NYCB 2017 Annual Report

100 NOTE 5: LOANS The following table sets forth the composition of the loan portfolio at December 31, 2017 and 2016: December 31, 2017 2016 Amount Percent of Non-Covered Loans Held for Investment Amount Percent of Non-Covered Loans Held for Investment (dollars in thousands) Non-Covered Loans Held for Investment: Mortgage Loans: Multi-family $28,074,709 73.19% $26,945,052 72.13% Commercial real estate 7,322,226 19.09 7,724,362 20.68 One-to-four family 477,228 1.24 381,081 1.02 Acquisition, development, and construction 435,825 1.14 381,194 1.02 Total mortgage loans held for investment $36,309,988 94.66 $35,431,689 94.85 Other Loans: Commercial and industrial 1,377,964 3.59 1,341,216 3.59 Lease financing, net of unearned income of $65,041 and $60,278, respectively 662,610 1.73 559,229 1.50 Total commercial and industrial loans (1) 2,040,574 5.32 1,900,445 5.09 Purchased credit-impaired loans -- -- 5,762 0.01 Other 8,460 0.02 18,305 0.05 Total other loans held for investment 2,049,034 5.34 1,924,512 5.15 Total non-covered loans held for investment $38,359,022 100.00% $37,356,201 100.00% Net deferred loan origination costs 28,949 26,521 Allowance for losses on non-covered loans (158,046) (158,290) Non-covered loans held for investment, net $38,229,925 $37,224,432 Covered loans -- 1,698,133 Allowance for losses on covered loans -- (23,701) Covered loans, net $ -- $ 1,674,432 Loans held for sale 35,258 409,152 Total loans, net $38,265,183 $39,308,016 (1) Includes specialty finance loans of $1.5 billion and $1.3 billion, and other C&I loans of $500.8 million and $632.9 million, respectively, at December 31, 2017 and 2016. Non-Covered Loans Non-Covered Loans Held for Investment The majority of the loans the Company originates for investment are multi-family loans, most of which are collateralized by non-luxury apartment buildings in New York City with rent-regulated units and below-market rents. In addition, the Company originates commercial real estate (“CRE”) loans, most of which are collateralized by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties that are located in New York City and on Long Island. To a lesser extent, the Company also originates one-to-four family loans, acquisition, development, and construction (“ADC”) loans, and C&I loans, for investment. One -to-four family loans held for investment were originated through the Company’s mortgage banking operation and primarily consisted of jumbo prime adjustable rate mortgages made to borrowers with a solid credit history. ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island. C&I loans consist of asset-based loans, equipment loans and leases, and dealer floor-plan loans (together, “specialty finance loans and leases”) that generally are made to large corporate obligors, many of whic h are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide; and “other” C&I loans that primarily are made to small and mid - size businesses in Metro New York. “Other” C&I loans are typically made for working capital, business expansion, and the purchase of machinery and equipment. The repayment of multi-family and CRE loans generally depends on the income produced by the underlying properties which, in turn, depends on their successful operation and management. To mitigate the potential for credit