Borrowings and Contractual Commitments (Notes)

12 Months Ended

Dec. 31, 2018

NOTE 13 - BORROWINGS AND CONTRACTUAL COMMITMENTS

Short-term Borrowings

Short-term borrowings at December 31 consisted of the following:



	2018				2017
(Dollars in millions)	Balance		Interest Rate		Balance		Interest Rate
Funds purchased		$2,141	2.40	%		$2,561	1.33	%
Securities sold under agreements to repurchase	1,774		2.58		1,503		1.39
Other short-term borrowings:
FHLB advances	4,000		2.53		—
Dealer collateral	503		2.40		367		1.33
Master notes	354		1.40		350		0.66
Total other short-term borrowings	4,857		2.44		717		1.00
Total short-term borrowings		$8,772	2.46	%		$4,781	1.30	%

Long-term Debt

Long-term debt at December 31 consisted of the following:



	2018				2017
(Dollars in millions)	Maturity Date(s)	Interest Rate(s)	Balance		Balance
Parent Company:
Senior, fixed rate	2019 - 2028	2.50% - 6.00%		$3,467		$3,353
Senior, floating rate	2019	2.69	51		51
Subordinated, fixed rate	2026	6.00	200		200
Junior subordinated, floating rate	2027 - 2028	3.29 - 3.44	627		628
Structured notes ¹	2019 - 2026		200		242
Total			4,545		4,474
Less: Debt issuance costs			9		8
Total Parent Company debt			4,536		4,466
Subsidiaries ²:
Senior, fixed rate ³	2019 - 2058	0.69 - 9.55	6,238		3,609
Senior, floating rate	2020 - 2043	1.04 - 3.15	1,085		512
Senior, fixed-to-floating rate	2021 - 2024	2.59 - 3.69	2,364		—
Subordinated, fixed rate	2020 - 2026	3.30 - 5.40	864		1,206
Total			10,551		5,327
Less: Debt issuance costs			15		8
Total subsidiaries debt			10,536		5,319

Total long-term debt ⁴				$15,072		$9,785

¹Consists of notes with various terms that include fixed or floating interest, or returns that are linked to an equity index.

²82% and 77% of total subsidiary debt was issued by the Bank as of December 31, 2018 and 2017, respectively.

³Includes leases and other obligations that do not have a stated interest rate.

⁴Includes $289 million and $530 million of long-term debt measured at fair value at December 31, 2018 and 2017, respectively.

The Company had no foreign denominated debt outstanding at December 31, 2018 or 2017. Maturities of long-term debt at December 31, 2018 were as follows:



(Dollars in millions)	Parent Company		Subsidiaries
2019		$792		$1,026
2020	—		1,496
2021	1,039		1,652
2022	984		1,800
2023	12		1,095
Thereafter	1,718		3,482
Total maturities	4,545		10,551
Less: Debt issuance costs	9		15
Total long-term debt		$4,536		$10,536

The Company’s issuances of long-term debt during 2018 are summarized in the following table:



2018 Debt Issuances	Principal Amount (Dollars in millions)
Parent Company:
7-year fixed rate senior notes		$850
Subsidiaries:
3-year fixed-to-floating rate senior notes	750
3-year fixed-to-floating rate senior notes	600
7-year fixed rate senior notes	500
6-year fixed-to-floating rate senior notes	500
5-year fixed rate senior notes	500
4-year fixed-to-floating rate senior notes	500
4-year floating rate senior notes	300
3-year floating rate senior notes	300
Total		$4,800

In addition to the long-term debt issuances presented above, outstanding FHLB advances increased $1.0 billion, direct finance leases increased $530 million, senior note maturities totaled $750 million, and subordinated note maturities totaled $314 million during 2018. The Company had no additional

material issuances, advances, repurchases, terminations, or extinguishments of long-term debt during the year.

Restrictive provisions of several long-term debt agreements prevent the Company from creating liens on, disposing of, or issuing (except to related parties) voting stock of subsidiaries. Furthermore, there are restrictions on mergers, consolidations, certain leases, sales or transfers of assets, minimum shareholders’ equity, and maximum borrowings by the Company. At December 31, 2018, the Company was in compliance with all covenants and provisions of long-term debt agreements.

As currently defined by federal bank regulators, long-term debt of $1.5 billion and $1.6 billion qualified as Tier 2 capital at December 31, 2018 and 2017, respectively. See Note 15, “Capital,” for additional information regarding regulatory capital adequacy requirements for the Company and the Bank.

The Company does not consolidate certain wholly-owned trusts which were formed for the sole purpose of issuing trust preferred securities. The proceeds from the trust preferred securities issuances were invested in junior subordinated debentures of the Parent Company. The obligations of these debentures constitute a full and unconditional guarantee by the Parent Company of the trust preferred securities.

Contractual Commitments

In the normal course of business, the Company enters into certain contractual commitments. These commitments include obligations to make future payments on the Company’s borrowings, partnership investments, and lease arrangements, as well as commitments to lend to clients and to fund capital expenditures and service contracts.

The following table presents the Company’s significant contractual commitments at December 31, 2018, except for long-term debt and short-term borrowings (presented in this Note above), operating leases (disclosed in Note 9, “Premises, Property, and Equipment”), UTBs (disclosed in Note 16, “Income Taxes”), and pension and other postretirement benefit plans (disclosed in Note 17, “Employee Benefit Plans”). Capital lease obligations were immaterial at December 31, 2018 and are not presented in the table.



	Payments Due by Period at December 31, 2018
(Dollars in millions)	2019		2020		2021		2022		2023		Thereafter		Total
Unfunded lending commitments		$26,122		$8,670		$11,495		$14,678		$22,421		$12,538		$95,924
Consumer and other time deposits ^{1, 2}	7,781		3,262		758		918		363		2,273		15,355
Brokered time deposits ¹	168		238		241		194		152		52		1,045
Purchase obligations ³	249		234		63		64		58		244		912
Commitments to fund tax credit investments ⁴	702		—		—		—		—		—		702

¹ Amounts do not include interest.

² The aggregate amount of time deposit accounts in denominations of $250,000 or more was $4.5 billion and $3.2 billion at December 31, 2018 and 2017, respectively.

³ For legally binding purchase obligations of $5 million or more, amounts include either termination fees under the associated contracts when early termination provisions exist, or the total potential obligation over the full contractual term for noncancelable purchase obligations. Payments made towards the purchase of goods or services under these contracts totaled $499 million, $395 million, and $236 million in 2018, 2017, and 2016, respectively.

⁴ Commitments to fund investments in affordable housing and other partnerships do not have defined funding dates as certain criteria must be met before the Company is obligated to fund. Accordingly, these commitments are considered to be due on demand for presentation purposes. See Note 12, “Certain Transfers of Financial Assets and Variable Interest Entities,” for additional information.