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Fair Value Measurement
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurement
NOTE 12—FAIR VALUE MEASUREMENT
Fair value, also referred to as an exit price, is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value accounting guidance provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. The fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are described below:
Level 1:Valuation is based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:Valuation is based on observable market-based inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3:
Valuation is generated from techniques that use significant assumptions not observable in the market. Valuation techniques include pricing models, discounted cash flow methodologies or similar techniques.
The accounting guidance for fair value measurements requires that we maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. We consider all available information, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs. Based upon the specific facts and circumstances of each instrument or instrument category, judgments are made regarding the significance of the observable or unobservable inputs to the instruments’ fair value measurement in its entirety. If unobservable inputs are considered significant, the instrument is classified as Level 3. The process for determining fair value using unobservable inputs is generally more subjective and involves a high degree of management judgment and assumptions. The accounting guidance provides for the irrevocable option to elect, on a contract-by-contract basis, to measure certain financial assets and liabilities at fair value at inception of the contract and record any subsequent changes in fair value in earnings.
The determination and classification of financial instruments in the fair value hierarchy is performed at the end of each reporting period. For additional information on the valuation techniques used in estimating the fair value of our financial assets and liabilities on a recurring basis, see “Part II—Item 8. Financial Statements and Supplementary Data—Note 17—Fair Value Measurement” in our 2024 Form 10-K.
Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table displays our assets and liabilities of continuing operations measured on our consolidated balance sheets at fair value on a recurring basis as of September 30, 2025 and December 31, 2024.
Table 12.1: Assets and Liabilities Measured at Fair Value on a Recurring Basis
September 30, 2025
Fair Value Measurements Using
Netting Adjustments(1)
(Dollars in millions)Level 1Level 2Level 3Total
Assets:
Securities available for sale:
U.S. Treasury securities$8,637 $0 $0 $0 $8,637 
RMBS0 68,773 126 068,899 
CMBS0 8,440 0 08,440 
Other securities132 3,625 0 03,757 
Total securities available for sale8,769 80,838 126 089,733 
Loans held for sale0 620 0 0620 
Other assets:
Derivative assets(2)
686 961 478 (481)1,644 
Other(3)
812 0 29 0841 
Total assets$10,267 $82,419 $633 $(481)$92,838 
Liabilities:
Other liabilities:
Derivative liabilities(2)
$524 $1,077 $370 $(449)$1,522 
Total liabilities$524 $1,077 $370 $(449)$1,522 
December 31, 2024
Fair Value Measurements Using
Netting Adjustments(1)
(Dollars in millions)Level 1Level 2Level 3Total
Assets:
Securities available for sale:
U.S. Treasury securities$6,110 $0 $0 $0 $6,110 
RMBS0 65,212 116 065,328 
CMBS0 7,823 2 07,825 
Other securities123 3,627 0 03,750 
Total securities available for sale6,233 76,662 118 083,013 
Loans held for sale0 87 0 087 
Other assets:
Derivative assets(2)
510 1,039 683 (1,056)1,176 
Other(3)
689 0 34 0723 
Total assets$7,432 $77,788 $835 $(1,056)$84,999 
Liabilities:
Other liabilities:
Derivative liabilities(2)
$384 $1,034 $614 $(304)$1,728 
Total liabilities$384 $1,034 $614 $(304)$1,728 
__________
(1)Represents balance sheet netting of derivative assets and liabilities, and related payables and receivables for cash collateral held or placed with the same counterparty. See “Note 9—Derivative Instruments and Hedging Activities” for additional information.
(2)Does not reflect approximately $6 million and $1 million recognized as a net valuation allowance on derivative assets and liabilities for non-performance risk as of September 30, 2025 and December 31, 2024, respectively. Non-performance risk is included in the measurement of derivative assets and liabilities on our consolidated balance sheets, and is recorded through non-interest income in the consolidated statements of income.
(3)As of September 30, 2025 and December 31, 2024, other includes retained interests in securitizations of $29 million and $34 million, deferred compensation plan assets of $810 million and $688 million, equity securities of $2 million (including unrealized gains of $1 million) and $1 million, respectively.
Level 3 Recurring Fair Value Rollforward
The table below presents a reconciliation for all assets and liabilities of continuing operations measured and recognized at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2025 and 2024. Generally, transfers into Level 3 were primarily driven by the usage of unobservable assumptions in the pricing of these financial instruments as evidenced by wider pricing variations among pricing vendors and transfers out of Level 3 were primarily driven by the usage of assumptions corroborated by market observable information as evidenced by tighter pricing among multiple pricing sources.
Table 12.2: Level 3 Recurring Fair Value Rollforward
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Three Months Ended September 30, 2025
Total Gains (Losses)
(Realized/Unrealized)
Net Unrealized Gains (Losses) Included in Net Income Related to Assets and Liabilities Still Held as of September 30, 2025(1)
(Dollars in millions)Balance, July 1, 2025
Included
in Net
Income(1)
Included in OCIPurchasesSalesIssuancesSettlementsTransfers
Into
Level 3		Transfers
Out of
Level 3		Balance,
September 30,
2025
Securities available for sale:(2)
RMBS$142 $1 $0 $0 $0 $0 $(2)$6 $(21)$126 $2 
CMBS0 0 0 0 0 0 0 0 0 0 0 
Total securities available for sale142 1 0 0 0 0 (2)6 (21)126 2 
Other assets:
Retained interests in securitizations29 0 0 0 0 0 0 0 0 29 0 
Net derivative assets (liabilities)(3)
108 (5)0 0 0 9 (4)0 0 108 (7)
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Nine Months Ended September 30, 2025
Total Gains (Losses)
(Realized/Unrealized)
Net Unrealized Gains (Losses) Included in Net Income Related to Assets and Liabilities Still Held as of September 30, 2025(1)
(Dollars in millions)Balance,
January 1, 2025
Included
in Net
Income(1)
Included in OCIPurchasesSalesIssuancesSettlementsTransfers
Into
Level 3		Transfers
Out of
Level 3		Balance,
September 30,
2025
Securities available for sale:(2)
RMBS$116 $5 $3 $0 $0 $0 $(9)$32 $(21)$126 $5 
CMBS2 0 0 0 (1)0 (1)0 0 0 0 
Total securities available for sale118 5 3 0 (1)0 (10)32 (21)126 5 
Other assets:
Retained interests in securitizations34 (5)0 0 0 0 0 0 0 29 (5)
Net derivative assets (liabilities)(3)
69 11 0 0 0 33 (5)0 0 108 7 
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Three Months Ended September 30, 2024
Total Gains (Losses)
(Realized/Unrealized)
Net Unrealized Gains (Losses) Included in Net Income Related to Assets and Liabilities Still Held as of September 30, 2024(1)
(Dollars in millions)Balance, July 1, 2024
Included
in Net
Income(1)
Included in OCIPurchasesSalesIssuancesSettlementsTransfers
Into
Level 3		Transfers
Out of
Level 3		Balance,
September 30,
2024
Securities available for sale:(2)
RMBS$304 $2 $11 $0 $0 $0 $(4)$2 $(135)$180 $2 
CMBS2 0 0 0 0 0 0 0 0 2 0 
Total securities available for sale306 2 11 0 0 0 (4)2 (135)182 2 
Other assets:
Retained interests in securitizations34 0 0 0 0 0 0 0 0 34 0 
Net derivative assets (liabilities)(3)
69 (20)0 0 0 4 (8)0 0 45 (15)
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Nine Months Ended September 30, 2024
Total Gains (Losses)
(Realized/Unrealized)
Net Unrealized Gains (Losses) Included in Net Income Related to Assets and Liabilities Still Held as of September 30, 2024(1)
(Dollars in millions)Balance, January 1, 2024
Included
in Net
Income(1)
Included in OCIPurchasesSalesIssuancesSettlementsTransfers
Into
Level 3		Transfers
Out of
Level 3		Balance,
September 30,
2024
Securities available for sale:(2)
RMBS$146 $6 $8 $0 $0 $0 $(9)$187 $(158)$180 $5 
CMBS132 0 (3)0 0 0 (3)0 (124)2 0 
Total securities available for sale278 6 5 0 0 0 (12)187 (282)182 5 
Other assets:
Retained interests in securitizations35 (1)0 0 0 0 0 0 0 34 (1)
Net derivative assets (liabilities)(3)
58 (17)0 0 0 1 3 0 0 45 (18)
__________
(1)Realized gains (losses) on securities available for sale are included in net securities gains (losses) and retained interests in securitizations are reported as a component of non-interest income in our consolidated statements of income. Gains (losses) on derivatives are included as a component of net interest income or non-interest income in our consolidated statements of income.
(2)For the nine months ended September 30, 2025 there were net unrealized gains of $6 million included in OCI related to Level 3 securities available for sale. For both the three and nine months ended September 30, 2024 there were net unrealized losses of $2 million included in OCI related to Level 3 securities available for sale. There were no net unrealized gains or losses for the three months ended September 30, 2025.
(3)Includes derivative assets and liabilities of $478 million and $370 million, respectively, as of September 30, 2025 and $613 million and $568 million, respectively, as of September 30, 2024.
Significant Level 3 Fair Value Asset and Liability Inputs
Generally, uncertainties in fair value measurements of financial instruments, such as changes in unobservable inputs, may have a significant impact on fair value. Certain of these unobservable inputs will, in isolation, have a directionally consistent impact on the fair value of the instrument for a given change in that input. Alternatively, the fair value of the instrument may move in an opposite direction for a given change in another input. In general, an increase in the discount rate, default rates, loss severity or credit spreads, in isolation, would result in a decrease in the fair value measurement. In addition, an increase in default rates would generally be accompanied by a decrease in recovery rates, slower prepayment rates and an increase in liquidity spreads, and would lead to a decrease in the fair value measurement.
Techniques and Inputs for Level 3 Fair Value Measurements
The following table presents the significant unobservable inputs used to determine the fair values of our Level 3 financial instruments on a recurring basis. We utilize multiple vendor pricing services to obtain fair value for our securities. Several of our vendor pricing services are only able to provide unobservable input information for a limited number of securities due to software licensing restrictions. Other vendor pricing services are able to provide unobservable input information for all securities for which they provide a valuation. As a result, the unobservable input information for the securities available for sale presented below represents a composite summary of all information we are able to obtain. The unobservable input information for all other Level 3 financial instruments is based on the assumptions used in our internal valuation models.

Table 12.3: Quantitative Information about Level 3 Fair Value Measurements

Quantitative Information about Level 3 Fair Value Measurements
(Dollars in millions)Fair Value at
September 30,
2025		Significant
Valuation
Techniques		Significant
Unobservable
Inputs		Range
Weighted
Average(1)
Securities available for sale:
RMBS$126 Discounted cash flows (vendor pricing)Yield
Voluntary prepayment rate
Default rate
Loss severity
5-10%
0-16%
0-6%
25-75%
6%
7%
1%
56%
CMBS0 Discounted cash flows (vendor pricing)Yield
4%
4%
Other assets:
Retained interests in securitizations(2)
29 Discounted cash flowsLife of receivables (months)
Voluntary prepayment rate
Discount rate
Default rate
Loss severity
34-68
8%
5-13%
1%
49%
N/A
Net derivative assets (liabilities)108 Discounted cash flowsSwap rates
3-4%
3%
Quantitative Information about Level 3 Fair Value Measurements
(Dollars in millions)Fair Value at
December 31,
2024		Significant
Valuation
Techniques		Significant
Unobservable
Inputs		Range
Weighted
Average(1)
Securities available for sale:
RMBS$116 Discounted cash flows (vendor pricing)Yield
Voluntary prepayment rate
Default rate
Loss severity
6-10%
0-12%
0-6%
25-80%
6%
7%
1%
61%
CMBS2 Discounted cash flows (vendor pricing)Yield
5-7%
7%
Other assets:
Retained interests in securitizations(2)
34 Discounted cash flowsLife of receivables (months)
Voluntary prepayment rate
Discount rate
Default rate
Loss severity
31-81
7-9%
5-15%
1%
44-155%
N/A
Net derivative assets (liabilities)69 Discounted cash flowsSwap rates
4%
4%
__________
(1)Weighted averages are calculated by using the product of the input multiplied by the relative fair value of the instruments.
(2)Due to the nature of the various mortgage securitization structures in which we have retained interests, it is not meaningful to present a consolidated weighted average for the significant unobservable inputs.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
We are required to measure and recognize certain assets at fair value on a nonrecurring basis on the consolidated balance sheets. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, from the application of lower of cost or fair value accounting or when we evaluate for impairment).
The following table presents the carrying value of the assets measured at fair value on a nonrecurring basis and still held as of September 30, 2025 and December 31, 2024, and for which a nonrecurring fair value measurement was recorded during the nine and twelve months then ended.
Table 12.4: Nonrecurring Fair Value Measurements
September 30, 2025
Estimated Fair Value HierarchyTotal
(Dollars in millions)Level 2Level 3
Loans held for investment$0 $525 $525 
Loans held for sale8 0 8 
Other assets(1)
0 122 122 
Total$8 $647 $655 
December 31, 2024
Estimated Fair Value HierarchyTotal
(Dollars in millions)Level 2Level 3
Loans held for investment$0 $827 $827 
Loans held for sale4 0 4 
Other assets(1)
0 133 133 
Total$4 $960 $964 
__________
(1)As of September 30, 2025, other assets included investments accounted for under measurement alternative of $41 million, repossessed assets of $76 million, and long-lived assets held for sale and right-of-use assets totaling $5 million. As of December 31, 2024, other assets included investments accounted for under measurement alternative of $71 million and repossessed assets of $62 million.

In the above table, loans held for investment are generally valued based in part on the estimated fair value of the underlying collateral and the non-recoverable rate, which is considered to be a significant unobservable input. The non-recoverable rate ranged from 0% to 63%, with a weighted average of 23%, and from 0% to 61%, with a weighted average of 18%, as of September 30, 2025 and December 31, 2024, respectively. The weighted average non-recoverable rate is calculated based on the estimated market value of the underlying collateral. The significant unobservable inputs and related quantitative information related to fair value of the other assets are not meaningful to disclose as they vary significantly across properties and collateral.
The following table presents total nonrecurring fair value measurements for the period, included in earnings, attributable to the change in fair value relating to assets that are still held at September 30, 2025 and 2024.
Table 12.5: Nonrecurring Fair Value Measurements Included in Earnings
Total Gains (Losses)
Nine Months Ended September 30,
(Dollars in millions)20252024
Loans held for investment$(270)$(224)
Loans held for sale(1)(6)
Other assets(1)
(116)(64)
Total$(387)$(294)
__________
(1)Other assets primarily include fair value adjustments related to repossessed assets, long-lived assets held for sale and right-of-use assets, and equity investments accounted for under the measurement alternative.
Fair Value of Financial Instruments
The following table presents the carrying value and estimated fair value, including the level within the fair value hierarchy, of our financial instruments that are not measured at fair value on a recurring basis on our consolidated balance sheets as of September 30, 2025 and December 31, 2024.
Table 12.6: Fair Value of Financial Instruments
September 30, 2025
Carrying
Value		Estimated
Fair Value		Estimated Fair Value Hierarchy
(Dollars in millions)Level 1Level 2Level 3
Financial assets:
Cash and cash equivalents$55,279 $55,279 $4,606 $50,673 $0 
Restricted cash for securitization investors3,248 3,248 3,248 0 0 
Net loans held for investment420,056 428,593 0 0 428,593 
Loans held for sale
50 50 0 50 0 
Interest receivable3,456 3,456 0 3,456 0 
Other investments(1)
2,625 2,625 0 2,625 0 
Financial liabilities:
Deposits with defined maturities104,981 105,244 0 105,244 0 
Securitized debt obligations13,642 13,713 0 13,713 0 
Senior and subordinated notes36,662 37,743 0 37,743 0 
Federal funds purchased and securities loaned or sold under agreements to repurchase616 616 0 616 0 
Other borrowings(2)
538 523 0 523 0 
Interest payable826 826 0 826 0 
 December 31, 2024
Carrying
Value		Estimated
Fair Value		Estimated Fair Value Hierarchy
(Dollars in millions)Level 1Level 2Level 3
Financial assets:
Cash and cash equivalents$43,230 $43,230 $3,028 $40,202 $0 
Restricted cash for securitization investors441 441 441 0 0 
Net loans held for investment311,517 316,467 0 0 316,467 
Loans held for sale115 115 0 115 0 
Interest receivable2,532 2,532 0 2,532 0 
Other investments(1)
1,329 1,329 0 1,329 0 
Financial liabilities:
Deposits with defined maturities78,944 79,091 0 79,091 0 
Securitized debt obligations14,264 14,335 0 14,335 0 
Senior and subordinated notes30,696 31,636 0 31,636 0 
Federal funds purchased and securities loaned or sold under agreements to repurchase562 562 0 562 0 
Interest payable666 666 0 666 0 
__________
(1)Other investments include FHLB and Federal Reserve Bank stock. These investments are included in other assets on our consolidated balance sheets.
(2)Other borrowings exclude capital lease obligations.