NOTE 8—DEPOSITS AND BORROWINGS

Deposits

Our deposits, which are our largest source of funding for our asset growth and operations, consist of non-interest bearing and interest-bearing deposits, which include checking accounts, money market deposit accounts, negotiable order of withdrawals, savings deposits and time deposits.

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 Federal Home Loan Banks (“FHLB”) advances, which are secured by certain portions of our loan and investment securities portfolios, for our funding needs. The securitized 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 $15.7 billion and $11.6 billion as of September 30, 2015 and December 31, 2014, respectively. During the first nine months of 2015, $4.2 billion of new debt was issued to third-party investors from our loan securitization trusts, offset by $175 million of debt maturities.

Senior and Subordinated Notes

As of September 30, 2015, we had $21.8 billion of senior and subordinated notes outstanding, inclusive of fair value hedging losses of $386 million. As of December 31, 2014, we had $18.7 billion of senior and subordinated notes outstanding, inclusive of fair value hedging losses of $179 million. During the first nine months of 2015, we issued $4.5 billion of long-term senior unsecured debt, comprised of $700 million of floating-rate notes and $3.8 billion of fixed-rate notes. During the first nine months of 2015, $1.6 billion of outstanding unsecured notes matured. See “Note 9—Derivative Instruments and Hedging Activities” for information about our fair value hedging activities.

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 $1.4 billion and $2.0 billion as of September 30, 2015 and December 31, 2014, respectively, and are included in other assets on our consolidated balance sheets.

Our FHLB advances and lines of credit are secured by our investment securities, residential home loans, multifamily real estate loans, commercial real estate loans and HELOCs. The outstanding FHLB advances totaled $4.3 billion as of September 30, 2015, all of which represented long-term callable advances, and $17.3 billion as of December 31, 2014, which was substantially comprised of short-term advances. We did not access the Federal Reserve Discount Window for funding during 2015 or 2014.

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 September 30, 2015 and December 31, 2014. 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 8.1: Components of Deposits, Short-Term Borrowings and Long-Term Debt



(Dollars in millions)	September 30, 2015		December 31, 2014
Deposits:
Non-interest bearing deposits	$	25,055	$	25,081
Interest-bearing deposits	187,848		180,467
Total deposits	$	212,903	$	205,548
Short-term borrowings:
Federal funds purchased and securities loaned or sold under agreements to repurchase	$	1,021	$	880
FHLB advances	0		16,200
Total short-term borrowings	$	1,021	$	17,080



	September 30, 2015
(Dollars in millions)	Maturity Dates	Interest Rates	Weighted- Average Interest Rate	Outstanding Amount		December 31, 2014
Long-term debt:
Securitized debt obligations⁽¹⁾	2015 - 2025	0.25 - 5.75%	1.37%	$	15,656	$	11,624
Senior and subordinated notes:⁽¹⁾
Fixed unsecured senior debt	2015 - 2025	1.00 - 6.75%	2.65	17,539		15,174
Floating unsecured senior debt	2015 - 2018	0.77 - 1.47%	1.00	1,580		880
Total unsecured senior debt			2.51	19,119		16,054
Fixed unsecured subordinated debt	2016 - 2023	3.38 - 8.80%	4.97	2,654		2,630
Total senior and subordinated notes				21,773		18,684
Other long-term borrowings:
FHLB advances	2015 - 2025	0.25 - 6.41%	0.32	4,304		1,069
Capital lease obligations	2016 - 2034	3.09 - 12.86%	4.24	24		0
Total other long-term borrowings				4,328		1,069
Total long-term debt				41,757		31,377
Total short-term borrowings and long-term debt				$	42,778	$	48,457

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

Components of Interest Expense

The following table displays interest expense attributable to short-term borrowings and long-term debt for the three and nine months ended September 30, 2015 and 2014:

Table 8.2: Components of Interest Expense on Short-Term Borrowings and Long-Term Debt



	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	2015		2014		2015		2014
Short-term borrowings:
Federal funds purchased and securities loaned or sold under agreements to repurchase	$	0	$	0	$	1	$	1
FHLB advances	0		6		9		15
Total short-term borrowings	0		6		10		16
Long-term debt:
Securitized debt obligations⁽¹⁾	39		32		108		109
Senior and subordinated notes⁽¹⁾	82		71		241		226
Other long-term borrowings	12		10		29		20
Total long-term debt	133		113		378		355
Total interest expense on short-term borrowings and long-term debt	$	133	$	119	$	388	$	371

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