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Derivative and Hedging Activities | 12 Months Ended
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Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative and Hedging Activities | Derivative and Hedging Activities Derivative financial instruments are recorded at fair value in other assets and other liabilities on the Consolidated Statements of Condition. The Company's policy is to present our derivative assets and derivative liabilities on the Consolidated Statement of Condition on a gross basis, even when provisions allowing for set-off are in place. However, for derivative contracts cleared through certain central clearing parties, variation margin payments are recognized as settlements. We are exposed to non-performance risk by the counterparties to our various derivative financial instruments. A majority of our derivatives are centrally cleared through a Central Counterparty Clearing House or consist of residential mortgage interest rate lock commitments further limiting our exposure to non-performance risk. We believe that the non-performance risk inherent in our remaining derivative contracts is minimal based on credit standards and the collateral provisions of the derivative agreements. Derivatives not designated as hedging instruments. The Company maintained a derivative portfolio of interest rate swaps, foreign currency swaps, futures, swaptions and forward commitments used to manage exposure to changes in interest rates and mortgage servicing right asset values and to meet the needs of customers. The Company also enters into interest rate lock commitments, which are commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. Market risk on interest rate lock commitments and mortgage loans held for sale is managed using corresponding forward sale commitments and U.S. Treasury futures. Changes in the fair value of derivatives not designated as hedging instruments are recognized on the Consolidated Statements of (Loss) Income. Derivatives designated as hedging instruments. The Company has historically designated certain interest rate swaps as cash flow hedges on overnight Secured Overnight Financing Rates-based variable interest payments on federal home loan bank advances. Changes in the fair value of derivatives designated as cash flow hedges are recorded in other comprehensive income on the Consolidated Statements of Condition and reclassified into interest expense in the same period in which the hedged transaction is recognized in earnings. At December 31, 2024, the Company had $48 million (net-of-tax) of unrealized gains related to terminated derivatives that had been in cash flow hedge relationships of forecasted interest payments classified as cash flow hedges recorded in accumulated other comprehensive loss. The Company had $10 million (net-of-tax) of unrealized gains on derivatives classified as cash flow hedges recorded in accumulated other comprehensive loss at December 31, 2023. There were no designated hedging relationships as of December 31, 2024. Fair Value of Hedges of Interest Rate Risk The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in interest rates. The Company previously used interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involved the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives were used to hedge the changes in fair value of certain of its pools of prepayable fixed rate assets. For derivatives previously designated and that qualified as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk were recognized in interest income. The fair value basis adjustments remaining from discontinued hedges are recognized in interest income over the remaining life of the hedged items. As of December 31, 2024, we have no derivatives designated in a fair value hedging relationship. For the year ended December 31, 2024, interest income from loans and leases in the accompanying Consolidated Statements of (Loss) Income was increased $30 million due to the floating rate payments received on the swaps being greater than the fixed rate payments, as well as the accretion of the fair value basis adjustment subsequent to discontinuance of the hedges. As of December 31, 2023, interest income from loans and leases in the accompanying Consolidated Statements of (Loss) Income increased $24 million. The fair value basis adjustment on our hedged real estate loans is included in loans and leases held for investment on our Consolidated Statements of Condition. The carrying amount of our hedged loans was $5.9 billion at December 31, 2024, of which unrealized gains of $18 million were due to the fair value hedge relationship. For December 31, 2023, the carrying amount of our hedged loans was $6.1 billion. The follow ing tables set forth information regarding the Company’s derivative financial instruments:
| December 31, 2024
|  |  | Fair Value |  |
(in millions) | Notional Amount |  | Other Assets |  | Other Liabilities |  | Expiration Dates
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Mortgage-backed securities forwards | $ | 186 |  |  | $ | 7 |  |  | $ | — |  |  | 2025
Rate lock commitments | 476 |  |  | 3 |  |  | — |  |  | 2025
Interest rate swaps and swaptions | 1,541 |  |  | 15 |  |  | — |  |  | 2024-2041
Liabilities |  |  |  |  |  |  |
Mortgage-backed securities forwards | $ | 158 |  |  | $ | — |  |  | $ | 2 |  |  | 2025
Rate lock commitments | 87 |  | — |  | 3 |  |  | 2025
Interest rate swaps and swaptions | 1,782 |  | — |  | 30 |  |  | 2024-2041
| December 31, 2023
|  |  | Fair Value |  |
(in millions) | Notional Amount |  | Other Assets |  | Other Liabilities |  | Expiration Date
Derivatives designated as cash flow hedging instruments: |  |  |  |  |  |  |
Interest rate swaps on FHLB advances | $ | 5,500 |  |  | $ | — |  |  | $ | 2 |  |  | 2025-2028
Derivatives designated as fair value hedging instruments: |  |  |  |  |  |  |
Interest rate swaps on multi-family loans held for investment | $ | 2,000 |  |  | $ | — |  |  | $ | 1 |  |  | 2025-2027
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Mortgage-backed securities forwards | $ | 1,012 |  |  | $ | 11 |  |  | $ | — |  |  | 2024
Rate lock commitments | 1,490 |  | 12 |  | — |  | 2024
Interest rate swaps and swaptions | 5,431 |  | 115 |  | — |  | 2024-2041
Liabilities |  |  |  |  |  |  |
Futures | $ | 2,235 |  |  | $ | — |  |  | $ | 1 |  |  | 2024
Mortgage-backed securities forwards | 1,048 |  |  | — |  |  | 32 |  |  | 2024
Rate lock commitments | 77 |  | — |  | 3 |  | 2024
Interest rate swaps and swaptions | 2,720 |  | — |  | 59 |  | 2024-2054
The tables below present the gross derivative assets and liabilities, and the related cash pledged as collateral at December 31, 2024 and 2023. No amounts were netted in th e Statement of Condition.
| December 31, 2024
|  | Gross Amounts Not Offset in the Statements of Condition
(in millions) |  | Financial Instruments |  | Cash Collateral Pledged (Received)
Derivatives not designated as hedging instruments: |  |  |  |
Assets |  |  |  |
Mortgage-backed securities forwards |  | $ | 7 |  |  | $ | (2) |
Interest rate swaptions |  | 15 |  |  | (3) |
Total derivative assets |  | $ | 22 |  |  | $ | (5) |
Liabilities |  |  |  |
Mortgage-backed securities forwards |  | $ | 2 |  |  | $ | 10 |
Interest rate swaps (1) |  | 30 |  |  | 47 |
Total derivative liabilities |  | $ | 32 |  |  | $ | 57 |
(1)Variation margin pledged to, or received from, a Central Counterparty Clearing House to cover the prior days fair value of open positions is considered settlement of the derivative position for accounting purposes.
| December 31, 2023
|  | Gross Amounts Not Offset in the Statements of Condition
(in millions) |  | Financial Instruments |  | Cash Collateral Pledged (Received)
Derivatives designated hedging instruments: |  |  |  |
Interest rate swaps on FHLB advances |  | $ | 2 |  |  | $ | 75 |
Interest rate swaps on multi-family loans held for investment (1) |  | 1 |  |  | 27 |
Derivatives not designated as hedging instruments: |  |  |  |
Assets |  |  |  |
Mortgage-backed securities forwards |  | $ | 11 |  |  | $ | (1) |
Interest rate swaptions |  | 115 |  |  | (34) |
Total derivative assets |  | $ | 126 |  |  | $ | (35) |
Liabilities |  |  |  |
Futures |  | $ | 1 |  |  | $ | 3 |
Mortgage-backed securities forwards |  | 32 |  |  | 57 |
Interest rate swaps (1) |  | 59 |  |  | 42 |
Total derivative liabilities |  | $ | 92 |  |  | $ | 102 |
(1)Variation margin pledged to, or received from, a Central Counterparty Clearing House to cover the prior days fair value of open positions is considered settlement of the derivative position for accounting purposes. Cash Flow Hedges of Interest Rate Risk Interest rate swaps with notional amounts totaling $5.5 billion as of December 31, 2023, were designated as cash flow hedges of certain FHLB borrowings. There were no designated hedging relationships as of December 31, 2024. The following table presents the effect of the Company’s cash flow derivative instruments on accumulated other comprehensive loss:
| Year Ended December 31,
(in millions) | 2024 |  | 2023 |  | 2022
Amount of gain (loss) recognized in accumulated other comprehensive loss | $ | 143 |  |  | $ | 9 |  |  | $ | 88 |
Amount of reclassified from accumulated other comprehensive loss to interest expense | $ | (93) |  |  | $ | (65) |  |  | $ | (4) |
In 2024, the Company repaid $2.8 billion of FHLB advances that were associated with previously de-designated cash flow hedging relationships. As no future cash flows will occur as a result of the repayments, the Company reclassified the gain of approximately $28.2 million out of accumulated other comprehensive loss into interest expense during the year. Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate borrow ings. We will recognize $30 million of lower interest expense over the next rolling twelve-month period related to the reclassification. Derivatives not Designated as Hedging Instruments The following table presents the net gain (loss) recognized in income on derivatives not designated as hedging instruments, net of the impact of offsetting positions:
|  | Year Ended December 31, |  |
(dollars in millions) |  | 2024 |  | 2023 |  | 2022 |  |
Derivatives not designated as hedging instruments | Location of Gain (Loss) |  |  |  |  |  |  |
Futures | Net return on mortgage servicing rights | $ | 2 |  |  | $ | 1 |  |  | $ | (1) |  |  |
Interest rate swaps and swaptions | Net return on mortgage servicing rights | (38) |  |  | (34) |  |  | (11) |  |  |
Mortgage-backed securities forwards | Net return on mortgage servicing rights | (18) |  |  | (15) |  |  | (4) |  |  |
Rate lock commitments and US Treasury futures | Net gain on loan sales | 23 |  |  | 2 |  |  | 28 |  |  |
Forward commitments | Other noninterest income | — |  |  | — |  |  | (1) |  |  |
Interest rate swaps (1) | Other non-interest income | — |  |  | (1) |  |  | — |  |  |
Total derivative (loss) gain |  | $ | (31) |  |  | $ | (47) |  | $ | (47) |  | $ | 11 |  |  |
(1) Includes customer-initiated commercial interest rate swaps.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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