NOTE 8—DEPOSITS AND BORROWINGS

Deposits

Our deposits, which are our largest source of funding for our assets 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

In addition to our deposits, which serve as our primary funding source, we use a variety of other funding sources 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 securitized debt obligations are separately presented on our consolidated balance sheets as they represent obligations of consolidated securitization trusts, 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 borrowings due to securitization investors decreased to $18.4 billion as of June 30, 2017 from $18.8 billion as of December 31, 2016. During the first six months of 2017, $3.0 billion of new debt was issued to third-party investors from our credit card loan securitization trust, more than offset by $3.5 billion of maturities.

Senior and Subordinated Notes

We had $28.5 billion and $23.4 billion of senior and subordinated notes outstanding as of June 30, 2017 and December 31, 2016, respectively. During the first six months of 2017, we issued $6.5 billion of long-term senior and subordinated debt comprised of $1.4 billion of floating-rate notes and $5.1 billion of fixed-rate notes. During the first six months of 2017, $1.5 billion of senior and subordinated notes matured.

FHLB Advances and Other

We 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 $1.9 billion as of June 30, 2017 and December 31, 2016, 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. Outstanding FHLB advances totaled $2.1 billion and $17.2 billion as of June 30, 2017 and December 2016, respectively, substantially all of which represented long-term advances generally callable on either a one-month or a three-month basis. We did not access the Federal Reserve Discount Window for funding during 2016 or the first six months of 2017.

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 June 30, 2017 and December 31, 2016. Our total short-term borrowings consist of federal funds purchased and securities loaned or sold under agreements to repurchase. Our long-term debt consists of borrowings with an original contractual maturity of greater than one year. The carrying value presented below for these borrowings include unamortized debt premiums and discounts, net of debt issuance costs and fair value hedge accounting adjustments.

Table 8.1: Components of Deposits, Short-Term Borrowings and Long-Term Debt



(Dollars in millions)	June 30, 2017		December 31, 2016
Deposits:
Non-interest-bearing deposits	$	25,953	$	25,502
Interest-bearing deposits	213,810		211,266
Total deposits	$	239,763	$	236,768
Short-term borrowings:
Federal funds purchased and securities loaned or sold under agreements to repurchase	$	958	$	992
Total short-term borrowings	$	958	$	992



	June 30, 2017
(Dollars in millions)	Maturity Dates	Interest Rates	Weighted- Average Interest Rate	Carrying Value		December 31, 2016
Long-term debt:
Securitized debt obligations⁽¹⁾	2017 - 2025	1.20 - 5.75%	1.88%	$	18,358	$	18,826
Senior and subordinated notes:⁽¹⁾
Fixed unsecured senior debt	2017 - 2027	1.50 - 6.75	2.76	21,174		17,546
Floating unsecured senior debt	2018 - 2023	1.85 - 2.33	2.08	2,748		1,353
Total unsecured senior debt			2.68	23,922		18,899
Fixed unsecured subordinated debt	2019 - 2026	3.38 - 8.80	4.09	4,556		4,532
Total senior and subordinated notes				28,478		23,431
Other long-term borrowings:
FHLB advances	2017 - 2023	1.20 - 5.54	1.24	2,114		17,179
Capital lease obligations	2024 - 2035	3.09 - 12.86	5.90	46		32
Total other long-term borrowings				2,160		17,211
Total long-term debt				$	48,996	$	59,468
Total short-term borrowings and long-term debt				$	49,954	$	60,460

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⁽¹⁾	Carrying value includes fair value hedge accounting adjustments.

Components of Interest Expense

The following table displays interest expense attributable to short-term borrowings and long-term debt for the three and six months ended June 30, 2017 and 2016:

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



	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2017		2016		2017		2016
Short-term borrowings:
Federal funds purchased and securities loaned or sold under agreements to repurchase	$	1	$	1	$	2	$	2
Total short-term borrowings	1		1		2		2
Long-term debt:
Securitized debt obligations⁽¹⁾	82		47		151		95
Senior and subordinated notes⁽¹⁾	179		111		328		217
Other long-term borrowings	11		27		35		50
Total long-term debt	272		185		514		362
Total interest expense on short-term borrowings and long-term debt	$	273	$	186	$	516	$	364

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