The consolidated interim financial statements of the Company were compiled in accordance with GAAP and with instructions for Form 10-Q and Article 10 Regulation S-X. The financial statements contain all adjustments which are, in the opinion of management, necessary for a fair statement of the Company's financial position, results of operations and cash flows for the interim periods presented. The consolidated interim financial statements should be read in conjunction with the consolidated financial statements included in the Company's 2025 Annual Report.

Effective January 1, 2026, the Company elected to prospectively measure its residential mortgage loan servicing right assets at fair value with changes in fair value reflected in Mortgage banking revenues in the Consolidated Statement of Income. As a result, amortization associated with residential mortgage loan servicing right assets previously recognized in Other costs of operations in the Consolidated Statement of Income before 2026 is no longer recorded. Instead, beginning in 2026 fair value changes in residential mortgage loan servicing right assets, inclusive of the realization of expected net servicing revenues over time, are included in Mortgage banking revenues. The accounting election resulted in an increase to capitalized servicing assets, included in Accrued interest and other assets in the Consolidated Balance Sheet, of $263 million and a corresponding after-tax increase to Retained earnings of $197 million. 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 and other derivative contracts, for which changes in fair value are reflected in Mortgage banking revenues in the Consolidated Statement of Income for the three and six months ended June 30, 2026.

For purposes of this statement, Cash and due from banks and federal funds sold are considered Cash and cash equivalents. Effective for the year ended December 31, 2025, the Company changed its accounting policy to also include Interest-bearing deposits at banks, which are primarily comprised of interest-bearing deposits at the FRB of New York, as Cash and cash equivalents. The Company considers such deposits to be an immediate source of funds in its liquidity management processes and therefore considers the accounting policy election preferable. Prior period amounts in the Consolidated Statement of Cash Flows have been adjusted to reflect this change in accounting policy as summarized in the following table:

Standard

Description

Required date

of adoption

Effect on consolidated financial statements

Standards adopted in the six-month period ended June 30, 2026

Improvements to the accounting for purchased loans

The standard expands the population of acquired financial assets accounted for using a gross-up approach which records an initial allowance for credit losses through an adjustment to the initial amortized cost basis. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. All non-purchased credit deteriorated loans (excluding credit cards) that are acquired in a business combination are deemed seasoned.

January 1, 2027
(Early adoption permitted)

Effective January 1, 2026, the Company prospectively adopted the amended guidance, which did not have a material impact on its consolidated financial statements for the three and six month-periods ended June 30, 2026.

Standards not yet adopted as of June 30, 2026

Income Statement - Expense
disaggregation disclosures

The standard requires disclosure in the notes to financial statements of specified information about certain cost and expense captions on the income statement.

January 1, 2027
(Early adoption permitted)

The Company does not expect the guidance will have a material impact on its consolidated financial statements.

Hedge accounting improvements

The amendment expands the hedged risks permitted to be aggregated in a group of individual forecasted transactions in a cash flow hedge by changing the requirement to designate a group of individual forecasted transactions from having a shared risk exposure to having a similar risk exposure. The amendment also provides a model to facilitate the application of cash flow hedge accounting to forecasted interest payments on variable rate debt instruments that permit the borrower to change the interest rate index. The amendment also modifies certain other hedge accounting rules.

January 1, 2027
(Early adoption permitted)

The Company does not expect the guidance will have a material impact on its consolidated financial statements.

Targeted improvements to the accounting for internal-use software

The standard eliminates the concept of a software development project stage such that the guidance is agnostic to different software development methods and introduces a new threshold for cost capitalization. The standard also provides factors to consider when determining whether significant development uncertainty exists.

January 1, 2028
(Early adoption permitted)

The Company does not expect the guidance will have a material impact on its consolidated financial statements.