NYCB 2017 Annual Report

35 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the purpose of this discussion and analysis, the words “we,” “us,” “our,” and the “Company” are used to refer to New York Community Bancorp, Inc. and our consolidated subsidiaries, including New York Community Bank (the “Community Bank”) and New York Commercial Bank (the “Commercial Bank”) (collectively, the “Banks”). Executive Summary New York Community Bancorp, Inc. is the holding company for New York Community Bank, with 225 branches in Metro New York, New Jersey, Ohio, Florida, and Arizona, and New York Commercial Bank, with 30 branches in Metro New York. At December 31, 2017, we had total assets of $49.1 billion, including total loans of $38.4 billion, total deposits of $29.1 billion, and total stockholders’ equity of $6.8 billion. Chartered in the State of New York, the Community Bank and the Commercial Bank are subject to regulation by the Federal Deposit Insurance Corporation (the “FDIC”), the Consumer Financial Protection Bureau, and the New York State Department of Financial Services (the “NYSDFS”). In addition, the holding company is subject to regulation by the Board of Governors of the Federal Reserve System (the “FRB”), the U.S. Securities and Exchange Commission (the “SEC”), and to the requirements of the New York Stock Exchange, where sh ares of our common stock are traded under the symbol “NYCB.” As a publicly traded company, our mission is to provide our shareholders with a solid return on their investment by producing a strong financial performance, maintaining a solid capital position, and engaging in corporate strategies that enhance the value of their shares. For the twelve months ended December 31, 2017, the Company reported net income of $466.2 million compared to $495.4 million for the twelve months ended December 31, 2016, down 6%. Net income available to common shareholders totaled $441.6 million, down 11% from the $495.4 million reported for the twelve months ended December 31, 2016. Diluted earnings per common share were $0.90 for the twelve months ended December 31, 2017, as compared to $1.01 per diluted common share for the twelve months ended December 31, 2016, down 11%. Additionally, we maintained our status as a well-capitalized institution with regulatory capital ratios that rose year-over-year. We also engaged in strategies that were consistent with our business model, as further described below: We Resumed Our Balance Sheet Growth After not growing our balance sheet over the past three years, the Company resumed its organic balance sheet strategy in the fourth quarter of 2017. Compared to the third quarter of 2017, total assets grew at an annualized rate of 5.5% to $49.1 billion. This growth was achieved through a combination of securities and loan growth. Total securities increased by $500.4 million or 16.5% (not annualized) to $3.5 billion, while total non-covered loans held for investment increased by $881.8 million, or 9.4% annualized. At the same time, we significantly curtailed the practice of selling loans to other financial institutions. While we recorded strong growth to end the year, we still managed to stay below the Systemically Important Financial Institution (“SIFI”) threshold of $50 billion. For the four quarters ended December 31, 2017, the Company’s total consolidated assets averaged $48.7 billion. We Maintained a Strong Presence in our Multi-Family Lending Niche In 2017, we originated $8.9 billion of loans for investment, including $5.4 billion of our core multi-family product, $1.0 billion of commercial real estate (“CRE”) loans, and $1.8 billion of specialty finance loans. The increase occurred in the latter half of the year, with most of it arising in the fourth quarter of 2017, as total originations of held- for-investment loans increased 52% as compared to the fourth quarter of 2016. This includes origination growth of 76% for our multi-family loans, 21% for our CRE loans, and 53% for our specialty finance loans. Strategic Asset Sale On June 27, 2017, the Company announced that it had entered into an agreement to sell its mortgage banking business, which was acquired as part of its 2009 FDIC- assisted acquisition of AmTrust Bank (“AmTrust”), to Freedom Mortgage Corporation. This sale included both our origination and servicing platforms, as well as our mortgage servicing rights portfolio. Additionally, the Company received approval from the FDIC to sell the assets covered under our Loss Share Agreements (“LSA”) and entered into an agreement to sell the majority of our one -to-four family residential mortgage-related assets, including those covered under the LSA, to an affiliate of Cerberus Capital Management, L.P. (“Cerberus”). Both transactions were completed during the third quarter.