NYCB 2017 Annual Report

113 Junior Subordinated Debentures At December 31, 2017 and 2016, the Company had $359.2 million and $358.9 million, respectively, of outstanding junior subordinated deferrable interest debentures (“junior subordinated debentures”) held by statutory business trusts (the “Trusts”) that issued guaranteed capital securities. The Trusts are accounted for as unconsolidated subsidiaries, in accordance with GAAP. The proceeds of each issuance were invested in a series of junior subordinated debentures of the Company and the underlying assets of each statutory business trust are the relevant debentures. The Company has fully and unconditionally guaranteed the obligations under each trust’s capital securities to the extent set forth in a guarantee by the Company to each trust. The Trusts’ capital securities are each subject to mandatory redemption, in whole or in part, upon repayment of the debentures at their stated maturity or earlier redemption. The following junior subordinated debentures were outstanding at December 31, 2017: Issuer Interest Rate of Capital Securities and Debentures Junior Subordinated Debentures Amount Outstanding Capital Securities Amount Outstanding Date of Original Issue Stated Maturity First Optional Redemption Date (dollars in thousands) New York Community Capital Trust V (BONUSES SM Units) 6.000 % $145,253 $138,902 Nov. 4, 2002 Nov. 1, 2051 Nov. 4, 2007 (1) New York Community Capital Trust X 3.188 123,712 120,000 Dec. 14, 2006 Dec. 15, 2036 Dec. 15, 2011 (2) PennFed Capital Trust III 4.838 30,928 30,000 June 2, 2003 June 15, 2033 June 15, 2008 (2) New York Community Capital Trust XI 3.345 59,286 57,500 April 16, 2007 June 30, 2037 June 30, 2012 (2) Total junior subordinated debentures $359,179 $346,402 (1) Callable subject to certain conditions as described in the prospectus filed with the SEC on November 4, 2002. (2) Callable from this date forward. The Bifurcated Option Note Unit SecuritiES SM (“BONUSES units”) included in the preceding table were iss ued by the Company on November 4, 2002 at a public offering price of $50.00 per share. Each of the 5,500,000 BONUSES units offered consisted of a capital security issued by New York Community Capital Trust V, a trust formed by the Company, and a warrant to purchase 2.4953 shares of the common stock of the Company (for a total of approximately 13.7 million common shares) at an effective exercise price of $20.04 per share. Each capital security has a maturity of 49 years, with a coupon, or distribution rate, of 6.00% on the $50.00 per share liquidation amount. The warrants and capital securities were non-callable for five years from the date of issuance and were not called by the Company when the five-year period passed on November 4, 2007. The gross proceeds of the BONUSES units totaled $275.0 million and were allocated between the capital security and the warrant comprising such units in proportion to their relative values at the time of issuance. The value assigned to the warrants, $92.4 m illion, was recorded as a component of additional “paid - in capital” in the Company’s Consolidated Statements of Condition. The value assigned to the capital security component was $182.6 million. The $92.4 million difference between the assigned value and the stated liquidation amount of the capital securities was treated as an original issue discount, and is being amortized to interest expense over the 49-year life of the capital securities on a level-yield basis. At December 31, 2017, this discount totaled $66.4 million. The other three trust preferred securities noted in the preceding table were formed for the purpose of issuing Company Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trusts Holding Solely Junior Subordinated Debentures (collectively, the “Capital Securities”). Dividends on the Capital Securities are payable either quarterly or semi- annually and are deferrable, at the Company’s option, for up to five years. As of December 31, 2017, all dividends were current. Interest expense on junior subordinated debentures was $19.6 million, $18.5 million, and $17.6 million, respectively, for the years ended December 31, 2017, 2016, and 2015.