NOTE 9—DEPOSITS AND BORROWINGS

Deposits

Our deposits, which are our largest source of funding for our operations and asset growth, consist of non-interest bearing and interest-bearing deposits, which include demand, money market, time deposits, negotiable order of withdrawals (“NOW”), and saving accounts.

We had $180.5 billion and $181.9 billion in interest-bearing deposits as of December 31, 2014 and 2013, respectively. Time deposits issued by domestic offices totaled $8.3 billion and $9.2 billion as of December 31, 2014 and 2013, respectively. Of these deposits, the amount of domestic time deposits with a denomination of $100,000 or more was $2.3 billion and $2.9 billion as of December 31, 2014 and 2013, respectively. Time deposits issued by foreign offices totaled $977 million and $1.2 billion as of December 31, 2014 and 2013, respectively. Substantially all of our foreign time deposits were greater than $100,000 as of December 31, 2014 and 2013.

Securitized and Unsecured Debt Obligations

We use a variety of funding sources other than deposits, including short-term borrowings, the issuance of senior and subordinated notes and other borrowings, and securitization transactions. In addition, we utilize FHLB advances, which are secured by certain portions of our loan and investment securities portfolios, for our funding needs. The securitization debt obligations are separately presented on our consolidated balance sheets, while federal funds purchased and securities loaned or sold under agreements to repurchase, senior and subordinated notes and other borrowings, including FHLB advances, are included in other debt on our consolidated balance sheets.

Securitized Debt Obligations

Our outstanding borrowings due to securitization investors were $11.6 billion and $10.3 billion as of December 31, 2014 and 2013, respectively. During 2014, $4.3 billion of new debt was issued to third-party investors from our loan securitization trusts, offset by $3.0 billion of debt maturities.

Senior and Subordinated Notes

As of December 31, 2014, we had $18.7 billion of senior and subordinated notes outstanding, net of fair value hedging losses of $179 million. As of December 31, 2013, we had $13.1 billion of senior and subordinated notes outstanding, net of fair value hedging losses of $8 million. During 2014, we issued $7.8 billion of long-term senior unsecured debt, comprised of $250 million of floating rate notes and $7.5 billion of fixed rate notes. During 2014, $2.4 billion of outstanding unsecured notes matured. See “Note 10—Derivative Instruments and Hedging Activities” for information about our fair value hedging activities.

During 2013, we exchanged $1.2 billion of outstanding 8.80% subordinated notes due 2019. The transaction involved offering current holders market value plus an exchange premium for these outstanding notes. The consideration was paid through a combination of $1.4 billion of new 3.375% subordinated notes due 2023 and cash of $209 million. In addition, in 2013, we exchanged $763 million of outstanding 6.75% senior notes due 2017. The transaction involved offering current holders market value plus an exchange premium for these outstanding notes. The consideration was paid through a combination of $839 million of new 3.5% senior notes due 2023 and cash of $88 million. Both exchanges were accounted for as a modification of debt. There were no such exchanges during 2014.

FHLB Advances and Other

In addition to the issuance capacity under the registration statement, we also have access to funding through the FHLB system and the Federal Reserve Discount Window. Our FHLB and Federal Reserve memberships require us to hold FHLB and Federal Reserve stock which totaled $2.0 billion and $1.9 billion as of December 31, 2014 and 2013, respectively, and are included in other assets on our consolidated balance sheets.

We had outstanding FHLB advances and lines of credit, which were secured by our investment securities, residential home loans, multifamily real estate loans, commercial real estate loans and HELOCs, totaling $17.3 billion and $16.3 billion as of December 31, 2014 and 2013, respectively.

We have access to short-term borrowings through the Federal Reserve. Our membership with the Federal Reserve is secured by our investment in Federal Reserve stock, totaling $1.2 billion, as of both December 31, 2014 and 2013. We did not access the Federal Reserve Discount Window for funding during 2014 or 2013.

Composition of Deposits, Short-Term Borrowings and Long-Term Debt

The table below summarizes the components of our deposits, short-term borrowings and long-term debt as of December 31, 2014 and 2013. Our total short-term borrowings consist of federal funds purchased and securities loaned or sold under agreements to repurchase and other short-term borrowings with an original contractual maturity of one year or less. Our long-term debt consists of borrowings with an original contractual maturity of greater than one year. The amounts presented for outstanding borrowings include unamortized debt premiums and discounts, net of fair value hedge accounting adjustments.

Table 9.1: Components of Deposits, Short-Term Borrowings and Long-Term Debt



(Dollars in millions)	December 31, 2014		December 31, 2013
Deposits:
Non-interest bearing deposits	$	25,081	$	22,643
Interest-bearing deposits	180,467		181,880
Total deposits	$	205,548	$	204,523
Short-term borrowings:
Federal funds purchased and securities loaned or sold under agreements to repurchase	$	880	$	915
FHLB advances	16,200		15,300
Total short-term borrowings	$	17,080	$	16,215



	December 31, 2014
(Dollars in millions)	Maturity Date	Interest Rate	Weighted Average Interest Rate		Outstanding Amount		December 31, 2013
Long-term debt:
Securitized debt obligations⁽¹⁾	2015 -2025	0.20 - 5.75%	1.40	%	$	11,624	$	10,289
Senior and subordinated notes:⁽¹⁾
Fixed unsecured senior debt	2015 - 2024	1.00 - 6.75%	2.77		15,174		9,612
Floating unsecured senior debt	2015 - 2017	0.70 - 0.87%	0.77		880		852
Total unsecured senior debt			2.66		16,054		10,464
Fixed unsecured subordinated debt	2016 - 2023	3.38 - 8.80%	4.97		2,630		2,670
Total senior and subordinated notes					18,684		13,134
Other long-term borrowings:
FHLB advances	2015 - 2023	0.26 - 6.88%	0.56		1,069		1,016
Total long-term debt					31,377		24,439
Total short-term borrowings and long-term debt					$	48,457	$	40,654

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⁽¹⁾	Outstanding amount includes the impact from hedge accounting.

Interest-bearing deposits, securitized debt obligations and other debt as of December 31, 2014 mature as follows:

Table 9.2: Maturity Profile of Borrowings and Debt



(Dollars in millions)	2015		2016		2017		2018		2019		Thereafter		Total
Interest-bearing time deposits⁽¹⁾	$	6,215	$	1,302	$	532	$	675	$	440	$	125	$	9,289
Securitized debt obligations	500		3,520		6,391		0		1,138		75		11,624
Federal funds purchased and securities loaned or sold under agreements to repurchase	880		0		0		0		0		0		880
Senior and subordinated notes	2,632		2,558		3,103		1,187		3,832		5,372		18,684
Other borrowings	17,219		19		18		10		1		2		17,269
Total	$	27,446	$	7,399	$	10,044	$	1,872	$	5,411	$	5,574	$	57,746

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⁽¹⁾	Includes only those interest-bearing deposits which have a contractual maturity date.

Components of Interest Expense

The following table displays interest expense attributable to short-term borrowings and long-term debt for the years ended December 31, 2014, 2013 and 2012:

Table 9.3: Components of Interest Expense on Short-Term Borrowings and Long-Term Debt



	Year Ended December 31,
(Dollars in millions)	2014		2013		2012
Short-term borrowings:
Federal funds purchased and securities loaned or sold under agreements to repurchase	$	2	$	1	$	2
FHLB advances	19		28		18
Total short-term borrowings	21		29		20
Long-term debt:
Securitized debt obligations⁽¹⁾	145		183		271
Senior and subordinated notes⁽¹⁾	299		315		345
Other long-term borrowings	26		24		336
Total long-term debt	470		522		952
Total interest expense on short-term borrowings and long-term debt	$	491	$	551	$	972

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⁽¹⁾	Interest expense includes the impact from hedge accounting.