v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements
5. Fair Value Measurements

In accordance with GAAP, Key measures certain assets and liabilities at fair value. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants in the principal market of the asset or liability. Additional information regarding our accounting policies for determining fair value is provided in Note 1 (“Summary of Significant Accounting Policies”) under the heading “Fair Value Measurements” beginning on page 111 of our 2025 Form 10-K and Note 5 (“Fair Value Measurements”) beginning on page 131 of our 2025 Form 10-K.
Assets and Liabilities Measured at Fair Value on a Recurring Basis

Certain assets and liabilities are measured at fair value on a recurring basis in accordance with GAAP. For more information on the valuation techniques used to measure classes of assets and liabilities reported at fair value on a recurring basis as well as the classification of each in the valuation hierarchy, refer to Note 5 (“Fair Value Measurements”) in our 2025 Form 10-K. The following tables present these assets and liabilities at March 31, 2026, and December 31, 2025.
March 31, 2026December 31, 2025
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Dollars in millions
ASSETS MEASURED ON A RECURRING BASIS
Trading account assets:
U.S. Treasury, agencies and corporations$— $428 $— $428 $— $674 $— $674 
States and political subdivisions— 37 — 37 — 60 — 60 
Other mortgage-backed securities— 261 — 261 — 316 — 316 
Other securities1 52 — 53 — 6 — 6 
Total trading account securities1 778 — 779 — 1,056 — 1,056 
Commercial loans— 4 — 4 — 5 — 5 
Total trading account assets1 782 — 783 — 1,061 — 1,061 
Securities available for sale:
U.S. Treasury, agencies and corporations— 7,844 — 7,844 — 7,886 — 7,886 
Agency residential collateralized mortgage obligations— 8,249 — 8,249 — 8,565 — 8,565 
Agency residential mortgage-backed securities— 18,933 — 18,933 — 19,195 — 19,195 
Agency commercial mortgage-backed securities— 3,892 — 3,892 — 3,950 — 3,950 
Other securities— — — — — — — — 
Total securities available for sale— 38,918 — 38,918 — 39,596 — 39,596 
Other investments:
Principal investments:
Indirect (measured at NAV) (a)
— — — 8 — — — 9 
Total principal investments— — — 8 — — — 9 
Equity investments:
Direct— — 2 2 — — 3 3 
Direct (measured at NAV) (a)
— — — 76 — — — 71 
Indirect (measured at NAV) (a)
— — — 3 — — — 3 
Total equity investments— — 2 81 — — 3 77 
Total other investments— — 2 89 — — 3 86 
Loans, net of unearned income (residential)— — 11 11 — — 11 11 
Loans held for sale (residential)— 100 — 100 — 149 — 149 
Derivative assets:
Interest rate— 117 (2)115 — 135 (3)132 
Foreign exchange58 32 — 90 39 44 — 83 
Commodity— 406 — 406 — 249 — 249 
Other— 51 1 52 — 7 1 8 
Derivative assets58 606 (1)663 39 435 (2)472 
Netting adjustments (b)
— — — (295)— — — (297)
Total derivative assets58 606 (1)368 39 435 (2)175 
Total assets on a recurring basis at fair value$59 $40,406 $12 $40,269 $39 $41,241 $12 $41,078 
LIABILITIES MEASURED ON A RECURRING BASIS
Bank notes and other short-term borrowings:
Short positions$621 $278 $— $899 $412 $409 $— $821 
Derivative liabilities:
Interest rate— 582 — 582 — 577 — 577 
Foreign exchange52 32 — 84 36 44 — 80 
Commodity— 394 — 394 — 237 — 237 
Credit— 1 — 1 — 8 — 8 
Other— 15 1 16 — 25 — 25 
Derivative liabilities52 1,024 1 1,077 36 891 — 927 
Netting adjustments (b)
— — — (485)— — — (274)
Total derivative liabilities52 1,024 1 592 36 891 — 653 
Total liabilities on a recurring basis at fair value$673 $1,302 $1 $1,491 $448 $1,300 $— $1,474 
(a)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.
(b)Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The net basis takes into account the impact of bilateral collateral and master netting agreements that allow us to settle all derivative contracts with a single counterparty on a net basis and to offset the net derivative position with the related cash collateral. Total derivative assets and liabilities include these netting adjustments.

The fair value and related unfunded commitments of our indirect principal investments and direct equity investments measured at net asset value as a practical expedient at March 31, 2026, was $8 million and $52 million, respectively.
Changes in Level 3 Fair Value Measurements

The change in the fair values of our Level 3 financial instruments measured at fair value on a recurring basis for the three months ended March 31, 2026, and March 31, 2025 was not material.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in accordance with GAAP. The adjustments to fair value generally result from the application of accounting guidance that requires assets and liabilities to be recorded at the lower of cost or fair value, or assessed for impairment. For more information on the valuation techniques used to measure classes of assets and liabilities measured at fair value on a nonrecurring basis, refer to Note 5 (“Fair Value Measurements”) in our 2025 Form 10-K. There were no liabilities measured at fair value on a nonrecurring basis at March 31, 2026, and December 31, 2025.

The following table presents our assets measured at fair value on a nonrecurring basis at March 31, 2026, and December 31, 2025:
 March 31, 2026December 31, 2025
Dollars in millionsLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
ASSETS MEASURED ON A NONRECURRING BASIS
Collateral-dependent loans$— $— $116 $116 $— $— $56 $56 
Accrued income and other assets— — 12 12 — — 32 32 
Total assets on a nonrecurring basis at fair value$— $— $128 $128 $— $— $88 $88 

We have other investments in equity securities that do not have readily determinable fair values and do not qualify for the practical expedient to measure the investment using a net asset value per share. We have elected to measure these securities at cost less impairment plus or minus adjustments due to observable orderly transactions. Impairment is recorded when there is evidence that the expected fair value of the investment has declined to below the recorded cost. At each reporting period, we assess if these investments continue to qualify for this measurement alternative. At March 31, 2026, and December 31, 2025, the carrying amount of equity investments under this method was $475 million and $467 million, respectively. We had no adjustments or impairments for the three months ended March 31, 2026.

Quantitative Information about Level 3 Fair Value Measurements

The range and weighted-average of the significant unobservable inputs used to measure the fair value of our material Level 3 recurring and nonrecurring assets at March 31, 2026, and December 31, 2025, along with the valuation techniques used, are shown in the following table:
Level 3 Asset (Liability) 
Valuation 
Technique
Significant
Unobservable Input
Range (Weighted-Average) (a), (b)
Dollars in millions
March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Recurring    
Loans, net of unearned income (residential)$11 $11 Market comparable pricingComparability factor
71.30 - 95.00% (84.58%)
74.30-99.00% (84.99%)
Derivative instruments:
Interest rate(2)(3)Discounted cash flowsProbability of default
.02 - 100% (4.80%)
.02 - 100% (4.40%)
Loss given default
0 - 1 (.449)
0 - 1 (.485)
Insignificant level 3 assets, net of liabilities(c)
2 4 
Nonrecurring   
Collateral-dependent loans116 56 Fair value of collateralCredit and liquidity discount
0 - 72.00% (22.00%)
0 - 100.00% (40.00%)
Accrued income and other assets: (d)
OREO and other Level 3 assets10 8 Appraised valueAppraised valueN/MN/M
(a)The weighted average of significant unobservable inputs is calculated using a weighting relative to fair value.
(b)For significant unobservable inputs with no range, a single figure is reported to denote the single quantitative factor used.
(c)Represents the aggregate amount of Level 3 assets and liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant. The amount includes certain equity investments and certain financial derivative assets and liabilities.
(d)Excludes $2 million pertaining to mortgage servicing assets measured on a nonrecurring basis as of March 31, 2026. Refer to Note 8 (“Mortgage Servicing Assets”) for significant unobservable inputs pertaining to these assets.
Fair Value Disclosures of Financial Instruments

The levels in the fair value hierarchy ascribed to our financial instruments and the related carrying amounts at March 31, 2026, and December 31, 2025, are shown in the following tables. Assets and liabilities are further arranged by measurement category.
 March 31, 2026
 Carrying
Amount		Fair Value
Dollars in millionsLevel 1Level 2Level 3Total
FINANCIAL ASSETS
Cash and short-term investments (a)
$12,912 $12,912 $— $— $12,912 
Held-to-maturity securities (b)
9,116 — 8,742 — 8,742 
Other investments (c)
1,113 — — 1,113 1,113 
Loans, net of unearned income (d)
107,730 — — 104,569 104,569 
Loans held for sale (c)
776 — — 776 776 
FINANCIAL LIABILITIES
Time deposits (e)
$11,155 $— $11,198 $— $11,198 
Short-term borrowings (a)
5,284 — 5,284 — 5,284 
Long-term debt (e)
10,877 10,025 963 — 10,988 
Deposits with no stated maturity (a)
136,660 — 136,660 — 136,660 
December 31, 2025
 Carrying
Amount		Fair Value
Dollars in millionsLevel 1Level 2Level 3Total
FINANCIAL ASSETS
Cash and short-term investments (a)
$11,450 $11,450 $— $— $11,450 
Held-to-maturity securities (b)
8,622 — 8,313 — 8,313 
Other investments (c)
863 — — 863 863 
Loans, net of unearned income (d)
105,103 — — 101,946 101,946 
Loans held for sale (c)
928 — — 928 928 
FINANCIAL LIABILITIES
Time deposits (e)
$12,680 $— $12,731 $— $12,731 
Short-term borrowings (a)
263 — 263 — 263 
Long-term debt (e)
9,917 9,318 $729 — 10,047 
Deposits with no stated maturity (a)
136,033 — 136,033 — 136,033 
Valuation Methods and Assumptions
(a)Fair value equals or approximates carrying amount. The fair value of deposits with no stated maturity does not take into consideration the value ascribed to core deposit intangibles.
(b)Fair values of held-to-maturity securities are determined by using models that are based on security-specific details, as well as relevant industry and economic factors. The most significant of these inputs are quoted market prices, interest rate spreads on relevant benchmark securities, and certain prepayment assumptions. We review the valuations derived from the models to ensure that they are reasonable and consistent with the values placed on similar securities traded in the secondary markets.
(c)Information pertaining to our methodology for measuring the fair values of these assets and liabilities is included in the sections entitled “Qualitative Disclosures of Valuation Techniques” and “Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis” within our 2025 Form 10-K Note 5 (“Fair Value Measurements”).
(d)The fair value of loans is based on the present value of the expected cash flows. The projected cash flows are based on the contractual terms of the loans, adjusted for prepayments and use of a discount rate based on the relative risk of the cash flows, taking into account the loan type, maturity of the loan, liquidity risk, servicing costs, and a required return on debt and capital. In addition, an incremental liquidity discount is applied to certain loans, using historical sales of loans during periods of similar economic conditions as a benchmark. The fair value of loans includes lease financing receivables at their aggregate carrying amount, which is equivalent to their fair value.
(e)Fair values of time deposits and long-term debt are based on discounted cash flows utilizing relevant market inputs.

Discontinued assets — education lending business. Our discontinued assets include government-guaranteed and private education loans originated through our education lending business that was discontinued in September 2009. This portfolio consists of loans recorded at carrying value with appropriate valuation reserves. All of these loans were excluded from the table above as follows:
 
•Loans at carrying value, net of allowance, of $194 million ($146 million at fair value) at March 31, 2026, and $205 million ($155 million at fair value) at December 31, 2025.

These assets are classified as Level 3 because we rely on unobservable inputs when determining fair value since observable market data is not available.