NYCB 2017 Annual Report
41 benefits associated with valuation allowances recorded in a business combination would be recorded as an adjustment to goodwill. FINANCIAL CONDITION Balance Sheet Summary At December 31, 2017, we recorded total assets of $49.1 billion, a $197.6 million increase from the balance at December 31, 2016. Loans, net, and securities represented $38.3 billion and $3.5 billion, respectively, of the December 31st balance and were down $1.0 billion and $285.6 million, respectively, from the prior year-end balances. The main reason for the decline in loan balances was due to the sale, during the year, of our covered loan portfolio, which totaled $1.7 billion at December 31, 2016. Excluding this sale, total non-covered loans, net, were $38.3 billion at the current year-end, up $631.6 million or 1.7% from the prior year-end. Total deposits and borrowed funds were $29.1 billion and $12.9 billion, respectively, at December 31, 2017. Deposits increased $214.3 million, or 0.7%, as compared to the prior year-end, while wholesale borrowings declined 5.7% or $760.0 million versus the balance at December 31, 2016. Total stockholders’ equity rose $671.4 million from the year-end 2016 balance, due primarily to a $502.8 million preferred stock offering in March of 2017. Common stockholders’ equity represented 12.81% of total assets at December 31, 2017 compared to 12.52% at December 31, 2016. Book value per common share was $12.88 at December 31, 2017 compared to $12.57 at December 31, 2016. Loans Total loans declined $1.0 billion year-over-year to $38.4 billion, representing 78.2% of total assets at December 31, 2017. Included in the 2016 year-end amount were covered loans of $1.7 billion. Given the sale of those loans during 2017, the Company did not have any covered loans as of December 31, 2017 and only $35.3 million of non-covered loans held for sale compared to non-covered loans held for sale of $409.2 million at December 31, 2016. Covered Loans As previously discussed, the Company sold its covered loan portfolio during the third quarter of 2017; therefore, the Company does not have any covered loans outstanding as of December 31, 2017. Covered loans at December 31, 2016 were $1.7 billion. Non-Covered Loans Held for Investment The majority of the loans we produce are loans held for investment and most of the held-for-investment loans we produce are multi-family loans. Our production of multi-family loans began several decades ago in the five boroughs of New York City, where the majority of the rental units currently consist of rent-regulated apartments featuring below-market rents. In addition to multi-family loans, our portfolio of loans held for investment contains a large number of CRE credits, most of which are secured by income-producing properties located in New York City and on Long Island. In addition to multi-family loans and CRE loans, our portfolio includes substantially smaller balances of one- to- four family loans, ADC loans, and other loans held for investment, with commercial and industrial (“C&I”) loans comprising the bulk of the other loan portfolio. Specialty finance loans and leases account for most of our C&I credits, with the remainder consisting primarily of loans to small and mid-size businesses, referred to as other C&I loans. At December 31, 2017, loans secured by multi-family, non-owner occupied CRE, and ADC properties represente d 742.1% of the consolidated Banks’ total risk -based capital, within our limit of 850%. In 2017, we originated $8.9 billion of held-for-investment loans, a $264.0 million decrease from the prior year. A major reason for this decline was related to a drop in one-to-four family originations, as we exited that business in the third quarter of the year. During 2017, we sold $429.4 million of held-for-investment loans, largely through participations, as compared to $1.7 billion in 2016. The decline in loan sales is consistent with the Company’s strategy of resuming growth in the second half of 2017. In 2017, sales of such loans produced net gains of $1.2 million as compared to $15.8 million in 2016.
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