NYCB 2017 Annual Report

62 Liquidity, Contractual Obligations and Off-Balance Sheet Commitments, and Capital Position Liquidity We manage our liquidity to ensure that our cash flows are sufficient to support our operations, and to compensate for any temporary mismatches between sources and uses of funds caused by variable loan and deposit demand. We monitor our liquidity daily to ensure that sufficient funds are available to meet our financial obligations. Our most liquid assets are cash and cash equivalents, which totaled $2.5 billion and $557.9 million, respectively, at December 31, 2017 and 2016. As in the past, our loan and securities portfolios provided meaningful liquidity in 2017, with cash flows from the repayment and sale of loans totaling $11.7 billion and cash flows from the repayment and sale of securities totaling $1.6 billion. Additional liquidity stems from deposits and from our use of wholesale funding sources, including brokered deposits and wholesale borrowings. In addition, we have access to the Banks’ app roved lines of credit with various counterparties, including the FHLB-NY. The availability of these wholesale funding sources is generally based on the amount of mortgage loan collateral available under a blanket lien we have pledged to the respective institutions and, to a lesser extent, the amount of available securities that may be pledged to collateralize our borrowings. At December 31, 2017, our available borrowing capacity with the FHLB-NY was $7.1 billion. In addition, the Community Bank and the Commercial Bank had available-for-sale securities of $3.5 billion, of which, $2.3 billion is unpledged. Furthermore, the Banks both have agreements with the Federal Reserve Bank of New York (the “FRB - NY”) that enable them to access the discount window as a further means of enhancing their liquidity. In connection with these agreements, the Banks have pledged certain loans and securities to collateralize any funds they may borrow. At December 31, 2017, the maximum amount the Community Bank could borrow from the FRB-NY was $1.3 billion; the maximum amount the Commercial Bank could borrow at that date was $79.5 million. There were no borrowings against either line of credit at December 31, 2017. Our primary investing activity is loan production, and the volume of loans we originated for sale and for investment totaled $10.6 billion in 2017. During this time, the net cash provided by investing activities totaled $1.1 billion; the net cash provided by our operating activities totaled $1.3 million. Our financing activities used net cash of $418.1 million. CDs due to mature or reprice in one year or less from December 31, 2017 totaled $6.8 billion, representing 78.8% of total CDs at that date. Our ability to attract and retain retail deposits, including CDs, depends on numerous factors, including, among others, the convenience of our branches and our other banking channels; our customers’ satisfaction with the service they receive; the rates of interest we offer; the types of products we feature; and the attractiveness of their terms. Our decision to compete for deposits also depends on numerous factors, including, among others, our access to deposits through acquisitions, the availability of lower-cost funding sources, the impact of competition on pricing, and the need to fund our loan demand. The Parent Company is a separate legal entity from each of the Banks and must provide for its own liquidity. In addition to operating expenses and any share repurchases, the Parent Company is responsible for paying any dividends declared to our shareholders. As a Delaware corporation, the Parent Company is able to pay dividends either from surplus or, in case there is no surplus, from net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. In each of the four quarters of 2017, the Company was required to receive a non-objection from the FRB to pay all dividends; non-objections were received from the FRB in all four quarters of the year. The Company expects to continue the exchange of wr itten documentation to obtain the FRB’s non -objection to the declaration of dividends in 2018. The Company has received all necessary non-objections from the FRB for the dividends declared as of the date of this report. The Parent Company’s ability to pay dividends may also depend, in part, upon dividends it receives from the Banks. The ability of the Community Bank and the Commercial Bank to pay dividends and other capital distributions to the Parent Company is generally limited by New York State Banking Law and regulations, and by certain regulations of the FDIC. In addition, the Superintendent of the New York State Department of Financial Services (the