v3.26.1
Derivative financial instruments
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative financial instruments


10. Derivative financial instruments
As part of managing interest rate risk, the Company enters into interest rate swap agreements to modify the repricing characteristics of certain portions of the Company’s portfolios of earning assets and interest-bearing liabilities. The Company designates interest rate swap agreements utilized in the management of interest rate risk as either fair value hedges or cash flow hedges. Interest rate swap agreements are generally entered into with counterparties that meet established credit standards and most contain master netting, collateral and/or settlement provisions protecting the at-risk party.
Information about interest rate swap agreements entered into for interest rate risk management purposes summarized by type of financial instrument those agreements were intended to hedge follows.
Notional
Amount		Weighted-Average
Maturity
(In years)
Weighted-
Average Rate

Fair Value
Gain (Loss) (a)
(Dollars in millions)
Fixed
Variable
March 31, 2026 
Fair value hedges: 
Fixed rate long-term borrowings (b)$6,100 4.63.56%3.81%$7 
Cash flow hedges:
Interest payments on variable rate commercial real estate and commercial
   and industrial loans (b) (c)		25,525 1.13.633.665 
Total$31,625 1.8$12 
December 31, 2025
Fair value hedges:
Fixed rate long-term borrowings (b) (d)$6,100 4.83.56%4.02%$(9)
Cash flow hedges:
Interest payments on variable rate commercial real estate and commercial
   and industrial loans (b) (e)		24,900 1.33.633.81(6)
Total$31,000 2.0$(15)
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(a)Certain clearinghouse exchanges consider payments by counterparties for variation margin on derivative instruments to be settlements of those positions. The impact of such payments for interest rate swap agreements designated as fair value hedges was a net settlement of losses of $56 million and $6 million at March 31, 2026 and December 31, 2025, respectively. The impact of such payments on interest rate swap agreements designated as cash flow hedges was a net settlement of gains of $4 million and $96 million at March 31, 2026 and December 31, 2025, respectively.
(b)Under the terms of these agreements, the Company receives settlement amounts at a fixed rate and pays at a variable rate.
(c)Includes notional amount and terms of $10.5 billion of forward-starting interest rate swap agreements that become effective in 2026 and 2027.
(d)Includes notional amount and terms of $1.8 billion of forward-starting interest rate swap agreements that became effective in 2026.
(e)Includes notional amount and terms of $9.7 billion of forward-starting interest rate swap agreements that become effective in 2026 and 2027.
The Company utilizes commitments to sell residential and commercial real estate loans to hedge the exposure to changes in fair value of real estate loans held for sale. Such commitments have generally been designated as fair value hedges. The Company also utilizes commitments to sell real estate loans to offset the exposure to changes in the fair value of certain commitments to originate real estate loans for sale. Changes in unrealized gains and losses as a result of such activities are included in Mortgage banking revenues in the Company's Consolidated Statement of Income and, in general, are realized in subsequent periods as the related loans are sold and commitments satisfied.
As described in note 1, the Company elected to prospectively measure its residential mortgage loan servicing right assets at fair value. In preparation for this election, on December 31, 2025 the Company began economically hedging the risk of fair value changes in those residential mortgage loan servicing right assets through the use of various interest rate derivative contracts with a total notional value of $1.7 billion and $1.6 billion at March 31, 2026 and December 31, 2025, respectively. Changes in the fair value of such derivative contracts in 2026 are included in Mortgage banking revenues in the Company's Consolidated Statement of Income.
Other derivative financial instruments not designated as hedging instruments included interest rate contracts, foreign exchange and other option and futures contracts. Interest rate contracts not designated as hedging instruments had notional values of $44.0 billion and $43.0 billion at March 31, 2026 and December 31, 2025, respectively. The notional amounts of foreign currency and other option and futures contracts not designated as hedging instruments aggregated $2.3 billion and $2.4 billion at March 31, 2026 and December 31, 2025, respectively.
10. Derivative financial instruments
Information about the fair values of derivative instruments in the Company’s Consolidated Balance Sheet and Consolidated Statement of Income follows.
 Asset DerivativesLiability Derivatives
 Fair ValueFair Value
(Dollars in millions)March 31,
2026		December 31,
2025		March 31,
2026		December 31,
2025
Derivatives designated and qualifying as hedging instruments (a)    
Interest rate swap agreements$12 $— $— $15 
Commitments to sell real estate loans17 1 1 1 
 29 1 1 16 
Derivatives not designated and qualifying as hedging instruments (a)    
Mortgage banking:    
Commitments to originate real estate loans for sale9 17 3 21 
Commitments to sell real estate loans11 24 2 6 
Interest rate contracts (b)9 13 4 2 
 29 54 9 29 
Other:    
Interest rate contracts (b)140 173 398 394 
Foreign exchange and other option and futures contracts19 17 17 15 
 159 190 415 409 
Total derivatives$217 $245 $425 $454 
__________________________________________________________________________________
(a)Asset derivatives are included in Accrued interest and other assets and liability derivatives are included in Accrued interest and other liabilities in the Consolidated Balance Sheet.
(b)The impact of variation margin payments at March 31, 2026 and December 31, 2025 was a reduction of the estimated fair value of interest rate contracts not designated as hedging instruments in an asset position of $362 million and $341 million, respectively, and in a liability position of $15 million and $32 million, respectively.
Amount of Gain (Loss) Recognized
Three Months Ended March 31,
20262025
(Dollars in millions)
Derivative
Hedged Item
Derivative
Hedged Item
Derivatives in fair value hedging relationships    
Interest rate swap agreements:    
Fixed rate long-term borrowings (a)$(33)$33 $93 $(92)
Total$(33)$33 $93 $(92)
Derivatives not designated as hedging instruments    
Interest rate contracts (b)$10 $5 
Foreign exchange and other option and futures contracts (c)6 4 
Total$16 $9 
__________________________________________________________________________________
(a)Reported as an adjustment to Interest expense in the Company's Consolidated Statement of Income.
(b)Includes gains of $8 million and $5 million in Trading account and other non-hedging derivative gains for the three months ended March 31, 2026 and 2025, respectively, and gains of $2 million in Mortgage banking revenues in the Company's Consolidated Statement of Income for the three months ended March 31, 2026.
(c)Included in Trading account and other non-hedging derivative gains in the Company's Consolidated Statement of Income.

Carrying Amount of the Hedged ItemCumulative Amount of Fair Value Hedging Adjustment Increasing (Decreasing) the Carrying
Amount of the Hedged Item
(Dollars in millions)March 31,
2026		December 31, 2025March 31,
2026		December 31, 2025
Location in the Consolidated Balance Sheet
of the Hedged Items in Fair Value Hedges
Long-term borrowings$6,039 $6,072 $(49)$(16)
10. Derivative financial instruments
The net effect of interest rate swap agreements was to increase net interest income by $1 million and decrease net interest income by $62 million during the three-month periods ended March 31, 2026 and 2025, respectively. The amount of interest income recognized in the Company's Consolidated Statement of Income associated with derivatives designated as cash flow hedges was an increase of $5 million and a decrease of $53 million for the three-month periods ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the unrealized gain recognized in other comprehensive income related to cash flow hedges was $9 million of which gains of $6 million are expected to be reclassified into earnings over the next twelve months.
The Company predominantly clears non-customer derivative transactions through a clearinghouse, rather than directly with counterparties. The transactions cleared through a clearinghouse require initial margin collateral and variation margin payments depending on the contracts being in a net asset or liability position. The amount of initial margin collateral posted by the Company was $172 million and $224 million at March 31, 2026 and December 31, 2025, respectively. The fair value asset and liability amounts of derivative contracts have been reduced by variation margin payments treated as settlements as described herein. Variation margin on derivative contracts not treated as settlements continues to represent collateral posted or received by the Company.
The Company does not offset derivative asset and liability positions in its consolidated financial statements. The Company’s exposure to credit risk by entering into derivative contracts is mitigated through master netting agreements and collateral posting or settlement requirements. Master netting agreements covering interest rate and foreign exchange contracts with the same party include a right to set-off that becomes enforceable in the event of default, early termination or under other specific conditions. Interest rate swap agreements entered into with customers are subject to the Company’s credit risk standards and may contain illiquid cross-collateral provisions with customer credit facilities. Information about master netting agreements and collateral postings related to the derivative instruments in the Company's Consolidated Balance Sheet follows.
10. Derivative financial instruments
(Dollars in millions)Fair Value Amount in Consolidated Balance SheetMaster Netting AgreementsCollateral (a)Net
Amount
March 31, 2026
Derivative assets
Clearinghouse settlements (b)$13 $— $— $13 
Subject to master netting agreements117 (24)(93)— 
Not subject to master netting agreements (c)87 — (2)85 
Total$217 $(24)$(95)$98 
Derivative liabilities
Clearinghouse settlements (b)$1 $— $— $1 
Subject to master netting agreements21 (24)22 19 
Not subject to master netting agreements (c)403 — (1)402 
Total$425 $(24)$21 $422 
December 31, 2025
Derivative assets
Clearinghouse settlements (b)$8 $— $— $8 
Subject to master netting agreements98(33)(49)16
Not subject to master netting agreements (c)139 — — 139 
Total$245 $(33)$(49)$163 
Derivative liabilities
Clearinghouse settlements (b)$16 $— $— $16 
Subject to master netting agreements38(33)(7)(2)
Not subject to master netting agreements (c)400 — (1)399 
Total$454 $(33)$(8)$413 
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(a)Collateral column only includes posting of cash and investment securities and excludes initial margin amounts posted to clearinghouses.
(b)The fair value of derivative assets and derivative liabilities subject to clearinghouse settlements are presented net of the variation margin payments in the Consolidated Balance Sheet.
(c)The fair value of derivative assets and derivative liabilities not subject to master netting agreements predominantly relate to transactions with commercial customers.