ISBC 2017 Form 10-K & 2018 Proxy Statement

FORM 10-K INVESTORS BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 2016 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) 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 Charge-offs (161) (455) (4,485) (52) (9,425) (419) — (14,997) Recoveries 1,885 689 541 267 1,631 102 — 5,115 Provision 5,614 5,563 6,851 4,644 (3,818) 12 884 19,750 Ending balance- December 31, 2016 $ 95,561 52,796 43,492 11,653 19,831 2,850 2,190 228,373 Individually evaluated for impairment $ — — — — 1,581 20 — 1,601 Collectively evaluated for impairment 95,561 52,796 43,492 11,653 18,250 2,830 2,190 226,772 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 Loans: Individually evaluated for impairment $ 248 5,962 3,370 — 24,453 371 — 34,404 Collectively evaluated for impairment 7,458,883 4,439,232 1,271,913 314,843 4,685,920 596,551 — 18,767,342 Loans acquired with deteriorated credit quality — 7,106 — — 1,507 343 — 8,956 Balance at December 31, 2016 $7,459,131 4,452,300 1,275,283 314,843 4,711,880 597,265 — 18,810,702 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. 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 100