NYCB 2017 Annual Report

53 The procedures we follow with respect to delinquent loans are generally consistent across all categories, with late charges assessed, and notices mailed to the borrower, at specified dates. We attempt to reach the borrower by telephone to ascertain the reasons for delinquency and the prospects for repayment. When contact is made with a borrower at any time prior to foreclosure or recovery against collateral property, we attempt to obtain full payment, and will consider a repayment schedule to avoid taking such action. Delinquencies are addressed by our Loan Workout Unit and every effort is made to collect rather than initiate foreclosure proceedings. The following table presents our non-covered loans 30 to 89 days past due by loan type and the changes in the respective balances from December 31, 2016 to December 31, 2017: December 31, Change from December 31, 2016 to December 31, 2017 (dollars in thousands) 2017 2016 Amount Percent Non-Covered Loans 30-89 Days Past Due: Multi-family $ 1,258 $ 28 $ 1,230 4,392.86% Commercial real estate 13,227 -- 13,227 -- One-to-four family residential 585 2,844 (2,259) (79.43) Other loans (1) 2,719 7,511 (4,792) (63.80) Total non-covered loans 30-89 days past due $17,789 $10,383 $ 7,406 71.33 (1) Includes $2.7 million and $6.8 million of non-accrual taxi medallion-related loans at December 31, 2017 and 2016, respectively. Fair values for all multi-family buildings, CRE properties, and land are determined based on the appraised value. If an appraisal is more than one year old and the loan is classified as either non-performing or as an accruing TDR, then an updated appraisal is required to determine fair value. Estimated disposition costs are deducted from the fair value of the property to determine estimated net realizable value. In the instance of an outdated appraisal on an impaired loan, we adjust the original appraisal by using a third-party index value to determine the extent of impairment until an updated appraisal is received. While we strive to originate loans that will perform fully, adverse economic and market conditions, among other factors, can negatively impact a borrower’s ability to repay. Historically, our level of charge -offs has been relatively low in downward credit cycles, even when the volume of non-performing loans has increased. In 2017, we recorded net charge-offs of $61.2 million, as compared to net charge-offs of $708,000 in the prior year. Taxi medallion-related net charge-offs accounted for $59.6 million of this year’s amo unt and $2.5 million of last year’s amount. Partially reflecting the net charge-offs noted above, and the provision of $60.9 million for the allowance for non-covered loan losses, the allowance for losses on non-covered loans remained relatively unchanged, equaling $158.0 million at the end of this December from $158.3 million at December 31, 2016. Reflecting the increase in non- performing non-covered loans cited earlier in this discussion, the allowance for losses on non-covered loans represented 214.50% of non-performing non-covered loans at December 31, 2017, as compared to 277.19% at the prior year-end. Based upon all relevant and available information at the end of this December, management believes that the allowance for losses on non-covered loans was appropriate at that date.