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Fair Value Measurements | 3 Months Ended
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Mar. 31, 2023
Fair Value Disclosures [Abstract] |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The Corporation utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. In cases where quoted market values in an active market are not available, the Corporation uses present value techniques and other valuation methods to estimate the fair values of its financial instruments. These valuation methods require considerable judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used. Investment securities available-for-sale, derivatives, deferred compensation plans and equity securities with readily determinable fair values (primarily money market mutual funds) are recorded at fair value on a recurring basis. Additionally, from time to time, the Corporation may be required to record other assets and liabilities at fair value on a nonrecurring basis, such as impaired loans, other real estate (primarily foreclosed property), nonmarketable equity securities and certain other assets and liabilities. These nonrecurring fair value adjustments typically involve write-downs of individual assets or application of lower of cost or fair value accounting. Refer to Note 1 to the consolidated financial statements in the Corporation's 2022 Annual Report for further information about the fair value hierarchy, descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value, as well as a description of the methods and significant assumptions used to estimate fair value disclosures for financial instruments not recorded at fair value in their entirety on a recurring basis. Assets and Liabilities Recorded at Fair Value on a Recurring Basis The following tables present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.
(in millions) | Total |  | Level 1 |  | Level 2 |  | Level 3 |
March 31, 2023 |  |  |  |  |  |  |  |
Deferred compensation plan assets | $ | 96 |  |  | $ | 96 |  |  | $ | — |  |  | $ | — |  |
Equity securities | 53 |  |  | 53 |  |  | — |  |  | — |  |
Investment securities available-for-sale: |  |  |  |  |  |  |  |
U.S. Treasury securities | 1,984 |  |  | 1,984 |  |  | — |  |  | — |  |
Residential mortgage-backed securities (a) | 11,531 |  |  | — |  |  | 11,531 |  |  | — |  |
Commercial mortgage-backed securities (a) | 4,780 |  |  | — |  |  | 4,780 |  |  | — |  |
Total investment securities available-for-sale | 18,295 |  |  | 1,984 |  |  | 16,311 |  |  | — |  |
Derivative assets: |  |  |  |  |  |  |  |
Interest rate contracts | 199 |  |  | — |  |  | 199 |  |  | — |  |
Energy contracts | 960 |  |  | — |  |  | 960 |  |  | — |  |
Foreign exchange contracts | 56 |  |  | — |  |  | 56 |  |  | — |  |
Total derivative assets | 1,215 |  |  | — |  |  | 1,215 |  |  | — |  |
Total assets at fair value | $ | 19,659 |  |  | $ | 2,133 |  |  | $ | 17,526 |  |  | $ | — |  |
Derivative liabilities: |  |  |  |  |  |  |  |
Interest rate contracts | $ | 473 |  |  | $ | — |  |  | $ | 473 |  |  | $ | — |  |
Energy contracts | 942 |  |  | — |  |  | 942 |  |  | — |  |
Foreign exchange contracts | 50 |  |  | — |  |  | 50 |  |  | — |  |
Other financial derivative | 12 |  |  | — |  |  | — |  |  | 12 |  |
Total derivative liabilities | 1,477 |  |  | — |  |  | 1,465 |  |  | 12 |  |
Deferred compensation plan liabilities | 96 |  |  | 96 |  |  | — |  |  | — |  |
Total liabilities at fair value | $ | 1,573 |  |  | $ | 96 |  |  | $ | 1,465 |  |  | $ | 12 |  |
December 31, 2022 |  |  |  |  |  |  |  |
Deferred compensation plan assets | $ | 92 |  |  | $ | 92 |  |  | $ | — |  |  | $ | — |  |
Equity securities | 44 |  |  | 44 |  |  | — |  |  | — |  |
Investment securities available-for-sale: |  |  |  |  |  |  |  |
U.S. Treasury securities | 2,664 |  |  | 2,664 |  |  | — |  |  | — |  |
Residential mortgage-backed securities (a) | 11,655 |  |  | — |  |  | 11,655 |  |  | — |  |
Commercial mortgage-backed securities (a) | 4,693 |  |  | — |  |  | 4,693 |  |  | — |  |
Total investment securities available-for-sale | 19,012 |  |  | 2,664 |  |  | 16,348 |  |  | — |  |
Derivative assets: |  |  |  |  |  |  |  |
Interest rate contracts | 206 |  |  | — |  |  | 206 |  |  | — |  |
Energy contracts | 1,020 |  |  | — |  |  | 1,020 |  |  | — |  |
Foreign exchange contracts | 53 |  |  | — |  |  | 53 |  |  | — |  |
Total derivative assets | 1,279 |  |  | — |  |  | 1,279 |  |  | — |  |
Total assets at fair value | $ | 20,427 |  |  | $ | 2,800 |  |  | $ | 17,627 |  |  | $ | — |  |
Derivative liabilities: |  |  |  |  |  |  |  |
Interest rate contracts | $ | 644 |  |  | $ | — |  |  | $ | 644 |  |  | $ | — |  |
Energy contracts | 1,006 |  |  | — |  |  | 1,006 |  |  | — |  |
Foreign exchange contracts | 45 |  |  | — |  |  | 45 |  |  | — |  |
Other financial derivative | 12 |  |  | — |  |  | — |  |  | 12 |  |
Total derivative liabilities | 1,707 |  |  | — |  |  | 1,695 |  |  | 12 |  |
Deferred compensation plan liabilities | 92 |  |  | 92 |  |  | — |  |  | — |  |
Total liabilities at fair value | $ | 1,799 |  |  | $ | 92 |  |  | $ | 1,695 |  |  | $ | 12 |  |
(a)Issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises. There were no transfers of assets or liabilities recorded at fair value on a recurring basis into or out of Level 3 fair value measurements during either of the three-month periods ended March 31, 2023 or 2022. The following table summarizes the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three-month periods ended March 31, 2023 and 2022.
|  |  |  | Net Realized/Unrealized Gains (Losses) (Pretax) Recorded in Earnings (a) |  |  |  |  |  |  |  |  |  |
(in millions) | Balance at Beginning of Period |  |  | Realized |  | Unrealized |  |  |  |  |  | Settlements |  |  |  | Balance at End of Period
Three Months Ended March 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other financial derivative | $ | (12) |  |  |  | $ | — |  |  | $ | — |  |  |  |  |  | $ | — |  |  |  |  | $ | (12) |
Three Months Ended March 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | 26 |  |  |  | $ | — |  |  | $ | (14) |  |  |  |  |  | $ | — |  |  |  |  | $ | 12 |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other financial derivative | (13) |  |  |  | — |  |  | 1 |  |  |  |  |  |  | — |  |  |  |  | (12) |
(a)Realized and unrealized gains and losses due to changes in fair value are recorded in other noninterest income on the Consolidated Statements of Comprehensive Income. Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis The Corporation may be required to record certain assets and liabilities at fair value on a nonrecurring basis. These include assets that are recorded at the lower of cost or fair value, and were recognized at fair value since it was less than cost at the end of the period. The following table presents assets recorded at fair value on a nonrecurring basis at March 31, 2023 and December 31, 2022. No liabilities were recorded at fair value on a nonrecurring basis at March 31, 2023 and December 31, 2022.
(in millions) |  |  |  |  | Level 3
March 31, 2023 |  |  |  |  |
Loans: |  |  |  |  |
Commercial |  |  |  |  | $ | 35 |
Real estate construction |  |  |  |  | 2 |
Commercial mortgage |  |  |  |  | 11 |
Total loans |  |  |  |  | 48 |
Loans held-for-sale |  |  |  |  | 186 |
Other real estate |  |  |  |  | 5 |
Total assets at fair value |  |  |  |  | $ | 239 |
December 31, 2022 |  |  |  |  |
Loans: |  |  |  |  |
Commercial |  |  |  |  | $ | 53 |
Real estate construction |  |  |  |  | 2 |
Commercial mortgage |  |  |  |  | 11 |
Total loans |  |  |  |  | 66 |
Other real estate |  |  |  |  | 9 |
Total assets at fair value |  |  |  |  | $ | 75 |
Level 3 assets recorded at fair value on a nonrecurring basis at March 31, 2023 and December 31, 2022 included loans with a specific allowance and certain bank property held for sale, both measured based on the fair value of collateral. The unobservable inputs were the additional adjustments applied by management to the appraised values to reflect such factors as non-current appraisals and revisions to estimated time to sell. These adjustments are determined based on qualitative judgments made by management on a case-by-case basis and are not observable inputs, although they are used in the determination of fair value. At March 31, 2023, loans held-for-sale classified as Level 3 represented loans held-for-sale in less liquid markets requiring significant management assumptions when determining fair value. Estimated Fair Values of Financial Instruments Not Recorded at Fair Value on a Recurring Basis The Corporation typically holds the majority of its financial instruments until maturity and thus does not expect to realize many of the estimated fair value amounts disclosed. The disclosures also do not include estimated fair value amounts for items that are not defined as financial instruments, but which have significant value. These include such items the future earnings potential of significant customer relationships and the value of trust operations and other fee generating businesses. The Corporation believes the imprecision of an estimate could be significant. The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a recurring basis on the Corporation’s Consolidated Balance Sheets are as follows:
| Carrying Amount |  | Estimated Fair Value
(in millions) |  | Total |  | Level 1 |  | Level 2 |  | Level 3
March 31, 2023 |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 1,563 |  |  | $ | 1,563 |  |  | $ | 1,563 |  |  | $ | — |  |  | $ | — |
Interest-bearing deposits with banks | 9,171 |  |  | 9,171 |  |  | 9,171 |  |  | — |  |  | — |
Other short-term investments | 19 |  |  | 19 |  |  | 19 |  |  | — |  |  | — |
Total loans, net of allowance for loan losses (a) | 54,285 |  |  | 53,828 |  |  | — |  |  | — |  |  | 53,828 |
Customers’ liability on acceptances outstanding | 3 |  |  | 3 |  |  | 3 |  |  | — |  |  | — |
Restricted equity investments | 707 |  |  | 707 |  |  | 707 |  |  | — |  |  | — |
Nonmarketable equity securities (b) | 5 |  |  | 11 |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |
Demand deposits (noninterest-bearing) | 33,173 |  |  | 33,173 |  |  | — |  |  | 33,173 |  |  | — |
Interest-bearing deposits | 27,340 |  |  | 27,340 |  |  | — |  |  | 27,340 |  |  | — |
Customer certificates of deposit | 2,077 |  |  | 2,039 |  |  | — |  |  | 2,039 |  |  | — |
Other time deposits | 2,116 |  |  | 2,131 |  |  | — |  |  | 2,131 |  |  | — |
Total deposits | 64,706 |  |  | 64,683 |  |  | — |  |  | 64,683 |  |  | — |
Short-term borrowings | 11,016 |  |  | 11,016 |  |  | 11,016 |  |  | — |  |  | — |
Acceptances outstanding | 3 |  |  | 3 |  |  | 3 |  |  | — |  |  | — |
Medium- and long-term debt | 7,084 |  |  | 6,826 |  |  | — |  |  | 6,826 |  |  | — |
Credit-related financial instruments | (83) |  |  | (83) |  |  | — |  |  | — |  |  | (83) |
December 31, 2022 |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 1,758 |  |  | $ | 1,758 |  |  | $ | 1,758 |  |  | $ | — |  |  | $ | — |
Interest-bearing deposits with banks | 4,524 |  |  | 4,524 |  |  | 4,524 |  |  | — |  |  | — |
Other short-term investments | 19 |  |  | 19 |  |  | 19 |  |  | — |  |  | — |
Loans held-for-sale | 2 |  |  | 2 |  |  | — |  |  | 2 |  |  | — |
Total loans, net of allowance for loan losses (a) | 52,792 |  |  | 50,964 |  |  | — |  |  | — |  |  | 50,964 |
Customers’ liability on acceptances outstanding | 3 |  |  | 3 |  |  | 3 |  |  | — |  |  | — |
Restricted equity investments | 223 |  |  | 223 |  |  | 223 |  |  | — |  |  | — |
Nonmarketable equity securities (b) | 5 |  |  | 12 |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |
Demand deposits (noninterest-bearing) | 39,945 |  |  | 39,945 |  |  | — |  |  | 39,945 |  |  | — |
Interest-bearing deposits | 29,566 |  |  | 29,566 |  |  | — |  |  | 29,566 |  |  | — |
Customer certificates of deposit | 1,762 |  |  | 1,719 |  |  | — |  |  | 1,719 |  |  | — |
Other time deposits | 124 |  |  | 124 |  |  | — |  |  | 124 |  |  | — |
Total deposits | 71,397 |  |  | 71,354 |  |  | — |  |  | 71,354 |  |  | — |
Short-term borrowings | 3,211 |  |  | 3,211 |  |  | 3,211 |  |  | — |  |  | — |
Acceptances outstanding | 3 |  |  | 3 |  |  | 3 |  |  | — |  |  | — |
Medium- and long-term debt | 3,024 |  |  | 3,071 |  |  | — |  |  | 3,071 |  |  | — |
Credit-related financial instruments | (79) |  |  | (79) |  |  | — |  |  | — |  |  | (79) |
(a)Included $48 million and $66 million of loans recorded at fair value on a nonrecurring basis at March 31, 2023 and December 31, 2022, respectively. (b)Certain investments that are measured at fair value using the net asset value have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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