NYCB 2017 Annual Report

65 Stockholders’ equity and tangible common stockholders’ equity both include accumulated other comprehensive loss (“AOCL”), which is comprised of the net unrealized gain or loss on available -for-sale securities; the net unrealized loss on the non- credit portion of OTTI securities; and the Company’s pension and post -retirement obligations at the end of a period. In the twelve months ended December 31, 2017 and 2016, AOCL totaled $15.2 million and $56.7 million, respectively. The decline in AOCL was largely the net effect of a $1.6 million decrease in net pension and post-retirement obligations to $49.1 million and the $39.9 million difference between the net unrealized loss on securities available for sale recorded at the end of this December and the net unrealized gain on securities available for sale recorded at December 31, 2016. As reflected in the following table, our capital measures continued to exceed the minimum federal requirements for a bank holding company at December 31, 2017 and 2016: At December 31, 2017 Actual Minimum (dollars in thousands) Amount Ratio Required Ratio Common equity tier 1 capital $3,869,129 11.36% 4.50% Tier 1 risk-based capital 4,371,969 12.84 6.00 Total risk-based capital 4,877,208 14.32 8.00 Leverage capital 4,371,969 9.58 4.00 At December 31, 2016 Actual Minimum (dollars in thousands) Amount Ratio Required Ratio Common equity tier 1 capital $3,748,231 10.62% 4.50% Tier 1 risk-based capital 3,748,231 10.62 6.00 Total risk-based capital 4,277,759 12.12 8.00 Leverage capital 3,748,231 8.00 4.00 At December 31, 2017, the capital ratios for the Company, the Community Bank, and the Commercial Bank continued to exceed the levels required for classification as “well capitalized” institutions, as defined under the Federal Deposit Insurance Corporation Improvement Act of 1991, and as further discussed in Note 18, “Capital,” in Item 8, “Financial Statements and Supplementary Data.” RESULTS OF OPERATIONS: 2017 AS COMPARED TO 2016 Earnings Summary For the twelve months ended December 31, 2017, the Company reported diluted earnings per common share of $0.90, as compared to diluted earnings per common share of $1.01 for the twelve months ended December 31, 2016, a decrease of 11%. Net income available to common shareholders totaled $441.6 million in 2017 as compared to $495.4 million in 2016, also down 11%. Net income for 2017 was $466.2 million, down 6% from 2016. Net Interest Income Net interest income is our primary source of income. Its level is a function of the average balance of our interest- earning assets, the average balance of our interest-bearing liabilities, and the spread between the yield on such assets and the cost of such liabilities. These factors are influenced by both the pricing and mix of our interest-earning assets and our interest-bearing liabilities which, in turn, are impacted by various external factors, including the local economy, competition for loans and deposits, the monetary policy of the Federal Open Market Committee of the Federal Reserve Board of Governors (the “FOMC”), and market interest rates. The cost of our deposits and borrowed funds is largely based on short-term rates of interest, the level of which is partially impacted by the actions of the FOMC. The FOMC reduces, maintains, or increases the target federal funds rate (the rate at which banks borrow funds overnight from one another) as it deems necessary. In 2017, the FOMC increased the target federal funds rate three times for a total of 75 basis points, to a target range of 1.25% to 1.50%. While the target federal funds rate generally impacts the cost of our short-term borrowings and deposits, the yields on our held-for-investment loans and other interest-earning assets are typically impacted by intermediate-term market interest rates. In 2017, the five-year CMT ranged from a low of 1.63% to a high of 2.26% with an average rate of 1.91% for the year. In 2016, the five-year CMT ranged from a low of 0.94% to a high of 2.40% with an average rate of 1.33% for the year.