NOTE 10: COMMITMENTS AND CONTINGENCIES

Pledged Assets

The Company pledges securities to serve as collateral for its repurchase agreements, among other purposes. At December 31, 2017, the Company had pledged available for sale mortgage-related securities and other securities with carrying values of $917.2 million and $346.0 million, respectively. At December 31, 2016, the Company had pledged mortgage-related securities and other securities held to maturity with carrying values of $1.6 billion and $346.7 million, respectively. In addition, the Company had $30.1 billion and $29.4 billion of loans pledged to the FHLB-NY to serve as collateral for its wholesale borrowings at the respective year-ends.

Loan Commitments and Letters of Credit

At December 31, 2017 and 2016, the Company had commitments to originate loans, including unused lines of credit, of $1.9 billion and $2.1 billion, respectively. The majority of the outstanding loan commitments at those dates were expected to close within 90 days. In addition, the Company had commitments to originate letters of credit totaling $339.4 million and $324.3 million at December 31, 2017 and 2016.

The following table summarizes the Company’s off-balance sheet commitments to originate loans and letters of credit at December 31, 2017:


(in thousands)
Mortgage Loan Commitments:
Multi-family and commercial real estate	$	377,782
One-to-four family		3,819
Acquisition, development, and construction		239,504


Total mortgage loan commitments	$	621,105
Other loan commitments		1,314,170

Total loan commitments	$	1,935,275
Commercial, performance stand-by, and financial stand-by letters of credit		339,403

Total commitments	$	2,274,678

Lease Commitments

At December 31, 2017, the Company was obligated under various non-cancelable operating lease and license agreements with renewal options on properties used primarily for branch operations. The Company currently expects to renew such agreements upon their expiration in the normal course of business. The agreements contain periodic escalation clauses that provide for increases in the annual rents, commencing at various times during the lives of the agreements, which are primarily based on increases in real estate taxes and cost-of-living indices. The remaining projected minimum annual rental commitments under these agreements, exclusive of taxes and other charges, are summarized as follows:


(in thousands)
2018	$	29,786
2019		26,425
2020		20,211
2021		16,523
2022 and thereafter		66,555

Total minimum future rentals	$	159,500

The rental expense under these leases, which is included in “Occupancy and equipment expense” in the Consolidated Statements of Operations and Comprehensive Income (Loss), amounted to $33.2 million, $32.6 million, and $32.8 million, respectively, in the years ended December 31, 2017, 2016, and 2015. Rental income on Company-owned properties, netted in occupancy and equipment expense, was approximately $9.5 million, $7.1 million, and $3.7 million in the corresponding periods. There was no minimum future rental income under non-cancelable sub-lease agreements at December 31, 2017.

Financial Guarantees

The Company provides guarantees and indemnifications to its customers to enable them to complete a variety of business transactions and to enhance their credit standings. These guarantees are recorded at their respective fair values in “Other liabilities” in the Consolidated Statements of Condition. The Company deems the fair value of the guarantees to equal the consideration received.

The following table summarizes the Company’s guarantees and indemnifications at December 31, 2017:


(in thousands)	Expires Within One Year		Expires After One Year		Total Outstanding Amount		Maximum Potential Amount of Future Payments
Financial stand-by letters of credit	$	19,996	$	55,202	$	75,198	$	267,174
Performance stand-by letters of credit		5,786		—		5,786		5,775
Commercial letters of credit		3,063		209		3,272		66,454

Total letters of credit	$	28,845	$	55,411	$	84,256	$	339,403

The maximum potential amount of future payments represents the notional amounts that could be funded under the guarantees and indemnifications if there were a total default by the guaranteed parties or if indemnification provisions were triggered, as applicable, without consideration of possible recoveries under recourse provisions or from collateral held or pledged.

The Company collects fees upon the issuance of commercial and stand-by letters of credit. Fees for stand-by letters of credit fees are initially recorded by the Company as a liability, and are recognized as income periodically through the respective expiration dates. Fees for commercial letters of credit are collected and recognized as income at the time that they are issued and upon payment of each set of documents presented. In addition, the Company requires adequate collateral, typically in the form of cash, real property, and/or personal guarantees upon its issuance of Irrevocable Stand-by Letters of Credit. Commercial letters of credit are primarily secured by the goods being purchased in the underlying transaction and are also personally guaranteed by the owner(s) of the applicant company.

At December 31, 2017, the Company had commitments to purchase GNMA securities of $29.4 million.

Legal Proceedings

The Company is involved in various legal actions arising in the ordinary course of its business. All such actions in the aggregate involve amounts that are believed by management to be immaterial to the financial condition and results of operations of the Company.