the risk category of loans as of September 30, 2017March 31, 2019 and December 31, 20162018 by class of loans, excluding PCI loans:

September 30, 2017March 31, 2019
Pass Watch 
Special
Mention
 Substandard Doubtful Loss TotalPass Watch 
Special
Mention
 Substandard Doubtful Loss Total
(In thousands)(In thousands)
Commercial loans:                          
Multi-family$6,884,230
 678,668
 158,101
 133,760
 
 
 7,854,759
$6,568,139
 981,139
 291,225
 333,839
 
 
 8,174,342
Commercial real estate3,828,406
 528,965
 135,840
 167,057
 
 
 4,660,268
4,027,646
 516,444
 150,022
 154,617
 
 
 4,848,729
Commercial and industrial1,026,038
 395,166
 64,815
 15,216
 
 
 1,501,235
1,625,810
 607,526
 57,203
 140,001
 
 
 2,430,540
Construction284,554
 106,798
 6,577
 
 
 
 397,929
156,986
 56,663
 
 18,521
 
 
 232,170
Total commercial loans12,023,228
 1,709,597
 365,333
 316,033
 
 
 14,414,191
12,378,581
 2,161,772
 498,450
 646,978
 
 
 15,685,781
Residential mortgage4,772,466
 15,174
 7,615
 76,205
 
 
 4,871,460
5,285,603
 15,110
 6,132
 59,610
 
 
 5,366,455
Consumer and other640,416
 7,048
 353
 6,884
 
 
 654,701
676,901
 10,173
 1,135
 2,927
 
 
 691,136
Total$17,436,110
 1,731,819
 373,301
 399,122
 
 
 19,940,352
$18,341,085
 2,187,055
 505,717
 709,515
 
 
 21,743,372

December 31, 2016December 31, 2018
Pass Watch 
Special
Mention
 Substandard Doubtful Loss TotalPass Watch 
Special
Mention
 Substandard Doubtful Loss Total
(In thousands)(In thousands)
Commercial loans:                          
Multi-family$6,961,809
 276,858
 165,948
 54,516
 
 
 7,459,131
$6,462,056
 1,061,168
 313,498
 328,465
 
 
 8,165,187
Commercial real estate3,900,988
 373,319
 134,154
 36,733
 
 
 4,445,194
3,910,282
 552,080
 162,488
 158,245
 
 
 4,783,095
Commercial and industrial900,190
 344,628
 23,588
 6,877
 
 
 1,275,283
1,647,130
 571,620
 53,861
 117,145
 
 
 2,389,756
Construction230,630
 76,773
 3,200
 4,240
 
 
 314,843
163,503
 35,774
 9,200
 18,538
 
 
 227,015
Total commercial loans11,993,617
 1,071,578
 326,890
 102,366
 
 
 13,494,451
12,182,971
 2,220,642
 539,047
 622,393
 
 
 15,565,053
Residential mortgage4,600,611
 21,873
 10,239
 77,650
 
 
 4,710,373
5,268,234
 12,082
 7,712
 62,476
 
 
 5,350,504
Consumer and other583,140
 5,627
 719
 7,436
 
 
 596,922
694,432
 8,443
 1,650
 3,221
 
 
 707,746
Total$17,177,368
 1,099,078
 337,848
 187,452
 
 
 18,801,746
$18,145,637
 2,241,167
 548,409
 688,090
 
 
 21,623,303
    

The following tables present the payment status of the recorded investment in past due loans as of September 30, 2017March 31, 2019 and December 31, 20162018 by class of loans, excluding PCI loans:
 
September 30, 2017March 31, 2019
30-59 Days 60-89 Days 
Greater
than 90
Days
 
Total Past
Due
 Current 
Total
Loans
Receivable
30-59 Days 60-89 Days 
Greater
than 90
Days
 
Total Past
Due
 Current 
Total
Loans
Receivable
(In thousands)(In thousands)
Commercial loans:                      
Multi-family$15,785
 
 207
 15,992
 7,838,767
 7,854,759
$29,637
 3,621
 31,420
 64,678
 8,109,664
 8,174,342
Commercial real estate32,663
 979
 14,546
 48,188
 4,612,080
 4,660,268
5,579
 314
 644
 6,537
 4,842,192
 4,848,729
Commercial and industrial611
 1,384
 336
 2,331
 1,498,904
 1,501,235
11,322
 3,810
 10,291
 25,423
 2,405,117
 2,430,540
Construction
 
 
 
 397,929
 397,929

 
 210
 210
 231,960
 232,170
Total commercial loans49,059
 2,363
 15,089
 66,511
 14,347,680
 14,414,191
46,538
 7,745
 42,565
 96,848
 15,588,933
 15,685,781
Residential mortgage16,851
 8,386
 54,101
 79,338
 4,792,122
 4,871,460
15,822
 6,555
 35,685
 58,062
 5,308,393
 5,366,455
Consumer and other7,048
 353
 6,025
 13,426
 641,275
 654,701
10,173
 1,215
 2,100
 13,488
 677,648
 691,136
Total$72,958
 11,102
 75,215
 159,275
 19,781,077
 19,940,352
$72,533
 15,515
 80,350
 168,398
 21,574,974
 21,743,372
 
December 31, 2016December 31, 2018
30-59 Days 60-89 Days 
Greater
than 90
Days
 
Total Past
Due
 Current 
Total
Loans
Receivable
30-59 Days 60-89 Days 
Greater
than 90
Days
 
Total Past
Due
 Current 
Total
Loans
Receivable
(In thousands)(In thousands)
Commercial loans:                      
Multi-family$5,272
 1,099
 234
 6,605
 7,452,526
 7,459,131
$23,098
 2,572
 33,683
 59,353
 8,105,834
 8,165,187
Commercial real estate6,568
 31,964
 6,445
 44,977
 4,400,217
 4,445,194
5,491
 3,511
 2,415
 11,417
 4,771,678
 4,783,095
Commercial and industrial864
 885
 2,971
 4,720
 1,270,563
 1,275,283
2,988
 867
 4,560
 8,415
 2,381,341
 2,389,756
Construction
 
 
 
 314,843
 314,843
9,200
 
 227
 9,427
 217,588
 227,015
Total commercial loans12,704
 33,948
 9,650
 56,302
 13,438,149
 13,494,451
40,777
 6,950
 40,885
 88,612
 15,476,441
 15,565,053
Residential mortgage24,052
 10,930
 58,119
 93,101
 4,617,272
 4,710,373
13,811
 7,712
 39,255
 60,778
 5,289,726
 5,350,504
Consumer and other5,627
 719
 7,065
 13,411
 583,511
 596,922
8,524
 1,650
 2,830
 13,004
 694,742
 707,746
Total$42,383
 45,597
 74,834
 162,814
 18,638,932
 18,801,746
$63,112
 16,312
 82,970
 162,394
 21,460,909
 21,623,303
The following table presents non-accrual loans, excluding PCI loans, at the dates indicated:
 
September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
# of loans Amount # of loans Amount# of loans Amount # of loans Amount
(Dollars in thousands)(Dollars in thousands)
Non-accrual:  
Multi-family4
 $14,137
 2
 $482
14
 $34,069
 15
 $33,940
Commercial real estate31
 35,329
 24
 9,205
32
 9,854
 35
 12,391
Commercial and industrial6
 1,926
 8
 4,659
14
 17,184
 14
 19,394
Construction1
 210
 1
 227
Total commercial loans41
 51,392
 34
 14,346
61
 61,317
 65
 65,952
Residential mortgage and consumer417
 74,270
 478
 79,928
296
 56,370
 320
 58,961
Total non-accrual loans458
 $125,662
 512
 $94,274
357
 $117,687
 385
 $124,913

Included in the non-accrual table above are TDR loans whose payment status is current but the Company has classified as non-accrual as the loans have not maintained their current payment status for six consecutive months under the restructured terms and therefore do not meet the criteria for accrual status. As of September 30, 2017March 31, 2019 and December 31, 2016,2018, these loans are comprised of the following:
September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
# of loans Amount # of loans Amount# of loans Amount # of loans Amount
(Dollars in thousands)(Dollars in thousands)
Current TDR classified as non-accrual:       
Multi-family
 $
 1
 $248
TDR with payment status current classified as non-accrual:       
Commercial real estate1
 396
 1
 63
2
 $2,845
 2
 $2,817
Commercial and industrial
 
 1
 286
1
 3,109
 2
 9,762
Total commercial loans1
 396
 3
 597
3
 5,954
 4
 12,579
Residential mortgage and consumer24
 4,815
 23
 5,721
34
 5,378
 26
 4,006
Total current TDR classified as non-accrual25
 $5,211
 26
 $6,318
Total TDR with payment status current classified as non-accrual37
 $11,332
 30
 $16,585
The following table presents TDR loans which were also 30-89 days delinquent and classified as non-accrual at the dates indicated:
September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
# of loans Amount # of loans Amount# of loans Amount # of loans Amount
(Dollars in thousands)(Dollars in thousands)
TDR 30-89 days delinquent classified as non-accrual:              
Commercial real estate1
 $56
 2
 $169
Residential mortgage and consumer12
 2,447
 14
 2,869
8
 $1,215
 11
 $1,810
Total TDR 30-89 days delinquent classified as non-accrual13
 $2,503
 16
 $3,038
8
 $1,215
 11
 $1,810
The Company has no loans past due 90 days or more delinquent that are still accruing interest.
PCI loans are excluded from non-accrual loans, as they are recorded at fair value based on the present value of expected future cash flows. As of September 30, 2017,March 31, 2019, PCI loans with a carrying value of $8.6$4.3 million included $7.4 million of which were current, $75,000 of which were 30-89 days delinquent and $1.1 million of which were 90 days or more delinquent. As of December 31, 2016, PCI loans with a carrying value of $9.0 million included $7.7$4.2 million of which were current, none of which were 30-89 days delinquent and $1.3$140,000 of which were 90 days or more delinquent. As of December 31, 2018, PCI loans with a carrying value of $4.5 million included $4.1 million of which were current, $229,000 of which were 30-89 days delinquent and $248,000 of which were 90 days or more delinquent.
At September 30, 2017March 31, 2019 and December 31, 2016,2018, loans meeting the Company’s definition of an impaired loan were primarily collateral dependent loans which totaled $75.4$83.8 million and $34.4$86.7 million, respectively, with allocations of the allowance for loan losses of $1.7$2.1 million and $1.6$2.2 million for the periods ending September 30, 2017as of March 31, 2019 and December 31, 2016,2018, respectively. During the ninethree months ended September 30, 2017March 31, 2019 and 2016,2018, interest income received and recognized on these loans totaled $1.2 million$268,000 and $1.0 million,$242,000, respectively.


The following tables present loans individually evaluated for impairment by portfolio segment as of September 30, 2017March 31, 2019 and December 31, 2016:2018:

September 30, 2017March 31, 2019
Recorded
Investment
 
Unpaid Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Recorded
Investment
 
Unpaid Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
(In thousands)(In thousands)
With no related allowance:                  
Multi-family$13,929
 13,977
 
 14,318
 121
$32,346
 35,851
 
 34,094
 21
Commercial real estate32,499
 42,362
 
 32,910
 284
5,173
 9,957
 
 5,707
 84
Commercial and industrial1,317
 1,896
 
 1,343
 28
17,152
 25,527
 
 16,833
 74
Construction
 
 
 
 

 
 
 
 
Total commercial loans47,745
 58,235
 
 48,571
 433
54,671
 71,335
 
 56,634
 179
Residential mortgage and consumer12,877
 16,830
 
 11,785
 398
13,765
 18,464
 
 12,189
 48
With an allowance recorded:                  
Multi-family
 
 
 
 

 
 
 
 
Commercial real estate
 
 
 
 

 
 
 
 
Commercial and industrial
 
 
 
 

 
 
 
 
Construction
 
 
 
 

 
 
 
 
Total commercial loans
 
 
 
 

 
 
 
 
Residential mortgage and consumer14,811
 15,422
 1,718
 14,338
 332
15,378
 16,073
 2,058
 15,723
 41
Total:                  
Multi-family13,929
 13,977
 
 14,318
 121
32,346
 35,851
 
 34,094
 21
Commercial real estate32,499
 42,362
 
 32,910
 284
5,173
 9,957
 
 5,707
 84
Commercial and industrial1,317
 1,896
 
 1,343
 28
17,152
 25,527
 
 16,833
 74
Construction
 
 
 
 

 
 
 
 
Total commercial loans47,745
 58,235
 
 48,571
 433
54,671
 71,335
 
 56,634
 179
Residential mortgage and consumer27,688
 32,252
 1,718
 26,123
 730
29,143
 34,537
 2,058
 27,912
 89
Total impaired loans$75,433
 90,487
 1,718
 74,694
 1,163
$83,814
 105,872
 2,058
 84,546
 268

December 31, 2016December 31, 2018
Recorded
Investment
 
Unpaid Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Recorded
Investment
 
Unpaid Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
(In thousands)(In thousands)
With no related allowance:                  
Multi-family$248
 248
 
 252
 20
$32,046
 34,199
 
 33,656
 146
Commercial real estate5,962
 9,265
 
 5,790
 301
6,623
 11,896
 
 6,611
 79
Commercial and industrial3,370
 3,972
 
 3,953
 169
19,624
 26,323
 
 20,218
 232
Construction
 
 
 
 

 
 
 
 
Total commercial loans9,580
 13,485
 
 9,995
 490
58,293
 72,418
 
 60,485
 457
Residential mortgage and consumer11,030
 14,565
 
 9,899
 483
12,626
 17,130
 
 11,907
 167
With an allowance recorded:                  
Multi-family
 
 
 
 

 
 
 
 
Commercial real estate
 
 
 
 

 
 
 
 
Commercial and industrial
 
 
 
 

 
 
 
 
Construction
 
 
 
 

 
 
 
 
Total commercial loans
 
 
 
 

 
 
 
 
Residential mortgage and consumer13,794
 14,382
 1,601
 13,689
 479
15,828
 16,498
 2,154
 15,627
 280
Total:                  
Multi-family248
 248
 
 252
 20
32,046
 34,199
 
 33,656
 146
Commercial real estate5,962
 9,265
 
 5,790
 301
6,623
 11,896
 
 6,611
 79
Commercial and industrial3,370
 3,972
 
 3,953
 169
19,624
 26,323
 
 20,218
 232
Construction
 
 
 
 

 
 
 
 
Total commercial loans9,580
 13,485
 
 9,995
 490
58,293
 72,418
 
 60,485
 457
Residential mortgage and consumer24,824
 28,947
 1,601
 23,588
 962
28,454
 33,628
 2,154
 27,534
 447
Total impaired loans$34,404
 42,432
 1,601
 33,583
 1,452
$86,747
 106,046
 2,154
 88,019
 904
The average recorded investment is the annual average calculated based upon the ending quarterly balances. The interest income recognized is the year to date interest income recognized on a cash basis.
Troubled Debt Restructurings
On a case-by-case basis, the Company may agree to modify the contractual terms of a borrower’s loan to remain competitive and assist customers who may be experiencing financial difficulty, as well as preserve the Company’s position in the loan. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a TDR.
Substantially all of our TDR loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan, or a combination of these two methods. These modifications rarely result in the forgiveness of principal or accrued interest. In addition, we frequently obtain additional collateral or guarantor support when modifying commercial loans. Restructured loans remain on non-accrual status until there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.


The following tables present the total TDR loans at September 30, 2017March 31, 2019 and December 31, 2016.2018. There were fourfive residential PCI loans that were previously designated as PCI classified as TDRs for the periodperiods ended September 30, 2017. There were three residential PCI loans that were classified as TDRs for the period endedMarch 31, 2019 and December 31, 2016.2018.
 
September 30, 2017March 31, 2019
Accrual Non-accrual TotalAccrual Non-accrual Total
# of loans Amount # of loans Amount # of loans Amount# of loans Amount # of loans Amount # of loans Amount
(Dollars in thousands)(Dollars in thousands)
Commercial loans:                      
Commercial real estate2
 $171
 4
 $17,930
 6
 $18,101

 $
 3
 $2,855
 3
 $2,855
Commercial and industrial
 
 1
 1,316
 1
 1,316
2
 1,970
 2
 6,146
 4
 8,116
Total commercial loans2
 171
 5
 19,246
 7
 19,417
2
 1,970
 5
 9,001
 7
 10,971
Residential mortgage and consumer56
 13,187
 64
 14,502
 120
 27,689
52
 11,676
 82
 17,470
 134
 29,146
Total58
 $13,358
 69
 $33,748
 127
 $47,106
54
 $13,646
 87
 $26,471
 141
 $40,117

December 31, 2016December 31, 2018
Accrual Non-accrual TotalAccrual Non-accrual Total
# of loans Amount # of loans Amount # of loans Amount# of loans Amount # of loans Amount # of loans Amount
(Dollars in thousands)(Dollars in thousands)
Commercial loans:                      
Multi-family
 $
 1
 $248
 1
 $248

 $
 1
 $892
 1
 $892
Commercial real estate2
 352
 4
 3,240
 6
 3,592

 
 3
 2,859
 3
 2,859
Commercial and industrial
 
 2
 1,688
 2
 1,688
2
 2,070
 4
 13,479
 6
 15,549
Total commercial loans2
 352
 7
 5,176
 9
 5,528
2
 2,070
 8
 17,230
 10
 19,300
Residential mortgage and consumer40
 9,093
 61
 15,731
 101
 24,824
52
 11,550
 79
 16,908
 131
 28,458
Total42
 $9,445
 68
 $20,907
 110
 $30,352
54
 $13,620
 87
 $34,138
 141
 $47,758

The following tables present information about TDRs that occurred during the three and nine months ended September 30, 2017March 31, 2019 and 2016:2018:

Three Months Ended September 30,Three Months Ended March 31,
2017 20162019 2018
Number of
Loans
 
Pre-modification
Recorded
Investment
 
Post-
modification
Recorded
Investment
 
Number of
Loans
 
Pre-modification
Recorded
Investment
 
Post-
modification
Recorded
Investment
Number of
Loans
 
Pre-modification
Recorded
Investment
 
Post-
modification
Recorded
Investment
 
Number of
Loans
 
Pre-modification
Recorded
Investment
 
Post-
modification
Recorded
Investment
(Dollars in thousands)(Dollars in thousands)
Troubled Debt Restructurings:           
Commercial real estate
 $
 $
 2
 $468
 $468

 $
 $
 2
 $788
 $616
Commercial and industrial
 
 
 1
 435
 435
Residential mortgage and consumer6
 1,673
 1,673
 6
 1,051
 1,051
6
 1,664
 1,664
 6
 712
 712
    
 Nine Months Ended September 30,
 2017 2016
 
Number of
Loans
 
Pre-modification
Recorded
Investment
 
Post-
modification
Recorded
Investment
 
Number of
Loans
 
Pre-modification
Recorded
Investment
 
Post-
modification
Recorded
Investment
 (Dollars in thousands)
Troubled Debt Restructurings:           
Commercial real estate3
 $20,225
 $15,787
 5
 $1,039
 $1,039
Residential mortgage and consumer23
 4,924
 4,824
 20
 2,600
 2,600
Post-modification recorded investment represents the net book balance immediately following modification.
All TDRs are impaired loans, which are individually evaluated for impairment, as discussed above. Collateral dependent impaired loans classified as TDRs were written down to the estimated fair value of the collateral. There were no$477,000 in charge-offs for a TDR of an unsecured commercial and industrial loan during the three months ended March 31, 2019. There were $172,000 in charge-offs for collateral dependent TDRs during the three months ended September 30, 2017 and 2016. There were charge-offs of $4.5 million for collateral dependent TDRsMarch 31, 2018. This amount was fully recovered from the borrower during the nine months ended September 30, 2017. There were no charge-offs for collateral dependent TDRs during the nine months ended September 30, 2016.2018. The allowance for loan losses associated with the TDRs presented in the above tables totaled $1.7$2.1 million and $1.6$2.2 million at September 30, 2017as of March 31, 2019 and December 31, 2016,2018, respectively.
Residential mortgage loanLoan modifications generally involve the reduction in loan interest rate andand/or extension of loan maturity dates and also may include step up interest rates in their modified terms which will impact their weighted average yield in the future. All residential loans

deemed to be TDRs were modified to reflect a reduction in interest rates to current market rates. The commercial loan modifications which qualified as TDRs in the three months ended March 31, 2018 had their maturity extended.extended and one loan was modified to reflect a reduction in interest rate.
The following tables present information about pre and post modification interest yield for troubled debt restructuringsTDRs which occurred during the three and nine months ended September 30, 2017March 31, 2019 and 2016:2018:
Three Months Ended September 30,Three Months Ended March 31,
2017 20162019 2018
Number of
Loans
 
Pre-modification
Interest Yield
 
Post-
modification
Interest Yield
 
Number of
Loans
 
Pre-modification
Interest Yield
 
Post-
modification
Interest Yield
Number of
Loans
 
Pre-modification
Interest Yield
 
Post-
modification
Interest Yield
 
Number of
Loans
 
Pre-modification
Interest Yield
 
Post-
modification
Interest Yield
Troubled Debt Restructurings:           
Commercial real estate
 % % 2
 4.93% 4.89%
 % % 2
 4.68% 4.68%
Commercial and industrial
 % % 1
 4.75% 4.50%
Residential mortgage and consumer6
 3.75% 2.98% 6
 6.30% 2.86%6
 5.26% 4.90% 6
 4.70% 3.28%
 Nine Months Ended September 30,
 2017 2016
 
Number of
Loans
 
Pre-modification
Interest Yield
 
Post-
modification
Interest Yield
 
Number of
Loans
 
Pre-modification
Interest Yield
 
Post-
modification
Interest Yield
Troubled Debt Restructurings:           
Commercial real estate3
 4.67% 4.67% 5
 4.38% 4.50%
Residential mortgage and consumer23
 4.15% 3.39% 20
 6.31% 3.42%
Payment defaults for loans modified as a TDR in the previous 12 months to September 30, 2017March 31, 2019 consisted of 81 residential loans and 1 commercial real estate loan with a recorded investment of $1.0 million and $160,000, respectively,$270,000, at September 30, 2017.March 31, 2019. Payment defaults for loans modified as a TDR in the previous 12 months to September 30, 2016March 31, 2018 consisted of 6 residential loans 4 commercial real estate loans and 1 constructionmulti family loan with a recorded investment of $1.0 million, $588,000$436,000 and $132,000,$918,000, respectively, at September 30, 2016.March 31, 2018.

Non Performing Loan Sales

For the nine months ended September 30, 2017, the Company sold $48.1 million of non-performing commercial real estate and multi-family loans, resulting in no charge-off recorded through the allowance. There were no sales of non-performing loans during the nine months ended September 30, 2016.


6.7.     Deposits
Deposits are summarized as follows:

September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
(In thousands)(In thousands)
Non-interest bearing:      
Checking accounts$2,263,198
 2,173,493
$2,477,079
 2,535,848
Interest bearing:      
Checking accounts4,633,096
 3,916,208
4,700,483
 4,783,563
Money market deposits4,298,171
 4,150,583
3,619,546
 3,641,070
Savings2,049,509
 2,092,989
1,976,798
 2,048,941
Certificates of deposit3,632,495
 2,947,560
4,856,093
 4,570,847
Total deposits$16,876,469
 15,280,833
$17,629,999
 17,580,269


7.8.    Goodwill and Other Intangible Assets
The following table summarizes netgoodwill and intangible assets and goodwill at September 30, 2017March 31, 2019 and December 31, 2016:2018:
 September 30, 2017 December 31, 2016 March 31, 2019 December 31, 2018
 (In thousands) (In thousands)
Mortgage servicing rights $14,536
 14,889
 $11,621
 11,712
Core deposit premiums 6,597
 8,451
 3,651
 4,050
Other 863
 928
 733
 755
Total other intangible assets 21,996
 24,268
 16,005
 16,517
Goodwill 77,571
 77,571
 82,546
 82,546
Goodwill and intangible assets $99,567
 101,839
 $98,551
 99,063

The following table summarizes other intangible assets as of September 30, 2017March 31, 2019 and December 31, 2016:2018:
 Gross Intangible Asset Accumulated Amortization Valuation Allowance Net Intangible Assets Gross Intangible Asset Accumulated Amortization Valuation Allowance Net Intangible Assets
 (In thousands) (In thousands)
September 30, 2017        
March 31, 2019        
Mortgage servicing rights $23,237
 (8,579) (122) 14,536
 $18,701
 (6,905) (175) 11,621
Core deposit premiums 25,058
 (18,461) 
 6,597
 25,058
 (21,407) 
 3,651
Other 1,150
 (287) 
 863
 1,150
 (417) 
 733
Total other intangible assets $49,445
 (27,327) (122) 21,996
 $44,909
 (28,729) (175) 16,005
                
December 31, 2016        
December 31, 2018        
Mortgage servicing rights $24,340
 (9,286) (165) 14,889
 $19,808
 (7,921) (175) 11,712
Core deposit premiums 25,058
 (16,607) 
 8,451
 25,058
 (21,008) 
 4,050
Other 1,150
 (222) 
 928
 1,150
 (395) 
 755
Total other intangible assets $50,548
 (26,115) (165) 24,268
 $46,016
 (29,324) (175) 16,517
Mortgage servicing rights are accounted for using the amortization method. Under this method, the Company amortizes the loan servicing asset in proportion to, and over the period of, estimated net servicing revenues. The Company sells loans on a servicing-retained basis. Loans that were sold on this basis had an unpaid principal balance of $1.91$1.60 billion and $1.98$1.62 billion at September 30, 2017March 31, 2019 and December 31, 2016,2018, respectively, all of which relate to residential mortgage loans. At September 30, 2017March 31, 2019 and December 31, 2016,2018, the servicing asset, included in other intangible assets, had an estimated fair value of $15.6$14.0 million and $16.2$14.9 million, respectively. At September 30, 2017,March 31, 2019, fair value was based on expected future cash flows considering a weighted

average discount rate of 14.24%12.50%, a weighted average constant prepayment rate on mortgages of 9.78%9.48% and a weighted average life of 6.8 years, seeyears. See Note 1214 for additional details.
Core deposit premiums are amortized using an accelerated method and having a weighted average amortization period of 10 years.


9.     Leases
The Company adopted ASU 2016-02, “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842 on January 1, 2019.  Topic 842 requires lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. We have operating leases for corporate offices, branch locations and certain equipment. Our leases have remaining lease terms of up to 17 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year. Certain of our operating leases for branch locations contain variable lease payments related to consumer price index adjustments.
The following table presents the balance sheet information related to our leases:
 March 31, 2019
 (Dollars in thousands)
Operating lease right-of-use assets$187,560
Operating lease liabilities197,281
Weighted average remaining lease term10.3 years
Weighted average discount rate2.73%
The discount rate used in determining the lease liability for each individual lease was the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This corresponded with the remaining lease term as of January 1, 2019 for leases that existed at adoption and as of the lease commencement date for leases subsequently entered into.
The following table presents the components of total lease cost recognized in the Consolidated Statement of Income:
 Three Months Ended March 31,
 2019
 (In thousands)
Included in office occupancy and equipment expense: 
Operating lease cost$6,320
Short-term lease cost83
Variable lease cost
Included in other income: 
Sublease income67
The following table presents supplemental cash flow information related to leases:
 Three Months Ended March 31,
 2019
 (In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases$6,138
Operating lease liabilities arising from obtaining right-of-use assets (non-cash):
Operating leases18

Future minimum operating lease payments and reconciliation to operating lease liabilities at March 31, 2019:
 March 31, 2019
 (In thousands)
Remainder of 2019$18,295
202023,791
202123,481
202221,751
202320,709
Thereafter119,901
Total lease payments227,928
Less: Imputed interest(30,647)
Total operating lease liabilities$197,281

At December 31, 2018, the Company’s minimum operating lease payments for non-cancelable operating leases were $24.4 million, $23.8 million, $23.4 million, $21.7 million and $20.7 million for 2019 through 2023, respectively, and $119.9 million in the aggregate for all years thereafter.

8.10.     Equity Incentive Plan
At the annual meeting held on June 9, 2015, stockholders of the Company approved the Investors Bancorp, Inc. 2015 Equity Incentive Plan (“2015 Plan”) which provides for the issuance or delivery of up to 30,881,296 shares (13,234,841 restricted stock awards and 17,646,455 stock options) of Investors Bancorp, Inc. common stock.
Restricted shares granted under the 2015 Plan vest in equal installments, over the service period generally ranging from 5 to 7 years beginning one year from the date of grant. Additionally, certain restricted shares awarded are performance vesting awards, which may or may not vest depending upon the attainment of certain corporate financial targets. The vesting of restricted stock may accelerate in accordance with the terms of the 2015 Plan. The product of the number of shares granted and the grant date closing market price of the Company’s common stock determine the fair value of restricted shares under the 2015 Plan. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period. For the ninethree months ended September 30, 2017March 31, 2019 and September 30, 2016,March 31, 2018, the Company granted 430,000119,663 and 271,89018,947 shares of restricted stock awards under the 2015 Plan, respectively.
Stock options granted under the 2015 Plan vest in equal installments, over the service period generally ranging from 5 to 7 years beginning one year from the date of grant. The vesting of stock options may accelerate in accordance with the terms of the 2015 Plan. Stock options were granted at an exercise price equal to the fair value of the Company’s common stock on the grant date based on the closing market price and have an expiration period of 10 years. Upon exercise of vested options, management expects to draw on treasury stock as the source for shares. For the ninethree months ended September 30, 2017March 31, 2019 and September 30, 2016,March 31, 2018, the Company granted 83,80025,000 and 201,44015,000 stock options under the 2015 Plan, respectively.
The fair value of stock options granted as part of the 2015 Plan was estimated utilizing the Black-Scholes option pricing model using the following assumptions for the periods presented below:
Nine Months Ended September 30,Three Months Ended March 31,
2017 20162019 2018
Weighted average expected life (in years)6.50
 7.00
6.50
 6.50
Weighted average risk-free rate of return2.04% 1.67%2.55% 2.74%
Weighted average volatility24.73% 24.05%18.59% 18.29%
Dividend yield2.44% 1.93%3.49% 2.64%
Weighted average fair value of options granted$3.00
 $2.80
$1.65
 $2.15
Total stock options granted83,800
 201,440
25,000
 15,000
The weighted average expected life of the stock option represents the period of time that stock options are expected to be outstanding and is estimated using historical data of stock option exercises and forfeitures. The risk-free interest rate is based

on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the historical volatility of the Company’s stock. The Company recognizes the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards in accordance with ASC 718, “Compensation-Stock Compensation”. The Company estimates the per share fair value of option grants on the date of grant using the Black-Scholes option pricing model using assumptionscompensation expense for the expected dividend yield, expectedfair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards. Upon exercise of vested options, management expects to draw on treasury stock price volatility, risk-free interest rate and expected option term. These assumptions are subjective in nature, involve uncertainties and, therefore, cannot be determined with precision.
Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718), requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits are classified as an operating activity. In accordance with SEC Staff Accounting Bulletin No. 107, the Company classifies share-based compensation for employees and outside directors within “compensation and fringe benefits” in the consolidated statements of income to correspond with the same line item as the cash compensation paid.

source for shares.
The following table presents the share based compensation expense for the three and nine months ended September 30, 2017March 31, 2019 and 2016:2018:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2017 2016 2017 20162019 2018
(Dollars in thousands)    (In thousands)
Stock option expense$1,469
 1,508
 4,373
 4,498
$1,302
 1,430
Restricted stock expense3,471
 3,954
 10,594
 10,658
3,271
 1,940
Total share based compensation expense$4,940
 5,462
 14,967
 15,156
$4,573
 3,370

The following is a summary of the Company’s stock option activity and related information for the ninethree months ended September 30, 2017:March 31, 2019:
 
Number of
Stock
Options
 
Weighted Average
Exercise Price
 
Weighted Average
Remaining
Contractual
Life (in years)
 
Aggregate
Intrinsic Value
 
Number of
Stock
Options
 
Weighted Average
Exercise Price
 
Weighted Average
Remaining
Contractual
Life (in years)
 
Aggregate
Intrinsic Value
Outstanding at December 31, 2016 13,165,333
 
$11.74
 8.2 
$29,101
Outstanding at December 31, 2018 10,216,047
 $12.43
 6.5 $522
Granted 83,800
 13.12
 9.8   25,000
 12.59
 9.9  
Exercised (936,881) 8.24
 3.8   (19,125) 8.80
 4.6  
Forfeited (495,248) 12.53
   (184,286) 12.30
  
Expired (1,429) 12.54
   (21,000) 12.71
  
Outstanding at September 30, 2017 11,815,575
 
$11.99
 7.7 
$19,453
Exercisable at September 30, 2017 4,603,154
 
$11.16
 6.9 
$11,426
Outstanding at March 31, 2019 10,016,636
 12.44
 6.2 812
Exercisable at March 31, 2019 5,093,217
 $12.35
 6.2 $807
Expected future expense relating to the non-vested options outstanding as of September 30, 2017March 31, 2019 is $22.3$14.0 million over a weighted average period of 4.02.59 years.
The following is a summary of the status of the Company’s restricted shares as of September 30, 2017March 31, 2019 and changes therein during the ninethree months ended:
 Number of Shares Awarded Weighted Average Grant Date Fair Value Number of Shares Awarded Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016 5,876,491
 $12.51
Outstanding at December 31, 2018 3,477,747
 $12.69
Granted 430,000
 14.39
 119,663
 12.62
Vested (960,564) 12.51
 (282,114) 13.03
Forfeited (268,163) 12.50
 (137,066) 12.63
Outstanding and non vested at September 30, 2017 5,077,764
 $12.67
Outstanding and non vested at March 31, 2019 3,178,230
 $12.66
Expected future expense relating to the non-vested restricted shares outstanding as of September 30, 2017March 31, 2019 is $56.6$32.1 million over a weighted average period of 4.12.98 years.

9.11.     Net Periodic Benefit Plan Expense
The Company has an Executive Supplemental Retirement Wage Replacement Plan (“Wage Replacement Plan”SERP II”) and the Supplemental ESOP and Retirement Plan (“SERP I”) (collectively, the “SERPs”). The Wage Replacement PlanSERP II is a nonqualified, defined benefit plan which provides benefits to certain executives as designated by the Compensation and Benefits Committee of the Board of Directors. More specifically, the Wage Replacement PlanSERP II was designed to provide participants with a normal retirement benefit equal to an annual benefit of 60% of the participant’s highest annual base salary and cash incentive (over a consecutive 36-month period within the participant’s credited service period) reduced by the sum of the benefits provided under the Pentegra Defined Benefit Plan for Financial Institutions (“Pentegra DB Plan”) and the SERP I.
Effective as of the close of business of December 31, 2016, the Wage Replacement PlanSERP II was amended to freeze future benefit accruals, and for certain participants, structure the benefits payable attributable solely to the participants’ 2016 year of service to vest over a two-year period such that the participants would havehad a right to 50% of their accrued benefits attributable to their 2016 year of service as of December 31, 2016, which will becomebecame 100% vested provided the participants remained continuously employed through and includingas of December 31, 2017.

The Supplemental ESOPSERP I compensates certain executives (as designated by the Compensation and Benefits Committee of the Board of Directors) participating in the ESOP whose contributions are limited by the Internal Revenue Code. The Company also maintains

the Amended and Restated Director Retirement Plan (“Directors’ Plan”) for certain directors, which is a nonqualified, defined benefit plan. The Directors’ Plan was frozen on November 21, 2006 such that no new benefits accrued under, and no new directors were eligible to participate in the plan. The Wage Replacement Plan, Supplemental ESOPSERPs and the Directors’ Plan are unfunded and the costs of the plans are recognized over the period that services are provided.
The components of net periodic benefit cost for the Directors’ Plan and the Wage Replacement PlanSERP II are as follows:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended March 31,
2017 2016 2017 20162019 2018
(In thousands)(In thousands)
Service cost$371
 894
 1,114
 2,681
Interest cost379
 474
 1,135
 1,422
$397
 355
Amortization of:          
Prior service cost
 
 
 
Net loss115
 514
 344
 1,542

 126
Total net periodic benefit cost$865
 1,882
 2,593
 5,645
$397
 481
Due to the unfunded nature of the SERPs and the Directors’ Plan, no contributions have been made or were expected to be made during the ninethree months ended September 30, 2017.March 31, 2019.
The Company also maintains the Pentegra DB Plan. Since it is a multiemployermulti-employer plan, costs of the pension plan are based on contributions required to be made to the pension plan. As of December 31, 2016, the annual benefit provided under the Pentegra DB plan has been amendedwas frozen by an amendment to freeze the plan. Freezing the plan eliminateseliminated all future benefit accruals and each participantsparticipant’s frozen accrued benefit will bewas determined as of December 31, 2016 andwith no further benefits will accrue beyond such date.accrued subsequent to December 31, 2016. There was no contribution required during the ninethree months ended September 30, 2017.March 31, 2019. We anticipate contributing funds to the plan to meet any minimum funding requirements for the remainder of 2017.2019.

10.12.    Derivatives and Hedging Activities
The Company uses variousis exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments including derivatives, to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its exposureknown or expected cash payments principally related to interestthe Company’s floating rate risk. Certain derivatives are designated as hedging instruments in a qualifying hedge accounting relationship (fair value or cash flow hedge). Asborrowings and pools of September 30, 2017 and December 31, 2016, the Company has cash flow hedges with aggregate notional amounts of $900.0 million and $400.0 million, respectively.fixed-rate assets.

Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are primarily to reduce cost and add stability to interest expense in an effort to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of amounts subject to variability caused by changes in interest rates from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  The effective portion of changesChanges in the fair value of derivatives designated and that qualify as cash flow hedges isare initially recorded in other comprehensive income and isare subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company did not have any derivatives outstanding prior to the third quarter of 2016.
During the three and nine months ended September 30, 2017 and the three months ended September 30, 2016, suchSuch derivatives were used to hedge the variability in cash flows associated with certain short term wholesale funding transactions. During the three and nine months ended September 30, 2017 and the three months ended September 30, 2016, the Company did not record any hedge ineffectiveness. The ineffective portion of the change in fair value of the derivatives would be recognized directly in earnings.borrowings.
Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate borrowings. During the next twelve months, the Company estimates that an additional $2.0$4.4 million will be reclassified as an increasea decrease to interest expense.

Fair Value Hedges of Interest Rate Risk
The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives were used to hedge the changes in fair value of certain of its pools of prepayable fixed rate assets.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.
Derivatives Not Designated as Hedges
The Company has credit derivatives resulting from participations in interest rate swaps provided to external lenders as part of loan participation arrangements which are, therefore, not used to manage interest rate risk in the Company’s assets or liabilities. Additionally, the Company provides interest rate risk management services to commercial customers, primarily interest rate swaps. The Company’s market risk from unfavorable movements in interest rates related to these derivative contracts is economically hedged by concurrently entering into offsetting derivative contracts that have identical notional values, terms and indices.
Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain lenders which participate in loans and commercial customers.

Fair Values of Derivative Instruments on the Balance Sheet
The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016:
Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives
September 30, 2017 (1)
 December 31, 2016 
September 30, 2017 (1)
 December 31, 2016March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018
Balance
Sheet
Location
Fair Value 
Balance
Sheet
Location
Fair Value 
Balance
Sheet
Location
Fair Value 
Balance
Sheet
Location
Fair ValueNotional Amount
Balance
Sheet
Location
Fair Value Notional Amount
Balance
Sheet
Location
Fair Value Notional Amount
Balance
Sheet
Location
Fair Value Notional Amount
Balance
Sheet
Location
Fair Value
(In thousands)(in millions) (In thousands) (in millions) (In thousands) (in millions) (In thousands) (in millions) (In thousands)
Derivatives designated as hedging instruments:                       
Interest Rate SwapsOther assets$
 Other assets$12,550
 Other liabilities$467
 Other liabilities$
$
Other assets$
 $
Other assets$
 $3,055
Other liabilities$527
 $2,605
Other liabilities$432
Total derivatives designated as hedging instruments $
 $12,550
 $467
 $

 $
 
 $
   $527
   $432
               
Derivatives not designated as hedging instruments:               
Interest Rate Swaps$36
Other assets$1,534
 $
Other assets$
 $36
Other liabilities$14
 $
Other liabilities$
Other Contracts
Other assets
 
Other assets
 22
Other liabilities91
 18
Other liabilities66
Total derivatives not designated as hedging instruments
 $1,534
 
 $
   $105
   $66

(1) In accordance with theThe Chicago Mercantile Exchange (“CME”) rulebook changes effective January 3, 2017, the fair value is inclusive of accrued interest and variation margin posted by the CME.

The CME amended their rules to legally characterizecharacterizes the variation margin posted between counterparties to be classified as settlements of the outstanding derivative contracts instead of cash collateral. The Company adopted the new rule on a prospective basis to include the accrued interest and variation margin posted by the CME in the fair value.

Effect of Derivative Instruments on Accumulated Other Comprehensive Income (Loss)
The following table presents the effect of the Company’s derivative financial instruments on Accumulated Other Comprehensive Income Statement(Loss) for the three months ended March 31, 2019 and 2018.
 Three Months Ended March 31,
 2019 2018
 (In thousands)
Cash Flow Hedges - Interest rate swaps   
Amount of (loss) gain recognized in other comprehensive income (loss)$(19,681) 16,938
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) to interest expense2,090
 (369)


Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
The following table presents the effect of the Company’s derivative financial instruments on the Consolidated StatementStatements of Income as of September 30, 2017March 31, 2019 and 2016.2018.
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Cash Flow Hedges - Interest rate swaps(In thousands)
Amount of gain (loss) recognized in other comprehensive income$(201) (1,109) (5,472) (1,109)
Amount of gain (loss) reclassified from accumulated other comprehensive loss to interest expense(1,147) (42) (3,233) (42)
Amount of gain (loss) recognized in other non-interest income (ineffective portion)
 
 
 
  For the Three Months Ended March 31,
  2019 2018
The effects of fair value and cash flow hedging:Income statement location(In thousands)
Gain or (loss) on fair value hedging relationships in Subtopic 815-20    
Interest contracts    
Hedged itemsInterest income on loans$922
 
Derivatives designated as hedging instrumentsInterest income on loans(1,021) 
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20    
Interest contracts    
Amount of gain or (loss) reclassified from accumulated other comprehensive incomeInterest expense on borrowings2,090
 (369)
Amount of gain or (loss) reclassified from accumulated other comprehensive income as a result that a forecasted transaction is no longer probable of occurringInterest expense on borrowings
 
Total amounts of income and expense line items presented in the income statement in which the effects of fair value are recorded $1,991
 (369)

As of March 31, 2019, the following amounts were recorded on the Consolidated Balance Sheets related to cumulative basis adjustment for fair value hedges. There were no fair value hedges at March 31, 2018:
Balance sheet locationCarrying Amount of the Hedged Assets/(Liabilities) Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)
 March 31, 2019December 31, 2018 March 31, 2019December 31, 2018
 (In thousands)
Loans receivable, net (1)
$1,256,215
1,005,294
 $1,215
294
(1) At March 31, 2019, the amortized cost basis of the closed portfolios used in these hedging relationships was $2.18 billion; the cumulative basis adjustments associated with these hedging relationships was $1.2 million; and the amounts of the designated hedged items were $1.26 billion.

Location and Amount of Gain or (Loss) Recognized in Income on Derivatives Not Designated as Hedging Instruments
The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Consolidated Statements of Income as of March 31, 2019. There were no derivative financial instruments that are not designated as hedging instruments as of March 31, 2018:
 Consolidated Statements of Income locationAmount of Gain or (Loss) Recognized in Income on Derivative
  For the Three Months Ended March 31,
  2019
  (In thousands)
Other ContractsOther income / (expense)$29
Total $29

Offsetting Derivatives
The following table presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives in the Consolidated Balance Sheets as of September 30, 2017March 31, 2019 and December 31, 2016.2018. The net amounts of derivative assets and liabilities can be reconciled to the tabular disclosure of the fair value.value hierarchy, see Note 14, Fair Value Measurements. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Company’s Consolidated Balance Sheets.
       Gross Amounts Not Offset  
 Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Posted Net Amount
 (In thousands)
September 30, 2017           
Liabilities:           
Interest Rate Swaps (1)
$467
 
 467
��
 
 467
Total$467
 
 467
 
 
 467
            
December 31, 2016           
Assets:           
Interest Rate Swaps$12,550
 
 12,550
 
 12,550
 
Total$12,550
 
 12,550
 
 12,550
 
       Gross Amounts Not Offset  
 Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Posted Net Amount
 (In thousands)
March 31, 2019           
Liabilities:           
Derivative contracts$632
 
 632
 
 
 632
Total$632
 
 632
 
 
 632
            
December 31, 2018           
Liabilities:           
Derivative contracts$498
 
 498
 
 
 498
Total$498
 
 498
 
 
 498

(1) In accordance with the CME rulebook changes effective January 3, 2017, the gross amounts recognized are inclusive of accrued interest and variation margin posted by the CME.

Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty. The Company has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well capitalized institution, then the Company could be required to terminate its derivative positions with the counterparty.
The Company has minimum collateral posting thresholds with certain of its derivative counterparties and posts collateral on a daily basis as required by the clearing house against the Company’s obligations, as required by these agreements.


11.13.    Comprehensive Income

 The components of comprehensive income, both gross and net of tax, are as follows:
Three Months Ended September 30,Three Months Ended March 31,
2017 20162019 2018
Gross Tax Net Gross Tax NetGross Tax Net Gross Tax Net
(Dollars in thousands)(Dollars in thousands)
Net income$74,282
 (28,437) 45,845
 71,728
 (21,878) 49,850
$67,463
 (19,305) 48,158
 78,009
 (20,084) 57,925
Other comprehensive income (loss):                      
Change in funded status of retirement obligations140
 (58) 82
 537
 (219) 318
18
 (5) 13
 143
 (40) 103
Unrealized gains (losses) on securities available-for-sale869
 (344) 525
 (2,708) 1,053
 (1,655)
Accretion of loss on securities reclassified to held to maturity from available for sale305
 (125) 180
 472
 (193) 279
Reclassification adjustment for security gains included in net income
 
 
 (72) 29
 (43)
Unrealized gains (losses) on debt securities available-for-sale21,514
 (5,275) 16,239
 (30,535) 7,812
 (22,723)
Accretion of loss on debt securities reclassified to held-to-maturity from available-for-sale157
 (44) 113
 233
 (66) 167
Other-than-temporary impairment accretion on debt securities315
 (129) 186
 533
 (218) 315
251
 (71) 180
 300
 (84) 216
Net gains (losses) on derivatives arising during the period946
 (386) 560
 (1,067) 436
 (631)
Net (losses) gains on derivatives(21,771) 6,120
 (15,651) 17,307
 (4,865) 12,442
Total other comprehensive income (loss)2,575
 (1,042) 1,533
 (2,305) 888
 (1,417)169
 725
 894
 (12,552) 2,757
 (9,795)
Total comprehensive income$76,857
 (29,479) 47,378
 69,423
 (20,990) 48,433
$67,632
 (18,580) 49,052
 65,457
 (17,327) 48,130
 Nine Months Ended September 30,
 2017 2016
 Gross Tax Net Gross Tax Net
 (Dollars in thousands)
Net income$211,654
 (80,156) 131,498
 215,619
 (75,958) 139,661
Other comprehensive income:           
Change in funded status of retirement obligations422
 (173) 249
 1,610
 (658) 952
Unrealized gains on securities available-for-sale8,320
 (3,115) 5,205
 19,652
 (7,686) 11,966
Accretion of loss on securities reclassified to held to maturity from available for sale981
 (401) 580
 1,433
 (586) 847
Reclassification adjustment for security gains included in net income(1,275) 510
 (765) (2,264) 906
 (1,358)
Other-than-temporary impairment accretion on debt securities1,302
 (532) 770
 1,179
 (481) 698
Net losses on derivatives arising during the period(2,239) 915
 (1,324) (1,067) 436
 (631)
Total other comprehensive income7,511
 (2,796) 4,715
 20,543
 (8,069) 12,474
Total comprehensive income$219,165
 (82,952) 136,213
 236,162
 (84,027) 152,135

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the ninethree months ended September 30, 2017March 31, 2019 and 20162018:

 
Change in
funded status of
retirement
obligations
 Accretion of loss on securities reclassified to held to maturity 
Unrealized (losses) gains
on securities
available-for-sale and gains included in net income
 
Other-than-
temporary
impairment
accretion on  debt
securities
 Unrealized gains (losses) on derivatives 
Total
accumulated
other
comprehensive
loss
 (Dollars in thousands)
Balance - December 31, 2016$(4,895) (1,988) (12,271) (12,870) 7,424
 (24,600)
Net change249
 580
 4,440
 770
 (1,324) 4,715
Balance - September 30, 2017$(4,646) (1,408) (7,831) (12,100) 6,100
 (19,885)
            
Balance - December 31, 2015$(12,366) (3,080) 1,371
 (13,750) 
 (27,825)
Net change952
 847
 10,608
 698
 (631) 12,474
Balance - September 30, 2016$(11,414) (2,233) 11,979
 (13,052) (631) (15,351)
 
Change in
funded status of
retirement
obligations
 Accretion of loss on debt securities reclassified to held-to-maturity 
Unrealized (losses) gains
on debt securities
available-for-sale and gains included in net income
 
Other-than-
temporary
impairment
accretion on  debt
securities
 Unrealized gains (losses) on derivatives 
Total
accumulated
other
comprehensive
loss
 (Dollars in thousands)
Balance - December 31, 2018$(3,018) (921) (8,884) (11,397) 12,651
 (11,569)
Net change13
 113
 16,239
 180
 (15,651) 894
Balance - March 31, 2019$(3,005) (808) 7,355
 (11,217) (3,000) (10,675)
            
Balance - December 31, 2017$(5,640) (1,520) (21,184) (14,482) 13,487
 (29,339)
Net change103
 167
 (22,723) 216
 12,442
 (9,795)
Reclassification due to the adoption of ASU No. 2016-01
 
 (606) 
 
 (606)
Balance - March 31, 2018$(5,537) (1,353) (44,513) (14,266) 25,929
 (39,740)

The following table presents information about amounts reclassified from accumulated other comprehensive loss to the consolidated statementstatements of income and the affected line item in the statement where net income is presented.

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 (In thousands)
Reclassification adjustment for gains included in net income       
Gain on security transactions, net$
 (72) (1,275) (2,264)
Change in funded status of retirement obligations       
Amortization of net loss120
 537
 359
 1,610
Interest Expense       
Reclassification adjustment for unrealized losses on derivatives1,147
 42
 3,233
 42
Total before tax1,267
 507
 2,317
 (612)
Income tax (expense) benefit(497) (190) (887) 248
Net of tax$770
 317
 1,430
 (364)
 Three Months Ended March 31,
 2019 2018
 (In thousands)
Change in funded status of retirement obligations   
Amortization of net (gain) loss$(2) 129
Interest expense   
Reclassification adjustment for unrealized (gains) losses on derivatives(2,090) 369
Total before tax(2,092) 498
Income tax benefit (expense)599
 (128)
Net of tax$(1,493) 370

12.14.    Fair Value Measurements
We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Our debt securities available-for-sale and derivatives are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other assets or liabilities on a non-recurring basis, such as held-to-maturity debt securities, mortgage servicing rights (“MSR”), loans receivable and other real estate owned. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets. Additionally, in connection with our mortgage banking activities we have commitments to fund loans held-for-sale and commitments to sell loans, which are considered free-standing derivative instruments, the fair values of which are not material to our financial condition or results of operations.
In accordance with Financial Accounting Standards Board (“FASB”)FASB ASC 820, “Fair Value Measurements and Disclosures”, we group our assets and liabilities at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:
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.
We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Assets Measured at Fair Value on a Recurring Basis
SecuritiesEquity securities
Our equity securities portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses recognized in the Consolidated Statements of Income. The fair values of equity securities are based on quoted market prices (Level 1).
Debt securities available-for-sale
Our debt securities available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income (loss) in stockholders’ equity. The fair values of debt securities available-for-sale securities are based onupon quoted market prices (Level 1), where available. The Company obtains one price for each security primarily from a third-party pricing service (pricing service), which generally uses quoted or other observable inputs for the determination of fair value. The pricing service normally derives the security prices through recently reported trades for identical or similar securities, making adjustments through the reporting date based upon available observable market information. For securities not actively tradedinstruments in active markets (Level 2), the. The pricing service may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to, benchmark yields, credit spreads, default rates, prepayment speeds and non-binding broker quotes. As the Company is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has not historically resulted in adjustment in the prices obtained from the pricing service.

Derivatives
Derivatives are reported at fair value utilizing Level 2 inputs. The fair values of interest rate swap and risk participation agreements are based on a valuation model that uses primarily observable inputs, such as benchmark yield curves and interest rate spreads.
The following tables provide the level of valuation assumptions used to determine the carrying value of our assets and liabilities measured at fair value on a recurring basis at September 30, 2017March 31, 2019 and December 31, 20162018.
 Carrying Value at September 30, 2017
 Total Level 1 Level 2 Level 3
 (In thousands)
Assets:       
Securities available for sale:       
Equity securities$5,646
 5,646
 
 
Mortgage-backed securities:       
Federal Home Loan Mortgage Corporation653,994
 
 653,994
 
Federal National Mortgage Association1,249,110
 
 1,249,110
 
Government National Mortgage Association40,679
 
 40,679
 
Total mortgage-backed securities available-for-sale1,943,783
 
 1,943,783
 
Total securities available-for-sale$1,949,429
 5,646
 1,943,783
 
Liabilities:       
Derivative financial instruments (1)$467
 
 467
 

(1) In accordance with the CME rulebook changes effective January 3, 2017, the gross amounts recognized are inclusive of accrued interest and variation margin posted by the CME.

 Carrying Value at March 31, 2019
 Total Level 1 Level 2 Level 3
 (In thousands)
Assets:       
Equity securities$5,880
 5,880
 
 
Debt securities available for sale:       
Mortgage-backed securities:       
Federal Home Loan Mortgage Corporation$1,016,518
 
 1,016,518
 
Federal National Mortgage Association974,430
 
 974,430
 
Government National Mortgage Association165,392
 
 165,392
 
Total debt securities available-for-sale$2,156,340
 
 2,156,340
 
Interest rate swaps$1,534
 
 1,534
 
Liabilities:       
Derivatives:       
Interest rate swaps$541
 
 541
 
Other contracts91
 
 91
 
Total derivatives$632
 
 632
 
Carrying Value at December 31, 2016Carrying Value at December 31, 2018
Total Level 1 Level 2 Level 3Total Level 1 Level 2 Level 3
(In thousands)(In thousands)
Assets:              
Securities available for sale:       
Equity securities$6,660
 6,660
 
 
$5,793
 5,793
 
 
Debt securities available for sale:       
Mortgage-backed securities:              
Federal Home Loan Mortgage Corporation598,439
 
 598,439
 
$986,650
 
 986,650
 
Federal National Mortgage Association1,008,587
 
 1,008,587
 
968,556
 
 968,556
 
Government National Mortgage Association46,747
 
 46,747
 
166,956
 
 166,956
 
Total mortgage-backed securities available-for-sale1,653,773
 
 1,653,773
 
Total securities available-for-sale$1,660,433
 6,660
 1,653,773
 
Derivative financial instruments$12,550
 
 12,550
 
Total debt securities available-for-sale$2,122,162
 
 2,122,162
 
Liabilities:       
Derivatives:       
Interest rate swaps$432
 
 432
 
Other contracts66
 
 66
 
Total derivatives$498
 
 498
 
There have been no changes in the methodologies used at September 30, 2017March 31, 2019 from December 31, 20162018, and there were no transfers between Level 1 and Level 2 during the ninethree months ended September 30, 2017March 31, 2019.
There were no Level 3 assets measured at fair value on a recurring basis for the ninethree months ended September 30, 2017.March 31, 2019 and December 31, 2018.

Assets Measured at Fair Value on a Non-Recurring Basis
Mortgage Servicing Rights, Net
Mortgage servicing rights are carried at the lower of cost or estimated fair value. The estimated fair value of MSR is obtained through independent third party valuations through an analysis of future cash flows, incorporating assumptions market participants would use in determining fair value including market discount rates, prepayment speeds, servicing income, servicing costs, default rates and other market driven data, including the market’s perception of future interest rate movements. The prepayment speed and the discount rate are considered two of the most significant inputs in the model.  At September 30, 2017,March 31, 2019, the fair value model used prepayment speeds ranging from 1.74%5.40% to 26.28%27.12% and a discount rate of 14.24%12.50% for the valuation of the mortgage servicing rights. At December 31, 2016,2018, the fair value model used prepayment speeds ranging from 3.15%4.98% to 24.18%27.30% and a discount rate of 14.27%12.50% for the valuation of the mortgage servicing rights. A significant degree of judgment is involved in valuing the mortgage servicing rights using Level 3 inputs. The use of different assumptions could have a significant positive or negative effect on the fair value estimate.
Impaired Loans Receivable
Loans which meet certain criteria are evaluated individually for impairment. A loan is deemed to be impaired if it is a commercial loan with an outstanding balance greater than $1.0 million and on non-accrual status, loans modified in a troubled debt restructuring, and other commercial loans with $1.0 million in outstanding principal if management has specific information that it is probable they will not collect all amounts due under the contractual terms of the loan agreement. Our impaired loans are generally collateral dependent and, as such, are carried at the estimated fair value of the collateral less estimated selling costs. Estimated fair value is calculated using the fair value of collateral based onan independent third-party appraisalsappraiser for collateral-dependent loans. In the event the most recent appraisal does not reflect the current market conditions due to the passage of time and other factors, management will obtain an updated appraisal or make downward adjustments to the existing appraised value based on their knowledge of the property, local real estate market conditions, recent real estate transactions, and for estimated selling costs, if applicable. At September 30, 2017, appraisalsAppraisals were generally discounted in a range of 0%-25% for estimated costs to sell.25%. For non collateral-dependent loans, management estimates the fair value using discounted cash flows based on inputs that are largely unobservable and instead reflect management’s own estimates of the assumptions as a market participant would in pricing such loans.
Other Real Estate Owned
Other Real Estate Owned is recorded at estimated fair value, less estimated selling costs when acquired, thus establishing a new cost basis. Fair value is generally based on independent appraisals. These appraisals include adjustments to comparable assets based on the appraisers’ market knowledge and experience, and are discounted an additional 0%- to 25% for estimated costs to sell. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for loan losses. If further declines in the estimated fair value of the asset declines,occur, a writedown is recorded through expense. The valuation

of foreclosed assets is subjective in nature and may be adjusted in the future because of changes in economic conditions. Operating costs after acquisition are generally expensed.
Loans Held For Sale
Residential mortgage loans held for sale are recorded at the lower of cost or fair value and are therefore measured at fair value on a non-recurring basis. When available, the Company uses observable secondary market data, including pricing on recent closed market transactions for loans with similar characteristics.

The following tables provide the level of valuation assumptions used to determine the carrying value of our assets measured at fair value on a non-recurring basis at September 30, 2017March 31, 2019 and December 31, 2016.2018. For the three months ended September 30, 2017March 31, 2019 and December 31, 2018 there was no change to the carrying value of other real estate owned andMSR or loans held for sale measured at fair value on a non-recurring basis. For the year ended December 31, 2016, there was no change to carrying value of other real estate owned measured at fair value on a non-recurring basis.sale.
 Carrying Value at September 30, 2017
Security TypeValuation TechniqueUnobservable InputRangeWeighted AverageTotalLevel 1Level 2Level 3Valuation TechniqueUnobservable InputRangeWeighted Average Input Carrying Value at March 31, 2019
 (In thousands) MinimumMaximum Total Level 1 Level 2 Level 3
MSR, netEstimated cash flowPrepayment speeds1.74% - 26.28%9.78%$12,372


12,372
 (In thousands)
Impaired loansMarket comparableLack of marketability1.0% - 45.0%31.72%4,496


4,496
Market comparableLack of marketability1.0%51.0%11.20% $27,594
 
 
 27,594
Other real estate ownedMarket comparableLack of marketability0.0%25.0%4.30% 697
 
 
 697
 $16,868


16,868
 $28,291
 
 
 28,291
 

 Carrying Value at December 31, 2016
Security TypeValuation TechniqueUnobservable InputRangeWeighted AverageTotalLevel 1Level 2Level 3Valuation TechniqueUnobservable InputRangeWeighted Average Input Carrying Value at December 31, 2018
 (In thousands) MinimumMaximum Total Level 1 Level 2 Level 3
MSR, netEstimated cash flowPrepayment speeds3.15% - 24.18%9.84%$12,877


12,877
 (In thousands)
Impaired loansEstimated cash flowLack of marketability and probability of default22.0% - 29.0%26.00%1,403


1,403
Market comparable and estimated cash flowLack of marketability and probability of default1.0%83.0%11.20% $15,148
 
 
 15,148
Loans held for saleMarket comparableLack of marketability2.5% - 4.5%3.45%313


313
Other real estate ownedMarket comparableLack of marketability0.0%25.0%10.50% 241
 
 
 241
 $14,593


14,593
 $15,389
 
 
 15,389
Other Fair Value Disclosures
Fair value estimates, methods and assumptions for the Company’s financial instruments not recorded at fair value on a recurring or non-recurring basis are set forth below.
Cash and Cash Equivalents
For cash and due from banks, the carrying amount approximates fair value.
Debt Securities Held-to-Maturity
Our debt securities held-to-maturity portfolio, consisting primarily of mortgage-backed securities and other debt securities for which we have a positive intent and ability to hold to maturity, is carried at amortized cost. Management utilizes various inputs to determine the fair value of the portfolio. The Company obtains one price for each security primarily from a third-party pricing service, which generally uses quoted or other observable inputs for the determination of fair value. The pricing service normally derives the security prices through recently reported trades for identical or similar securities, making adjustments through the reporting date based upon available observable market information. For securities not actively traded, the pricing service may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs that are currently observable in the markets for similar securities. Inputs that are often used in the valuation methodologies include, but are not limited to, benchmark yields, credit spreads, default rates, prepayment speeds and non-binding broker quotes. In the absence of quoted prices and in an illiquid market, valuation techniques, which require inputs that are both significant to the fair value measurement and

unobservable, are used to determine fair value of the investment. Valuation techniques are based on various assumptions, including, but not limited to forecasted cash flows, discount rates, rate of return, adjustments for nonperformance and liquidity, and liquidation values. As the Company is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has not historically resulted in adjustment in the prices obtained from the pricing service.

FHLB Stock
The fair value of the Federal Home Loan Bank of New York (“FHLB”) stock is its carrying value, since this is the amount for which it could be redeemed. There is no active market for this stock and the Bank is required to hold a minimum investment based upon the balance of mortgage related assets held by the member.member and or FHLB advances outstanding.
Loans
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential mortgage and consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories.
The fair value of performing loans is calculated by discounting forecasted cash flows through the estimated maturity date using estimatedestimates are made at a specific point in time based on relevant market information. They do not reflect any premium or discount rates that reflect the credit and interest rate risk inherent in the loan.could result from offering for sale a particular financial instrument. Fair value for significant non-performing loans is based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. Fair values estimated in this manner do not fully incorporate an exit price approach to fair value, but insteadestimates are based on a comparison to current market rates for comparable loans.judgments regarding future expected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties, and cannot be determined with precision.
Deposit Liabilities
The fair value of deposits with no stated maturity, such as savings, checking accounts and money market accounts, is equal to the amount payable on demand. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates which approximate currently offered for deposits of similar remaining maturities.
Borrowings
The fair value of borrowings are based on securities dealers’ estimated fair values, when available, or estimated using discounted contractual cash flows using rates which approximate the rates offered for borrowings of similar remaining maturities.

Commitments to Extend Credit
The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For commitments to originate fixed rate loans, fair value also considers the difference between current levels of interest rates and the committed rates. Due to the short-term nature of our outstanding commitments, the fair values of these commitments are immaterial to our financial condition.
The carrying values and estimated fair values of the Company’s financial instruments are presented in the following table.
September 30, 2017March 31, 2019
Carrying Estimated Fair ValueCarrying Estimated Fair Value
value Total Level 1 Level 2 Level 3value Total Level 1 Level 2 Level 3
(In thousands)(In thousands)
Financial assets:                  
Cash and cash equivalents$413,322
 413,322
 413,322
 
 
$186,083
 186,083
 186,083
 
 
Securities available-for-sale1,949,429
 1,949,429
 5,646
 1,943,783
 
Securities held-to-maturity1,733,751
 1,769,179
 
 1,689,531
 79,648
Stock in FHLB232,814
 232,814
 232,814
 
 
Equities5,880
 5,880
 5,880
 
 
Debt securities available-for-sale2,156,340
 2,156,340
 
 2,156,340
 
Debt securities held-to-maturity1,516,600
 1,536,684
 
 1,456,268
 80,416
FHLB stock258,949
 258,949
 258,949
 
 
Loans held for sale6,975
 6,975
 
 6,975
 
6,827
 6,827
 
 6,827
 
Net loans19,707,157
 19,776,775
 
 
 19,776,775
21,503,110
 21,451,866
 
 
 21,451,866
Derivative financial instruments1,534
 1,534
 
 1,534
 
Financial liabilities:                  
Deposits, other than time deposits$13,243,974
 13,243,974
 13,243,974
 
 
$12,773,906
 12,773,906
 12,773,906
 
 
Time deposits3,632,495
 3,619,747
 
 3,619,747
 
4,856,093
 4,840,838
 
 4,840,838
 
Borrowed funds4,484,869
 4,488,058
 
 4,488,058
 
5,549,587
 5,531,399
 
 5,531,399
 
Derivative financial instruments632
 632
 
 632
 
December 31, 2016December 31, 2018
Carrying Estimated Fair ValueCarrying Estimated Fair Value
value Total Level 1 Level 2 Level 3value Total Level 1 Level 2 Level 3
(In thousands)(In thousands)
Financial assets:                  
Cash and cash equivalents$164,178
 164,178
 164,178
 
 
$196,891
 196,891
 196,891
 
 
Securities available-for-sale1,660,433
 1,660,433
 6,660
 1,653,773
 
Securities held-to-maturity1,755,556
 1,782,801
 
 1,703,559
 79,242
Stock in FHLB237,878
 237,878
 237,878
 
 
Equities5,793
 5,793
 5,793
 
 
Debt securities available-for-sale2,122,162
 2,122,162
 
 2,122,162
 
Debt securities held-to-maturity1,555,137
 1,558,564
 
 1,476,565
 81,999
FHLB stock260,234
 260,234
 260,234
 
 
Loans held for sale38,298
 38,298
 
 38,298
 
4,074
 4,074
 
 4,074
 
Net loans18,569,855
 18,391,018
 
 
 18,391,018
21,378,136
 21,085,185
 
 
 21,085,185
Financial liabilities:                  
Deposits, other than time deposits$12,333,273
 12,333,273
 12,333,273
 
 
$13,009,422
 13,009,422
 13,009,422
 
 
Time deposits2,947,560
 2,938,137
 
 2,938,137
 
4,570,847
 4,546,991
 
 4,546,991
 
Borrowed funds4,546,251
 4,545,745
 
 4,545,745
 
5,435,681
 5,398,553
 
 5,398,553
 
Derivative financial instruments498
 498
 
 498
 
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic

conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets that are not considered financial assets include deferred tax assets, premises and equipment and bank owned life insurance.

Liabilities for pension and other postretirement benefits are not considered financial liabilities. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

13.15.    Revenue Recognition
The Company’s contracts with customers in the scope of Topic 606, Revenue from Contracts with Customers, are contracts for deposit accounts and contracts for non-deposit investment accounts through a third party service provider.  Both types of contracts result in non-interest income being recognized.  The revenue resulting from deposit accounts, which includes fees such as insufficient funds fees, wire transfer fees and out-of-network ATM transaction fees, is included as a component of fees and service charges on the consolidated statements of income.  The revenue resulting from non-deposit investment accounts is included as a component of other income on the Consolidated Statements of Income. 
Revenue from contracts with customers included in fees and service charges and other income was as follows:
 Three Months Ended March 31,
 March 31, 2019 March 31, 2018
 (Dollars in thousands)
Revenue from contracts with customers included in:   
Fees and service charges$3,283
 3,122
Other income2,223
 1,769
Total revenue from contracts with customers$5,506
 4,891
For our contracts with customers, we satisfy our performance obligations each day as services are rendered.  For our deposit account revenue, we receive payment on a daily basis as services are rendered and for our non-deposit investment account revenue, we receive payment on a monthly basis from our third party service provider as services are rendered.




























16.    Recent Accounting Pronouncements
In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 718): Targeted Improvements to Accounting for Hedging Activities”. The purpose of this guidance is to better align a company’s financial reporting for hedging relationships with the company’s risk management activities by expanding strategies that qualify for hedge accounting, modifying the presentation of certain hedging relationships in the financial statements and simplifying the application of hedge accounting in certain situations. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted in any interim or annual period before the effective date. ASU 2017-12 will be applied using a modified retrospective approach through a cumulative-effect adjustment related to the elimination of the separate measurement of ineffectiveness to the balance of accumulated other comprehensive income with a corresponding adjustment to retained earnings as of the beginning of the fiscal year in which the amendments in this update are adopted. The amended presentation and disclosure guidance is required only prospectively. The Company is currently assessing the impact that the new guidance will have on the Company’s Consolidated Financial Statements.
In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting”. This update provides guidance about changes to terms or conditions of a share-based payment award which would require modification accounting. In particular, an entity is required to account for the effects of a modification if the fair value, vesting condition or the equity/liability classification of the modified award is not the same immediately before and after a change to the terms and conditions of the award. ASU No. 2017-09 is effective on a prospective basis for fiscal years beginning after December 15, 2017, with early adoption permitted. Due to prospective application, the new guidance is not expected to have an impact on the Company’s Consolidated Financial Statements upon adoption.
In March 2017, the FASB issued ASU 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”. The amendments in this update require the premium on callable debt securities to be amortized to the earliest call date rather than the maturity date; however, securities held at a discount continue to be amortized to maturity. The amendments apply only to debt securities purchased at a premium that are callable at fixed prices and on preset dates. The amendments more closely align interest income recorded on debt securities held at a premium or discount with the economics of the underlying instrument. ASU No. 2017-08 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the provisions of ASU No. 2017-08 to determine the potential impact the new standard will have on the Company’s Consolidated Financial Statements.
In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”, which requires that companies disaggregate the service cost component from other components of net benefit cost. This update calls for companies that offer postretirement benefits to present the service cost, which is the amount an employer has to set aside each quarter or fiscal year to cover the benefits, in the same line item with other current employee compensation costs. Other components of net benefit cost will be presented in the income statement separately from the service cost component and outside the subtotal of income from operations, if one is presented. ASU No. 2017-07 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the provisions of ASU No. 2017-07 to determine the potential impact the new standard will have on the Company’s Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU simplifies subsequent measurement of goodwill by eliminating Step 2 of the impairment test while retaining the option to perform the qualitative assessment for a reporting unit to determine whether the quantitative impairment test is necessary. The ASU also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment testing dates beginning after January 1, 2017. The Company is currently evaluating the provisions of ASU No. 2017-04 to determine the potential impact the new standard will have on the Company’s Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update)”, which amends certain paragraphs in the ASC to give effect to announcements made by the SEC observer at two recent Emerging Issues Task Force meetings. SEC registrants are required to reasonably estimate the impact that adoption of the standards on revenue recognition, leases, and measurement of credit losses on financial instruments is expected to have on financial statements. If such estimate is indeterminate, registrants
StandardDescriptionRequired date of adoptionEffect on Consolidated Financial Statements
Standards Adopted in 2019
Leases (Topic 842)The amendment requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date for leases classified as operating leases as well as finance leases. ASU 2018-01 provides an optional practical expedient to not evaluate land easements which were existing or expired before the adoption of Topic 842 that were not accounted for as leases under Topic 840. ASU 2018-10 provides an optional transition method under which comparative periods presented in the financial statements will continue to be in accordance with current Topic 840, Leases, and a practical expedient to not separate non-lease components from the associated lease component. ASU 2018-20 provides an accounting policy election for lessors related to sales and other similar taxes collected from lessees and addresses lessor accounting for variable payments. ASU 2019-01 addresses three issues related to (i) determination of the fair value of the underlying assets by lessors, (ii) presentation of sales-type and direct financing leases in the statement of cash flows and (iii) transition disclosures related to accounting changes and error corrections.January 1, 2019Upon adoption, the Company recognized operating lease right-of-use assets and related operating lease liabilities totaling $193.3 million and $200.7 million, respectively. The Company adopted this amendment utilizing a modified retrospective approach and the optional transition method under which we use the effective date as the date of initial application of the amendments. The modified retrospective approach includes practical expedients such that we will not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. See Note 9 for expanded disclosures.
Derivatives and Hedging (Topic 815)-Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes The amendment permits the use of the Overnight Index Swap (OIS) Rate based on the Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes.January 1, 2019The Company is applying the amendments in this update prospectively for qualifying new or redesignated hedging relationships entered into on or after the effective date.
Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment AccountingThe amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and to apply the guidance therein except for specific guidance on inputs to an option pricing model and the attribution of cost; i.e., the period of time over which share based payment awards vest and the pattern of cost recognition over that period. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide financing to the issuer or awards granted in conjunction with selling goods and services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. Upon adoption, an entity should remeasure liability-classified awards that have not been settled at date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the first day of the fiscal year of adoption. Upon transition, an entity should measure these nonemployee awards at fair value as of the adoption date but must not remeasure assets that are completed.January 1, 2019The Company had applied the guidance of Topic 718 to its accounting for share-based payment awards to its Board of Directors prior to adoption of the amendments, and, therefore, this update did not have an impact on the Company’s Consolidated Financial Statements.

should consider providing additional qualitative disclosures to assess the effect on financial statements as a result of adopting of these new standards. There is no effective date or transition requirements for this standard.
In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The amendments in this ASU provide a practical way to determine when a set of assets and activities is not a business. The screen provided in this ASU requires that when all or substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. The amendments also provide other considerations to determine whether a set is a business if the screen is not met. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those periods. The Company is currently evaluating the provisions of ASU No. 2017-01 to determine the potential impact the new standard will have on the Company’s Consolidated Financial Statements.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” This ASU addresses the recognition of current and deferred taxes for an intra-entity asset transfer and amends current U.S. GAAP by eliminating the exception for intra-entity transfers of assets other than inventory to defer such recognition until sale to an outside party. ASU No. 2016-16 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been made available for issuance. The Company is currently evaluating the provisions of ASU No. 2016-16 to determine the potential impact the new standard will have on the Company’s Consolidated Financial Statements.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”, a new standard which addresses diversity in practice related to eight specific cash flow issues: debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Entities will apply the standard’s provisions using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the provisions of ASU No. 2016-15 to determine the potential impact the new standard will have on the Company’s Consolidated Financial Statements.
In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. In issuing the standard, the FASB is responding to criticism that today’s guidance delays recognition of credit losses. The standard will replace today’s “incurred loss” approach with an “expected loss” model. The new model, referred to as the current expected credit loss (“CECL”) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL model does not apply to available-for-sale (“AFS”) debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). While early adoption is permitted, the Company does not expect to elect that option. The Company has begun its evaluation of the amended guidance including the potential impact on its Consolidated Financial Statements. The extent of the change is indeterminable at this time as it will be dependent upon portfolio composition and credit quality at the adoption date, as well as economic conditions and forecasts at that time. Upon adoption, any impact to the allowance for credit losses - currently allowance for loan and lease losses - will have an offsetting impact on retained earnings.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date for leases classified as operating leases as well as finance leases. The update also requires new quantitative disclosures related to leases in the Consolidated Financial Statements. There are practical expedients in this update that relate to leases that commenced
StandardDescriptionRequired date of adoptionEffect on Consolidated Financial Statements
Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt SecuritiesThe amendments in this update require the premium on callable debt securities to be amortized to the earliest call date rather than the maturity date; however, securities held at a discount continue to be amortized to maturity. The amendments apply only to debt securities purchased at a premium that are callable at fixed prices and on preset dates. The amendments more closely align interest income recorded on debt securities held at a premium or discount with the economics of the underlying instrument.January 1, 2019The adoption of the amendments did not have an impact on the Company’s Consolidated Financial Statements.
Standards Not Yet Adopted
Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Specifically, where a cloud computing arrangement includes a license to internal-use software, the software license is accounted for by the customer in accordance with Subtopic 350-40, “Intangibles- Goodwill and Other-Internal-Use Software”.
January 1, 2020

Early adoption permitted
The amendments in this Update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company does not expect ASU No. 2018-15 to have a material impact on the Company’s Consolidated Financial Statements.
Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans
The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures, and adding disclosure requirements identified as relevant.
January 1, 2021

Early adoption permitted
The update is to be applied on a retrospective basis. The Company will evaluate the effect of ASU 2018-14 on disclosures with regard to employee benefit plans but does not expect a material impact on the Company’s Consolidated Financial Statements.
Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement
The amendments remove the requirement to disclose the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of such transfers and the valuation processes for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarify the purpose of the measurement uncertainty disclosure. The ASU adds disclosure requirements about the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.
January 1, 2020

Early adoption permitted to any removed or modified disclosures and delay of adoption of additional disclosures until the effective date
Changes should be applied retrospectively to all periods presented upon the effective date with the exception of the following, which should be applied prospectively: disclosures relating to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the disclosures for uncertainty measurement. The adoption of ASU 2018-13 will not have a material impact on the Company’s Consolidated Financial Statements.
Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill ImpairmentThis ASU simplifies subsequent measurement of goodwill by eliminating Step 2 of the impairment test while retaining the option to perform the qualitative assessment for a reporting unit to determine whether the quantitative impairment test is necessary. The ASU also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units.
January 1, 2020

Early adoption permitted for interim or annual goodwill impairment testing dates beginning after January 1, 2017
The update is to be applied prospectively. The Company does not expect ASU No. 2017-04 to have a material impact on the Company’s Consolidated Financial Statements.

before the effective date, initial direct costs and the use of hindsight to extend or terminate a lease or purchase the leased asset. Lessor accounting remains largely unchanged under the new guidance. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period, with early adoption permitted. A modified retrospective approach must be applied for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company continues to evaluate the impact of the guidance, including determining whether other contracts exist that are deemed to be in scope. As such, no conclusions have yet been reached regarding the potential impact on adoption on the Company’s Consolidated Financial Statements and regulatory capital and risk-weighted assets; however, the Company does not expect the amendment to have a material impact on its results of operations.
In January 2016, the FASB issued ASU 2016-01, “Financial Instruments- Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” This amendment supersedes the guidance to classify equity securities with readily determinable fair values into different categories, requires equity securities to be measured at fair value with changes in the fair value recognized through net income, and simplifies the impairment assessment of equity investments without readily determinable fair values. The amendment requires public business entities that are required to disclose the fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion. The amendment requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option. The amendment requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. The amendment reduces diversity in current practice by clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. This amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Entities should apply the amendment by means of a cumulative effect adjustment as of the beginning of the fiscal year of adoption, with the exception of the amendment related to equity securities without readily determinable fair values, which should be applied prospectively to equity investments that exist as of the date of adoption. The Company intends to adopt the accounting standard during the first quarter of 2018, as required, and is currently evaluating the impact on its results of operations, financial position, and liquidity. Due to the Company’s proportionately small portfolio of equity securities, the update is not expected to have a material impact on the Company’s results of operations.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” The objective of this amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS. This update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are in the scope of other standards. The ASU is effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2017, and early adoption is permitted. Subsequently, the FASB issued the following standards related to ASU 2014-09: ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” ; ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting”; ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”; and ASU 2017-05, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” These amendments are intended to improve and clarify the implementation guidance of ASU 2014-09 and have the same effective date as the original standard. The Company will adopt the guidance in the first quarter of 2018. As the guidance does not apply to revenue associated with financial instruments, including loans, leases, securities and derivatives that are accounted for under other U.S. GAAP, the new revenue recognition standard does not have a material impact on the Company’s Consolidated Financial Statements. The Company’s implementation efforts have included the identification of revenue within the scope of the guidance, as well as the evaluation of revenue contracts. While we have not identified any material changes related to the timing or amount of revenue recognition, the Company will continue to evaluate the need for additional disclosures.
StandardDescriptionRequired date of adoptionEffect on Consolidated Financial Statements
Measurement of Credit Losses on Financial Instruments
This ASU changes how entities will report credit losses for financial assets held at amortized cost and available-for-sale debt securities. The amendments replace today’s “incurred loss” approach with a methodology that incorporates macroeconomic forecast assumptions and management judgments applicable to and through the expected life of the portfolios based on relevant information about past events, including historical loss experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. The amendments will apply to financial assets such as loans, leases and held-to-maturity investments; and certain off-balance sheet credit exposures. The amendments expand credit quality disclosure requirements. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, which clarifies the scope of the guidance in the amendments in ASU 2016-13 with respect to operating lease receivables.
January 1, 2020

Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018
Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). While early adoption is permitted, the Company does not expect to elect that option. The Company has begun its evaluation of the amended guidance including the potential impact on its Consolidated Financial Statements. The extent of the change is indeterminable at this time as it will be dependent upon portfolio composition and credit quality at the adoption date, as well as economic conditions and forecasts at that time. Upon adoption, any impact to the allowance for credit losses - currently allowance for loan losses - will have an offsetting impact on retained earnings.
    
14.17.    Subsequent Events
As defined in FASB ASC 855, “Subsequent Events”, subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued or available to be issued. Financial statements are considered issued when they are widely distributed to stockholders and other financial statement users for general use and reliance in a form and format that complies with U.S. GAAP.
On October 26, 2017,April 24, 2019, the Company declared a cash dividend of $0.09$0.11 per share. The $0.09$0.11 dividend per share will be paid to stockholders on NovemberMay 24, 2017,2019, with a record date of NovemberMay 10, 2017.2019.

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. Reference is made to Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and additional risk factors included in Part II, Item 1A of this quarterly report.2018.
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 except as may be required by law.

Critical Accounting Policies
We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. WeAs of March 31, 2019, we consider the following to be our critical accounting policies.
Allowance for Loan Losses. The allowance for loan losses is the estimated amount considered necessary to cover credit losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses that is charged against income. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.
The allowance for loan losses has been determined in accordance with U.S. generally accepted accounting principles, under which we are required to maintain an allowance for probable losses at the balance sheet date. We are responsible for the timely and periodic determination of the amount of the allowance required. We believe that our allowance for loan losses is adequate to cover specifically identifiable losses, as well as estimated losses inherent in our portfolio for which certain losses are probable but not specifically identifiable. Loans acquired are marked to fair value on the date of acquisition with no valuation allowance reflected in the allowance for loan losses. In conjunction with the quarterly evaluation of the adequacy of the allowance for loan losses, the Company performs an analysis on acquired loans to determine whether or not an allowance should be ascribed to those loans.
Management performs a quarterly evaluation of the adequacy of the allowance for loan losses. The analysis of the allowance for loan losses has two components: specificcollectively evaluated and general allocations.individually evaluated. Specific allocations are made for loans determined to be impaired. A loan is deemed to be impaired if it is a commercial loan with an outstanding balance greater than $1.0 million and on non-accrual status, loans modified in a troubled debt restructuring (“TDR”), and other commercial loans greater than $1.0 million if management has specific information that it is probable it will not collect all amounts due under the contractual terms of the loan agreement. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. The general allocationcollectively evaluated component is determined by segregating the remaining loans by type of loan, risk rating (if applicable) and payment history. In addition, the Company’s residential portfolio is subdivided between fixed and adjustable rate loans as adjustable rate loans are deemed to be subject to more credit risk if interest rates rise. Reserves for each loan segment or the loss factors are generally determined based on the Company’s historical loss experience over a look-back period determined to provide the appropriate amount of data to

accurately estimate expected losses as of period end. Additionally, management assesses the loss

emergence period for the expected losses of each loan segment and adjusts each historical loss factor accordingly. The loss emergence period is the estimated time from the date of a loss event (such as a personal bankruptcy) to the actual recognition of the loss (typically via the first full or partial loan charge-off), and is determined based upon a study of the Company’s past loss experience by loan segment. The loss factors may also be adjusted to account for qualitative or environmental factors that are likely to cause estimated credit losses inherent in the portfolio to differ from historical loss experience. This evaluation is based on among other things, loan and delinquency trends, general economic conditions, credit concentrations, industry trends and lending and credit management policies and procedures, but is inherently subjective as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions. Actual loan losses may be different than the allowance for loan losses we have established which could have a material negative effect on our financial results.
Purchased Credit-Impaired (“PCI”) loans, are loans acquired at a discount due, in part, to credit quality. PCI loans are accounted for in accordance with Accounting Standards Codification (“ASC”) Subtopic 310-30 and are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance (i.e., the allowance for loan losses). The difference between the undiscounted cash flows expected at acquisition and the initial carrying amount (fair value) of the PCI loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of the loans. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a yield adjustment, as a loss accrual or a valuation allowance. Reclassifications of the non-accretable difference to the accretable yield may occur subsequent to the loan acquisition dates due to increases in expected cash flows of the loans and would result in an increase in yield on a prospective basis. The Company analyzes the actual cash flow versus the forecasts and any adjustments to credit loss expectations are made based on actual loss recognized as well as changes in the probability of default. For a period in which cash flows aren’t reforecasted, prior period’s estimated cash flows are adjusted to reflect the actual cash received and credit events that occurred during the current reporting period.
On a quarterly basis, management reviews the current status of various loan assets in order to evaluate the adequacy of the allowance for loan losses. In this evaluation process, specific loans are analyzed to determine their potential risk of loss. Loans determined to be impaired are evaluated for potential loss exposure. Any shortfall results in a recommendation of a specific allowance or charge-off if the likelihood of loss is evaluated as probable. To determine the adequacy of collateral on a particular loan, an estimate of the fair value of the collateral is based on the most current appraised value available for real property or a discounted cash flow analysis on a business. ThisThe appraised value for real property is then reduced to reflect estimated liquidation expenses.
The allowance contains reserves identified as unallocated. These reserves reflect management’s attempt to provide for the imprecision and the uncertainty that is inherent in estimates of probable credit losses.
Our lending emphasis has been the origination of multi-family loans, commercial real estate loans, commercial and industrial loans, one- to four-family residential mortgage loans secured by one- to four-family residential real estate, construction loans, and consumer loans, the majority of which are home equity loans, home equity lines of credit and cash surrender value lending on life insurance contracts. These activities resulted in a concentration of loans secured by real estate property and businesses located in New Jersey and New York. Based on the composition of our loan portfolio, we believe the primary risks to our loan portfolio are increases in interest rates, a decline in the general economy, and declines in real estate market values in New Jersey, New York and surrounding states. Any one or combination of these events may adversely affect our loan portfolio resulting in increased delinquencies, loan losses and future levels of loan loss provisions. As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans are critical in determining the amount of the allowance required for specific loans. Assumptions for appraisal valuations are instrumental in determining the value of properties. Negative changes to appraisal assumptions could significantly impact the valuation of a property securing a loan and the related allowance determined. The assumptions supporting such appraisals are carefully reviewed to determine that the resulting values reasonably reflect amounts realizable on the related loans.
For commercial real estate, multi-family and construction loans, theThe Company obtains an appraisal for all commercial loans that are collateral dependent loans upon origination. An updated appraisal is obtained annually for loans rated substandard or worse with a balance of $500,000$1.0 million or greater. An updated appraisal is obtained biennially for loans rated special mention with a balance of $2.0 million or greater. This is done in order to determine the specific reserve or charge off needed. As part of the allowance for loan losses process, the Company reviews each collateral dependent commercial real estate loan classified as non-accrual and/or impaired and assesses whether there has been an adverse change in the collateral value supporting the loan. The Company utilizes information from its commercial lending officers and its credit department and special assets department’s knowledge of changes in real estate conditions in our lending area to identify if possible deterioration of collateral value has occurred. Based on the severity of the changes in market conditions, management determines if an updated appraisal is warranted or if downward adjustments to the previous appraisal are warranted. If it is determined that the deterioration of the collateral value is significant enough to warrant ordering

a new appraisal, an estimate of the downward

adjustments to the existing appraised value is used in assessing if additional specific reserves are necessary until the updated appraisal is received.
For homogeneous residential mortgage loans, the Company’s policy is to obtain an appraisal upon the origination of the loan and an updated appraisal in the event a loan becomes 90 days delinquent. Thereafter, the appraisal is updated every two years if the loan remains in non-performing status and the foreclosure process has not been completed. Management adjusts the appraised value of residential loans to reflect estimated selling costs and declines in the real estate market.
Management believes the potential risk for outdated appraisals for impaired and other non-performing loans has been mitigated due to the fact that the loans are individually assessed to determine that the loan’s carrying value is not in excess of the fair value of the collateral. Loans are generally charged off after an analysis is completed which indicates that collectability of the full principal balance is in doubt.
Although we believe we have established and maintained the allowance for loan losses at adequate levels, additions may be necessary ifbased on the currentgrowth and composition of the loan portfolio, the level of loan delinquency and the economic environment deteriorates.conditions in our lending area. Management uses relevant information available; however, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change. In addition, the Federal Deposit Insurance Corporation and the New Jersey Department of Banking and Insurance, as an integral part of their examination process, will periodically review our allowance for loan losses. Such agencies may require us to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination.
Deferred Income Taxes. The Company records income taxes in accordance with ASC 740, “Income Taxes,” as amended, using the asset and liability method. Accordingly, deferred tax assets and liabilities: (i) are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases; and (iii) are measured using enacted tax rates expected to apply in the years when those temporary differences are expected to be recovered or settled. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable income during the periods in which those temporary differences and carryforwards became deductible. Where applicable, deferred tax assets are reduced by a valuation allowance for any portions determined not likely to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period of enactment. The valuation allowance is adjusted, by a charge or credit to income tax expense, as changes in facts and circumstances warrant.
Asset Impairment Judgments. Certain of our assets are carried on our consolidated balance sheets at cost, fair value or at the lower of cost or fair value. Valuation allowances or write-downs are established when necessary to recognize impairment of such assets. We periodically perform analyses to test for impairment of such assets. In addition to the impairment analyses related to our loans discussed above, another significant impairment analysis is the determination of whether there has been an other-than-temporary decline in the value of one or more of our securities.
Our available-for-sale portfolio is carried at estimated fair value, with any unrealized gains or losses, net of taxes, reported as accumulated other comprehensive income or loss in stockholders’ equity. While the Company does not intend to sell these securities, and it is more likely than not that we will not be required to sell these securities before their anticipated recovery of the remaining carrying value, we have the ability to sell the securities. Our held-to-maturity portfolio, consisting primarily of mortgage- backed securities and other debt securities for which we have a positive intent and ability to hold to maturity, is carried at carrying value. We conduct a periodic review and evaluation of the securities portfolio to determine if the value of any security has declined below its cost or amortized cost, and whether such decline is other-than-temporary. Management utilizes various inputs to determine the fair value of the portfolio.  The use of different assumptions could have a positive or negative effect on our consolidated financial condition or results of operations.
If a determination is made that a debt security is other-than-temporarily impaired, the Company will estimate the amount of the unrealized loss that is attributable to credit and all other non-credit related factors. The credit related component will be recognized as an other-than-temporary impairment charge in non-interest income as a component of gain (loss) on securities, net. The non-credit related component will be recorded as an adjustment to accumulated other comprehensive income, net of tax.
Goodwill Impairment. Goodwill is presumed to have an indefinite useful life and is tested, at least annually, for impairment at the reporting unit level. Impairment exists when the carrying amount of goodwill exceeds its implied fair value. For purposes of our goodwill impairment testing, we have identified the Bank as a single reporting unit.
In connection with our annual impairment assessment we applied the guidance in Financial Accounting Standards Board Accounting Standards Update 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment, which permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. The Company performed its annual impairment assessment for goodwill testing as of November 1, 2016 and concluded that it was not more likely than not that the fair value of the reporting unit is less than its carrying amount.

Valuation of Mortgage Servicing Rights (“MSR”). The initial asset recognized for originated MSR is measured at fair value. The fair value of MSR is estimated by reference to current market values of similar loans sold with servicing released. MSR are amortized in proportion to and over the period of estimated net servicing income. We apply the amortization method for measurements of our MSR. MSR are assessed for impairment based on fair value at each reporting date. MSR impairment, if any, is recognized in a valuation allowance through charges to earnings as a component of fees and service charges. Subsequent increases in the fair value of impaired MSR are recognized only up to the amount of the previously recognized valuation allowance. Fees earned for servicing loans are reported as income when the related mortgage loan payments are collected.
The estimated fair value of MSR is obtained through independent third party valuations through an analysis of future cash flows, incorporating assumptions market participants would use in determining fair value including market discount rates, prepayment speeds, servicing income, servicing costs, default rates and other market driven data, including the market’s perception of future interest rate movements. The valuation allowance is then adjusted in subsequent periods to reflect changes in the measurement of impairment. All assumptions are reviewed for reasonableness on a quarterly basis to ensure they reflect current and anticipated market conditions.
The fair value of MSR is highly sensitive to changes in assumptions. Changes in prepayment speed assumptions generally have the most significant impact on the fair value of our MSR. Generally, as interest rates decline, mortgage loan prepayments accelerate due to increased refinance activity, which results in a decrease in the fair value of MSR. As interest rates rise, mortgage loan prepayments slow down, which results in an increase in the fair value of MSR. Thus, any measurement of the fair value of our MSR is limited by the conditions existing and the assumptions utilized as of a particular point in time, and those assumptions may not be appropriate if they are applied at a different point in time.
Stock-Based Compensation. We recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards in accordance with ASC 718, “Compensation-Stock Compensation”. We estimate the per share fair value of option grants on the date of grant using the Black-Scholes option pricing model using assumptions for the expected dividend yield, expected stock price volatility, risk-free interest rate and expected option term. These assumptions are subjective in nature, involve uncertainties and, therefore, cannot be determined with precision. The per share fair value of options is highly sensitive to changes in assumptions. In general, the per share fair value of options will move in the same direction as changes in the expected stock price volatility, risk-free interest rate and expected option term, and in the opposite direction as changes in the expected dividend yield. For example, the per share fair value of options will generally increase as expected stock price volatility increases, risk-free interest rate increases, expected option term increases and expected dividend yield decreases. The use of different assumptions or different option pricing models could result in materially different per share fair values of options.
Derivative Financial Instruments. As part of our interest rate risk management, we may utilize, from time-to-time, derivative financial instruments which are recorded as either assets or liabilities inrequired by ASC 815, the consolidatedCompany records all derivatives on the balance sheetssheet at fair value.  The effective portion ofaccounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and that qualifyqualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges is initially recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings inhedges.  Hedge accounting generally provides for the period that the hedged forecasted transaction affects earnings. The ineffective portionmatching of the changetiming of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the derivatives would be recognized directlyhedged asset or liability that are attributable to the hedged risk in earnings.a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.  The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.  
Executive Summary
Since the Company’s initial public offering in 2005, we have transitioned from a wholesale thrift business to a retail commercial bank. This transition has been primarily accomplished by increasing the amount of our commercial loans and core deposits (savings, checking and money market accounts). Our transformation can be attributed to a number of factors, including organic growth, de novo branch openings, bank and branch acquisitions, as well as product expansion. We believe the attractive markets we operate in, namely, New Jersey and the greater New York metropolitan area, will continue to provide us with growth opportunities. Our primary focus is to build and develop profitable customer relationships across all lines of business, both consumer and commercial.
Our results of operations depend primarily on net interest income, which is directly impacted by the market interest rate environment. Net interest income is the difference between the interest income we earn on our interest-earning assets, primarily loans and investment securities, and the interest we pay on our interest-bearing liabilities, primarily interest-bearing transaction accounts, time deposits, and borrowed funds. Net interest income is affected by the level and direction of interest rates, the shape of the market yield curve, the timing of the placement and the repricing of interest-earning assets and interest-bearing liabilities on our balance sheet, and the prepayment ratesrate of prepayments on our mortgage-related assets.
A flattening of the yield curve, caused primarily by rising short termshort-term interest rates combined with competitive pricing in both the loan and deposit markets, continuecontinues to create a challenging net interest margin environment.  We continue to actively manage our interest rate risk against a backdrop of slow but positive economic growth and the potential for additional increases in short-term rates.interest rate uncertainty.  If short-term interest rates and related deposit competition increase further, we may be subject to near-termadditional net interest margin compression.  Should

the yield curve steepen, we may experience an improvement in net interest income, particularly if short-term interest rates do not increase further.
Our results of operations are also significantly affected by general economic conditions.  While the domestic consumer continues to generally benefit from lower energy costs and improved housing and employment metrics, the velocity of economic growth, domestically and internationally, remains sluggish.is challenged by global trade discord and pockets of socioeconomic and political unrest. Our tax rate was

negatively impacted by the enacted State of New Jersey legislation that created a temporary surtax effective for tax years 2018 through 2021 and will require companies to file combined tax returns beginning for 2019.
Total assets increased by $1.61 billion,$316.6 million, or 6.9%1.2%, to $24.78$26.55 billion at September 30, 2017March 31, 2019 from $23.17$26.23 billion at December 31, 2016.2018. Effective January 1, 2019, we adopted new accounting guidance that requires leases to be recognized on our Consolidated Balance Sheet as a right-of-use asset and a lease liability. Our operating lease right-of-use assets and operating lease liabilities were $187.6 million and $197.3 million, respectively, at March 31, 2019. Net loans increased $1.14 billion,by $125.0 million, or 6.1%0.6%, to $19.71$21.50 billion at September 30, 2017March 31, 2019 from $18.57$21.38 billion at December 31, 2016, and securities increased by $267.2 million, or 7.8%, to $3.68 billion at September 30, 2017 from $3.42 billion at December 31, 2016. During the nine months ended September 30, 2017, we originated $999.7 million in multi-family loans, $637.3 million in commercial real estate loans, $444.2 million in commercial and industrial loans, $388.5 million in residential loans, $344.6 million in construction loans and $101.5 million in consumer and other loans.2018. Our ongoing strategy is to continue to work towards becoming more commercial bank-like and maintain a well-diversified loan portfolio. We understand the heightened regulatory sensitivity around commercial real estate and multi-family concentrationconcentrations, and continue to be diligent in our underwriting and credit risk monitoring of these portfolios.  The overall level of non-performing loans remains low compared to our national and regional peers,peers; however, our commercial real estate concentration is above 300% of regulatory capital and therefore subjects us to heightened regulatory scrutiny.
Capital management is a key component of our business strategy. We continue to manage our capital through a combination of organic growth, stock repurchases and cash dividends. Effective capital management and prudent growth allows us to effectively leverage the capital from the Company’s public offerings, while being mindful of tangible book value for stockholders. Our capital to total assets ratio has decreased to 12.73%11.13% at September 30, 2017March 31, 2019 from 13.48%11.46% at December 31, 2016.2018. Since the commencement of our first stock repurchase plan in March 2015 through September 30, 2017,March 31, 2019, the Company has repurchased a total of 67.394.0 million shares at an average cost of $11.95$12.10 per share, totaling $804.2 million.$1.14 billion. For the ninethree months ended September 30, 2017,March 31, 2019, stockholders’ equity was impacted by net income of $131.5 million and $27.6 million of share-based plan activity. These increases were partially offset by cash dividends of $0.24 per share totaling $74.1 million and the repurchase of 4.46.2 million shares of common stock for $57.8$73.7 million and cash dividends of $0.11 per share totaling $31.0 million. These reductions to stockholders’ equity were partially offset by net income of $48.2 million and $6.2 million of share-based plan activity.
We continue to enhance our employee training and development programs, build additional risk management and operational infrastructure and add personnel as our Company grows and our business evolves. We will continue to execute our business strategies with a focus on prudent and opportunistic growth while striving to produce financial results that will create value for our stockholders. We intend to continue to grow our business by successfully attracting deposits, identifying favorable loan and strengtheninvestment opportunities, acquiring other banks and non-bank entities, enhancing our market share through planned de novo branch expansion, opportunistic acquisitionspresence and product offerings as well as continuing to invest in our market area when appropriate, enhanced product offerings and investments in our people. We continue to enhance our employee training and development programs, build additional risk management and operational infrastructure and add personnel as our Company grows and our business changes. In August 2016 we entered into an informal agreement with the FDIC and NJDOBI with regard to Bank Secrecy Act (“BSA”) and Anti-Money Laundering (“AML”) compliance matters. Our BSA/AML team continues to work diligently to enhance the risk infrastructure procedures and technology, while ensuring its long term sustainability for the Company.
Comparison of Financial Condition at September 30, 2017March 31, 2019 and December 31, 20162018
Total Assets. Total assets increased by $1.61 billion,$316.6 million, or 6.9%1.2%, to $24.78$26.55 billion at September 30, 2017March 31, 2019 from $23.17$26.23 billion at December 31, 2016.2018. Net loans increased $1.14 billion,by $125.0 million, or 6.1%0.6%, to $19.71$21.50 billion at September 30, 2017March 31, 2019 from $18.57$21.38 billion at December 31, 2016, while2018. Total securities increaseddecreased by $267.2$4.3 million, or 7.8%0.1%, to $3.68 billion at September 30, 2017March 31, 2019 from $3.42 billion at December 31, 2016.2018. Operating lease right-of-use assets were $187.6 million at March 31, 2019.


Net Loans. Net loans increased by $1.14 billion,$125.0 million, or 6.1%0.6%, to $19.71$21.50 billion at September 30, 2017March 31, 2019 from $18.57$21.38 billion at December 31, 2016.2018. The detail of the loan portfolio (including PCI loans) is below:

September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
(Dollars in thousands)(Dollars in thousands)
Commercial loans:      
Multi-family loans$7,854,759
 7,459,131
$8,174,342
 8,165,187
Commercial real estate loans4,667,113
 4,452,300
4,852,402
 4,786,825
Commercial and industrial loans1,501,235
 1,275,283
2,430,540
 2,389,756
Construction loans397,929
 314,843
232,170
 227,015
Total commercial loans14,421,036
 13,501,557
15,689,454
 15,568,783
Residential mortgage loans4,872,872
 4,711,880
5,366,970
 5,351,115
Consumer and other655,021
 597,265
691,229
 707,866
Total loans19,948,929
 18,810,702
21,747,653
 21,627,764
Net unamortized premiums and deferred loan costs(11,701) (12,474)
Deferred fees, premiums and other, net(9,826) (13,811)
Allowance for loan losses(230,071) (228,373)(234,717) (235,817)
Net loans$19,707,157
 18,569,855
$21,503,110
 21,378,136

During the ninethree months ended September 30, 2017,March 31, 2019, we originated $999.7 million in multi-family loans, $637.3$213.4 million in commercial real estate loans, $444.2$197.7 million in commercial and industrial loans, $388.5$186.0 million in multi-family loans, $85.5 million in residential loans, $344.6 million in construction loans and $101.5$16.8 million in consumer and other loans and $1.5 million in construction loans. This increaseThe growth in loansthe loan portfolio reflects our continued focus on generating multi-family loans, commercial real estate loansgrowing and commercial and industrial loans, which was partially offset by pay downs and payoffs of loans.diversifying our loan portfolio. A significant portion of our commercial loan portfolio, including commercial and industrial loans, are secured by commercial real estate and are primarily on properties and businesses located in New Jersey and New York.
Our loan portfolio contains interest-only residential and consumer 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 contractually required payments due to the required amortization of the principal amount after the interest-only period. These payment increases could affect the borrower’s ability to repay the loan. The amount ofAt March 31, 2019, interest-only residential and consumer loans at September 30, 2017represented less than 1% of the residential and December 31, 2016 was $84.0 million and $124.2 million, respectively.consumer portfolio. From time to time and for competitive purposes, we originate commercial loans with limited interest only periods. As of September 30, 2017, we had $276.7 millioninterest-only commercial real estate interest onlyand multi-family loans. As of March 31, 2019, these loans in ourrepresented less than 10% of the total commercial loan portfolio, of which $178.2 million have twenty-four months or less remaining on the interest only term.portfolio. We maintain stricter underwriting criteria for these interest-only loans than for amortizing loans. We believe these criteria adequately control the potential exposure to such risks and that adequate provisions for loan losses are provided for all known and inherent risks.
We also purchase mortgage loans from correspondent entities including other banks and mortgage bankers. During the three months ended March 31, 2019, we purchased loans totaling $84.7 million from these entities. In addition to the loans originated for our portfolio, our mortgage subsidiary, Investors Home Mortgage Co.,we originated residential mortgage loans for sale to third parties totaling $126.8$27.6 million during the ninethree months ended September 30, 2017.


March 31, 2019.
    The following table sets forth non-accrual loans (excluding PCI loans and loans held-for-sale) on the dates indicated as well as certain asset quality ratios:

September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018
# of LoansAmount # of LoansAmount # of LoansAmount # of LoansAmount # of LoansAmount# of Loans Amount # of Loans Amount # of Loans Amount # of Loans Amount # of Loans Amount
(dollars in millions)(dollars in millions)
                                 
Multi-family4
$14.2
 6
$19.0
 2
$0.5
 2
$0.5
 1
$0.2
14
 $34.1
 15
 $33.9
 3
 $2.6
 9
 $19.5
 8
 $20.2
Commercial real estate31
35.3
 36
75.6
 24
8.2
 24
9.2
 29
8.9
32
 9.8
 35
 12.4
 39
 15.5
 36
 16.7
 38
 19.7
Commercial and industrial6
1.9
 5
1.8
 4
2.2
 8
4.7
 6
2.3
14
 17.2
 14
 19.4
 14
 19.8
 13
 28.9
 19
 23.3
Construction

 

 

 

 

1
 0.2
 1
 0.2
 1
 0.2
 1
 0.3
 1
 0.3
Total commercial loans41
51.4
 47
96.4
 30
10.9
 34
14.4
 36
11.4
61
 61.3
 65
 65.9
 57
 38.1
 59
 65.4
 66
 63.5
Residential and consumer417
74.3
 447
81.0
 470
76.2
 478
79.9
 481
86.1
296
 56.4
 320
 59.0
 347
 66.3
 375
 69.2
 390
 72.5
Total non-accrual loans458
$125.7
 494
$177.4
 500
$87.1
 512
$94.3
 517
$97.5
357
 $117.7
 385
 $124.9
 404
 $104.4
 434
 $134.6
 456
 $136.0
Accruing troubled debt restructured loans58
$13.4
 45
$11.7
 47
$12.2
 42
$9.4
 31
$8.8
54
 $13.6
 54
 $13.6
 59
 $13.2
 56
 $12.8
 54
 $12.4
Non-accrual loans to total loans 0.63%  0.89%  0.45%  0.50%  0.53%  0.54%   0.58%   0.50%   0.65%   0.66%
Allowance for loan losses as a percent of non-accrual loans 183.09%  129.68%  265.16%  242.24%  229.31%  199.44%   188.78%   221.06%   171.46%   169.97%
Allowance for loan losses as a percent of total loans 1.15%  1.16%  1.18%  1.21%  1.22%  1.08%   1.09%   1.10%   1.11%   1.12%
Total non-accrual loans decreased to $125.7were $117.7 million at September 30, 2017March 31, 2019 compared to $177.4$124.9 million at June 30, 2017December 31, 2018 and $97.5$136.0 million at September 30, 2016.March 31, 2018. Included in non-accrual loans at March 31, 2019 were $8.6 million of loans that were classified

as non-accrual which were performing in accordance with their contractual terms. Classified (substandard) loans as a percent of total loans increased to 2.00%3.26% at September 30, 2017March 31, 2019 from 1.00%3.18% at December 31, 2016.2018. We continue to proactively and diligently work to resolve our troubled loans in light of the impact that low economic growth, rising interest rates and regional real estate market conditions may have on our portfolio. During the three months ended September 30, 2017, we sold a $48.1 million commercial loan relationship which was included in our non-accrual loans at June 30, 2017. loans.
At September 30, 2017,March 31, 2019, there were $47.1$40.1 million of loans deemed as TDRs, of which $27.7$29.1 million were residential and consumer loans, $18.1$8.1 million were commercial and industrial loans and $2.9 million were commercial real estate loans and $1.3 million were commercial and industrial loans. TDR loansTDRs of $13.4$13.6 million were classified as accruing and $33.7$26.5 million were classified as non-accrual at September 30, 2017.March 31, 2019.
In addition to non-accrual loans, we continue to monitor our portfolio for potential problem loans. Potential problem loans are defined as loans or relationshipsabout which we have concerns as to the ability of the borrower to comply with the current loan repayment terms and which may cause the loan to be placed on non-accrual status. As of September 30, 2017,March 31, 2019, the Company has deemed potential problem loans, excluding PCI loans, totaling $36.2$50.3 million, which is comprised of 712 multi-family loans totaling $30.7 million, 22 commercial and industrial loans totaling $15.1 million and 4 commercial real estate loans totaling $8.3 million, 10 multi-family loans totaling $15.8 million and 12 commercial and industrial loans totaling $12.1$4.5 million. Management is actively monitoring all of these loans.
The ratio of non-accrual loans to total loans was 0.63%0.54% at September 30, 2017March 31, 2019 compared to 0.50%0.58% at December 31, 2016.2018. The allowance for loan losses as a percentage of non-accrual loans was 183.09%199.44% at September 30, 2017March 31, 2019 compared to 242.24%188.78% at December 31, 2016.2018. At September 30, 2017,March 31, 2019, our allowance for loan losses as a percentage of total loans was 1.15%1.08% compared to 1.21%1.09% at December 31, 2016.2018.
At September 30, 2017, loans meeting the Company’s definition of an impaired loan totaled $75.4 million, of which $14.8 million of impaired loans had a specific allowance for credit losses of $1.7 million and $60.6 million of impaired loans had

no specific allowance for credit losses. At DecemberMarch 31, 2016,2019, loans meeting the Company’s definition of an impaired loan were primarily collateral dependent loans totaling $34.4$83.8 million, of which $13.8$15.4 million had a specific allowance for credit losses of $2.1 million and $68.4 million had no specific allowance for credit losses. At December 31, 2018, loans meeting the Company’s definition of an impaired loan were primarily collateral dependent loans totaling $86.7 million, of which $15.8 million had a related allowance for credit losses of $1.6$2.2 million and $20.6$70.9 million had no related allowance for credit losses.
The allowance for loan losses increaseddecreased by $1.7$1.1 million to $230.1$234.7 million at September 30, 2017March 31, 2019 from $228.4$235.8 million at December 31, 2016. The increase in our2018. Our allowance for loan losses from December 31, 2016 was due tois impacted by the inherent credit risk, ingrowth and composition of our overall portfolio, the growth of the loan portfolio, andas well as the level of non-accrual loans and charge-offs. Future increases in the allowance for loan losses may be necessary based on the growth and composition of the loan portfolio, the level of loan delinquency and the economic conditions in our lending area.
The following table sets forth the allowance for loan losses at September 30, 2017March 31, 2019 and December 31, 20162018 allocated by loan category and the percent of loans in each category to total loans at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.
 
September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
Allowance for
Loan Losses
 
Percent of Loans
in Each Category
to Total Loans
 
Allowance for
Loan Losses
 
Percent of Loans
in Each Category
to Total Loans
Allowance for
Loan Losses
 
Percent of Loans
in Each Category
to Total Loans
 
Allowance for
Loan Losses
 
Percent of Loans
in Each Category
to Total Loans
(Dollars in thousands)(Dollars in thousands)
End of period allocated to:              
Multi-family loans$86,939
 39.4% $95,561
 39.6%$75,572
 37.6% $82,876
 37.7%
Commercial real estate loans59,683
 23.4% 52,796
 23.7%47,627
 22.3% 48,449
 22.1%
Commercial and industrial loans47,289
 7.5% 43,492
 6.8%78,845
 11.2% 71,084
 11.1%
Construction loans9,782
 2.0% 11,653
 1.7%7,303
 1.0% 7,486
 1.1%
Residential mortgage loans21,031
 24.4% 19,831
 25.0%20,557
 24.7% 20,776
 24.7%
Consumer and other loans2,937
 3.3% 2,850
 3.2%2,991
 3.2% 3,102
 3.3%
Unallocated2,410
 
 2,190
 
1,822
 
 2,044
 
Total allowance$230,071
 100.0% $228,373
 100.0%$234,717
 100.0% $235,817
 100.0%
Securities. Securities are held primarily for liquidity, interest rate risk management and long-term yield enhancement. Our Investment Policy requires that investment transactions conform to Federal and New Jersey State investment regulations. Our investments purchased may include, but are not limited to, U.S. Treasury obligations, securities issued by various Federal Agencies, State and Municipal subdivisions, mortgage-backed securities, certain certificates of deposit of insured financial institutions, overnight and short-term loans to other banks, investment grade corporate debt instruments, and mutual funds. In addition, the Company may invest in equity securities subject to certain limitations. Purchase decisions are based upon a thorough analysis of each security

to determine if it conforms to our overall asset/liability management objectives. The analysis must consider its effect on our risk-based capital measurement, prospects for yield and/or appreciation and other risk factors. SecuritiesDebt securities are classified as held-to-maturity or available-for-sale when purchased.
At September 30, 2017,March 31, 2019, our securities portfolio represented 14.9%13.9% of our total assets. Securities, in the aggregate, increaseddecreased by $267.2$4.3 million, or 7.8%0.1%, to $3.68 billion at September 30, 2017March 31, 2019 from $3.42 billion at December 31, 2016.2018. This increasedecrease was a result of purchasespaydowns, partially offset by paydowns and sales.purchases.
Stock in the Federal Home Loan Bank, Bank Owned Life Insurance and Other Assets. The amount of stock we own in the FHLB decreased by $5.1$1.3 million, or 2.1%0.5%, to $232.8$258.9 million at September 30, 2017March 31, 2019 from $237.9$260.2 million at December 31, 2016.2018. The amount of stock we own in the FHLB is primarily related to the balance of our outstanding borrowings thereforefrom the decrease in borrowings has an impact on FHLB stock owned.FHLB. Bank owned life insurance was $154.7$213.5 million at September 30, 2017March 31, 2019 and $161.9$211.9 million at December 31, 2016.2018. Other assets were $6.6$43.9 million at September 30, 2017March 31, 2019 and $14.5$29.3 million at December 31, 2016.2018.
Deposits.  At September 30, 2017,March 31, 2019, deposits totaled $16.88$17.63 billion, representing 78.0%74.7% of our total liabilities. Our deposit strategy is focused on attracting core deposits (savings, checking and money market accounts), resulting in a deposit mix of lower cost core products. WeAlthough recent increases in interest rates has resulted in consumer preference for and growth in time deposits, we remain committed to our plan of attracting more core deposits because core deposits represent a more stable source of low cost funds and may be less sensitive to changes in market interest rates.

We have a suite of commercial deposit products, designed to appeal to small and mid-sized business ownersbusinesses and non-profit organizations. The interestInterest rates, we pay, our maturity terms, service fees and withdrawal penalties are all reviewed on a periodic basis. Deposit rates and terms are based primarily on our current operating strategies, market rates, liquidity requirements, rates paid by competitorscompetitive forces and growth goals. We also rely on personalized customer service, long-standing relationships with customers and an active marketing program to attract and retain deposits.
Deposits increased by $1.60 billion,$49.7 million, or 10.4%0.3%, from $15.28$17.58 billion at December 31, 20162018 to $16.88$17.63 billion at September 30, 2017. TheMarch 31, 2019 primarily driven by an increase isin time deposits, partially attributed to the deposit campaignoffset by decreases in the third quarter.checking and savings accounts. Checking accounts increased $806.6decreased $141.8 million to $6.90$7.18 billion at September 30, 2017March 31, 2019 from $6.09$7.32 billion at December 31, 2016.2018. Core deposits represented approximately 78%72% of our total deposit portfolio at September 30, 2017March 31, 2019 compared to 81% of our total deposit portfolio74% at December 31, 2016.2018.
The following table sets forth the distribution of total deposit accounts, by account type, at the dates indicated:
September 30, 2017 December 31, 2016March 31, 2019 December 31, 2018
Balance Percent of Total Deposit Balance Percent of Total DepositBalance Percent of Total Deposit Balance Percent of Total Deposit
(Dollars in thousands)(Dollars in thousands)
Non-interest bearing:              
Checking accounts$2,263,198
 13.4% $2,173,493
 14.2%$2,477,079
 14.1% $2,535,848
 14.4%
Interest-bearing:              
Checking accounts4,633,096
 27.5% 3,916,208
 25.6%4,700,483
 26.7% 4,783,563
 27.2%
Money market deposits4,298,171
 25.5% 4,150,583
 27.2%3,619,546
 20.5% 3,641,070
 20.7%
Savings2,049,509
 12.1% 2,092,989
 13.7%1,976,798
 11.2% 2,048,941
 11.7%
Certificates of deposit3,632,495
 21.5% 2,947,560
 19.3%4,856,093
 27.5% 4,570,847
 26.0%
Total Deposits$16,876,469
 100.0% $15,280,833
 100.0%$17,629,999
 100.0% $17,580,269
 100.0%
Borrowed Funds.  We borrow directly fromBorrowings are primarily with the FHLB and various financial institutions. Our FHLB borrowings, frequently referred to as advances, are over collateralized by our residential and non-residentialcommercial mortgage portfolios as well as qualified investment securities.portfolios. Borrowed funds decreasedincreased by $61.4$113.9 million, or 1.4%2.1%, to $4.48$5.55 billion at September 30, 2017March 31, 2019 from $4.55$5.44 billion at December 31, 2016. Short-term borrowings were reduced as a result2018 to help fund the growth of our deposit gathering efforts.the loan portfolio.
Stockholders’ Equity. Stockholders’ equity increaseddecreased by $31.9$49.5 million to $3.16$2.96 billion at September 30, 2017March 31, 2019 from $3.12$3.01 billion at December 31, 2016.2018. The increasedecrease was primarily attributed to the repurchase of 6.2 million shares of common stock for $73.7 million and cash dividends of $0.11 per share totaling $31.0 million during the three months ended March 31, 2019. These reductions to stockholders’ equity were partially offset by net income of $131.5$48.2 million and share-based plan activity of $27.6$6.2 million for the ninethree months ended September 30, 2017. These increases were partially offset by cash dividends of $0.24 per share totaling $74.1 million and the repurchase of 4.4 million shares of common stock for $57.8 million during the nine months ended September 30, 2017.March 31, 2019.

Analysis of Net Interest Income
Net interest income represents the difference between income we earn on our interest-earning assets and the expense we pay on interest-bearing liabilities. Net interest income depends on the volume of interest-earning assets and interest-bearing liabilities and the interest rates earned on such assets and paid on such liabilities.

Average Balances and Yields. The following tables settable sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, however interest receivable on these loans have been fully reserved for and not included in interest income. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.


 Three Months Ended September 30, Three Months Ended March 31,
 2017 2016 2019 2018
 
Average
Outstanding
Balance
 
Interest
Earned/
Paid
 
Average
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
Earned/
Paid
 
Average
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
Earned/
Paid
 
Average
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
Earned/
Paid
 
Average
Yield/
Rate
 (Dollars in thousands) (Dollars in thousands)
Interest-earning assets:                        
Interest-bearing deposits $379,670
 $875
 0.92% $129,226
 $76
 0.24% $175,281
 $535
 1.22% $199,283
 $455
 0.91%
Securities available-for-sale 1,901,626
 9,674
 2.03% 1,424,338
 6,315
 1.77%
Securities held-to-maturity 1,672,675
 10,589
 2.53% 1,815,288
 10,434
 2.30%
Equity securities 5,811
 37
 2.55% 5,702
 35
 2.46%
Debt securities available-for-sale 2,111,832
 15,416
 2.92% 2,020,833
 10,852
 2.15%
Debt securities held-to-maturity 1,532,764
 11,002
 2.87% 1,759,737
 11,702
 2.66%
Net loans 19,633,388
 201,069
 4.10% 17,707,883
 179,234
 4.05% 21,452,923
 224,890
 4.19% 20,011,353
 204,722
 4.09%
Stock in FHLB 241,033
 3,557
 5.90% 216,813
 2,315
 4.27% 260,543
 4,337
 6.66% 239,100
 3,801
 6.36%
Total interest-earning assets 23,828,392
 225,764
 3.79% 21,293,548
 198,374
 3.73% 25,539,154
 256,217
 4.01% 24,236,008
 231,567
 3.82%
Non-interest-earning assets 759,203
     778,244
     942,523
     697,486
    
Total assets $24,587,595
     $22,071,792
     $26,481,677
     $24,933,494
    
Interest-bearing liabilities:                        
Savings deposits $2,076,769
 $2,174
 0.42% $2,104,583
 $1,577
 0.30% $2,039,919
 $4,370
 0.86% $2,331,475
 $3,290
 0.56%
Interest-bearing checking 4,422,930
 10,883
 0.98% 3,472,472
 4,451
 0.51% 4,975,209
 22,082
 1.78% 4,812,897
 13,579
 1.13%
Money market accounts 4,320,547
 9,478
 0.88% 3,971,339
 6,605
 0.67% 3,630,708
 14,246
 1.57% 4,091,149
 9,292
 0.91%
Certificates of deposit 3,481,135
 9,765
 1.12% 3,009,330
 7,693
 1.02% 4,752,700
 24,724
 2.08% 3,398,732
 10,215
 1.20%
Total interest-bearing deposits 14,301,381
 32,300
 0.90% 12,557,724
 20,326
 0.65% 15,398,536
 65,422
 1.70% 14,634,253
 36,376
 0.99%
Borrowed funds 4,633,628
 22,553
 1.95% 4,074,743
 18,442
 1.81% 5,229,663
 28,117
 2.15% 4,667,160
 22,707
 1.95%
Total interest-bearing liabilities 18,935,009
 54,853
 1.16% 16,632,467
 38,768
 0.93% 20,628,199
 93,539
 1.81% 19,301,413
 59,083
 1.22%
Non-interest-bearing liabilities 2,485,667
     2,316,873
     2,868,166
     2,508,888
    
Total liabilities 21,420,676
     18,949,340
     23,496,365
     21,810,301
    
Stockholders’ equity 3,166,919
     3,122,452
     2,985,312
     3,123,193
    
Total liabilities and stockholders’ equity $24,587,595
     $22,071,792
     $26,481,677
     $24,933,494
    
Net interest income   $170,911
     $159,606
     $162,678
     $172,484
  
Net interest rate spread(1)
     2.63%     2.80%     2.20%     2.60%
Net interest-earning assets(2)
 $4,893,383
     $4,661,081
     $4,910,955
     $4,934,595
    
Net interest margin(3)
     2.87%     3.00%     2.55%     2.85%
Ratio of interest-earning assets to total interest-bearing liabilities 1.26
     1.28
     1.24
     1.26
    

(1)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3)Net interest margin represents net interest income divided by average total interest-earning assets.

  Nine Months Ended September 30,
  2017 2016
  
Average
Outstanding
Balance
 
Interest
Earned/
Paid
 
Average
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
Earned/
Paid
 
Average
Yield/
Rate
  (Dollars in thousands)
Interest-earning assets:            
Interest-bearing deposits $229,729
 $1,159
 0.67% $141,230
 $253
 0.24%
Securities available-for-sale 1,807,962
 26,959
 1.99% 1,339,122
 18,350
 1.83%
Securities held-to-maturity 1,689,790
 33,605
 2.65% 1,856,318
 32,453
 2.33%
Net loans 19,291,939
 579,921
 4.01% 17,218,547
 527,989
 4.09%
Stock in FHLB 247,228
 9,722
 5.24% 197,958
 6,396
 4.31%
Total interest-earning assets 23,266,648
 651,366
 3.73% 20,753,175
 585,441
 3.76%
Non-interest-earning assets 758,616
     774,102
    
Total assets $24,025,264
     $21,527,277
    
Interest-bearing liabilities:            
Savings deposits $2,100,918
 $6,053
 0.38% $2,099,960
 $4,684
 0.30%
Interest-bearing checking 4,265,758
 25,712
 0.80% 3,207,413
 11,198
 0.47%
Money market accounts 4,225,519
 24,772
 0.78% 3,868,155
 18,884
 0.65%
Certificates of deposit 3,086,739
 23,283
 1.01% 3,258,702
 26,873
 1.10%
Total interest-bearing deposits 13,678,934
 79,820
 0.78% 12,434,230
 61,639
 0.66%
Borrowed funds 4,744,701
 66,460
 1.87% 3,667,473
 52,328
 1.90%
Total interest-bearing liabilities 18,423,635
 146,280
 1.06% 16,101,703
 113,967
 0.94%
Non-interest-bearing liabilities 2,436,893
     2,234,692
    
Total liabilities 20,860,528
     18,336,395
    
Stockholders’ equity 3,164,736
     3,190,882
    
Total liabilities and stockholders’ equity $24,025,264
     $21,527,277
    
Net interest income   $505,086
     $471,474
  
Net interest rate spread(1)
     2.67%     2.82%
Net interest-earning assets(2)
 $4,843,013
     $4,651,472
    
Net interest margin(3)
     2.89%     3.03%
Ratio of interest-earning assets to total interest-bearing liabilities 1.26
     1.29
    

(1)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3)Net interest margin represents net interest income divided by average total interest-earning assets.



Comparison of Operating Results for the Three and Nine Months Ended September 30, 2017March 31, 2019 and 20162018
Net Income. Net income for the three months ended September 30, 2017March 31, 2019 was $45.8$48.2 million compared to net income of $49.9$57.9 million for the three months ended September 30, 2016. Net income for the nine months ended September 30, 2017 was $131.5 million compared to net income of $139.7 million for the nine months ended September 30, 2016.March 31, 2018.
Net Interest Income. Net interest income increaseddecreased by $11.3$9.8 million, or 7.1%5.7%, to $170.9$162.7 million for the three months ended September 30, 2017March 31, 2019 from $159.6$172.5 million for the three months ended September 30, 2016.March 31, 2018. The net interest margin decreased 1330 basis points to 2.87%2.55% for the three months ended September 30, 2017March 31, 2019 from 3.00%2.85% for the three months ended September 30, 2016.March 31, 2018.
Net interest income increased by $33.6 million, or 7.1%, to $505.1 million for the nine months ended September 30, 2017 from $471.5 million for the nine months ended September 30, 2016. The net interest margin decreased 14 basis points to 2.89% for the nine months ended September 30, 2017 from 3.03% for the nine months ended September 30, 2016.
Total interest and dividend income increased by $27.4$24.7 million, or 13.8%10.6%, to $225.8$256.2 million for the three months ended September 30, 2017.March 31, 2019. Interest income on loans increased by $21.8$20.2 million, or 12.2%9.9%, to $201.1$224.9 million for the three months ended September 30, 2017March 31, 2019 as a result of a $1.93$1.44 billion increase in the average balance of net loans to $19.63$21.45 billion, primarily attributableattributed to growth in the commercial loan portfolio.originations, partially offset by paydowns and payoffs. The weighted average yield on net loans increased 510 basis points to 4.10%4.19%. Prepayment penalties, which are included in interest income, totaled $5.4$3.7 million for the three months ended September 30, 2017March 31, 2019 compared to $4.0$5.2 million for the three months ended September 30, 2016.March 31, 2018. Interest income on all other interest-earning assets, excluding loans, increased by $5.6$4.5 million, or 29.0%16.7%, to $24.7$31.3 million for the three months ended September 30, 2017March 31, 2019 which is attributableattributed to a $609.3 millionan increase in the weighted average yield on interest-earning assets, excluding loans, of 53 basis points to 3.07%. The average balance of all other interest-earning assets, excluding loans, decreased $138.4 million to $4.20$4.09 billion for the three months ended September 30, 2017. The weighted average yield on interest-earning assets, excluding loans, increased 21 basis points to 2.35%.
Total interest and dividend income increased by $65.9 million, or 11.3%, to $651.4 million for the nine months ended September 30, 2017. Interest income on loans increased by $51.9 million, or 9.8%, to $579.9 million for the nine months ended September 30, 2017 as a result of a $2.07 billion increase in the average balance of net loans to $19.29 billion, primarily attributable to growth in the commercial loan portfolio. This increase was offset by a decrease of 8 basis points in the weighted average yield on net loans to 4.01%. Prepayment penalties, which are included in interest income, totaled $11.6 million for the nine months ended September 30, 2017 compared to $14.6 million for the nine months ended September 30, 2016. Interest income on all other interest-earning assets, excluding loans, increased by $14.0 million, or 24.4%, to $71.4 million for the nine months ended September 30, 2017 which is attributable to a $440.1 million increase in the average balance of all other interest-earning assets, excluding loans, to $3.97 billion for the nine months ended September 30, 2017. The weighted average yield on interest-earning assets, excluding loans, increased 23 basis points to 2.40%.March 31, 2019.
Total interest expense increased by $16.1$34.5 million, or 41.5%58.3%, to $54.9$93.5 million for the three months ended September 30, 2017.March 31, 2019. Interest expense on interest-bearing deposits increased $12.0$29.0 million, or 58.9%79.9%, to $32.3$65.4 million for the three months ended September 30, 2017.March 31, 2019. The weighted average cost of interest-bearing deposits increased 71 basis points to 1.70% for the three months ended March 31, 2019. In addition, the average balance of total interest-bearing deposits increased $1.74 billion,$764.3 million, or 13.9%5.2%, to $14.30$15.40 billion for the three months ended September 30, 2017. In addition, the weighted average cost of interest-bearing deposits increased 25 basis points to 0.90% for the three months ended September 30, 2017.March 31, 2019. Interest expense on borrowed funds increased by $4.1$5.4 million, or 22.3%23.8%, to $22.6$28.1 million for the three months ended September 30, 2017.March 31, 2019. The average balance of borrowed funds increased $558.9$562.5 million, or 13.7%12.1%, to $4.63$5.23 billion for the three months ended September 30, 2017.March 31, 2019. In addition, the weighted average cost of borrowings increased 1420 basis points to 1.95%2.15% for the three months ended September 30, 2017.
Total interest expense increased by $32.3 million, or 28.4%, to $146.3 million for the nine months ended September 30, 2017. Interest expense on interest-bearing deposits increased $18.2 million, or 29.5%, to $79.8 million for the nine months ended September 30, 2017. The average balance of total interest-bearing deposits increased $1.24 billion, or 10.0%, to $13.68 billion for the nine months ended September 30, 2017. In addition, the weighted average cost of interest-bearing deposits increased 12 basis points to 0.78% for the nine months ended September 30, 2017. Interest expense on borrowed funds increased by $14.1 million, or 27.0%, to $66.5 million for the nine months ended September 30, 2017. The average balance of borrowed funds increased $1.08 billion, or 29.4%, to $4.74 billion for the nine months ended September 30, 2017. This increase was offset by a decrease of 3 basis points in the weighted average cost of borrowings to 1.87% for the nine months ended September 30, 2017.March 31, 2019.
Provision for Loan Losses. Our provision is primarily a result of the inherent credit risk in our overall portfolio, the growth and composition of the loan portfolio, and the level of non-accrual loans and charge-offs. For the three months ended September 30, 2017,March 31, 2019, our provision for loan losses was $1.8$3.0 million, compared to $5.0$2.5 million for the three months ended September 30, 2016.March 31, 2018. For the three months ended September 30, 2017,March 31, 2019, net charge-offs were $1.7$4.1 million, compared to $1.8$2.3 million for the three months ended September 30, 2016. Our provision for loan losses was $11.8 million for the nine months ended September 30, 2017 and $15.0March 31, 2018.

million for the nine months ended September 30, 2016. For the nine months ended September 30, 2017, net charge-offs were $10.1 million compared to $10.0 million for the nine months ended September 30, 2016.
Non-Interest Income. Total non-interest income decreased $125,000,increased $2.1 million, or 1.5%22.9%, to $8.4$11.2 million for the three months ended September 30, 2017. OtherMarch 31, 2019. Fees and service charges increased $718,000 and other income attributed to non-depository investment products and gaingains on loan sales decreased $686,000 and $675,000, respectively,our equipment finance portfolio increased $718,000 for the three months ended September 30, 2017. These decreases were partially offset by an increase to fees and service charges of $968,000.March 31, 2019.
Total non-interest income decreased $1.3 million, or 4.5%, to $27.4 million for the nine months ended September 30, 2017. Gain on securities transactions and other income decreased $1.8 million and $1.4 million, respectively, for the nine months ended September 30, 2017. These decreases were partially offset by an increase to fees and service charges of $2.0 million.
Non-Interest Expenses. Compared to the third quarter of 2016, totalTotal non-interest expenses increased $11.9were $103.4 million or 13.0%. Forfor the three months ended September 30, 2017, compensationMarch 31, 2019, an increase of $2.3 million, or 2.3%, compared to the three months ended March 31, 2018. Compensation and fringe benefits increased $4.0$1.9 million due to additions to our staff to support continuedour growth as well as merit increases, data processing and continued build out of our risk managementcommunication expense increased $1.9 million and operating infrastructure. Additionally, advertising and promotional expensesexpense increased $2.9 million due to our current advertising campaigns and professional fees increased $2.5 million largely attributable to our BSA remediation efforts. Federal insurance premiums increased $900,000 for the three months ended September 30, 2017.
Total non-interest expenses$1.5 million. These increases were $309.1 million for the nine months ended September 30, 2017, an increase of $39.5 million, or 14.7%, compared to the nine months ended September 30, 2016. Professional fees increased $15.6 million for the nine months ended September 30, 2017 as compared to the nine months of 2016, largely attributable to BSA remediation efforts and the continued risk management infrastructure enhancements. Compensation and fringe benefits increased $9.7 million for the nine months ended September 30, 2017 as a result of additions to our staff to support continued growth and infrastructure, especially in our risk management area, as well as normal merit increases, partially offset by lower pension costs. Advertisinga decrease of $1.5 million in professional fees and promotional expenses increased $5.3a decrease of $1.2 million due to our current advertising campaigns. Federalin federal insurance premiums increased $3.3 million for the nine months ended September 30, 2017.premiums.
Income Taxes. Income tax expense for the thirdfirst quarter of 20172019 was $28.4$19.3 million compared to $21.9$20.1 million for the thirdfirst quarter 2016.2018.  The effective tax rate was 38.3%28.6% for the three months ended September 30, 2017March 31, 2019 and 30.5%25.7% for the three months ended September 30, 2016. Income tax expense includes the excess tax benefits related to our stock plans of $127,000 for the three months ended September 30, 2017 and $6.4 million for the three months ended September 30, 2016.March 31, 2018.
Income tax expense for the nine months ended September 30, 2017 was $80.2 million compared to $76.0 million for the nine months ended September 30, 2016.  The effectiveOur tax rate was 37.9%negatively impacted by the enacted State of New Jersey legislation that created a temporary surtax effective for the nine months ended September 30, 2017tax years 2018 through 2021 and 35.2%will require companies to file combined tax returns beginning for the nine months ended September 30, 2016. Income tax expense includes the excess tax benefits related to our stock plans of $1.6 million for the nine months ended September 30, 2017 and $8.2 million for the nine months ended September 30, 2016.2019.
The effective tax rate iswas affected by the level of income earned that is exempt from tax relative to the overall level of pre-tax income and the level of expenses not deductible for tax purposes relative to the overall level of pre-tax income,income. The effective tax rate is also affected by the level of income allocated to the various state and local jurisdictions where the Company operates, because tax rates differ among such jurisdictions, andjurisdictions. In addition, the impact ofeffective tax rate can be impacted by any large but infrequently occurring items.

Liquidity and Capital Resources
The Company’s primary sources of funds are deposits, principal and interest payments on loans and mortgage-backed securities, proceeds from the sale of loans, FHLB and other borrowings and, to a lesser extent, proceeds from the sale of loans and investment maturities. While scheduled amortization of loans is a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. Our Asset Liability Committee is responsible for establishing and monitoring our liquidity targets and strategies to ensure that sufficient liquidity exists for meeting the needs of our customers as well as unanticipated contingencies. The Company has other sources of liquidity, if a need for additional funds arises, including unsecured overnight lines of credit, brokered deposits and other borrowings from the FHLB and other correspondent banks.
At September 30, 2017,March 31, 2019, the Company had no$675.0 million of overnight borrowings outstanding. The Company had $686.0 million overnight borrowings outstanding as compared to $735.0 million at December 31, 2016.2018. The Company borrows directly from the FHLB and various financial institutions. The Company had total borrowings of $4.48$5.55 billion at September 30, 2017, a decreaseMarch 31, 2019, an increase of $61.4$113.9 million from $4.55$5.44 billion at December 31, 2016.2018.
In the normal course of business, the Company routinely enters into various commitments, primarily relating to the origination of loans. At September 30, 2017,March 31, 2019, outstanding commitments to originate loans totaled $390.5$393.2 million; outstanding unused lines of credit totaled $1.15$1.46 billion; standby letters of credit totaled $25.5$37.6 million and outstanding commitments to sell loans totaled $7.0$19.0 million. The Company expects to have sufficient funds available to meet current commitments in the normal course of business. Time deposits scheduled to mature in one year or less totaled $2.05$3.94 billion at September 30, 2017.March 31, 2019. Based upon historical experience management estimates that a significant portion of such deposits will remain with the Company.

Regulatory Matters. In July 2013, the Federal Deposit Insurance Corporation and the other federal bank regulatory agencies issued a final rule that revised their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The Final Capital Rules also revised the quantity and quality of required minimum risk-based and leverage capital requirements, consistent with the Reform Act and the Third Basel Accord adopted by the Basel Committee on Banking Supervision, or Basel III capital standards. In doing so, the Final Capital Rules:
Established a new minimum Common equity tier 1 risk-based capital ratio (common equity tier 1 capital to total risk-weighted assets) of 4.5% and increased the minimum Tier 1 risk-based capital ratio from 4.0% to 6.0%, while maintaining the minimum Total risk-based capital ratio of 8.0% and the minimum Tier 1 leverage capital ratio of 4.0%.
Revised the rules for calculating risk-weighted assets to enhance their risk sensitivity.
Phased out trust preferred securities and cumulative perpetual preferred stock as Tier 1 capital.
Added a requirement to maintain a minimum Conservation Buffer, composed of Common equity tier 1 capital, of 2.5% of risk-weighted assets, to be applied to the new Common equity tier 1 risk-based capital ratio, the Tier 1 risk-based capital ratio and the Total risk-based capital ratio, which means that banking organizations on a fully phased in basis no later than January 1, 2019, must maintain a minimum Common equity tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5% and a minimum Total risk-based capital ratio of 10.5% or have restrictions imposed on capital distributions and discretionary cash bonus payments.
Changed the definitions of capital categories for insured depository institutions for purposes of the Federal Deposit Insurance Corporation Improvement Act of 1991 prompt corrective action provisions. Under these revised definitions, to be considered well-capitalized, an insured depository institution must have a Tier 1 leverage capital ratio of at least 5.0%, a Common equity tier 1 risk-based capital ratio of at least 6.5%, a Tier 1 risk-based capital ratio of at least 8.0% and a Total risk-based capital ratio of at least 10.0%.
The new minimum regulatory capital ratios and changes to the calculation of risk-weighted assets became effective for the Bank and Company on January 1, 2015. The required minimum Conservation Buffer was phased in incrementally, starting at 0.625%commenced on January 1, 2016 at 0.625% and increased in annual increments to 1.25% on January 1, 2017. The Conservation Buffer will increase to 1.875% on January 1, 2018 and 2.5% on January 1, 2019. The rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum Conservation Buffer is not met. As of September 30, 2017March 31, 2019 the Company and the Bank met the currently applicable Conservation Buffer of 1.25%2.5%.

As of September 30, 2017,March 31, 2019, the Bank and the Company were considered “well capitalized” under applicable regulations and exceeded all regulatory capital requirements as follows:
September 30, 2017
As of March 31, 2019 (1)
Actual Minimum Capital Requirement 
To be Well Capitalized under Prompt Corrective Action Provisions (1)
Actual Minimum Capital Requirement with Conservation Buffer 
To be Well Capitalized under Prompt Corrective Action Provisions (2)
Amount Ratio Amount Ratio Amount RatioAmount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)(Dollars in thousands)
Bank:                      
Tier 1 Leverage Ratio$2,789,460
 11.38% $980,717
 4.00% $1,225,897
 5.00%$2,586,512
 9.85% $1,050,188
 4.00% $1,312,735
 5.00%
Common equity tier 1 risk-based2,789,460
 14.29% 1,122,734
 5.75% 1,269,177
 6.50%
Common Equity Tier 1 Risk-Based Capital2,586,512
 12.87% 1,406,376
 7.00% 1,305,921
 6.50%
Tier 1 Risk Based Capital2,789,460
 14.29% 1,415,621
 7.25% 1,562,064
 8.00%2,586,512
 12.87% 1,707,743
 8.50% 1,607,287
 8.00%
Total Risk-Based Capital3,020,546
 15.47% 1,806,137
 9.25% 1,952,580
 10.00%2,822,188
 14.05% 2,109,564
 10.50% 2,009,109
 10.00%
                      
Company:           
Investors Bancorp, Inc.:           
Tier 1 Leverage Ratio$3,093,359
 12.61% $981,113
 4.00% n/a n/a$2,876,322
 10.86% $1,059,719
 4.00% n/a n/a
Common equity tier 1 risk-based3,093,359
 15.83% 1,123,420
 5.75% n/a n/a
Common Equity Tier 1 Risk-Based Capital2,876,322
 14.28% 1,409,798
 7.00% n/a n/a
Tier 1 Risk Based Capital3,093,359
 15.83% 1,416,486
 7.25% n/a n/a2,876,322
 14.28% 1,711,898
 8.50% n/a n/a
Total Risk-Based Capital3,324,445
 17.02% 1,807,241
 9.25% n/a n/a3,111,997
 15.45% 2,114,697
 10.50% n/a n/a
(1) For purposes of calculating Tier 1 leverage ratio, assets are based on adjusted total average assets. In calculating Tier 1 risk-based capital and Total risk-based capital, assets are based on total risk-weighted assets.
(2) Prompt corrective action provisions do not apply to the bank holding company.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
In the ordinary course of its operations, the Company engages in a variety of financial transactions that, in accordance with U.S. generally accepted accounting principles, are not recorded in the financial statements. These transactions primarily relate to debt obligations and lending commitments.

The following table shows the contractual obligations of the Company by expected payment period as of September 30, 2017:March 31, 2019:
Contractual Obligations Total Less than One Year One-Two Years Two-Three Years More than Three Years Total Less than One Year One-Two Years Two-Three Years More than Three Years
 (In thousands) (In thousands)
Debt obligations (excluding capitalized leases) $4,484,869
 603,724
 775,404
 1,075,000
 2,030,741
 $5,549,587
 1,719,074
 1,000,000
 1,000,000
 1,830,513
Commitments to originate and purchase loans $416,009
 416,009
 
 
 
 $393,191
 393,191
 
 
 
Commitments to sell loans $7,000
 7,000
 
 
 
 $19,000
 19,000
 
 
 

Debt obligations include borrowings from the FHLB and other borrowings. The borrowings have defined terms and, under certain circumstances, $28.1$5.0 million of the borrowings are callable at the option of the lender. Additionally, at September 30, 2017,March 31, 2019, the Company’s commitments to fund unused lines of credit totaled $1.15$1.46 billion. Commitments to originate loans, commitments to fund unused lines of credit and standby letters of credit are agreements to lend additional funds to customers as long as there have been no violations of any of the conditions established in the agreements. Commitments generally have a fixed expiration or other termination clauses which may or may not require a payment of a fee. Since some of these loan commitments are expected to expire without being drawn upon, total commitments do not necessarily represent future cash requirements.
In addition to the contractual obligations previously discussed, we have other liabilities which include capitalized andincludes $197.3 million of operating lease obligations. Theseliabilities. While the contractual obligations as of September 30, 2017March 31, 2019 have not changed significantly from December 31, 2016.2018, the accounting for such obligations required changes effective January 1, 2019 in accordance with the Company’s adoption of Topic 842 which requires these liabilities to be recorded.
In the normal course of business the Company sells residential mortgage loans to third parties. These loan sales are subject to customary representations and warranties. In the event that we are found to be in breach of these representations and warranties, we may be obligated to repurchase certain of these loans.
The Company has entered into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

borrowings and loans. During the three months ended September 30, 2017,March 31, 2019, such derivatives were used (i) to hedge the variability in cash flows associated with borrowings and (ii) to hedge changes in the fair value of certain short term wholesale funding transactions.pools of prepayable fixed-rate assets. These derivatives had an aggregate notional amount of $900.0 million$3.06 billion as of September 30, 2017.March 31, 2019. The fair value of the derivativederivatives designated as hedging activities as of September 30, 2017March 31, 2019 was a a liability of $467,000. In accordance with the Chicago Mercantile Exchange (“CME”) rulebook changes effective January 3, 2017, the fair value is$527,000, inclusive of accrued interest and variation margin posted in accordance with the Chicago Mercantile Exchange.
The Company has credit derivatives resulting from participations in interest rate swaps provided to external lenders as part of loan participation arrangements which are, therefore, not used to manage interest rate risk in the Company’s assets or liabilities. Additionally, the Company provides interest rate risk management services to commercial customers, primarily interest rate swaps. The Company’s market risk from unfavorable movements in interest rates related to these derivative contracts is economically hedged by the CME.concurrently entering into offsetting derivative contracts that have identical notional values, terms and indices.
For further information regarding our off-balance sheet arrangements and contractual obligations, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our December 31, 20162018 Annual Report on Form 10-K.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Qualitative Analysis. We believe oneOne significant form of market risk is interest rate risk. Interest rate risk results from timing differences in the cash flow or re-pricing of our assets, liabilities and off-balance sheet contracts (i.e., loan commitments); the effect of loan prepayments, deposit activity; the differencepotential differences in the behavior of lending and funding rates arising from the usesuse of different indices; and “yield curve risk” arising from changing interest rate relationships acrosschanges in the term structure of interest rates. Changes in market interest rates can affect net interest income by influencing the amount and rate of new loan originations, the ability of borrowers to repay variable rate loans, the volume of loan prepayments and the mix and flow of deposits.
The general objective of our interest rate risk management process is to determine the appropriate level of risk given our business model and then to manage that risk in a manner consistent with our policy to reduce, to the extent possible, the exposure of our net interest income to changes in market interest rates.policies. Our Asset Liability Committee, which consists of senior management and executives, evaluates the interest rate risk inherent in our balance sheet, ourthe operating environment and capital and liquidity requirements and may modify our lending, investing and deposit gathering strategies accordingly. On a quarterly basis, our Board

of Directors reviews thevarious Asset Liability Committee report, the aforementioned activities and strategies, the estimated effect of those strategies on our net interest margin and the estimated effectreports that changes in market interest rates may have onestimate sensitivity to the economic value of equity and net interest income of assets and liabilities and off-balance sheet contracts under various interest rate scenarios.
Our tactics and strategies may include the use of various financial instruments, including derivatives, to manage our exposure to interest rate risk. Certain derivatives are designated as hedging instruments in a qualifying hedge accounting relationship (fair value or cash flow hedge). Hedged instruments can be either assets or liabilities. As of March 31, 2019 and December 31, 2018, the Company had cash flow and fair value hedges with aggregate notional amounts of $3.06 billion and $2.61 billion, respectively. Included in the fair value hedges are $1.25 billion in asset swap transactions where fixed rate loan and securities portfolios, as well aspayments are exchanged for variable rate payments. These transactions were executed in an effort to reduce the intrinsic value of our deposits and borrowings.Company’s exposure to rising rates.
We actively evaluate interest rate risk in connection with our lending, investing and deposit activities.activities, which also includes the evaluation of our off-balance sheet positions. At September 30, 2017, 24%March 31, 2019, 24.7% of our total loan portfolio was comprised of residential mortgages, of which approximately 35%30.9% was in variable rate products, while 65%69.1% was in fixed rate products. Our variable rate and short term fixed rate mortgage related assets have helped to reduce our exposure to interest rate fluctuations. Fixed-rateLong term fixed-rate products may adversely impact our net interest income in a rising rate environment. The origination of commercial real estate loans, particularly multi-family loans and commercial and industrial loans, which have outpaced the growth in the residential portfolio in recent years, generally help reduce our interest rate risk due to their shorter term compared to fixed rate residential mortgage loans. In addition, we primarily invest in relatively low risk securities which generally have shorter average lives and lower yields compared to longer term securities.display relatively conservative interest rate risk characteristics.
We use an internally managed and implemented industry standard asset/liability model to complete our quarterly interest rate risk reports. The model projects net interest income based on various interest rate scenarios and horizons. We use a combination of analyses to monitor our exposure to changes in interest rates.
Our net interest income sensitivity analysis determines the relative balance between the repricing of assets and liabilities over various horizons. This asset and liability analysis includes expected cash flows from loans and securities, using forecasted prepayment rates, reinvestment rates, as well as contractual and forecasted liability cash flows. This analysis identifies mismatches in the timing of asset and liability cash flows but does not necessarily provide an accurate indicator of interest rate risk because the rate forecasts and assumptions used in the analysis may not reflect the actual response of cash flows to market interest rate changes.experience. The economic value of equity (“EVE”) analysis estimates the change in the net present value (“NPV”) of assets and liabilities and off-balance sheet contracts over a range of immediately changedimmediate rate shock interest rate scenarios. In calculating changes in EVE, for the various scenarios we forecast loan and securities prepayment rates, reinvestment rates and deposit decay rates.
In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to USD-LIBOR for

use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. The Company has material contracts that are indexed to USD-LIBOR and is monitoring this activity and evaluating the related risks.
Quantitative Analysis. The table below sets forth, as of September 30, 2017,March 31, 2019, the estimated changes in our EVE and our net interest income that would result from the designated changes in interest rates. Such changes to interest rates are calculated as an immediate and permanent change for the purposes of computing EVE and a gradual change over a one yearone-year period for the purposes of computing net interest income. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results. The following table reflects management’s expectations of the changes in EVE and net interest income for an interest rate decrease of 100 basis points and increase of 200 basis points.
 EVE (1) (2) Net Interest Income (3) 
EVE (1) (2)
 
Net Interest Income (3)
Change in
Interest Rates
(basis points)
 
Estimated
EVE
 Estimated Increase (Decrease) 
Estimated  Net
Interest
Income
 Estimated Increase (Decrease) 
Estimated
EVE
 Estimated Increase (Decrease) 
Estimated
Net
Interest
Income
 Estimated Increase (Decrease)
Amount Percent Amount PercentAmount Percent Amount Percent
 (Dollars in thousands) (Dollars in thousands)
+ 200bp $3,993,494
 (433,633) (9.8)% $630,750
 (42,169) (6.3)% $3,787,062
 (425,988) (10.1)% $594,867
 (39,336) (6.2)%
0bp $4,427,127
 
 
 $672,919
 
 
 $4,213,050
 
 
 $634,203
 
 
-100bp $4,441,774
 14,647
 0.3 % $685,454
 12,535
 1.9 % $4,350,241
 137,191
 3.3 % $657,552
 23,349
 3.7 %
(1)Assumes an instantaneous and parallel shift in interest rates at all maturities.
(2)EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
(3)Assumes a gradual change in interest rates over a one year period at all maturities.
The table set forth above indicates at September 30, 2017,March 31, 2019, in the event of a 200 basis points increase in interest rates, we would be expected to experience a 9.8%an 10.1% decrease in EVE and a $42.2$39.3 million, or 6.3%6.2%, decrease in net interest income. In the event of a 100 basis points decrease in interest rates, we would be expected to experience a 0.3%3.3% increase in EVE and a $12.5$23.3 million, or 1.9%3.7%, increase in net interest income. This data does not reflect any future actions we may take in response to changes in interest rates, such as changing the mix in or growth of our assets and liabilities, which could change the results of the EVE and net interest income calculations.
As mentioned above, we use an internally developed asset liability model to compute our quarterly interest rate risk reports. Certain shortcomings are inherent in any methodology used in the above interest rate risk measurements. Modeling changes in EVE and net interest income require certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The EVE and net interest income table presented above assumes no balance sheet growth and that generally the composition of our interest-rate sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and, accordingly, the data does not reflect any actions we may take in response to changes in interest rates. The table also assumes a particular change in interest rates is reflected uniformly across the yield curve.

Accordingly, although the EVE and net interest income table provide an indication of our sensitivity to interest rate changes at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effects of changes in market interest rates on our EVE and net interest income.

ITEM 4.CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2017March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Part II Other Information

ITEM 1.LEGAL PROCEEDINGS
The Company, the Bank and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations.

ITEM 1A.RISK FACTORS
There have been no material changes in the “Risk Factors” disclosed in the Company’s December 31, 20162018 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) The following table reports information regarding repurchases of our common stock during the quarter ended September 30, 2017March 31, 2019 and the stock repurchase plans approved by our Board of Directors.
Period
Total Number of Shares Purchased (1)(2)
 Average Price paid Per Share As part of Publicly Announced Plans or Programs 
Yet to be Purchased under the Plans or Programs (1)
July 1, 2017 through July 31, 2017953,100
 $13.21
 953,100
 19,002,476
August 1, 2017 through August 31, 2017520,000
 13.01
 520,000
 18,482,476
September 1, 2017 through September 30, 20171,045,454
 13.26
 1,043,000
 17,439,476
Total2,518,554
 $13.19
 2,516,100
 17,439,476
Period
Total Number of Shares Purchased (1)(2)
 Average Price paid Per Share As part of Publicly Announced Plans or Programs 
Yet to be Purchased Under the Plans or Programs (1)
January 1, 2019 through January 31, 20193,233,141
 $11.47
 3,230,000
 23,036,834
February 1, 2019 through February 28, 20191,168,272
 12.71
 1,050,000
 21,986,834
March 1, 2019 through March 31, 20191,806,966
 12.07
 1,800,000
 20,186,834
Total6,208,379
 $11.88
 6,080,000
 20,186,834
(1) On April 28, 2016,October 25, 2018, the Company announced its thirdfourth share repurchase program, which authorized the purchase of 10% of its publicly-held outstanding shares of common stock, or approximately 31,481,189 million28,886,780 shares. The plan commenced upon the completion of the secondthird repurchase plan on June 17, 2016.December 10, 2018. This program has no expiration date and has 17,439,47620,186,834 shares yet to be repurchased as of September 30, 2017.March 31, 2019.
(2) 2,454128,379 shares were withheld to cover income taxes related to restricted stock vesting under our 2015 Equity Incentive Plan. Shares withheld to pay income taxes are repurchased pursuant to the terms of the 2015 Equity Incentive Plan and not under our share repurchase program.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES
Not applicable.

ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5.OTHER INFORMATION
Not applicable.


ITEM 6.EXHIBITS
The following exhibits are either filed as part of this report or are incorporated herein by reference:
 
  
   
  
   
  
   
  
   
  
   
101.INS  XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Labels Linkbase Document
101.PRE XBRL Taxonomy Presentation Linkbase Document
   
 
(1)Incorporated by reference to the Registration Statement on Form S-1 of Investors Bancorp, Inc. (Commission File no. 333-192966), originally filed with the Securities and Exchange Commission on December 20, 2013.


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
     
    INVESTORS BANCORP, INC.
   
Date: November 9, 2017May 10, 2019 By: /s/  Kevin Cummings
    
Kevin Cummings
Chief Executive Officer and President
(Principal Executive Officer)
  By: /s/  Sean Burke
    
Sean Burke
SeniorExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)



6158