v3.26.1
Fair Value Accounting (Tables)
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Gains and Losses from Fair Value Changes Included in Consolidated Statement of Operations
The following table presents unrealized gains and losses from fair value changes on junior subordinated debt:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(in millions)
Unrealized (losses) gains$(1.2)$(5.4)$0.1 $(3.9)
Changes included in OCI, net of tax(0.9)(4.1)0.1 (3.0)
Fair Value of Assets and Liabilities
The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputs: 
Fair Value Measurements at the End of the Reporting Period Using:
Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Fair Value
June 30, 2026(in millions)
Assets:
Available-for-sale debt securities
CLO$— $3,221 $— $3,221 
Commercial MBS issued by GSEs and GNMA— 514 — 514 
Corporate debt securities— 222 — 222 
Private label residential MBS— 1,136 — 1,136 
Residential MBS issued by GSEs and GNMA— 7,428 — 7,428 
Tax-exempt— 794 — 794 
U.S. Treasury securities5,494 — — 5,494 
Other29 42 — 71 
Total AFS debt securities$5,523 $13,357 $— $18,880 
Equity securities
CRA investments$28 $— $— $28 
Preferred stock52 — — 52 
Total equity securities$80 $— $— $80 
Loans HFS (2)$— $3,261 $963 $4,224 
Mortgage servicing rights— — 1,500 1,500 
Derivative assets (1)— 106 59 165 
Liabilities:
Junior subordinated debt (3)$— $— $71 $71 
Derivative liabilities (1)— 103 1 104 
(1)See "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is decreased by $42 million as of June 30, 2026 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates. Derivative assets exclude margin of $411 million. There was no margin for derivative liabilities as of June 30, 2026.
(2)Includes only the portion of loans HFS that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
(3)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
Fair Value Measurements at the End of the Reporting Period Using:
Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Fair Value
December 31, 2025(in millions)
Assets:
Available-for-sale debt securities
CLO$— $2,747 $— $2,747 
Commercial MBS issued by GSEs and GNMA— 635 — 635 
Corporate debt securities— 297 — 297 
Private label residential MBS— 1,039 — 1,039 
Residential MBS issued by GSEs and GNMA— 7,230 — 7,230 
Tax-exempt— 802 — 802 
U.S. Treasury securities5,970 — — 5,970 
Other28 40 — 68 
Total AFS debt securities$5,998 $12,790 $— $18,788 
Equity securities
CRA investments$27 $— $— $27 
Preferred stock52 — — 52 
Total equity securities$79 $— $— $79 
Loans HFS (2)$— $2,664 $700 $3,364 
Mortgage servicing rights— — 1,494 1,494 
Derivative assets (1)— 148 59 207 
Liabilities:
Junior subordinated debt (3)$— $— $71 $71 
Derivative liabilities (1)— 105 1 106 
(1)See "Note 12. Derivatives and Hedging Activities." Derivative assets and liabilities exclude margin of $366 million and $7 million, respectively.
(2)Includes only the portion of loans HFS that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
(3)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
Change in Level 3 Liabilities Measured at Fair Value on Recurring Basis
The change in Level 3 liabilities measured at fair value on a recurring basis included in OCI was as follows:
Junior Subordinated Debt
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(in millions)
Beginning balance$(69.9)$(63.2)$(71.2)$(64.7)
Change in fair value (1)(1.2)(5.4)0.1 (3.9)
Ending balance$(71.1)$(68.6)$(71.1)$(68.6)
(1)Unrealized gains (losses) attributable to changes in the fair value of junior subordinated debt are recorded in OCI, net of tax, and totaled $(0.9) million and $(4.1) million for three months ended June 30, 2026 and 2025, respectively, and $0.1 million and $(3.0) million for the six months ended June 30, 2026 and 2025, respectively.
The change in Level 3 assets and liabilities measured at fair value on a recurring basis recognized in income was as follows:
Three Months Ended June 30, 2026Six Months Ended June 30, 2026
Loans HFSMSRsIRLCs (1)WarrantsLoans HFSMSRsIRLCs (1)Warrants
(in millions)
Balance, beginning of period$1,011 $1,516 $(3)$40 $700 $1,494 $19 $39 
Purchases and additions381 294 6,571 3 903 589 12,111 5 
Sales and payments(429)(268)— — (654)(479)— — 
Transfers from Level 2 to Level 33 — — — 5 — — — 
Transfers from Level 3 to Level 2— — — — — — — — 
Settlement of IRLCs upon acquisition or origination of loans HFS— — (6,549)— — — (12,109)— 
Warrant exercises— — — (10)— — — (12)
Change in fair value(3)12 1 4 9 34 (1)5 
Mark to market adjustments— — — — — — — — 
Realization of cash flows— (54)— — — (138)— — 
Balance, end of period$963 $1,500 $20 $37 $963 $1,500 $20 $37 
Changes in unrealized gains (losses) for the period (2)$5 $3 $20 $(3)$16 $26 $20 $(3)
Three Months Ended June 30, 2025Six Months Ended June 30, 2025
Loans HFSMSRsIRLCs (1)WarrantsLoans HFSMSRsIRLCs (1)Warrants
(in millions)
Balance, beginning of period$63 $1,241 $13 $31 $3 $1,127 $(2)$30 
Purchases and additions90 284 5,490 2 154 545 11,232 6 
Sales and payments(71)(452)— — (80)(535)— — 
Transfers from Level 2 to Level 32 — — — 4 — — — 
Transfers from Level 3 to Level 2— — — — — — — — 
Settlement of IRLCs upon acquisition or origination of loans HFS— — (5,481)— — — (11,213)— 
Warrant exercises— — — — — — — (1)
Change in fair value— 23 2 — 3 3 7 (2)
Mark to market adjustments— — — — — — — — 
Realization of cash flows— (52)— — — (96)— — 
Balance, end of period$84 $1,044 $24 $33 $84 $1,044 $24 $33 
Changes in unrealized gains (losses) for the period (2)$2 $3 $24 $2 $3 $(6)$24 $2 
(1)     IRLC asset and liability positions are presented net.
(2)    Amounts recognized as part of non-interest income.
The significant unobservable inputs used in the fair value measurements of these Level 3 assets and liabilities were as follows:
June 30, 2026
Asset/liabilityKey inputsRangeWeighted average
MSRs:Option adjusted spread (in basis points)
287 - 484
390 
Conditional prepayment rate (1)
5.5% - 12.4%
9.8 %
Recapture rate
0.0% - 55.0%
25.2 %
Servicing fee rate (in basis points)
25.0 - 56.5
37.9 
Cost to service
$77 - $83
$80 
Loans HFS:Lifetime liquidation probability
1.6% to 22.9%
9.7 %
IRLCs:Servicing fee multiple
4.8 - 7.2
5.9 
Pull-through rate
78% - 100%
91.0 %
Equity warrants:Volatility
47.5% - 179.2%
77.7 %
Risk-free interest rate
3.9% - 4.4%
4.1 %
Time to expiration (in years)
1.0 - 10.0
3.3
December 31, 2025
Asset/liabilityKey inputsRangeWeighted average
MSRs:Option adjusted spread (in basis points)
283 - 317
316 
Conditional prepayment rate (1)
6.1% - 14.1%
11.0 %
Recapture rate
0.0% - 55.0%
25.5 %
Servicing fee rate (in basis points)
25.0 - 56.5
38.1 
Cost to service
$77 - $83
$79 
Loans HFS:Lifetime liquidation probability
1.6% - 10.7%
4.6 %
IRLCs:Servicing fee multiple
4.7 - 6.5
5.5 
Pull-through rate
74% - 100%
92.0 %
Equity warrants:Volatility
40.3% - 180.4%
74.7 %
Risk-free interest rate
3.5% - 4.1%
3.6 %
Time to expiration (in years)
1.0 - 10.0
2.9
(1)    Lifetime total prepayment speed annualized.
For Level 3 assets measured at fair value on a nonrecurring basis as of period end, the significant unobservable inputs used in the fair value measurements were as follows:
June 30, 2026Valuation Technique(s)Significant Unobservable InputsRange
(in millions)
Loans HFI$481 Collateral methodThird party appraisalCosts to sell
6.0% to 10.0%
Discounted cash flow methodDiscount rateContractual loan rate
3.0% to 8.0%
Scheduled cash collectionsProbability of default
0% to 20.0%
Proceeds from non-real estate collateralLoss given default
0% to 70.0%
Other assets acquired through foreclosure126 Collateral methodThird party appraisalCosts to sell
1.0% to 6.0%
December 31, 2025Valuation Technique(s)Significant Unobservable InputsRange
(in millions)
Loans HFI$395 Collateral methodThird party appraisalCosts to sell
6.0% to 10.0%
Discounted cash flow methodDiscount rateContractual loan rate
3.0% to 8.0%
Scheduled cash collectionsProbability of default
0% to 20.0%
Proceeds from non-real estate collateralLoss given default
0% to 70.0%
Other assets acquired through foreclosure137 Collateral methodThird party appraisalCosts to sell
1.0% to 6.0%
Assets Measured at Fair Value on Nonrecurring Basis
The significant unobservable inputs used in the fair value measurements of these Level 3 liabilities were as follows:
June 30, 2026Valuation TechniqueSignificant Unobservable InputsInput Value
(in millions)
Junior subordinated debt$71 Discounted cash flowImplied credit rating of the Company5.49 %
 
December 31, 2025Valuation TechniqueSignificant Unobservable InputsInput Value
(in millions)
Junior subordinated debt$71 Discounted cash flowImplied credit rating of the Company5.36 %
The following table presents such assets carried on the Consolidated Balance Sheet by caption and by level within the ASC 825 hierarchy:
Fair Value Measurements at the End of the Reporting Period Using
TotalQuoted Prices in Active Markets for Identical Assets
(Level 1)		Active Markets for Similar Assets
(Level 2)		Unobservable Inputs
(Level 3)
(in millions)
As of June 30, 2026:
Loans HFI$481 $— $— $481 
Other assets acquired through foreclosure126 — — 126 
As of December 31, 2025:
Loans HFI$395 $— $— $395 
Other assets acquired through foreclosure137 — — 137 
Estimated Fair Value of Financial Instruments
The following is a summary of the difference between the aggregate fair value and the aggregate UPB of loans HFS for which the FVO has been elected:
June 30, 2026December 31, 2025
Fair valueUPBDifferenceFair valueUPBDifference
(in millions)
Loans HFS:
Current through 89 days delinquent$3,528 $3,421 $107 $2,846 $2,744 $102 
90 days or more delinquent696 676 20 518 501 17 
Total$4,224 $4,097 $127 $3,364 $3,245 $119 
The estimated fair value of the Company’s financial instruments is as follows:
June 30, 2026
Carrying AmountFair Value
Level 1Level 2Level 3Total
(in millions)
Financial assets:
Investment securities:
HTM$1,676 $— $1,497 $— $1,497 
AFS18,880 5,523 13,357 — 18,880 
Equity80 80 — — 80 
Derivative assets (1)165 — 106 59 165 
Loans HFS4,347 — 3,285 1,062 4,347 
Loans HFI, net60,462 — — 58,938 58,938 
Mortgage servicing rights1,500 — — 1,500 1,500 
Accrued interest receivable505 — 505 — 505 
Financial liabilities:
Deposits$81,874 $— $81,899 $— $81,899 
Other borrowings6,236 — 6,239 — 6,239 
Qualifying debt1,069 — 980 86 1,066 
Derivative liabilities (1)104 — 103 1 104 
Accrued interest payable109 — 109 — 109 
(1)    Derivative assets and liabilities exclude margin of $411 million and zero, respectively.
December 31, 2025
Carrying AmountFair Value
Level 1Level 2Level 3Total
(in millions)
Financial assets:
Investment securities:
HTM$1,584 $— $1,427 $— $1,427 
AFS18,788 5,998 12,790 — 18,788 
Equity securities79 79 — — 79 
Derivative assets (1)207 — 148 59 207 
Loans HFS3,498 — 2,664 834 3,498 
Loans HFI, net58,216 — — 57,206 57,206 
Mortgage servicing rights1,494 — — 1,494 1,494 
Accrued interest receivable473 — 473 — 473 
Financial liabilities:
Deposits$77,159 $— $77,185 $— $77,185 
Other borrowings5,240 — 5,242 — 5,242 
Qualifying debt1,076 — 981 87 1,068 
Derivative liabilities (1)106 — 105 1 106 
Accrued interest payable116 — 116 — 116 
(1)    Derivative assets and liabilities exclude margin of $366 million and $7 million, respectively.