Note 7. Borrowed Funds

Short-term borrowings consist of funds with remaining maturities of one year or less and long-term debt consists of borrowings with remaining maturities greater than one year. The components of short-term borrowings and long-term debt as of June 30, 2014 and December 31, 2013 are provided below:

	June 30,		December 31,
(in thousands) (1)	2014		2013
Short-term borrowings
Current portion of subordinated debt:
City National Bank - 9.00% Subordinated Notes Due July 2019 (2)	$	50,000	$	—
City National Bank - Fixed and Floating Subordinated Notes due August 2019 (3)	55,000		—
Federal funds purchased	50,000		—
Current portion of nonrecourse debt (4)	5,337		3,889
Total short-term borrowings	$	160,337	$	3,889

Long-term debt
Senior notes:
City National Corporation - 5.25% Senior Notes Due September 2020	$	299,502	$	299,463
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due July 2019 (2)	—		50,000
City National Bank - 9.00% Subordinated Notes Due August 2019	75,000		75,000
City National Bank - Fixed and Floating Subordinated Notes due August 2019 (3)	—		55,000
City National Bank - 5.375% Subordinated Notes Due July 2022	149,994		149,994
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (5)	5,155		5,155
Nonrecourse debt (4)	88,246		91,388
Other long-term debt (6)	9,871		9,968
Total long-term debt	$	627,768	$	735,968

(1) The carrying value of certain borrowed funds is net of discount which is being amortized into interest expense, as well as the impact of fair value hedge accounting, if applicable.

(2) These notes bear a fixed interest rate of 9 percent for the initial five years from the date of issuance (July 15, 2009) and thereafter the rate is reset at the Bank’s option to either LIBOR plus 6 percent or to prime plus 5 percent. The Bank elected to redeem the notes in accordance with their terms and procedures on July 15, 2014.

(3) These notes bear a fixed interest rate of 9 percent for the initial five years from the date of issuance (August 12, 2009) and thereafter bear an interest rate equal to the three-month LIBOR rate plus 6 percent. The rate is reset quarterly and is subject to an interest rate cap of 10 percent throughout the term of the notes. The Bank has notified investors of its election to redeem the notes in accordance with their terms and procedures on August 12, 2014.

(4) Nonrecourse debt bears interest at an average rate of 3.83 percent as of June 30, 2014 and has maturity dates ranging from August 2014 to February 2023.

(5) These floating rate securities pay interest of three-month LIBOR plus 1.965 percent which is reset quarterly. As of June 30, 2014, the interest rate was approximately 2.19 percent.

(6) Other long-term debt includes a note payable that bears a fixed interest rate of 5.64 percent and is scheduled to mature on June 2017.

The Company holds debt affiliated with First American Equipment Finance (“FAEF”), its wholly-owned equipment finance subsidiary. FAEF assigns the future rentals of certain lease financing loans to financial institutions on a nonrecourse basis at fixed interest rates. In return for future minimum lease rentals assigned, FAEF receives a discounted cash payment. Proceeds from discounting are reflected in the table above as nonrecourse debt.