Borrowed Funds

12 Months Ended

Dec. 31, 2019

NOTE 9: BORROWED FUNDS

The following table summarizes the Company’s borrowed funds at December 31,

2019

and 2018:


	December 31,
(in thousands)	2019		2018
Wholesale borrowings:
FHLB advances	$	13,102,661	$	13,053,661
Repurchase agreements		800,000		500,000

Total wholesale borrowings	$	13,902,661	$	13,553,661
Junior subordinated debentures		359,866		359,508
Subordinated notes		295,066		294,697

Total borrowed fund s	$	14,557,593	$	14,207,866

Accrued interest on borrowed funds is included in “Other liabilities” in the Consolidated Statements of Condition and amounted to $23.4 million and $23.5 million, respectively, at December 31, 2019 and 2018.

FHLB Advances

The contractual maturities and the next call dates of FHLB advances

outstanding at December 31, 2019 were as follows:


	Contractual Maturity					Earlier of Contractual Maturity or Next Call Date
(dollars in thousands) Year	Amount		Weighted Average Interest Rate			Amount		Weighted Average Interest Rate
2020	$	4,525,000		2.06		$	6,805,000		2.09
2021		822,661		2.40			4,222,661		2.30
2022		275,000		2.01			1,875,000		1.55
2023		—		—			200,000		1.61
2028		4,350,000		2.40			—		—
2029		3,130,000		1.55			—		—

Total FHLB advance s	$	13,102,661		2.07	%	$	13,102,661		2.07	%

FHLB advances include both straight fixed-rate advances and advances under the FHLB convertible advance program, which gives the FHLB the option of either calling the advance after an initial

lock-out

period of up to five years and quarterly thereafter until maturity, or a

one-time

call at the initial call date.

The Company had

$1.0 billion of

short-term FHLB advances at December 31, 2019

. During the twelve months ended December 31, 2019, the average balance of short-term FHLB advances were $52.4 million, with a weighted average interest rate of 1.9%, generating interest expense of $1.0 million. There were no short-term advances at December 31,

2018. During the twelve months ended at December 31, 2017, the average balances of short-term FHLB advances were $3.3 million, with a weighted average interest rate of 0.82%, generating interest expense of $27,000.

At December 31, 2019 and 2018, respectively, the Bank had unused lines of available credit with the

FHLB

of up to $7.9 billion and $7.5 billion. The

Company

had

overnight advances

of $100.0 million

at December 31, 2019

The

re were no over

night FHLB advances a

t December 31,

2018. During the twelve months ended December 31, 2019, the average balance of overnight advances amounted to $3.1 million, with a weighted average interest rate of 2.1%, generating interest expense of $66,000. During the twelve months ended December 31, 2018 and 2017, the average balances of overnight advances amounted to $5.2 million and $7.7 million, with weighted average interest rates of 2.3% and 0.98%, respectively. In 2018 and 2017, the interest expense generated by average overnight advances was $121,000 and $75,000.

Total FHLB advances generated interest expense of $259.0 million, $248.0 million, and $186.0 million, in the years ended December 31, 2019, 2018, and 2017, respectively.

Repurchase Agreements

The following table presents an analysis of the contractual maturities and next call dates of the Company’s outstanding repurchase agreements accounted for as secured borrowings at December 31, 2019


	Contractual Maturity					Earlier of Contractual Maturity or Next Call Date
(dollars in thousands) Year	Amount		Weighted Average Interest Rate			Amount		Weighted Average Interest Rate
2021	$	—		—	%	$	400,000		2.31	%
2022		—		—			400,000		2.16
2028		300,000		2.37			—		—
2029		500,000		2.16			—		—

	$	800,000		2.24		$	800,000		2.24

The following table provides the

contractual maturity and weighted average interest rate of repurchase agreements, and the amortized cost and fair value of the securities collateralizing the repurchase agreements, at December 31, 2019:


						Mortgage-Related and Other Securities				GSE Debentures and U.S. Treasury Obligations
(dollars in thousands) Period of Maturity	Amount		Weighted Average Interest Rate			Amortized Cost		Fair Value		Amortized Cost		Fair Value
30 to 90 days	$	—		—		$	—	$	—	$	—	$	—
Greater than 90 days		800,000		2.24	%		232,836		238,180		636,190		637,050

Total	$	800,000		2.24	%	$	232,836	$	238,180	$	636,190	$	637,050

The Company had no short-term repurchase agreements outstanding at December 31, 2019 or 2018.

At December 31, 2019 and 2018, the accrued interest on repurchase agreements amounted to $1.7

million

and $287,000, respectively. The interest expense on repurchase agreements was $17.7 million, $6.8 million, and $16.4 million, in the years ended December 31, 2019, 2018, and 2017, respectively.

Federal Funds Purchased

There were no federal funds purchased outstanding at December 31, 2019 or 2018.

In 2019 and 2018, respectively, the average balances of federal funds purchased were $6.8

million

and $620,000, with weighted average interest rates of 1.7% and 2.2%. In 2017, the average balance of federal funds purchased amounted to $47.9 million with

weighted average interest rate of 2.2%. The interest expense produced by federal funds purchased was $118,000, $14,000 and $418,000 for the years ended December 31, 2019, 2018 and 2017, respectively.

Junior Subordinated Debentures

At December 31, 2019 and 2018, the Company had $359.9 million and $359.5 million, respectively, of outstanding junior subordinated deferrable interest debentures (“junior subordinated debentures”) held by statutory business trusts (the “Trusts”) that issued guaranteed capital securities.

The Trusts are accounted for as unconsolidated subsidiaries, in accordance with GAAP. The proceeds of each issuance were invested in a series of junior subordinated debentures of the Company and the underlying assets of each statutory business trust are the relevant debentures. The Company has fully and unconditionally guaranteed the obligations under each trust’s capital securities to the extent set forth in a guarantee by the Company to each trust. The Trusts’ capital securities are each subject to mandatory redemption, in whole or in part, upon repayment of the debentures at their stated maturity or earlier redemption.

The following junior subordinated debentures were outstanding at December 31, 2019:


Issuer	Interest Rate of Capital Securities and Debentures			Junior Subordinated Debentures Amount Outstanding		Capital Securities Amount Outstanding		Date of Original Issue		Stated Maturity		First Optional Redemption Date
				(dollars in thousands)
New York Community Capital Trust V (BONUSES SM Units)		6.00	%	$	145,940	$	139,589		Nov. 4, 2002		Nov. 1, 2051		Nov. 4, 2007	(1)
New York Community Capital Trust X		3.49			123,712		120,000		Dec. 14, 2006		Dec. 15, 2036		Dec. 15, 2011	(2)
PennFed Capital Trust III		5.14			30,928		30,000		June 2, 2003		June 15, 2033		June 15, 2008	(2)
New York Community Capital Trust XI		3.61			59,286		57,500		April 16, 2007		June 30, 2037		June 30, 2012	(2)

Total junior subordinated debentures				$	359,866	$	347,089

(1)	Callable subject to certain conditions as described in the prospectus filed with the SEC on November 4, 2002.

(2)	Callable from this date forward.

The Bifurcated Option Note Unit SecuritiES

(“BONUSES units”) included in the preceding table were issued by the Company on November 4, 2002 at a public offering price of $50.00 per share. Each of the 5,500,000 BONUSES units offered consisted of a capital security issued by New York Community Capital Trust V, a trust formed by the Company, and a warrant to purchase 2.4953 shares of the common stock of the Company (for a total of approximately 13.7 million common shares) at an effective exercise price of $20.04 per share. Each capital security has a maturity of 49 years, with a coupon, or distribution rate, of 6.00% on the $50.00 per share liquidation amount. The warrants and capital securities were

non-callable

for five years from the date of issuance and were not called by the Company when the five-year period passed on November 4, 2007.

The gross proceeds of the BONUSES units totaled $275.0 million and were allocated between the capital security and the warrant comprising such units in proportion to their relative values at the time of issuance. The value assigned to the warrants, $92.4 million, was recorded as a component of additional

“paid-in

capital” in the Company’

Consolidated Statements of Condition. The value assigned to the capital security component was $

182.6

million. The $

92.4

million difference between the assigned value and the stated liquidation amount of the capital securities was treated as an original issue discount, and is being amortized to interest expense over the

49-year

life of the capital securities on a level-yield basis. At December

2019

, this discount totaled $

65.8

million.

The other three trust preferred securities noted in the preceding table were formed for the purpose of issuing Company Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trusts Holding Solely Junior Subordinated Debentures (collectively, the “Capital Securities”). Dividends on the Capital Securities are payable either quarterly

or semi-annually and are deferrable, at the Company’s option, for up to five years. As of December

2019

, all dividends were current.

Interest expense on junior subordinated debentures was $22.4 million, $21.7 million, and $19.6 million, respectively, for the years ended December 31, 2019, 2018, and 2017.

Subordinated Notes

At December 31, 2019 and 2018, the Company had $295.1 million and $294.7 million, respectively, of

fixed-to-floating

rate subordinated notes outstanding:


Date of Original Issue	Stated Maturity	Interest Rate (1)	Original Issue Amount
(dollars in thousands)
Nov. 6, 2018	Nov. 6, 2028	5.90%	$300,000

(1)

From and including the date of original issuance to, but excluding November 6, 2023, the Notes will bear interest at an initial rate of 5.90% per annum payable semi-annually. Unless redeemed, from and including November 6, 2023 to but excluding the maturity date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR rate plus 278 basis point payable quarterly.

The interest expense on subordinated notes amounted to $18.3 million and $2.8 million, for the years ended December 31, 2019 and 2018, respectively.