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 March 31, 2013 and December 31, 2012 are provided below:

	March 31,		December 31,
(in thousands) (1)	2013		2012
Short-term borrowings
Current portion of senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	—	$	206,581
Federal funds purchased	703,600		1,214,200
Current portion of nonrecourse debt (5)	3,160		3,017
FHLB borrowings	100,000		—
Total short-term borrowings	$	806,760	$	1,423,798

Long-term debt
Senior notes:
City National Corporation - 5.25% Senior Notes Due September 2020	$	297,690	$	297,613
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due July 2019 (2)	49,764		49,755
City National Bank - 9.00% Subordinated Notes Due August 2019	74,881		74,876
City National Bank - Fixed and Floating Subordinated Notes due August 2019 (3)	54,913		54,909
City National Bank - 5.375% Subordinated Notes Due July 2022	148,640		148,642
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (4)	5,152		5,152
Nonrecourse debt (5)	71,927		75,104
Total long-term debt	$	702,967	$	706,051

(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 6 percent or to prime plus 5 percent. These notes are callable by the Bank, subject to any prior approval requirements of the Office of the Comptroller of the Currency (“OCC”), on or after July 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. These notes are callable by the Bank, subject to any prior approval requirements of the OCC, on or after August 2014.

(4) These floating rate securities pay interest of three-month LIBOR plus 1.965 percent which is reset quarterly. As of March 31, 2013, the interest rate was approximately 2.25 percent.

(5) Nonrecourse debt bears interest at an average rate of 3.94 percent as of March 31, 2013 and has maturity dates ranging from May 2013 to December 2019.

On April 30, 2012, the Company assumed borrowings through its acquisition of FAEF. 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 were used for general corporate purposes.