v3.26.1
Fair Value
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Fair Value
Fair Value Measurements
For purposes of this disclosure, fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date under current market conditions. Fair value is based on the assumptions we believe market participants would use when pricing an asset or liability. Additionally, entities are required to consider all aspects of nonperformance risk, including the entity’s own credit standing, when measuring the fair value of a liability.
U.S. GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels.
Level 1    Inputs are quoted prices in active markets for identical assets or liabilities at the measurement date. Additionally, the entity must have the ability to access the active market, and the quoted prices cannot be adjusted by the entity.
Level 2    Inputs are other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices in active markets for similar assets or liabilities; quoted prices in inactive markets for identical or similar assets or liabilities; or inputs that are observable or can be corroborated by observable market data by correlation or other means for substantially the full term of the assets or liabilities.
Level 3    Unobservable inputs are supported by little or no market activity. The unobservable inputs represent management’s best assumptions of how market participants would price the assets or liabilities. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation.
Judgment is used in estimating inputs to our internal valuation models used to estimate our Level 3 fair value measurements. Level 3 inputs such as interest rate movements, prepayment speeds, credit losses, and discount rates are inherently difficult to estimate. Changes to these inputs can have a significant effect on fair value measurements and amounts that could be realized.
The following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models, and significant assumptions utilized.
•Equity securities — We hold various marketable equity securities measured at fair value with changes in fair value recognized in net income. Measurements based on observable market prices are classified as Level 1.
•Available-for-sale securities — We carry our available-for-sale securities at fair value based on external pricing sources. We classify our securities as Level 1 when fair value is determined using quoted prices available for the same instruments trading in active markets. We classify our securities as Level 2 when fair value is determined using prices for similar instruments trading in active markets. We perform pricing validation procedures for our available-for-sale securities.
•Derivative instruments — We enter into a variety of derivative financial instruments as part of our risk-management strategies. Certain of these derivatives are exchange traded, such as equity options. To determine the fair value of these instruments, we utilize the quoted market prices for those particular derivative contracts; therefore, we classified these contracts as Level 1.
We also execute OTC and centrally cleared derivative contracts, such as interest rate swaps, foreign-currency denominated forward contracts, interest rate options, and agency to-be-announced securities. We utilize third-party-developed valuation models that are widely accepted in the market to value these derivative contracts. The specific terms of the contract and market observable inputs (such as interest rate forward curves, interpolated volatility assumptions, or equity pricing) are used in the model. We classified these derivative contracts as Level 2 because all significant inputs into these models were market observable.
We also entered into interest rate lock commitments and forward commitments that were executed as part of our mortgage operations, certain of which met the accounting definition of a derivative and therefore were recorded as derivatives on our Condensed Consolidated Balance Sheet. Interest rate lock commitments were valued with unobservable inputs, so they are classified as Level 3. Certain forward commitments are Level 2 and others are Level 3 depending on the valuation model inputs.
We purchased automotive finance receivables and loans from third parties as part of forward flow arrangements and, from time-to-time, executed opportunistic ad-hoc bulk purchases. As part of those agreements, we were required to pay the counterparty at agreed upon measurement dates and determinable amounts if actual credit performance of the acquired loans on the measurement date was better than what was estimated at the time of acquisition. Because these contracts met the accounting definition of a derivative, we recognized a liability at fair value for these deferred purchase price payments. The fair value of these liabilities was determined using a discounted cash flow method. To estimate cash flows, we utilized various significant assumptions, including market observable inputs (for example, forward interest rates) and internally developed inputs (for example, prepayment speeds, delinquency levels, and expected credit losses). These liabilities were valued using internal loss models with unobservable inputs, and were classified as Level 3.
We enter into arrangements with certain counterparties through which we issue credit-linked notes covering a specified pool of loans. These notes contain an embedded derivative, which provides us credit protection against the risk of loss when a specified credit event occurs on the reference pool. The embedded derivatives are valued using both market observable inputs and unobservable inputs, as such they are classified as Level 3.
We are required to consider all aspects of nonperformance risk, including our own credit standing, when measuring fair value of derivative assets and liabilities. We reduce credit risk on the majority of our derivatives by entering into legally enforceable agreements that enable the posting and receiving of collateral associated with the fair value of our derivative positions on an ongoing basis. In the event that we do not enter into legally enforceable agreements that enable the posting and receiving of collateral, we will consider our credit risk in the valuation of derivative liabilities through a DVA and the credit risk of our counterparties in the valuation of derivative assets through a CVA, if warranted. When measuring these valuation adjustments, we generally use credit default swap spreads.
Recurring Fair Value
The following tables display the assets and liabilities measured at fair value on a recurring basis including financial instruments elected for the fair value option. We often economically hedge the fair value change of our assets or liabilities with derivatives. The tables below display the hedges separately from the hedged items; therefore, they do not directly display the impact of our risk-management activities.
Recurring fair value measurements
March 31, 2026 ($ in millions)
Level 1Level 2Level 3Total
Assets
Investment securities
Equity securities (a) (b)$804 $— $— $804 
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies
2,397 — — 2,397 
U.S. States and political subdivisions
— 483 34 517 
Foreign government32 167 — 199 
Agency mortgage-backed residential
— 12,695 — 12,695 
Mortgage-backed residential
— 193 — 193 
Agency mortgage-backed commercial— 5,107 — 5,107 
Asset-backed— 2 — 2 
Corporate debt
— 1,928 — 1,928 
Total available-for-sale securities2,429 20,575 34 23,038 
Derivative contracts in a receivable position
Interest rate— 1 — 1 
Foreign exchange— 2 — 2 
Total derivative contracts in a receivable position— 3 — 3 
Total assets$3,233 $20,578 $34 $23,845 
Liabilities
Accrued expenses and other liabilities
Derivative contracts in a payable position
Interest rate$— $1 $— $1 
Credit — — 1 1 
Equity1 — — 1 
Total derivative contracts in a payable position
1 1 1 3 
Total liabilities$1 $1 $1 $3 
(a)Our direct investment in any one industry did not exceed 15%. When performing the concentration calculation, mutual funds and ETFs are not allocated to any one industry.
(b)Excludes $59 million of equity securities that are measured at fair value using the net asset value practical expedient and therefore are not classified in the fair value hierarchy.
Recurring fair value measurements
December 31, 2025 ($ in millions)
Level 1Level 2Level 3Total
Assets
Investment securities
Equity securities (a) (b)$819 $— $— $819 
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies
2,279 — — 2,279 
U.S. States and political subdivisions
— 517 34 551 
Foreign government31 157 — 188 
Agency mortgage-backed residential
— 12,901 — 12,901 
Mortgage-backed residential
— 198 — 198 
Agency mortgage-backed commercial— 4,932 — 4,932 
Asset-backed— 12 — 12 
Corporate debt
— 1,912 — 1,912 
Total available-for-sale securities2,310 20,629 34 22,973 
Total assets$3,129 $20,629 $34 $23,792 
Liabilities
Accrued expenses and other liabilities
Derivative contracts in a payable position
Foreign exchange$— $4 $— $4 
Total derivative contracts in a payable position
— 4 — 4 
Total liabilities$— $4 $— $4 
(a)Our direct investment in any one industry did not exceed 11%. When performing the concentration calculation, mutual funds and ETFs are not allocated to any one industry.
(b)Excludes $57 million of equity securities that are measured at fair value using the net asset value practical expedient and therefore are not classified in the fair value hierarchy.
The following tables present the reconciliation for all Level 3 assets and liabilities measured at fair value on a recurring basis. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The Level 3 items presented below may be hedged by derivatives and other financial instruments that are classified as Level 1 or Level 2. Thus, the following tables do not fully reflect the impact of our risk-management activities.
Available-for-sale securitiesLoans
held-for-sale (a)
($ in millions)2026202520262025
Assets
Fair value at January 1,$34 $35 $— $5 
Net realized/unrealized gains
Included in earnings— — — — 
Included in OCI— — — — 
Purchases and originations— — — 8 
Sales— — — (10)
Issuances— — — — 
Settlements— — — — 
Transfers into Level 3— — — — 
Transfers out of Level 3— — — — 
Fair value at March 31,
$34 $35 $— $3 
Net unrealized gains still held at March 31,
Included in earnings$— $— $— $— 
Included in OCI— — — — 
(a)Consumer mortgage loans carried at fair value due to fair value option elections.
Derivative liabilities, net of derivative assets (a)
($ in millions)20262025
Liabilities
Fair value at January 1,$— $3 
Net realized/unrealized losses (gains)
Included in earnings1 (1)
Included in OCI— — 
Purchases and originations— — 
Sales— — 
Issuances— — 
Settlements— — 
Transfers into Level 3— — 
Transfers out of Level 3 (b)— 2 
Fair value at March 31,
$1 $4 
Net unrealized losses still held at March 31,
Included in earnings$1 $— 
Included in OCI— — 
(a)Net realized/unrealized losses (gains) are reported as (loss) gain on mortgage and automotive loans, net, and other income, net of losses, in our Condensed Consolidated Statement of Comprehensive Income.
(b)Represents the settlement value of interest rate derivative assets that are transferred to loans held-for-sale within Level 2 of the fair value hierarchy during the three months ended March 31, 2025. These transfers are deemed to have occurred at the end of the reporting period.
Nonrecurring Fair Value
We may be required to measure certain assets and liabilities at fair value from time to time. These periodic fair value measures typically result from the application of lower-of-cost or fair value accounting or certain impairment measures. These items would constitute nonrecurring fair value measures.
The following tables display assets and liabilities measured at fair value on a nonrecurring basis and still held at March 31, 2026, and December 31, 2025, respectively. The amounts are generally as of the end of each period presented, which approximate the fair value measurements that occurred during each period.
Nonrecurring fair value measurements
Lower-of-cost-or-fair-value reserve, valuation reserve, or cumulative adjustments
Total gain (loss) included in earnings
March 31, 2026 ($ in millions)
Level 1
Level 2
Level 3
Total
Assets
Loans held-for-sale, net$— $— $336 $336 $(15)n/m(a)
Commercial finance receivables and loans, net (b)
Other
— — 12 12 (96)n/m(a)
Total commercial finance receivables and loans, net
— — 12 12 (96)n/m(a)
Other assets
Nonmarketable equity investments— — 2 2 (1)n/m(a)
Repossessed and foreclosed assets (c)— — 8 8 (1)n/m(a)
Total assets
$— $— $358 $358 $(113)n/m
n/m = not meaningful
(a)We consider the applicable valuation reserve, allowance for loan losses, or cumulative adjustments to be the most relevant indicator of the impact on earnings caused by the fair value measurement. Accordingly, the table above excludes total gains and losses included in earnings for these items. The carrying values are inclusive of the respective valuation reserve, loan loss allowance, or cumulative adjustment.
(b)Represents collateral-dependent loans held for investment for which a nonrecurring measurement was made. The related allowance for loan losses represents the cumulative fair value adjustments for those specific receivables.
(c)The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.
Nonrecurring fair value measurementsLower-of-cost-or-fair-value reserve, valuation reserve, or cumulative adjustmentsTotal gain (loss) included in earnings
December 31, 2025 ($ in millions)
Level 1Level 2Level 3Total
Assets
Loans held-for-sale, net$— $— $545 $545 $(32)n/m(a)
Commercial finance receivables and loans, net (b)
Other— — 27 27 (97)n/m(a)
Total commercial finance receivables and loans, net— — 27 27 (97)n/m(a)
Other assets
Nonmarketable equity investments— 9 1 10 4 n/m(a)
Repossessed and foreclosed assets (c)— — 7 7 (1)n/m(a)
Total assets$— $9 $580 $589 $(126)n/m
n/m = not meaningful
(a)We consider the applicable valuation reserve, allowance for loan losses, or cumulative adjustments to be the most relevant indicator of the impact on earnings caused by the fair value measurement. Accordingly, the table above excludes total gains and losses included in earnings for these items. The carrying values are inclusive of the respective valuation reserve, loan loss allowance, or cumulative adjustment.
(b)Represents collateral-dependent loans held for investment for which a nonrecurring measurement was made. The related allowance for loan losses represents the cumulative fair value adjustments for those specific receivables.
(c)The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.
Fair Value Option for Financial Assets
We elected the fair value option for an insignificant amount of conforming mortgage loans held-for-sale and certain non-conforming jumbo mortgage loans held-for-sale to mitigate earnings volatility by better matching the accounting for the assets with the related derivatives. Our intent in electing fair value measurement was to mitigate a divergence between accounting gains or losses and economic exposure for certain assets and liabilities.
Fair Value of Financial Instruments
The following table presents the carrying and estimated fair value of financial instruments, except for those recorded at fair value on a recurring basis presented in the previous section of this note titled Recurring Fair Value. When possible, we use quoted market prices to determine fair value. Where quoted market prices are not available, the fair value is internally derived based on appropriate valuation methodologies with respect to the amount and timing of future cash flows and estimated discount rates. However, considerable judgment is required in interpreting current market data to develop the market assumptions and inputs necessary to estimate fair value. As such, the actual amount received to sell an asset or the amount paid to settle a liability could differ from our estimates. Fair value information presented herein was based on information available at March 31, 2026, and December 31, 2025.
Estimated fair value
($ in millions)
Carrying value
Level 1
Level 2
Level 3
Total
March 31, 2026
Financial assets
Held-to-maturity securities
$4,337 $— $4,387 $— $4,387 
Loans held-for-sale, net
337 — — 338 338 
Finance receivables and loans, net
136,350 — — 139,266 139,266 
FHLB/FRB stock (a)
789 — 789 — 789 
Financial liabilities
Deposit liabilities
$40,215 $— $— $40,362 $40,362 
Short-term borrowings
4,126 — — 4,123 4,123 
Long-term debt
17,349 — 12,891 5,469 18,360 
December 31, 2025
Financial assets
Held-to-maturity securities$4,371 $— $4,451 $— $4,451 
Loans held-for-sale, net549 — — 560 560 
Finance receivables and loans, net133,964 — — 137,579 137,579 
FHLB/FRB stock (a)811 — 811 — 811 
Financial liabilities
Deposit liabilities$42,310 $— $— $42,523 $42,523 
Short-term borrowings4,695 — — 4,706 4,706 
Long-term debt17,070 — 12,642 5,707 18,349 
(a)Included in other assets on our Condensed Consolidated Balance Sheet.
In addition to the financial instruments presented in the above table, we have various financial instruments for which the carrying value approximates the fair value due to their short-term nature and limited credit risk. These instruments include cash and cash equivalents, restricted cash, cash collateral, accrued interest receivable, accrued interest payable, trade receivables and payables, on-demand deposit liabilities, and other short-term receivables and payables. Included in cash and cash equivalents are highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value due to interest rate, quoted price, or penalty on withdrawal. Classified as Level 1 under the fair value hierarchy, cash and cash equivalents generally expose us to limited credit risk and are so near maturity that they present insignificant risk of changes in value because of changes in interest rates.