NYCB 2017 Annual Report

60 Federal Home Loan Bank Stock As members of the FHLB-NY, the Community Bank and the Commercial Bank are required to acquire and hold shares of its capital stock. At December 31, 2017, the Community Bank held FHLB-NY stock in the amount of $588.7 million; the Commercial Bank held FHLB-NY stock of $15.1 million at that date. At December 31, 2016, the Community Bank and the Commercial Bank held FHLB-NY stock in the amount of $574.5 million and $16.4 million, respectively. Dividends from the FHLB-NY to the Community Bank totaled $31.4 million and $26.2 million, respectively, in 2017 and 2016; dividends from the FHLB-NY to the Commercial Bank totaled $933,000 and $1.4 million in the corresponding years . Bank-Owned Life Insurance Bank- owned life insurance (“BOLI”) is recorded at the total cash surren der value of the policies in the Consolidated Statements of Condition, and the income generated by the increase in the cash surrender value of the policies is recorded in “Non - interest income” in the Consolidated Statements of Operations and Comprehensive Income (Loss). Reflecting an increase in the cash surrender value of the underlying policies, our investment in BOLI rose $18.1 million year-over-year to $967.2 million at December 31, 2017. Goodwill and Core Deposit Intangibles We record goodwill and core deposit intangibles (“CDI”) in our consolidated statements of condition in connection with certain of our business combinations. Goodwill, which is tested at least annually for impairment, refers to the difference between the purchase price and the fair value of an acquired company’s assets, net of the liabilities assumed. CDI refers to the fair value of the core deposits acquired in a business combination, and is typically amortized over a period of ten years from the acquisition date. While goodwill totaled $2.4 billion at both December 31, 2017 and 2016, the balance of CDI declined from $208,000 to zero as a result of amortization over the twelve-month period. For more information about the Company’s goodwill, see the discussion of “Critical Accounting Policies” earlier in this report. Sources of Funds The Parent Company (i.e., the Company on an unconsolidated basis) has four primary funding sources for the payment of dividends, share repurchases, and other corporate uses: dividends paid to the Parent Company by the Banks; capital raised through the issuance of securities; funding raised through the issuance of debt instruments; and repayments of, and income from, investment securities. On a consolidated basis, our funding primarily stems from a combination of the following sources: retail, institutional, and brokered deposits; borrowed funds, primarily in the form of wholesale borrowings; cash flows generated through the repayment and sale of loans; and cash flows generated through the repayment and sale of securities. In 2017, loan repayments and sales generated cash flows of $11.7 billion, as compared to $12.5 billion in 2016. Cash flows from repayments accounted for $7.8 billion and $6.4 billion of the respective totals and cash flows from sales accounted for $3.9 billion and $6.2 billion, of the respective totals. In 2017, cash flows from the repayment and sale of securities respectively totaled $563.1 million and $1.0 billion, while the purchase of securities amounted to $1.2 billion for the year. By comparison, cash flows from the repayment and sale of securities totaled $2.5 billion and $323.3 million, respectively, in 2016, and were offset by the purchase of securities totaling $492.6 million. In 2017, the cash flows from loans and securities were primarily deployed into the production of multi-family loans held for investment, as well as held-for-investment CRE loans and specialty finance loans and leases.