Borrowed Funds

6 Months Ended

Jun. 30, 2012

Borrowed Funds

Borrowed Funds

Note 8. 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, 2012 and December 31, 2011 are provided below:

	June 30,		December 31,
(in thousands) (1)	2012		2011
Short-term borrowings
Current portion of senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	210,466	$	—
Federal funds purchased	110,000		50,000
Current portion of nonrecourse debt (5)	1,611		—
Total short-term borrowings	$	322,077	$	50,000
Long-term debt
Senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	—	$	215,848
City National Corporation - 5.25% Senior Notes Due September 2020	297,461		297,308
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due July 2019 (2)	49,736		49,718
City National Bank - 9.00% Subordinated Notes Due August 2019	74,867		74,858
City National Bank - Fixed and Floating Subordinated Notes due August 2019 (3)	54,902		54,895
City National Bank - 5.375% Subordinated Notes Due July 2022	149,018		—
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (4)	5,151		5,151
Nonrecourse debt (5)	81,145		—
Total long-term debt	$	712,280	$	697,778

(1)	The carrying value of certain borrowed funds is net of discount and issuance costs, which are 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 600 basis points or to prime plus 500 basis points.
(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.
(4)	These floating rate securities pay interest of three-month LIBOR plus 1.965 percent which is reset quarterly. As of June 30, 2012, the interest rate was 2.43 percent.
(5)	Nonrecourse debt bears interest at an average rate of 4.09 percent as of June 30, 2012 and has maturity dates ranging from September 2012 to July 2018.

On April 30, 2012, the Company assumed $320.9 million in borrowings in its acquisition of FAEF. Subsequent to the acquisition date, the Company paid off a significant portion of the outstanding balance and as of June 30, 2012, FAEF borrowings were comprised of $82.8 million of nonrecourse debt. 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.

On June 20, 2012, the Bank issued $150.0 million in subordinated notes that bear a fixed rate of interest of 5.375 percent. The notes mature on July 15, 2022. The proceeds will be used for general corporate purposes.