ISBC 2017 Form 10-K & 2018 Proxy Statement

FORM 10-K INVESTORS BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements Mortgage-backed securities have been sold, subject to repurchase agreements, to the FHLB and various brokers. Mortgage-backed securities sold, subject to repurchase agreements, are held by the FHLB for the benefit of the Company. Repurchase agreements require repurchase of the identical securities. Whole mortgage loans have been pledged to the FHLB as collateral for advances, but are held by the Company. The amortized cost and fair value of the underlying securities used as collateral for borrowings are as follows: December 31, 2017 2016 (Dollars in thousands) Amortized cost of collateral: Mortgage-backed securities $411,933 468,159 Total amortized cost of collateral $411,933 468,159 Fair value of collateral: Mortgage-backed securities $404,331 469,200 Total fair value of collateral $404,331 469,200 During the years ended December 31, 2017, 2016 and 2015, the maximum month-end balance of the repurchase agreements was $153.0 million, $153.0 million and $163.0 million, respectively. The average amount of repurchase agreements outstanding during the years ended December 31, 2017, 2016 and 2015 was $149.0 million, $153.0 million and $159.4 million, respectively, and the average interest rate was 2.11%, 2.16% and 2.25%, respectively. At December 31, 2017, our borrowing capacity at the FHLB was $11.58 billion, of which the Company had outstanding borrowings of $8.03 billion, which included letters of credit totaling $3.70 billion. In addition, the Bank had access to unsecured overnight borrowings (Fed Funds) with other financial institutions totaling $475.0 million, of which no balance was outstanding at December 31, 2017. 9. Income Taxes The components of income tax expense are as follows: Years Ended December 31, 2017 2016 2015 (In thousands) Current tax expense: Federal $ 47,101 82,708 87,748 State 6,736 12,599 14,804 53,837 95,307 102,552 Deferred tax expense (benefit): Federal 105,044 8,107 4,310 State (5,036) 3,533 (7,490) 100,008 11,640 (3,180) Total income tax expense $153,845 106,947 99,372 111