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Contingent Liabilities and Guarantees | 6 Months Ended
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Jun. 30, 2026
Commitments and Contingencies Disclosure [Abstract] |
Contingent Liabilities and Guarantees | 14. Contingent Liabilities and Guarantees Legal Proceedings Litigation. From time to time, in the ordinary course of business, we and our subsidiaries are subject to various litigation, investigations, and administrative proceedings. Private, civil litigation may range from individual actions involving a single plaintiff to putative or actual class action lawsuits with potentially thousands of class members, as well as arbitrations and mass arbitrations. Investigations may involve both formal and informal proceedings, by both government agencies and self-regulatory bodies. These matters may involve claims for substantial monetary or non-monetary relief. At times, these matters may present novel claims or legal theories. Due to the complex nature of these various other matters, it may be years before some matters are resolved. While it is impossible to ascertain the ultimate resolution or range of financial liability, based on information presently known to us, we do not believe there is any matter to which we are a party, or involving any of our properties, that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on our financial condition. We continually monitor and reassess the potential materiality of these litigation matters. We note, however, that in light of the inherent uncertainty in legal proceedings there can be no assurance that the ultimate resolution will not exceed established accruals. As a result, the outcome of a particular matter, or a combination of matters, may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period. On at least a quarterly basis, we assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we have not accrued a liability for said loss, consistent with applicable accounting guidance. Based on information currently available to us and advice of counsel, we believe that our established accruals are adequate and the liabilities arising from the legal proceedings will not have a material adverse effect on our consolidated financial condition. Guarantees We are a guarantor in various agreements with third parties. The following table shows the types of guarantees that we had outstanding at June 30, 2026. Information pertaining to the basis for determining the liabilities recorded in connection with these guarantees is included in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Contingencies and Guarantees” beginning on page 115 of our 2025 Form 10-K.
June 30, 2026 | Maximum Potential Undiscounted Future Payments | Liability Recorded
Dollars in millions
Financial guarantees: |  |
Standby letters of credit | $ | 6,934 |  | $ | 72 |
Recourse agreement with FNMA | 8,200 |  | 62 |
Residential mortgage reserve | 3,431 |  | 7 |
Written options (a) | 4,000 |  | 35 |
Total | $ | 22,565 |  | $ | 176 |
(a)The maximum potential undiscounted future payments represent notional amounts of derivatives qualifying as guarantees. We determine the payment/performance risk associated with each type of guarantee described below based on the probability that we could be required to make the maximum potential undiscounted future payments shown in the preceding table. We use a scale of low (0% to 30% probability of payment), moderate (greater than 30% to 70% probability of payment), or high (greater than 70% probability of payment) to assess the payment/performance risk, and have determined that the payment/performance risk associated with each type of guarantee outstanding at June 30, 2026, is low. Information pertaining to the nature of each of the guarantees listed below is included in Note 19 (“Commitments, Contingent Liabilities, and Guarantees”) under the heading “Guarantees” beginning on page 166 of our 2025 Form 10-K. Standby letters of credit. At June 30, 2026, our standby letters of credit had a remaining weighted-average life of 2.1 years, with remaining actual lives ranging from less than 1 year t o 10.0 years. Recourse agreement with FNMA. At June 30, 2026, the outstanding commercial mortgage loans in this program had a weighted-average remaining term of 5.5 years, and the unpaid principal balance outstanding of loans sold by us as a participant was $25.1 billion. The maximum potential amount of undiscounted future payments that we could be required to make under this program, as shown in the preceding table, is equal to approximately 32.7% of the principal balance of loans outstanding at June 30, 2026. FNMA delegates responsibility for originating, underwriting, and servicing mortgages, and we assume a limited portion of the risk of loss during the remaining term on each commercial mortgage loan that we sell to FNMA. We maintain a reserve for such potential losses of $62 million that we believe approximates the fair value of our liability for the guarantee as described in Note 4 (“Asset Quality”). Residential Mortgage Banking. At June 30, 2026, the unpaid principal balance outstanding of loans sold by us in this program was $11.4 billion. The maximum potential amount of undiscounted future payments that we could be required to make under this program, as shown in the preceding table, is equal to approximately 30% of the principal balance of loans outstanding at June 30, 2026. Our liability for estimated repurchase obligations on loans sold, which is included in “accrued expenses and other liabilities” on the Consolidated Balance Sheets, was $7 million at June 30, 2026. For more information on our residential mortgages, see Note 8 (“Mortgage Servicing Assets”). Written options. In the ordinary course of business, we “write” put options for clients that wish to mitigate their exposure to changes in interest rates and commodity prices. At June 30, 2026, our written put options had an average life of 1.3 years. These written put options are accounted for as derivatives at fair value, as further discussed in Note 7 (“Derivatives and Hedging Activities”). Written put options where the counterparty is a broker-dealer or bank are accounted for as derivatives at fair value but are not considered guarantees since these counterparties typically do not hold the underlying instruments. In addition, we are a purchaser and seller of credit derivatives, which are further discussed in Note 7 (“Derivatives and Hedging Activities”). Other Off-Balance Sheet Risk Other off-balance sheet risk stems from financial instruments that do not meet the definition of a guarantee as specified in the applicable accounting guidance, and from other relationships. Additional information pertaining to types of other off-balance sheet risk is included in Note 19 (“Commitments, Contingent Liabilities, and Guarantees”) under the heading “Other Off-Balance Sheet Risk” on page 167 of our 2025 Form 10-K.

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