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## MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

## Borrowings 

Total borrowings declined $693 million from December 31, 2009, as the result of a decrease in long-term debt partially offset by an increase in federal funds purchased and other short-term borrowings. 

Long-term debt at December 31, 2010 decreased $949 million, or nine percent, compared to December 31, 2009 primarily as the result of the repayment of $1.0 billion in FHLB advances during the fourth quarter of 2010 and the maturity of $800 million of long-term debt in the first quarter of 2010. These declines were partially offset by the impact of a change in U.S. GAAP which required the Bancorp to consolidate long-term debt on January 1, 2010 that had an outstanding balance of $692 million as of December 31, 2010. 

Average borrowings declined $5.2 billion from 2009, primarily as a result of repayment of term auction facility funds 

and FHLB advances throughout 2009 which contributed $3.7 billion and $1.2 billion, respectively, to average balances in 2009. These repayments were made possible by a decrease in loan demand combined with growth in deposits during 2009. See the Capital Management Section for additional information. 

Information on the average rates paid on borrowings is included within the Statements of Income Analysis. Additionally, refer to the Liquidity Risk Management section for a discussion on the role of borrowings in the Bancorp’s liquidity management. 

On January 25, 2011, the Bancorp issued $1.0 billion of senior notes to third party investors, bearing a fixed rate of interest of 3.625% per annum. The notes are unsecured, senior obligations of the Bancorp and mature on January 25, 2016. See Note 32 of the Notes to Consolidated Financial Statement for further information on the debt issuance. 

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