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Commitments, Contingent Liabilities and Guarantees | 9 Months Ended
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Sep. 30, 2025
Commitments and Contingencies Disclosure [Abstract] |
Commitments, Contingent Liabilities and Guarantees | Commitments, Contingent Liabilities and Guarantees The Bancorp, in the normal course of business, enters into financial instruments and various agreements to meet the financing needs of its customers. The Bancorp also enters into certain transactions and agreements to manage its interest rate and prepayment risks, provide funding, equipment and locations for its operations and invest in its communities. These instruments and agreements involve, to varying degrees, elements of credit risk, counterparty risk and market risk in excess of the amounts recognized in the Condensed Consolidated Balance Sheets. The creditworthiness of counterparties for all instruments and agreements is evaluated on a case-by-case basis in accordance with the Bancorp’s credit policies. The Bancorp’s significant commitments, contingent liabilities and guarantees in excess of the amounts recognized in the Condensed Consolidated Balance Sheets are discussed in the following sections. Commitments The Bancorp has certain commitments to make future payments under contracts. The following table reflects a summary of significant commitments as of:
($ in millions) | September 30, 2025 | December 31, 2024
Commitments to extend credit | $ | 82,736 |  | 80,680 |
Letters of credit | 2,102 |  | 1,952 |
Forward contracts related to residential mortgage loans measured at fair value | 1,412 |  | 881 |
Capital commitments for private equity investments | 258 |  | 219 |
Capital expenditures | 165 |  | 80 |
Purchase obligations | 6 |  | 27 |
Commitments to extend credit Commitments to extend credit are agreements to lend, typically having fixed expiration dates or other termination clauses that may require payment of a fee. Since many of the commitments to extend credit may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements. The Bancorp is exposed to credit risk in the event of nonperformance by the counterparty for the amount of the contract. Fixed-rate commitments are also subject to market risk resulting from fluctuations in interest rates and the Bancorp’s exposure is limited to the replacement value of those commitments. As of September 30, 2025 and December 31, 2024, the Bancorp had a reserve for unfunded commitments, including letters of credit, totaling $151 million and $134 million, respectively, included in other liabilities in the Condensed Consolidated Balance Sheets. The Bancorp monitors the credit risk associated with commitments to extend credit using the same standard regulatory risk rating systems utilized for its loan and lease portfolio. Risk ratings of outstanding commitments to extend credit under this risk rating system are summarized in the following table as of:
($ in millions) | September 30, 2025 | December 31, 2024
Pass | $ | 81,006 |  | 78,734 |
Special mention | 701 |  | 850 |
Substandard | 987 |  | 1,095 |
Doubtful | 42 |  | 1 |
Total commitments to extend credit | $ | 82,736 |  | 80,680 |
Letters of credit Standby and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party and expire as summarized in the following table as of September 30, 2025:
($ in millions) |
Less than 1 year(a) | $ | 1,173 |
1 - 5 years(a) | 928 |
Over 5 years | 1 |
Total letters of credit | $ | 2,102 |
(a)Includes $12 issued on behalf of commercial customers to facilitate trade payments in U.S. dollars and foreign currencies which expire in less than 1 year and $2 that expire between 1 - 5 years. Standby letters of credit accounted for approximately 99% of total letters of credit at both September 30, 2025 and December 31, 2024 and are considered guarantees in accordance with U.S. GAAP. Approximately 78% and 76% of the total standby letters of credit were collateralized as of September 30, 2025 and December 31, 2024, respectively. In the event of nonperformance by the customers, the Bancorp has rights to the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The reserve related to these standby letters of credit, which was included in the total reserve for unfunded commitments, was $8 million and $12 million at September 30, 2025 and December 31, 2024, respectively. The Bancorp monitors the credit risk associated with letters of credit using the same standard regulatory risk rating systems utilized for its loan and lease portfolio. Risk ratings of outstanding letters of credit under this risk rating system are summarized in the following table as of:
($ in millions) | September 30, 2025 | December 31, 2024
Pass | $ | 1,956 |  | 1,779 |
Special mention | 36 |  | 60 |
Substandard | 106 |  | 110 |
Doubtful | 4 |  | 3 |
Total letters of credit | $ | 2,102 |  | 1,952 |
Forward contracts related to residential mortgage loans measured at fair value The Bancorp enters into forward contracts and mortgage options to economically hedge the change in fair value of certain residential mortgage loans held for sale, and certain residential mortgage portfolio loans measured at fair value, due to changes in interest rates. The outstanding notional amounts of these forward contracts are included in the summary of significant commitments table for all periods presented. Other commitments The Bancorp has entered into a limited number of agreements for work related to banking center construction and to purchase goods or services. Contingent Liabilities Legal claims There are legal claims pending against the Bancorp and its subsidiaries that have arisen in the normal course of business. Refer to Note 14 for additional information regarding these proceedings. Guarantees The Bancorp has performance obligations upon the occurrence of certain events under financial guarantees provided in certain contractual arrangements as discussed in the following sections. Residential mortgage loans sold with representation and warranty provisions Conforming residential mortgage loans sold to unrelated third parties are generally sold with representation and warranty provisions. A contractual liability arises only in the event of a breach of these representations and warranties and, in general, only when a loss results from the breach. The Bancorp may be required to repurchase any previously sold loan, or indemnify or make whole the investor or insurer for which the representation or warranty of the Bancorp proves to be inaccurate, incomplete or misleading. For more information on how the Bancorp establishes the residential mortgage repurchase reserve, refer to Note 1 of the Notes to Consolidated Financial Statements included in the Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2024. As of both September 30, 2025 and December 31, 2024, the Bancorp maintained reserves related to loans sold with representation and warranty provisions totaling $5 million included in other liabilities in the Condensed Consolidated Balance Sheets. The Bancorp uses the best information available when estimating its mortgage representation and warranty reserve; however, the estimation process is inherently uncertain and imprecise and, accordingly, losses in excess of the amounts reserved as of September 30, 2025 are reasonably possible. The Bancorp currently estimates that it is reasonably possible that it could incur losses related to mortgage representation and warranty provisions in an amount up to approximately $8 million in excess of amounts reserved. This estimate was derived by modifying the key assumptions to reflect management’s judgment regarding reasonably possible adverse changes to those assumptions. The actual repurchase losses could vary significantly from the recorded mortgage representation and warranty reserve or this estimate of reasonably possible losses, depending on the outcome of various factors, including those previously discussed. During both the three months ended September 30, 2025 and 2024, the Bancorp paid an immaterial amount in the form of make-whole payments and repurchased $3 million and $2 million, respectively, in outstanding principal of loans to satisfy investor demands. During both the nine months ended September 30, 2025 and 2024, the Bancorp paid an immaterial amount in the form of make-whole payments and repurchased $13 million and $17 million, respectively, in outstanding principal of loans to satisfy investor demands. Total repurchase demand requests during the three months ended September 30, 2025 and 2024 were $10 million and $8 million, respectively. Total repurchase demand requests during the nine months ended September 30, 2025 and 2024 were $27 million and $36 million, respectively. Total outstanding repurchase demand inventory was $9 million and $7 million at September 30, 2025 and December 31, 2024, respectively. Margin accounts FTS, an indirect wholly-owned subsidiary of the Bancorp, guarantees the collection of all margin account balances held by its brokerage clearing agent for the benefit of its customers. FTS is responsible for payment to its brokerage clearing agent for any loss, liability, damage, cost or expense incurred as a result of customers failing to comply with margin or margin maintenance calls on all margin accounts. The margin account balances held by the brokerage clearing agent were $22 million and $16 million at September 30, 2025 and December 31, 2024, respectively. In the event of customer default, FTS has rights to the underlying collateral provided. Given the existence of the underlying collateral provided and negligible historical credit losses, the Bancorp does not maintain a loss reserve related to the margin accounts. Long-term borrowing obligations The Bancorp had certain fully and unconditionally guaranteed long-term borrowing obligations issued by wholly-owned issuing trust entities of $62 million at both September 30, 2025 and December 31, 2024. Visa litigation The Bancorp, as a member bank of Visa prior to Visa’s reorganization and IPO (the “IPO”) of its Class A common shares (the “Class A Shares”) in 2008, had certain indemnification obligations pursuant to Visa’s certificate of incorporation and bylaws and in accordance with its membership agreements. In accordance with Visa’s bylaws prior to the IPO, the Bancorp could have been required to indemnify Visa for the Bancorp’s proportional share of losses based on the pre-IPO membership interests. As part of its reorganization and IPO, the Bancorp’s indemnification obligation was modified to include only certain known or anticipated litigation (the “Covered Litigation”) as of the date of the restructuring. This modification triggered a requirement for the Bancorp to recognize a liability equal to the fair value of the indemnification liability. In conjunction with the IPO, the Bancorp received 10.1 million of Visa’s Class B common shares (the “Class B Shares”) based on the Bancorp’s membership percentage in Visa prior to the IPO. The Class B Shares were not transferable (other than to another member bank) until the later of the third anniversary of the IPO closing or the date on which the Covered Litigation has been resolved; therefore, the Bancorp’s Class B Shares were classified in other assets and accounted for at their carryover basis of $0. Visa deposited $3 billion of the proceeds from the IPO into a litigation escrow account, established for the purpose of funding judgments in, or settlements of, the Covered Litigation. Since then, when Visa’s litigation committee determined that the escrow account was insufficient, Visa issued additional Class A Shares and deposited the proceeds from the sale of the Class A Shares into the litigation escrow account. When Visa funded the litigation escrow account, the Class B Shares were subjected to dilution through an adjustment in the conversion rate of Class B Shares into Class A Shares. On January 23, 2024, Visa announced shareholder approval of changes to its articles of incorporation that would release certain transfer restrictions on portions of Class B Shares. The program allows holders of Class B Shares to liquidate some of their shares subject to assurances that other Visa stockholders will retain existing protection from exposure to the Covered Litigation. In 2009, the Bancorp completed the sale of Visa, Inc. Class B Shares and entered into a total return swap in which the Bancorp will make or receive payments based on subsequent changes in the conversion rate of the Class B Shares into Class A Shares. The swap terminates on the later of the third anniversary of Visa’s IPO or the date on which the Covered Litigation is settled. Refer to Note 18 for additional information on the valuation of the swap. The counterparty to the swap as a result of its ownership of the Class B Shares will be impacted by dilutive adjustments to the conversion rate of the Class B Shares into Class A Shares caused by any Covered Litigation losses in excess of the litigation escrow account. If actual judgments in, or settlements of, the Covered Litigation significantly exceed current expectations, then additional funding by Visa of the litigation escrow account and the resulting dilution of the Class B Shares could result in a scenario where the Bancorp’s ultimate exposure associated with the Covered Litigation (the “Visa Litigation Exposure”) exceeds the value of the Class B Shares owned by the swap counterparty (the “Class B Value”). In the event the Bancorp concludes that it is probable that the Visa Litigation Exposure exceeds the Class B Value, the Bancorp would record a litigation reserve liability and a corresponding amount of other noninterest expense for the amount of the excess. Any such litigation reserve liability would be separate and distinct from the fair value derivative liability associated with the total return swap. As of the date of the Bancorp’s sale of the Visa Class B Shares and through September 30, 2025, the Bancorp has concluded that it is not probable that the Visa Litigation Exposure will exceed the Class B Value. Based on this determination, upon the sale of Class B Shares, the Bancorp reversed its net Visa litigation reserve liability and recognized a free-standing derivative liability associated with the total return swap. The fair value of the swap liability was $150 million at September 30, 2025 and $170 million at December 31, 2024, respectively. Refer to Note 9 and Note 18 for further information. After the Bancorp’s sale of the Class B Shares, Visa has funded additional amounts into the litigation escrow account which have resulted in further dilutive adjustments to the conversion of Class B Shares into Class A Shares, and along with other terms of the total return swap, required the Bancorp to make cash payments in varying amounts to the swap counterparty as follows:
Period ($ in millions) | Visa Funding Amount | Bancorp Cash Payment Amount
Q2 2010 | $ | 500 |  | 20 |
Q4 2010 | 800 |  | 35 |
Q2 2011 | 400 |  | 19 |
Q1 2012 | 1,565 |  | 75 |
Q3 2012 | 150 |  | 6 |
Q3 2014 | 450 |  | 18 |
Q2 2018 | 600 |  | 26 |
Q3 2019 | 300 |  | 12 |
Q4 2021 | 250 |  | 11 |
Q2 2022 | 600 |  | 25 |
Q4 2022 | 350 |  | 15 |
Q2 2023 | 500 |  | 21 |
Q3 2023 | 150 |  | 6 |
Q3 2024 | 1,500 |  | 65 |
Q1 2025 | 375 |  | 15 |
Q3 2025 | 500 |  | (a)
(a)The Bancorp made a cash payment of $21 million to the swap counterparty on October 6, 2025 as a result of the Visa escrow funding in the third quarter of 2025.

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