ISBC 2017 Form 10-K & 2018 Proxy Statement

FORM 10-K INVESTORS BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 2017, non-credit related OTTI recorded on the previously impaired TruPS was $20.1 million ($14.5 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 Years Ended December 31, 2017 2016 2015 (In thousands) Balance of credit related OTTI, beginning of period $95,743 100,200 108,817 Additions: Initial credit impairments — — — Subsequent credit impairments — — — Reductions: Accretion of credit loss impairment due to an increase in expected cash flows (6,164) (4,457) (3,804) Reductions for securities sold or paid off during the period (3,811) — (4,813) Balance of credit related OTTI, end of period $85,768 95,743 100,200 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 year ended December 31, 2017, the Company received sales proceeds of $102.1 million on pools of mortgage- backed securities from the available-for-sale portfolio resulting in gross realized gains of $1.3 million and gross realized losses of $69,000. There were no proceeds from sales of securities in the held-to-maturity portfolio for the year ended December 31, 2017; however, for the year ended December 31, 2017, the Company received sale 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 year ended December 31, 2016, the Company received proceeds of $57.9 million on equity securities and pools of mortgage-backed securities sold from the available-for-sale portfolio resulting in a gross realized gain of $2.3 million. For the year ended December 31, 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 95