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DERIVATIVES
 9 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES DERIVATIVES
General

Derivatives represent contracts between parties that usually require little or no initial net investment and result in one or both parties delivering cash or another type of asset to the other party based on a notional amount and an underlying asset, index, interest rate or future purchase commitment or option as specified in the contract. Derivative transactions are often measured in terms of notional amount, but this amount is generally not exchanged, is not recorded on the balance sheet and does not represent the Company`s exposure to credit loss. The notional amount is the basis on which the financial obligation of each party to the derivative contract is calculated to determine required payments under the contract. The Company controls the credit risk of its derivative contracts through credit approvals, limits and monitoring procedures. The underlying variable is typically a referenced interest rate (commonly the OIS rate or a SOFR-based rate), security, credit spread or index.

The Company’s capital markets and mortgage banking activities are subject to price risk. The Company employs various tools to measure and manage price risk in its portfolios. In addition, the Board of Directors has established certain limits relative to positions and activities. The level of price risk exposure at any given time depends on the market environment and expectations of future price and market movements and will vary from period to period.

See Note 14 to these Condensed Consolidated Financial Statements for discussion of the valuation methodology for derivative instruments.

Credit Risk Contingent Features

The Company has entered into certain derivative contracts that require the posting of collateral to counterparties when those contracts are in a net liability position. The amount of collateral to be posted is based on the amount of the net liability and thresholds generally related to the Company's long-term senior unsecured credit ratings. In a limited number of instances, counterparties also have the right to terminate their ISDA Master Agreements if the Company's ratings fall below a specified level, typically investment grade. As of September 30, 2026, derivatives in this category had a fair value of zero. The credit ratings of the Company and SBNA are currently considered investment grade. As of September 30, 2026, no additional collateral would be required if there were a further 1- or 2- notch downgrade by either S&P or Moody's.

As of September 30, 2026 and December 31, 2025, the aggregate fair value of all derivative contracts with credit risk contingent features (i.e., those containing collateral posting or termination provisions based on the Company's ratings) that were in a net liability position totaled $6 million and $7 million, respectively. The Company had $6 million and $7 million in cash and securities collateral posted to cover those positions as of September 30, 2026 and December 31, 2025, respectively.

Hedge Accounting

Management uses derivative instruments designated as hedges to mitigate the impact of interest rate and foreign exchange rate movements on the fair value of certain assets and liabilities and on highly probable forecasted cash flows. These instruments primarily include interest rate swaps that have underlying interest rates based on key benchmark indices. The nature and volume of the derivative instruments used to manage interest rate risk depend on the level and type of assets and liabilities on the balance sheet and the risk management strategies for the current and anticipated interest rate environment.

Interest rate swaps are generally used to convert fixed-rate assets and liabilities to variable rate assets and liabilities and vice versa. The Company utilizes interest rate swaps that have a high degree of correlation to the related financial instrument.

Fair Value Hedges

The Company enters into derivatives to hedge the risk of changes in fair value of a portion of its AFS debt securities portfolio and borrowings. These derivatives are designated as fair value hedges at inception. The gains/(losses) from changes in the fair value of the hedging derivative and the offsetting gains/(losses) from changes in the fair value of the related underlying hedged items due to the hedged risk are reported in the same line item in the Condensed Consolidated Statements of Operations as earnings from the hedged items. The cumulative fair value hedge basis adjustments included in the carrying amount of hedged assets is reversed through earnings in future periods as an adjustment to yield. The Company includes gains/(losses) on the hedging derivatives and the related hedged items in the assessment of hedge effectiveness. All of these swaps have been deemed highly effective fair value hedges. The last of the hedges is scheduled to expire in June 2036. The Company has entered into fair value hedges of portions of a closed portfolio of approximately $2.3 billion of AFS debt securities, using the portfolio layer method.
NOTE 13. DERIVATIVES (continued)

The carrying amount and fair value hedge adjustment of hedged assets at the dates indicated was:

Carrying Amount of Hedged ItemAmount of Fair Value Hedge Adjustment Included in the Carrying Amount
(in millions)September 30, 2026December 31, 2025September 30, 2026December 31, 2025
Debt securities AFS (Note 2)$1,155 $1,473 $95 $27 
Borrowings (Note 7)$2,392 $— $(99)$— 

Cash Flow Hedges

The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s floating-rate assets and liabilities and forecasted issuances of borrowed funds. The Company also has foreign exchange contracts designed to hedge certain contractual payments in foreign currencies.

Except as noted below, all of these derivatives have been deemed highly effective cash flow hedges. The gain or loss on the derivative instrument is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same Condensed Consolidated Statements of Operations line item as the earnings effect of the hedged item.

The last of the hedges is scheduled to expire in August 2029. The Company includes all components of each derivative's gain or loss in the assessment of hedge effectiveness. As of September 30, 2026, the Company estimated that approximately $16 million of unrealized gains included in AOCI would be reclassified to earnings during the subsequent twelve months as the future cash flows occur.

Derivatives Designated in Hedge Relationships – Notional and Fair Values

Derivatives designated as accounting hedges included the following as of the dates indicated:
(in millions)Notional
Amount		AssetLiabilityWeighted Average Receive RateWeighted Average Pay
Rate		Weighted Average Life
(Years)
September 30, 2026
Fair value hedges:
Interest rate swaps$6,250 $81 $99 2.83 %1.94 %3.40
Cash flow hedges:
Pay fixed - receive variable interest rate swaps
55 — — 3.47 %3.86 %3.77
Pay variable - receive fixed interest rate swaps21,500 1 197 3.75 %1.22 %1.33
Total$27,805 $82 $296 3.54 %1.38 %1.80
December 31, 2025
Fair value hedges:
    Interest rate swaps
$3,750 $17 $4 1.60 %3.01 %2.36
Cash flow hedges:
Pay fixed — receive variable interest rate swaps618 — — 3.87 %3.49 %3.30
Pay variable - receive fixed interest rate swaps14,300 63 23 3.41 %0.90 %1.22
Total$18,668 $80 $27 3.06 %1.41 %1.52
NOTE 13. DERIVATIVES (continued)

Other Derivative Activities

The Company also enters into derivatives that are not designated as accounting hedges under GAAP. Although these derivatives are used to hedge risk and are considered economic hedges, they are not designated as accounting hedges because the contracts they are hedging are often carried at fair value on the balance sheet, resulting in generally symmetrical accounting treatment for the hedging instrument and the hedged item.

Customer-related derivatives

The Company offers derivatives to its customers in connection with their risk management requirements related to foreign exchange and lending arrangements. These derivatives primarily consist of interest rate swaps, caps, floors, and foreign exchange contracts. Risk exposure from customer positions is managed through offsetting transactions with other dealers, including Santander. Refer to Note 21 in the Company's Annual Report on Form 10-K for 2025 for related party transactions.

Broker dealer activities

The Company uses exchange-traded options and futures, credit default swaps, and forward-settling securities trades as part of its trading business, as well as to actively manage risk exposures that arise from its trading in cash instruments.

Structured financing activities

In certain circumstances, the Company is required to hedge its interest rate risk on revolving credit and term borrowings related to its secured structured financings. The Company uses interest rate caps to satisfy these requirements and enters into offsetting option contracts.

Foreign exchange activities

The Company uses foreign exchange contracts to manage the foreign exchange risk associated with certain foreign currency-denominated assets and liabilities. Foreign exchange contracts, which include spot and forward contracts as well as cross-currency swaps, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date and may or may not be physically settled depending on the Company’s needs. Exposure to gains and losses on these contracts increase or decrease over their respective lives as currency exchange and interest rates fluctuate.

Mortgage Banking Derivatives

The Company retains the servicing rights related to certain residential mortgage loans that have been sold. Most of the Company`s residential MSRs are accounted for at fair value. As deemed appropriate, the Company economically hedges MSRs using interest rate swaps and forward contracts to purchase MBS.

Other derivative activities

Other derivative instruments primarily include forward contracts related to certain investment securities sales, loan sales, an OIS, and a total return swap on Visa, Inc. Class B common shares.
NOTE 13. DERIVATIVES (continued)

Derivatives Not Designated in Hedge Relationships – Notional and Fair Values

Other derivative activities included the following as of the dates indicated:
NotionalAsset derivatives
Fair value		Liability derivatives
Fair value
(in millions)September 30, 2026December 31, 2025September 30, 2026December 31, 2025September 30, 2026December 31, 2025
Mortgage banking derivatives:
Total mortgage banking risk management$650 $626 $1 $5 $16 $14 
Customer-related derivatives:
Swaps receive fixed19,323 12,310 9 42 878 336 
Swaps pay fixed21,388 12,491 918 341 2 42 
Other12,911 10,006 133 136 133 133 
Total customer-related derivatives53,622 34,807 1,060 519 1,013 511 
Other derivative activities:
Foreign exchange contracts11,209 8,107 133 50 86 49 
Interest rate cap agreements308 741 — — — — 
Options for interest rate cap agreements308 741 — — — — 
TBA MBS forwards
30,082 23,256 431 18 46 2 
Other27,265 32,307 34 — 73 46 
Total$123,444 $100,585 $1,659 $592 $1,234 $622 
NOTE 13. DERIVATIVES (continued)

Gains (Losses) on all Derivatives

The following Condensed Consolidated Statements of Operations line items were impacted by the Company’s derivative activities for the periods indicated:
(in millions)
Three months ended September 30,
Nine months ended September 30,
Line Item2026202520262025
Fair value hedges:
Cross-currency swapsNet interest income$— $— $— $(1)
Interest rate swapsNet interest income(97)7 (90)18 
Derivative Activity (1)
Cash flow hedges:
Pay fixed-receive variable interest rate swapsInterest expense on borrowings2 6 8 18 
Pay variable receive-fixed interest rate swapInterest income on loans(3)(38)(17)(110)
Other derivative activities:
Mortgage banking derivativesNon interest income(6)— (9)3 
Customer-related derivativesNon interest income165 (3)172 80 
Foreign exchangeNon interest income51 33 103 (57)
Interest rate swaps, caps, and optionsNet interest income— — — (1)
OtherNon interest income765 (90)837 (287)
(1)    Gains are disclosed as positive numbers while losses are shown as a negative number regardless of the line item being affected.

The net amount of change recognized in OCI for cash flow hedge derivatives were losses of $155 million and $229 million, and gains of $23 million and $97 million, net of tax, for the three months and nine months ended September 30, 2026 and 2025, respectively.

The net amount of changes reclassified from OCI into earnings for cash flow hedge derivatives were gains of $2 million and $6 million, and $3 million and $8 million, net of tax, for the three months and nine months ended September 30, 2026 and 2025, respectively.

Disclosures about Offsetting Assets and Liabilities

The Company enters into legally enforceable master netting agreements which reduce risk by permitting netting of transactions with the same counterparty on the occurrence of certain events. A master netting agreement allows two counterparties the ability to net-settle amounts under all contracts, including any related collateral posted, through a single payment and in a single currency. The right to offset and certain terms regarding the collateral process, such as valuation, credit events and settlement, are contained in the applicable master agreement. The Company's financial instruments, including resell and repurchase agreements, securities lending arrangements, derivatives, and cash collateral, may be eligible for offset on its Condensed Consolidated Balance Sheets.

The Company has elected to present derivative balances on a gross basis even if the derivative is subject to a legally enforceable nettable ISDA Master Agreement for all trades executed after April 1, 2013. Collateral that is received or pledged for these transactions is disclosed within the “Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets” section of the tables below.
NOTE 13. DERIVATIVES (continued)

Information about financial assets and liabilities that are eligible for offset on the Condensed Consolidated Balance Sheets was as follows for the dates indicated:
Offsetting of Financial Assets
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(in millions)Gross Amounts of Recognized AssetsGross Amounts Offset in the Condensed Consolidated Balance SheetsNet Amounts of Assets Presented in the Condensed Consolidated Balance Sheets
Financial Instruments (2)
Cash Collateral Received (2)
Net Amount
September 30, 2026
Fair value hedges$81 $— $81 $— $— $81 
Cash flow hedges1 — 1 $— $— 1 
Other derivative activities (1)
1,649 — 1,649 (12)(1,145)492 
Total derivatives subject to a master netting arrangement or similar arrangement1,731 — 1,731 (12)(1,145)574 
Total derivatives not subject to a master netting arrangement or similar arrangement10 — 10 — — 10 
Total Derivative Assets$1,741 $— $1,741 $(12)$(1,145)$584 
December 31, 2025
Fair value hedges$17 $— $17 $— $(7)$10 
Cash flow hedges63 — 63 $— $(31)32 
Other derivative activities (1)
592 — 592 — (41)551 
Total Derivative Assets$672 $— $672 $— $(79)$593 
(1)Includes customer-related and other derivatives.
(2)When the Company receives cash collateral, it is reported in Other Liabilities and Deposits, and the cash received is classified as restricted in the Condensed Consolidated Balance Sheets. In some instances, collateral exceeds the related financial asset, and such excess amounts are excluded from this table. Financial instruments that are pledged to the Company are not reflected in the accompanying Condensed Consolidated Balance Sheets.
NOTE 13. DERIVATIVES (continued)

Offsetting of Financial Liabilities
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(in millions)Gross Amounts of Recognized LiabilitiesGross Amounts Offset in the Condensed Consolidated Balance SheetsNet Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets
Financial Instruments (2)
Cash Collateral Pledged (2)
Net Amount
September 30, 2026
Fair value hedges$99 $— $99 $— $(7)$92 
Cash flow hedges197 — 197 $— $(2)195 
Other derivative activities (1)
853 — 853 (12)(446)395 
Total derivatives subject to a master netting arrangement or similar arrangement1,149 — 1,149 (12)(455)682 
Total derivatives not subject to a master netting arrangement or similar arrangement381 — 381 — — 381 
Total Derivative Liabilities $1,530 $— $1,530 $(12)$(455)$1,063 
December 31, 2025
Fair value hedges$4 $— $4 $— $— $4 
Cash flow hedges23 — 23 $— $(11)12 
Other derivative activities (1)
622 — 622 — (18)604 
Total Derivative Liabilities $649 $— $649 $— $(29)$620 
(1)Includes customer-related and other derivatives.
(2)Cash collateral pledged is reported in Other Assets and Cash, cash equivalents, and restricted cash in the Condensed Consolidated Balance Sheets. In some instances, collateral exceeds the related financial liability, and such excess amounts are excluded from this table.