ISBC 2017 Form 10-K & 2018 Proxy Statement

FORM 10-K INVESTORS BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 2016 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized (In thousands) With no related allowance: Multi-family $ 248 248 — 252 20 Commercial real estate 5,962 9,265 — 5,790 301 Commercial and industrial 3,370 3,972 — 3,953 169 Construction — — — — — Total commercial loans 9,580 13,485 — 9,995 490 Residential mortgage and consumer 11,030 14,565 — 9,899 483 With an allowance recorded: Multi-family — — — — — Commercial real estate — — — — — Commercial and industrial — — — — — Construction — — — — — Total commercial loans — — — — — Residential mortgage and consumer 13,794 14,382 1,601 13,689 479 Total: Multi-family 248 248 — 252 20 Commercial real estate 5,962 9,265 — 5,790 301 Commercial and industrial 3,370 3,972 — 3,953 169 Construction — — — — — Total commercial loans 9,580 13,485 — 9,995 490 Residential mortgage and consumer 24,824 28,947 1,601 23,588 962 Total impaired loans $34,404 42,432 1,601 33,583 1,452 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. 105