ISBC 2017 Form 10-K & 2018 Proxy Statement

FORM 10-K INVESTORS BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements year ended December 31, 2017, there was no change to the carrying value of MSR or loans held for sale. 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. Security Type Valuation Technique Unobservable Input Range Weighted Average Input Carrying Value at December 31, 2017 Total Level 1 Level 2 Level 3 (In thousands) Impaired loans Market comparable and estimated cash flow Lack of marketability and probability of default 1.0% - 45.0% 21.00% 30,445 — — 30,445 Other real estate owned Market comparable Lack of marketability 0.0% - 25.0% 21.65% 263 — — 263 $30,708 — — 30,708 Security Type Valuation Technique Unobservable Input Range Weighted Average Input Carrying Value at December 31, 2016 Total Level 1 Level 2 Level 3 (In thousands) MSR, net Estimated cash flow Prepayment speeds 3.15% - 24.18% 9.84% $12,877 — — 12,877 Impaired loans Estimated cash flow Lack of marketability and probability of default 22.0% - 29.0% 26.00% 1,403 — — 1,403 Loans held for sale Market comparable Lack of marketability 2.5% - 4.5% 3.45% 313 — — 313 $14,593 — — 14,593 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. Securities Held-to-Maturity 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 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 127